Using a data warehouse is becoming increasingly necessary for today’s organizations, especially as many require current information for better decision-making. If you’re thinking about exploring the possibilities of data warehousing soon, these advantages can show you what to anticipate. They’ll also help you determine if a data warehouse is the best choice for your situation.
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10 Benefits of Data Warehousing
1. Unlock Data-Driven Capabilities
The days of making decisions with gut instincts or educated guesses are in the past—or at least, they should be. Today’s leaders can now use recent data to determine which choices to make. A data warehouse makes that possible.
Making effective use of information means eliminating data silos and instances where single departments control most or all of the information. A data warehouse can prevent those unwanted circumstances. Then, it’s easier for the appropriate parties to source the information they need without going through other departments to get it.
A data warehouse serves as a centralized information repository. When people can go directly to one place to get the necessary information, they’ll feel more confident using it to make decisions that shape an organization’s future.
2. Maintain Data Quality and Consistency
Data could become useless to an organization if it is poor quality and shows numerous inconsistencies. However, a data warehouse can support improved quality and consistency, provided people develop a system for finding and fixing errors before transferring content to the data warehouse.
Preparing the data could mean removing duplicate records, putting all data in a standardized format, and correcting outdated data. Ensuring data warehouses contain high-quality information facilitates using those repositories to their fullest potential.
Imagine if a customer service representative could not contact customers about defective products and associated recalls because they needed the current details for those individuals. Alternatively, if a data warehouse contains a high percentage of duplicate records, it could cause a person to make the wrong decisions. Creating a quality framework for people to follow is an excellent way to make the data warehouse’s contents as valuable as possible for everyone who uses it.
3. Use Data From Numerous Sources
Most organizations don’t have all of their information in one place. It comes from various departments. The customer service team may have statistics about how many people contact them monthly about specific issues. Then, the marketing department probably has data about specific campaign outcomes and whether they fell short of or surpassed expectations.
The great thing about a data warehouse is it combines data from all of those places within the business, making it more usable for different needs. The warehouse puts that information in a consolidated format, shortening the time frame required for people to get the insights they need.
Accessing information gathered throughout an organization also minimizes the inconsistencies that can occur if people don’t have holistic data. Suppose a leader makes a decision without the benefit of information from all affected departments. Then, they may reach faulty conclusions that compromise the outcomes and impact the organization by placing it under preventable threat.
4. Realize the Power of Automation
Data warehousing allows people to experiment with how automation might improve their businesses. Automating various steps within operations is becoming more popular, especially as people realize the value of using automation to prevent costly mistakes and accelerate workflows.
A market analysis predicts global industrial automation will be worth $265 billion by 2025. That’s impressive since the 2020 worth was $175 billion. Businesspeople can rely on data warehouses to support various automation initiatives. They might use software-defined workflows to automate data access and transfer, shortening the time required to gather information for auditors, potential investors, or other parties.
People may also automate data analysis, allowing them to uncover insights faster than before. Other possibilities are to automate error detection and logging. Then, users will become aware of potential problems more quickly and know where to start in finding the root causes. A clear understanding of how an organization uses a data warehouse will highlight some of the most appropriate ways to pursue automation.
5. Respond to Business Growth
As companies grow, they often expand into new markets or serve larger customer segments. A data warehouse can contain the information people need to pinpoint the extent of a current growth period and how long it’ll last. Users can also retrieve information to study what likely caused the business’s success. Was it a new product, lower prices, or offering in-demand items at the most opportune times that made people most interested in and loyal to a company?
Business leaders frequently access location data before approving expansion options. Where does it make the most sense to open a new distribution center, convenience store, or dental practice? A company may consider offering subscription services for beauty boxes, fresh food kits, or baby essentials. A data warehouse contains the information that can pinpoint the most viable cities or communities to serve during the initial rollout.
Decision-makers may also depend on a data warehouse to learn whether now is the best time to hire new team members for specific departments or to cope with seasonal demand spikes. Although growth periods are often exciting, uncertainty characterizes them, too. A data warehouse holds the information that can make people more confident in choosing how they’ll respond to growth and how to make that success endure.
