Data Warehousing for Small Business

Recently, Tom Foydel responded on my post on Data Warehousing for the Rest of Us. He brings up a couple of ideas that I would like to respond to. First:

But if I am a small or medium sized business then I probably don't have the volume of transactions that make a Data Warehouse necessary. With my volume of transactions I ought to be able to use a business analytics tool that's part of my ERP/CRM system.

Tom, you have a great point here. I honestly believe that a business has to have a reason to build a data warehouse before building one. I know that sounds overly simple and ridiculous, but you see this mentality all the time in IT. If your ERP/CRM analytics tools are adequate for your business then there is no reason for having a data warehouse. I think that principle needs to be taught to most techies in general, if you don't need it - don't build/buy it.

On the other hand, there are many small to mid-sized businesses that do have the volume of transactions that warrant a data warehouse. But, it's not just volume that counts. As soon as the business needs to start performing analytics across multiple disparate data sources a data warehouse of some kind and size is probably going to be necessary. This is the area that I am referring to when I say that the big boys have left us out. There really isn't anything out there, that I have found, that addresses this problem.

My other comment is that large business that have data warehouses have not fared very well lately. Some smart people like Peter Drucker have noted that small and medium sized business are growing today, but large businesses are mostly stuck in neutral. Are data warehouses necessary? Do they really propel growth?

Another GREAT point. Yes, it is true that even the big boys have many data warehousing woes as well. It just goes to show how immature data warehousing still is. I believe the reason businesses question the value of warehouses is because of poor alignment between the business and the warehouse. Companies may spend millions trying to get a data warehouse together only to find that it doesn't bring any of the promised value.

I personally believe that data warehouses can propel growth. They can do this at the large scale and the small scale if they are built with properly aligned business objectives. Businesses that don't have any plans to utilize the analytics to make business decisions will just end up producing a bunch of "gee-wiz" reports that don't bring any business value. Companies that allow the reporting and analytics to drive decision making will be able to utilize the power of the data warehouse to propel growth.