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Table of contents
1.
Introduction
2.
Determine Why You Require a Data Warehouse
2.1.
Standardize your data 
2.2.
Improve decision-making  
2.3.
Reduce costs 
3.
Do I Need a Data Lake?
3.1.
Data Warehouse  
3.2.
Data Lake
3.3.
Choose Whether You Want it On-Premise or in the Cloud.
3.4.
Instead of a Big Bang Approach, take an Agile Approach.
3.5.
Examine how often you'll need to load data.
3.6.
Define a Real-Time Data Change Data Capture (CDC) Policy
3.7.
Analyze and Understand Your Data
3.8.
I prefer ELT Tools Instead of ETL.
4.
Four Ways to Build a Data Warehouse
4.1.
Top-Down Approach
4.2.
Bottom-Up Approach
4.3.
Hybrid Approach
4.4.
Federated Approach
5.
FAQs
6.
Conclusion
Last Updated: Mar 27, 2024

How are Data Warehouses Built?

Leveraging ChatGPT - GenAI as a Microsoft Data Expert
Speaker
Prerita Agarwal
Data Specialist @
23 Jul, 2024 @ 01:30 PM

Introduction

In this article, we shall be covering How are Data Warehouses Built? Data from source systems containing business information is regularly acquired, such as ERP programs. Data quality is increased by cleansing, reformatting, and supplementing with data from other sources when this data is moved to a specialized data warehouse. This data warehouse can then be utilized for ad-hoc searches and dashboards and serve as the primary source of information for reporting and analysis. To comprehend this issue, one must first comprehend the essential technique. So, let us get down to business.

Determine Why You Require a Data Warehouse

Many firms fail to implement a data lake because they haven't developed a compelling business case. Organizations that start by defining a business problem using their data and stay focused on solving it are more likely to succeed. Some compelling reasons to invest in a data warehouse are listed below.

Standardize your data 

Data warehouses store data in a consistent format, making it easier for executives to evaluate and extract useful information. Standardizing data from many sources reduces the likelihood of errors and enhances overall accuracy.

Improve decision-making  

Many companies make decisions without thoroughly evaluating and interpreting their data, whereas successful companies establish data-driven plans and strategies. Data warehousing enhances data access speed and efficiency, allowing business executives to build data-driven plans and gain a competitive advantage.

Reduce costs 

Decision-makers can utilize data warehouses to delve deeper into historical data and assess the performance of previous projects. They can understand how they need to adjust their strategy to cut expenses, improve operational efficiencies, and drive growth, which will help them improve their bottom line.

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Do I Need a Data Lake?

Data Warehouse  

A data warehouse gathers and stores information from various sources, such as an organization's operational databases and external systems. Data warehouses hold structured, transactional data and provide predetermined and repeatable analytics. A data warehouse is best suited for specific use cases with well-defined objectives. It often uses a fixed processing technique and is best suited to complex queries with high-performance demands.

Data Lake

A data lake is a collection of unstructured data from various sources. Data lakes are commonly used to assist exploratory analysis and data science operations across various analytics use cases. Many diverse processing methodologies, such as discovery, machine learning, massive batch computation, and so on, are supported by data lakes.

Choose Whether You Want it On-Premise or in the Cloud.

Should you utilize an on-premise data warehouse or a cloud-based data warehouse? A data warehouse unifies corporate data from on-premises and cloud apps into a single repository that can be used for analytics and decision-making. Many companies are opting for cloud-based data warehouses to replace their on-premises data warehouses. On-premises data warehouses provide you with complete control over the tech stack, but you'll have to buy, install, and manage all of the hardware and software yourself. Because all data is maintained in-house, it provides better governance and regulatory compliance.

With bundled identity and access management and analytics capabilities, modern cloud-based data warehouses provide on-demand scalability and cost-effectiveness (no need for hardware, server rooms, IT staff, or operational expenditures). The initial outlay is small, and the Cloud provider is in charge of data protection. Another benefit of cloud data warehouses is that they have higher system availability and uptime. Giving a vendor control over the upkeep and management of a data warehouse frees up time and resources that could be better spent on analytics or other strategic initiatives.

Instead of a Big Bang Approach, take an Agile Approach.

Building a modern data warehouse can take a few months to several years, depending on the complexity. The business cannot derive any benefit from its data warehouse investment while it is being implemented. Business requirements change over time and can diverge dramatically from the original requirements. The failure rate of a big bang strategy for data warehousing is significant. Because they don't see quick results, businesses put the project on hold (often before the warehouse is even finished). The big bang strategy can't be adjusted to a particular industry, company, or vertical.

Following an  Agile approach allows the data warehouse to adapt to changing business needs and focus on current issues. Modern data warehouses are constructed in many sprints using the agile methodology, which involves the business customer throughout the process for constant input. Instead of waiting months or years for results, this method produces them quickly. The TCO of fast data warehouse development is often cheaper than the TCO of traditional big bang data warehouse development.

Examine how often you'll need to load data.

