Data classification is the categorization of data for its most effective and efficient use. In a basic approach to storing computer data, data can be classified according to its critical value or how often it needs to be accessed, with the most critical or often-used data stored on the fastest media while other data can be stored on slower (and less expensive) media. This kind of classification tends to optimize the use of data storage for multiple purposes - technical, administrative, legal, and economic.
Data can be classified according to any criteria, not only relative importance or frequency of use. For example, data can be broken down according to its topical content, file type, operating platform, average file size in megabytes or gigabytes, when it was created, when it was last accessed or modified, which person or department last accessed or modified it, and which personnel or departments use it the most. A well-planned data classification system makes essential data easy to find. This can be of particular importance in risk management, legal discovery, and compliance with government regulations.
Computer programs exist that can help with data classification, but in the end it is a subjective business and is often best done as a collaborative task that considers business, technical, and other points-of-view.