What is a Data Warehouse and Why Do You Need One?

If you are unsure of what a data warehouse is and why your company needs one, this article will act as your guide to understand it. We will walk you through the definition of a data warehouse, its features, and the associated benefits to convince you to use one.

A company must make good decisions to be successful in the future, and for that matter requires all relevant data to be taken into consideration. This is where a data warehouse proves to be useful.

A data warehouse is a place where valuable assets of a company are stored such as employee data, customer data, sales data, and so on. It helps in data analysis and reporting. The concept is very much similar to a Single Source of Truth (SSOT) which is a practice of collecting data from within the many systems of an organization and assigning a single reference point for all the data.

The data warehouse system stores data from a company’s internal databases as well as external sources. These are different from operational databases because of their ability to store historical data, thereby making it easier for businesses to analyze data over a specific period of time.

How does a data warehouse work?

Although we have revealed the concept, here’s how a data warehouse works. A company that has expanded its business in multiple regions would have different databases with each region having its own database. To streamline data management, data is extracted from a company’s source systems, which is then maneuvered to a dedicated server called the data warehouse where the obtained data is structured and aligned in one format. This resulting data warehouse thus becomes the primary source of information for report generation and analysis and other advanced use cases.

This is the purpose of a data warehouse, i.e. to support reporting and analysis of data clustered from multiple sources. The fact that the data is combined from various source systems is the reason why it is often referred to as de facto a SSOT. However, the information sought from the data warehouse is not used to update other systems; rather it becomes the “single source of truth” for reporting to various stakeholders.

Features of a data warehouse

A data warehouse has certain characteristics-

1. Subject-oriented

This means that the information in the data warehouse revolves around a subject or a theme instead of the company’s entire data. For example, the data warehouse would have your sales and marketing data but not possess any data related to your competitors. It also eliminates unnecessary data that has no role to play while making any decisions.

2. Integrated

Data systems exist in silos in a company. A data warehouse thus integrates data from several sources such as the relational database and mainframe database and places it into a single place. As a result of this, common standards are developed to ensure that the data warehouse picks the best quality data from all sources.

3. Time-variant

This characteristic implies that the data in a data warehouse is maintained weekly, monthly, and annually, which allows companies to track down the years of previous data and retrieve the required information.

4. Non-volatile

This implies that the data in the data warehouse cannot be changed or deleted. Once added, it would remain the same forever. The addition of new data doesn’t affect the previous data.

Why do you need a data warehouse?

The introduction of cloud-based technology has reformed the business world by allowing organizations to easily retrieve and store valuable data, which helps them make better and informed decisions. Companies around the globe have turned to data warehousing to structure their data, streaming from different databases around the world. Having organized data at one location enable businesses to stay competitive in a rapidly evolving global marketplace.

Apart from this, here are a few benefits of having a data warehouse-

1. Consistency in data

All the collected data is standardized and stored in one same format that allows everyone to make decisions based on uniform data. This also minimizes the error probability in interpretation and improves overall accuracy.

2. Identify changing trends

Since a data warehouse stores a large volume of historical data, one can identify trends through month-over-month and year-over-year analysis. Access to historical data also allows organizations to evaluate initiatives that have been successful and unsuccessful in the past, thus forming a better strategy at present and improving the bottom line.

3. Easy access and fast response to queries

One can quickly and easily access crucial data in one specific location by having a data warehouse. Moreover, data warehouses are generally built and optimized for read access which implies fast report generation.

4. Auditing

A data warehouse provides a full audit of when the data was exactly loaded and which data source it belongs to.

5. Security

A data warehouse provides qualified end-users with access to specific data and excludes others, thereby making the provision easy.

6. Metadata creation

A data warehouse can store the descriptions of the data to simplify it for the users to understand it. This makes report creation a much easier task for the end-user.

Types of data warehouse

Though there are many, the three most common data warehouses are-

1. Enterprise Data Warehouse

EDW is a centralized repository of databases from multiple sources and applications that supports decision-making for the entire enterprise. The data stored in an EDW can be one of the most valuable assets of a business as it comprises information about the business, its employees, its customers, and more.

2. Operational Data Store

Operational Data Store or ODS is similar to EDW in terms of scope but here the data is refreshed in real-time and can be used to support organizations’ operational reporting needs. It provides information on the latest data from multiple transaction systems and enables enterprises to merge data in its original format from multiple sources to one destination for the purpose of business reporting.

3. Data Mart

A data mart is nothing but a subset of the data warehouse, also referred to as a mini data warehouse. It typically aligns with a specific line of business such as finance, sales, or marketing. Data marts accelerate the business process by providing access to relevant data in a data warehouse very quickly.

Final Word

Clustering data that has a different structure than operational databases can be a bit intimidating for many organizations. How are you supposed to form data from diverse source systems with different structures? More often than not, it is done by investing days and weeks in retrieving data to generate reports. There’s also a point to note. Operational systems are not built for analytical queries but possess data relevant to a specific business area. Moreover, the lack of skills to query data applications can create hurdles in the process when handling several source systems.

A data warehouse makes this an efficient and automated process by extracting, transforming, and loading data from multiple source systems in a consistent and standardized manner. A single reference point to access data enables users to plan quick and better business decisions, and at the same time, saves a lot of time that could have been wasted otherwise while obtaining data from various source systems.

We, at Dew, have been managing data warehouses for businesses over the years, and we would be more than happy to do the same for your business. Connect with us here.