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Peter TasalaJan 31, 2024 5:10:36 PM2 min read

What Are Data Contracts?

Understanding Data Contracts

Data communication between producers and consumers is increasingly important in our interconnected world. This is where data contracts come into play, ensuring both ends understand and leverage data effectively.

But what is a data contract, and how do technical elements like APIs fit in?

What is a Data Contract?

A data contract is fundamentally an agreement between a data producer and its consumers. This contract specifies the data's structure (its schema) and its meaning (semantics), creating a shared understanding between both parties.

While the precise definition of a "data contract" is still emerging, the value it offers to modern businesses is undeniable.

Relationship with Data Product Descriptor Specification (DPDS)

The DPDS is a community-driven open specification that declaratively defines a data product in all its components. It broadens the concept by diving into service agreements, of which data contracts are a specific subset. This comprises:

  1. Promises: These outline the data product's promises, like its service API details, service level objectives, and update rules.

  2. Expectations: This section spells out how the data product expects its consumers to engage with the data, highlighting intended usage and audience.

  3. Contracts: The actionable elements binding both sides, including enforceable facets like terms of service, Service Level Agreements (SLAs), and billing modalities.

You can find a template for a DPDS from here.

Implementing Data Contracts: An E-Commerce Example

To truly grasp the practicality of data contracts, let's dive into a technical example involving an e-commerce platform:

Scenario: An e-commerce platform wishes to share its customer purchase data with a third-party logistics partner to enhance delivery speeds.

  1. Define Scope: You should start by identifying crucial data points. This might cover order timestamps, locations, and purchased items.

  2. Craft the Contract with API Specifications: Next, detail out how the data will be retrieved. In our scenario, an API endpoint like GET /orders might be established, returning data in a JSON format. This contract will detail the expected JSON schema and clarify semantics, such as ensuring timestamps are in UTC format and locations are given in lat-long coordinates.

  3. Set Clear Expectations: The e-commerce site may want the data solely for delivery optimization, barring its use for marketing. This could involve setting API rate limits or using OAuth scopes to restrict data access.

  4. Monitoring and Enforcement: Tools can be deployed to monitor API calls, ensuring contract adherence and identifying any breaches.

For a seamless data contract integration, organizations must focus on:

  • Technical Infrastructure: This involves creating a robust API management platform, ensuring data integrity, security, and scalability.

  • Cultural Shift: Cultivating a mindset that emphasizes data transparency, collaboration, and accountability is crucial.

  • Enhancing Data Literacy: Equip stakeholders with the knowledge and tools they need to understand and respect data contracts.

Concluding Thoughts

As data-driven strategies become commonplace, data contracts, with their technical and organizational facets, will take center stage. They promise enhanced communication, fostered trust, and improved data transaction transparency.

How can we help you?

At Vidalico Digital, we specialize in navigating the complex terrains of data. If you're keen to explore or establish data contracts, we're here to guide you!

We are passionate about helping you to manage your data better, as this will help you to understand your customers too!

It is our mission to help you better reach your customers, manage your customers and understand your customers.

Together, let's harness the power of data.

Book a free DATA STRATEGY call!


Peter Tasala

As Data Strategist at Vidalico Digital, he is a hands-on problem solver and turnaround manager with over 20 years of experience in data analytics and digital transformation.