So, how do you determine what is master data vs. reference data? Reference data is the non-volatile slow-moving subset of master data used to classify other data. Examples of reference data include product codes, measurement units, and tax rates.
The internal reference data, such as product codes, is defined by the organization and shared with partners, vendors, and customers to ensure consistent use. The external reference data, such as tax rates, is defined by the country or industry-specific bodies.
|Master data||Reference Data|
|Data about the business entities||A subset of master data used to classify other data|
|Shared standard definitions of business data||Shared standard values of specific fields|
|Types include people, products, places, financial and organizational data, and reference data||Types include internal and external reference data|
|Can change when business entities change, get added, or removed|| Can change when business entities change, get added, or removed |
Changes only when categories update due to transformation in the business model or the industry standards
|Changes in master data are managed by the existing business processes||Changes in reference data values may need associated changes in business processes|
Both provide context to transactions and drive data quality. Organizations typically manage master and reference data together to deliver operational efficiency.