Companies have been looking for the various methods they can use to create more revenue, reduce costs and increase efficiency. In order to follow through with these goals, organizations are now making data management a streamlined process using MDM strategies (Master Data Management) to be able to provide consistency in the view of data across their business.
Master Data Management moves dissimilar, identical, and conflicting information out of the way, allowing space for simplified intelligence and improved business decisions.
However, a large number of companies tend to ignore a very important area in data management which is reference data management. They play a very important role in showing the true value of reference data. The management of information, such as a user inputting dates, their country, gender into the database, over a large company or business can be extremely complicated.
The general approach would be to use an application-by-application basis of maintaining the reference data. This can bring in a lack of consistency and cause difficulty in collecting data across various functions if done poorly, thus preventing us from getting a complete image of how healthy the business is.
Keeping all this in mind, we must understand that the right reference data management structure if used would only serve to build a company and further its growth by increasing efficiency, productivity and making them more reliable.
Advantages of Reference Data Management
- Empowerment of business users: To be of any value, the accessibility of data is key. An intuitive and easy to use interface is required to allow users to utilise reference data in a way that makes sense. Both power and business users should be encouraged to define, manage and have ownership of data models as well as the data that they hold from the same UI without being dependent on IT services.
- Simplification of compliance and reduction of risks: Companies, no matter the size, spend a large portion of their time reporting both internal compliances as well as external compliances. Reports provide a framework for boosting confidence and improving decision making when they are internal.Meanwhile, regulatory reports (external reports) for compliance don’t really improve the margin and can in turn be of financial risk to the organization. An approach which takes into account all of this produces accurate data exchange and entitlements. These tools allow accuracy in internal as well as external reports and largely decrease risks.
- Removing operational overheads and reducing costs: Companies can have tasks which overlap across the enterprise's functions. Thus employees would need to automate the use of data from each source to be able to avoid the struggle of manually collecting data from various source points every time. Reference data management thus reduces costs and expenditures.
Why Reference Data Management Important and Where is it Put To Use?
Management of reference data can be a much more tedious task than meets the eyes. A cloud-based management system would reduce the struggle of reference data management by having the ability to consolidate, manage and distribute the data. AI and machine learning if incorporated in the process of reference data management would serve to strengthen and simplify the data sets.
It is being put to use in various places. They have been mentioned below.
1. Financial services:
Common issues faced in this sector are:
- New securities
- A large number of security masters are to be managed
- Increase in assets
- Presence of various identifiers used by front officers and mid-officers.
The advantages of reference data management are as follows:
- Streamlining of value chains
- Efficient risk management
- Customer loyalty increased
2. Healthcare:
The advantages of reference data management are as follows:
- Ensures maximum reimbursement
- Betters the patient’s experience
- Creates a cost-effective environment and saves time
- Supports the improvement in reporting
