As businesses gather and store ever greater quantities of data, managing it becomes increasingly challenging. To get the maximum value from it, it needs to be easily accessed and compiled so that it can be analysed. However, when it is stored in separate silos across numerous departments, this is hard to achieve. The solution that many companies are opting for in order to overcome these issues is data warehousing. In this post, we’ll look at the pros and cons of setting up a data warehouse.
What is a data warehouse?
A data warehouse is a centralised storage space used by companies to securely house all their data. As such, it becomes a core resource from which the company can easily find and analyse the datasets it needs to generate timely reports and gain the meaningful insights needed to make important business decisions.
The pros of data warehousing
The growing popularity of data warehousing is down to the benefits it provides business. Key, here, is that a unified data storage solution enhances decision making, enabling businesses to perform better in the marketplace and thus improve their bottom line. As a data warehouse also means data can be analysed faster, another advantage is that it puts the company in a better position to react to opportunities and threats that come their way.
With the entire array of the company’s data available to them, data managers can make more accurate market forecasts and do so quicker, helping them implement data-driven strategies swiftly and before their competitors. The accuracy of market forecasts is improved due to the warehouse’s ability to store huge amounts of historical data that can highlight patterns in market trends and shifting consumer behaviours over time.
Data warehousing can also help companies reduce expenditure by enabling them to make more cost-effective decisions, whether that’s in procurement, operations, logistics, communications or marketing. It can also massively improve the customer experience, with end to end customer journey mapping helping the company personalise product recommendations, issue timely and relevant communications, deliver better quality customer service and much more.
The cons of data warehousing
While the centralised storage of data brings many benefits, it does have some drawbacks that companies need to consider. For example, with such vast amounts of data in one place, finding and compiling the datasets needed for analyses can take time. However, not as long as would be needed if they were all kept in different silos.
Another potential issue is that when data is stored centrally, all the company’s data queries have to go through the warehouse. If the company’s system lacks the resources to deal with so many queries, this can slow down the speed at which data is processed. However, using a scalable cloud solution for data warehousing, where additional resources, charged on a pay per use basis, can be added as and when needed, eradicates this issue.
For many companies, the biggest obstacle for setting up a data warehouse is the cost. When undertaken in-house, there is often significant capital expenditure required for the purchase of hardware and software, together with the overheads of running the infrastructure. Additionally, there are ongoing staffing costs for experienced IT professionals. Again, the solution comes in the form of managed cloud services, like Infrastructure as a Service (IaaS), where the hardware and operating systems are provided without the need for capital expenditure and where software licencing can be significantly less expensive. What’s more, the service provider manages the infrastructure on your behalf, reducing staffing requirements. Even where specialised IT knowledge is required in-house, such as with integrating different systems, the 24/7 technical support from your provider will be there to offer expertise when needed.
Any company undergoing the process of digital transformation needs to consider the benefits of data warehousing. The centralised storage of all the company’s data is essential for companies that wish to integrate their existing business processes with today’s advanced digital technologies. Doing this means you can fully benefit from big data analytics, artificial intelligence and machine learning, and all the crucial insights they offer to drive the company forward.
Setting up a data warehouse in-house, however, presents several major challenges. There is significant capital expenditure required at the outset, together with on-going overheads. In addition, integrating a diverse set of company systems so that data can be centralised is not without its technical challenges. By opting for a cloud solution, however, cap-ex is removed, costs are lowered and many of the technical challenges are managed on your behalf.