• 19 January 2021
  • Laura Kszczanowicz, Kuba Dubowik
  • Big Data

Collecting, storing and processing data is crucial for every company. You can use many tools to manage your customers’ or partners’ data more easily – Operational Databases and Data Warehouses can help make your company more efficient.

The main question is: how does a data warehouse differ from a database? The similarity is obvious – both those systems work with data – but what are the differences? How can you benefit by investing in a data warehouse? In this article you will find information about databases, data warehouses, their advantages and the tasks they can perform. We will also mention how they can be used in particular industries. 

Databases and Data Warehouses – definitions and main differences

Both Databases and Data Warehouses operate on data, though the first is a structured place to store data in a particular form that enables management of Online Transactional Processing (OLTP) operations and the second is a collection of data extracted from a database in a form which enables Online Analytical Processing.  Let’s look at a simple example.

Imagine you’re running a bank. You need a database where you store all your customers’ data – about them, their accounts and the transactions on these accounts, but the database is not only the place where you keep this information. The database processes and changes the data every time a customer makes a transaction using a mobile bank app or withdraws money from the ATM.

Now imagine that your business prospers and you collect a lot of information over a long period of time. You would probably like to store this historical data to analyze your business growth and you need an analytic tool which can handle the vast amount of new data you collect and store in your database so you can use it for predictive analytics. You can use a variety of technologies to predict your future costs, customer behaviors, needs, possible crises and other issues.

A Data Warehouse is an information system which stores this data, analyzes it and makes reports from it. It takes data from integrated databases and performs analytics fast and easily.

What are the purposes of Database and Data Warehouse operations

Databases collect, store and modify data according to ongoing OLTP operations, such as inserting, updating and removing data from a database. They are designed to simply manage the daily transactions in a company – that is why they are called transactional or operational databases.

A data warehouse is a solution for OLAP and its purpose is reporting and data analysis, but not only! Data Warehouses need data to perform analytics, so they store so-called cleaned data, by means of data cleaning – a process whose main goal is to ensure that the set of data used for analytics is correct and accurate.

By using both databases and data warehouses you can actually improve your business. How? A good deal of the data your systems receive and collect every day can be used to create useful insight for your company. ETL is the method of extracting data from source databases and transferring it into a data warehouse, where it can be used, processed and, later on, loaded into data visualization tools helping data analysts formulate business insights.

How can you use Databases and Data Warehouses for your business?

You need a database if you have multiple processes that modify data. A database will allow you to avoid overwriting performed changes and will become a necessity when your data outgrows the memory you have access to.

In short, if you sell products or services, you’ll most likely need a database soon. It is used to manage everyday business operations, like:

  • collecting sales data,
  • managing online orders and transactions,
  • resolving customer queries.

As most of these are standard operations for most industries, a database is an unavoidable investment. In banking, databases are used to check account balances, and in e-commerce, to create orders. Databases are vital for call-centers engaged with customer service!

And how about a data warehouse? Small companies often don’t realize how important analysis is for business, but reporting and data analysis is crucial for a company’s growth. This helps provide recommendations for your customers, so it supports sales.

Data warehouses can be used for:

  • planning budgets and developing a financial strategy for the company,
  • supporting sales by improving marketing strategy,
  • analyzing and forecasting. 

Those are just a few examples, as data warehouses allow us to use data for almost any kind of analysis.

Which industries can benefit from having Databases and Data Warehouses?

In order to be competitive you have to manage your data properly and use it to predict the future of your industry. Are you still not certain if investing in databases and data warehouses is good for your business? Check out how many industries benefit from it in day-to-day work.

  1. Banks – for the banking sector, databases are a necessity. Without them, it would be impossible to manage all customers’ products, such as loans, credit cards and investments, among others. While databases make it possible to collect information about all actions performed on accounts, data warehouses make it possible to run banks effectively by improving offers, analyzing market risk, etc. 
  2. Retail, production and sales – no matter what you are selling, you have to store data about transaction details, products and customers. Databases can be used for data management of the supply chain, tracking the production cycle and sales. Information about sold items and transactions may be later used to identify customer needs and behaviors and to plan marketing strategy and promotions.
  3. Healthcare – important patient data, test results and transaction details have to be stored in databases. Nowadays the healthcare sector is really investing in new technology such as big data, machine learning and data warehouse systems in order to predict the health status of the population, decide what kind of research to run, etc. Data warehouse solutions are also widely used in the insurance sector to find useful patterns.
  4. Transport – airline, train and bus networks are using databases to manage reservations and schedule information. Data Warehouses enable data analysis, creating good routes, adjusting loyalty programs for customers and more.

Databases are used widely by companies in many industries. They’re absolutely necessary for HR managers, telecommunication companies, education systems, e-commerce and many others. You should definitely consider using them for your business. At the same time, taking advantage of a data warehouse will allow you to improve your strategies (both financial and marketing strategies) and better predict market changes.

Advantages and disadvantages of Databases and Data Warehouses – final thoughts

Databases make managing daily transactions and other operations easy. Such a system offers high security and various techniques of storing and retrieving data. A properly designed data warehouse solution should meet any business analytics needs. Thanks to it, you can access data from many sources using one program and reduce the total time your employees spend on reporting and analytics. Of course all of your business’s historical data can be stored in a data warehouse.

A database enables your company to perform fundamental operations – it is a necessity. A data warehouse, on the other hand, can help you not only report, but also analyze data and come up with better ideas for your business. Would you like to expand your business? Contact us to get the best solutions for modern companies!