With the increasing demand for data usage in the workplace, many companies are now focusing more on Master Data Management (MDM). As we explained in a previous article, let’s delve deeper into this concept and how it differs from other types of data.

What is Master Data?

Master Data is a collection of unified identifiers and extended attributes describing the core entities of a business, such as customers, suppliers, business units, and account charts.

There are three popular definitions:

  1. Gartner: A collection of unified identifiers and extended attributes describing the core entities of a business, including customers, suppliers, business units, and account charts.
  2. Philip Russom: Consists of consistent definitions across an entire enterprise or organization (customers, products, etc.), managed on a comprehensive IT system and can even extend beyond the enterprise’s scope.
  3. Technopedia: Includes customer information, product information, etc., considered primary data, distinct from transaction data.

Master Data is used consistently in transactions across the entire system, analyzing customer behavior, establishing contact directories, or conducting high-level research. It ensures consistent information and gathers the core data necessary for business operations.


  • Product names
  • Customer categories
  • Raw materials used in production
  • Warehouse locations

Types of Data Collected by Businesses

  1. Transaction Data: Generated by applications running or supporting daily business processes.
  2. Analytical Data: Formed through calculations or analysis on transaction data.
  3. Master Data: Represents business objects essential for transactions and parameters used for data analysis.


  • Parties: Individuals and organizations, including instructors, buyers, suppliers, customers, vendors, and employees.
  • Products: Goods bought and sold between parties.
  • Financial Structure: Assets, accounts, documents, etc.
  • Locations: Sales territories, branches, office locations, etc.

Importance to Businesses

Master data is crucial because many business processes and IT systems depend on it. Standardizing its formats, synchronizing values, and properly managing data ensures successful integration into enterprise systems. It is inherently non-transactional and is often grouped into master record sets, which may include associated “reference data.”

It is essential to separate master data from reference data. Reference data is linked similarly to tagged data, such as zip codes in office branch addresses within a customer’s master record set.

What is Transaction Data?

Transaction Data is information collected from transactions, recording the time, place, items purchased, payment methods, discounts, etc. It is usually collected at the point of sale and is updated frequently. Transaction data relies on master data and is often updated and replaced.


  • When you buy an item, the price, promotions, and payment methods are transaction data, as they frequently change.
  • An electronic voucher will have its unique code.

Given the number of touchpoints, transaction data can be difficult to read or contain unnecessary parts. Clearly capturing transaction data helps run analysis, prevent costly customer support calls, or track facts in fraud complaints.

Distinguishing Between Master Data and Transaction Data

Both data types have unique attributes. Managing both is crucial for modern organizations. Here are the differences summarized:

CategoryMaster DataTransaction Data
DefinitionRepresents business entities containing valuable information, standardized and shared within the organization.Updated periodically with new information, not synchronized over time, and shared among relevant departments.
FoundationData representing people, places, or everything related to the organization.Data used by Master Data, related to business transactions.
VariabilityStatic, fixed.Changes frequently.
IssuesConsistency-related issues.Logic and quantity-related issues.
ExamplesCustomer information, product information, store information.Price, promotions, payment methods.

Managing Data Simply and Effectively

Master Data and Transaction Data are crucial for managing an organization’s information system. Properly handling these data types ensures consistency, accuracy, and reliability, facilitating smooth business operations and strategic decision-making.

In the realm of MDM, SimpleMDG stands out as a Certified SAP BTP (Business Technology Platform) Master Data Governance solution designed to provide seamless integration for managing over 70 objects. This comprehensive tool helps organizations maintain data integrity and streamline processes, enhancing their data governance strategies and ensuring effective management and utilization of core data.