When a significant volume of data is acquired over a period of time, batch processing is an efficient approach to handle it all at once. Data is collected, entered, processed, and then produced in the batch results. It helps businesses save money on operations because it doesn't require skilled data entry employees to run. On the other hand, real-time data processing is characterized by continuous data entry, processing, and output. While batch processing is enough for the majority of businesses, some require real-time data processing for specific applications. Real-time data processing and analytics enable an organization to take rapid action and are particularly useful in situations where speed is critical. Real-time processing enables key stakeholders to acquire the information they need to take the appropriate action at the appropriate moment.

Define a Real-Time Data Change Data Capture (CDC) Policy

By defining a change data capture (CDC) policy, you can capture any database changes and verify that they are duplicated in the data warehouse. Change tables are relational tables that track, capture, and store changes. These change tables provide you with a look at how historical data has altered over time. When loading fresh data into your data warehouse, CDC is a highly efficient approach for decreasing the impact on the source. It eliminates the need for cumbersome batch windows and bulk load updates. It can also be used to streamline data transfers and populate real-time analytics dashboards.

Analyze and Understand Your Data

A data warehouse is a central repository that gathers data from several sources. A data warehouse's data must be clean, accurate, and consistent in order to get the most value out of it. As a result, it's critical to identify all possible data sources and understand their properties as well as their interdependencies. All of this data comes from an integrated, enterprise-wide data model in an ideal scenario. This method cuts down on time it takes to develop and manage a data warehouse while also improving the data quality.

I prefer ELT Tools Instead of ETL.

The extract, transform, load (ETL) or extract, transform (ELT) data integration approach is commonly used in data warehouses. ETL and ELT are two prevalent methods for gathering data from a variety of sources and storing it in a data warehouse. The flexibility and convenience of storing new, unstructured data are the key advantages of ELT versus ETL. You can store all types of data using ELT, including unstructured data, giving you instant access to all of your data and saving BI analysts time when dealing with fresh data.

Four Ways to Build a Data Warehouse

Top-Down Approach

The data warehouse is viewed as the linchpin of the overall analytic environment in the top-down approach. The data warehouse contains atomic or transactional data that has been taken from one or more source systems and merged into a normalized business data model. The information is then summed up, dimensionalized, and sent to one or more "dependent" data marts. Because they get all of their data from a single data warehouse, these data marts are "dependent." A "top-down" approach has the advantage of providing an integrated, flexible framework to enable downstream analytic data structures.

Bottom-Up Approach

The purpose of a bottom-up approach is to generate business value as rapidly as possible by building dimensional data marts. Unlike the top-down approach, these data marts contain all of the atomic and summary data that consumers could want or require in the future. To improve usability and query performance, data is modeled using a star schema design. Each data mart builds on the previous one, reusing dimensions and facts so that users can query across data marts to get a single version of the truth as well as summary and atomic data if needed.

Hybrid Approach

The hybrid approach combines the best of both "top-down" and "bottom-up" thinking. It tries to take advantage of the "bottom-up" strategy's speed and user orientation while foregoing the integration mandated by a data warehouse in a "top-down" approach. The most prominent proponent of this method is Pieter Mimno, an independent consultant who teaches at TDWI conferences.

Before constructing the initial data mart, the hybrid technique suggests spending around two weeks developing an enterprise model in the third normal form. The first several data marts are similarly planned in third normal form, but they're delivered using physical models based on a star schema. This dual modeling method adds depth to the business model without jeopardizing the star schema's usability and query efficiency.

Federated Approach

The federated strategy is occasionally confused with the hybrid technique described above, or with top-down data warehousing systems such as "hub-and-spoke."

The federated approach, as stated by its most outspoken proponent, Doug Hackney, is not a methodology or architecture in and of itself, but rather a concession to the natural forces that thwart even the best-laid plans for implementing a faultless system. To suit changing needs or business conditions, a federated approach rationalizes the use of whatever tools are available to integrate analytical resources. In sum, it's a balm for the stressed-out data warehousing project manager who has to compromise architectural purity in order to fulfill the urgent (and ever-changing) needs of his business customers.

FAQs

1. What is Datawarehousing?

Ans: A Datawarehouse is the repository of data, and it is used for the Management decision support systems. Datawarehouse consists of a wide variety of data with a high level of business conditions at a single point in time.

2. What is Dimension Table? 

Ans: A dimension table is a table that stores the properties of measures from fact tables. The hierarchies, categories, and logic in this table can be utilized to traverse nodes.

3. What is Data Mining?

Ans: Data mining is defined as examining data from many perspectives and synthesizing the results into valuable knowledge. Data from the database can be queried and retrieved in their format.

4. What is real-time data warehousing?

Ans: Real-time data warehousing captures the business data whenever it occurs. When business activity is completed, that data will be available in the flow and become available for use instantly.

Conclusion

In this blog, we have extensively discussed How are Data Warehouses Built? A data warehouse is a great solution to centralizing and easily analyzing your business's data. It increases data availability, boosts efficiency in analytical activity, improves the quality of information needed for reporting, and makes working with data security. The structure of a data warehouse is basic, consisting of a storage system, two types of software, and a few employees to make it all work. 

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