7 Biggest Advantages of a Data Warehouse Explained


Pragya Chauhan

Jun 21, 2024

Data is king in today's business world, but having a lot of data doesn't guarantee success.  Poorly organized and scattered data can lead to bad decisions.  This is where data warehouses come in.

Data warehouses offer an effective solution for businesses struggling to manage and analyze massive amounts of data.  By storing and integrating data from various sources into a central location, data warehouses offer a wealth of benefits for organizations.

Let's delve into the 7 biggest advantages of a data warehouse and see how they can help businesses to make smarter decisions. But, first, let’s see what a data warehouse exactly is and how it works.

What is a Data Warehouse?

A data warehouse (DWH) is a data management system that allows businesses to store current and historical data from multiple sources in an easy way for easier insights and reporting.

Data warehouses are generally used for business intelligence (BI), reporting, and data analysis. DWH makes it possible to quickly and easily analyze business data uploaded from operational systems such as point of sale systems, inventory management systems, or marketing or sales software.

How does a Data Warehouse Work?

A data warehouse works as a central repository where data from one or more sources is stored.

The transactional system and other relational databases upload data into a data warehouse. Examples of data sources include Structured Data, Semi-Structured Data, and Unstructured Data.

After the data has been processed, transformed, and ingested, users can access it in the warehouse using business intelligence tools, SQL clients, and spreadsheets.

A data warehouse combines data from various sources into a comprehensive database.

By combining all of this information in one place, a business can examine its consumers more holistically and ensure that it has taken into account all of the accessible data.

Among other advantages of a data warehouse, data warehousing also makes data mining possible. Data mining is looking for patterns in data that could lead to new insights.

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History of Data Warehouse

The concept of data warehousing was introduced in the early 1980s. Early data warehouses were dependent on a large number of redundancies.

They were primarily used for business intelligence, data analysis, and decision support systems (DSS).

Organizations use it to maintain several DSS environments that cater to various users. While these DSS systems use the same data, users must replicate each environment's cleaning, gathering, and integration process.

Since its inception, the data warehouse concept has evolved from information stores and expanded into broad analytics infrastructures that support performance management and operational analytics.

Data warehouse processes have advanced to enterprise data warehouse (EDW).

Types of Data Warehouse

There are main three types of data warehouses that businesses use today:

  • Enterprise Data Warehouse (EDW): EDW is a centralized data warehouse that provides a holistic approach to organizing and presenting data.
  • Operational Data Store (ODS): An ODS is a type of data store suitable when neither the OLTP nor a DWH can support a business’s reporting requirements.
  • Data Mart: A data mart is a type of data warehouse that is specifically designed for departmental data, such as sales, finance, and supply chain.

Important Data Warehouse Statistics

A data warehouse is an effective tool to store data and use it, allowing businesses to process, transform, and use their data to make effective decisions.

Because of its capabilities the popularity of data warehouses is constantly growing, and seeing the advantages of a data warehouse, many organizations are turning to it.

Here are some recent statistics that confirm the need and potential of DWH:

  • By 2028, an estimated $7.69 billion is projected for the data warehouse market.
  • The global data warehouse market includes more than 37,000 companies.
  • The main reasons for data analytics are process improvement and cost efficiency – 60%.
  • Not more than 28% of Fortune 500 companies have a data culture in place.
  • All data stored in the cloud are backed up automatically, providing 99.99 percent availability of data and a tolerance of errors.
  • 31% of companies want to quickly increase their analytics investments to handle more users and more data.
  • 37% of organizations have a central data warehouse.
  • By 2026, the global cloud storage market is expected to be $10.42 billion.

Use Cases of a Data Warehouse in Different Industries

The data warehouse has various applications and can be used in almost all industries to facilitate business decisions. Let’s have a quick look at how data warehousing is used in different sectors:

In Retail

There are many advantages of data warehouses in the retail sector. A good example of DWH would be a retail data mart that includes customer information from cash registers, mailing lists, websites, and feedback cards and helps retailers make better decisions.

In Healthcare

In the healthcare industry, data warehouses are used to record patient information from different sources in the medical unit.

This includes patient personal information, financial transactions with the hospital, and insurance data. The warehouse combines and connects all this data through the database schema.

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In Construction

Like any other industry, construction businesses require data on every purchase made during the construction timeline. This purchase needs to be attributed to a data source to make financial decisions. The same goes for the wages of contractual workers.

The top-level decision-makers can use the data recorded in a data store for business intelligence to estimate the company’s overall spending on a single construction site.

In Finance

The data plays a crucial role in the finance sector. Banks, insurance companies, trading firms, and others related to the finance industry require accurate data at all times.

Proper data validation in databases and suitable connection with other tables in the database allow the possibility of achieving this.

These are just a few of the examples of how data warehouses can be used widely in different industries and for various purposes. As they are just an organized store of raw data, they can be used for many purposes for the end-user.

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What are the Advantages of a Data Warehouse

Now that we know the basics of a data warehouse including how it works, types of DWH, and use cases, it’s time we reveal the 7 biggest benefits of the data warehouse.

So, below are some of the key advantages of data warehousing that you can enjoy:

1. Saves Time

In this fast-paced and extremely competitive environment, as a business, your capacity to swiftly make sound decisions is essential to stay relevant and beat your competitors.

A data warehouse allows you to access all your needed data within minutes, so you and your co-workers don’t have to be concerned about an approaching deadline. You only have to deploy your data model to acquire data within seconds.

