Comprehensive Guide to Modern Data Warehouse in 2024

A data warehouse is a centralized system that stores, integrates, and analyzes large volumes of structured data from various sources. It is predicted that more than 200 zettabytes of data will be stored in the global cloud by 2025. This exponentially growing data becomes a challenge for traditional data warehouses, as they frequently have issues with performance, scalability, high costs, and complex data integration.

According to Gartner, more than 85% of organizations will embrace a cloud-first approach by 2025 and will not be able to fully execute their digital strategies without using cloud-native technologies.

Modern data warehouses mitigate the issues of traditional data warehouses by leveraging cloud-based solutions that provide scalability with on-demand resources. They can handle both structured and unstructured data and also provide cost-effective storage and computation with a pay-as-you-go model.

What is a Modern Data Warehouse?

A modern data warehouse is an advanced storage system that can store large volumes of structured and unstructured data from multiple sources. It differs from traditional warehouses because it is based on cloud technology, providing scalability, flexibility, and real-time data processing.

A modern data warehouse combines data management and processing systems like data lakes, big data processing engines, and machine learning platforms. It can handle multiple data types and formats, has strong security measures, and is designed for high performance with services like Google BigQuery and Amazon Redshift.

With a modern data warehouse, businesses do not have to struggle with time-consuming data pipelines. They can gain insights more efficiently, providing customers with what they want.

Modern Data Warehouse Architecture Overview

A modern data warehouse is designed to handle vast and diverse types of data. It integrates data from various sources, from structured traditional databases to unstructured data like social media and IoT devices.

A modern data warehouse is specifically designed to handle both batch and stream data processing so that information can be transformed, stored, and analyzed quickly and easily.

Key Components

Data Sources

Data from a modern data warehouse can be structured such as from a relational database, semi-structured such as JSON or XML from application APIs, and unstructured such as text, images and videos.

The most common data sources include Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), social media platforms, Internet of Things (IoT) devices, and mobile applications. We can combine these types of data to get an overall view of business operations and customer interactions.

Data Ingestion

Data ingestion is the process of importing, transferring, loading, and processing data from various sources into the data warehouse. It can be done in batches at scheduled intervals or in real time, where it runs on streaming data continuously.

The tools used to perform data ingestion must be able to handle the volume, velocity, and variety of data to ensure data quality and availability.

Data Storage

Modern data storage solutions often include data lakes and data warehouses. A data lake is a cost-effective repository for large volumes of raw, unprocessed data. It has many analytical uses, such as exploratory data analysis and machine learning.

On the other hand, a data warehouse stores structured and processed data that is optimized for querying and reporting. It is useful for specific queries and tasks, where it can provide high-speed analysis of datasets.

Data Processing and Transformation

After the data is collected, it must be processed and transformed to match the schema of the data warehouse. This includes data cleaning, deduplication, validation, and standardization through ETL (Extract, Transform, Load) or ELT (Extract, Load, Transform) processes.

These transformations are performed within a modern data warehouse using highly scalable and elastic cloud-based resources to simplify dealing with big data.

Data Governance and Security

Data governance refers to the policies and standards to make data consistent, reliable, and secure. Security is a part of governance that prevents breaches or unauthorized access to the data.

Modern data warehouses are designed to include safety measures such as data encryption, access management, and audit. They also follow compliance standards like the GDPR or HIPAA to ensure we maintain individual privacy while handling data.

Data Analytics and BI Tools

Data analytics and Business Intelligence (BI) tools support end-users to interact with data for decision-making purposes. These tools allow for complex data queries, reporting, data visualization, and predictive modeling without requiring deep technical expertise. Users can thus identify trends, generate reports, and create dashboards to visualize metrics and KPIs.

Modern BI tools such as Tableau, Power BI, and Looker integrate analytical capabilities and make data accessible and comprehensible for many business users and decision-makers.

Modern Data Warehouse Pyramid

Level 1: Data Acquisition

Data Acquisition or ingestion involves collecting raw data from various sources, such as databases, CRM systems, sensors, social media, and IoT devices. This data is often unstructured or semi-structured and may be collected in real time or in batches.

The key aspect at this level is to ensure the timely and accurate retrieval of data, which lays the foundation for subsequent processes in the data warehouse.

Level 2: Data Engineering

Data engineering can be described as the process of transforming the collected data so that it is comprehensible to the system and easily usable. At this level, the data engineers perform data cleaning, enrichment, and transformation to make it suitable for analysis.

They build data pipelines for efficient data flow and storage in a data lake or a data warehouse. This process also involves checking for data format, duplication, and query scan optimization.

