There was a time when AI and machine learning insights were only available to large tech firms like Google, Amazon, Facebook, and Microsoft. These days, anyone can set up a data warehouse to produce valuable machine learning insights affordably.
What is a Data Warehouse?
Data warehouses aggregate, store, and process information from diverse data sources to make it available to business intelligence systems (so they can query it as a single, integrated whole). With a data warehouse, users can analyze all of a company's information together—or focus on different levels of information—to derive the most accurate business insights and forecasting models.
In this guide, we'll help you understand the topic of data warehousing with the following sections:
(1) An Example of Data Warehousing in Action
Imagine you need to decide how many workstations (and all of their requisite components) to order for the upcoming year, and which departments of your company need them. A decision like this requires a bird's eye view of the following data:
- Number of employees in each department
- What workstations employees are using and what's included: Monitor, mouse, keyboard, desk, chair, etc.
- Roles of each employee
- Tech/equipment required for different employee roles to perform their responsibilities
- Prices of different components needed for a complete workstation
- Potential bulk-rate discounts available for larger equipment purchases
- Different vendors providing the equipment
- Equipment attrition rates
- Employee turnover rates
- Forecasting that predicts employee expansion or reduction
- Current budget limitations, guidelines, and goals
Instead of trying to gather all of this information from different sources, a data warehouse makes it immediately available in one place—so you can analyze and organize it into easy-to-understand reporting models. Some of the most popular data warehouse platforms that make this possible include:
Of course, to derive these insights, you'll need to pair a business intelligence platform with your data warehouse...
(2) Business Intelligence Platforms and Data Warehouses
Business intelligence (BI) platforms access the aggregated data within a data warehouse to query and analyze it to create profit-boosting insights. BI platforms analyze your data via complicated SQL queries, AI tools, and machine-learning algorithms. Some of the most popular business intelligence platforms include:
- Amazon QuickSight
- Periscope Data
Regarding the above example on deciding how many employee workstations to purchase, a BI platform allows you to look at all the information surrounding how many workstations to buy, and present it in stunning, easy-to-understand visual metrics that support your decision-making process.
(3) Why Are Data Warehouses and BI Platforms So Important Right Now?
Data warehouses and BI solutions are currently more essential than ever because (1) their BI insights give companies a competitive advantage; and (2) more companies are using them. The companies that fail to incorporate these advanced data solutions will be at a serious disadvantage.
The following graphics from iMPACT show just how many companies are devoting resources to business intelligence. The first image shows the number of employees dedicated to business intelligence by size:
The next image shows the number of employees dedicated to business intelligence by annual contract value:
*Image source: iMPACT. These graphics refer to business intelligence as "CI" (competitive intelligence).
Investing in a data warehousing and BI solution will help your business stay competitive in the years to come, especially if your data strategy includes the technologies outlined below.
Related Reading: What to Consider When Selecting a Data Warehouse for Your Business
(4) Modern Data Warehouse Technology
Now that you understand more about data warehouses and BI solutions, let's look at the latest technology to look for when planning your data strategy: (a) cloud-based data warehouses; (b) automated ETL tools; and (c) data lakes.
(a) Cloud-Based Data Warehouses: Save Money and Time With a Highly Scalable and Flexible Data Warehouse Solution
In the past, data warehouses required physical, on-site servers. These days, companies have either moved their information systems to cloud-based data warehouses already, or they’re considering it. For example, Nielsen recently moved the processing for its National Television Audience Measurement service from on-site servers to Amazon Web Services' (AWS) cloud-based ecosystem.
Nielson's Head of Product, TV, and Audio, Scott N. Brown, explains why moving to a cloud-based system was important:
"The move to a cloud-based engine is a significant undertaking and underscores Nielsen's commitment to invest in technology that will benefit our clients and the industry as a whole. Cloud processing allows for greater flexibility and velocity, as we build new and enhance existing products. It will also give us the opportunity to spend more time innovating and less time on managing infrastructure."