Most warehousing solutions enable you to do that without a complicated query or machine learning.

This means that with a DWH, your business will not have to depend on the 24/7 availability of a technical expert to troubleshoot problems related to retrieving information. This can save a lot of time and effort.

2. Enhances Data Quality

When it comes to the advantages of a data warehouse, one significant benefit is that it helps maintain data quality. Good data quality guarantees that your company’s policies are based on precise information.

Understanding the data warehousing concept allows you to shift data from multiple sources into a shared arrangement. This will enable you to identify and remove replicated, poorly recorded data.

In contrast, integrating data quality management software can be costly and laborious for your business. DWH can easily remove many of these annoyances while saving money and boosting your organization’s productivity.

After all, poor-quality data is a burden and can reduce the overall efficiency and effectiveness of your strategies.

3. Improves Business Intelligence

Data warehousing allows you to gather, assimilate, and derive data from any source and set up a process to leverage business analytics.

This will improve your BI by leaps and bounds, as it effortlessly integrates data from district sources.

Crosschecking various data sources can be challenging and sometimes inconvenient, but data warehousing allows you to have an integrated understanding of all the relevant information on time.

An EDW is advantageous to your sales and marketing teams because it allows you to track and find which of your targets are dynamic and have accounts on social networking websites.

So, suppose you’re running an advertising campaign that targets females in their mid-twenties working in the beauty industry.

In that case, your team can fetch profiles of your target audience using your data lake within seconds. They won’t even have to crosscheck spreadsheets and databanks.

4. Leads to Data Consistency

Another important advantage of a data warehouse is the evenness of big data. Your business can benefit from data storage or data mart in the same arrangement.

A data warehouse keeps a large amount of data from diverse sources, such as a transactional system, consistently, each source will generate outcomes synchronized with other sources.

This ensures enhanced quality and consistency of data. Meanwhile, you can feel assured that your data is correct which will result in more mindful corporate decisions.

5. Improve Return on Investment (ROI)

When discussing the advantages of data warehouses, the notable benefit is that they help you increase your overall ROI by harnessing the value and insight implanted within numerous databanks.

As per the International Data Corporation (IDC) report, using a data warehouse generates an average 5-year ROI of 112% with an average payback period of 1.6 years.

As you progressively use the information consolidated and arranged within the central store, you achieve more from your investment. Thus, you can elucidate, enumerate, and validate the efficiency of your initiatives to higher management in terms of improved ROI.

6. Stores Historical Data

By storing large volumes of historical data from databases a DWH allows for easy investigation of different time phases and trends, which can be highly impactful for your business

With this, you can make better corporate decisions concerning your business strategies with the right and real-time data.

Additionally, predicting the results of your business operations is a significant aspect of a successful business. Forecasting future outcomes without a tangible understanding of your historical performance can be challenging.

7. Increases Data Security

You might be surprised to know that data-related complications cost many companies more than a whopping five million dollars every year.

However, with the data warehouse, you can save yourself from the hassle of additional data security.

If your business regularly deals with customer information, you should prioritize protecting the information of existing and prospective consumers.

Hence, to evade all future nuisances, you take all the necessary actions to prevent data breaches.

Data warehouses offer the advantage of keeping all your data sources consolidated and protected, significantly reducing the threat of data breaches.

Data warehousing improves security by offering advanced safety characteristics built into its implementation.

While consumer information is a valuable resource for any company, once safety becomes a problem, this information becomes your main burden.

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Final Thought on Advantages of a Data Warehouse

These are some of the main benefits of using a data warehouse for your business. It offers improved business intelligence, robust decision support, superior business practices, and effective analytics processing.

Businesses that understand the full potential of data warehousing are better equipped to adapt to changing market conditions and customer requirements.

If you’ve any questions regarding data warehousing, Contact our IT Experts. They will be happy to help you!

Frequently Asked Questions

Q. What is the Data warehouse definition?

Ans. A data warehouse is a central repository that stores large amounts of integrated data from multiple sources, specifically designed for analysis and reporting, rather than daily transactions.

Q. What are 5 examples of data warehouses?

Ans. The 5 examples of data warehouses include Sales Data Warehouses, Customer Data Warehouses, Financial Data Warehouses, Human Resources Data Warehouses, and Web Analytics Data Warehouses.

Q. What are the main components of a data warehouse?

Ans. The main components of a data warehouse include Data Extraction, Data Storage, Data Modeling, and Data Analysis and Reporting.

Q. What are the advantages and disadvantages of a data warehouse?

Ans. The advantages of a data warehouse are improved decision-making, better data quality and consistency, faster analysis, and centralized data access. On the other hand, the disadvantages include high initial setup and maintenance costs, complexity to manage, and potential for data latency (delay) during updates.

Q. Who benefits from a data warehouse?

Ans. All levels of an organization can benefit from a data warehouse. From executives making strategic decisions to analysts performing deep dives, a data warehouse provides insights across departments.

Q. Why is data warehousing important?

Ans. In today's data-driven world, data warehouses are crucial for making informed decisions, identifying trends, optimizing operations, and gaining a competitive edge.

Q. What does data warehousing allow organizations to achieve?

Ans. Data warehousing helps organizations transform raw data into actionable insights, improve operational efficiency, gain a deeper understanding of customers, and make data-driven decisions for better business outcomes.

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