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Apr 14, 2023

What is Master Data Management (MDM), and Why Is It Important?

For most companies, data flows in from all sources and gets stored by different departments in different systems. When this is the case, even the simplest questions about your customers or products become tricky to answer. Luckily, MDM, when combined with PIM, can help.




Data is critical to businesses of all sizes, and most brands are sitting on a lot of it. But the power of data isn’t about how much you collect, it’s about how you manage, analyze, and use it. Correctly utilizing data can lead to huge growth… and, you guessed it, mismanaging it can cause major problems (think duplicate customer records, mismatched product information, and more). 

For most companies, data flows in from all sources and gets stored by different departments in different systems. When this is the case, even the simplest of questions about your customers or products become tricky to answer accurately.

That’s where Master Data Management (MDM) can help. MDM tools are crucial for brands across all industries as they tackle common product and customer data challenges. 


What is Master Data Management (MDM)?

Master Data Management creates and manages a single, consistent, and accurate source of master data across an organization. It’s a category of software that centralizes and standardizes different data types, processing them from multiple systems within an enterprise to build a “Master” record. This master data is the essential data that is shared and reused across different systems and applications, including PIM tools.

Master data can be divided into four main data domains: 

    • Customer: Contains data related to customers, such as their names, contact information, purchase history, and demographic information. Keeping this data accurate and up-to-date means more effective communication, stronger marketing, and better customer service.
    • Product: Includes data like product descriptions, features, prices, and inventory levels. Product domain data helps businesses manage their product catalogs and streamline supply chain operations.
    • Locations: Contains data such as store addresses, warehouse locations, and shipping routes. It helps businesses optimize their logistics operations and ensure timely and efficient deliveries. 
    • Other: Make no mistake, “other” doesn’t mean “unimportant.” This contains data related to license, warranty, contract, employees, and other critical business information.


What does an MDM Software Do?

Think of MDM software like a big, universal filing cabinet for all your company’s info, from customer names and addresses to product descriptions and inventory levels. 

MDM platforms are IT-driven solutions that bring harmony to chaotic technology systems. Simply put, they provide a “golden record” (a.k.a. the “best version of the truth”) of essential business data that eliminates the potential for redundancy, duplication, and mistakes. They do this by synchronizing and standardizing data across the entire ecosystem, making MDM a valuable tool for establishing data policies and guidelines, regulatory compliance, and improving operational efficiencies. 

This master record that’s created contains the customer, product, location, and business data that an organization needs to perform essential tasks more effectively, like marketing campaigns, service calls, or sales conversations. 

MDM software usually includes data integration, data quality, and data governance capabilities. It also provides tools for managing the lifecycle of master data, from creation to retirement, ensuring data is up-to-date and relevant.



A tool for centralizing data and making your teams’ lives easier… sound familiar? That’s because MDM and PIM (Product Information Management) are both software solutions that help organizations manage and organize their data into a universal source of truth. Both MDM and PIM make it easier for everyone in the company to make important business decisions based on accurate and consistent information.

But while there are similarities between the two, don’t assume they’re interchangeable. 

MDM tosses a wider data net, providing a single information source for all types of data. PIM, on the other hand, is technically a subset of MDM that specifically focuses on managing high-quality product information. PIM is typically used by marketing and sales teams to support their efforts in merchandising and advertising products.

I know what you’re thinking – if MDM stores all data, and PIM stores only product data, why not forgo PIM for the “all-in-one” solution that MDM platforms appear to offer? Resist the temptation! MDM and PIM compliment each other to create an incredibly efficient system for marketing and sales teams, and ultimately, an enhanced product experience. 

MDM platforms can aggregate product information from across the ecosystem into a single PIM system. This information is then enhanced by marketers and combined with assets within the PIM before being distributed across all of a company’s sales channels.


What are the Benefits of Implementing an MDM?

We know an MDM creates a universal data source for organizations, but why does that matter? Implementing an MDM system can have a big impact:

    • Increases data consistency: That “single source of truth” we keep talking about reduces the risk of inconsistent or inaccurate data caused by different teams using different information systems across the organization. 
    • Pulls customer information into one source of record: MDM consolidates customer data from different sources into a single source of record, which can be accessed and updated by authorized users across the organization.
    • Improves product & customer experience: Better product and user data means sales and marketing teams can operate more effectively. Plus, this data leads to stronger product recommendations and more personalized customer experiences. 
    • Improves internal operational efficiency: Nobody likes spending time chasing down data from other departments or manually entering information into 10 different systems. MDM tools cut down on both. 
    • Helps comply with data regulations: To successfully protect consumer data, you have to know what type of data you hold, where it is, and how much you have. MDM can help companies identify all of the personal data they collect. With regulatory mandates like the Sarbanes-Oxley Act (SOX), the Health Insurance Portability and Accountability Act (HIPAA), the European Union’s GDPR, and the California Consumer Privacy Act (CCPA) in effect, MDM is huge.  


How to Choose the Best MDM for Your Organization

Of course, not all MDM platforms are created equal. Choosing the right MDM solution for your organization is the key to maintaining high-quality data and improving efficiency. Though every business will have its own needs, there are a few key features to look for in an effective MDM solution. 

For example, you’ll likely want a platform that’s SaaS-based, which usually requires less upfront investment in hardware and IT infrastructure, and can be more flexible as your business grows. 

Growth is also why you’ll want an MDM platform that’s customizable. As you scale, your data management needs may change, and your MDM solution should be able to adapt to those changes. Make sure that the one you choose offers the ability to customize workflows, data models, and more as needed.

Just as important as “customizable” is “composable.” Composable software communicates via API, and this means that each individual solution can be updated or replaced at any time without disrupting the rest of the system. A composable MDM solution also allows for easier integration with other technologies in your organization, such as PIM systems, data analytics tools, or other business applications. This can help you create a more seamless data management environment and avoid data silos. 

Whether you’re a small business just getting started or a large enterprise looking to streamline your data management, MDM software is worth adding to your stack. Not only can it help streamline data management processes, improve data accuracy, and boost consistency across the organization, it can also have a huge impact on your customer and product experiences. With the right MDM system, you can take control of your data management and unlock its full potential.

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