Whether large or small, a business of any size can benefit from database management, especially within the realm of finance. To reduce compliance risk, increase internal communication between departments, better serve customers and take advantage of automation, a database management system can help you achieve business goals.
Data collection and storage continues to grow at record rates. By 2020, it is expected that the digital universe will reach 44 zettabytes.
A database management system (DBMS) securely stores data information within an organisation. It allows for multi-user access, helps to enhance data quality, and can be used to assist in financial forecasts, modelling and reporting. Importantly, a DMS gives a user the freedom to create their database based on need. The DBMS acts as a conduit between applications and operating systems to provide the data of interest.
When considering the best database management system for your organisation, you will want to take into account the following:
Performance monitoring and tuning
Storage and capacity
Backup and recovery
Types of Database Organisation
There are various types of database organisation. Each serves a different purpose and can be the optimal choice depending on your business need.
The models include:
Hierarchical DBMS: As the name suggests, data is stored hierarchically, either top-down or bottom-up. There is a parent-child relationship between the data points. In this model, a parent may have multiple children, but each child only has one parent.
Network Model: Organised in a graph, this model allows for more relationships between information. As such, children can have multiple parents.
Object-Oriented Model: A database constructed in the object-oriented model contains classes. Each class displays data, which can consist of both values and operations.
Relational Model: The most popular format, the relational model consists of columns and rows in stored in a table of relational information. Users can manipulate and use the data by using SQL
Benefits of Data Management
The collection of data without having secure storage and the ability to manipulate it to glean insights for decision makes rendering data useless. By leveraging a database management system, you can gain the ROI of collecting the data in the first place.
Data management has a multitude of benefits, especially for leaders of financial departments. Since the industry of data management is under high scrutiny and has immense compliance risk, it pays to have a system that is transparent, efficient and accessible.
Data management’s benefits include:
Data Security: As an organisation collecting data, its security and your customers’ privacy is your responsibility. Having a data management system will manage this requirement for you. Additionally, data updates are made in real-time.
Data Integrity: Through a DBMS locking system, you can ensure that data can only be accessed by one person at a time so that the data’s integrity cannot be compromised.
Data Integration: An efficient handler to balance the needs of multiple applications using the same data, including integrating with legacy systems.
Data Retrieval: The ability to swiftly recover from crashes and errors, including restart ability and recoverability.
Audit Trails: For audits and analytical procedures, every time a user accesses the database, it is recorded. Also, most data systems like SolveXia provide and store this data to be used for audit trails.
Data Accessibility: Simple access using a standard application programming interface (API).
Process Standardisation: Rather than relying on an IT department or programmer to complete algorithms and create code to work with your data, the process is standardised for your entire organisation. For any user who accesses the system and needs to run a script or produce a report.
Disadvantages of Data Management
Many organisations forego the crucial steps it takes to put a database management system in place. That’s because it can feel overwhelming and for many, out of their area of expertise.
Some of the disadvantages of data management include:
High Cost: Robust data systems can cost a lot for both hardware and software. Therefore, they become a new line item that can increase your budget.
Training: Most database management systems require training. However, you must take into consideration that although the cost and time of this training may seem too much to bear at the offset, having the system will make processes more efficient going forward. Therefore, it’s an up-front investment that will pay dividends moving forward. Additionally, most database management software providers offer support and training, while many like SolveXia are built to be intuitive and allow users to understand the system very fast with minimal assistance.
Risk of Damage: While storing data in multiple locations is a less than optimal practice for businesses, having all data in a centralised location also carries with it some risk. If the single database is damaged or corrupted, you may lose information. However, to address this concern, be sure to select a DBMS that has cloud storage that prides itself on data security and automatically backs up your information.
In whichever way that you choose to store, access and utilise your data, you must consider and aim to adhere to these best practices:
Security: Follow your internal security protocols within your organisation and choose a DBMS that prides itself with bank-grade security of data.
Data Collection: Only collect the information you need for your business purposes. It’s important to remember that the quality of data is more important than the quantity.
Storage: Ensure that data is stored in a centralised and accessible location. You should have the ability to back up and restore all the data.
Version Control: When you access data, especially as it's done so frequently within financial departments, you will rely on version control. There will be both back office and front office tasks that require the manipulation of data and potentially new data entry. As such, the risk of human error is high. Having a system, like SolveXia, that provides version control is imperative.
Data Automation and Database Management
Along with database management, you can maximise your time by letting automation do much of the work. Automation will help to cleanse, calculate, validate and store data safely. It will also create a more transparent system to generate analytics and modelling and to quickly and securely share these insights. For example, you can have procedures run themselves with automation to create live reports and dashboards for organisation-wide or individual focused accessibility.
Using automation for data management and reporting will decrease human error by removing low-value manual tasks. Also, to make use of data that is separated within your organisation, a database management tool can leverage automation to centralise information and map data. Furthermore, having a well-maintained database management tool will allow for automatic updates as security rollouts take place. Automation connects with all data systems, including legacy systems and is a massive piece of the puzzle for organisations optimisation, especially in the case of database management systems.
The Bottom Line: Data is Transforming Finance Teams
Big data is ushering in the creation of new business models that are allowing for more agility. Therefore, having a database management system in place is crucial to being able to use data wisely.
As a CFO or finance leader in your organisation, you may serve as a funnel for data within your department and others. Financial departments are transforming and expanding capabilities to serve organisation leaders with decision-making insights better.
In support, database management allows for more data access and more transparency within departments of an organisation. When departments such as marketing, sales, and finance can access dashboards and reports, they can leverage insights to optimise their functions, increase their profitability, reduce costs, and reduce their compliance risk.
Database management ties in with data automation to provide for deeper insights and more accurate forecasts and modelling. Furthermore, such systems like SolveXia can lead to better business operations, and customer service as organisations can be proactive in foreseeing issues and solving them before they harm the business.
Data management also goes hand in hand with data analytics, where diagnostic, descriptive, predictive, and prescriptive analysis can be performed.