Why is data extraction important?

Wavestone’s 2023 survey of Chief Data Officers (CDOs) in Fortune 1000 companies shows that nearly 92% of organizations achieved significant value from investments in data and analytics. According to Wavestone’s 2024 data and analytics report, 87.9% of respondents reported that investments in data and analytics are a top priority for their organizations. 

Data is an important asset for businesses. Data extraction and analysis help organizations gain insights into existing operations and future requirements, resulting in better business decisions. This article discusses the importance of data extraction, its numerous benefits for businesses, and the significance of automated data extraction processes.

What is data extraction?

Data extraction means capturing relevant information from various sources and converting it into a standardized format for easy access, storage, and analysis. The process includes data preparation, during which the documents undergo preprocessing checks to reduce errors. 

Why is data extraction important in different industries?

Data extraction importance are crucial for businesses to stay competitive and confident in their operations. They are fundamental processes that help organizations gather actionable insights to reevaluate existing operations, identify growth opportunities, curate effective strategies, and minimize risks.

Data extraction is employed widely across various industries, and here’s how insights from data help businesses overcome bottlenecks and streamline operations: 

a. Banking and lending

Banks and lending businesses extract data from bank statements, payslips, cheques, identity proofs, and mortgage documents to approve or reject loans, create customer accounts and process payments. The data gives insights into the borrowers’ creditworthiness, helping banks determine accurate loan amounts and avoid losses. 

b. Insurance

Insurance companies and real estate investment firms extract data from ACORD forms and flood certificates to determine insurance coverage amount, expiration date, flood zones, lowest floor elevation, and customer details such as name, address, and phone number. This helps businesses with accurate risk assessment, claims processing, and insurance premium calculations. 

c. Healthcare

Healthcare organizations extract data from patient records, medical bills, and diagnostic reports to provide personalized services. Moreover, accurate data extraction also ensures compliance with regulations such as HIPAA and The HITECH Act for healthcare industries. 

d. Logistics

Organizations extract data from invoices, receipts, purchase orders, custom forms, bills, and purchase slips to learn about shipment details, inventory levels, and orders. Insights derived from the extracted data help with inventory planning, timely restocking, and stock replenishment. This eliminates procurement delays and reduces costs associated with overstocking. 

e. Commercial real estate

Property owners capture data from utility bills, leases, rental invoices, vendor contracts, agreements, and mortgage documents to streamline tenant payment and lease renewal processes. Additionally, data from utility bills help property owners gain insights into energy consumption and identify areas to reduce costs. 

Some data extraction benefits for businesses 

Here are some data extraction benefits that highlight how you can streamline business operations: 

1. Accessibility to information

Data in disparate sources result in accuracy, access issues, efficient collaboration, and complex data analysis. According to the Worldwide Business Research survey of 250 financial leaders, 85% of IT staff spend at least 25-50% of their time helping other staff access the data, and 62% of respondents say that improving access to siloed data is their top priority in the next 12 months. 

The data extraction process consolidates data from diversified sources, converts it into a standardized digital format, and stores it in a centralized location. This simplifies access since businesses can easily share the unified data with stakeholders, investors, employees, and underwriters. Hence, data extraction ensures easy accessibility and searchability

2. Data accuracy

Accurate data extraction results in precise decision-making and supports adherence to compliance and regulations. However, manual extraction may result in errors due to missing fields, inaccurate data, and duplicate entries. Moreover, large volumes of documents and boredom also contribute to errors and inaccuracies. 

Automated data extraction processes promise a 99% accuracy rate by employing Optical Character Recognition (OCR) and Artificial Intelligence (AI) to adapt to varying structures and formats. Some advanced data extraction tools offer automatic validation using Excel-like formulas to ensure accuracy. 

3. Improving productivity

Automated data extraction can improve your business's efficiency and productivity by 10X. Organizations can efficiently handle large volumes of documents and extract data in 30-60 seconds without human effort. 

This allows businesses to allocate human resources to strategic and critical tasks and optimize operations. Moreover, employees can use the saved time to address customer queries and improve customer satisfaction promptly. 

4. End-to-end automation

Businesses using data extraction tools benefit from automating the end-to-end document processing workflows. The data extraction software solution automatically ingests, captures, and validates data without manual intervention. 

Businesses can leverage this straight-through processing and automate integrations with software applications for smooth data flow and more efficiency.

5. Improved customer service

Using automated data capture, businesses can optimize customer service operations and massively improve customer satisfaction. Data analysis helps personalize services and faster resolve customer queries. 

6. Data-driven decision-making

Industries such as finance, healthcare, marketing, logistics, insurance, mortgage, and commercial real estate rely on accurate data and insights to make timely business decisions. Data extraction and analysis help businesses identify trends and patterns and detect fraud and potential risks. 

