Using the fleixble update method for master data loads you need to create update rules for the InfoSource and the InfoObject. The direct update loads the data directly without going through the update rule layer.
The presence of Update Rules allows for extra processing and data transformation capability. Also the flexible update makes it possible to load data from several sources to the InfoObject, since all you need to do it to create update rules between the InfoSource and your InfoObject. An example of using this is when you need to populate certian master data attributes but the data is coming as transaction data. Sometimes the descriptions are also a part of transaction data, whereas you may want to load them as text rather than in the cube (this happens a lot in CRM datasources). So here flexible updates are useful.
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