There is a truth that people always ask the difference between Master Data Management and Data Governance. Are they the same or different eventually? As a result, they are somewhat related but have other aspects. We will show you the differences between Master Data Management and Data Governance in this article. 

What Is Master Data Management (MDM)? 

Master Data Management is the creation and implementation of architectures, policies, and procedures that manage the full data lifecycle needs of an organization. Having these policies and procedures in place is critical to analyze complex and big data. Understanding what is MDM will help us to clarify the characteristics of Master Data Management and Data Governance. 

What Is Master Data Governance (MDG)? 

Master Data Governance is the application of Data Governance factors to a subset of data called Master Data. The factors of Data Governance are documenting definitions, sources, processes, policies, rules, metrics, and people to improve the management of data. Defining MDG clearly will support the next part of the blog about the difference between MDM and MDG on the other hand.  

What Are the Differences Between Master Data Management and Data Governance? 

Firstly, Master Data Management is the technology, tools, and processes that ensure the coordination of Master Data across the business. Moreover, MDM provides a consistent Master Data service that delivers accuracy, compatibility, and complete Master Data across the enterprise and business partners. Therefore, we can ponder MDG as an essential part of MDM within this framework.  

On the other hand, Master Data Governance defines how Master Data is accessed and treated within a broader MDM strategy, down to access granted to specific users and compliance protocols. MDG constitutes an essential piece in any enterprise’s Master Data Management strategy; and relates to how data is managed and protected as an asset. We can best understand Master Data Governance as using policies, human resources, processes, and technology to create consistent and proper use of a company’s data.  

Here is an example to illustrate more clearly the difference between Master Data Management and Data Governance. An MDG program will define the Master Data models, detail data retention policies, and define roles and responsibilities for data reprise’s information assets are officially, properly, proactively, and efficiently managed throughout the company to safeguard its trustworthiness & accountability. This MDG implies a better organization of business operations. In an era of sprouting regulations like GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act) and apparent data leaks, Master Data Governance has become a priority for data executives.  

Master Data Governance is the procedure to handle the availability, usability, integrity, and security of the data in enterprise systems; based on internal data standards and policies that control data usage. Good Master Data Governance ensures that data is consistent, trustworthy, and not misused. It is crucial for an organization to meet its goals, derive substantial improvements, and maintain a legal and ethical reputation in the eyes of shareholders, regulators, and the wider community.  

Above perspectives are basic differences between Master Data Management and Data Governance to help organizations decide suitable ERP SAP for their most effective implementation. 

Advantages of A Successful Master Data Governance 

  • Adopting an influential Master Data Governance strategy has many vital benefits:  
  • Better decision-making: This applies to the decision-making process and the decisions themselves. Well-governed data makes it easier to find helpful insights. Decisions will be based on the correct data, ensuring greater accuracy and trust.  
  • Operational efficiency: Provides a better understanding of your data and where it is stored; it provides a comprehensive view of all data assets.  
  • Greater accountability: Enforcing roles and responsibilities for Master Data Management makes it far easier to determine who is responsible for specific data.  
  • More excellent data quality: Data quality refers to how valuable and complete data is, while Master Data Governance refers to where the data is and who handles it. Master Data Governance improves data quality because addressing the latter makes it easier to tackle the former.  
  • Other benefits of Master Data Governance include: Preserves regulatory compliance; Standardizes Master Data Management and exploitation; Reducing inefficiencies and costs for Master Data Management; and Expanding data security thanks to the requirements for data access.  
  • Increases revenue: All the benefits of Master Data Governance addressed above help businesses make faster, better decisions with more certainty. It results in less costly errors. 

How Do MDM and MDG Work Together? 

Master Data Governance is essential in any business MDM strategy, but it cannot work alone. Master Data Management and Data Governance plans and programs are still necessary to guarantee that data is appropriately collected, structured, organized, and stored.  

Besides, we can implement a good Master Data Governance framework only when the proper data collection, classification, architecture, quality control methods, integration mechanisms, and Master Data Management are in place. For example, you cannot govern data if you do not specify what it is about, how to collect it, where to store it, and how to access it.  

Master Data Management includes procedures from creating Master Data to its disposal. MDG makes the rules of the operational processes executed within those procedures. Hence, MDG does not sit as an isolated process. Competent MDM creates remarkable consistency and accuracy in data. It can be an advantage to propel world-class operations. 

The Bottom Line 

It is very critical for all businesses to understand about Master Data Management and Data Governance in this digital transformation age. Data Governance is part of the overall management of data. Master Data Governance without execution is just documentation. Master Data Governance puts all of the policies and procedures in place, and Master Data Management executes all of these pieces to compile and use the data for management decision-making. 

With our expertise in SAP consulting and implementation, we know that good data quality drives SAP business performance. That is why we built SimpleMDG – a SAP BTP solution for Master Data Governance – to help businesses manage master data simply and efficiently. 

Request here for SimpleMDG Demo.