Importance of Data Transformation in Business Process

Last Modified: April 27th, 2023

importance of data transformation FI

In today’s data-driven world, businesses collect and store vast amounts of data from various sources. However, raw data is often unstructured, inconsistent, and may not be immediately usable for analysis or decision-making. That’s where data transformation comes into play. It’s a crucial step in data processing pipelines that involves cleansing, standardizing, and converting data into a structured and usable format.

In this guide, we will explore how data transformation plays a vital role in optimizing business processes and unlocking valuable insights to drive informed decision-making.

Let’s dive in and discover why data transformation is important for the success of modern businesses.

What is Data Transformation?

Data transformation refers to the process of converting data from one format to another or modifying it to meet specific requirements. It involves various tasks such as cleaning, filtering, validating, and combining data from different sources. With data transformation, you can ensure that your data is accurate, consistent, and relevant to your business needs.

Data transformation is important because it helps to prepare data for analysis and detect patterns in the data. It also allows you to understand the data, make informed decisions about how to market their products, develop new products, and improve overall business strategies. 

The data transformation process involves several key steps:

  • Data discovery: Identify and collect the data you need for analysis from various sources.
  • Data mapping: The collected data is then mapped to ensure it is compatible with the desired format for analysis.
  • Code generation: This step involves creating an executable code to convert the input data into the desired output format. 
  • Code execution: Once the code is generated and tested, it can be executed on input data to transform it into the desired format.
  • Data review: Finally, the transformed data is reviewed to ensure it is accurate and appropriate for the intended use.
  • Sending: Once the transformed data has been reviewed and validated, the final step is to send it to the target system.
Importance of Data Transformation : Data Transformation Process

A commonly used data transformation process is ETL (Extract, Transform, Load), which is used to extract data from various sources, transform it into a consistent format, and load it into a target system. Other popular data transformation processes include ELT (Extract, Load, Transform), ETLT (Extract, Transform, Load, Transform), ETLA (Extract, Transform, Load, Analyze) and CDC (Change Data Capture).

Importance of Data Transformation

Why is data transformation important for the success of modern businesses? Today, it’s common for businesses to collect a massive amount of data regularly. If the data is not transformed properly, businesses might make wrong decisions based on incorrect or incomplete data. This can lead to costly mistakes. But it is challenging to convert data into useful information that can help you make better decisions. 

Let’s explore some of the significant reasons why it’s important.

Improved Data Quality

Data transformation allows businesses to transform and cleanse the raw data, ensuring that it is standardized, validated, and free from errors and inconsistencies. This means that the data can be trusted for decision-making purposes. 

For example, if a company is using customer data from various sources for a marketing campaign, it must ensure the accuracy and reliability of data. Companies can employ data transformation techniques to ensure data quality. These techniques include data cleaning by removing duplicates, correcting errors, filling in missing information, and formatting data consistently.

Data transformation improves data accuracy and reliability, ensuring that the marketing campaign is targeted to the right audience and is more likely to be successful.

Automate Data Consumption

Data transformation enables businesses to automate data consumption. Data pipelines enable data movement between systems, making processing and analyzing large volumes of data easier and faster. Automating data consumption enables you to consume and process data efficiently. This saves you time and resources that can be used to analyze the data and make better decisions.

Data pipelines can be set up using various tools such as Apache Airflow, AWS Glue, Google Cloud Dataflow, Microsoft Azure Data Factory, etc. These tools provide a visual interface for creating and managing data pipelines, enabling businesses to automate the data transformation process with ease.

For instance, data transformation allows a retail company to track sales data across multiple online marketplaces, such as Amazon, eBay, Walmart, etc. The company can create data pipelines that automatically extract the sales data from each marketplace, transform it into a consistent format, and load it into a centralized database. This avoids the need for manually entering the data and minimizes the chance of data inaccuracies.

The data pipeline can be set up using ETL tools such as Hevo, which provide a user-friendly interface for designing and managing data pipelines. With an automated data pipeline in place, the retail company can process and analyze sales data accurately.

Enhanced Decision-Making

Data transformation also provides valuable insights into customer behavior, market trends, and other key business metrics. 

For example, a healthcare provider can improve patient care by analyzing patient feedback data. It can collect feedback from various sources, such as surveys, social media, and online reviews. As the data is in different formats, the healthcare provider can use data transformation techniques to clean, standardize, and combine the feedback data into a single dataset to understand the overall sentiment. 

You can also use data visualization tools, such as Tableau or Power BI, to gain insights from the transformed data. It helps healthcare providers to make informed decisions about patient care and address areas of concern. This can lead to higher patient satisfaction, improved health outcomes, and a competitive advantage in the healthcare industry.