6. Get Data Warehousing on a Subscription Model
Data warehouses typically require significant investments and upfront costs. Those realities can make some executives balk at creating and using such offerings. However, the data warehousing-as-a-service model eliminates most of those obstacles. It allows people to pay for data warehouse usage through a flat fee and only to get specific desired services.
A Maximize Market Research report expects a 21.7% compound annual growth rate for the market between 2022 and 2029. The analysts said the ease of use and ability to access the data over the internet with an application programming interface (API) were some of the factors driving growth. They also pointed out how difficulties associated with the COVID-19 pandemic made more business leaders realize they needed to access current and dependable data to minimize disruptions.
Snowflake, IBM, Google, and Microsoft are some of the top companies offering data warehouses through subscription tiers. Company leaders thinking about using them should first make lists of their must-have features and ponder how such products could help them meet data warehousing goals.
7. Learn More About Your Customers
It’s becoming more common for companies to offer their customers personalized content. Doing that can increase the chances that people spend more time interacting with a service or website or cause them to spend more money on products than expected.
Personalized recommendations can become significant parts of a business model. Consider how most Netflix users decide what to watch after the service’s algorithm suggests content. If people enjoy what they consume, they’re more likely to remain subscribers and have overall good impressions of using Netflix to stay entertained.
Data is the essential ingredient of customer intelligence. What are their pain points, and how could your company ease them? Which factors make people more or less likely to complete a purchase at your site? How did customer behavior change after a recent site redesign? These are all questions a data warehouse’s content could answer.
8. Enjoy Interoperability Between Physical Solutions and the Cloud
Business leaders are embracing the cloud and realizing how convenient it is to have data stored there rather than solely using hardware in company headquarters. Some of today’s data warehouses are entirely cloud-based. Others work at least partially in the cloud, supporting company representatives yet to transition to the cloud fully.
Data warehouses provide the flexibility to work well regardless of a company’s current infrastructure and information storage practices. Thus, no matter what stage a business is in with its cloud usage, there’s a data warehousing solution to suit.
Cloud-based solutions are convenient for people who need to access data from anywhere. Such individuals could include traveling sales representatives, remote workers, and executives who want to compare company performance across multiple sites.
9. Retain the Security of Your Data
Keeping information in multiple locations makes security more challenging. Many executives don’t know how much data they have, let alone how to access it. Since a data warehouse allows storing data in one location, it raises the visibility of the information and facilitates a cybersecurity team’s plans to secure it.
It also helps that most data warehousing platforms have built-in security features. Some allow setting things up to block harmful SQL code from outsider attacks. Others restrict how much data a person can see at a time, minimizing the chances they’ll use the content for unapproved purposes.
Organizations can also specify which people can access a data warehouse’s material and why. Then, individuals only see information that directly relates to their role or task. Further, some data warehouses may lock users out if they try to access them from unusual locations, making it more difficult for online intruders to exploit weaknesses.
10. Study Historical Overviews of Business Activities
Having the most up-to-date information about a specific facet of a business is valuable, but it may only show part of the picture. People in positions of authority often need to see how an organization has changed over time. Those insights allow them to make more confident predictions about what’s on the horizon.
Fortunately, a data warehouse can contain historical information, allowing a person to obtain the necessary information through a few queries. Executives can typically get the content themselves without support from IT teams. That capability enhances productivity and keeps an organization running smoothly.
Historical data can also support preparedness for teams throughout an organization. People usually can’t predict the future with total certainty, but they often find the past holds valuable clues about what might happen soon.
3 Examples of Data Warehouse Benefits in Action
Now that you know some of the main advantages of data warehouses, you’re probably curious about how people use them in real life. These examples help answer that all-important question.
1. Compiling Data for Cancer Research
Efforts are underway to improve cancer data interoperability. Succeeding in this area could reveal new treatments or show which types of cancer respond best to certain widely utilized interventions. However, challenges arise since people often record clinical data in various unstructured formats. Thus, extracting the data for further study becomes prohibitively time-consuming.
