Image: Benefits of a Secure Data Warehouse
In today’s data-centric world, it’s clear that many business executives may not fully grasp the concept and value of a “Data Warehouse”. This gap in understanding is not due to any fault of their own but rather the technical nature of the industry. Most resources are not tailored to an executive audience, which often leaves them seeking straightforward insights on how such technologies can drive business growth.
As a business executive, your primary concern is understanding how a Data Warehouse can add value to your business. This blog aims to demystify the concept, explaining its benefits and potential for revenue generation.
What is a Data Warehouse?
Think of a Data Warehouse as an organised storage facility for your business data.
Imagine you owned an Amazon fulfilment store. You place an order to purchase various types of stock in bulk. Over at your storage facility, you have separated the receivings area from the warehouse area.
Your order arrives and all your stock is packed into the receivings area, unorganised, unmarked and stacked up. The stock sits in receivings area waiting to be unpacked, tagged,organised and moved into the warehouse where it will be stored in an ordered and easily accessible manner.
In the world of data, this receiving area is known as a “Data Lake”; where all data is stored in its raw format from various sources. In this receiving area all data is equal and is simply stored awaiting to be moved to the ‘organised area’ when needed.
The organised warehouse in this scenario resembles a business Data Warehouse. Data in the warehouse is cleansed, tagged, organised, transformed and ready to answer business questions on demand. The data is reshaped, aggregated and able to answer everyday business questions with ease.
This is the point where executives usually ask themselves, “Okay this sounds nice, but why exactly do I need this and what revenue will this generate for my business?”. Sounds familiar right?
Let’s look into the 5 main reasons why your business needs a Data Warehouse and how it can be used to generate revenue.
Ease of use and accessibility for analytics and reporting
Data in a warehouse has been cleansed, transformed and repurposed to answer business questions and provide insights to business teams. Data is usually sorted and stored in different layers that makes it easy to understand and use.
According to Bill Inmon – the father of the Data Warehouse, “a Data Warehouse is a subject-oriented, integrated, time-variant and non-volatile collection of data in support of management’s decision-making process.” (The Data Warehouse: From the Past to the Present – DATAVERSITY)
As an example data in a warehouse can be stored by business area, finance data would sit under the finance folder and operations data under the operations folder. This way of storing data makes it easy for data users to understand where data is stored and the data becomes much more discoverable.
Having a Data Warehouse eliminates the need to run around on a wild goose chase looking for data across multiple spreadsheets managed by various people, most times the person is on leave and everyone is locked out of the spreadsheet anyway! Data is secured and stored in a central location managed by a centralised data team.
One Source Of Truth
Ever been in a session where 3 of your senior managers from different departments do a presentation on monthly or annual sales and each one displays a different value for total sales? Even worse is that none of the figures match the financial statements you looked at yesterday!
This is one of the consequences of not having a centralised Data Warehouse. People across the business all do their own analysis from spreadsheets of data and have their own definition of key business metrics (i.e what is a new customer defined as?), it is not surprising when each manager presents a different figure for total sales.
With a Data Warehouse, one team is responsible for managing metrics, business logic and the Data Warehouse. This single source of truth is served to the rest of business to use for analytics and reporting. All business users and management use the same data for reporting and present a unified figure directly from the Data Warehouse.
Increased Data Governance and Compliance
We are seeing a massive drive and focus for data governance and compliance over the last few years. This is mainly due to the increased scrutiny from regulators on companies being required to protect customer data. Companies have been fined record amounts for non-compliance with data regulations such as GDPR and POPIA.
Imagine having to explain to a regulator how you protect customer data across your companies 100’s of Google sheets used for reporting. With a Data Warehouse governance is simplified as data is stored in a centralised location and managed by a centralised data team.
Using off the shelf data management and warehousing tools like Databricks and Unity Catalog makes data management and compliance extremely easy and all within the budget for startups.
Image: Data Governance with Databricks Unity Catalog
Access to the data is controlled by fine grained access controls and only authorised people are allowed to access the data. Processing and access of the data is fully auditable and executives can rest easily knowing that data is secured and only being used for intended purposes.
Data Is AI and Machine Learning Ready
The industry is in uncharted waters with the craze of AI exceeding even the wildest imaginations. Businesses are in a state of fear that if they do not jump onto the AI band wagon, they would be left behind.
While this sentiment is not totally unfounded, the even bigger risk is jumping on the AI bandwagon while your data is in a state that is not ready to support AI. As the saying goes “Garbage in – Garbage out” and rushing into the AI craze without a proper Data Warehouse in place can be detrimental to your customers and business.
A well orchestrated data lake and Data Warehouse can serve as an amazing base for your AI applications and seriously drive up revenue. Tech giants like Amazon leverage Data and AI to promote certain products to customers based on their previous shopping experience and what customers usually buy with a certain product. This massively drives revenue for Amazon online stores.
In today’s fast paced world, customers love convenience and ease of use. Simple things such as a customer adding a pair of jeans to their online cart and your AI predicting that the customer might need a matching T-shirt is life changing for the customer and drives sales revenue.
Increased Customer Satisfaction And Revenue Realisation
Image: Netflix uses customer data to personalise every customer’s streaming experience.
Many companies have perished due to not understanding the needs of their customers and shifts in the market. The signs were usually in the data but businesses were not equipped to read the signs and identify the early warnings from customers.
A Data Warehouse enables and empowers business users and analysts to interrogate data, identify trends and early warning signs and take swift action before the business starts losing customers and revenue.
Businesses also leverage data to understand gaps in their product offerings and gaps in the market and turn them into opportunities and competitive advantages to massively drive business growth, revenue and grab market share from competitors.
Netflix uses customer data to create a personalised experience for every single customer, only displaying series and movies that the customer enjoys based on their previous streaming patterns. No surprise at all that Netflix boasts an unheard of 93% customer retention rate.
Final Thoughts and Conclusion
Image: Meta was issued a massive fine in 2023 for non-compliance with GDPR regulations.
Although this blog discusses the benefits of having a Data Warehouse in place, executives usually still struggle to realise actual tangible revenue. I urge executives to flip this script on its head and look at the consequences of not having a Data Warehouse in place.
Look no further than the list of massive fines issued to companies for non-compliance with Data regulations. I usually advise executives to ask themselves the question, Is it worth the risk to not set up proper data governance and get fined as much as $1.3bn?
The short and simple answer is no! Especially if you weigh up the value a secure Data Warehouse can add to your business.
It should be quite evident that building a Data Warehouse is not a nice-to-have but an essential part of your business if you wish to be compliant with regulations and drive business growth. It is never too early or late to start your journey of building a secure Data Warehouse and start gaining Data Driven Insights from your warehouse.
Reach out to the Senture Team today to get a complimentary Data Landscape & Strategy – Senture review!