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What You Need to Know About Data Modeling

What You Need to Know About Data Modeling
Image credit: Illustration by Jason Lee

Q: How can data modeling boost my business?

A: Data modeling refers to the organization of various databases (customer lists, inventory, sales history, etc.) into tools that help you use that information as effectively and flawlessly as possible. These customized programs, such as CRM software and inventory-management services, are designed to make database information nearly idiot-proof to enter, then easy to slice and dice into a myriad of reports or to be used to find specific bits of information. We asked Chris Basham, co-founder and COO of TrackVia, a Denver-based company that helps nontechnical users create online business applications, to give us more details on what makes data modeling good for business.

What's the biggest benefit?
No. 1 is that it codifies data entry across the company, which keeps everyone on the same page and reduces mistakes such as multiple people changing entries on a spreadsheet at the same time or working on an older, outdated version of a spreadsheet. As grim as it sounds, if you avoid data modeling, you're destined to end up with inaccurate information.

Can the data model grow with a company?
If you haven't done good data modeling upfront, your reporting is going to fall flat, especially when you start experiencing growth. If done right, it will easily scale and keep things humming. Consider this all-too-common scenario: A small startup starts tracking customers on a spreadsheet, then reaches the point where that's not going to work anymore. That's where data modeling comes in--where a CRM tool or inventory-management software replaces the spreadsheet and grows seamlessly with the company.

How does this affect the customer?
Here's an example I like to use: Say you call a company to seek help and you're immediately asked to provide your account number. With data modeling, the company has set up their system so they can find your account number via name and address.

OK, but can data modeling give me a competitive edge?
Certainly. I know of a small oil and gas industry service provider who used it to become an industry leader. Their niche is helping exploration companies secure permission from landowners to conduct seismic testing. As you can imagine, figuring out who owns what land is a headache--often one person will own multiple scattered parcels--and the company's spreadsheet system wasn't working well. But after implementing a well-thought-out data model, this guy was able to connect disparate title information to individual owners and make a quantum leap in successful deals. As a result, the provider quickly became the go-to guy in the industry.

Mikal E. Belicove is a market positioning, social media, and management consultant specializing in website usability and business blogging. His latest book, The Complete Idiot’s Guide to Facebook, is now available at bookstores. For more information, visit MikalBelicove.com.

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This article was originally published in the January 2013 print edition of Entrepreneur with the headline: Information You Can Use.

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