Data Warehouse: Definition, Uses, and Examples

Where do you store a petabyte of data for business intelligence? A data warehouse, that’s where.

Data warehouses store and process large amounts of data from various sources within a business. An integral component
of business intelligence (BI), data warehouses help businesses make better, more informed decisions by applying data
analytics to large volumes of information.

In this article, you’ll learn more about what data warehouses are, their benefits, and how they’re used in the real world. You’ll
also learn how data warehouses differ from other similar concepts, explore common warehousing tools, and find relevant
courses that can help you start exploring a career in data today.

What is a data warehouse?

A data warehouse, or “enterprise data warehouse” (EDW), is a central repository system in which businesses store valuable
information, such as customer and sales data, for analytics and reporting purposes.

Used to develop insights and guide decision-making via business intelligence (BI), data warehouses often contain a
combination of both current and historical data that has been extracted, transformed, and loaded (ETL) from several
sources, including internal and external databases.

Typically, a data warehouse acts as a business’s single source of truth (SSOT) by centralizing data within a non-volatile and
standardized system accessible to relevant employees. Designed to facilitate online analytical processing (OLAP) and used
for quick and efficient multidimensional data analysis, data warehouses contain large stores of summarized data that can
sometimes be many petabytes large [1].

Data warehouse examples

As data becomes more integral to the services that power our world, so too do warehouses capable of housing and
analyzing large volumes of data. Whether you’ve realized it or not, you likely use many of these services every day.

Here are some of the most common real-world examples of data warehouses being used today:

Health care

In recent decades, the health care industry has increasingly turned to data analytics to improve patient care, efficiently
manage operations, and reach business goals. As a result, data scientists, data analysts, and health
informatics professionals rely on data warehouses to store and process large amounts of relevant health care data [2].

Banking

Open up a banking statement and you’ll likely see a long list of transactions: ATM withdrawals, purchases, bill payments, and
on and on. While the list of transactions might be long for a single individual, they’re much longer for the many millions of
customers who rely on banking services every day. Rather than simply sitting on this wealth of data, banks use data
warehouses to store and analyze this data to develop actionable insights and improve their service offerings.

Retail

Retailers – whether online or in-person – are always concerned about how much product they’re buying, selling, and
stocking. Today, data warehouses allow retailers to store large amounts of transactional and customer information to help
them improve their decision-making when purchasing inventory and marketing products to their target market.

Data warehouse benefits

 Data warehouses provide many benefits to businesses. Some of the most common benefits include:
 Provide a stable, centralized repository for large amounts of historical data
 Improve business processes and decision-making with actionable insights
 Increase a business’s overall return on investment (ROI)
 Improve data quality
 Enhance BI performance and capabilities by drawing on multiple sources
 Provide access to historical data business-wide
 Use AI and machine learning to improve business analytics

Data lake vs data warehouse vs. database

There are many terms that sound alike in the world of data analytics, such as data warehouse, data lake, and database. But,
despite their similarities, each of these terms refers to meaningfully different concepts.

At a glance, here's what each means:

Database Data warehouse Data lake

A centralized repository and A large repository designed to

Any collection of data stored
information system that is used to capture and store structured,
electronically in tables. In
develop insights and guide decision- semi-structured, and
business, databases are often
making through business unstructured raw data. This
used for online transaction
intelligence. A data warehouse data can be used for machine
processing (OLTP), which
stores summarized data from learning or AI in its raw state
captures and records detailed
multiple sources, such as and data analytics, advanced
information in real-time, such as
databases, and employs online analytics, or databases and
sales transactions, and then stores
analytical processing (OLAP) to data warehouses after being
them for later reference.
analyze data. processed.

Data warehouse concepts

Whether you’re looking to start a career in business intelligence or data analytics more generally, you should have a strong
grasp of key data warehouse concepts and terms. Here are some of the most common to know:

Data warehouse architecture

The exact architecture of a data warehouse will vary from one to another. Data warehouses can be one-, two-, or three-tier
structures. Perhaps the most common, however, is the three-tier architectural structure, which looks as follows:
 Bottom tier, also called the data tier, in which the data is supplied to the warehouse.
 Middle tier, also called the application tier, in which an OLAP server processes the data.
 Top tier, also called the presentation tier, which is designed for end-users with particular tools and application programming
interfaces (APIs) used for data extraction and analysis.

Cloud data warehouse

Traditionally, data warehouses were housed in servers within a business’s physical location. Today, though, more and more
data warehouses use cloud storage to house and analyze large volumes of data. Some of the most common cloud data
warehouse software, include:
 Microsoft Azure data warehouses, particularly Azure Synapse Analytics and Azure SQL database
 AWS’ data warehouse Amazon Redshift
 Google cloud’s data warehouse Google Big Query
 Snowflake data warehouse

Data warehouse acronym glossary

Acronym Term
AI Artificial Intelligence
ATM Automated Teller Machine
BI Business Intelligence
EDW Enterprise Data Warehouse
ETL Extracted, Transformed, and Loaded
OLAP Online Analytical Processing
OLTP Online Transaction Processing
ROI Return on Investment
SQL Structured Query Language
SSOT Single Source of Truth