Today’s businesses, no matter their size or the industry they operate in, are highly dependent on data. Be it marketing, sales, product development or HR operations – no unit can function to its potential without relevant and reliable data backing their decisions.
However, demand doesn’t always guarantee supply. Real-world data isn’t always available to organizations due to scarcity, privacy regulations or high costs. Synthetic data offers a powerful solution to bridge this gap, enabling businesses to thrive in a data-driven world.
In this article, we’ll define synthetic data before discussing how it can be useful for your business and its different functions.
What is Synthetic Data?
Synthetic data is artificially generated data that mimics the properties of real-world data. Deep generative algorithms, such as Generative Adversarial Networks (GANs) or Variational Autoencoders (VAEs), are at the core of synthetic data generation. These algorithms learn patterns, characteristics and relationships from real-world data samples and then create statistically identical synthetic datasets without compromising sensitive information or the utility of the original data.
In today’s business context, where data-driven decisions power innovation, efficiency and competitive edge, synthetic data is a game-changer. It provides organizations with the ability to overcome data limitations while adhering to data privacy laws and regulations.
Now that we have a fair knowledge of synthetic data, let’s look at how it is beneficial to modern businesses.
Advantages of Using Synthetic Data in Business
1. Scalability
Synthetic data can be generated in virtually unlimited quantities, allowing businesses to scale their data resources without restrictions. With real-world data, data shortage or crisis is often a recurring issue; on the contrary, synthetic data can be created infinitely to simulate diverse business scenarios and/or develop advanced machine learning models.
2. Security and Compliance
By design, synthetic data does not contain personally identifiable information (PII) or sensitive data. So, businesses leveraging synthetic data can maintain 100% compliance with regulations like GDPR, CCPA and HIPAA. This reduces the risk of data breaches and keeps organizations from getting into legal complications.
3. Rich Machine Learning (ML) Models
Synthetic data powers advanced machine learning models with diverse, high-quality datasets. It can augment limited real-world data, introduce edge cases and balance biased datasets, leading to precise, generalizable models. These highly sophisticated models help businesses find exclusive insights and patterns, enriching data-driven decisions.
4. Cost Efficiency
Collecting, collating and analyzing real data consumes time and resources that could be put to better use. Synthetic data generation comes up as a cost-effective alternative without any compromise on quality or utility.
Synthetic Data Use Cases by Business Function
1. Marketing
Synthetic data is a boon for modern marketing and growth teams as they heavily rely on customer data to personalize outreach, test campaigns and optimize strategies. Synthetic customer profiles help segment the audience, simulate engagement and run A/B tests – all without real customer data. Similarly, email marketers can use synthetic subscriber lists to assess the effectiveness of different templates, subject lines and body text. Not only does this help improve marketing performance, but saves valuable resources and time.
2. Product
In product development, synthetic data supports prototyping and testing. New product features and updates can be tested on synthetic profiles to avoid exposing real users to potential bugs. Simulating user interactions or product performance under various conditions significantly improves customer experience and reduces the need for costly real-world testing.
3. Operations
Synthetic data can model supply chain scenarios, forecast demand and optimize logistics processes. By generating realistic operational datasets, businesses can identify inefficiencies and improve decision-making without exposing proprietary data.
4. Analytics
For analytics teams, synthetic data enables scenario analysis. Synthetic financial data helps simulate market trends to reveal investment opportunities, which can otherwise remain hidden due to regulatory constraints on sensitive financial information. Data scientists can even design advanced machine learning models that mirror real-world scenarios while maintaining compliance with data privacy laws.
5. HR
HR teams generally use employee data to evaluate workforce performance, build & optimize training programs and derive insights into recruitment patterns. Synthetic data replaces sensitive employee information to uphold employee privacy while improving analysis and decision-making capabilities of the entire HR function.
Power Data-driven Decisions with Synthetic Data
Synthetic data is useful for businesses of all sizes across industries. With synthetic data generation, you can overcome the limitations of data shortage and biased data to optimize your business processes and performance.