Why should a company consider investing in a data warehouse in the cloud?

Let’s delve into the reasons why data warehousing is crucial. While setting up a data warehouse can be a costly endeavor, it holds significant importance regardless of the size of a company. Essentially, a data warehouse serves as a repository that stores copies of data from internal databases and third-party tools. However, there are numerous compelling reasons why having a cloud-based data warehouse is essential.

Enhanced Performance:
Performance stands out as a primary motivation for establishing a data warehouse. Extracting data directly from databases for analytical purposes can cause issues for both analysis and application performance. Granting analysts direct access to application databases could potentially slow down their performance since queries often involve scanning large numbers of rows at once.
Furthermore, the frequent updates and transactions taking place increase the likelihood of table crashes or server overloads, which could adversely affect users. Application databases often require complex joins due to their high level of normalization. This not only poses challenges for analysts and users but also hampers the speed of general queries.
Overall, the design, infrastructure, and usability demands of cloud data warehousing drive organizations to adopt data warehousing solutions.

Centralized Data for Analysis:
Another key advantage of a data warehouse is its ability to centralize all business workflows in one location. For instance, if users solely rely on application databases and third-party reports, they would need to extract, download, and subsequently consolidate data within Excel or Tableau dashboards and documents.
This process is prone to errors and consumes valuable time. Moreover, it doesn’t even account for the essential data cleansing procedures; it solely addresses the task of bringing all the data together.
In contrast, a centralized cloud data warehouse eliminates these challenges by creating a unified data layer. This layer is already processed, cleaned, and often contains relational keys that establish connections between various datasets.
Consequently, analysts can seamlessly combine data from finance, sales, human resources, and other business departments without manually extracting the data.

Improved Analyst Experience:
Data warehouses typically adhere to star or snowflake schemas. These schemas not only offer better performance due to reduced joins and a more intuitive design, but they are also conceptually easier for analysts to comprehend.
The focus on a central business workflow represented by a fact table, along with accompanying descriptive information in dimension tables, is straightforward to grasp. This simplicity contrasts with the intricately normalized structure of application databases, which require analysts to invest time in understanding and often lead to complications.
Hence, designing a data warehouse itself is more user-friendly, saving considerable time and preventing future headaches. These advantages mentioned thus far are only a glimpse of the benefits that adopting a data warehouse can bring to any organization.

Among other benefits that the implementation of a cloud data warehouse brings to a company we can also mention that unlike on-premises data warehouses that require expensive hardware, time-consuming upgrades, and constant maintenance, cloud solutions offer a more economical approach. With on-premises setups, scaling up a business intelligence plan can lead to skyrocketing costs, as computing and storage cannot be purchased independently. In contrast, cloud data warehouses allow organizations to purchase the exact amount of computing and storage power needed, eliminating the need for unnecessary hardware and associated expenses. This flexibility proves especially advantageous for companies dealing with fluctuating data flows and varying computing requirements throughout the year.

Another benefit is the accelerated speed and performance optimization that cloud data warehouses provide, by managing the increasing number of data sources while maintaining optimal speed and performance. On-premises data warehouses often struggle to keep up with the data influx, leading to bottlenecks and slower processing times. In contrast, cloud data warehouses excel in speed and agility. By leveraging multiple servers, these warehouses efficiently balance data loads and can process multiple data streams simultaneously. This inherent scalability and processing power enable organizations to efficiently analyze and derive insights from data, supporting faster and more informed decision-making.

We can also note as another benefit the improved self-service capabilities for business users that cloud data warehouses bring, because data accessibility is crucial for organizations aiming to make evidence-based decisions. On the other hand, traditional on-premises data warehouses often struggle to provide self-service analytics, limiting visibility and data exploration for business users. Configuring individual virtual machines and allocating physical storage for each user can be a time-consuming and costly endeavor. In contrast, cloud data warehouses leverage resource pooling, allowing for efficient sharing of computing power, networking, and storage. This enables IT teams to create data marts and provide self-service capabilities to business users without impacting overall performance or exceeding storage limits. Moreover, stakeholders from diverse business areas and locations can simultaneously query the same data set, fostering collaboration and empowering users to extract valuable insights.

Also, we can also bring to the table the enhanced data security that these implementations provide. While on-premises data warehouses were once considered more secure, the perception is shifting as companies recognize the enhanced security measures and cost savings offered by cloud data warehouses. Managing data security in on-premises environments involves dedicating full-time teams to oversee database security, which can be time-consuming and prone to human error. Additionally, on-premises data may reside in multiple locations, making it challenging to track and monitor data flows effectively. Cloud data, on the other hand, benefits from centralized security management and robust encryption services. Cloud engineers can implement tailored controls to protect data, ensuring a higher level of security. Features such as multi-factor authentication and virtual private networks further fortify the transport and storage of data, minimizing the risk of breaches and unauthorized access.

Finally, cloud data warehouses offer unparalleled scalability and flexibility, addressing the evolving needs of organizations. Unlike on-premises solutions that require significant upfront investments to accommodate future growth, cloud warehouses allow businesses to scale their computing and storage resources on-demand. This scalability ensures that organizations can handle increasing data volumes, accommodate seasonal peaks, and adapt to changing business requirements without the need for extensive hardware provisioning or infrastructure redesign. The flexibility of cloud data warehouses also enables seamless integration with various data sources and analytics tools, providing a unified and agile environment for data-driven insights.