If you have a company, having a data-driven approach will help you make sound business decisions to aid you to reach your goals. To have that approach you need to perform analysis on your data, and therefore need to store it and manage it in as databases.
Depending on your resources and capabilities, having flat files or a relational database will make more sense or not. Let us discuss each type with its pros and cons.
Flat Files Databases
Flat files are the most basic way to organize information. It occurs when all the information and dimensions of data are stored in a single file. It is truly the easiest way to manage data and can be done with something as simple as an Excel file.
The beauty comes from its simplicity. Excel can be a powerful tool to make analysis using its statistical analysis platform, pivot tables, and even format analysis with your data. For a small business with one person responsible for managing the database and that needs simple analysis like seasonality, price, or a simple database, Flat files seem like the clear option due to their low cost.
On the other hand, if you have several different departments and need live data to make decisions, flat files are prone to generating mistakes and confusion.
Relational databases are built around a variety of files that are very specific and linked with each other. For large sets of information in medium to large organizations, they offer the most efficient way to store information that is live, easy to update, and safer.
On the negative aspects, we have a higher cost of implementation, both from having to buy software and from additional training of employees. Also, other tools are required to access the data.
Some of the premier providers of this type of systems are SAP and Oracle. They are experts in handling issues like understanding your inventories, understanding sales per region on a daily basis, or merely keeping your e-commerce and other departments aligned with the capacities of the business.
I hope you enjoyed this week’s article! If you want to learn more about how databases are structured in terms of dimensions, attributes, and hierarchies, please visit my last week’s post. For questions, feel free to reach out in the comment section below.
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