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Key insights and benefits

Modern Data Warehouse Benefits Outweigh the Financial Cost

Fred Bliss
© Shutterstock / fullvector

No matter the industry, size of the organization, technology involved, or data savviness, our clients always ask us the same question: how do the benefits of a data warehouse justify the cost? Learn about the main benefits of a data warehouse and how it will help you remain competitive.

Any organization that’s invested in an analytics tool like Tableau, Power BI, Looker, etc. knows that they’re only as good as the data you feed them. Challenges such as disparate sources, inconsistent data formats, and slow legacy systems are just some of the roadblocks that stand in the way of getting the insights you need from your BI reporting and analytics tool.

A common solution to this challenge is a data warehouse that enables data management, analytics, and advanced data science. The data warehouse helps organizations to facilitate data-driven decision making, find cost savings, improve profitability, and the list goes on. No matter the industry, size of the organization, technology involved, or data savviness, our clients always ask us the same question: how do the benefits of a data warehouse justify the cost?

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The costs of building a modern data warehouse

Before diving into the many reasons why the benefits of a data warehouse are worth the costs to build it, let’s spend a bit of time discussing the two main investments.

The first major investment will be either hiring a consulting firm to develop your modern data warehouse or dedicating internal resources to the task. By hiring data consultants, you introduce additional costs in consulting fees, but yield results much quicker and therefore save time. If you choose to create an internal task force for the job, you reduce upfront costs, but altering day-to-day functions and the inevitable learning curve lead to longer development timelines.

The second investment is almost always necessary as you will need a tech stack to support your modern data warehouse. This may simply involve expanding or repurposing current tools or it could require selecting new technology. It’s important to note that pricing is different for each technology and varies greatly based on your organization’s needs and goals.

It typically involves paying for storage, computing time, or computing power, in addition to a base fee for using the technology. In total, this can typically incur a yearly starting cost of $25,000 and up. To make it easier, each of the major data warehouse technology stacks (Amazon Redshift, Snowflake, and Microsoft Azure SQL Database) offer cost estimating tools. With a clearer understanding of what your costs will look like, let’s jump into why they are worth it.

Using a modern data warehouse costs less than a traditional analytics system

While this is a considerable amount of money to invest in data analytics, many of your current technology investments will be phased out, or the costs will be reduced using modern technology. These solutions alleviate your IT team from cumbersome maintenance tasks through automatic clustering, self-managed infrastructure, and advanced data security options. This allows your IT team to focus on more important business needs and strategic analytics.

With the volume and variety in data organizations track, it’s easy to find yourself stuck with messy data held in siloed systems. Modern data warehouses automate processes to eliminate duplicate information, reduce unnecessary clutter, and combine various sources of data together which enables you to save money by storing data efficiently. Think of it this way, if your data experts struggle to find key information, so does your technology. The extra compute time and storage costs more than you would expect, implementing a system that stores your data logically and in a streamlined manner greatly reduces these costs.

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Advanced analytics unlocks insights, enables you to respond to events quicker, and optimizes key decision-making activities

While it is more difficult to quantify the ROI here, dashboards and advanced analytics greatly enhance your employee’s ability to perform well in their job and save money. Regardless of your industry, using a modern data warehouse to drive analytics that empowers employees to perform better in several ways:

  • Dashboards dramatically decrease the time employees spend finding and organizing the data. For many of our clients, reports that once took analysts weeks of effort are now able to automatically aggregate in seconds.
  • Accurate data empowers better decision-making and yields creative problem-solving. You have the right information quicker.
  • Real-time analytics enables you to quickly respond to significant business events. This gives you a competitive edge since you can easily retain customers, spot inefficiencies, and respond to external influences.
  • Predictive analytics save you money by finding opportunities before you would need to act.

Developing a full-scale data warehouse requires time and money that may not be available at the moment. That being said, the benefits of a data warehouse are necessary to remain competitive, and there are ways to build a modern data warehouse quickly and without the large upfront investment. A modular data warehouse contains key strategic data and ensures that you gain advantages of analytics almost immediately. On top of that, it provides a scalable foundation that you can add data to over time until you incorporate all the data necessary for your business functions.

Author

Fred Bliss

Fred Bliss is CTO, Insights Practice at 2nd Watch. He and his team work with large and midsize enterprises to develop custom applications, data pipelines and analytical data platforms.


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