Traditional vs Cloud Data Warehouse: Which One Should You Go For?

Sherlock Holmes once said – “It is a capital mistake to theorize before one has data.”

Sure you want to be all Sherlock Holmes by using data to its full power.

But with so much data lying around, you must already be aware of the importance of a data warehouse.

In fact, the global data warehouse market is expected to grow by approximately 8.3% between 2019-2024!

Surpassing a total market value of $20 billion by 2024, a data warehouse is no longer just a buzzword or a novel idea.

It is now mainstream as a growing cadre of organizations has turned to this methodology for their data storage needs. While traditional data warehouses have been around for quite some time, cloud data warehouses have emerged over the last five years.

But what is the difference between traditional and cloud data warehouses? And how is a cloud data warehouse better for your business?

What is a traditional data warehouse?

Requiring a provision of IT resources such as servers and software on-premise, a traditional data warehouse is located onsite to collect, store, and analyze data.

Here are some of the most common concepts of a traditional DWH –

Three tier architecture

Top Tier – Front-end BI tools used for reporting, querying, and analyzing

Middle Tier – Containing OLAP servers to make data more accessible

Bottom Tier – Comprises of the data warehouse server which has data pulled from multiple sources integrated into a single repository

Extract, Transform, and Load (ETL) tools are used mostly to pull data from disparate sources, blend it, and put it in a correct structure before loading it into a warehouse.

Here are some key pointers of a traditional DWH –

i) The data warehouses are located on-premises and require extensive investment – such as buying all the hardware and having a staff to manage it (regardless of when you’re going to use it)

ii) You extract the data at a database level from disparate sources, then standardize it to prepare it for analysis

iii) This warehouse will be huge since data will be from across the organization and put into one large database. However, the director of marketing or the managing director might have a set of questions. Thus, for them, data marts are created, which will be much smaller than the data warehouse and will give answers quicker

What is a cloud data warehouse?

As cloud technologies proliferate, cloud-based data warehouses have become a popular option. They help in collecting, storing, and analyzing data in a cloud environment, without needing for investments in hardware or IT teams.

Used for online transaction processing (OLTP) as well as lightweight operational reporting, a cloud DWH is built to work on very large data sets.

A dedicated cloud data warehouse is a great option if your data and query complexity grows or if you want to prevent your heavy-duty analytics workloads from interfering with the performance of your OLTP workloads.

However, each data warehouse in the cloud is built differently. Every provider has a unique structure and different way of processing data across physical servers and networks.

While Amazon Redshift is similar to a traditional warehouse, Google BigQuery enables users to query and share data without even setting up and paying for storage.

The distinctive capabilities of cloud DWHs allow companies to increase productivity and discover new paths to increase revenue through shared data insights.

Which one should you go for?

According to a report by Rightscale, 96% of companies now prefer using cloud computing.

For starters cloud data warehouse –

• Is self-service and user-friendly
• Requires lesser investment
• Helps you identify business trends, make future predictions with machine learning, data science, and AI
• Builds reports pulling anything you want to know from multiple data sources
• Track data and performance across your organization with mixed-load analysis

Cloud data warehouses have lesser barriers comparatively. Lower costs and effortless scalability make it more accessible for small, medium-sized and large enterprises as well. While they do have potential security concerns, the benefits definitely outweigh the negatives.

Leverage Grazitti’s Data Warehousing Solutions.