/ Everything you need to know about data warehouses

Everything you need to know about data warehouses

A data warehouse (also known as an enterprise data warehouse, or EDW) is a system that combines data from several sources into a central and consistent data storage. This storage facilitates data mining, machine learning, artificial intelligence (AI), and data analysis. Unlike a regular database, a data warehouse system empowers an enterprise to do advanced analytics on enormous volumes of historical data.

For more than 30 years, business intelligence (BI) tools have included data warehousing systems, but in recent years, new data types and hosting techniques have caused these systems to change. The functionality of any data warehouse is traditionally centered on extracting data from external sources, cleaning and organizing the data, and loading and storing the data in a relational database. This hosting was typically done on-premises, frequently on a mainframe computer. A data warehouse is now housed on a dedicated device or in the cloud, and the majority of data warehouses now include analytical capabilities and tools for data visualization and presentation.



How data warehousing uses machine learning

The current data warehouse, which collects massive volumes of data from various sources and devices and stores it on a unified platform for simple retrieval and analysis, is becoming increasingly common. The purpose of data warehouses is straightforward in relation to machine learning: The more data you apply to an issue, the better your machine learning models will perform. Machine learning models make predictions and suggest actions based on the data that is stored in a data warehouse.

Data warehousing and artificial intelligence: where they fit in

Data warehouses, which serve as centralized repositories for storing and analyzing corporate data from many sources, have historically been crucial to business intelligence. They have assisted businesses at each stage of the data maturity curve in organizing and making sense of enormous amounts of data. But the game has now changed thanks to artificial intelligence. The modern data warehouse has developed into a catalyst for AI, in addition to serving as a solution for conventional data management needs. It does more than just offer reports and dashboards or only solve problems with data volume and quality. Instead, it is now the vital first step in assisting businesses with the digital transformation of their operations using AI breakthroughs. The modern EDW (enterprise data warehouse) has evolved into what is known as a “system of insight” that closes the loop between data, insight, and action by automating data input and analysis.

It is designed to process complex questions that may be distributed to several AI tools, facilitating smooth machine learning (ML) and more precise predictions. A current data warehouse pulls together all corporate data, at any scale, to give actionable insights, enabling businesses to make better decisions faster.


The data warehouse architecture

Data warehouses typically use a three-tier architecture, and it includes:

Bottom tier

A server belonging to the data warehouse comprises the bottom level. The bottom tier is often a relational database system that gathers, purifies, and transforms data from varying data sources using extraction, transformation, and loading (ETL).

Middle tier

Online analytical processing, commonly abbreviated as OLAP server, which permits quick query times, makes up the middle tier. Three different OLAP model types that can be applied in this tier are MOLAP, ROLAP, and HOLAP. It depends on the database system in use and what kind of OLAP model is employed.

Top tier

The top tier is represented by the reporting tool or a front-end user interface that allows the end-users to execute ad hoc analysis of their corporate data.


Understanding how OLAP and OLTP work in data warehouses

OLAP software is used to quickly analyze massive volumes of data from a single, centralized data source, such as a data warehouse, in a multidimensional manner. Online transaction processing, often known as OLTP, allows many users to execute numerous database transactions in real-time, usually over the internet. The name of each technology distinguishes its primary function: while OLTP is transactional, OLAP is analytical.

A data warehouse containing historical and transactional data is where OLAP technologies for multidimensional data analysis apply. Numerous corporate reporting processes such as budgeting, financial analysis, forecast planning, data mining, other business intelligence (BI) applications, intricate analytical computations, and predictive scenarios are common uses of OLAP.

OLTP was created to support transaction-oriented applications by reliably and swiftly processing recent transactions. In addition to record-keeping tools, OLTP is frequently used in ATMs, credit card payment processing, e-commerce software, online bookings, and reservation systems.


Data warehouse schemas

A data warehouse can be structured using schemas. The snowflake and star schemas are the primary schema structures that will affect how your data model is designed.

Star schema

Several denormalized dimension tables can be coupled to the one fact table that makes up this schema. It is thought to be the most straightforward and typical kind of schema, and its users benefit from its quicker querying speeds.

