For many years, the principles of normalizing database design have been well understood and are increasingly practiced. Yet many databases are created in third normal form, or even higher normal forms, only to be populated with reference data in a chaotic and nonstandard manner. This can have a negative impact that offsets the main advantage of a normalized database design, which is that the database design only needs to change if there are changes in the subject area that it supports. A strong case can be made that reference data needs to be normalized in its own special way if a database is to provide the best possible return on the investment in it.

The term reference data means different things to different people. The definition used here is: Reference data is any kind of data that is used solely to categorize other data found in a database, or solely for relating data in a database to information beyond the boundaries of the enterprise.

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