Data is a key asset in every organization. As we utilize more automation in supporting our business processes, we end up gathering more data. It is collected by the marketing team through various marketing and lead generation campaigns, and by the sales team on prospects, communications, price quotes, and competitive information. Data is needed by the operations team to process orders, schedule activities, and make or deliver goods and services. And it is used by the accounting and finance teams for billing, payables, financial reporting, budgeting, and forecasting.
All of this data is critical for running a business. We are frequently asked whether it is better to maintain all of this data in one large database or break it up among multiple databases. For those who may be considering a centralized data repository, there are a few important advantages and disadvantages to keep in mind.
- A centralized repository makes it easier to achieve maximum data integrity and minimize data redundancy. All of your data resides in one place, which minimizes the risks of data duplications.
- It is easier for users and reporting tools to access the data. Users will have an easier time learning about various data files and using the reporting tools when dealing with a single repository.
- Data kept in one place is easier to manage, change, re-organize, and analyze. Data administration is simpler, since all data adheres to a single standard.
- As data volumes grow, system administration and reporting could become slower. Larger files take more time to process and you need to make sure sufficient computing power exists.
- If the main repository crashes or goes down, you can lose access to all of your data because it is all in one place. It’s similar to putting all your eggs in one basket.
- In the case of a security breach, all of your data could be exposed (versus just a portion, if you were using multiple databases). Same as the previous point, if you are using a centralized repository, intruders will have easier access to all of your data if safeguards are breached.
Deciding which data management approach is a better fit also depends on a number of other factors such as your organization’s size and resources. For instance, in companies with more limited IT resources, it may be more realistic to focus on getting as much data as possible into a single repository, since it will be easier to manage and utilize when IT resources are scarce.
However, given emerging IT trends, data is increasingly being collected and stored across multiple applications. If your organization has access to proper IT resources, a decentralized data management approach would address some of the challenges presented by a single data repository while also providing more flexibility and risk management benefits.
Sassan S. Hejazi is a director with Kreischer Miller and a specialist for the Center for Private Company Excellence. Contact him at Email.
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