What are reference data?

As reference data, we define the data that is used to describe primary master data objects. We distinguish between internal and external reference data. The quality of the reference data significantly determines the data quality and usability of the master data.

Example 1 - Countries

A necessary component of an address is the country. (Why this information is necessary, I describe in the article: The benefit of annoying mandatory information) Here you will find alternative spellings especially often when country names are specified in different languages or codes - for example A, AT, Austria or Autriche for the country Austria. In some cases codes are even ambiguous. For example, the country code RU according to ISO-3166 stands for Russia, and as a vehicle registration number according to a UN convention for Burundi.

The problem: evaluations lose their accuracy, distort the results or are even wrong if they are based on non-standardised data.

Example 2 - Units of measure

It makes sense to maintain (order or sales) units of measure in the article master. If a user-defined text can be entered here, it is only a matter of time before different spellings are used for the same unit. In practice, you often come across

  • L, l, ltr. or Liter
  • qm, m² or squaremeter
  • h, hrs. or Hour.

This is not only ugly, but often causes massive problems with the conversion.

Example 3 - Product groups

Another important entry in the article master is the merchandise category. Here too, deficiencies in the definition lead to unwanted distortions. If it is not clear whether a screw belongs in the group "fasteners", "standard parts" or "consumables", the spend analysis of the purchasing department can only be wrong.

Conscious use of external and internal reference data

All three examples show that standardised, clear selection options are far superior to free text when it comes to the interpretability and significance of data. As so-called "reference data", they are defined centrally and are available for data maintenance throughout the company.

External reference data is based on sources outside the company. For example, country lists or units of measure are published by recognized institutions and do not have to be compiled individually. Using such conventions creates clarity and facilitates the exchange of information between companies.

Internal reference data, on the other hand, are individual definitions within your own company or group. The provision of agreed value lists (e.g. for a commodity group system or product hierarchy) avoids misunderstandings and misinterpretations; it also opens up prospects for the further use of information (e.g. standardised translations).

Keep reference data up-to-date

The following applies (unfortunately) to all reference data: they can change over time, so they must also be maintained regularly. Again and again we come across countries in projects that no longer exist, or product numbers that have become invalid... by the way: have you already entered the renaming of the state "Macedonia" to "Northern Macedonia" in all applications used?

Good reference data creates trust and added value

Conclusion: Reference data are the foundation of master data management. Their quality significantly determines the quality and thus the value of the primary master data, i.e. the data on business partners, articles, assets or plants.

We support you in monitoring your reference data, develop suitable concepts for you and accompany you during their introduction. Use our experience to build a solid database - we make your data powerful!


Matthias Knapp

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Matthias Knapp, Managing Director