Data Contracts in Data Governance

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Data Contracts in Data Governance

Data contracts have recently emerged as a significant topic in the market. What exactly is a data contract, and how does it work? At its core, a data contract is an agreement between two parties that outlines the terms for using, collecting, and sharing data. These contracts can be applied both internally and externally. Often, the data consumer and data producer collaborate to create a data contract that ensures quality, availability, accuracy, format, and other criteria mutually agreed upon. A critical aspect of using a data contract is the business value it offers to the consumer. Data contracts are frequently utilized by data product and engineering teams.

Potential Elements within a Data Contract

  • Individuals (teams) Involved Purpose and Objective
  • Business Value
  • Data Ownership or SME Involved
  • Data Classification
  • Format and Structure
  • Data Quality Metrics (Completeness, Validity, Uniqueness Etc)
  • Security and Compliance Measures
  • Access & Version Control
  • Retention and Deletion
  • Data Schema

How can Data Contracts help Data Governance?

Data contracts can help an organization’s data governance in a direct way. Data governance entails explicitly managing data assets and using data for corporate value by developing policies, procedures, responsibilities, and measurements. Data contracts formalize data usage norms so that all parties understand proper handling and enable uniform governance. They also frequently appoint data stewards to monitor usage, defining oversight responsibilities. Penalties for policy violations serve as enforcement tools for governance policies, allowing for accountability. Contract access controls and security measures prevent illegal data use, boosting data integrity and quality. Finally, contract auditing tools enable data practices to be monitored, supporting the evaluation of governance program success. A key benefit to implementing a data contract is accountability and a showcase of business value. This can offer transparency on both sides while opening dialogue for collaboration.

Challenges with Data Contracts

While data contracts enable secure data flow, proper contract design raises significant problems. Complex contracts can take time and money to negotiate and handle over time. It is challenging to strike the correct balance of protections while minimizing administrative hassles. Restrictive contracts may eventually fail to accommodate unforeseen events or legitimate extra use cases. It is difficult to provide the necessary flexibility without creating loopholes. Even with contractual provisions in place, infractions can occur, and legal remedies can be time-consuming, complex, and expensive. There is also an inherent contradiction in contracts that are solely focused on preventing data misuse, as this might delay production and add an additional layer of governance and complexity to the current process.

Many members of the DataQG community agree with the concept of a Data Contract but are still challenged with formalizing an ongoing and collaborative relationship with various stakeholders within the enterprise.