Data Warehousing

Written By:
Paul Tracy
Updated August 5, 2020

What is Data Warehousing?

Data warehousing is an electronic method of organizing information.

How Does Data Warehousing Work?

A data warehouse essentially combines information from several sources into one comprehensive database. For example, in the business world, a data warehouse might incorporate customer information from a company's point-of-sale systems (the cash registers), its website, its mailing lists and its comment cards. Alternatively, it might incorporate all the information about employees, including time cards, demographic data, salary information, etc.

By combining all of this information in one place, a company can analyze its customers in a more holistic way, ensuring that it has considered all the information available. Data warehousing also makes data mining possible, which is the task of looking for patterns in the data that could lead to higher sales and profits.

There are different ways to establish a data warehouse and many pieces of software that help different systems "upload" their data to a data warehouse for analysis. However, the basic idea is to first extract data from all the individual sources (cash registers, time clocks, office computers), remove redundant data and organize the data into a consistent format that can be queried.

Why Does Data Warehousing Matter?

Companies with data warehouses can have an advantage in product development, marketing, pricing strategy, production time, historical analysis, forecasting and customer satisfaction. However, data warehouses also can be very expensive to design and implement, and sometimes their construction makes them unwieldy.