Knowing how to easily identify, list, and access reference data has become a must-have skill for any company that seeks to be data-driven. So, what is reference data and what implications does it hold for your operation’s performance? Keep reading.
The Gartner Institute defines reference data as “a consistent and uniform set of identifiers and attributes that accurately describe the strategic information required for an organization to function properly.” For a company, reference data is thus used to structure information that changes little over time.
While reference data is used to define and classify other data, master data is directly linked to business entities and provides customer and product data. Master data is necessary for business transactions. This is information that you don’t want to lose and that you want to be able to access quickly and easily.
Cross-functionality is also an important concept in understanding reference data, whose use is distributed throughout the company. After all, the inventory management application and the ordering application both use reference data related to the company’s products. Similarly, applications use customer data for handling disputes as part of after-sales service, deliveries, and more.
Most companies regard data as a gold mine, but often it can be difficult to extract usable, reliable information from datasets. But why is this?
Data is typically replicated in multiple silos (databases, Excel spreadsheets, etc.) spread across the enterprise with little or no governance to manage or update information. This affects the quality, speed, and availability of data. Data quality issues lead to failures in business processes and transactions. Decision makers then make poor decisions based on incorrect data. This is why data classification is essential. Master data management addresses these issues by providing a unified view of reference data for better decision-making and business processes.
The goal of using reference data management is to select and create a single version of the data that will serve as a reference for all departments within the organization. Reference data management, therefore, refers to both the IT tools used to classify reference data and the philosophy surrounding this approach. Thinking and decision-making are greatly facilitated when all entities in your IT system or data stack use the same clean, consolidated, centralized, and current data. The process of data management helps companies develop a common language around data.
Without question, data is your company’s most valuable asset, and reference data management lets you maximize its potential. Reference data management stands as a crucial pillar in the foundation of effective and efficient data governance. Through its meticulous organization, maintenance, and dissemination of reference data, reference data management empowers organizations to make informed decisions, enhance data quality, and streamline operations.
The benefits of implementing a robust reference data management framework are far-reaching, ranging from improved data accuracy and consistency to increased regulatory compliance and agility in adapting to evolving business needs. As businesses navigate an increasingly data-centric landscape, understanding the significance of reference data management becomes paramount. Embracing reference data management not only fosters a culture of data integrity but also positions organizations to harness the full potential of their data assets in a rapidly changing digital environment.
Still have questions about data management? Turn to DataGalaxy to create your company’s data lineage mapping, develop a standardized business glossary, and much more! Check our calendar and select a date that works for you. Jumpstart your free 15-day platform trial access to start making the most of your data today!