Data modeling is the process of diagramming data flows. When creating a new or alternate database structure, the designer starts with a diagram of how data will flow into and out of the database. This flow diagram is used to define the characteristics of the data formats, structures, and database handling functions to efficiently support the data flow requirements. After the database has been built and deployed, the data model lives on to become the documentation and justification for why the database exists and how the data flows were designed.

The data model that results from this process provides a framework of relationships between data elements within a database as well as a guide for use of the data. Data models are a foundational element of software development and analytics. They provide a standardized method for defining and formatting database contents consistently across systems, enabling different applications to share the same data.

Why is data modeling important?

A comprehensive and optimized data model helps create a simplified, logical database that eliminates redundancy, reduces storage requirements, and enables efficient retrieval. It also equips all systems with a ‘single source of truth’ – which is essential for effective operations and provable compliance with regulations and regulatory requirements. Data modeling is a key step in two vital functions of a digital enterprise.

Software development projects (new or customizations) performed by IT professionals

Before designing and building any software project, there must be a documented vision of what the final product will look like and how it will behave. A big part of that vision is the set of business rules that govern the desired functionality. The other part is the data description – the data flows (or data model) and the database design to support it.

Data modeling keeps a record of the vision and provides a roadmap for the software designers. With the database and data flows fully defined and documented, and systems developed per those specifications, the systems should deliver the expected functionality required to keep the data accurate (assuming that procedures have been properly followed.)

Analytics and visualization – or business intelligence – a primary decision-making tool for users

With increasing data volumes and growing numbers of users, organizations need a way to turn raw data into actionable information for decision-making. Not surprisingly, the demand for data analytics has grown dramatically. Data visualization makes data even more accessible to users by presenting the data graphically.

Today’s data models transform raw data into useful information that can be turned into dynamic visualizations. Data modeling prepares the data for analysis: cleansing the data, defining the measures and dimensions, and enhancing data by establishing hierarchies, setting units and currencies, and adding formulas.

What are the types of data modeling?

The three primary data model types are relational, dimensional, and entity-relationship (E-R). There are also several others that are not in general use, including hierarchical, network, object-oriented, and multi-value. The model type defines the logical structure – how the data is stored, logically – and therefore how it is stored, organized, and retrieved.

  1. Relational: Although “older” in approach, the most common database model still in use today is relational, which stores the data in fixed-format records and arranges data in tables with rows and columns. The most basic type of data model has two elements: measures and dimensions. Measures are numeric values, such as quantities and revenue, used in mathematical calculations like sum or average. Dimensions can be text or numeric. They are not used in calculations and include descriptions or locations. The raw data is defined as a measure or a dimension. Other terminology used in relational database design includes “relations” (the table with rows and columns), “attributes” (columns), “tuples” (rows), and “domain” (set of values allowed in a column). While there are additional terms and structural requirements that define a relational database, the important factor is the relationships defined within that structure. Common data elements (or keys) link tables and data sets together. Tables can also be related explicitly, like parent and child relationships including one-to-one, one-to-many, or many-to-many.
  2. Dimensional: Less rigid and structured, the dimensional approach favors a contextual data structure that is more related to the business use or context. This database structure is optimized for online queries and data warehousing tools. Critical data elements, like a transaction quantity for example, are called “facts” and are accompanied by reference information called “dimensions,” be that product ID, unit price, or transaction date. A fact table is a primary table in a dimensional model. Retrieval can be quick and efficient – with data for a specific type of activity stored together – but the lack of relationship links can complicate analytical retrieval and use of the data. Since the data structure is tied to the business function that produces and uses the data, combining data produced by dissimilar systems (in a data warehouse, for instance) can be problematic.
  3. Entity-Rich (E-R): An E-R model represents a business data structure in graphical form containing boxes of various shapes to represent activities, functions, or “entities” and lines to represent associations, dependencies, or “relationships.” The E-R model is then used to create a relational database with each row representing an entity and the fields in that row contain attributes. As in all relational databases, “key” data elements are used to link tables together.

What are the three levels of data abstraction?

There are many types of data models, with different types of possible layouts. The data processing community identifies three kinds of modeling to represent levels of thought as the models are developed.

Conceptual data model

This is the “big picture” model that represents the overall structure and content but not the detail of the data plan. It is the typical starting point for data modeling, identifying the various data sets and data flow through the organization. The conceptual model is the high-level blueprint for development of the logical and physical models and is an important part of the data architecture documentation.

