Improving the quality of master data by means of standardization with Master Data Management System

The master data management process is based on the synchronization of values in selected tables between different companies in a system. However, taking into account the system’s architecture, it is quite clear that it is required to use a separate database for each subsidiary. However, the use of multiple databases makes the synchronization process more complex. Though, the databases do not have to be physically separate databases; they can be set up as separate companies in Microsoft Dynamics NAV. The structure is always based on a central database connected with several local databases.

To manage data stored in these databases efficiently and enable effective data interchange, it is necessary to standardize and synchronize data. The benefits are obvious – when uniform item or customer naming and numbering or a uniform chart of accounts are used, it is easier to create e.g. accurate OLAP reports. Master data standardization is a prerequisite for efficient document exchange between organizational entities.

Obviously, it is possible to map item numbers, account numbers etc. between databases. However, it is a tedious, time-consuming and error prone task. Therefore, if companies exchange documents, manage intercompany purchase or sales transactions within a group, it is recommended to perform master data standardization as soon as possible.

Master Data Management System

Master data quality

Obviously, at a certain level all local subsidiaries develop similar policies for data consistency, but sticking to such policies is a real challenge; otherwise we would not encounter so many data inconsistencies.

Large companies usually delegate the whole departments to data maintenance tasks. Their goal is to set up new cards, create technical documentation and enter data into a database. Besides, such teams are

responsible for data cleansing. It is also a big challenge as a repository of material cards can consist of hundred thousand of records, which means that employees have to look through the lists, pore over Excel files over months to identify duplicates, redundancies, inconstancies in numbering and if needed, modify invalid cards and codes. This is a huge time investment, which cannot be avoided before the system is set up for data synchronization.

With Master Data Management System which imposes specific standards, data quality enhancement process is much simpler. After implementing such standards, it is easier to set up the system for data synchronization which is the final stage of data quality upgrade process.

Data interconnections

When setting up customer cards, standardization should be ensured at the level of countries, cities, zip codes, customer and vendor groups. To harmonize customer data properly, other cards such as country cards should be standardized, too.

It is noteworthy that after changing one document, other modifications are required. This is a cascading effect. Therefore, it is recommended to look at data setup from a global perspective. Therefore, a global chart of accounts can be used to prepare special NAV structures for generating specific views from a local level. A global chart of accounts can be easily changed into a local one, but not vice-versa.

Master Data Management System used to implement standardized data structures

In most cases, a common chart of account structure can be established for all subsidiaries, however due to local legal regulations, some chart of accounts groups can be different. For example, in some countries, VAT does not exist. Therefore, in countries where VAT is obligatory a special group needs to be created to identify accounts as VAT accounts. This group will be marked as a local one. This means

that a company chart of accounts may include both global and local data. No matter whether local or global, all data is managed from one central data base.

For this reason, such accounts are also created in a central database. Generally, this issue can be approached in two different ways: a global chart of accounts can include all accounts used or it can comprise only globally managed accounts. In the first case, it is easier to monitor all accounts used within the company and use a new local account created for a specific subsidiary to other local subsidiaries if needed. In the latter case, the headquarters do not intervene in subsidiaries’ policies on local accounts and only global accounts are replicated into the central database.

Two approaches

This means that subsidiaries add, post and analyze local accounts only in a local database and when such data is retrieved for a global analysis, only the summary of the local chart of accounts is analyzed.

It is the customer to decide which of the two approaches is the most accurate solution for its company. One of our customers have just decided to have all the accounts added to its global chart of accounts in order to gain insight into needs of local subsidiaries. However, in this case all subsidiaries are based in Western Europe, which makes their requirements very similar. These assumptions will probably not be effective if multiple subsidiaries from different regions of the world are involved.

In addition, some countries such as Slovakia, France, Portugal, Greece and Spain impose very strict requirements on companies to provide standardized financial reports which in turn secures posting compliance. Therefore, when defining the chart of accounts, local CAOs’ role is crucial.


For example, the Polish Accounting Act specifies the structures of the balance sheet and P&L Account; in France, the chart of accounts is statutorily obligatory and local subsidiaries are obliged to export files into a specific format file for tax authorities. The file must contain accounts that are compliant with this schema. For one of our recent global NAV roll-out projects, we have used a global chart of accounts in which a field with a local account number was added for each account – the so-called Field No. 2. With this enhancement, several statutory reports that have to be issued periodically or when required by tax authorities, are modified when printed based on No. 2. In the case of tax audit, documents are printed in a correct format as if all daily postings were done in the same way. However, such a workaround was not acceptable for all CAO in local subsidiaries.

At this point, we should realize that in group projects, there might be a clash between requirements of local subsidiaries and headquarters, which makes them impose pressure on their implementation partner. The headquarters would usually advocate a standardized chart of accounts which ensures benefits such as standardized reporting and the elimination of mapping and processing of local reports.


Ensuring consistency and accuracy at data mapping, cleansing of existing data as well as creating of new data is a prerequisite for the improvement of data quality within a global organization. Master Data Management System supports these processes as a tool for data standardization and synchronization.

Master Data Management System

Opinion about MDMS solution