7 Benefits of Data Lineage to Businesses and How to Implement It

By Jesse Fröhling

Published on March 26, 2024

Four business people standing and talking on the stairs

Data has become the most prized possession for many savvy businesses. Yet 69% of data and analytics (D&A) leaders are still struggling to deliver measurable returns on investment (ROI). Why is translating raw data into ROI so difficult? In large part because the value of data is highly dependent upon its reliability and integrity.

Data lineage is among the tactics companies employ to achieve business ROI. This tool meticulously tracks the data journey through its stages and evolutions.

If you’d like to know precisely why this process can benefit your company, then look no further. Read on for the seven most significant advantages of data lineage for business — and a framework for implementing it into your current infrastructure.

What Is Data Lineage?

Data lineage creates a detailed map of how data moves from source to target database in a system. It shows data's origin from source systems, transformations for business needs, and the loading into a database for analysis.

Reliable data informs countless modern business solutions, from critical applications to advanced analytics platforms. Adopting data lineage gives you a detailed record of the data flow from beginning to end — and everything in between.

Each step and transformation during its lifecycle is visible so that you can be sure of the integrity of every data asset (and troubleshoot solutions when something breaks). Data lineage enables users to trace where the data was created, when it was transformed, and its storage locations.

Data lineage gives you an X-ray image of how your business uses the data. Decisions like what data to prioritize and how to manage resources more economically are among those supported by data lineage.

An open laptop showing charts and data

The 7 Benefits of Data Lineage

Below are the top advantages of incorporating data lineage into your operations.

1. Understand Downstream Impact

As data changes, it can have a significant trickle-down effect. Data lineage enables you to proactively assess what kind and level of impact you can expect. For example, when stock levels are updated, you can use data lineage to understand how this will affect the accuracy of sales forecasts.

Another prime example is understanding the impact of your reporting assets when preparing for a cloud migration. Understanding and prioritizing the most essential data assets is critical when moving them from the legacy database to the new cloud database.

2. Faster Root Cause Analysis

Data quality issues can emerge to impact your business in innumerable frustrating ways. One problem you may be familiar with is poorly recorded customer data, which is often the culprit for shipping mishaps and disgruntled customers. Similarly, making business decisions based on inaccurate or out-of-date data can lead to costly mistakes.

Utilizing data lineage and data quality metrics expedites finding the root cause of the data quality issue. You can then swiftly establish when the problem started that caused the data to become corrupted.

3. Optimized Resource Allocation

How is data used across the different departments and procedures within your company? Data lineage provides a clear picture of data usage, which helps analyze duplicate reports, deprecated (old) data, and other processes so that computing and people resources can be used more efficiently.

When you understand what data assets are most important for which operations, it becomes clear where to concentrate investment in employee training, data infrastructure, and analytics tools. Optimizing your resources in this way enables you to streamline operations for improved efficiency and overall performance.

A persons hands typing on an open laptop displaying charts and data

4. Stronger Data Governance

Data lineage can significantly improve your active data governance processes. This is because the visibility you get from data lineage serves to inform and refine your policies, which in turn helps to fortify the protection of sensitive information.

Take financial data, for example; data lineage can help you differentiate between individual translation data and aggregated metrics. This information allows you to apply the correct governance rules to sensitive transactional data.

5. Automatic Data Quality

Poor quality data can also hinder your company from creating impactful content. If you want to generate leads using content, you’ll likely look to data to inform what content you should be making more of — but your success hinges upon the data you use being up-to-date and accurate.

However, maintaining the quality of your data throughout its entire lifecycle is a challenging feat. Data lineage clarifies the root of quality issues, such as incomplete data sources. Utilizing data observability and quality tools enhances the detection and notification of issues.

6. Improved Data Compliance and Risk Management

Data privacy laws are constantly evolving toward an ever more stringent standard, and complying with them is non-negotiable. Data lineage helps you to keep on top of data compliance laws because it provides such a detailed roadmap of the evolution of your data.

Comprehensive data lineage enables you to quickly isolate data assets that are subject to specific compliance requirements. For example, data lineage tracks customer marketing preferences, such as whether they have agreed to various types of communication. You can then be confident you comply strictly with regulations and reduce the risk of a potential breach.

Man typing on is phone in front of a large monitor displaying a chart

7. Auditing

It is imperative to keep precise records and audit trails of all your data handling processes. While it should be noted that data lineage doesn’t serve this purpose alone, it does play a significant role.

Data lineage provides a chronological trail of data usage that demonstrates a company’s compliance with regulatory requirements. Your company is then fully prepared for any audit or check of your data management.

How To Implement Data Lineage

Now you know why you should implement data lineage into your operations, here are the steps to make it happen.

Define Data Lineage Goals

Before you put anything into practice, you must determine your objectives. Precisely knowing what you want to achieve will help to guide your data lineage strategy. Your goal might be to ensure absolute compliance with industry regulations or to raise overall data quality standards.

Regardless, clarifying them at the beginning will help the implementation process remain focused and aligned with your company’s overall targets. You’ll be armed with a clear plan to achieve the optimum benefits data lineage can provide.

Choose the Right Tools

As with most new business endeavors, choosing the right tools is essential for success. If you want to assess and mitigate operational risks effectively, you should seek out operational risk management software capabilities.

Likewise, to integrate data lineage seamlessly into your operations, you should adopt a data intelligence platform that provides comprehensive data lineage tracking features.

You should also carefully consider the capacity of any potential system to handle your unique data volume and complexity demands. This will help ensure that your data lineage implementation is sustainable in the long run.

A server rack

Map Data Flows and Establish Lineage Paths

Once you have your goals and tools, you must map all your data flows. This means every stage, from extraction to loading process onto a database or repository. Doing this will allow you to visualize the complete data journey.

Once you have your map planned out, scrutinize every stage to identify potential problem areas. This holistic understanding of how data moves through your systems will help create a robust data lineage framework that delivers transparency and enables effective decision-making.

Integrate Data Lineage with Existing Systems

For data lineage to work seamlessly, it has to be incorporated into your current systems and workflows. Say your business is in the healthcare sector; having application data with your data lineage framework gives you a clear overview of how patient information is collected and processed.

You can then be confident that privacy regulations are adhered to and that the information you record is reliable. This is just one example of how data lineage works with other systems rather than as a standalone solution.

Data Lineage Adoption and Training

Putting your data lineage framework in place is only the beginning. Next up is the task of getting everyone on board. You’ll need to encourage organization-wide adoption of data lineage using training programs and awareness initiatives.

All the appropriate personnel must be proficient in the ways of data lineage. A lack of understanding can derail even the most well-thought-out strategy, so provide every possible opportunity to inform your teams of the potential of data lineage and how they can use it to improve their work and the company.

Several people talking in a conference room

Regular Maintenance and Updates

Establishing your data lineage operations is not a one-time solution. You must automate the process to ensure the lineage information is up-to-date and accurate. You’ll need to ensure your processes can keep up with a constantly evolving data ecosystem.

Keeping data lineage accurate and up-to-date also helps to optimize your data operations, minimizing unnecessary resource usage, which enables greener data storage.

Employ Data Lineage for a More Secure Future

The advantages of adopting data lineage are clear: better data governance, superior data quality, and improved compliance all contribute to a more efficient and valuable use of your data.

Follow the tips above to get your data lineage strategy up and running, and you’ll soon reap the benefits of a more secure, data-driven business culture.

  • What Is Data Lineage?
  • The 7 Benefits of Data Lineage
  • How To Implement Data Lineage
  • Employ Data Lineage for a More Secure Future
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