Knowing the differences between data warehouses and databases can clear up a lot of confusion for many people, especially with the volume of data we have these days.
In this blog post, I'll discuss the differences between these two types of data systems. I'll also provide some examples to help illustrate the points we make. Let's get started!
Data warehouse vs. database, quickly
If you just need the quick answer, here’s the TLDR:
- A data warehouse is a data system that stores data from various data sources for data analysis and reporting. Data warehouses are often used for data analytics and business intelligence tasks like market segmentation and forecasting.
- A database is a data storage system for recording information collected from applications in an organized format.
Now let’s look at each in detail.
How data warehouses work
Data warehouses are used for data analysis and reporting. With data warehouses, data can be analyzed over time to gain insights into trends and patterns. Having a data warehouse in your organization can bring about many benefits, including:
- Having a central data repository with data cleansing and data normalization and transformation capabilities
- Enhancing data security and data privacy
- Enabling real-time data analytics
- Collaborating on data
Data warehouses also provide a central data source that can be easily accessed from multiple applications. It contains data from multiple sources, usually from transactional systems such as point-of-sale or customer relationship management (CRM) software.
In my experience as a data analyst, data warehouses are typically built up as part of data pipelines to ensure good reporting. All data ingested by data warehouses are cleaned and segmented according to the purposes and needs of business intelligence reporting.
Here are some examples of common data warehouses:
- Amazon Redshift
- Microsoft Azure Data Warehouse
- Google BigQuery
I first experienced working with a data warehouse when I pursued my Google Data Analytics Certification. I had opportunities to work with Google BigQuery to load CSV files to create a data warehouse for my project.
Through this experience, I realized that having a cloud data warehouse was extremely helpful in structuring and storing data for analysis — as compared to a database. Although the learning curve to learning how to set one up can be hard, it is an essential skill in the data analytics field.
(Remember: data warehouses differ from data lakes.)
How databases work
A database is a data system that stores data in an organized format, typically on a server. It is used to store data collected from applications and other sources.
Databases are commonly used for data management tasks such as data validation, data manipulation and data retrieval. They are also often used for online transaction processing (OLTP) systems, such as customer and sales data.
Databases can come in different forms based on their structure. Some common forms of databases include:
- SQL relational databases
- NoSQL databases
- Cloud databases
Some common databases include MySQL, Oracle Database and Microsoft SQL Server.
Data warehouses & databases: 4 key differences
With the core concepts out of the way, let’s clarify the differences. Some key differences between a data warehouse and a database include the following:
- Data modeling
- Data storage
- Data type
Data warehouses use dimensional data models to organize data into meaningful categories for analysis. Conversely, databases typically use relational data models, which are better suited for data management tasks such as data manipulation and data retrieval.
This means that data warehouses are designed to be more focused on downstream analytics!
Data warehouses tend to store large amounts of data from multiple sources, typically for long-term storage and reporting. Data warehouses tend to have more extensive storage due to the need to retrieve historical data for analysis. For example, if you're going to do a year-on-year analysis, you've got to have data from at least a few years back!
Databases, on the other hand, store data in tables and are used for short-term data storage or data manipulation tasks. A database is mainly used for:
- Data manipulation
- Data retrieval tasks
It stores data in tables, and data is typically stored only for a short time. However, some databases can also store quite a large amount of data as well, depending on the use case and design.
Data warehouses typically store data that's been cleaned through some ETL processes and are either segmented or summarized in a suitable format for analysis. Databases usually have data that's less clean but have a higher level of detail.
In my experience, databases will be where more of your raw data will come from. A data analyst will typically take these highly detailed real-time data from databases and clean them. Moreover, data may be summarized in a lower level of detail.
For example, data taken from databases can be summed by month. This will be useful for monthly reporting on website users, customers, and company financials. Subsequently, the data will be loaded into data warehouses, where detailed data will no longer be stored.
Having a data system that's optimized is crucial in maximizing value from your data. That's why both the data warehouse and the database have unique optimizations to suit their specific needs. Let's have a look at their differences in optimization:
- Data warehouses use OnLine Analytical Processing (OLAP) as a layer to better optimize for processing large volumes of data at high speeds.
- Databases use OnLine Transaction Processing (OLTP) to process data more efficiently for data management tasks.
Best practices for data warehousing & managing databases
When it comes to managing data warehouses and databases, there are some important best practices you should be aware of:
- Keep data up to date. Make sure data is as current as possible by using data pipelines or automated data refresh processes that update data in real-time or close to it.
- Use a suitable data model. Make sure data is organized and structured in the right data model that best fits your data needs and usage.
- Optimize data. Ensure data is optimized to the fullest extent so that query performance can be improved. Use data compression techniques or other optimization methods such as OLAP or OLTP to improve data processing speed.
- Adhere to security best practices. Establish data security policies and ensure data is encrypted whenever possible. Also, ensure data access permissions are set to the right levels and data privacy laws are followed.
- Monitor data usage. Track data usage metrics and understand how data is being used better to optimize data pipelines and processes for data analysis.
Following these best practices will help ensure data is managed, stored, and used in the most effective way possible!
Choosing data storage
To summarize, a data warehouse and a database each have their own unique data storage and data processing functions, as well as capabilities that can be beneficial to different organizations.
I hope this article clears out any confusion about data warehouses and databases and gives you a better understanding of the differences between them. However, do take note that while most organizations follow these key differences, some may vary!
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