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What is Data Warehousing?

An Introduction for Beginners

Rajanand Ilangovan's photo
Rajanand Ilangovan
·Apr 1, 2023·

3 min read

If you're curious about what a data warehouse is and why companies use it, then this post is for you. We'll cover the basics of data warehousing and how it can help businesses make better decisions.

What is Data Warehousing?

Data warehousing is a centralized repository that stores data from various sources in an organized and structured format. Its primary goal is to support business intelligence activities, including data analysis, reporting, and decision-making.

Unlike traditional databases, data warehouses are optimized for read-intensive operations, such as queries and reporting, rather than write-intensive operations like inserts and updates. Also, data warehouses store historical data, while traditional databases store current data. This difference means that data warehouses are used to analyze past events and trends, while traditional databases record current transactions.

Why Do Companies Need Data Warehousing?

Companies need data warehousing to help them make better decisions by providing a consolidated view of their data. By storing data in an organized and structured format, it becomes easier to analyze and make sense of it.

For example, imagine you run an e-commerce website that sells clothing. You want to know which products are selling the most and which customers are buying them. Without a data warehouse, you would have to query multiple databases and combine the data manually. This process would be time-consuming and prone to errors.

With a data warehouse, on the other hand, you can store all your sales data in one place and query it using a BI tool such as Power BI or Tableau. This approach makes it easy to identify top-selling products, track customer behaviour, and make data-driven decisions.

Data Warehouse Architecture

The typical data warehouse architecture consists of three layers: the source layer, the ETL layer, and the presentation layer.

The source layer is where the data comes from, which can include transactional databases, flat files, APIs, and other sources. The data is usually extracted from these sources using an ETL (extract, transform, load) process.

The ETL layer is where the data is transformed and loaded into the data warehouse. This process involves cleaning, structuring, and integrating the data to ensure consistency and accuracy. There are various tools like SSIS, Informatica, Talend, etc can be used for ETL.

The presentation layer is where the data is accessed by BI tools and end-users. This layer consists of data marts, which are subsets of the data warehouse optimized for specific business needs.

Data Warehouse Examples

In different industries, data warehousing can provide various benefits, such as:

  • Retail: A retail company can use a data warehouse to track customer purchasing habits, inventory levels, and sales trends across multiple locations.

  • Healthcare: A hospital system can use a data warehouse to consolidate patient records from multiple sources, such as electronic health records, lab results, and billing systems.

  • Finance: A financial services company can use a data warehouse to track stock prices, trading volumes, and other market data.

  • Education: A school district can use a data warehouse to track student performance, attendance records, and other relevant data.

  • Manufacturing: A manufacturing company can use a data warehouse to track production schedules, inventory levels, and quality control data.

These are just a few examples of how data warehousing can be used in different industries. The takeaway is that any organization that needs to analyze large amounts of data can benefit from a data warehouse.

In conclusion, data warehousing is an essential tool for businesses to consolidate and analyze large volumes of data from multiple sources. It allows companies to make data-driven decisions and gain valuable insights into their operations. With the increasing availability of BI tools and data warehousing solutions, companies of all sizes can take advantage of the benefits of data warehousing to gain a competitive edge and make better decisions.

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