Do You Need A Data Warehouse – A Quick Guide
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Recently several consulting calls started with people asking, “Do we need a data warehouse?”
This isn’t a question about whether you need data warehouse consultants, but instead whether you should event start a data warehouse project. Which is a very fair question. Not every company needs a data warehouse.
That being said data warehouses can provide a lot of benefits.
They help centralize data, provide an easy access layer for data analysts and more. But they aren’t always a worthwhile investment. Our team has helped some companies develop far lighter weight solutions in order to keep costs low.
So in this article we will answer the all important question, do you need a data warehouse.
Why Build A Data Warehouse – Benefits Of A Data Warehouse
The most important question you need to answer is why you want to build a data warehouse. Does having greater access to your data really align with your business in its current state. Yes, all businesses can be improved by having access to data. But, not all businesses need a 3-6 month project to develop a maintainable data warehouse right now in their current state.
In order to understand whether you need a data warehouse, you need to understand the benefits of a data warehouse. Here are a few.
Makes Data Easy To Access For Analysts And Other End-users
One of the main benefits of a data warehouse is improved data accessibility. With a data warehouse, data from various sources is consolidated into a single location, making it easier for users to access and analyze the data they need. This eliminates the need for users to access multiple systems and databases to gather the information they need, which can be time-consuming and error-prone. Additionally, data warehouses typically provide a user-friendly interface that makes it easy for users to navigate and find the data they need.
Centralizes Data Sources
When I was early on in my career, the first way someone described a data warehouse to me was a central repository of all of a companies data. Whether it the data comes form marketing, finance, operations, research, etc. It’ll likely end up in the data warehouse. One of goals of a data warehouse is to be a place where all teams and analysts can come to and access the data they need. That way it’s easy to meld data across various sources.
Also there are lots of companies that want to pull in data from external sources as well. This could include government data, free data sets, scraped data sets and so many more.
The point is, in these cases you are centralizing multiple data sets into one location. Again, to go back to the first point and making data easier to access for analysts.
Data Warehouses Better Ensure Data Quality
Another benefit of a data warehouse is enhanced data quality. Data warehouses often include data cleansing and data integration processes that help ensure that the data is accurate and consistent. This is particularly important when dealing with large amounts of data from multiple sources, as it can be difficult to ensure that the data is accurate and consistent without these processes in place. Additionally, data warehouses typically include data validation and data quality checks that help ensure that the data is accurate and reliable.
Improved Reporting And Business Intelligence Capabilities
Increased business intelligence is another benefit of a data warehouse. With a data warehouse, organizations can gain valuable insights into their data that can help them make better business decisions. This is because a data warehouse allows users to analyze data from multiple sources in a single location, which can provide a more complete picture of the organization’s performance. Additionally, data warehouses often include advanced analytics tools and reporting capabilities that can help users identify trends and patterns in the data that may not be immediately apparent.
A data warehouse also enables organizations to improve their decision-making by providing a single version of truth. It allows all the users to access the same data, without the need to access multiple sources. This ensures that data is accurate and consistent, which means that users can trust the data they are working with.
Historical Tracking Of Data
One of the main problems some data sources have is they don’t always track historical data or at the very least they make it hard to access. Data warehouses are developed to make tracking historical data easy. Whether that be via performance or just by actually having a place where you can track historical information. Meaning when your customers change states or employees change job roles you can track that information easily. You don’t have to mesh dozens of different Excel sheets together, instead you can write a basic query.
This makes a huge difference when it comes to making processes repeatable.
Automation
One final point I’ll make about why your team should build a data warehouse is automation. Now automation, like data warehouses, has its pros and cons. But if you are constantly doing a process and it does take up enough of your time, then you might want to automate it. More specifically if your finance team or marketing team is constantly building the same report over and over again, there might be a better way.
You might consider building a data warehouse that then feeds into some BI tool like Sigma or Tableau and use that instead. Our team would be happy to do a quick consult to answer, “do you even need to automate that process”
In the end, there are still more reasons you might want to consider a data warehouse but this is a good baseline for most companies.
Who Can Help Build Your Data Warehouse
Data warehouses are often built by data engineers and data architects. At many companies this is a single individual or team that plans, designs and builds the data warehouse. Although, when first starting out its not uncommon for companies to hire data warehouse consultants to build their data warehouses.
The benefit when using data warehouse consultants is that they have built countless data warehouses so they can work with your team to deploy said data warehouse quickly. Then usually the data warehouse can be managed by internal teams.
Overall, there are a lot of options when it comes to answering the “who should build your teams data warehouse” question.
When Don’t You Need A Data Warehouse
The truth is you don’t always need a data warehouse. They are expensive to build, maintain and manage they also duplicate data and pose risks in terms of mis-guiding teams when there aren’t well designed data observability solutions set up.
So here are a few reasons why a data warehouse might not be a good idea.
- You just need to pull data from a single source
- You only need to know a few key numbers(KPIs)
- You only need to pull data once a month and the report takes an hour to put together
- You don’t actually have a plan of what to do with the data once it’s in the data warehouse
Now there is nuance in all of this of course. But the general idea of why you might not need a data warehouse is because your reporting requirements are limited. This could be due to smaller amounts of data, fewer data sources, fewer KPIs or your company only looks at reports a few times a year.
What Data Warehouse Solution Should You Pick
There are plenty of options in terms of best of breed data warehouses. There are also solutions these days that are more hybrid between a data lake and data warehouse (a data lakehouse) if you will. But here are some very common solutions that your data warehouse consultant might recommend.
How To Start Your Data Warehouse Project
Before looking to start your data warehouse project, you will want to assess a few things. Here are just some high-level questions you should ask yourself before looking into a data warehouse consultant or new employee.
- What business goals are you trying to drive with data
- Which data warehouse should your company pick
- What types of reports/use cases do you want to create
- How will you manage your data
What business goals are you trying to drive with data
One of the biggest mistakes companies make is that they read that they need a data warehouse and then start looking for consultants. When you should first see if the idea of a data warehouse aligns with your business goals. To do this, first you should figure out what KPIs or OKRs align with your businesses goals. Once you have those you can work to figure out where you would get that data.
If your team doesn’t have the expertise or time to do this, then it might be time to hire a data consultant who can provide those insights for you. Our team has done this dozens of times for companies in multiple industries so feel free to reach out.
What types of reports do you want to create
Finally, what do you actually want to do with your data? Are there specific types of reports that you want to create? Are you looking to build automated reporting or use Excel?
Try to get a general idea of where you actually want to be in the future. Yes, a data warehouse consultant should help you do a lot of this. But having a general idea will help save time and ensure that the project runs even smoother.
How will you manage your data in the long term
Building a data warehouse is only step 0 in your companies journey of becoming data-driven. Another important aspect a top tier data warehouse consultant will consider is data governance, privacy and security. There is a lot of data that your company may have access to that could put them at risk. There are data breaches every day, some external others internal. A good data warehouse consultant will make sure that access management is set-up correctly. They will also work with your team to set-up policies in terms of how to continue to manage and maintain good practices.
So. Do You Need A Data Warehouse?
You might still be wondering at this point, do you need a data warehouse or perhaps now you’re pretty sure you need one. You need to be able to access your data quickly and have it all centralized in one place.
Then it’s probably time for you to consider building a data warehouse.
The next questions you need to answer is who do you want to build your data warehouse. You either need to hire a more senior data engineer or you should look into consultants. The key here is you need an individual who has worked on a start-to-finish data warehouse project a few times in the past. This helps ensure the likelihood of success for your data warehouse project.
Our team would love to talk to you to see how we could help you on this journey. Feel free to reach out to us today!
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