SAP Thought Leadership Paper | PUBLIC Data Management in the Cloud Optimize Master Data Management Through Federated Data Governance An Adaptive Model for Trusted, Process-Relevant Data to Drive Greater Insights, Efficiencies, and ROI 1 / 17 © 2021 SAP SE or an SAP affiliate company. All rights reserved. All rights company. affiliate SE or an SAP SAP © 2021 Table of Contents 3 The Master Data Imperative 5 The Importance of Master Data Integration 8 A New Paradigm: Federated Data Governance 11 The Case for Cloud-Centered Federation 12 Master Data Governance in the Cloud 15 Becoming an Intelligent Enterprise 17 First Steps to Federated Data Governance 2 / 17 © 2021 SAP SE or an SAP affiliate company. All rights reserved. Optimize Master Data Management Through Federated Data Governance The Master Data Imperative Organizations have seldom faced greater chal- analysis and insights to respond quickly and lenges. Financial markets and corporate finance accurately to a rearranged business landscape. remain volatile. Customer behaviors are evolving as more people shop electronically. Employee But effective master data management (MDM) behaviors are adapting as more staff work has long been an escalating imperative. You need remotely. And operations are adjusting as supply the right data in the hands of the right people chains recoil from sudden shocks. to optimize operations, understand and serve customers, and speed innovations to market It has never been more important for your enter- (see Figure 1). And in a digital economy, you need prise and your lines of business (LoBs) to have those insights fast. access to trusted, high-quality data. They require Figure 1: Business-Critical Initiatives Supported by MDM E nsure r ies. eliab teg le a tra rt s ific n ss ia T io ne l i r t si nt u p u el s u b lig t r n e s e n i iv c r e D d , - a a t n a a l d y h t ic it s w , a d n a d e L i n s i g h t Master data . management . t n D a e r l e i l v e e c r c d a a l ta a n C n o p io i o ro t t t ra m e e a p ct p m l io o r i n an o a a s f n nd a s c pr ta n e iva da ra cy. ock T Unl 3 / 17 © 2021 SAP SE or an SAP affiliate company. All rights reserved. Optimize Master Data Management Through Federated Data Governance Yet meeting these intensifying requirements hasn’t To achieve those goals, you need the right mix been easy. In many organizations, data governance of technology and organizational support. is control focused, one size fits all, and separated Your MDM platform should offer robust capabilities, from real-world use cases. Enterprise MDM out-of-the-box integration, aligned data-domain becomes an unnecessarily complex and costly models, and on-demand scalability. undertaking that’s disconnected from local decision-making in the LoBs. And as a result, Just as important, you need effective data gover- master data governance initiatives fail to deliver nance. You must have a governance model that the benefits the organization needs. reflects your organization, business processes, and data drivers. Instead, data governance programs, including MDM, should extend throughout the enterprise. That’s the power of a new MDM paradigm: They should be context relevant and supportive federated data governance. With federated data of frontline decisions and actions. They should governance, you can: be agile enough to respond to rapidly changing • Skillfully access and share master data to business dynamics. And they should drive new fuel cross-functional analytics, insights, and innovations, experiences, and business models. business processes • Manage data where it’s best understood to optimize MDM scope, benefits, and effort • Take a stepwise approach to enterprise MDM to accelerate time to value Your MDM platform should offerrobust capabilities, out-of-the-box integration, aligned data-domain models, and on-demand scalability. 4 / 17 © 2021 SAP SE or an SAP affiliate company. All rights reserved. Optimize Master Data Management Through Federated Data Governance The Importance of Master Data Integration Effective MDM enables integration of data Alternatively, you can use a purely centralized across your enterprise. Integration equips you, model, creating master data in a single location for example, to combine operational data from for consumption by LoB applications. But this your ERP system with experiential data on how approach doesn’t accommodate the governance customers interact with your brand. As a result, of context-relevant data attributes required by you’re able to deliver – and reap business returns your LoBs. As a result, inadequate data quality on – better customer experiences. impedes the efficiency and accuracy of LoB processes and insights. You can achieve integration – or something like integration – in a variety of ways. For example, A more effective approach is to place an integration you can treat each LoB application as having its service between your LoB