Back to basics: Why do you need OLAP cubes/ Data-Warehouses for enterprise business reporting systems?


Once in a while I write about back to basics topics to revisit some of the fundamental technology concepts that I’ve learned over past few years. Today, we’ll revisit why do we use OLAP and Data Warehouses for business reporting systems. Let me share some of the most common reasons and then I’ll point to resources that offer other reasons.

Let’s see some of the most common reason:

#1: Business Reports should not take lot of time to load.

From a Business User Perspective: They don’t want to wait for their report to populate data. Reports should be fast!

business reporting analysis

But if business users have to wait for data to show up on their report because of slow query response, then that would be bad for everyone involved. Business Intelligence solutions cannot permeate in an organization if the reports take a lot of time to load:

Business reporting analysis querying

So from a Technology standpoint: What can you do? And also why did the problem arise in the first place?

Let’s first see why the problem occurred in the first place?

So we have a bunch of database tables. To create a report, we’ll have to summarize (aggregate) values in lots of rows (think millions) and join few tables – turns out that if you query a transactional system (Database / OLTP), then you’ll get a slow response. In some cases, if the data model + data size + queries are not complex, then you could just run a query to create operational business reports and you won’t see any performance issues. But that’s not the case always! So if data model + data size + query requirements for reporting are not simple for OLTP/databases to handle and you see a poor performance – in other words, database/OLTP system takes up a lot of time returning data that the business reports require and the business users would see bad performance. The issue goes beyond complex data model + data size + query. You see, transactional systems may be running other tasks in parallel to returning data to business reports. So there’s the issue of resource contention on the OLTP database.

so that’s no good, right? Not only is the OLTP system bad at running queries needed for business reports but it also does not dedicate it’s resource for us!

So let’s create a copy of databases and have them dedicated to answer questions to business reports. so there’s not an issue of resource contention as we have dedicated resources to handle that. And while, we are at it – why don’t change the data model so that it best suits the queries that are needed for business reporting and analysis?

Well, that’s exactly what OLAP database is. It’s a database that’s created for business reporting and analysis. It’s does some neat things like pre-aggregating some values PLUS the data model in OLAP  is also best suited for reporting purposes. (Read more about Star schemas/ data mart / data warehouse / ETL if you’re curious to learn more).

OK – so that’s one reason: To improve performance! Now let’s see another one.

#2: Creating Business Reports over Transactional systems (OLTP) data is NOT developer-friendly:

Ok, so we already covered in the previous section that creating business reports over OLTP can cause performance issues. But there’s more to it then just performance. You see – the requirements of creating business reports is different then the requirements of transactions systems. So? well, that means that the data model used for OLTP is best suited for transactional systems and it is not an optimal data model for analysis and reporting purpose. for example: creating hierarchies, drill-down reports, year-over-year growth among other things are much more efficiently handles by OLAP systems. But if we were to use OLTP database, then it would take a lot of developer hours to write efficient (and correct!) SQL commands (mostly stored procedures) to get OLTP to give data that the business reports need. Also, some of the common business metrics that are used in reporting can be stored in a cube. so that each time a report get’s created, you can re-use the business metric stored in the OLAP cubes.

OK – so OLAP cube saves time (to create reports).

Not only, OLAP cubes perform better at returning data they also help us speed the process of creating reports.

That’s great! let’s see one more reason:

#3: Ad-hoc reporting over OLTP systems creates confusion!

This reason is more about why we should have a data-mart and data-warehouse.. So why do ad-hoc reporting over OLTP systems creates confusion among business users?

Imagine creating reports over a LIVE system that’s getting updated every seconds. If there are ad-hoc (as-needed basis) reports being created by different users – then everyone would see different results. so it’s important to have a common version for everyone. Also imagine, everyone combining data from different data sources. If they’re doing it differently then they would see different data. And not only that, if they’re creating derived (or calculated) columns and their formula’s are different then they would see different data. you see a common pattern here? There’s no conformity in data & formulas in the reports that gets created. What does it cause? Confusion! So what’s needed is what they call in the data-warehouse “single version of truth”. OLAP cubes (which gets data from data-warehouse) provide that common single data source for everyone and thus the conformity in data is maintained while creating business reports.

Also while we are at this, one more consideration that typically reports require historical data at aggregated level. So we don’t want to store each transaction over the last 10 years in an OLTP database, do we? NO! right? In such cases, the historical data is aggregated based on requirements and stored in datamarts (/data-warehouse) which is later consumed by the OLAP cubes and that way OLTP databases do not have to store lot of historical data.

Ok – that’s one more reason OLTP are bad w/ business reporting and analysis and that’s why we need data-marts (data warehouse) and OLAP Cubes.

That’s about it. for this post. Let me point you to Related Resources:

  1.  Just what are cubes Anyway (MSDN)
  2. Why do I need a Cube
  3. Why use a SSAS cube?

And as always, your feedback is most welcome! if I have missed some point and if you want to highlight it – please leave a comment!

Note from Paras: To support this blog and free content here, I partnered with Datacamp for affiliate marketing revenue. I personally use this platform (see my profile here) and highly recommend it. I wouldn't be endorsing them if it wasn't 10/10! Click on the link below to start your journey towards becoming the BEST data professional! datacampParas's datacamp referral link

7 thoughts on “Back to basics: Why do you need OLAP cubes/ Data-Warehouses for enterprise business reporting systems?

  1. Damu Venkatesan

    Great article Paras. One more thing to add is to have the calculations defined in one place so that users get consistent correct results whether they use it Excel or Reports. The cube is the place to do it.

  2. sasanka

    any idea that u have certificate experience but not practical experience and calling u a “GURU” CUBES takes a lot of time to load and worst part any changes i.e. just an additional cell value can make the cube go haywire.

  3. Jeff Stubing

    Paras, this is a GREAT explanation! It not only explains the reason OLAP is needed, it also goes into detail about what makes up the OLAP solution – something I wasn’t totally clear on. Thank you so much!

What do you think? Leave a comment below.