The Impact of Data Modeling on Your Business Strategy

Anyone in the business world knows that the current landscape is incredibly data-driven. Information holds incredible power that can lead to substantial growth, especially when used right. 

As mentioned during the 2022 Gartner Data & Analytics Summit, “Businesses that can handle that uncertainty are ones that will navigate the future most successfully.” This fact has even led to the augmentation of business rules to fit today’s standards. 

Knowing this, how should businesses leverage the power of data modeling to better their business strategy?

The Power of Big Data

In our article on ‘The Impact of Big Data on Your Business Strategy’, we mention several examples of corporations harnessing the power of Big Data. For one, the streaming service Spotify utilizes data-driven techniques to offer listeners relevant songs and keep them coming for more. They do so by gathering loads of information, such as song preferences, genres, song volume reduction, and even headphone selection. 

Coca-Cola provides more than 200 nations with over 3,500 items under more than 500 brands. There’s definitely a lot to manage from manufacturing, distribution, sales, to consumption metrics. To handle this, the corporation uses social media postings and AI to better understand its customer demographics in various areas. During the COVID-19 pandemic, for instance, the firm gave consumers the option to select beverages using their phones and a QR code.

Data Modeling Basics

As explained in MongoDB’s guide to ‘What is Data Modeling?’, the goal of data modeling is to create a data model according to a system’s data components. But to word it simply, data modeling involves creating a model of how a business is to store data in its database. It is done at the application level and requires identifying a system’s multiple components, namely: entity, entity types, attributes, and relationships. 

Entity refers to either tangible or intangible components of a system. A white shirt is a tangible entity, while prices and discounts are intangible entities. The entity type would then be “top” or “shirt”. Attributes refer to the characteristics of an entity – in this case, it could be “collection”, or “cotton”. Lastly, relationships connect multiple entities. One customer can purchase multiple white shirts at a time, which makes the relationship between them one-to-many.

Predicting Outcomes Using Patterns

The proper data model will help you spot patterns and trends within data that would otherwise have gone unnoticed – especially within consumer profiles and behaviors. Through this, businesses can identify what it is customers are looking for, therefore making better and well-informed decisions. Moreover, Forbes highlights that Big Data and machine learning technologies are used for predictive modeling to help minimize the risks of any cyberattacks or fraudulent transactions.

All About Scalability

Some of the best benefits of data modeling would be scalability. Also called data infrastructure scalability, scalability refers to the flexibility of a system when faced with changes in dataset size, update frequency, and distribution of data usage, among others. 

According to Towards Data Science’s feature on ‘Three Data Scaling Pitfalls and How to Avoid Them,’ with a good business data model, you shouldn’t even notice these changes happening because all systems should continue to work normally. Moreover, one of the best benefits of data modeling would be reduced costs.

Improved Consistency

As mentioned, data collected from different touchpoints is crucial in deciphering consumer behavior, which helps fuel a customer retention program. Data-driven organizations have been found to be 23 times more likely to gain a more loyal customer base and consistency in revenue.

Furthermore, data integration across various business platforms and systems is also improved thanks to data models facilitating seamless data flow. In other words, everything from your operations, collaboration, and business procedures will become more streamlined, since data modeling reduces complexities.

Conclusion

In this article, we’ve detailed how data modeling plays an important role in modern business strategizing. It helps you harness the full potential of your day-to-day data, ensure data quality and consistency, and make well-informed decisions. Data modeling is truly an investment with which you can better hone your business strategy. It is also a good foundation for leveraging new and emerging technologies and is foreseen to be part of most of today’s software projects.

Asim Boss

Muhammad Asim is a Professional Blogger, Writer, SEO Expert. With over 5 years of experience, he handles clients globally & also educates others with different digital marketing tactics.

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