Snowflake schema

Another organizational style used in data warehouses, though less frequently, is the snowflake schema. In this instance, the fact table is linked to numerous dimension tables that are normalized and have child tables. Although the minimal levels of data redundancy in a snowflake structure are advantageous to users, query performance suffers as a result.



Database vs. data warehouse

Databases are different from data warehouses; databases are structured collections of information that have been saved, while data warehouses are used to store large amounts of data from different data sources.

Additional distinctions that separate databases and data warehouses at a high level are listed below:

  • Data warehouses are ideal for OLAP solutions, while databases are best utilized with OLTP solutions.
  • Many thousands of users can simultaneously access databases. The number of requests that data warehouses can handle is limited.
  • For quick, discrete transactions, databases are most helpful. Data warehouses are the most appropriate solution for more powerful queries requiring deeper analysis.
  • Downtime is expensive since databases must be accessible 365 days a year. The impact of downtime is less severe for data warehouses.
  • For CRUD (create, read, update, and delete) activities, databases are designed to be blazingly fast. Data warehouses are designed to handle fewer, more difficult queries from many big data repositories.
  • With no information repeated across numerous tables, databases are organized as effectively as feasible. For read activities to take precedence over write operations, data warehouses often denormalize their data.
  • Historical inquiries are impossible in databases since they often only contain the most recent data. For the purpose of reporting and analysis, data warehouses were created from the ground up, keeping historical data.


Data warehouses types

Cloud data warehouse

Customers can purchase a managed service known as a cloud data warehouse, which is a data warehouse designed expressly to operate in the cloud. Over the past five to seven years, cloud-based data warehouses have become more widespread as more businesses adopt cloud services and try to shrink the footprint of their on-premise data centers.

Because the actual infrastructure for a cloud data warehouse is managed by the cloud provider, the client is spared the upfront costs of purchasing hardware and software as well as the burden of managing and maintaining the data warehouse system.

Data warehouse software (license/on-premises)

A company can get a license for a data warehouse and then set up a data warehouse on their on-premise equipment. Government agencies, financial institutions, and other companies that need to adhere to data privacy or stringent security standards or rules may find that this is a better option even if it is often more costly relative to a data warehouse service that is cloud-based.

Data warehouse appliance

A firm can connect a data warehouse device to its network and begin utilizing it right away. A data warehouse device is a pre-integrated set of hardware and software, including CPUs, storage, an operating system, and data warehouse applications. In terms of initial cost, speed of deployment, simplicity of scalability, and administrative control, a data warehouse appliance falls halfway between cloud and on-premise systems.


A data warehouse’s advantages

A data warehouse offers advantages such as:

Improved data quality

Transactional systems, flat files, operational databases, and other sources of data are all centralized in a data warehouse. It then purifies, gets rid of duplicates, and systematizes it to produce a single repository of the truth.

Quicker business insights

Decision-makers’ capacity to confidently define corporate strategy is hampered by data from too many different sources. Data integration is made possible by data warehouses, enabling business users to include all of a company’s data in every business decision.

Making wiser choices

A data warehouse enables large-scale business intelligence (BI) services including data mining (identifying hidden relationships between the data), artificial intelligence (AI), as well as machine learning (ML) — tools that business leaders as well as data professionals may use to gain concrete evidence for making better decisions in any aspect of the organization.

Increasing and establishing a competitive advantage

The aforementioned factors work together to assist an organization in uncovering more possibilities in data more rapidly than is feasible from other data repositories, which results in a competitive advantage.



Data obtained from various sources is subjected in a data warehouse to industry-developed standards (such as formatting procedures). This guarantees that all data is accurate and free from duplicates or errors that can affect the analysis. Data warehouses provide a multitude of additional benefits that can be used to ultimately help companies improve their bottom line.

Check out some related resources:

From Data Chaos to Cohesion—Consolidate Your Tech Stack with Domo’s Integration Capabilities

Manage, Transform, and Visualize Your Data

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