A data warehouse is a virtual solution for data storage and management. It is designed to enable and support business intelligence (BI) activities including analytics.
The data in question can come from multiple different sources – in fact, it usually comes from a wide range of sources – including transaction applications and application log files.
Also known as an enterprise data warehouse (EDW), the data that is stored and analysed by a data warehouse can come from CRM systems, marketing automation, point-of-sale transactions and more.
What is the Purpose of a Data Warehouse?
The main function of a data warehouse is to store data safely and to conduct analysis on said data. Thus, data warehouses include analytical databases and critical analytical components and procedures that are able to support general analysis as well as custom reporting.
With broad capabilities, they’re able to consolidate and integrate really large amounts of data, both current and historical, all in a single location. Indeed, this particular function of a data warehouse is really helpful in allowing companies to make informed business decisions.
Currently, having all this consolidated data helps improve businesses’ decision-making capabilities, and in the long run, it allows for the creation of a historical record that can be used by data scientists and business analysts down the line.
For this reason, a company’s data warehouse is often considered its “single source of truth”.
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What Does a Data Warehouse Do?
So, generally speaking, it’s clear that the purpose of a data warehouse is to collect and store data and organise it in such a way that it can be properly analysed.
Here are some of the more intricate details of the purpose of a data warehouse:
- Data Storage: Storing massive volumes of historical data in a format that makes it easy to quickly go back and check data and information at the drop of a hat.
- Data Integration: Bring data together from a plethora of different sources, including CRM systems, ERP systems, operational databases and other external sources.
- Transforming Data: Processes raw data (that is useless as it is) into formats that are helpful and meaningful, allowing for accuracy, consistency and reliability.
- Data Analysis: Analysts can run complex queries on the data, as well as generate reports and analyse it to look for any important insights.
- Supports Business Intelligence: Data warehouses make it possible for business intelligence to be carried out, giving professionals access to data and making it easier for them to visualise ad interpret trends.
The Importance of Data Warehouses
Data warehouses are absolutely essential for modern organisations because they provide them with a centralised platform for storage, management and analysis of large volumes of data that come from a variety of different sources.
Consolidating data into just one single repository ensures that everything is accurate and consistent so it’s not only easier to keep tracking, but companies can make better, more informed decisions too.
Data warehouses are designed to be able to handle complex queries so that they can provide businesses with quick answers and critical insights.
Also, because they report all data over time, this allows businesses to track performance historically, forecasting future trends and making strategic decisions for the future based on past events and statistics. This also enhances quality and the governance of data, ensuring that it’s all reliable ad standardised.