Ways Companies Can Transform the Data

Have you ever wondered how companies manage their data to make better decisions? Well, Collecting and storing data is only the first step towards making informed decisions. To unlock the full potential of data, companies need to transform it into meaningful insights that can guide business strategies.

Let’s explore some of the most widely used ways for transforming data.

On-Premise Data Transformation 

On-premise data transformation refers to transforming data within an organization’s physical infrastructure using an on-premise ETL tool. This approach is often preferred by companies that need to handle sensitive or confidential data, as it is a more transparent process.

However, on-premise data transformation can also come with some challenges. It requires significant resources in terms of hardware, software, and IT support. Organizations must invest in the infrastructure needed to support their data transformation needs, including servers, storage, and networking equipment. They must also ensure their IT staff has the necessary skills and knowledge to maintain and update the on-premise data transformation.

Cloud-Based Data Transformation

Cloud-based data transformation is a process of transforming and manipulating data on a cloud-based server using cloud-based ETL tools. Cloud-based data transformation is popular due to its scalability, flexibility, and cost-effectiveness over traditional on-premise data transformation.

One of the most significant advantages of cloud-based data transformation is its pay-as-you-go pricing model. 

This pricing model allows businesses to pay only for their services and resources, making it an ideal solution for businesses with dynamic needs. Another advantage of cloud-based data transformation is the speed of installation and configuration. Cloud-based tools are already set up and configured on the cloud. This means businesses can start transforming data immediately without worrying about infrastructure setup.

However, there are also some concerns regarding cloud-based data transformation. Data security is crucial for companies that use cloud-based data transformation. They need to take extra precautions to protect their data because it’s stored on third-party servers, which can pose risks to data privacy and security. You must ensure that your data is protected by implementing proper security measures such as encryption and access controls.

Manual Data Transformation

Manual data transformation is a method of transforming data using manual coding or programming. It involves using a dedicated development resource or team to write the necessary code to transform the data.

One of the main advantages of manual data transformation is the level of control and customization it provides. Since the transformation process is written specifically for the data being transformed, it can be tailored to the specific needs of the business. This level of control also allows for more complex transformations that may not be possible with automated tools.

However, manual data transformation also comes with several disadvantages. The process can be time-consuming and require significant expertise, particularly when dealing with large or complex datasets. There is also a higher risk of human error, which can result in mistakes in the transformation process that can have significant consequences for the business.

Choosing the Right Data Transformation Tool

With a multitude of data transformation tools available in the market, choosing the right one can be challenging. The right data transformation tool automates extraction, transformation, and loading of data from various sources into a consistent format for analysis and decision-making. When choosing a data transformation tool, consider these features to find the right fit for your organization:

  • Evaluate your needs: Identify the specific data transformation requirements of your business, including the volume of data, the complexity of the data, and the desired output format. Assess whether the tool is suitable for your requirements.
  • Assess the scalability of the tool: Consider its ability to handle large amounts of data and its capacity to scale as your business grows.
  • Look for integration capabilities: Check whether the tool integrates with other data management tools and platforms that your organization uses.
  • Evaluate the tool’s security features: Ensure that the tool provides adequate security features, such as data encryption, access control, backup and recovery options, or advanced security features, such as multi-factor authentication, role-based access control, threat detection, and response mechanisms.
  • Consider the level of technical expertise: Evaluate the technical skills of your team members to determine whether a tool with a user-friendly interface or a more advanced tool is required.
  • Review the pricing model: Consider the total cost of ownership, including licensing fees, maintenance costs, and support services. Check whether the tool fits within your budget.


Data transformation is an essential component of any successful business strategy in order to leverage the full potential of data. Data transformation offers countless benefits to businesses, from automating data consumption to ensuring data accuracy and reliability. With the increasing amount of data, mastering the art of data transformation has become crucial. So, if you wish to stay ahead of the crowd and take your business to the next level, start prioritizing data transformation today!

In case you want to integrate data into your desired Database/destination, then Hevo Data is the right choice for you! It will help simplify the ETL and management process of both the data sources and the data destinations. 

Visit our Website to Explore Hevo

Offering 150+ plug-and-play integrations and saving countless hours of manual data cleaning & standardizing, Hevo Data also offers in-built pre-load data transformations that get it done in minutes via a simple drag-and-drop interface or your custom python scripts. 

Want to take Hevo Data for a ride? SIGN UP for a 14-day free trial and experience the feature-rich Hevo suite first hand. Check out the pricing details to understand which plan fulfills all your business needs.

Freelance Technical Content Writer, Hevo Data

Amulya combines her passion for data science with her interest in writing on various topics on data, software architecture, and integration through her problem-solving approach.

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