Companies have been facing master data management challenges, encountering difficulties in terms of both organizing and managing their key information.
Many businesses are having a hard time generating strong results with their existing information, according to a recent piece in Harvard Business Review. Many of them are struggling to obtain the return on investment they are looking for.
Companies not using data efficiently
In the article, Cynthia Beath, professor emeritus at the University of Texas at Austin, Jeanne Ross, director of MIT Sloan School of Management’s Center for Information Systems Research and Anne Quaadgras, research scientist at CISR, asserted that many companies are facing these problems because there is a disconnect between their technological resources and their management procedures.
More specifically, companies are not leveraging all the information that is now available as a result of them installing ERP and CRM systems over the last decade or so, the authors wrote. They are certainly not alone in stating that companies are having a hard time managing their key data.
Businesses have been suffering problems like this for some time, John Parkinson, an affiliate partner at a Chicago-based management consulting firm, wrote in CFO Magazine. He said that these data challenges started accumulating close to 50 years ago. The market expert specifically noted the difficulties that are associated with firms and their transaction records. Parkinson said that a company creates one of these every time it either buys or sells a good or service.
To make one of these records, companies will combine the data that is unique to the transaction with master data references, which could include the sales person, the product transacted and information on the customer, Parkinson wrote. While companies can harness this methodology to stay organized, they can run into problems when they are figuring out how to relate the new values to the old ones.
Data has become enterprise-wide challenge
The market expert said that while master data management was originally only a challenge for IT, it has become a challenge for entire businesses. Big data has generated significant visibility, and companies have been investing heavily in their efforts to gather the best software, databases and staff, the authors wrote in the Harvard Business Review article.
Many of these firms have great expectations of the results they might generate by harnessing big data, the market experts emphasized. However, they have frequently been disappointed by the outcome of their efforts. These companies are encountering the limitations of what they can do with available information. For example, a firm might glean a key insight from data analytics, and then be incapable of actually using that information. A company may find that in order to act on the available data, it might have to completely change its business model.
In addition, many companies suffer from low-quality data, Parkinson notes. More specifically, some firms have customer information that is either inconsistent, or not all stored in the same place. When businesses suffer from these challenges, they can face higher expenses for compliance and reporting, supply chain difficulties and lackluster market share.
Low-quality data can cause serious problems
These organizations can then suffer greater problems that are not caused directly by their data challenges, the market expert noted. Companies that work with low-quality data could run into major problems such as inefficient sales, marketing campaigns based on improper information and inaccurate revenue. These operational difficulties could undermine customer loyalty and damage an organization’s reputation.
Companies might benefit from considering these potential implications when they contemplate the optimal way to approach master data management. Doing so could reduce unanticipated costs and challenges.
- Service Spotlight: New ESG Indices, A Series of Fund Launches and Seemingly Impossible Deadlines
- [INFOGRAPHIC] The Trends, Challenges & Solutions to Maintaining Market Integrity
- European Commission Adopts BMR Technical Standards
- Regulation Remains a Challenge for Asset Managers
- BMR and the Benchmarks Valuation Dilemma