Data warehouses need analytical intelligence to deliver value

A data warehouse is a vital link in any organisation`s broad business intelligence (BI) strategy, but on its own does not deliver any value.

"There is a common misunderstanding about what a data warehouse actually is," says Bruce Jones, manager of sales support for the South African subsidiary of the global SAS Institute. "In reality, it is a storage place for structured data in a format that makes it ready for analysis. It is a means to an end, but definitely not an end in itself."

Jones believes that a data warehouse with an OLAP focus is of only very specific value.

"OLAP is good, but it focuses on history," he says. "It may tell where companies have made mistakes or good decisions, but does not show how these can be prevented or repeated. It is backward-looking, limited to reporting on what has happened in the business in the past. This neither adds significant value nor saves costs.

"When properly structured according to its intended business purpose, and viewed as integral to the organisation`s overall BI strategy, the data warehouse gives companies the ability to predict the future," he says. "When used to enable analytical intelligence, it provides real value."

Analytical intelligence goes one step further than business intelligence by looking into the future as well as the past. It does not merely look in the rear view mirror, but looks ahead to predict future happenings based on past performance.

"Prediction is achieved very accurately through predictive modelling, forecasting and data mining, all analytical intelligence techniques," says Jones. "By determining what a company should be doing, rather than what it has already done, managers can make meaningful decisions, for example about changing business strategies or processes. This results in several benefits, including major cost savings."

By looking towards the future, analytical intelligence enables managers to make sound decisions about where they should steer their organisations to maximise profit and customer value.

"Data warehousing, then, is a means to an end," says Jones. "It is a vital link in the intelligence value chain which is made up of business intelligence planning, quality ETL (extract, transform and load - with quality), intelligence storage, business intelligence and analytical intelligence."