Benefits of Data Warehouse

Introduction into benefits and risks of Data Warehouse

In companies there is an increasing need for presentation of larger and larger amounts of quality information contained in production systems. For now in many companies, a part or major parts of information from production systems are exported in the data warehouse – Datamarts. There is a constant need for expanding existing and constructing new Datamarts that would include production systems that are not yet covered by existing Datamarts. The need for new Datamarts is recognized by management and employees at all levels of the organizational structure. Therefore, the article tries to explain how and when company can get involved in the building of a new segment of Data warehouses – Datamarts, and what are the dangers and benefits of data warehouse construction.

Decision support systems are fast becoming the practice in most companies. The fact that should be kept in mind is that investment in a large data warehouse is often greater than in any of the applications that the company currently uses. Initially it might seem not so big of an investment, but one must reckon that once built, the warehouse still does not work by itself and requires the attention of one or more persons depending on company size and number of users that use it. Adding the working hours of several people involved in cleaning the data identified as ”garbage” and optimization of response time to inquiries and similar activities for which a warehouse is several times more expensive. Without these processes, data warehouse benefits would be significantly decreased. On the other hand, engaged and responsible persons for the data warehouse must be a person from the company who knows how to operate production systems – data sources for the DWH. Depending on the number of such sources and the time and comprehensiveness of data in the warehouse, such employees are often very valuable to the company.

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Buying Data Warehouse or building with own resources?

The strategic value and advanatage of data warehouse

The company in its daily operating-production systems collects large amounts of data. This information may be of different shapes, e.g. data – a person Y paid on 23 March 200 USD subscription service, or Z – sales in continental region has decreased for 11 percent compared with the same period of last year. Data provide a picture of what is happening in a particular segment of business enterprises. After the data are collected, the next important step is transformation to information. This information (later knowledge) allows a company to bring a number of important decisions for future business based on available information. For example – Service XX is terminated because it created a loss of 12 percent per month. Based on sales data, it is obvious that it is outdated and unattractive to users.

Data Warehouse is a tool and a system of knowledge for people in the company responsible for making decisions. This means that the sooner  a company begins to make decisions based on available data stored in the warehouse, the sooner will the DWH project prove its value to the company. Therefore, the out-of-the-box solution might sound like a good idea, but it is, unfortunately, not possible, i.e. it is possible in a narrow sense, but for now let’s call the finished product a warehouse.

Reasons for success or failure of data warehouse projects

Studies show that about 50 to 60 percent of benefits of a data warehouse are not as expected. To go a little bit further, data warehouse projects fail to fulfill planned targets. About 70 percent of these failures by warehouses were constructed by their own forces. Why is this so, and what are the reasons that a company has its own forces not able to build a data warehouse? Here are reasons why the benefits of data warehouse are not as expected:

1. There is no insured sponsor in the managerial structures. Top management must be interested in building a data warehouse if the analysis proves the validity of its construction, and must support it with all the resources. Support of top management is reflected in the sponsorship of the project. BI is primarily intended for people who make decisions in the company and their assistants. If they do not want it to use for their services, the project simply collapses. On the other hand, any such project is quite expensive, and without a solid management, structure determination sooner or later will be suspended due to high costs and a large commitment of human resources.
2. In our company there is no sufficient number of people who can devote 100 percent to building data warehouses. It should be remembered that the construction of a typical warehouse takes one to two years and normally mobilizes 10 to 30 people. Talk to many human resources and it does not bother them. Operational problems through such a long period are usually impossible. If it is possible then these people definitely were not valuable for existing production systems and were in excess from the beginning.
3. Engagements only own power within the organization without consultants and subcontractors. The idea is that IT specialists within companies know better data and processes in a company of professionals out of business, but it is a fact that the external IT companies unburdened by the problems, and due to the nature of their jobs have a higher and broader experience, especially if you are engaged in a data warehouse for some time. For example, an external IT specialist on the basis of these requirements often can recognize future problems and what needs to be done for their elimination before the real need arises. As previously stated, the construction with own forces succeeded in merely 30 percent of cases and is therefore a real danger of the failure of building a data warehouse if not engaging specialists outside the company.
4. Resistance is possible within the company in introducing new technologies – data warehouses in the regular work. Resistance can manifest itself from the leadership structure to the lowest levels. Employees and management who will most use applications based on the technology of data warehousing must be open to new technologies.

More information:

Benefits and risks of building Data Warehouse (Part2)

Benefits and risks of building Data Warehouse (Part3)

Benefits and risks of building Data Warehouse (Part4)