The 21st century executive

6 Advantages of Databases for Modern Businesses

advantages of databases

Modern businesses create a staggering amount of data every day in the course of regular operations. From customer interactions to supply management, every process at work produces valuable information. Business leaders are capitalizing on this to create better operational strategies and improve ROI. To get the best out of their resources, many data-driven businesses are now discovering the advantages of databases. 

Databases are an excellent option for storing, managing, and accessing large quantities of data. For businesses aiming to make more objective, data-based decisions about their strategies there are several database implementation options available. Options can range from physical on-site data servers, which can be costly, to remote Cloud-hosted databases, hosted and managed by external service providers.  

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Understanding Databases 

To understand the unique advantages of databases for business needs, you need to know exactly what databases are and how they’re used. When most people think of databases, they imagine huge stacks of data servers, flashing lights, and cables. In reality, that’s all just the hardware. Databases are much simpler than that.  

At their most basic level, databases are organized collections of data. They’re digital constructs that assemble stored data into a usable format. Administrators and users interact with databases using Database Management Systems (DBMS) to create storage partitions and to edit, remove, or otherwise update existing records.  

What makes databases so useful is that they can store just about anything. Different DBMS options are better suited to different storage tasks. For example, relational databases (where data is stored as linked tables), require Relational Database Management Systems.  Non-relational data like audio, video, or other multimedia data can be stored on Non-Relational Database Management Systems (commonly known as NoSQL management systems). 

Why are databases important in business? 

Databases are a necessary technology for organizing and managing a company’s data assets. They’re a way to centralize the storage of critical information in a secure, but readily accessible form. Databases can be thought of as the digital evolution of company filing and record management. What makes them so useful is the way they store data, and how easily that information can be retrieved.  

Together with skilled Business Intelligence or Data Science teams, databases can provide critical insights into business practices and decisions. This can help business management optimize processes and make better-informed choices. From a tech standpoint, the advantages of databases can extend into: 

  • monitoring performance of tech investments 
  • IT operations 
  • employee performance 
  • customer interactions 

What are the benefits of databases? 

As previously mentioned, databases make data storage and management faster and easier for companies. At scale, this offers a range of utilities for day-to-day business problems. The following are 7 key ways that companies are leveraging the advantages of databases for better business.

 1. Improved decision making

It goes without saying that better decisions start with having the right information at the right time. Many companies are realizing that better-managed data with better access to data can provide the insights necessary for guiding smarter business decision-making. 

The ready availability of data, combined with the tools (and expertise) to transform that data into actionable insights, empowers business stakeholders to make informed decisions. This is one of the reasons why data-driven businesses are on the rise, and data teams are becoming key players in business operations.

 2. Improved data-sharing

Databases with effective DBMS provide the infrastructure that gives users access to better-managed data. Along with the ability to edit or update existing data records, database managers can facilitate the ready supply of mission-critical data to stakeholders throughout the company as they need it. 

Readily accessible data makes it easier for users to respond quickly to changes in the information they need. Getting the right information may have been a manual process with different levels of bureaucracy in the past, but with databases, it’s as easy as sending an email or writing a query.

 3. Better security

Having the right DBMS in place along with a skilled database administration team can help ensure that data privacy and security policies are followed to standards of best practice. This is particularly important considering that most cyberattacks these days come from data breaches, caused by bad actors exploiting vulnerabilities in company infrastructure. 

The more users there are accessing data hosted on company databases, the greater the risks of data breaches. It’s no surprise that companies are now pouring billions into cybersecurity and data management solutions to ensure that corporate data is used properly.

 4. Improved data access

Data access and data sharing are closely related concepts when it comes to data management. Another advantage of databases is the ability to produce quick answers to informal queries run on the fly. Sometimes, you might want aggregated information, (e.g., “the percentage of customers who paid for a subscription in a given month”), but you don’t really need the entire table of 10 million rows. 

In such cases, a simple query can return the answers needed. Most DBMSs provide a range of data manipulation functions that allow users to do preliminary cleaning, segmentation, and mathematical operations on large amounts of data. For BI or Data teams, this can provide insights quickly and reliably. 

5. Holistic data integration

Data integration describes the process and practice of unifying disparate data sources to create a single, accurate view of the data as a whole. With databases, well-managed data can provide this by using an organization’s business data. This gives business users a clearer view of how different processes throughout the company contribute to performance. 

With more integrated data, it becomes much easier to see trends in certain areas of data and consequently how they might impact other areas of the company. 

6. Better Data Consistency

Data consistency refers to information about specific entities being stored consistently and viewable by users in a consistent form. Inconsistencies occur when different versions of the same entity exist in different records. This can lead to redundant data entries and difficulties locating accurate information. 

This can be caused by differences in labeling, input values, or date format. For example, a sales department record may list a client with a record like: 

ID. 

Name 

Gender 

Age 

Location 

Subscriptions 

Activation date 

00100 

JOHN DOE 

Male 

31 

Florida 

Basic Service 

01/12/2020 

 

The same client might have a different record in Customer Complaints: 

ID. 

Last Name 

First Name 

Location  

Active since 

Issue 

00100 

Doe 

Jonh 

FL 

2021/12/01 

 

 

A significant advantage of databases with proper design and management policies in place is the reduction of these inconsistencies.   

Take advantage of databases to improve business 

Having the right data on your business operations can keep what’s important in view. Tracking performance in different aspects of your business processes provides snapshots into underlying patterns. Tech businesses especially need consistent data collection to monitor ongoing trends in their regular operations 

Databases are often a key part of business transformation efforts. However, when undertaking the challenge to overhaul business processes, there’s a lot of room for things to go sideways. Check out our helpful tips for better business process transformation here 

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About the author
Elena Leralta

Working as Foreworth’s Chief Financial Officer, Elena possesses a wealth of knowledge on business management and finance owing to her over 20 years of experience working in the financial sector.

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