The benefits of cloud-based data warehouses are clear:
- Zero startup costs: It used to be very expensive to purchase and install the hardware for a physical, on-site servers. With cloud-based data warehouses, you don’t have to invest in any hardware when you launch a cloud-based server. Just select the server configuration you require via the internet, launch the server, and you’re ready to go. Instead of buying expensive equipment, with cloud-based servers, you pay SaaS (software as a service) fees as you go.
- Near-instant deployment: Data warehousing plans formerly required painstaking preparation to ensure you purchased the right equipment. However, with cloud-based data warehouses, if you don’t estimate your needs correctly, you can upgrade the solution by adjusting the server configuration. This eliminates the need for complicated preparations before launching your data solution.
- Scalability and cost elasticity: Another financial benefit of cloud-based data warehousing is that you only pay for what you need as you need it. Let’s say you have to run a lot of complex queries in the summer months—so you’ll pay more during those months. The rest of the year, when your data needs are less, you won’t pay as much in costs. This translates into cost elasticity because your data solution can scale up or down with you as required.
- Faster, better insights: Businesses used to suffer with sluggish server hardware and crippling storage constraints because they weren’t financially ready to invest in an upgrade. The elasticity of cloud-based solutions eliminates the threat of “slow query syndrome” to deliver faster, better BI insights.
- Eliminate server maintenance costs: Cloud-based data warehouse users enjoy automated patches, upgrades, and security updates. They also automate many of the tasks you needed an in-house tech team to implement. This reduces your server maintenance costs and frees up your technical team and developers to worry about more important issues.
The most popular cloud-based data warehouses in 2019 include Redshift, Snowflake, Incorta, and Google BigQuery. The most popular on-site data warehousing solutions—including IBM, Microsoft Azure, Teradata, and Oracle—have also developed hybrid platforms with a mix of cloud and on-site features.
(b) Automated ETL Tools: Integrate Diverse Types of Structured and Unstructured Data Into Your Data Warehouse
In the past, integrating incompatible data formats into a data warehouse required time-consuming and costly hand-coded programming. These days, automated ETL (exchange, transform, load) tools like Xplenty help you integrate diverse types of structured and unstructured data into your data warehouse and BI solution.
What's the Difference Between Structured and Unstructured Data?
Structured data: Technically, data warehouses can only incorporate data with a defined schema, i.e., structured data that is organized in a way that lets you search it and run queries on it. Structured data includes information found in relational database systems (RDBMSs) such as Oracle RDBMS, IBM DB2, Microsoft SQL server, Teradata, MySQL, ADABAS, Microsoft Access, and others. This data might relate to your accounting software, payroll records, and information pertaining to advertising, warehousing, distribution, fulfillment, etc.
While your data warehouse should be able to work with most forms of structured data, you may need to transform the data into a compatible format with an ETL (extract, transform, load) solution like Xplenty before integrating with the rest of the data warehouse. You can browse the many built-in structured data integrations that Xplenty offers here.
Unstructured data: Even though data warehouses can only work with structure data, most of the information in the world is unstructured, which means it lacks a defined organization or schema. According to the Journal of Accountancy, unstructured data could include the following:
It's worth noting that some of this information is semis-structured, like emails. Emails have a loose structure that includes unstructured text content (the bulk of the data) but it also includes structured, searchable information like the sender, recipient, and timestamp.
The volume of unstructured data is growing by the year. According to some experts, 80 percent of the world's data will be unstructured by 2025. Therefore, the need to incorporate unstructured data is more paramount than ever, and business that integrate it with their data warehouses will derive better, more competitive insights.
How Automated ETL Tools Help Integrate All Types of Data
The benefits of automated ETL tools like Xplenty include:
- Fast and easy connections: With one-to-one, hand-coded integrations it could take months to establish a reliable data connection between a particular data source and your data warehouse. Maintaining these connections after they're built presents more time-consuming challenges. However, cloud-based data integration services like Xplenty have pre-built connectors and adapters to instantly connect your valuable data from services like Salesforce, Facebook, Google services, Excel, MySQL, and more.
- Access more data: By integrating previously-incompatible data, you open your data warehouse and BI tools to more information for better, more accurate reporting to support better business decisions.
