Master vs Reference Data

What is a Critical Data Asset?

This is another topic with loads and loads of definitions on the internet. Most of these are confusing unless you're a real data guru.??

It doesn't help that critical data assets are often referred to as CDAs, KDEs (Key Data Elements) or CDEs (Critical Data Elements). It doesn't matter what you call them. Like everything else in business (or in life), call them by the name that means something to your stakeholders.?

We use a couple of short definitions for Critical Data Assets. Both mean the same thing, but they are worded differently for different stakeholders.?

The first definition is that critical data assets are the bits of data that are important to your firm's business operations, decision-making, client needs, plus regulatory and compliance demands.?

The second definition says that a critical data asset is a piece of data that would compromise or damage the firm's reputation or P&L if lost, stolen or otherwise compromised.?

This concept of Critical Data Element is often considered a technical view of the data. In order to have good conversations with business stakeholders, the language we use needs to be different.

What is Master Data?

Master data (golden records or authoritative data) is the consistent and uniform set of identifiers and extended attributes that describe the firm's core entities (e.g., clients, people, and practices).?

In other words, Master Data is data about things that provide context for transactions (e.g., matters, invoices, reports). Master Data is usually shared directly or via a central data warehouse with other systems.?

When Master Data is governed, the firm can achieve greater consistency and accuracy of data.?

What is Reference Data?

Reference data is a controlled vocabulary (or agreed list) of options for the contents of a master data field—for example, the list of firm offices, or the list of currencies.?

Reference data is data used to classify other data (e.g., a list of the firm’s offices, a list of practice names, a list of job titles, or a list of countries).

What is the benefit of identifying reference and master data??

Well, that depends on whether you're a glass-half-full or glass-half-empty kind of person.??

If you're a glass-half-empty, you can say that critical data must be managed to prevent disruption to the firm's business and loss of revenue.??

If you're more glass-half-full, you can say that proper governance of critical data can maximise revenue, customer satisfaction, and operational cost-efficiency.??

Of course, both are true.?

Those definitions tell us that the firm needs to manage data as an asset. But what does that mean??

Data should be viewed as an economic asset that can help a firm improve its operations, increase revenue, improve client relationships, and produce new revenue streams. It can also enhance the quality of services, establish competitive differentiation, allow innovation, and reduce risks.??

It's worth noting that a body of data is a comprehensive asset (e.g., timekeeper data or CRM data). In other words, the individual data points themselves are not the only valuable assets. Reporting, analytics, insights, and the value gained from people having access to data are all part of the overall value.?

What does it mean to manage data as an asset??

To treat data as an asset, you need to be prepared to manage, monitor and control it like you would every other investment in the firm (like buildings, people, knowledge, and money).??

All large firms hold comprehensive registers of other more tangible assets such as human capital, financial resources and premises.?

For data to be managed as a strategic asset to a firm, there needs to be a register of what data is held, where it is, for which purpose, and who is involved. It doesn't have to be the latest whizzy technology; a simple list or a 4 column spreadsheet can do the job.?

The biggest hurdle to managing data as an asset is the lack of a way to include data on the firm's balance sheet. Using the balance sheet would send a strong signal to the firm about the value and importance of the critical data assets. But International Accounting Standards haven't caught up yet, so there is no way to include data as an asset class in the firm's accounts.?

Some firms are putting monetary values on their data so that the Partners and Business Services Leaders understand the value of their data assets. A widely seen figure in the press is that data represents 20% of the organisations' total value - it would be hard not to invest in managing an asset like that.?

Data is one of a firm's most critical assets because it is unique in its detail and context. Used strategically, it can ensure that your firm remains relevant and viable.??

Where does data governance fit in?

Data governance?is the practice of identifying important data across a firm, ensuring it is of high quality, and improving its value to the business.??

One of the achievable data governance goals for law firms in the first year is to Identify critical data.??? You can't govern everything, and nor should you want to.???Your focus should be on the essential data for your firm's client and operational success and the data you need to retain for regulatory purposes.??Knowing your critical data gives your data governance effort clear parameters to work within, making it easier to identify stakeholders and effect change.

In complex organisations like law firms, the technologies, processes, and people depend on each other for success. The best practice is to develop a framework for shared understanding to support upstream and downstream dependencies.?

Most people in the firm will only see data at a specific phase of the lifecycle, and that is when the data is relevant to the task at hand. They need to trust the information they see and participate in the data management lifecycle to ensure that they are looking at quality data.?

In addition to operational considerations, there are increasing data requirements relating to regulatory compliance and reporting. That means that law firms need to understand where their data is, where it goes, and who uses it.?

How do I find my master and reference data?

Just start with a list of all the data points in partner or client reports, and I'll bet you're 75% of the way to identifying your firm's Critical Data Assets. You'll find more Critical Data Assets in the cross-functional processes, too.?

Then you can think about things like:?

1. Which are the most and least valuable data assets??
2. What do we want to achieve with them??
3. How are we going to do that??
4. How do we know we're on track with that??
5. How are we responding to changes in use or requirements??
6. How do we get the best ROI out of the critical data asset??

Conclusion

By recognizing your master and reference data types as strategic assets and governing them effectively, your firm can make informed decisions and maintain a competitive edge.

As such, effective data management and data governance are not just operational necessities but are the foundation to achieving sustainable growth and success in your law firm.

How Iron Carrot can help

Innovative law firms have big goals for improving the client experience through data innovation.

Through our extensive law firm background, we have developed a unique data governance road-mapping approach to help law firm leaders launch the proper foundation for their data strategy.

If you want to chat confidentially about how Iron Carrot can help your firm with its Data Strategy and Data Governance initiatives, then send me a Direct Message via my Profile, or book a call via the Iron Carrot Limited website.

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