Times were that all of the crucial information a business needed was stored in text documents and spreadsheets. Later on, the organization (org) chart became popular as a basic visualization of entities to sort out operations. But this still didn’t quite solve the problem of translating all that information into a form that can be grasped and acted upon by an entity’s board of directors or senior management.

Entity Relationship Diagraming (ERD) is a step up from the org chart that was made in the wake of the 2008 financial crisis and the ensuing political turmoil in the United States, Europe and other hot spots for business. Through the most advanced software applications, it aims to capture the full complexity of modern enterprises as they gain in size due to the ever-advancing world market.

Entity relationship diagrams work better than most forms of presentation that rely heavily on text because human beings (board members and senior managers included!) learn more effectively through visual representation rather than reading. The process of making memories and analyzing all the data we’re presented with is aided enormously by visualization, which is what a chart or diagram provides.

As with other software solutions and business decisions generally, when it comes to entity management, you get what you pay for. This post aims to demonstrate why free ERD is a solution that a growing organization – whatever its size, specialties or the number of its entities – can ill afford. In this post, we outline the basics of ERD and make the case that the most creative, effective software solutions are those that you can activate through the purchase and service of a comprehensive platform for entity management.

What Is Entity Relationship Diagramming?

A diagram that aims to capture ownership relations between the different entities might use lines in specific ways that tell you at a glance whether a subsidiary is wholly or partially owned, and what its non-majority shareholder population looks like. Historical diagramming is another perspective to consider. Through using the same color, line and shape elements an ownership diagram has in a different way, an historical diagram will tell the overall story of its creations and spinoffs.

Geographical diagramming is especially important for enterprises that operate simultaneously across many different countries and under, in some cases, radically different regulation authorities. Fortunately, these are just a few of the different perspectives that can be put into play when diagramming or charting, and you can play around with different kinds of charts to find the most effective ways of telling the story of your business.

There are four general questions that can help you to figure out what features you need from an ERD application:

1) What is the purpose of the chart?

Each entity diagram will be aiming to tell a slightly different story from the next one. When charting your entities, you need to think about its purpose — basically, who is reading the chart    and what do you want to tell them with it?

2) What kind of data is it presenting?

An entity diagram or chart is only useful to the extent that it presents your leadership with accurate, up-to-date information. You could have the prettiest, most multicolored diagram in the world, but if it’s based on old data, it has defeated the purpose of diagramming in the first place. ERD, of course, does entail a certain level of abstraction. But the interactivity in entity diagramming software can help you add more detail through, for example, hyperlinks.

3) What level of detail for data and relationships should the chart reveal?

The basic functionality of entity charting/diagramming is to tell a story that is both comprehensible and actionable. Remember, the reason why we chart is that we learn better this way. In each chart, extending on the questions raised above, you need to be thinking about how complex to make it so that it tells a coherent story that is not overly simplified.

4) What visual elements best fit your purpose?

The visual elements making up a chart, such as shapes (e.g., rectangles or squares, circles or ovals, triangles), lines or text, are all to be determined according to the type of data you need to   present. The lines in a diagram might tell you about ownership patterns or historical mergers and spinoffs, as we discussed above.

Why Free Entity Relationship Diagram Tools Are Inadequate

In today’s world, entity professionals are constrained to measure the effectiveness of a particular platform for ERD and other entity management tasks against its costs. Especially among small and medium-size entities, the need for growing organizations to cut costs at or above the bone that hard-pressed accounting departments are continually emphasizing is making some look to free platforms.

There are two basic reasons why free charting and diagramming tools should be avoided by organizations seeking to unlock the potential of ERD solutions.

The first is adaptability: In ERD, the task of all entity management software to adapt to fulfill the needs of a large organization with a growing number of entities becomes especially pointed. The bare minimum standard for functionality that exists among free platforms for EMS unfortunately most often means that even when the essential features you need are there, they aren’t appropriately sized or designed to scale along with your business.

Free ERD solutions often have to be prodded and coaxed into providing the kinds of tools your organization needs to visualize all of its entities right now. Even where they can be, free often means no or minimum service — which, in turn, may lead to your IT team spending dozens of frustrating hours getting the free platform to work to your requirements. It might have been cheaper in the end to just buy a platform that has more functionality and that includes service!

The second reason is reliability: Free platforms in all different kinds of software tasks, not just entity diagramming, can appear and disappear with few consequences to their makers — but potentially brutal ones to those who rely on them. They can get bought up, change their essential functions on a dime or impose fees without your input. Consider whether the savings is truly worthwhile when it comes to protecting and managing your data.

Leveraging Technology for Data Visualization

Blueprint OneWorld’s entity management platform isn’t free, but it has a number of elegant and effective solutions along these lines to enable smarter decision-making and to help your organization avoid the headaches that free ERD tools bring when implemented.

Our ChartIt software, available to all Blueprint users, is at the cutting edge of diagramming applications. Not only does it offer all the functionality discussed in this post, but it can automatically generate reports in PDF form that chart the global structure of your entity and tie this information into specialized spreadsheets to see specific transactional data, as well as overall indexing, sorting and management functions. Please call or email us today to discuss this and others of our solutions.