What is 'Data Warehousing'

Data warehousing is the electronic storage of a large amount of information by a business. Data warehousing is a vital component of business intelligence that employs analytical techniques on business data.

The concept of data warehousing was introduced in 1988 by IBM researchers Barry Devlin and Paul Murphy. The need to warehouse data evolved as computer systems became more complex and handled increasing amounts of data.

BREAKING DOWN 'Data Warehousing'

Data warehousing is used to provide greater insight into the performance of a company by comparing data consolidated from multiple heterogeneous sources. A data warehouse is designed to run query and analysis on historical data derived from transactional sources. Once the data has been incorporated into the warehouse, it does not change and cannot be altered since a data warehouse runs analytics on events that have already occurred by focusing on the changes in data over time. Warehoused data must be stored in a manner that is secure, reliable, easy to retrieve and easy to manage.

A data warehouse is not necessarily the same concept as a standard database. A database is a transactional system that is set to monitor and update real time data so as to only have the most recent data available. A data warehouse is programmed to aggregate structured data over a period of time. For example, a database might only have the most recent address of a customer, while a data warehouse might have all the addresses that the customer has lived in for the past 10 years.

There are certain steps that are taken to create a data warehouse. The first step is data extraction, which involves gathering large amounts of data from multiple source points. After the data has been compiled, it goes through data cleaning, the process of combing through the data for errors and correcting or excluding any errors found. The cleaned-up data is then converted from a database format to a warehouse format. Once it’s stored in the warehouse, the data goes through sorting, consolidating, summarizing, etc. so that it’s more coordinated and easier to use. Over time, more data is added to the warehouse as the multiple data sources are updated.

Businesses might warehouse data for use in exploration and data mining, looking for patterns of information that will help them improve their business processes. A good data warehousing system can also make it easier for different departments within a company to access each other's data. For example, a data warehouse might allow a company to easily assess the sales team's data and help to make decisions about how to improve sales or streamline the department. The business might choose to focus on its customers’ spending habits to better position its products and increase sales. With data warehousing, the company can gather historical data of its customers’ spending over the past, say 20 years, and run analytics on this data. The resulting information could provide insight into the preferences of its consumers; the time of day, month, or year with greater sales; highest spending customer for the year; etc. Effective data storage and management are also what makes processes, such as initiating travel reservations and using automated teller machines possible.

A key book on data warehousing is W. H. Inmon's "Building the Data Warehouse", which was first published in 1990 and has been reprinted several times since.

RELATED TERMS
  1. Big Data

    Big data refers to the growth in the volume of structured and ...
  2. Data Science

    Data science is a field of Big Data that seeks to provide meaningful ...
  3. Warehouse Financing

    A form of inventory financing in which loans are made to manufacturers ...
  4. Warehousing

    Warehousing is an intermediate step in a collateralized debt ...
  5. Vault Receipt

    A document frequently used as a delivery instrument to indicate ...
  6. Data Migration

    Data migration is the process of moving stored digital information ...
Related Articles
  1. Tech

    How Big Data Has Changed Marketing

    Big data has enabled marketers to enhance their customer engagement and customer retention strategies by providing insight into behavior and thoughts.
  2. Tech

    Data Analyst: Job Description & Average Salary

    Learn about a data analyst career and how much money you can expect to make. Understand the skills and education needed to become a data analyst.
  3. Personal Finance

    Financial Data Analyst: Job Description & Average Salary

    Learn about the average salary for a financial data analyst position and the skills, education and experience employers require of candidates.
  4. Tech

    The Big Play In Big Data

    Given just how technology oriented our lives are becoming, the amount of data we are creating is staggering. But in that staggering amount of zeros and ones, there are opportunities for investors. ...
  5. Tech

    How Big Data Has Changed Insurance

    No longer confined to technology, big data has become integral to providing solutions to the insurance industry's long standing challenges.
  6. Investing

    Positive Warehouse Sales May Help Revive Retail

    Costco and PriceSmart are reporting rising revenue as other brick-and-mortar retailers struggle with sales.
  7. Investing

    How Much Does a Costco Store Sell Each Year?

    When I walk into a business, I often try to guess how much it generates in sales each year. One of my favorite places to do so is Costco (NASDAQ: COST), which offers a peerless volume of products ...
  8. Tech

    Data Analyst: Career Path & Qualifications

    Explore becoming a data analyst, one of the hottest careers in the current economy; learn about the career paths and the qualifications you need to get hired.
  9. Tech

    Blockchain Could Make You—Not Equifax—the Owner of Your Data

    All hype aside, blockchain technology is really good at one thing: taking out the middlemen. Leaky data brokers' days may be numbered.
  10. Personal Finance

    Common Interview Questions for Data Integrity Analysts

    Prepare for a data integrity analyst job interview by identifying some of the key questions commonly asked and developing winning responses.
RELATED FAQS
  1. What are some common functions of business intelligence technologies?

    Understand the common functions of business intelligence technologies, and learn how business intelligence is used to increase ... Read Answer >>
  2. What impact does a higher non-farm payroll have on the forex market?

    The employment report, released by the Bureau of Labor Statistics, is an economic indicator that contains data on the employment ... Read Answer >>
  3. What is the banking sector?

    Learn why the banking sector is a vital industry to our economy, what it does to drive the economic growth and understand ... Read Answer >>
  4. How do you calculate variance in Excel?

    To calculate statistical variance in Microsoft Excel, use the built-in Excel function VAR. Read Answer >>
  5. How does a merger affect the customer?

    Learn how a merger may affect customers of the industry. The effects of mergers may be positive or negative, but there's ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  2. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  3. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  4. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  5. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  6. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
Trading Center