Inclusion Cloud Digital Engineering
July 4, 2023
🕒 7 minutes
Synthetic data A viable alternative to real data
Table of Contents

In the last few years, the era of Big Data captivated the world, with organizations eagerly accumulating massive volumes of data in pursuit of valuable insights and competitive advantages. However, over time has passed, we have realized that an abundance of data comes with its own set of risks. The larger the datasets grow, the more enticing they become as targets for cyberattacks, forcing us to reconsider the trade-offs associated with relying solely on real data. 

As we navigate the evolving landscape of data analytics and grapple with the question of how to strike the delicate balance between data abundance, security, privacy, and ethical concerns a promising alternative has emerged—synthetic data. This innovative approach offers the potential to mitigate the risks associated with real data while still enabling valuable insights and robust analyses

In this article, we embark on a journey to explore the central question that looms in the minds of data experts and decision-makers alike: Can synthetic data truly serve as a compelling alternative to real data?  

What Is Synthetic Data? 

Synthetic data can be defined as computer-generated information that follows certain rules and mimics real-world data. Synthetic data is a powerful tool that enables testing and training AI models, offering a cost-effective, labeled alternative to real-world data while circumventing privacy and ethical concerns

The Rise of Synthetic Data 

The exponential growth of AI models coupled with stricter data privacy regulations has fueled the demand for synthetic data. According to research firm Gartner, synthetic data is projected to overtake actual data in training AI models by 2030. This surge in adoption can be attributed to several key factors, including data confidentiality, security, alleviation of data scarcity, and the need to augment existing datasets. 

Can Synthetic Data Be an Alternative to Real Data? 

In the realm of data-driven decision-making, the quest for reliable, diverse, and privacy-compliant data is unending. However, real data often poses significant challenges. It can be limited in quantity, costly to obtain, or restricted due to privacy concerns. This begs the question: Can synthetic data step forward as a worthy contender to bridge the gaps left by real data? 

Synthetic data is artificial data created to mimic the patterns and characteristics of real data while ensuring privacy. It is generated using algorithms that carefully analyze real data to learn its features and distributions, then create a synthetic replica. Synthetic data offers advantages like the ability to simulate scenarios, augment rare events, or balance imbalanced datasets

However, synthetic data also have limitations. While it can capture the statistical properties of real data, it lacks the variability, nuances, and real-world context that genuine data provides. Its suitability as an alternative depends on the specific use case, the quality of the generation process, and how well it aligns with the target domain. 

So, whether synthetic data can truly replace real data depends on various factors. It relies on the purpose, trade-offs, and finding the right balance between authenticity and privacy. Exploring the benefits, practical applications, and considerations surrounding synthetic data can help us understand its potential to complement and sometimes even surpass real data in data-driven decision-making. 

The Potential of Synthetic Data to Overcome Challenges 

Synthetic data has emerged as a powerful tool for overcoming challenges and maximizing the benefits of data utilization. One crucial aspect to address is data confidentiality. As organizations collect and process massive amounts of data, ensuring the privacy and protection of sensitive information becomes paramount. The use of synthetic data offers a solution by generating realistic yet artificial data that retains the statistical properties of the original dataset without compromising the confidentiality of individuals or organizations. 

Next, we will look at some of the challenges that synthetic data can face: 

1. Safeguarding data confidentiality  

Data confidentiality stands as a critical concern in the realm of data utilization. With synthetic data, organizations can unlock the vault of valuable insights while maintaining the anonymity of individuals. By replacing personally identifiable information (PII) with synthetic counterparts, such as synthetic names, addresses, or financial details, organizations can conduct analyses, build models, and share data with third parties without the risk of exposing sensitive information. This approach enables collaborative innovation while upholding data protection standards and compliance regulations. 

2. Charting the course for effective data retention strategies 

Data retention poses its own set of challenges, especially considering the abundance of data generated daily. Synthetic data comes to the rescue by providing a practical solution for managing data retention effectively. By replacing original data with synthetic equivalents, organizations can reduce the storage requirements for large datasets while preserving the statistical properties necessary for analysis. This approach not only optimizes storage resources but also simplifies data management and ensures compliance with data retention policies. 

3. Data de-identification and the battle against re-identification 

Data de-identification, the process of removing personally identifiable information, is crucial to protect privacy. However, even de-identified data can be susceptible to re-identification attacks, jeopardizing individuals’ anonymity. Synthetic data plays a vital role in this battle against re-identification. By generating synthetic data that closely mimics the original dataset, organizations can mitigate the risk of re-identification while preserving the analytical value of the data. This approach provides an added layer of protection and reassurance, ensuring that individuals’ identities remain hidden and their privacy remains intact. 

4. The dark side of big data 

Accumulating vast amounts of data comes with its own risks. The increasing size and value of datasets have made them lucrative targets for hackers. Synthetic data, with its ability to emulate real data while maintaining privacy, offers a proactive defense against these risks.  

5. Balancing imbalanced datasets with synthetic ingenuity 

Achieving a balanced dataset is crucial for training accurate machine learning models. However, imbalanced datasets, where certain classes or categories are underrepresented, pose a significant challenge. Synthetic data comes to the rescue by enabling the creation of artificial data points to balance out the distribution. By carefully synthesizing data instances that capture the characteristics of the underrepresented class, organizations can train models that are more robust and accurate.  

6. Tools that empower data generation 

The emergence of synthetic data has given rise to a plethora of powerful tools that empower organizations to generate high-quality artificial datasets. From generative adversarial networks (GANs) to variational autoencoders (VAEs), these cutting-edge technologies enable organizations to generate synthetic data that is almost indistinguishable from the original, enabling more accurate analysis, model training, and experimentation. 

