Why a good company information database can reduce your costs
Organisation is key to success. Fail to prepare and you prepare to fail, as the old adage goes. Which is why it’s so important to have a good company information database. After all, this provides the foundation for your business. If structured and shared effectively, a good company information database could reduce your business costs. However, if it’s not closely monitored, instead of saving you time and resources, it could do the opposite.
Databases are a critical resource to store information – provided they are well organised and regularly updated. Most companies begin with a centralised database but as their business expands, particularly if new departments are formed or mergers and acquisitions are involved, databases can become fragmented. In fact, a company may end up operating with a number of databases that use entirely different software. But even within one database, a variety of different softwares can be used, each collecting insight that isn’t joined up.
Failing to at least connect up your databases and align the findings from different softwares, even if they aren’t fully synthesised, means that key information may be updated in one area of your business and outdated in another. For example, only some departments might know that a client has moved address, meaning invoices could be sent to the wrong address and therefore lead to late payment. Aligning your databases can save you time and prevent mistakes; this process is called master data management.
Understanding master data management
Without data, a company can’t exist. The nature of this data depends on the company and may range from basic information, such as addresses and key financial data, to tailored customer profiles, sales history and customer contact logs. The concept of master data management is to collate all these different streams of data stored throughout a business and house them in one comprehensive master data system. If done effectively, this can be accessed by all relevant parties within the company, updated regularly and used for effective customer scoring. Streamlining this data makes it easier for employees and departments to share up-to-date resources, regardless of whether different technologies, architectures and applications are used across the organisation.
Master data management requires consistency in processes, governance, policies and standards in order to create a single point of reference. In standardising both the approach and data storage itself, you can reverse the segmentation that occurs across complex, matrix organisations over time.
How does master data management reduce costs?
Implementing a master data management system can reduce costs in a number of ways. Some of the more palpable include lowering interface costs, cutting redundant third-party data acquisition costs and reducing data clean-up costs – particularly if these are outsourced. When a database is controlled by a master file, any adjustments made are automatically enacted throughout the system and sent to the relevant data points. For example, if the finance department inputs a change to sales figures, the client relations team is informed, and if the risk department changes an organisation’s credit status, the sales team is immediately aware.
Not only does this ensure information is timely, it can prevent potentially damaging results. For example, if the sales team closes a sale with a company that has started falling behind on invoice payments, this could lead to bad debt. But with a master data management system, departments should be able to access up-to-date information in real-time.
How easy is it to implement?
Setting up a master data management system will take some effort and involve extensive planning. There are a number of stumbling blocks when it comes to data migration. To be prepared, you’ll need to consider how information should be prioritised, who needs access and which software to use.
In order to establish an effective system, you’ll also need to set up the correct business culture, process and policies. However, through this, a clearer picture of your business objectives will emerge.
To implement your master data management system, there is a simple process you can follow:
- Firstly, you need to create a single environment for all your master data, considering its structure and functionality carefully.
- The next step is to remove any duplication within your existing data, making sure that all information is current.
- Following this, decide who will be given the ability to make adjustments – allocate responsibility for updating data and monitoring external information sources.
What are the advantages?
The benefits of a master data management system are numerous – but here are four key advantages:
- Firstly, it enables seamless integration of data.
- Secondly, your company will embed data intelligence into its core business functions.
- Thirdly, you’ll have access to real time credit and financial intelligence.
- And lastly, with this added resource you’ll have more opportunity to detect, negotiate and win the best deals for your business.