Users trying to use any digital business system will discover that the system seems to be non-user-friendly initially. There will be difficulty to understand the various modules in the system. This is because a lot of time will need to be spent on creating the basic reference data which is required to operate the system.
This data which is entered and stored in the system is termed “Master Data” and is entered only once. Master Data is permanent data which means that it remains with the system as long as the system is in use. For example, in an inventory system, each record on master data would contain items such as code, description, unit cost, and quantity on hand.
In contrast, data that is entered and stored in the system about business transactions that have occurred is called “Transaction Data”.
To the User, this shall constitute the very reason why the system is used to track and monitor business performance. This would be the easy part when trying out a digital business system.
Transaction data remains with the system only until the transactions are processed. Any re-processing of the same business transaction shall lead to duplication of data leading to wrong ending balance in the system. Hence, the transaction data is replaced with other transaction data for new transactions. For example, in the inventory system, each record on transaction data would contain items such as code, quantity added to stock, and quantity removed from stock.
The processing of the Transaction Data would lead to the information in the Master Data to be automatically updated.