Years into your company, and it’s now time to expand to a new city. Your current infrastructure is ready to scale with growing sales, but you confront the unknowns of a new location. You tried streamlining operations across internal departments, but have you considered the impact of managing your business data across different places? Let’s assess the pros and cons of a centralized or distributed data systems.
Today, businesses face a common challenge after entering new locations, cities, or markets – generate summarized reports and analysis of data derived from numerous sources/systems efficiently. While a centralized data warehouse offers considerable benefits, companies tend to house data in multiple places, including Excel sheets, databases, data warehouses or other systems.
Having multiple data sources could ultimately compromise reporting accuracy. Due to cumbersome replication of information, users increase the need to correct inconsistencies and validate reports. With that in mind, business leaders struggle finding a true view of the company’s performance. Internal functions/organizations consequently cannot agree on what constitutes accurate information. On the other hand, a centralized database approach allows organizations to get a clean, holistic view of their business and performance while avoiding mishaps that occur from pulling data from multiple sources.
I. Centralized: Advantages
Data Integrity – single source of truth. Companies apply data to analyze performance, understand trends and establish strategies. Housing a single repository offers trustworthy data in order to produce accurate analysis. This increased quality results from data being consistently updated as well as standardized for all users.
Time savings and improve efficiency. Users are able to do more value-added work. With multiple data sources, resources spend the majority of their time on gathering data, consolidating, and checking accuracy. In some cases, data in one source could be in a format different than another, leaving less time to do analysis and interpretation.
Easy to learn. All users will learn a single system. As a result, this makes it simpler for those who pull data from different organizational functions to get the information they need.
II. Centralized: Disadvantages
Avoid “one-size-fits-all” in nature. Database options may not have the functionality or reporting capabilities needed for every function or user within the organization, and thus you’d have to weigh the pros and cons in such cases.
Costly to implement. Some industry software cost thousands, even tens of thousands, of dollars per year. Therefore, higher prices may put these tools out of reach for companies of a certain size. You must carefully consider your budget when deciding to integrate systems into centralized databases.
Is a centralized database the right answer for you? Your company must determine your needs, goals and potential budget. Understand and consider the limitations, growth path and total cost of ownership of any potential solutions. Also, keep in mind that functionality within a company’s individual circumstances is much more important than operational efficiency. For more information on deciding the right system that matches the needs of your organization, read about 9Gauge’s Systems Integration practice and contact 9Gauge.