In conclusion, synthetic data offers a transformative solution to the challenges associated with data confidentiality, retention, imbalanced datasets, and more. By harnessing the power of synthetic data generation tools and techniques, organizations can maximize the potential of their data while safeguarding privacy, strengthening security, and fueling innovation.  

Synthetic Data Use Cases 

Training models with limited real-world data:  

AI and machine learning systems require massive amounts of data. However, certain use cases either lack sufficient data due to infrequency or are new with limited historical data. Synthetic data bridges these gaps, providing a valuable resource for training models when real-world data is scarce. 

Accelerating model development:  

Gathering and processing real-world training data can be time-consuming, leading to delays in AI model development. Synthetic data allows for the training and calibration of models even before real-world data becomes available, accelerating the development process

Simulating alternate and black swan events:  

Synthetic data enables companies to run scenario simulations and prepare for potential future changes. It is particularly useful for rare or unprecedented events that may have a significant impact on organizations. By simulating these events, companies can model their responses and develop effective strategies

Software testing and digital twins:  

Synthetic data provides a safe alternative for testing new software without compromising privacy and security. Additionally, it can be used to create digital twins, enabling organizations to simulate real-world scenarios and test various hypotheses


Synthetic data has emerged as a valuable asset in the healthcare industry, offering innovative use cases that address privacy concerns while enabling advanced research and development. In medical imaging analysis, synthetic data allows researchers to create diverse datasets that mimic real patient scans, without compromising sensitive personal information. This synthetic data can then be used to train and validate algorithms for image segmentation, disease diagnosis, and treatment planning, ultimately leading to improved healthcare outcomes


The automotive industry is undergoing a transformative shift towards autonomous driving technologies. Synthetic data plays a pivotal role in this domain by providing simulated environments and scenarios for training and validating autonomous driving systems. By generating synthetic datasets that mirror real-world driving conditions, including diverse weather conditions, traffic patterns, and potential hazards, manufacturers and developers can enhance the safety and performance of self-driving vehicles without relying solely on large-scale real data collection, which can be time-consuming and resource-intensive. 

Financial services 

In the financial services sector, synthetic data is proving to be an effective tool in the fight against fraud and ensuring data privacy. Traditional methods of detecting fraudulent activities rely on historical datasets, which may not adequately capture evolving tactics employed by criminals. By generating synthetic data that closely resembles real financial transactions, organizations can create more robust models for fraud detection and prevention. Synthetic data allows for the exploration of various scenarios, helping to identify patterns and anomalies that may indicate fraudulent behavior, ultimately strengthening security measures and protecting both businesses and customers. 

Synthetic Data

Generating Synthetic Data 

Synthetic data can be generated using various techniques, including: 

Rule-based generation:  

This method involves defining rules and constraints to generate data that adheres to specific patterns or distributions. It is particularly useful for structured data with well-defined relationships and dependencies. 

Generative models:  

Generative models, such as GANs and VAEs, learn the underlying distribution of real data and generate synthetic samples that resemble the original data. These models have gained popularity for their ability to capture complex patterns and generate highly realistic data

Data augmentation:  

Data augmentation techniques involve applying transformations or perturbations to real data to create new samples. This approach is commonly used in computer vision tasks, where images can be rotated, cropped, or augmented with artificial noise to increase the diversity of the training set. 

Best Practices for Synthetic Data Utilization 

To effectively leverage synthetic data, consider the following best practices

Understand data requirements:  

Clearly define the data requirements for your AI model and identify the gaps in your real-world dataset. Determine which attributes, patterns, or relationships are crucial for model training and focus on generating synthetic data that fulfills those requirements

Ensure data utility:  

Validate the utility and quality of synthetic data by comparing it to real data. Measure the performance of AI models trained on synthetic data and assess their ability to generalize to real-world scenarios. Iteratively refine the generation process to improve data quality. 

Maintain diversity and variability:  

Synthetic data should capture the diversity and variability present in real-world data. Ensure that the generated samples cover a wide range of scenarios, including edge cases and outliers, to improve model robustness and performance. 

H3: Consider Ethical Implications:  

Synthetic data should be generated and used in a manner that upholds ethical standards and respects privacy concerns. Avoid the generation of sensitive information and follow ethical guidelines to mitigate potential biases and discrimination. 

Combine real and synthetic data:  

In many cases, a hybrid approach using both real and synthetic data yields the best results. By combining the strengths of real data (capturing real-world complexity) and synthetic data (providing scalability and privacy), you can achieve enhanced model performance and generalization. 

Looking Ahead: The Future of Synthetic Data 

As AI continues to advance, the importance of synthetic data will only grow. Its applications extend beyond training AI models and encompass areas such as virtual reality, robotics, and digital twins. By generating highly realistic and diverse synthetic data, we can create virtual worlds, simulate complex scenarios, and explore possibilities that were once limited by the availability of real-world data. 

In conclusion, synthetic data has emerged as a game-changing resource in the AI era. With its ability to address data limitations, ensure privacy compliance, and accelerate AI model development, synthetic data unlocks new possibilities for innovation and research. However, synthetic data is not without its challenges and limitations, requiring organizations to follow best practices and consider ethical considerations

At Inclusion Cloud, we can help take your business to the next level of data strategy with our cutting-edge digital engineering solutions. Leverage our expertise in expert consulting, seamless deployment, and innovative engineering services to optimize your organization’s data. Whether you’re in finance, healthcare, e-commerce, or any other industry, our tailored solutions can drive innovation, enhance decision-making, and safeguard sensitive information. Contact us today! 

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