The best data extraction tools can accurately extract data because of their preprocessing capabilities and built-in validation processes. Moreover, real-time data analysis enables businesses to respond quickly to market trends and evolving consumer needs. 

7. Integrations 

With the best-automated data extraction software, businesses can integrate extracted data with their industry-specific customer relationship management (CRM) systems, enterprise resource planning (ERPs), accounting, and other software applications. 

Data seamlessly flows across systems without errors or duplicate entries, maintaining data integrity. These tools also offer real-time synchronization, helping businesses update data simultaneously across different systems and platforms. 

8. Scalability

Depending only on human resources to extract data may be unreliable as the business grows. With the right data extraction tools, companies can efficiently handle growing data volumes without overwhelming employees. 

Unlike manual extraction, automation tools process data in batches without compromising accuracy and integrity. This supports business growth while saving costs and time and improving efficiency. 

9. Security and compliance

Data security is a significant concern for businesses as data breaches and compliance risks lead to severe losses and damaged reputations. Companies should increase their cybersecurity investments to combat such breaches and cyber threats. 

IBM’s 2023 data breach report shows that 51% of organizations want to increase security investments, including employee cybersecurity awareness training, threat detection, and sensors to avoid breaches. 

However with robust data extraction tools, businesses can easily enhance security by providing data encryption, cloud storage, and role-based access. These tools ensure compliance by adhering to standard security protocols, laws, and specific ethical and legal regulations such as SOC-2, HIPAA, and GDPR. 

10. Cost efficiency

Streamlining data extraction processes using automation results in reduced operational costs for businesses. Various factors contribute to these significant cost savings. First, businesses eliminate the need to invest in human resources, professional training, and supervision. 

Secondly, automated data extraction tools guarantee high accuracy, cutting costs related to corrections, penalties, and compliance risks due to errors. Lastly, automation transforms data into a standardized digital format, saving costs related to paper, printers, ink, and storage of physical documents. 

11. Supports data transformation and loading

Data extraction converts extracted data into a specific format (Excel or JSON), and this transformation facilitates storage, analysis, and integration with existing databases for businesses. For instance, companies convert bank statements to Excel to perform complex calculations and identify trends and patterns. 

12. Gain a competitive edge 

Using data extraction tools guarantees benefits such as accuracy, efficiency, cost savings, security, and business compliance. This combined impact can easily help businesses stand apart from their competitors and dominate their industry. 

13. Employee satisfaction 

Employers embracing automation and AI technologies in workflows to improve employee experience can significantly reduce attrition rates and improve employee satisfaction. Research backs this up. 

According to Deloitte’s 2022 state of AI report, 82% of respondents say their employees believe investing in AI solutions will enhance job satisfaction and performance. 

Employees can improve their relationships with stakeholders, develop skills, and take up more challenging tasks by automating the repetitive and tedious data extraction tasks. This supports their growth and increases loyalty towards your organization. 

Elevating Business Intelligence with Strategic Data Extraction

Data-driven decision-making helps businesses outperform competitors, increase customer retention, and gain confidence in strategies. Moreover, investing in a robust data extraction tool improves efficiency, saves time and money, and reduces errors. 

Docsumo is an ideal solution for businesses as it extracts data in 30-60 seconds with a 99%+ accuracy rate. It guarantees a 95% straight-through processing rate, facilitating direct data usage and streamlining business operations. The result is over 60-70% reduction in operational costs and increased security. 

Start extracting data without any human intervention using Docsumo and improve the efficiency of your business by 10X. 

Additional FAQs: Data extraction benefits

1. How can data extraction minimize business costs?

Data extraction, especially using automation, ensures accuracy, saves time, and improves efficiency. This minimizes and eliminates business costs related to errors, storage, slow turnaround time, and hiring significant human resources. 

2. What role does data extraction play in customer service improvement?

Data extraction speeds up operations and helps in providing prompt services for customers. For instance, lenders can approve loans quickly by analyzing the data from income proofs using automation. 

3. Can data extraction support real-time decision-making?

Yes, businesses can extract real-time data using automation to derive insights and make decisions while they are still relevant. This supports real-time and accurate decision-making, helping businesses to mitigate risks and optimize operations on time.

4. How to ensure security when extracting data? 

Manual extraction doesn't guarantee security, as multiple touchpoints may result in data theft or accidental loss. However, automation tools like Docsumo ensure security with cloud storage and authorized personnel access.

5. How does automated data extraction support scalability? 

Automated data extraction tools can process multiple documents simultaneously and extract accurate data from them. This helps document-heavy businesses scale their operations with a cost-effective investment.