Data warehouse – what it is and why you need one21.01.2020
A data warehouse is a permanent storage space which is used to store and connect business data from heterogeneous sources (ERP, CRM, third party, IoT,…) and is later used for analysis to make well-informed decisions.
The concept is simple – data is extracted from various source systems and when moved it is edited, formatted, validated and rearranged (process known as ETL/ELT) in a way it will support better and faster reporting, analysis and other BI functions. It’s kind of a well-structured and organized storage for all your data and as such, it is the core of your data management system.
Up until recently building a data warehouse was time-consuming, expert-intensive and expensive, which is why many organisations opted for directly accessing the data from the applications that created it. That brought many challenges such as slower performance (running queries against transactional data bases burdens the database therefore core business applications performance is at risk) and limited insight to data (purpose of BI tools is not data modelling but data visualization for better decision making). Joining data from variety of sources in various forms is a hefty task. No wonder this option usually consumed a lot of time and money.
To simplify things up, let’s imagine you want to bake cookies and the only thing you have is a list of ingredients based on your recipe. So, before the process, you need to do some shopping. The challenge is (since these cookies are quite special), you need to go in several different stores (your sources) to get all the ingredients (your data). This process is time consuming and can get expensive in the long run, because stores are so far apart and ingredients are scattered around, so it takes a lot of time to gather everything. Finally, you got the stuff and you’re ready to bake (data preparation). But in the middle, you see you could greatly improve your batch with one more thing (missing data from new a new source).
Now imagine you have a special cookie baking cupboard. Everything you will ever need for your next bake is there – nicely organised and quickly visible. That is your data warehouse. Without it, you’re left pulling your data from several sources into a single file. The painful cost comes, when you want to change or add something in the middle of the process.
With data warehouse, all your unorganized data from various systems is pulled into a structured entity. It ensures consistency, because all your data is uniformed and modelled in a way it will best serve your needs. Since it’s well joined, always up to date and contains all your company’s valuable information, it’s your perfect data source. As such, it’s reliable, secure and much easier to analyse. Time needed to analyse reduces for 40-60%.
Data driven strategy is then just around the corner.
This is why you need a data warehouse. You want to know your consumers better. You want to make better business decisions.
Up until recently, having proper data warehouse in place required enough hardware to store the data from different sources and compute resources to enable analysts from different departments to get enough speed to perform analysis in timely manner. One of the main issue with legacy data warehouse is that hardware and compute resource often need to be over-dimensioned to cover spikes, which happens only 20% of the time. In long term hardware resources are not utilized enough which is expensive for every organization to maintain. Most of the companies couldn’t afford to spend so much money on the resources therefore departments started to compete for the resources which led to business inefficiency.
Fortunately, times have changed, and companies of any size are able to get the data warehouse they need. One that is fast, scalable, flexible and cost-effective.
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