Costs and Risks of Database Approach:

The database approach causes some additional costs and risks that must be recognized and managed when implementing this approach.

New, Specialized Personnel: Frequently, organizations that adopt the database approach need to hire or train individuals to design and implement databases. This personnel increase seems to be expensive, but an organization should not minimize the need for these specialized skills.

Installation and Management Cost and Complexity: A multi-user database management system is large and complex software that has a high initial cost. It requires trained personnel to install and operate, and also has annual maintenance costs. Installing such a system may also require upgrades to the hardware and data communications systems in the organization.  

Conversion Costs: The term “legacy systems” is used to refer to older applications in an organization that are based on file processing. The cost of converting these older systems to modern database technology may seem prohibitive to an organization.

Need for Explicit Backup and Recovery: A shared database must be accurate and available at all times. This raises the need to have backup copies of data for restoring a database when damage occurs.  A modern database management system normally automates recovery tasks. 

Organizational Conflict: A database requires an agreement on data definitions and ownership as well as responsibilities for accurate data maintenance. The conflicts on data definitions, data formats and coding causes updating of shared data. Handling these issues requires organizational commitment to the database approach.