Data Warehouses and Business Intelligence: What They Are and How They Work

Data is the fuel of modern business. It helps companies understand their customers, optimize their operations, and make better decisions. But data alone is not enough. To unlock its full potential, data needs to be collected, stored, processed, and analyzed in an efficient and effective way. That's where data warehouses and business intelligence come in.

What is a data warehouse?

A data warehouse is a centralized system that stores large amounts of data from various sources within a business, such as sales, marketing, finance, inventory, and customer service. A data warehouse is designed to facilitate online analytical processing (OLAP), which means it enables fast and complex queries and analysis of multidimensional data.

A data warehouse is different from a database or a data lake, which are other systems for storing data. A database is a system that stores structured data in tables and supports online transaction processing (OLTP), which means it enables fast and simple queries and transactions of operational data. A data lake is a system that stores raw and unstructured data in its original format and supports various types of analysis, such as machine learning and artificial intelligence.

A data warehouse integrates data from multiple sources and transforms it into a consistent and standardized format. This process is known as extract, transform, and load (ETL). A data warehouse also organizes data into different layers or schemas, such as staging, operational, integrated, and dimensional. A data warehouse often acts as a single source of truth (SSOT) for a business, meaning it provides reliable and accurate information for analysis and reporting.

How do data warehouses and business intelligence work together?

Data warehouses and business intelligence work together to enable data-driven decision-making. Data warehouses provide the foundation for business intelligence by storing and organizing large volumes of data from various sources in a centralized location. Business intelligence provides the tools and techniques for accessing and analyzing the data stored in the data warehouse, creating insights that can improve business performance.

Here are some examples of how different teams and departments use data warehouses and business intelligence:

•  Data scientists and analysts: Analysts are BI power users, who use centralized company data paired with powerful analytics tools to understand where opportunities for improvement exist and what strategic recommendations to propose to company leadership.

•  Finance: Finance teams use BI to monitor financial performance, such as revenue, expenses, cash flow, profitability, and budgeting. They also use BI to create financial reports, such as income statements, balance sheets, cash flow statements, and financial ratios.

•  Marketing: Marketing teams use BI to measure marketing effectiveness, such as return on investment (ROI), customer acquisition cost (CAC), customer lifetime value (CLV), conversion rates, retention rates, churn rates, and customer satisfaction. They also use BI to segment customers based on demographics, behavior, preferences, and needs.

•  Sales: Sales teams use BI to track sales performance, such as sales volume, revenue, quota attainment, pipeline velocity, win rate, average deal size, and sales cycle length. They also use BI to identify sales opportunities