Centralized versus decentralized customer master data management (CMDM) has been a topic of debate for many years. The rise of cloud-based solutions like the Pretectum CMDM, has intensified the conversation. Those with an existing decentralized model and home-grown or on-premise customer master data management platforms fiercely defend their fiefdoms of data without recognizing the benefits of making use of a shared infrastructure.
While both approaches to master data management have their advantages and disadvantages, we favour the centralized CMDM approach in the cloud. Central control is ultimately more compliant, more transparent, more auditable, and ultimately more secure than a decentralized CMDM approach.
Single source of truth
Centralized CMDM in the cloud provides a single source of truth for all customer data, making it easier for teams to manage. Central control with appropriate role and security assignment accompanied by detailed auditing can provide a higher level of accountability and change management which in turn drives behaviours that promote greater precision and behavioural consistency.
This is particularly important in today’s business environment, where companies are collecting more data than ever before, from diverse sources. behaviours are important, regulating and monitoring them equally so. If you can change the behaviour of your users you can drive closer to impeccable data quality.
Conversely, decentralized CMDM, actually promotes individualism and isolated realms of excellence in data management or poor management practices due to the siloed nature of the data managers, customer data itself and the tools and systems that are in use to manage that data.
Decentralized model are often difficult to manage and particularly when the requirements grow and the volumes and impact require scaling. Having multiple business areas all doing something different leads to the risk of cross functional data inconsistencies and errors and often won’t stand up to rigorous compliance scrutiny
Regulatory compliance
Centralized CMDM also suggests the ability of an organization to engage in better data compliant practices that meet the rigours of regulations such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). These regulations require businesses to manage and protect customer data, and centralized CMDM in the cloud allows for better control and oversight of this data. Data management and ownership is accompanied by accountability and the ability to audit.
For example, businesses can set policies and procedures for data access, storage, and deletion, ensuring that customer data is only accessed by authorized personnel and is deleted in a timely manner.
Centralized CMDM also provides greater transparency and auditability as mentioned. With a centralized system, it is easier to track changes to customer data, monitor data access, and ensure that data is being used appropriately. This is particularly important for businesses that are subject to compliance regulations or are dealing with sensitive customer data.
Centralized CMDM in the cloud typically offer greater security due to more complex role based access and fewer data loss opportunity vectors. Cloud-based solutions offer robust security features, including encryption, multi-factor authentication, and regular security updates. This higher level of security reduces the risk of data breaches and provides more assurance that customer data is protected from unauthorized access and misuse.
One argument often made in favour of decentralized CMDM is that it allows for greater innovation and agility. Decentralized systems may allow for more flexibility in how data is managed and accessed, which can be important for businesses that are rapidly growing or changing. However, this argument fails to take into account the risks associated with maverick use and potential abuse of customer data which is often more prevalent with decentralized systems.
Autonomy and control
Another argument often made in favour of decentralized CMDM is that it provides greater autonomy and control for individual business units or departments. However, this very autonomy often leads to non-compliance or breaches of data privacy regulations. For example, if a business unit is managing its own customer data, it may not be aware of changes to privacy regulations that affect how that data can be collected, stored, or used.
Finally, some argue that decentralized CMDM is more cost-effective than centralized CMDM. While it is true that decentralized systems may have lower upfront costs, they can be more expensive in the long run. This is because decentralized systems require more resources to manage and maintain them. As well as more people and potentially infrastructure resources there is the hidden costs of managing the risks associated with potential data loss or failure to meet compliance expectations.
Centralized CMDM offered “in the cloud” by Pretectum is the better choice for businesses looking to manage customer data in a compliant, transparent, auditable, and secure manner. While decentralized systems may offer greater flexibility or autonomy, they come with significant risks that can lead to non-compliance, data breaches, and wasted resources. Leverage the power of a modern flexible cloud-based solution today so that your business can benefit from the scalability, security, and cost-effectiveness of Pretectum’s centralized CMDM, while still maintaining the flexibility and agility you need to succeed in today’s rapidly changing business environment.