As your entity structure grows more complex, the data at your disposal explodes exponentially. It doesn’t help that the economy, markets and regulations are moving at light speed at the same time. There is rarely time to digest the data at your disposal and leverage it for the insights that you need to tactically grow your core businesses.
However, without context, the data you possess is, at worst, potentially misleading and, at best, virtually useless. To be of value, data must be appropriately visualized and contextualized so that stakeholders can understand it quickly and leverage it to make smarter business decisions.
If you’ve ever been mired in an inbox of spreadsheets, you understand that numbers in themselves don’t create enough of an impact to build understanding of a situation, let alone make change. That’s because the human brain is designed to process stories, which are highly visual.
What is an Entity Relationship Diagram
Entity relationship diagrams are customized flowcharts that illustrate the ways in which “entities” — people, companies, concepts, information, objects — relate to each other within a set system.
They use a defined set of simple symbols, such as rectangles, diamonds, circles and squares, linked by a variety of lines to represent the interconnectedness of entities, their attributes and their various relationships. Although simple diagrams have been used by many cultures for millennia, the development of ERDs as they apply to business and data management began in the 1960s and 1970s with the work of Peter Chen, Charles Bachman and A.P.G. Brown.
Originally, these developments led to diagrams that mimicked the structure of languages, with some shapes representing concepts or people (nouns), others dedicated to attributes (adjective and adverbs) and the lines between them depicting actions or relationships (verbs). While this is still a commonly accepted model, current charting technology offers a wide range of fully customizable options, allowing for easy ways to depict entities according to geography, function, tax status, ownership, shares, corporate structure, voting history or myriad other factors.
Using Entity Relationship Diagram Tools
ERDS are a game-changing tool for any organization that deals with the management of complex information. In particular, ERDs have proven invaluable for the following operations:
- Database Design. Use ERDs to model relational databases. When conceiving an information systems project, ERDs are often the initial step, ensuring a logical working plan and helping to determine the necessary technology requirements.
- Database Troubleshooting. Producing a working ERD can often reveal probable misfires or bottlenecks within a database and facilitate fast resolution.
- Business Information Systems. Whether you are planning a new business process, establishing operational jurisdictions or re-engineering corporate structure, ERDs can provide clarity and context that a stack of spreadsheets and raw numbers simply cannot convey.
- Determine Business Patterns. ERDs take existing organizational data and allow users to transform it into flowcharts and diagram trees that reveal new and useful patterns of behavior. This may be a new trend developing, a shift in the market or the opening up of wider opportunities.
- Create Scenario Models. ERDs help business leaders to contextualize and to organize the glut of information they need to process every day through the construction of scenario models. Such models can predict the outcomes of a changing market and help companies plan for eventualities well in advance of any downturn or opportunities.
ERD Embedded Apps
Premier entity management software systems already have ERD technology embedded in their programs. This means that the same suite of programs that stores and organizes your corporate data can also transform it into useful visuals for presentation or analysis.
Top-tier entity management systems allow users to create ERD presentations with easy-to-use drag-and-drop technology that is fully customizable to suit any need. Build direct ownership charts, business process designs and business structure representations in minutes. Add hyperlinked text to provide users with further information or context. Many of these options also allow for easy collaboration through online sharing tools.
In addition, it is possible to create custom views for various users, ensuring that each member of the organization sees the information most pertinent to him. For example, personalized views are available for corporate secretaries, paralegals, compliance officers and legal operations personnel.
The Power of Data Visualization
Raw numbers rarely convey the true complexity behind any business decision. Businesses rely on relationships to function: relationships between company and client, between vendors and distributors, and between management and employee. Understanding these relationships is essential to understanding the heart of a successful organization. ERDs bring these relationships into focus by delineating each entity’s role and mapping the many ways in which it is connected to the larger enterprise.
The most successful way to convey complex, multi-tiered information is through a series of clear, clean visuals. Our brains process visual data far faster than verbal information, and our memories tend to store information more efficiently when it is accompanied by an allied visual.
Effective use of ERDs helps organizations communicate their most pressing messages to all stakeholders, whether they are team members, clients, boards of directors or potential investors. In addition, ERDs’ capacity to inform and educate a workforce can result in a wide range of benefits, including:
- Streamlined business processes for greater overall efficiency
- Improved productivity
- Accurate and reliable business forecasts
- More informed and focused stakeholders
- Optimized business structures
- Enhanced opportunities for business insights
Leverage Entity Relationship Diagram Tools
ERD technology is a powerful tool for analyzing, contextualizing and communicating complex corporate data. Blueprint OneWorld delivers one of the strongest, most flexible Entity Relationship Diagramming packages as part of its overall suite of entity management services. To learn more about how you can benefit from the power of ERDs, or to schedule a demonstration, contact a Blueprint representative today.