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!

What’s the benefit of columnar databases?


I hear you ask: “why are you writing about columnar databases?”. To answer that, I have spent some time researching about PowerPivot and Tabular Model these days which is powered by what Microsoft calls xVelocity (previously called Vertipaq) engine. It’s a columnar in memory Engine. And curiosity got better of me when I read the word: Columnar and I wondered what’s the benefit of Columnar Databases (aka column oriented databases) ? And why do they just not use the row-oriented database that powers OLTP workload and to answer the questions I did some research and here’s what I found:

First of all, let’s understand the difference between how row-oriented database and column-oriented database stores data:

Consider that we have a Table like this:


Now, in a row-oriented databases, it’s stored like this:



So on.


And in a column oriented databases, it’s stored like this:







Benefits of columnar approach:

Imagine that we want to compute the aggregation for column “Sales”. So if we have row-oriented database then we have to get access to every “page” and then extract the value of column from each row. Lot of work, right? But in columnar databases, if we want to compute aggregations over Sales column then we just access the page that has ALL values of sales column. Does it not reduce the IO by not accessing lot of pages?

I know there’s more to the story and this is just a over-simplification of the process – But you get the point, don’t you?

Thus remember that:

Column-oriented systems are more efficient when an aggregate needs to be computed over many rows but only for a notably smaller subset of all columns of data, because reading that smaller subset of data can be faster than reading all data. – wikipedia


The OTHER benefit is in the level of compression that can be achieved. Let’s see this concept in simplest of terms.

consider the following data stored in columnar database:

Q1Q1Q1Q1Q1……30 more timesQ2Q2Q2…….40 more times

The above data can be compressed by using the form:

valueBegin positionEnd position

And as you can see, we stored 76 values using just 9 values. So when they say we do 10x compression – this is how they do it!

This was an example of Run-length encoding.

Technically there are algorithms like: Run Length Encoding, Dictionary Encoding, GZIP, LZ compression that are used to compress data. The engine (like xVelocity) decides the best algorithm to use.

so let’s connect the dots.

In-memory technologies need that ENTIRE data is loaded into MEMORY before processing. It’s beneficial IF we can compress the data and so more data can be loaded into the same amount of memory. Also, in the realm of OLAP, aggregating  needs to be as efficient as it can be and as we have seen columnar databases are efficient at computing aggregations over many rows of a given column. So there’s certainly some serious benefits of using columnar databases in OLAP scenario’s and NOW I GET IT that why xVelocity is columnar and not row-oriented. Do not get me wrong, I am not saying that row oriented databases are bad, but in context of OLAP, column stores offer some benefits. And in general, the row oriented databases and column oriented databases have their set of pros and cons and there’s no superior way of doing things. Also, column stores does not need to be in-memory or in-memory does not need be to columnar. In case of xVelocity – it’s in-memory + columnar. But again In-memory does NOT equal to columnar databases.


Thus, in this blog post:

we’ve seen:

1) How do columnar databases store data?

2) Benefits of column stores

What we’ve not seen:

1) we’ve not explored the disadvantages and caveats of columnar databases.

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