What Is A Data Warehouse? (With Benefits And Uses)

Indeed Editorial Team

Updated 3 March 2023

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A data warehouse is a vital operational component for any business. They are tools that companies often use to analyse critical data, based on which they can make various important decisions in the company. Learning about data warehouses can help you store and manage business-related data and information more efficiently. In this article, we answer, 'What is a data warehouse?', explain its uses and benefits and provide details on various types of data warehouses, along with different forms of data warehousing.

What Is A Data Warehouse?

If you are interested in working as a data warehousing professional, you may benefit from knowing, 'What is a data warehouse?'. A data warehouse is a critical component for storing and analysing various kinds of essential data for a business. Data warehouses can help businesses in making informed decisions by allowing them to retrieve vital data and use it for various purposes like reporting and policy making. A company collects this data from departments like marketing, sales and research. Creating a centralised system of data can help a company in achieving effective communication and impactful policy implementation across divisions.

A data warehouse differs greatly from a database. A database can only collect and store data. Whereas, a data warehouse can collect, store, analyse and sort data. It is also an essential tool for a business to perform its business intelligence activities. Business intelligence refers to analysing historical data and using the results to create plans for the betterment of the company. Beyond simply categorising data, a data warehouse converts the information into readable dashboards that the entire company or individual departments can use.

Related: All You Need To Know About Data Warehouse Architecture

Skills To Become A Data Warehousing Professional

Here are some essential skills you may require to become a data warehouse professional:

  • Extract, Transform, Load (ETL)

  • Data modelling

  • Quality assurance

  • Quality control

  • Debugging

  • Software development lifecycle

  • Unit testing

  • Code architecture

  • Data flow diagrams

Related: What Is ETL? (Definition, Importance And Prominent Uses)

Uses Of A Data Warehouse

Companies can use data warehouses as tools to make informed business decisions. By analysing historical data and generating reports on it, companies can determine what processes or systems are working efficiently and what ones require improvement. A data warehouse can create a visualisation of what practices are performing the best for a company by ranking the performance of various products or services. Using data warehouses may help business intelligence analyses be effective in securing a company's long-term growth.

Here are some additional uses of data warehouses:

  • Auditing and compliance

  • Big data integration

  • Tactical reporting

  • Natural language processing

  • Data mining analytics

  • Performance evaluations

Related: 35 Data Architects Interview Questions (With Answers)

Benefits Of Using A Data Warehouse

Data warehouses can help in automating processes that relate to business intelligence analysis. Here are some benefits of using data warehouses in business intelligence processes:

Helps gather data from several departments

Companies that maintain a data warehouse can typically ensure that every sector of the business is using the same updated information. Enabling several departments within a large corporation to access shared information can allow them to be in sync with each other. With data warehouses, individual departments can report their data to the central system more accurately.

Businesses may also be able to make more informed decisions by accessing the same central data. Data warehouses help easy data transfer between teams and between departments in a company. Businesses may also have control over accessibility permissions depending upon the seniority or department of the employees.

Related: 12 Data Transformation Tools (With Examples And FAQs)

Maintains a backup of data for companies

Data warehouses allow companies to store historical data for long-term use. This is because the function of data warehouses is to catalogue all the data available in extensive archives. Maintaining a long history of a company's data allows data warehouses to perform analysis and calculations based on all the relevant figures, including both past and recent company information. This can help companies in analysing large amounts of data at once and making faster decisions.

Related: 13 Data Mining Techniques: A Complete Guide

Provides consistent dashboards to various departments

Analysis of relevant performance metrics often comes in a form that is only available to selective employees. Data warehouses can provide the ability to create dashboards that show all the relevant information in a simple format. Having a dashboard of performance metrics that is readily available can allow employees to remain updated regularly on their own performance and the company's needs. Depending on the level or the seniority of an employee, businesses may be able to customise individual dashboards to show relevant employee information.

Related: 10 Valuable Data Analysis Skills

Improves the quality of data for a company

Data warehouses can store a variety of data types and convert them into usable forms. This means that they are able to maintain a history of a company's data. Besides, data warehouses can convert all historical information into relevant data types that the system can use to more easily analyse a company's performance. Many warehouses also allow quick sorting and filtering of data, which can help companies retrieve data and generate reports effortlessly.

Ensures efficient operation of a transactional database

Many data solutions combine a transactional database with a data storage device. In these types of systems, running any sort of analysis likely prevents the transactional database from operating correctly. Having a data warehouse with a separate solution for a transactional database may allow analysing important data easily to prevent incurring downtime. It may also help speed up the process of analysis significantly compared to a transactional database.

Related: What Are The Different Database Types?

Types Of Data Warehouses

There are various types of data warehouses that companies can use depending on their requirements. Here are the two main types of warehouses available:

Cloud-based warehouse

A cloud-based data warehouse is a virtual place on the cloud where companies can store their data. Businesses set up these types of warehouses on external cloud servers. Companies typically require exporting their internal data to a centralised server system hosted by a cloud service provider. Cloud-based data warehouses are flexible and companies can choose the amount of storage space based on their needs. These warehouses are also often cost-efficient. They may be preferable to companies that are just starting out and require flexible data warehouses on a controlled budget.

On-premises warehouse

On-premises data warehouses are often physically available on the company premises. Unlike with a cloud-based warehouse, companies do not require exporting their data to external servers. They may directly upload the required data to the warehouses from the company systems. This also allows companies the advantage of faster data processing.

This type of data warehouse can be beneficial because it allows a company to have complete control over its data without the data leaving the company's system. Another key benefit of having an on-premises data warehouse is that if there are any problems with internet connectivity, there are likely no interruptions in data accessibility.

Forms Of Data Warehousing

Here are the different forms of data warehousing available to businesses:

Enterprise data warehousing

This type of data warehousing is often suitable for large companies. It helps them centralise data and information for the entire network of the business. Businesses may also have the option to choose between cloud-based or on-premises warehouses.

Related: What Is A Relationship In Database? (Definition And Types)

Operational data store

This form of data warehousing is smaller in scale than enterprise warehousing. Companies may use it as a data source as it operates well with fewer amounts of data. Unlike enterprise warehousing, operational data warehousing does not centralise data for the entire business network.

Related: 14 Data Modelling Tools For Data Analysis (With Features)

Data mart warehousing

This form of warehousing is a combination of enterprise data warehousing and operational warehousing but is simpler than both. It allows businesses to access small amounts of data with ease. Companies often use this form of warehousing for specific information, like sales and inventory.

Explore more articles