Level 3: Data Management and Governance

Data Management and Governance are critical layers that ensure that data within the organization is in compliance with standards and regulations. At this level, policies on data security, data quality, data privacy, and data life cycle are planned and implemented.

Data governance frameworks assist in defining ownership and accountability, data lineage, and metadata management – to ensure accurate and reliable data.

Level 4: Reporting and Business Intelligence

Reporting and Business Intelligence (BI) is the fourth layer of the modern data warehouse pyramid. Here, data is transformed into actionable insights through reporting, dashboards, and visual analytics.

The use of visualization tools at this level assists decision makers in efficiently identifying trends, patterns, and outliers. BI tools such as Tableau and Microsoft Power BI process and present data in a format allowing non-technical users to make data-driven decisions without technical expertise.

Level 5: Data Science

Data Science includes advanced techniques like machine learning, predictive modeling, and artificial intelligence. At this level, data scientists focus on understanding data at a deeper level, predicting future trends, and recommending actions.

Data science uses statistical models and algorithms to provide a competitive edge and drive innovation. The data available in the modern data warehouse is analyzed using analytical tools such as Python, R, SAS, and Apache Spark. These tools help analyze datasets and build predictive models that can improve decision-making.

Modern Data Warehousing Use Cases

Some of the key use cases of modern data warehouses are as follows:

1. Business Intelligence: Modern data warehouses collect data from multiple sources, enabling complex queries and reports. This provides advanced analytical capabilities on sales, customers, and market trends.
2. Real-time Analytics: Modern warehouses enable streaming data, allowing for the analysis of current business operations, market trends, and customer interactions in real time. This is especially beneficial for industries such as financial services and e-commerce.
3. Predictive Analytics: Historical data can be used in machine learning models to predict future events, which is useful in planning, demand forecasting, and risk analysis in organizations.
4. Customer Relationship Management (CRM): It assists in better managing customer data and providing services according to the customer’s preferences, thus increasing user satisfaction and retention.
5. Internet of Things (IoT) Analytics: Modern data warehouses can store and process huge amounts of data generated by IoT devices to analyze patterns and optimize IoT systems.
6. Regulatory Compliance: Data warehouses help meet regulatory requirements by containing historical data for audit trails and reporting purposes.

To gain deeper insights into the frameworks that support data warehousing, check out our article on Understanding Modern Data Architecture.

Traditional Data Warehouse vs. Modern Data Warehouse

Traditional data warehouses are centralized repositories built to store structured data for batch processing. Their architecture is designed to enable BI activities based on an Extract, Transform and Load (ETL) process. The data is extracted from different sources and cleaned before being loaded into a structured model, usually in a star or snowflake schema.

In contrast, modern data warehouses are designed to handle structured, semi-structured, and unstructured data. They may also incorporate massively parallel processing (MPP) to handle larger datasets more efficiently and improve query response rates. Moreover, modern data warehouses may be integrated with data lakes, where raw data can be stored at scale before being processed.

Additionally, modern data warehouses are available as Data Warehouse as a Service (DWaaS) in the cloud, allowing for horizontal scaling, high availability, and minimizing administrative overhead. They are built to work seamlessly with real-time data streaming and are integrated with machine learning and AI to support predictive analytics. They are designed to be flexible, allowing users to quickly respond to the changes in the data models and workload.

The below table summarises the key differences between a traditional data warehouse and a modern data warehouse:

Factor	Traditional Data Warehouse	Modern Data Warehouse
Location	On-premises	Cloud
Purpose	Decision-Making processes	Processing big data in any form
Data Source	Operational and Transactional databases	Structure or Unstructured data sources (Blogs, IoT devices, etc)
Scope	Business Intelligence	Extracting insights from data
Architecture	ETL (Star or Snowflake schema)	No predefined architecture
Cost	Higher	Lower

Conclusion

Modern data warehouses enable organizations to store, process, and analyze vast amounts of data efficiently. Strategies that take advantage of cloud, advanced analytics, and real-time data processing capabilities help organizations gain deeper insights and maintain competitive advantage.

Read more about this topic in our Step-by-Step Guide on Building a Data Warehouse for Modern Businesses to gain a deeper understanding of the process.

Furthermore, modern data warehouses store data and enable AI and machine learning efforts, thus changing decision-making and driving innovation. Modern data warehousing solutions are crucial for any organization looking to thrive in this ever-changing data landscape.

Consider scheduling a personalized demo with Hevo to leverage the most of your modern data warehouse.

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