The devil`s in the data
Gary Lawrence, MD of Business Objects SA, says the need for a data warehouse is based on management`s requirement to have instant access to standard reporting information and the additional ability to extract and analyse information as needed on an ad hoc basis.
"The answer to one question will often prompt further queries and the data warehouse must have the flexibility to furnish what is required.
"Traditional transactional databases are good at efficiently processing transactions but they fall short when managers are seeking to analyse information and engage in complex queries.
"Data warehouses address this issue by creating a specialised information extraction environment," Lawrence says.
Another reason for a data warehouse is that most businesses have their information stored on a variety of systems and applications including enterprise resource planning systems, the Internet, human resources systems, and even desktop computers.
The data warehouse provides a single interface with all the enterprise`s information. Additional tools are added on top of the data warehouse to facilitate the extraction of ad hoc information and to analyse that data. Furthermore, these tools can be used to develop scenarios that can assist in optimising the business.
"Business intelligence is one of these tools. A manager might notice that sales are down in a particular region and then drill down into the data further to analyse trends such as individual product sales, delivery cycles, product quality and seasonal factors.
"The next step is to examine remedies such as alternative products, improving delivery times and even providing new products that might offset seasonal fluctuations.
"Having reached his conclusions, the manager will then use the system to inform all other interested parties so as to share the information across a business intelligence portal," Lawrence says.
Lawrence maintains that data warehouses are not cheap and companies need to ensure that they fully understand the cost justifications and business case before embarking on projects.
"There are different ways of achieving results. A data mart may solve the problem in a particular area of a business and in some cases placing a business intelligence tool over the operational databases may meet the business need," he says.
In most cases as much as 60% of a company`s data is inaccessible to managers, severely hampering their ability to make quality decisions. It is this fact that often provides the cost justification for improving the company`s access to information.
He says one of the ways in which companies can realise direct bottom line benefit, over and above assisting their own staff, is by making information in data warehouses available to suppliers and customers so as to facilitate more effective supply chain management.
In addition, to cutting transaction cost in the supply chain, company resources are no longer needed for routine customer and supplier queries. "There are some interesting developments taking place as a direct result of having information available.
"For example, a US insurance company is providing its broker network with the ability to analyse and understand the claims their customers are making on the insurer. This allows the brokers the opportunity to work with their customers to reduce claims.
"The insurer provides an incentive by sharing the reduction in claims experience with brokers," Lawrence says.