Researchers solved this problem by creating an automatically updated data warehouse for cancer patient information. It contains material about 67,617 people with six tumor types. Results from this landmark project showed the automatic-updating feature allowed users to get the most current test results and treatment outcomes. They could then use that information to improve prognoses for current and future patients with cancer.
2. Supporting Information Sharing Between Multiple University Departments
The University of Minnesota’s motto is “Driven to Discover.” It comes as no surprise that the institution has an enterprise data warehouse that aids authorized users in answering essential questions. The data warehouse enables five of the university’s central departments to build and publish visualizations, dashboards, and analyses.
People from the university’s campuses and colleges, as well as individual students, can author data queries and build databases and visualizations. The data warehouse’s scalability makes it a future-proof platform able to meet diverse needs now and later.
3. Tracking Cost and Availability Data for Military Weapons
Virginia’s Defense Acquisition University is a U.S. Department of Defense arm that teaches military and civilian staff and federal contractors about acquisition, logistics, and technology relevant to their work. The organization created the Maintenance and Availability Data Warehouse. It stores more than 12 years of maintenance records from 46 data systems used by the military.
The massive data warehouse contains more than 1.6 billion records of maintenance and supply-related transactions in a standardized format. People use this resource to differentiate between each military weapon’s standard and unusual maintenance and availability aspects. Such specialized information supports informed planning and better national security readiness.
What Are the Disadvantages of Data Warehouses?
Time Required for Data Warehousing’s Early Stages
Many leaders must pay more attention to the time required to plan, design, and populate their data warehouses. These phases can collectively take the better part of a year. However, the time frames vary based on metrics such as the amount of information going into the warehouse, its quality level, and the number of formats.
People must set realistic expectations for their data warehousing initiatives. Otherwise, they may become prematurely discouraged and give up before seeing how data warehouses can help their organizations.
Risk of Outdated Technologies and Performance Degradation
A data warehouse is not something people can let run with little oversight after getting it established. Instead, relevant parties must ensure the system runs with up-to-date technologies and performs smoothly, even as data volumes increase.
All data warehouse projects need ongoing support and investment. When company leaders opt for on-premises solutions rather than those operating in the cloud, there’s an increased risk that the data warehouse’s infrastructure may become outdated. If that happens, people often notice progressive slowness when running queries or otherwise interacting with the system.
Possibility of Not Using the Warehouse Enough to Justify the Resources
Business leaders may find the cost-benefit analysis of data warehouses does not warrant building them. Besides the resources necessary to get the data warehouse operational, a company may also hire extra team members to prepare information for the data warehouse or oversee how things operate.
Decision-makers must verify that the planned use cases justify the implementation and upkeep expenses. If they decide against building a data warehouse, investing in an end-to-end business intelligence platform is another solution. Outlining the specific ways a company will use and benefit from a data warehouse is an excellent way to see if the associated costs make sense.
When Does an Organization Need Data Warehousing?
It’s not always easy to determine the right time to invest in a data warehouse. However, many company representatives start thinking about this option when their workflows require querying data from numerous disparate sources. That can be time-consuming, but a data warehouse typically makes it much more manageable.
Data warehouses can often improve productivity in cases where employees struggle to use data because it exists in many formats. Taking the time to clean up the data before it goes into the warehouse can make the information more usable later. That’s especially true when companies set rules for how to format new data.
Organizations become more likely to need data warehouses as their information volumes rise. Inefficient queries caused by the lack of a data warehouse aren’t significant issues when companies only work with small databases. However, as the total information reaches the petabyte scale and beyond, those slow queries could significantly disrupt business processes, necessitating using a data warehouse as soon as possible.
Deciding Whether You Need a Data Warehouse
Data warehouses can be highly beneficial, mainly as more company leaders rely on accurate information to drive their business decisions and maintain competitive advantages. However, they also require significant ongoing investments.
People tasked with exploring the benefits of data warehousing should compare those characteristics with a company’s primary goals. They should also ensure employees across the organization will use the data warehouse often enough to support its creation and upkeep.
Evaluating these aspects makes it easier to judge whether creating a data warehouse is the best option for an organization’s current and future needs. Then, people will have the knowledge needed to feel confident in their ultimate decision.