Master Data and Reference Data

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During the Master Data Management session in my bootcamp, my mentor laid particular emphasis on knowing the difference between master and reference data types. I thought what better way of understanding than writing an article about them. So, here it is, my understanding of the two data types.

Master Data

Master Data are the critical nouns of business.

They fall into four main groups:

1. People: E.g. Customer, Vendor, Employee
2. Things: Product, Item, Vehicles, etc.
3. Places: Geographical locations like office, site, etc.
4. Concepts: Contract, Account, Agreement etc.

Master data is data that provides context for business transactions. They do not have pre-defined values, business rules dictate the form and values for master data. They usually are already existing in the operational systems. Master data enables the connection between transactions for the management of data across disparate data sources and applications.

Reference Data

Reference Data is a data that classifies other data. It is the data that an organization needs to run its operations. It describes the core business entities. Reference data typically has a range of values. For example, 29 States in India.

Examples of reference data include billing information, country codes, months and days in a calendar, units of measurement, etc.

Managing reference data is essential to identify components needed for everyday business operations, maintain data quality, and reduce risks. They describe the common structures in an organization such as department codes, product codes, coding structures, external data structures like location codes etc.

Supporting Reference: https://www.ewsolutions.com/reference-master-data-management/