- Real-time availability: The faster you get the BI insights you need, the better decision makers can lead your organization. When your competitors adopt real-time reporting systems, receiving insights and reports once or twice a day won’t allow you to be competitive. Reliable data integration is the best way to achieve real-time reporting like this.
- Improved data quality and integrity: Data integration strategies help to preserve data quality and data integrity when integrating different information into your data warehouse. This supports your BI solutions to provide more accurate insights.
(c) Data Lakes: Tech for Storing and Analyzing Unstructured Data
There are some types of data that either (1) you can't apply relational structures to with ETL solutions, or (2) you have not yet applied relational structures to. This unstructured data could be valuable because BI tools might be able to extract valuable insights from unstructured data. For example, you could query a large amount of unstructured text by searching for specific words and phrases.
Even if you don't have a use for the unstructured data, it could be useful later. The problem is, a traditional data warehouse can't store or work with unstructured information. That's where a "data lakes" comes in.
Related Reading: How to Make a Data Lake Worthwhile for Your Business
Data lakes work together with traditional data warehouses to store vast quantities of unstructured data. You can import any type of information into a data lake and loosely catalog it—kind of like dumping the information into different file folders. Data lakes accept raw information in real-time from multiple sources—such as data from a network of IoT devices, social media sites, email accounts, and mobile apps.
According to a survey from Arcadia Data, firms using data lakes are enjoying excellent results:
- 76% of survey participants believe “BI/analytics for our data lake increases the number and value of analytics for business users.”
- 72% of survey participants felt the data lake they use “fosters better decisions and actions by business users.”
Here are some more benefits of data lakes:
- Access to massive unstructured data pools: Data lakes allow machine learning tools to crawl, catalog, and index massive pools of unstructured data to produce insights in the form of historical graphs, forecast models, and "range of prescribe" suggestions. Machine learning platforms that work with data lakes include Presto, Apache Spark, Apache Hadoop, and other business intelligence solutions
- Game-changing insights from analyzing unstructured data: The insights derived from analyzing previously-inaccessible unstructured data can be illuminating. In this example, a business intelligence team analyzed employee performance, first by looking at the structured data and then by looking at the unstructured data. The structured data masked biases that only became clear after the BI team applied machine learning algorithms to the unstructured free-written portions of the surveys. The unstructured data analysis revealed systemic age and gender biases in the language managers used to describe certain genders and ages of employees. Because data lakes allow your BI tools to analyze unstructured data, they can open up the door to previously invisible insights like this.
- More valuable research: Giving machine learning tools access to previously off-limits data can reveal profit opportunities. For example, you can incorporate more CRM data to understand what strategies your customers respond to and which ones they reject. Or, you can test hypotheses and assumptions before taking ideas to market. Lastly, by looking at manufacturing data collected by IoT devices, business can dramatically boost process efficiency through real time reporting and immediate response.
As a final word of caution, using data lakes with data warehouses to derive business insights is still relatively new. Therefore, make sure you have a strong support team in place before you use an advanced BI strategy like this.
Learn More About Data Warehouses
Check out related articles published by Xplenty:
- What to Consider When Selecting a Data Warehouse for Your Business
- 17 Best Data Warehousing Tools and Resources
- The Ultimate Guide to Data Warehouse Design
- The Importance of Good Data Lake & Warehouse Hygiene
- Data Mart vs. Data Warehouse: A Comprehensive Guide
- Data Mapping: An Overview of Data Mapping and Its Technology
Xplenty: Fast, Easy ETL Integration for Your Growing Data Needs
By now, you should have a good understanding of data warehouses and why their important in modern business. Of course, "grocking" the topic of data warehousing isn't the half of it. Now, you've got to set-up a data warehouse and load all your different sources of information into it (and that's not easy without the right people and tools).
If you or your BI team have delayed integrating key data streams into your data warehouse and BI platform, Xplenty is here to help. When you use Xplenty's out-of-the-box ETL solutions, integration is quick, fast and painless. Why wait? Contact the Xplenty team now to find out how our technology can blow through your data integration bottlenecks.