What is master data management (MDM), and how does it relate to data governance?

Master Data Management (MDM) is the practice of creating and maintaining consistent, accurate, and reliable definitions of core business entities across an organization. These entities, called master data, include critical information like customers, products, suppliers, or locations. MDM ensures that systems and teams use the same “single source of truth” for these entities, reducing duplication and conflicts. For example, a customer’s name, address, and contact details stored in separate systems (e.g., CRM, billing, shipping) are unified through MDM to avoid discrepancies. This often involves tools and processes to clean, deduplicate, and synchronize data.

Data Governance is the framework of policies, roles, and processes that ensure data is managed as a strategic asset. It defines accountability for data quality, security, and compliance. For instance, a governance policy might require customer data to be validated against postal standards or restrict access to sensitive fields. While Data Governance sets the rules, MDM operationalizes those rules specifically for master data. Without governance, MDM lacks clear standards; without MDM, governance policies for critical data lack enforcement mechanisms. Think of governance as defining “what” needs to happen (e.g., data must be standardized) and MDM as the “how” (e.g., implementing validation rules in an MDM tool).

The relationship between MDM and Data Governance is complementary. For example, a governance team might mandate that product codes follow a specific format, while MDM enforces this by integrating validation into data entry workflows. Developers implementing MDM solutions often collaborate with governance stakeholders to align technical processes (like data matching algorithms) with business rules (like privacy requirements). A practical scenario: when merging customer records from two departments, MDM tools deduplicate entries, while governance ensures the process adheres to compliance policies like GDPR. Together, they ensure critical data is both trustworthy and actionable.