Data integrity is critical to running a business profitably. That’s why just about every business can benefit from maintaining some form of system of record.
In this guide, you’ll learn what a system of record is and how it’s used, especially in the retail space.
- What is a system of record?
- System of record vs. source of truth
- How to work with your system of record
- The importance of a system of record
- Types of systems of record
- How to build a system of record
What is a system of record?
A system of record is whatever houses your company’s most important data. This data is typically mission-critical; it’s the information you need to make decisions about your business.
Your system of record is the source of truth for your organization’s data. It’s the one system that you can always trust to have the most up-to-date and accurate data.
Your system of record also tends to be the most difficult to maintain. This is either because it houses a large amount of data, or because the data is complex, or both.
System of record vs. source of truth
It’s important to note that a system of record is not the same thing as a source of truth. Your system of record is the system that houses your data, while your source of truth is the data itself.
How to work with your system of record
Once you’ve identified your system of record, there are a few things you can do to make it easier to manage.
The first thing you can do is to implement data governance, the process of making sure your data is accurate, consistent, and accessible.
Data governance is important because it ensures your data is reliable. And only when your data is reliable can you trust it to make decisions about your business.
There are a few different ways to implement data governance, but the basics have to do with people and their actions: who can do what with what information, when, and under what circumstances.
The importance of a system of record
Again, your system of record is the source of truth for your data. It’s the one system that you can trust to always have the most up-to-date and accurate data. That’s why it’s such an important part of your business. It can help you:
Organize business data
A system of record keeps your business data organized in terms of the types of data in the system and its completeness. It’s a great way to ensure the accuracy of your data while keeping it secure and providing all the types of data you need to make crucial business decisions.
Data entry is time-consuming and error-prone. A system of record can help you automate the data entry process, both improving the accuracy of your data and saving time.
When it comes to business data, security is always going to be a top priority. If customer records, financial data, employee files, or similarly vital information fell into the wrong hands, it could be disastrous for your company.
That’s why a system of record is so important. As noted, keeping all your business data in one central location and putting the right security measures in place can help you better protect it from potential threats.
Having all your business data in one place will also help you keep track of who has access to it and what they’re doing with it. It will enable you to quickly identify any potential security breaches and take steps to address them.
A system of record can also help you comply with data privacy regulations like GDPR and HIPAA. By having a clear and well-documented system in place for managing your data, you can ensure and demonstrate that your company is adhering to all applicable laws and regulations. This can help minimize the risk of costly penalties or reputational damage.
When you work with one source of truth where all relevant stakeholders within your business can extract and update data, you set your business up to operate more efficiently and with better results.
Costly errors are fewer and your organization is able to communicate clearly across departments.
Types of systems of record
Customer system of record
Today’s consumers expect a personalized omnichannel experience. To meet this expectation, retailers need to have a strong understanding of their customers. They need to know who their customers are, what they’re interested in, and how best to reach them.
This customer data is typically housed in a customer relationship management (CRM) system. A CRM system is a system of record that houses customer data—which can include contact information, purchase history, and preferences.
A customer system of record provides retailers with a 360-degree view of their customers. It helps retailers personalize the customer experience and improve customer loyalty.
Financial system of record
A financial system of record is a critical component of any business. It provides a complete and accurate picture of the company's financial position, including all transactions, at any given point in time.
There are many different types of financial records systems, but they all share one common goal: to give businesses the information they need to make informed decisions about their finances. The right financial system of record can help businesses save money, improve efficiency, and make better strategic decisions.
There are several different types of financial system of records available today, including:
- General ledger
- Accounts receivable
- Accounts payable
- Budgeting and forecasting
IT system of record
There are many different types of IT systems of record, each with its own advantages and disadvantages. The type of system you choose should be based on the needs of your business.
The most common types of IT systems of record are:
- Relational databases
- NoSQL databases
- Data warehouses
- Data lakes
Operational system of record
Operational system of record (OSR) is a type of software used to manage operational data, i.e., data that changes frequently and is used to support business operations. OSR systems are often used by businesses that have real-time or near-real-time requirements, such as ecommerce businesses.
Operational data can be generated by transactions, such as sales and purchase orders, or by other events, such as customer service calls or website visits. OSR systems store this data in a format that can be easily accessed and analyzed. This allows businesses to use the data to improve their operations, make better decisions, and provide better customer service.
HR system of record
A human resources (HR) system of record is an application used to manage employee data. HR systems store employee data in a format that can be easily accessed and analyzed, which allows businesses to use the data to improve their operations, make better decisions, and provide better customer service.
There are several types of HR systems, but they all share some common features, such as the ability to handle large volumes of employee data, process data quickly, and support real-time or near-real-time requirements.
Marketing system of record
A marketing system of record contains data about your marketing campaigns. This data can include campaign performance data, contact lists, and creative assets.
Product system of record
In the retail space, product data is typically housed in a product information management (PIM) system. PIM systems help retailers keep their product data accurate and up to date. They also help retailers ensure there are minimal errors within their system as they record transactions, process orders, and keep track of product inventory.
How to build a system of record
Deciding which system will serve as your organization’s system of record is a challenging decision. To make an informed choice, you need to consider a few factors, including:
- The type of data you’re storing
- How important this data is to your business
- How often this data changes
- How complex this data is
- The security requirements
Let’s take a closer look at each stage of the vetting process.
1. Determine use case
Determining the use case for your system of record, as well as the data sources, will help guide your decision. For example Salesforce, a cloud-based CRM system that helps organizations manage customer data, serves as a system of record for many organizations. It’s easy to use and built specifically to manage the sales and customer relationship process.
Other organizations may prefer to focus on product inventory, sales, or some other primary use case. Whatever the use case, it’s important to remember that there are a few different types of data sources, including:
- Relational databases
- Data warehouses
- Data lakes
Ensuring compatibility between data sources and your system of record is key.
2. Decide on data type
There are two types of data: structured and unstructured. Structured data is data that’s easy to organize, like customer contact information or product prices. Unstructured data is data that’s more difficult to organize, like customer preferences or product reviews.
When you’re deciding which system will serve as your system of record, you need to consider the type of data you’re storing.
3. Understand manual inputs
In retail, an inventory system is typically the system of record. To understand how to integrate manual inputs, it’s important to understand how inventory is managed. To successfully integrate manual inputs into an inventory management system, it is important to first understand inventory management.
Inventory can be managed either manually or through an automated system. If inventory is managed manually, then inputs must be entered into the system manually. This can be done either through data entry forms or through bar code scanners.
On the other hand, if inventory is managed through an automated system, then inputs can be entered into the system either through bar code scanners or through an integration with the POS system. In this case, it is important to understand how the POS system works in order to successfully integrate manual inputs.
4. Purchase software
With this information, you should be better equipped to decide what software you want to onboard to secure and manage your most important business data. Again, it depends on your needs.
For example, Shopify’s POS inventory management solution is a system of record that’s perfect for businesses that manage physical inventory to make sales. It can keep track of inventory levels in real time while alerting you of low inventory levels with automations you can customize.
This is just one example of what a system of record software solution can do. Once onboarded into your workflow, it’s a powerful way to stay on top of the flow and freshness of your business data, whatever it may be.
Build a system of record for your store with Shopify
In a world increasingly driven by data, retail businesses cannot afford to manage operations without a robust system of record in place.
Fortunately, there are many options on the market from which to choose from. There’s no shortage of software-as-a-service (SaaS) solutions that are niche-specific and built to cater to the unique needs of different operations.