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Data classification is the analysis and categorization of an organization’s data assets to determine appropriate access, storage, and retention. It helps understand security, legal and compliance requirements, business importance, availability needs, and current location. It benefits an organization by meeting legal and compliance requirements, reducing backup and archiving costs, and providing more effective use of data for decision-making or marketing purposes.
Data classification is the analysis and categorization of an organization’s data assets with the goal of determining appropriate access, storage, and retention. It is a discipline within the broader field of data management. It is also part of information lifecycle management (ILM).
As part of ILM, data classification helps an organization understand various aspects of its data, including security, legal and compliance requirements, business importance, availability needs, and current location. Once the various aspects of the data are understood, an appropriate policy can be implemented for its security and retention. The classification project should be undertaken by business process owners and legal and compliance representatives in cooperation with the information technology (IT) department. While software tools are available to facilitate collection and analysis, the data classification process is primarily manual and can be time consuming.
Data is considered to be of two types: structured or unstructured. Structured data is usually found in databases. This is often information specific to your organization, such as employee, customer, and product records. Typically, information cannot be accessed directly, but must be accessed through an application programming interface (API). Unstructured data is found in electronic or paper documents, emails, or other types of free-form content, which could include audio and video files.
Data classification can benefit an organization in several ways. Proof of the existence of a policy and adherence to the policy may be required to meet government regulations on the handling of financial or sensitive data. Tax law requirements are one example of these regulations. Data classification can benefit an organization in the event of a litigation, because proper data classification, coupled with an implemented ILM policy, ensures that the data required by the litigation is available and that no extraneous data is available. Your organization can be protected from disgruntled employee actions or employee mistakes by properly classifying and limiting access to proprietary, highly confidential, top-secret data.
Some other benefits of data classification include the potential reduction in backup and archiving costs because the data will not be retained longer than necessary. The data storage media must also be adapted to the availability requirements. In other words, the data you need immediately must be on a storage device that allows for immediate access, such as a network server. Data not immediately needed can be stored on a device that does not provide immediate access, such as digital tape.
In addition to meeting legal and compliance requirements, understanding data could provide other important benefits. The organization that has analyzed and classified your data may be able to more effectively extract this information for decision-making or marketing purposes. This more effective use of data can lead to better profitability.
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