Logical data model

The second level of detail is the logical data model. It most closely relates to the general definition of “data model” in that it describes the data flow and database content. The logical model adds detail to the overall structure in the conceptual model but does not include specifications for the database itself as the model can be applied to various database technologies and products. (Note that there may not be a conceptual model if the project relates to a single application or other limited system.)

Physical data model

The physical database model describes the specifics of how the logical model will be realized. It must contain enough detail to enable technologists to create the actual database structure in hardware and software to support the applications that will use it. Needless to say, the physical data model is specific to a designated database software system. There can be multiple physical models derived from a single logical model if different database systems will be used.

Data modeling process and techniques

Data modeling is inherently a top-down process, starting with the conceptual model to establish the overall vision, then proceeding to the logical model, and finally the detailed design contained in the physical model. 

Building the conceptual model is mostly a process of converting ideas into a graphical form that resembles a programmer developer’s flow chart.

Modern data modeling tools can help you define and build your logical and physical data models and databases. Here are a few typical data modeling techniques and steps:

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Modern analytics solutions can also help you select, filter, and connect data sources using a graphical drag-and-drop display. Advanced tools are available for data experts typically working in IT – but users can also create their own stories by visually creating a data model and organizing tables, charts, maps, and other objects to tell a story based on data insights.

Data modeling examples

For any application – whether business, entertainment, personal, or other – data modeling is a necessary early step in designing the system and defining the infrastructure needed to enable the system. This includes any type of transactional system, data processing application set or suite, or any other system that collects, creates, or uses data.

Data modeling is imperative for data warehousing because a data warehouse is a repository for data brought in from multiple sources, which likely have similar or related data in different formats. It is necessary to first map out the warehouse formats and structure in order to determine how to manipulate each incoming data set to conform to the needs of the warehouse design – so that the data will be useful for analysis and data mining. The data model is then an important enabler for analytical tools, executive information systems (dashboards), data mining, and integration with any and all data systems and applications.

In the early stages of design for any system, data modeling is a key prerequisite that all the other steps and stages depend on to establish the foundation upon which all of the programs, functions, and tools rely. The data model is like a common language that allows systems to communicate through their understanding and acceptance of the data as described in the model. This is more important than ever in today’s world of Big Data, machine learning, artificial intelligence, cloud connectivity, IoT, and distributed systems including edge computing.

Evolution of data modeling

In a very real sense, data modeling has been around for as long as data processing, data storage, and computer programming, although the term itself probably only came into common use around the time that database management systems began to evolve in the 1960s. There’s nothing new or innovative about the concept of planning and architecting a new structure. Data modeling itself has become more structured and formalized as more data, more databases, and more varieties of data have emerged.

Today, data modeling is more essential than ever as technologists struggle with new sources of data (IoT sensors, location-aware devices, clickstreams, social media) along with an onrush of unstructured data (text, audio, video, raw sensor output) – at volumes and velocity that exceed the capabilities of traditional systems. There is now a constant demand for new systems, innovative database structures and techniques, and new data models to tie this new development effort together.

What is next for data modeling?

Information connectivity and large quantities of data from so many different sources –including sensors, voice, video, email, and more – extend the scope of modeling projects for IT professionals. The Internet is, of course, one of the enablers of this evolution. The cloud is a major part of the solution as it is the only computing infrastructure big enough, scalable enough, and agile enough to address current and future requirements in the expanding world of connectivity.

Options for database design are also changing. A decade ago, the dominant database structure was a row-oriented relational database using traditional disk storage technology. The data for a typical ERP’s general ledger or inventory management was stored in dozens of different tables that need to be updated and modeled. Today, modern ERP solutions store active data in memory using a columnar design for a dramatic reduction in tables and increase in speed and efficiency.

For line of business professionals, the new self-service tools available today will continue to improve. And new tools will be introduced to make data modeling and visualization even easier and more collaborative. 


A well-thought-out and complete data model is the key to the development of a truly functional, useful, secure, and accurate database. Start with the conceptual model to lay out all the components and functions of the data model. Then refine those plans into a logical data model that describes the data flows and clarifies the definition of what data is needed and how it will be acquired, handled, stored, and distributed. The logical data model drives the physical data model that is specific to a database product and is the detailed design document that guides the creation of the database and application software.

Good data modeling and database design are essential to the development of functional, reliable, and secure application systems and databases that work well with data warehouses and analytical tools – and facilitate data exchange with business partners and among multiple application sets. Well-thought-out data models help ensure data integrity, making your company’s data even more valuable and reliable.

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