Data Standards: Nice To Have Or Mission Critical?

As the amount of data generated within an industry increases, it becomes increasingly important for trading partners to developdata_standards.png and maintain a secure, efficient and scalable method of transferring and assimilating all of this data.

This is why data standards are essential to any modern industry. Data standards are a set of definitions, structures and protocols that are agreed upon by an industry or regulatory body. Their purpose is to allow entities that regularly exchange data to share a common strategy and methodology for handling data.


Three Good Reasons For Data Standards:

  • Total accumulated global data will increase from 4.4 zettabytes in 2016 to around 44 zettabytes (44 trillion gigabytes) by 2020.
  • A typical Fortune 1000 company, can increase net revenue by $65 million just by increasing data availability by 10%
  • 65% of senior executives say that hard data now influences their decisions


Data standards can range from a basic set of guidelines to a comprehensive set of formats and definitions that are regularly maintained and updated by a standards body. This standards body is comprised of members of the industry that they serve and ensure that the data standards are providing maximum benefit to their industry.


Some Examples Of Data Standards And Their Organizations Include:

  • STAR (Automotive)
  • CIECA (Collision)
  • ACORD (Insurance)
  • ASC X12 (The “granddaddy” of many other standards organizations)


Why Data Standards?

Comprehensive data standards have many benefits that include; enhancing privacy/security, lowering IT costs, and accelerating growth via the use of big data and robust analytics.

When discussing the benefits of data standards, the issue of security is often overlooked. Data standards make it easier for everyone involved to agree on levels of security, comply with mandated privacy regulations (PII) and to respond to changes in security requirements (i.e. hacking, patching vulnerabilities). In a world where data is becoming increasing valuable and thus more prone to theft, data standards are essential for minimizing the risk of security breaches.

If multiple parties (trading partners) are involved in the exchange of data, as is common in many industries, integrating the exchange of data is critical to achieving maximum efficiencies. A lack of standards means that system interoperability is diminished, often requiring the manual transfer and editing of data files. This reliance on manual processes significantly drives up IT costs and increases the chances of errors.

Data is a lot like sushi, the fresher the better. Lack of data standards prevents real time system integration. Everything from supply chains, to personnel scheduling/HR, accounting and business intelligence decisions are negatively impacted by having to wait for the arrival and analysis of data that was created hours, days and even weeks prior. The ability to make fast, accurate decisions based on real time data is a great way to increase profits and improve service. Robust data standards can go a long way towards achieving these objectives.


Sounds Good. So Why Doesn’t Everyone Use Standards?

If standards are such a good idea, why do many industries lack robust standards? There can be several reasons, but a lack of agreement within the industry is a common culprit.

Here’s A Few Common Roadblocks:

  • Lack of consensus within the industry on the needs for standards
  • The cost of creating and maintaining a standards body and who pays for it
  • The costs associated with implementing the standards and upgrading technology
  • Disagreement on which type(s) of data interchange to adopt (XML, JSON, etc.)

There is no getting around the fact that implementing standards takes some co-operation, co-ordination and there will be costs associated with the creation of the standards body and developing the guidelines. But given the substantial benefits, it is usually a worthwhile endeavor, especially for large industries.


Future Of Data Standards


Data standards evolve with changes in technology and the needs of the trading partners. Some data standards allow for multiple data formats (often allowing for a transition from one format to another), although the preferred method is to adopt a single format, such as XML.

Extensible Markup Language (XML) is widely used in many industries and is commonly used with web services. XML allows for “machine to machine” transfer of data over the internet and is a very powerful data format. It’s primary drawback is that XML based messages can be very large and are not ideally suited for mobile and other “lite” applications. This weakness is leading to many standards organizations looking to JSON (JavaScript Object Notation), as a replacement for XML. JSON promises faster communications that are more compatible with mobile devices. This is especially important in industries that have large numbers of employees working in the field, such as insurance adjusters, heavy equipment technicians and salespersons.

As the IoT (Internet of Things) ramps up, the needs for standards within industries will only increase. The grand vision of the IoT is for everything from your car to your phone to the appliances in your home to be able to seamlessly communicate. To achieve this,  all of the relevant industries will need to adopt standards that can keep up with the rapid acceleration in the amount of data that is being produced daily.

Ultimately, the combination of a dramatic increase in the quantity of data being produced by virtually every industry coupled with the paradigm shifts that are being created by the IoT are going to definitively move data standards from the “nice to have” into the “mission critical” category.  If your industry doesn’t have standards or is dragging their feet on developing them, the clock is definitely ticking.

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