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. Warehouser's Liability Form

    A document that describes the obligations of a storage facility ...
  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. Warehouse Receipt

    A warehouse receipt is a type of documentation used in the futures ...
  5. Social Data

    Social data is information shared publicly by social media users, ...
  6. Safe Harbor Agreement

    The Safe Harbor Agreement was drafted to protect EU citizen’s ...
Related Articles
  1. Tech

    Predictive Analytics Drives Return for Investors

    A new industry of predictive analysis has developed to make sense of big data and give investors real-time buy and sell recommendations based on the patterns forming in the data long before traditional ...
  2. 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.
  3. Managing Wealth

    Job Description for a Data Integrity Analyst

    Most jobs have required skills, education, and previous experience to fill the role and this includes the data integrity analyst position.
  4. 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.
  5. Tech

    Financial Advisors' Next Big Tech Tool: Big Data

    Here's how big data is playing a crucial role in the work life of financial advisors and some strategies on how to take advantage of the technology.
  6. Investing

    Amazon to Build Massive Warehouse in Mexico

    Amazon's new million-square-foot warehouse aims to get more consumers in Mexico to shop online.
  7. Investing

    Amazon Tests Delivery Service—Targets FedEx, UPS

    Amazon aims at reducing its reliance on UPS and FedEx and overcrowding in its warehouses.
  8. Tech

    Wal-Mart Is Betting Big On E-Commerce In 2017

    The Arkansas-retailer will look more like an e-commerce company in the future, according to CEO Doug McMillon.
  9. Tech

    How Big Data Has Changed Healthcare

    Like many other industries, healthcare has adapted to data analytics not only for its financial returns but also improving patient’s quality of life.
  10. 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 ...
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 is the difference between business intelligence and competitive intelligence?

    Understand the difference between business intelligence and competitive intelligence. Learn why both are important for the ... Read Answer >>
  3. How operating expenses and cost of goods sold differ?

    Operating expenses and cost of goods sold are both expenditures used in running a business but are broken out differently ... Read Answer >>
  4. What's the difference between moving average, weighted moving average and exponential ...

    Moving averages are one of the most popular tools used by active traders to measure momentum. We'll take a look at three ... Read Answer >>
Trading Center