Sunday, February 10, 2013

Who Is Responsible for Master Data?

Most organizations are run based on the assumption that their business can be hierarchically structured with well-defined exclusive tasks and responsibilities – so if everyone “minds his business”, the organization as a whole will do well. At some point in history, when the benefits of information technology were discovered, the IT department was added to the org-chart, and one after the other operational department began to use IT’s service to automate “their” business. The natural result over the years: a siloed application structure.

Now that the benefits of sharing and shared information such as Master Data have become obvious, organizations realize that neither their departmental nor their application structure is made for sharing: Master Data either has too many “masters” (having the right to modify it, e.g. Sales, Customer Service, Order Processing, Accounting) or none (when it comes to the responsibility to maintain its quality (completeness, cleanliness, integrity etc.))

Since IT as the common information service unit “has all the data”, it comes to no surprise that very often they initiate enterprise-wide tasks such as Master Data Management. However, IT is a service department, does not represent the business and does not have the business expertise in detail (otherwise IT could run the whole business alone). 

So who should be in charge of Master Data Management (and other topics related to shared information)? Given the limitations of the endeavor to succeed in a hierarchical world, given all known negative effects related to shared responsibilities, all eyes need to turn on the one and only that represents the business as a whole - the CEO. Yes, this endeavor is “Chefsache” (My apologies for the German expression, but apparently there is no term in the English language that expresses the same intensity of engagement in one word).

“Chefsache” includes
  • CEO’s executive sponsorship
  • CEO’s complete understanding, full consent, active driving and regular status check (which is more than just “buy-in”)
  • Alignment of all CxOs on this common target
  • Creation of a permanent (as this endeavor is a program, not a project) organizational unit with the head of this unit directly reporting to the CEO.

This newly created organizational unit will own the Master Data (primarily Master Data belonging to the domains "Party" and "Location") and be responsible for Master Data Management, i.e.
  • Define the business data models for Master Data (and related business functions / rules!)
  • Conceive and evaluate (later: own and conceptually maintain) the Master Data Management solution
  • License the right to create / update Master Data to other organizational units
  • Create / update reference data (i.e. third-party data that is important for the business, e.g. currency codes, country codes, tax rates)
  • Check and maintain the quality of shared data in regular service intervals (e.g. integrity verifications, cleansing)
  • Represent Master Data Management in related projects

Please be invited to weigh in.

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