Master data is defined as data about the key business entities of an organization. Examples include customer, product, organizational structure, and chart of accounts. A common question about master data is, “What is the difference between master data and reference data?” Some people take the position that they are the same thing, but it can be argued that not all reference data is master data. For example, lookup and code tables that are used to encode information, such as state names and order codes, are not strictly master data tables.

The diving line between master data and reference data is not always clear cut. One solution is to break master data into two types: master reference data and master business entity data. Master reference data has well defined and simple data structures, has simple keys and governance rules, is often standardized (US state codes, for example), involves only a few applications, and is reasonably stable. Master business entity data, such as customer, on the other hand, is usually ill-defined, has complex data structures and relationships, requires compound and intelligent keys and complex governance rules, is not usually standardized, involves many business processes, and changes frequently.

Does this distinction really matter? When developing data quality management and master data management systems it can do. Cleaning and managing master reference status is a reasonable easy job. The opposite is true for master business entity data.

Any comments?