applications (see own master data and simply share that data Figure 2). In this model, the integration service among applications in a point-to-point manner. centrally shares all application data. It provides But this approach is obviously complex and a lingua franca for applications to speak to one inefficient, and it won’t result in a single version another across heterogeneous multi-cloud and of the truth. hybrid environments. This common language helps link different representations of the same master data domain. Figure 2: Point-to-Point Versus Centrally Managed Integration Point to point Hub and spoke Procurement Procurement Commerce Service Commerce Service Master data services Marketing Billing Marketing Billing ERP system ERP system 5 / 17 © 2021 SAP SE or an SAP affiliate company. All rights reserved. Optimize Master Data Management Through Federated Data Governance The centrally managed integration model achieves An effective integration service should allow you further data integration through a common to add your own data to standard master domain understanding of the exchanged objects, along with models. It should also work with your existing key mapping. Key mapping links the storage of solution landscape, enabling you to leverage identical physical objects under different identifiers current IT investments while exchanging data in different systems. among applications. An integration service provides a lingua franca for applications to speak to one another across heterogeneous multi-cloud and hybrid environments. INTEGRATION VERSUS DATA GOVERNANCE The focus of master data integration isn’t data consolidation or quality – that’s the role of master data governance. Instead, integration provides a distribution layer that gives your line-of-business applications a consistent view of data. Ultimately, a data integration service should increase the effectiveness and reduce the cost and effort of data sharing. 6 / 17 © 2021 SAP SE or an SAP affiliate company. All rights reserved. Optimize Master Data Management Through Federated Data Governance Your data integration service should increase the effectiveness andreduce the cost and effort of data sharing. SAP® MASTER DATA INTEGRATION Chief data officers recognize that it’s not viable to merge all data domains across business units and functions to achieve a single enterprise data model. Different data domains have different data needs and require different standards and semantics. The solution is the SAP® Master Data Integration service. The service enables you to unite separate data models with a shared identity and interoperability. SAP Master Data Integration enables harmonized integration and distribution of master data objects and data among SAP and third-party applications. In practical terms, it applies standardized fields and attributes, such as name, type, and length, across data models that it then integrates. The service delivers ready integration achieved in a single, harmonized way across a wide variety of SAP solutions – for example, SAP S/4HANA®, SAP Customer Experience solutions, and Ariba® Network. It also helps enable integration with third-party and legacy software. The service is an important part of the Intelligent Enterprise, enabling smooth integration of information and insights across your applications, lines of business, and key business processes. 7 / 17 © 2021 SAP SE or an SAP affiliate company. All rights reserved. Optimize Master Data Management Through Federated Data Governance A New Paradigm: Federated Data Governance Your organization needs master data integration Federated data governance enables you to manage to provide the same master data in the same state data where it’s best understood. It intelligently to all applications that need it. But integration alone separates your core, enterprise-wide master won’t optimize data quality. To truly conquer MDM, data from your application-specific master data. you also need master data governance. You need It applies the appropriate level of governance based to deduplicate existing data, avoid the creation of on the scope, ownership, and context of the data. new duplicates, and make sure new or changed And it empowers you to take a comprehensive, data is consistent right from the start. That way, scalable approach to orchestrating data gover- the master data you deliver to your LoBs will be nance across your entire IT landscape. of the highest quality. The federated model is an effective way to bridge This is the power of federated data governance – on-premise, multi-cloud, and hybrid cloud a whole new way of thinking about MDM. The landscapes. By supporting end-to-end business federated data governance imperative is driven by: processes and bidirectional communication, it • The need to flexibly apply the right level of data enables you to fuel cross-functional analytics, governance to reduce MDM cost and effort insights, and innovation.