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Over the last couple of decades, the role of data in the business world has become increasingly vital. Data is often referred to as the most important asset of an organization, as it can be used for purposes ranging from improving revenue and optimizing customer experiences to mitigating security risks.

SEE: Data governance checklist for your organization (TechRepublic Premium)

However, with the vast quantities of data that are now available and in operational use in the business world, it can be challenging for organizations to understand all of their data fully. For companies that are having trouble keeping track of all of their data asset types, locations and use cases, a data inventory becomes extremely useful.

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What is data inventory?

A data inventory is the catalog or map of an organization’s data assets. A typical data inventory has a comprehensive and up-to-date record of all data assets and where they reside in enterprise systems. Each listing within the data inventory often includes additional details about the data, such as its owner, name, source, format, access permissions, frequency of use and other properties.

The purpose of a data inventory is to help an organization understand its data or metadata and derive valuable insights from it. The data inventory illustrates key information about data and provides invaluable information about how each data point interacts with other data. This helps the organization understand how data flows through the business, how to protect it and how to derive the most value from it.

Why is a data inventory necessary?

Creating a data inventory allows organizations to improve operational efficiency, meet compliance obligations, mitigate risk and achieve data-driven business outcomes. The clearer view of data that a data inventory enables is a major advantage for organizations looking to identify high-risk or high-value data and develop strategies to manage that data through its lifecycle.

Operational efficiency is improved by having better access to data, which can help with decision-making, analysis and productivity. Another important way data inventory helps improve operational efficiency is by identifying obsolete, redundant or trivial data that is unnecessarily using organizational resources.

SEE: Top data quality tools (TechRepublic)

Several research studies over the years have identified that most organizational data is “dark,” which means either it is unknown or unexploited. Dark data is a byproduct of applications, data interactions and devices that add to the costs of maintaining IT infrastructure. With a data inventory, organizations can get better visibility into dark data, allowing them to identify where it came from and how they can utilize or dispose of it.

For example, an organization can identify and sort data into different categories, including unused data that needs to be retained for legal or compliance reasons, intellectual property, duplicate data, data under legal hold or other business data. The data inventory process can help an organization dispose of unneeded data while implementing data retention policies for sensitive or valuable data.

Common challenges with data inventory

Building a data inventory is more than just a one-off process: It requires alignment across different departments, an investment of resources and technical expertise. One of the challenges in building or maintaining a data inventory is identifying all data sources that an organization works with, especially as data sources and dataset sizes change over time.

In today’s digital world, data resides in different applications, devices and formats. Getting the business process owners involved is a good start; however, utilizing data discovery software is an important next step. This software can help your team to detect and identify the contents of datasets more effectively.

Another common challenge with a data inventory is keeping it up to date, not just in terms of data content but also in terms of data quality. As organizational data changes rapidly, it has to be regularly evaluated for quality. Organizations can employ continuous and automated data intake processes to keep the data inventory useful. This will ensure the data stays fully integrated with the organization’s technology stack.

Lastly, a significant challenge that comes with creating a data inventory is making it actionable. A well-maintained data inventory is less like storage and more like a resource that stakeholders can use to make business decisions. It’s important that your most important stakeholders not only know that a data inventory exists but that they use it to help themselves and their teams keep track of valuable business assets.

Data inventory and GDPR

Data inventories assist organizations in complying with regulations like General Data Protection Regulation, California Consumer Privacy Act and other regulatory bodies. However, as data lives within and across different departments of an organization, such as sales, IT and finance, it can be challenging for an organization to ensure all data is compliant with applicable laws and regulations.

SEE: GDPR resource kit: Tools to become compliant (TechRepublic Premium)

A well-maintained data inventory helps organizations with privacy and protection compliance, regardless of where data lives. Some of the benefits of a data inventory for regulatory compliance include the following:

  • Provides a supportive structure for data protection programs.
  • Facilitates the data protection efforts of data engineers and data protection officers.
  • Offers information for teams as they carry out risk assessments.
  • Gives a blueprint for managing data access, data sharing and permissions.
  • Creates a framework for more effective data breach notifications.

Meeting GDPR compliance requirements can be challenging for organizations, especially if they don’t understand the type of data they have, how it is stored and how it flows through the organization. Data inventories are simple but highly effective support resources for teams that are tackling these kinds of compliance projects.

The use of data inventory will only grow as more data privacy protection programs are introduced. The need for data inventories will also increase the demand for technology that can make data inventory creation and management easier for an organization.

Read next: Top data governance tools (TechRepublic)

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