data classification

All modern businesses manage data to a certain extent, regardless of the industry or niche. Some have enormous data flows, while others manage minimal volumes of information. However, they all do have one thing in common – this data needs to be properly handled and classified. 

Logically, each company should approach the process of creating a data classification strategy from its unique standpoint and optimize it according to its own workflow needs. The way your business will classify, label and manage data, both critical and less important, depends on myriad factors. They include: 

  • type of data
  • pertinence of data
  • level of accessibility
  • security clearance
  • Sensitivity, etc  

Typically, businesses – both large and small – handle various categories of data. As not all information is created equal, certain data pieces are likely to require higher levels of accessibility and security, which is why figuring out which data pieces to place in that category should be among your top priorities. 

When you take a closer look at the data flow backend of most modern companies, you realize that they manage huge amounts of data on a monthly basis. Think invoice records, email lists, customer-related data (like payment information), software-based user data, order history, passwords, workflow management data, and the list goes on. 

Making sure that all these pieces of information are being kept secure, organized and accessible – as well as compliant with various tricky data governance laws – can indeed be a convoluted process. 

This is why tackling data classification by creating an effective and comprehensive strategy is essential for tightening risk assessment and prevention plans. An organization that doesn’t know where most of its sensitive data is, can easily fail to comply with data governing standards and potentially lose business, as well as ruin its reputation. 

That said, let’s delve into some of the proven data classification best practices that every small business should consider when classifying business data.

1. Determine the Location of Your Data for Improved Accessibility

Most companies have multiple communication channels through which data is flowing daily. This makes it difficult for them to create a centralized database. Storage can also be an issue here. However, these problems can be avoided by using certain information archiving platforms and tools that can help you store, organize and access your data.

These tools automate your data correspondence and assist you in making data more manageable, as well as more easily traceable. By optimizing your daily information management and making sure all regulatory compliance laws are being adhered to, your business will solve most litigation-based issues in a preemptive manner. 

Additionally, these data classification solutions allow you to create labels, tags and handy keywords to ensure streamlined data management and enable high data accessibility. You never know when you will need to quickly retrieve critical pieces of information. Better to be safe than sorry. 

2. Use “Value” as the Main Classification Factor 

Your data classification strategy should be well-defined in terms of both – determining different types of data and classifying the levels of sensitivity. This should be clear to all employees within your business so the entire ecosystem of various data is easy to follow and manage.

The following are classification categories to consider: 

  • External
  • Internal
  • Confidential
  • Restricted

After you’ve done creating the main categories, we also suggest you think of some additional sub-categories. Be sure not to overdo it, though. If your classification is too complicated it can be quite overwhelming and counter-productive. 

When done in an optimal way, classification helps companies secure sensitive data and boosts analytics, as well as workflow performance. Numbers state that over 70% of the data businesses are managing are not analytics-friendly if not stored and classified in an optimal manner. In order to easily read and properly interpret its data, small businesses must handle value-based classification with a logical approach. 

3. Identify Your Most Sensitive Data

Understanding what type of data is most sensitive to your business is crucial. Otherwise, it won’t be adequately protected, stored and accessible. Performing this task the right way will mitigate the waste of valuable resources since not all security protocols should be utilized for all data types, especially as they vary in costs.

Beware that, although the majority of your business data requires strict security measures, there are certain categories of information that do not require protection. When you identify which data is the most sensitive, your classification strategy will be optimized in terms of costs. 

4. Come up With a Valid Retention Policy

Determining how long which pieces of information your business will keep is also extremely important. For (at least) two reasons. 

The first is that this will mitigate the waste of resources as not all data needs the same retention strategy. And the second, much more critical, is that this policy will help you tackle legal compliance. 

Be sure to have a clear retention policy for each data category, and always consider all the laws, rules and regulations in order to obviate potential legal issues due to deletion or loss of critical data.

As emails are among the most commonly used communication channels conveying sensitive pieces of information, be sure to implement a strong email retention policy by utilizing email archiving solutions in a proper and optimized way. Email data safety and information retrieval should be among your top priorities, and these retention strategies will ensure high levels of security and retrieval of critical data.

5. Ensure Consistency and Proper Maintenance

When you are satisfied with your data classification plan, the last step should be making sure that your strategy is consistent across all employees and departments. All staff should follow the same protocol in order to avoid potential data loss due to classification inconsistencies.

Make sure that each employee is classifying and managing each and every document, file, folder, email and other pieces of information according to the same rules. All departments should have the same overview of how data types should be handled. If necessary, perform tests across your business, and once you’ve established an optimal plan, implement and maintain it. 

This way, (almost) all data loss and security risks will be prevented. 


Regardless of the size of your business, as well as the industry your company operates in, having a strong data classification is the fulcrum of leading a hush-performing organization. 

Your company’s data should be organized in such a way that is properly accessible, safely stored, and retrievable. 

Bio: Damian is a business consultant and a freelance blogger from New York. He writes about the latest tech solutions and marketing insights. Follow him on Twitter for more articles.