A Data Warehouse is a central place where data is stored from different data sources and applications. It consists of data from multiple heterogeneous data sources.
Data is information processed or stored by a computer where the information may be in the form of text, images, audio clips, software programs, or other types of data. A warehouse is a large building where raw materials or manufactured goods may be stored prior to their distribution for sale. So basically, a data warehouse is the place or repository where all the data are stored.
You can see from the above image that the data is coming from different sources to a Data Warehouse. A data warehouse stores both current and historical data.
To build a data warehouse, you first need to copy the raw data from each of the data sources, cleanse, and optimize it. The process of getting data into a data warehouse is called ETL: Extract, Transform, Load.
A data warehouse is very important for large enterprises because it helps the company in product development, marketing, price strategy, production time, historical analysis, forecasting and customer satisfaction. The data in a data warehouse is used for analytical reporting, data mining and analysis which is later used by Business Analyst, Sales Manager or Knowledge workers for decision-making and future strategies.
For example, an e-commerce business having a data warehouse can analyze its data to recognize what product is mostly purchased by the age-group of 18-22 to display similar or related products in the recommendation.
Data warehouse databases provide a decision support system (DSS) environment in which the performance of an entire enterprise can be evaluated over time. In the broadest sense, the term data warehouse is used to refer to a database that contains very large stores of historical data. The data is stored as a series of snapshots, in which each record represents data at a specific time. By analyzing these snapshots, you can make comparisons between different time periods. You can then use these comparisons to help make important business decisions.