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Data Classification: Importance, Types, and much more

Data classification assists businesses to identify confidential and public data being stored in the systems. The article will help you understand the importance, types, and stages of data classification.

Data is raw information that can be classified. This classification allows users to understand the confidentiality of the information fed in machines. Classification is needed over an array of objects to make a choice. An absence of this stage leads to mishaps in decision-making. There are areas requiring attention to break complexities into minute details. In the process of classification, the characteristics of the objects allow adding value to the decisions. Moreover, over time stage one being actioned aids in decision-making and reduces effort. Data is one such object having innumerable complexities. But, there are selective characteristics to segregate information as per specifications. Attention to the characteristics allows users to choose the required information and place it on the right end.

Importance of Data Classification

Data classification has importance at various levels of business. It helps in being compliant with data regulation and reduces risks.
Companies can set alerts if there is an attempt of cyberattack as preventive measures can be taken. Attending these attacks and restoring data helps to retain customers. Moreover, it helps businesses to identify stale data, reduce duplicate entries and maintain storage costs at an optimum level. It helps the IT teams to assess investments in technologies and increase data security for every classified data.

The importance of data classification is underlined from a business perspective to allot security levels for information. An allotment of the required algorithms alerts users from modifying a certain set of information. This allocation prevents data to be shared with third parties and avoids data breaches. However, there is a cost associated with the classification. The more sensitive data the higher the cost. To avoid these costs, an audit has to be initiated to assess data sensitivity. It assists in avoiding duplicate entries. The staff has to be trained according to the standards differing in every organization.

The Four Types

Statistics being a subject of data classification has divided data into four categories. 

  • The first is Geographical Classification. The data in this type is divided according to the demographics followed by numbers. These numbers allow ease of classification allowing ease in decision-making. 
  • The second is Chronological Classification represented through trends. These results help to analyze business positions and set targets for the future. It allows businesses to prioritize their requirements and assist in fund allocation. 
  • The third is Qualitative Classification, as the name suggests it relies on distinct features of organisms or objects. However, these attributes cannot be measured, and sometimes they can be absent.
  • Talking about the fourth classification, Quantitative Classification, they are measurable attributes. They are height, weight, and so forth. Data classification in business is an important criterion to measure the usefulness of data in decision-making. The software designated for the purpose allows us to identify sensitive data and reduce the possibility of data breaches. This identification process enables businesses to set the sensitivity level of data and set protection accordingly. 

The levels selected allow to automate the data entry process to reduce time and effort. Businesses can easily prioritize their objectives with data classification in place.

The Four stages

Data classification rests on four stages for easy and timely access. 

  • It initiates from entering data in the prescribed system and classifying it according to its confidentiality. This stage allows us to restrict data or grant free access. 
  • The second stage allows information labeling and allots certain guidelines for its use. 
  • In the third stage, there are policies for handling data.
  • If these guidelines are breached it may lead to legal procedures. These stages allow users to define the purpose of data and use it in the right manner.

Moreover, a business can save data breach costs by investing in data audit stages and labeling their data according to the nature of the business.


Data classification is a boon for businesses to identify and protect confidential information. The stages assist in gaining customer confidence for handing over sensitive information. Furthermore, businesses should identify their data storage needs and invest in the right resources to gain the most out of their investments.

For more such updates and perspectives around Digital Innovation, IoT, Data Infrastructure, AI & Cybersecurity, go to

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