System of Record (SOR) vs. Source of Truth (SOT)

Understanding the Difference Between System of Record and Source of Truth

In today's data-driven world, organizations rely heavily on data to make informed decisions, drive business processes, and gain a competitive edge.

However, with data scattered across multiple systems and applications, it can be challenging to ensure consistency, accuracy, and reliability.

This is where the concepts of "System of Record" (SOR) and "Source of Truth" (SOT) come into play.

While these terms are often used interchangeably, they have distinct meanings and serve different purposes within an organization's data management strategy.

System of Record (SOR)

A System of Record (SOR) is an authoritative data source that serves as the primary repository for a specific set of data elements or information.

It is the system where data is created, updated, and maintained, and it is considered the "single source of truth" for that particular data domain. SORs are typically transactional systems, such as Enterprise Resource Planning (ERP) systems, Customer Relationship Management (CRM) systems, or Human Resource Management Systems (HRMS).

The key characteristics of a System of Record are:

1. Authoritative Source: The SOR is the authoritative source for a specific set of data, and all other systems should rely on it for that data.
2. Data Creation and Maintenance: Data is created, updated, and maintained within the SOR, ensuring data integrity and consistency.
3. Transactional Nature: SORs are often transactional systems that support core business processes, such as order management, customer management, or employee management.
4. Data Ownership: Each data element or domain has a designated SOR, ensuring clear ownership and accountability for data quality and accuracy.

Examples of Systems of Record include:

• ERP systems such as NetSuite for financial data, inventory data, and supply chain data
• CRM systems such as Salesforce and HubSpot for customer data and sales data
• HRMS for employee data and payroll data
• Product Information Management (PIM) systems for product data or internal databases

Source of Truth (SOT)

A Source of Truth (SOT), also known as a "Single Source of Truth" (SSOT), is a centralized and trusted data repository that consolidates data from multiple Systems of Record and other data sources. It provides a comprehensive and consistent view of an organization's data, enabling better decision-making, reporting, and analysis.

The key characteristics of a Source of Truth are:

1. Centralized Data Repository: The SOT consolidates data from various SORs and other data sources into a single, centralized location.
2. Data Integration and Transformation: Data from different sources is integrated, cleansed, and transformed to ensure consistency and accuracy.
3. Trusted and Authoritative: The SOT is considered the authoritative and trusted source for consolidated data, serving as the "single version of the truth" for the organization.
4. Data Governance: The SOT is typically governed by data governance policies and processes to ensure data quality, security, and compliance.

Examples of Sources of Truth include:

• Data warehouses or data lakes that consolidate data from multiple SORs
• Master Data Management (MDM) systems that manage and govern master data entities, such as customers, products, or locations
• Business Intelligence (BI) platforms or analytics tools that provide a unified view of data for reporting and analysis

The Relationship Between SOR and SOT

While SORs and SOTs serve different purposes, they are closely related and complementary within an organization's data management strategy. The relationship between SORs and SOTs can be summarized as follows:

1. SORs feed the SOT: Data from various SORs is extracted, transformed, and loaded into the SOT, providing a consolidated view of the organization's data.
2. SOT relies on SOR data quality: The quality and accuracy of the data in the SOT depend on the quality of the data in the underlying SORs.
3. SOT enables data-driven decision-making: By consolidating data from multiple sources, the SOT provides a comprehensive view of the organization's data, enabling better decision-making, reporting, and analysis.
4. Data governance spans SORs and SOT: Data governance policies and processes should encompass both SORs and the SOT to ensure data quality, consistency, and compliance across the organization.

In summary, while SORs are authoritative sources for specific data domains, the SOT serves as the centralized and trusted repository for consolidated data, enabling organizations to leverage their data assets effectively and make informed decisions based on a comprehensive and consistent view of their data.

FAQ

Q1: Can a single system serve as both a System of Record and a Source of Truth?
While it is possible for a single system to serve as both an SOR and an SOT, it is generally not recommended. SORs are typically transactional systems focused on specific data domains, while SOTs are designed to consolidate data from multiple sources and provide a comprehensive view. Separating these roles promotes data governance, ensures data quality, and enables better data management practices.

Q2: How often should data be synchronized between SORs and the SOT?
The frequency of data synchronization between SORs and the SOT depends on the organization's data requirements and the criticality of the data. In general, it is recommended to synchronize data on a regular basis, such as daily or hourly, to ensure that the SOT reflects the most up-to-date data from the SORs. However, for time-sensitive data or real-time reporting requirements, more frequent or near-real-time synchronization may be necessary.

Q3: Who is responsible for maintaining data quality in SORs and the SOT?
Data quality is a shared responsibility across the organization. For SORs, the respective data owners or subject matter experts are typically responsible for ensuring data quality and accuracy within their respective data domains. For the SOT, a dedicated data governance team or data stewards should be responsible for enforcing data quality rules, monitoring data quality metrics, and implementing data quality improvement initiatives.

Q4: Can an organization have multiple Sources of Truth?
While the concept of a "Single Source of Truth" implies a single, centralized repository, it is possible for an organization to have multiple SOTs, particularly in large or complex organizations with diverse data domains or business units. However, it is generally recommended to strive for a single, enterprise-wide SOT to promote data consistency, reduce redundancy, and enable better data-driven decision-making across the organization.

By understanding the differences between Systems of Record and Sources of Truth, as well as their relationship within an organization's data management strategy, businesses can effectively leverage their data assets, make informed decisions, and drive business success in today's data-driven landscape.