What is a Data Warehouse?
A data warehouse is where an organization stores all of its data collected from disparate sources and various business systems in one centralized source. This aggregation of data allows for easy analysis and reporting with the ultimate end goal of making informed business decisions.
While data from multiple sources is stored within the warehouse, data warehouses remain separate from operational and transactional systems. Data flows from these systems and is cleansed through the ETL process before entering the warehouse. This ensures the data, regardless of its source, is in the same format which improves the overall quality of data used for analysis as a result.
There are many additional advantages to implementing a data warehouse. Some key benefits of data warehouses include the following:
- Enhanced business intelligence and reporting capabilities
- Improved standardization and consistency of data
- Centralized storage increases accessibility to data
- Better performance across systems
- Reduced cost of data management
Why is a Data Warehouse Important?
Data warehouses are important in that they increase flexible access to data as well as provide a centralized location for data from disparate sources.
With the rapidly increasing amounts of operational data being created each day, finding the data you need is half the battle. You’re likely using multiple applications and collecting data from a number of sources. Each of these sources recording data in its own unique format.
Say you want to figure out why you sold a higher volume of goods in one region compared to another last quarter. Traditionally, you would need to find data from your sales, marketing, and ERP systems. But how can you be certain this information is up to date? Do you have access to each of these individual sources? How can you bring this data together in order to even begin analyzing it?
These questions depict how a simple query can quickly become an increasingly time consuming and complex process without the proper infrastructure. Data warehouses allow you to review and analyze all of this data in one unified place, developing a single source of data truth in your organization. A single query engine is able to present data from multiple sources, making accessibility to data from disparate sources increasingly flexible.
Why We Build Data Warehouses
At the end of the day, data warehouses help companies answer questions. What types of employees are hitting their sales targets? Which customer demographics are most likely to cancel their subscription? Why are we selling more through partnerships and affiliates compared to email marketing?
Questions like these arise by the handful throughout the course of everyday business. Companies need to be able to answer these questions fast in order to quickly respond to change. Data warehouses empower businesses with the answers they need, when they need them.