Lack of master data governance: a silent risk inside SAP

Without a clear governance model, customer, vendor, material and service master data turns into a minefield. Small inconsistencies — such as wrong bank details, outdated address, incompatible tax regime or variations in the master data of the same vendor — pile up silently.

In the short term, these issues may look harmless. At most, a fix here, an adjustment there. But over time, the company starts operating with data disconnected from reality, undermining the quality of management reports, strategic analyses and decision-making.

It's common for the lack of governance to be noticed only when the impacts are already felt across the chain. If reports take too long to close due to unreliable data, if the purchasing team needs to manually confirm information that “should already be in the system”, if audits keep pointing out master data flaws… the alarm has been raised.

In many cases, the problem shows up in very concrete situations, such as a high rate of invoice rejections due to incorrect customer master data or delayed payments to vendors caused by wrong bank details.

Another recurring symptom is low leadership trust in internal data. When directors and managers feel the need to “validate it in a spreadsheet” what the system should deliver precisely, data has stopped being an asset — it has become suspect.

• Tax authority invoice rejection: wrong information in customer or vendor master data compromises invoice issuance and creates immediate tax risk.
• Incorrect tax withholding: flaws in fields such as tax regime or service code result in assessments and tax liabilities.
• Purchasing errors: duplicated or wrong codes directly impact material procurement, increasing costs and generating rework.
• Impaired audits: a fragile master data structure makes it harder to trace information, compromising the transparency required in internal and external audits.
• Blocked digital transformation projects: without quality data, technologies such as BI, process automation and AI become unfulfilled promises.

Imagine an industrial company with dozens of sites, each with autonomy to register vendors.

On paper, the process exists. But in practice, there are twelve different versions of the same vendor, each with a different address, legal name or bank details. The result? Duplicated payments, incorrect tax withholding, compliance failures and an absurd effort to reconcile everything at accounting closing.

The cause is neither the technology nor the effort of the teams. It's the absence of rules, criteria and control.

Perhaps the greatest danger of the lack of governance lies in what does not appear in end-of-month reports: decisions made based on inaccurate information. When leadership relies on contaminated data, it sets misguided strategies, misallocates investments and misses real market opportunities.

Every poorly created master record, every field filled without criteria, is a crack in the company's foundation. And cracks, sooner or later, come at a price.

If the absence of governance causes rework, errors and losses, the opposite is also true: well-treated data becomes a silent ally of performance.

Among the main benefits:

• Operational agility: processes flow faster when data is right at the source. Approvals, purchases, payments and analyses gain speed.
• More reliable decisions: a clean and standardized database reduces the error margin and increases confidence in strategic decision-making.
• Reduction of hidden costs: rework, manual corrections, duplications and waste are cut — and this is directly reflected in the budget.
• Greater trust in systems: when data is reliable, the company goes back to using SAP as it should: as a true system, not as a reference that must be double-checked in Excel.
• Easier audits and regulatory compliance: data traceability allows the company to safely respond to fiscal, legal and regulatory requirements.

Creating a governance culture is like sharpening the axe before cutting the tree: it takes preparation, but drastically reduces effort — and prevents crooked cuts.

Master data governance rarely becomes a priority because the effects of its absence aren't noisy at first. They pile up silently, year after year. Resistance to change is also real: it requires the involvement of several areas, review of old processes and, above all, sponsorship from top management.

But the cost of not acting — that one — grows fast and doesn't ask for permission.

Treating master data as simple records is a vision mistake. Well-managed master data are strategic assets: they support operations, strengthen compliance, enable innovation and speed up decision-making.

Implementing master data governance practices is not just about fixing wrongly filled fields. It's about establishing clear rules, standardized processes, defined responsibilities and continuous validation mechanisms.

Governance doesn't need to start big. It can (and should) start with role clarity, minimum criteria for master data creation, and automated validations that prevent duplications and blank fields. The difference lies in transforming what today is done by habit into something done with intent.

At akquinet, we understand that reliable master data is not a luxury: it's the foundation for solid and secure growth.

Treating master data governance in SAP as a strategic asset is the first step to building solid foundations for growth.

If you want to understand how to structure robust master data governance in SAP, akquinet can help. Every company has its own challenges — and a tailor-made solution is always the best starting point.