What is a data warehouse?

A data warehouse, or “enterprise data warehouse” (EDW), is a central

repository system in which businesses store valuable information, such as
customer and sales data, for analytics and reporting purposes.

Used to develop insights and guide decision making via business

intelligence (BI), data warehouses often contain a combination of both
current and historical data that has been extracted, transformed, and loaded
(ETL) from several sources, including internal and external databases.
Typically, a data warehouse acts as a business’s single source of truth
(SSOT) by centralizing data within a non-volatile and standardized system
accessible to relevant employees. Designed to facilitate online analytical
processing (OLAP), used for quick and efficient multidimensional data
analysis, data warehouses contain large stores of summarized data that can
sometimes be many petabytes large.
Data warehouse benefits

Data warehouses provide many benefits to businesses. Some of the most

common benefits include:
 Provide a stable, centralized repository for large amounts of historical data
 Improve business processes and decision making with actionable insights
 Increase a business’s overall return on investment (ROI)
 Improve data quality
 Enhance BI performance and capabilities by drawing on multiple sources
 Provide access to historical data business-wide
 Use AI and machine learning to improve business analytics
Data warehouse example

As data becomes more integral to the services that power our world, so too
do warehouses capable of housing and analyzing large volumes of data.
Whether you’ve realized it or not, you likely use many of these services
every day.

Here are some of the most common real-world examples of data

warehouses being used today:
Health care

In recent decades, the health care industry has increasingly turned to data
analytics to improve patient care, efficiently manage operations, and reach
business goals. As a result, data scientists, data analysts, and health
informatics professionals rely on data warehouses to store and process
large amounts of relevant health care data.
Banking

Open up a banking statement and you’ll likely see a long list of transactions:
ATM withdrawals, purchases, bill payments, and on and on. While the list of
transactions might be long for a single individual, they’re much longer for the
many millions of customers who rely on banking services every day. Rather
than simply sitting on this wealth of data, banks use data warehouses to
store and analyze this data to develop actionable insights and improve their
service offerings.
Retail

Retailers – whether online or in-person – are always concerned about how

much product they’re buying, selling, and stocking. Today, data warehouses
allow retailers to store large amounts of transactional and customer
information to help them improve their decision making when purchasing
inventory and marketing products to their target market.

Key Characteristics of Data Warehouse

The main characteristics of a data warehouse are as follows:

 Subject-Oriented

A data warehouse is subject-oriented since it provides topic-wise information rather

than the overall processes of a business. Such subjects may be sales, promotion,
inventory, etc. For example, if you want to analyze your company’s sales data, you
need to build a data warehouse that concentrates on sales. Such a warehouse
would provide valuable information like ‘who was your best customer last year?’ or
‘who is likely to be your best customer in the coming year?’

 Integrated

A data warehouse is developed by integrating data from varied sources into a

consistent format. The data must be stored in the warehouse in a consistent and
universally acceptable manner in terms of naming, format, and coding. This
facilitates effective data analysis.

 Non-Volatile
Data once entered into a data warehouse must remain unchanged. All data is read-
only. Previous data is not erased when current data is entered. This helps you to
analyze what has happened and when.

 Time-Variant

The data stored in a data warehouse is documented with an element of time, either
explicitly or implicitly. An example of time variance in Data Warehouse is exhibited in
the Primary Key, which must have an element of time like the day, week, or month.

Database vs. Data Warehouse

Although a data warehouse and a traditional database share some similarities, they
need not be the same idea. The main difference is that in a database, data is
collected for multiple transactional purposes. However, in a data warehouse, data is
collected on an extensive scale to perform analytics. Databases provide real-time
data, while warehouses store data to be accessed for big analytical queries.

Data warehouse is an example of an OLAP system or an online database query

answering system. OLTP is an online database modifying system, for example,
ATM. Learn more about the OLTP vs. OLAP differences.

Data Warehouse Architecture

Usually, data warehouse architecture comprises a three-tier structure.

Bottom Tier

The bottom tier or data warehouse server usually represents a relational database
system. Back-end tools are used to cleanse, transform and feed data into this layer.

Middle Tier

The middle tier represents an OLAP server that can be implemented in two ways.

The ROLAP or Relational OLAP model is an extended relational database

management system that maps multidimensional data process to standard relational
process.
The MOLAP or multidimensional OLAP directly acts on multidimensional data and
operations.

Top Tier

This is the front-end client interface that gets data out from the data warehouse. It
holds various tools like query tools, analysis tools, reporting tools, and data mining
tools.

Benefits of Data Warehouse

 Improved data consistency

 Better business decisions

 Easier access to enterprise data for end-users

 Better documentation of data

 Reduced computer costs and higher productivity

 Enabling end-users to ask ad-hoc queries or reports without deterring the

performance of operational systems

 Collection of related data from various sources into a place