What Is Data Warehousing?

Also known as enterprise data warehousing, data warehousing is an electronic method of organizing, analyzing, and reporting information. In modern business, being able to integrate multiple sources of data is crucial to make better-informed decisions.

For example, data warehousing makes data mining possible, which assists businesses in looking for data patterns that can lead to higher sales and profits.

How Does Data Warehousing Work?

A data warehouse essentially combines information from several sources into one comprehensive database. Data is extracted from individual sources and redundant data/outliers are removed. Next, the data is reorganized into a consistent format (e.g. tables, columns, charts) that can be queried.

Just like there are several different ways to establish a data warehouse, there are numerous data warehousing tools that businesses can use to upload and analyze their data. Some of the most popular data warehouse tools include:

Google BigQuery
Amazon Redshift
Microsoft Azure
Amazon DynamoDB

Data Warehouse Example

Company ABC is a body care retailer that’s struggling to gain repeat customers. They purchase data warehousing software and incorporate customer information from its point-of-sale systems (i.e. cash registers), website analytics, email lists, and feedback surveys.

By placing all of this information in one place (and considering all points of data), their team is better able to analyze its customer journey in a more holistic way.

Company ABC discovers that its products tend to open while being shipped, affecting reorders. By implementing necessary changes with their packaging team – and notifying previous customers about these changes – Company ABC ensures better customer satisfaction.

Why Is Data Warehousing Important?

Companies with data warehouses can have a distinct advantage in product development, marketing, pricing strategy, production time, historical analysis, forecasting, and customer satisfaction.

Ask an Expert about Data Warehousing

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Data Warehousing.

Are There Disadvantages of Data Warehousing?

Depending on the data warehouse software, it can be cost-prohibitive to design and implement a new system. Their setup can also be difficult to learn without the right training.

Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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