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Data Contracts: Bridging the Gap Between Business and Data

In this blog post, we'll explore the importance of data contracts and how they bridge the gap between business and data. We'll define data contracts, discuss their key elements, their benefits, and offer tips on how to implement them effectively.

May 23, 2023

Hooked on Data

May 23, 2023
Data Contracts: Bridging the Gap Between Business and Data

Data governance is a fundamental aspect of modern business. Companies rely on data to make informed decisions about their direction and goals. To ensure that data is trustworthy and reliable, businesses need to have controls in place to ensure that data is being used appropriately, and is being accessed and utilized only by authorized personnel.

This is where data contracts come in. Data contracts define the terms and conditions of data usage, including data quality and data SLAs, in a clear and systematic way. By specifying these terms and conditions, data contracts bridge the gap between data and business and promote transparency, communication, and trust.

Data Governance and Data Contracts

Effective data governance is critical to ensure that data is being used appropriately and is of high quality. Data contracts are an essential component of data governance. They define how data is exchanged between different teams and organizations, what data is exchanged, and the quality standards that must be met.

Data contracts provide a framework for data governance that helps ensure that data is being utilized ethically, efficiently and effectively. With proper data governance and data contracts, companies can take a big step towards building a trusted relationship between business and data.

Key Elements of Effective Data Contracts

The key to effective data contracts is clarity. Clear definitions and standards make it easy for everyone to understand what is expected of them. Here are the most important elements of an effective data contract, using Rainforest, an e-commerce company that sells hydroponic aquariums. Rainforest uses Fivetran for ELT, Snowflake for warehousing, dbt for transformation, Sigma for BI, and Hightouch for Reverse ETL. The company had inconsistent data definitions across its different data platforms, which led to low-quality data and a lack of trust across its organization.

Clear definitions and metrics

Do data updates account for pipeline latency?

Clear definitions and metrics are essential to ensure that all parties involved understand what is expected of them. Definitions should be concise and accurate, while metrics should be measurable and specific. Without these definitions, data contracts can become ambiguous and lead to disagreements.

Purpose and Scope

Defining the purpose and scope of data contracts is essential. It ensures that all parties involved are aligned on how data will be used, exchanged, and maintained. Data contracts should specify what data is covered, who will be responsible for it, and when it will be exchanged.

Regular Reviews and Updates

Regular reviews and updates to data contracts are important to ensure that they remain current and relevant. Data contracts should be reviewed at least annually and updated as necessary. These changes may include updates to definitions, metrics, or the scope of the contract.

Ownership and Accountability

Data contracts should clearly define who is responsible for the data covered by the contract, and who is accountable for its quality. This ensures that data quality issues are addressed quickly and that everyone is aware of their responsibilities.

By implementing clear definitions and metrics across different data platforms and specifying the scope of their data contracts, Rainforest was able to improve the quality of their data and build trust across the organization.

Benefits of Data Contracts

Data contracts can be beneficial to businesses in many ways. Here are some of the most important benefits of data contracts:

Improved Data Quality

Data contracts improve data quality by setting clear standards for data accuracy, completeness, and timeliness. By ensuring that data quality is consistent across different data sources, data contracts help businesses make better decisions and improve their bottom line.

Better Decision Making

Data contracts provide businesses with a clear understanding of the data available to them and how to use it effectively. This helps businesses make better decisions based on data insights rather than assumptions.

Improved Communication

Data contracts facilitate communication between different teams by setting clear expectations for data exchange. With data contracts in place, business and data teams can communicate more effectively and work more collaboratively.

To illustrate, let's take a look at a startup that was looking to improve its machine learning features. To help us understand, let's say that you're Head of Data at the startup, and you're responsible for developing machine learning models. By specifying the requirements and expectations of the data contracts, you're able to improve the quality of your data inputs, leading to a higher quality output for the machine learning models.

Implementing Data Contracts

Implementing data contracts can seem daunting, but with the right approach, it can be straightforward. Here are some tips for getting started with data contracts:

Use the Right Tools and Technologies

Data contracts are easier to implement with the right tools and technologies. These include data observability platforms like Metaplane that provide monitoring and troubleshooting tools to ensure data quality.

Communicate and Collaborate

Effective communication and collaboration are essential to ensure that everyone involved understands the data contracts and what is expected of them. Business and data teams should be in constant communication to ensure that data contracts are being implemented effectively.

Overcome Common Challenges

Common challenges in implementing data contracts include resistance to change, lack of trust between different teams, and lack of agreement on data definitions and metrics. Addressing these challenges requires patience and a willingness to work collaboratively to find common ground.


Data contracts are essential for effective data governance, bridging the gap between business and data, and promoting transparency and trust. Clear definitions, metrics, and ownership are critical to the success of data contracts, along with regular updates and reviews. Implementing data contracts requires good communication, collaboration, and persistence. Metaplane provides monitoring and troubleshooting tools to help businesses implement data contracts effectively and improve data quality.

We hope this blog post has helped you understand the importance of data contracts and how they can benefit your business. By implementing data contracts effectively, you can build trust between business and data, make better decisions, and improve your bottom line.

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