A company experiences the need of data warehouse when the executives and managers of the organization require the strategic information for taking decisions that keeps the company competitive in the market and ensures the company’s survival.
In the early 1960s, the computer system emerges as an essential requirement as they would perform order processing, payment billing, maintaining accounts, process claims and many more. The computer systems were capable of processing and storing the data that is important for performing daily operations. The companies get dependent on these computer systems.
But with the time the businesses were growing complex, were spreading globally, and becoming more competitive. To cope up with all these the business executives requires strategic information which helps the company or enterprise to stay competitive. The old operation systems were unable to provide this strategic information so, they turn to search for a new method to get this strategic information which was data warehouse.
Before going deeper into the concept of data warehouse we have to understand how the earlier operational computer system failed to provide vital strategic information. So, that we have a clear motive of studying data warehouse and understand why data warehouse is an only viable solution.
Content: Need of Data Warehouse
- Extreme Need for Strategic Information
- Failure of Earlier Decision Supporting Systems
- Operational Vs Decision Supporting Systems
- Data Warehouse an Operable Solution
- Key Takeaways
Extreme Need for Strategic Information
The first question that will be striking your mind would be what is this strategic information and who requires this information? The strategic information is information that plays a vital role while taking decisions which helps the company in staying competitive in the market.
The business executives and managers of the company require this strategic information as they are involved in making decisions to keep the company competitive. They utilize this strategic information for setting up the goals and objectives, analysing the results, formulate new business strategies etc…
The strategic information briefs the executives and managers about the operations of the company. Also, about the business factor that keeps on changing with time. It also involves a comparison of the company’s performance in the market over the last few years.
Strategic information let the executives and managers know what does the customer need and how their preferences change over time. They should also consider emerging technologies as every company must implement new technologies to proceed in the competitive market.
The strategic information is not required to perform the daily routine operation like billing payment, preparing a claim, settling a claim, preparing an invoice, manging account. It is used to make a decision that keeps the company competitive in the market.
If your strategic information is not properly integrated or analyzed it would lead to making an improper decision which may not be fruitful for the company.
First of all, a company has a huge collection of data and it is said that this data gets double in every 18 months but still executives and managers find it difficult to turn this huge amount of data into useful information for making a strategic decision.
Why executives and managers fail to make a strategic decision? This is because the data of a company is not in an integrated form. Sometimes data is on different platforms, with diverse structures or on different systems. The disparity of the data depends on how many technologies have been used by your company in the past.
We all are aware of how technology has been changing over the past few decades. The digital storage, network bandwidth has been increasing along with the decrease in price. But the question is how this is relevant to strategic information.
The miniaturization of the hardware has made it available for everyone desk. The internet allows us to interact with the number of systems and databases far away. The advances in technology have made the digital storage bigger and it’s cost smaller which fulfils the need of larger data storage.z
The internet let executives and managers perform interactive analysis. This is how advancing technology has made strategic information feasible.
Failure of Earlier Decision Supporting Systems
In early times whenever the need for strategic information arises, the IT department personnel would create an ad hoc report from a single system. If the report seems to be inappropriate, they were again asked to formulate the report in a different way.
The IT personnel would again prepare this ad hoc report may be in a different format and from multiple systems. Most of the time their attempt fails to provide strategic information. This was because of the strategy used to prepare strategic information.
This failure could be resolved if there was an interactive system which can be queried online and from the obtained result the information could be gathered and if require the interactive system could be queried more.
The result obtained from this interactive system must be in a format that would be easily analysed. Later the special suite of programs was written to extract the reports. If the reports were inappropriate IT individuals would again write a different program.
Further some small applications were written to extract the required information.In these applications, the user has to specify certain ‘parameters’ based on which the information was extracted.
Later in the 1970s, the bigger companies would create the data centre where the user can go and request for particular information. IT personnel were present there to help the user in extracting the information.
Later the decision support systems were generated which were ‘menu-driven’ and provide the online information to the users. Most of these systems were used for marketing. All these attempts fail due to the reason specified below:
- The IT resources were limited and they would get enormous requests for ad hoc reports and their requests keep on changing with time which would create an overload for IT personnel.
- The user has to depend on IT personnel for extracting the information each time.
- The information extracting system has to be feasible in order to provide an appropriate environment for making a decision which didn’t happen.
Operational Vs Decision Supporting Systems
Our earlier attempts to get strategic information failed as the attempts were made to get the information from the operational system.
Operation systems are the systems that are used to run day to day business processes like checking accounts, settling claim, processing invoice etc…
Data Warehouse as a Solution
Due to the failure of earlier decision support system there arise the need of data warehouse. Data warehouse would provide the information that would be suitable for analysis. The data warehouse also collects data from multiple systems.
Information obtained from the data warehouse is easy to use and doesn’t even require IT assistance. The data in a data warehouse is updated periodically due to which it contains current as well as historical data. Users can simply request a query and gets its online result.
- For making the strategic decision that would keep the company’s healthy and competitive, executives and managers require strategic information.
- Strategic information helps executives to understand the business keys of the company, the company’s operation, a business factor that changes with time.
- Earlier operational systems that would deal with the day to day operation of the company was used to extract the strategic system which failed.
- Later the decision support system like data warehouse was introduced to extract the strategic information for making the decision.
This is why there arises the need of data warehouse which helps the executive in making strategic decisions.