Blockchain and reference data management
Master Data Management (MDM) is the management, consolidation, and organization of multiple data within a master database. A single database for multiple uses including commercial prospecting, supplier contacts, product logistics or employee personal information. MDM will not only unify the data, but also “clean” it consistently for value-creating usage that is always up-to-date. While MDM is a key success factor for organizations managing multiple data, especially in e-commerce – it is also a subject that is evolving. In question: the of blockchain. A technology that is about to revolutionize many sectors of our economy. Including reference data management
MDM and blockchain: a new paradigm
Over the past two decades, data management has undergone significant changes. Not only by the volume collected and the importance of data in the operational functioning of companies, but also by the way in which these have been used. Local storage was first and foremost the universal rule: secure, cooled servers in a specially equipped room within your premises. Then, data gradually migrated to cloud solutions, which can be hybrid, public or private, with possible local redundancies. And tomorrow ? This is the blockchain that could appear in companies. Although the number of projects involving blockchain is still very low among professionals – 8% of companies have started an experimental project, according to the annual Gartner survey of 3,000 IT directors, relayed in a recent article in the Échos – all the big names on the web and on the committee are ready to move. Blockchain is a technology and not a network. It’s a way to organize MDM in a secure, decentralized and flexible manner: no central server, no hacking risk, no corruption or loss of data and no dependency on a cloud service. In a changing technology environment, it’s more than necessary to stay connected to these innovations that could transform data management and administration in the next ten years, just as Facebook has transformed online marketing.
The advantages of blockchain in master data management
The use of blockchain in data management and administration opens up new opportunities for companies. Examples and use cases::
- Data reconciliation: as soon as all services, business units or subsidiaries are integrated in a private blockchain network, it is no longer necessary to move data between these organizations.. Significant time savings in reconciliation and data quality control.
- Cost: a double-edged sword and everything depends on current usage. However, maintaining and managing a central infrastructure can be a major expense, both in terms of technical infrastructure, maintaining internal processes and managing sensitive security aspects. Even the cloud has a cost and is not immune to hacking or data theft. With blockchain, transactions are only validated if the whole network approves them, thus limiting risks.
- Organizational effectiveness: data reconciliations are more efficient and require less work. The history of each data item can be public and it is easy to follow data changes within a system, from creation, to use through all updates.
- Disintermediation: no more central authorities, servers or third-party intermediaries that can created a dependency link with the organization. The flows are direct and fast.
- Transparency and trust: all data transactions, changes and updates are fully traceable, measurable and are monitored. A way of making all stakeholders who may manipulate data accountable.
Blockchain is not (yet) for all
While it’s never too early to experience the blockchain, it’s always helpful to know both sides of the story. Yes, blockchain is potentially revolutionary. Yes, it is a technology that is emulated and that attracts global interest, but it is not necessarily suitable for everyone.
- Cost: this is the counterpart of the previous argument. Before building a skyscraper for your business, it is better to have the basics and the sources of funding. With blockchain, it’s the same thing. Its development and implementation can be consumers of liquidity. While a return on investment is likely in the medium or long term, it is certainly not a that is project accessible to all. Especially since the costs of storage in the cloud are constantly decreasing.
- Write speed: the integration of data in a blockchain will always be longer. This is normal and it is the way technology has been designed to secure all aspects. A transaction with Ethereum can take about fifteen seconds or more to materialize. With bitcoin, it is up to 15 minutes. If you need real-time data updates with minimal latency, blockchain may not be the right solution.
- Editing: blockchain saves everything to memory. Including errors and bugs. The principle is not to rewrite, modify or alter, but to record each new transaction in a new block. If a program based on blockchain contains a bug or a programming error, it is not as easy to get out a new version that replaces the previous one.
The management of master data is a key issue for companies. In many ways, the blockchain may be a catalyst, able to better secure, use and manage the data used by professionals. A trend that we follow very closely for better support to companies in their practices.