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The Pros and Cons of DIY Data Warehousing
As the world becomes increasingly digital, from the way we as individuals communicate and learn to how businesses engage their customers and their partners to create a supply chain, one often overlooked question is where does all of our information go when we’re not using it, and how is it accessed and utilized when we are? As consumers, that question usually takes the form of privacy and access concerns; businesses small and large are more interested in how best to store, access and analyze data to better serve their customers going forward. That’s where business intelligence and data warehousing come in.
Business intelligence is an umbrella term that incorporates all the tools, software, applications and methodologies used to collect, analyze and present data in a format that businesses can use to make more informed decisions. Restaurants can see which menu items are underperforming; credit card companies can decide how to price their offers; big-box retailers and small retail shops alike can choose to increase production of inventory based on historical spikes in demand; and so on. Previously, these decisions came down to educated guesses or even “gut feelings.”
Data warehousing is one of the tools of the business intelligence trade. Data warehouses are central repositories that hold data from a variety of sources; different from a database in that a database is often used to access data in near-real time for immediate use, such as a transaction. Warehouses, on the other hand, stores, filter and retrieve a huge amount of historical information, and require clean, consistent data that makes searching and analyzing easier. That way, when a manager requests an annual or quarterly or even daily report or sales analysis, all the accurate data will be included in order to help make the correct decision.
Not all data warehouses operate the same way or serve the same purpose, it all depends on the business that utilizes them and that business’s goals. Some warehouses use a dimensional approach to storing data; others have a normalized approach. Some have a bottom-up design, a top-down design or a hybrid approach. Some are only sophisticated enough for offline operational data, updated on a time-cycle; others are integrated with other systems and can search through them on the fly.
For many businesses, especially those competing in the retail, hospitality and even sports spaces, some kind of data warehouse practically a necessity in this day and age. But how should they approach this arena: By building a custom system of their own, or licensing a solution from a third-party?
The DIY approach is not an uncommon choice, as some businesses are able to work in-house or hire a freelancer to create their system, using licensed software tools. But according to FastCasual, as many as 70 percent of all internal data warehousing projects fail to live up to management’s expectations within the first year and half to two years. There are pros and cons to both approaches, though it appears the cons of DIY can outweigh the pros in many cases.
In order to decide whether a DIY data warehouse is an investment your company should be willing to make, consider the pros and cons of the endeavor:
Pros of DIY business intelligence and data warehousing systems
- You own your own system: Once the original investment of paying to create the system is recouped, you’ll never have to pay fees for it again. And if your system is a success, you may even be able to license yours to other companies as well.
- Customize as needed: Your financial and analytic teams can customize fields and reports to best suit your business, on the fly, without consultation.
- Integrate into your other systems: Another other software applications your company uses can theoretically be integrated into this system. Out-of-the-box solutions can’t promise to grow exactly as your business does.
- No cloud-connection issues: Most third-party solutions are web-based and rely on the cloud. If there’s an issue with the internet, or the service is temporarily unavailable, that leaves your business out to dry.
Cons of DIY business intelligence and data warehousing systems
- Expensive to build, and even more so to start over: Buying the tools and labor and investing company resources and time into building a DIY warehouse can be expensive, and can be doubly expensive if the final product doesn’t satisfy necessary data-collection or analytical requirements. Though lower-cost options for DIY building are arriving all the time, the use of System-as-a-service products and cloud delivery software beg the question, why not just go with an out-of-the-box service entirely?
- Long installation times: A completely customized data warehouse can take more than a year to build, depending on factors such as the current state of your data and resources used.
- You are dependent on your IT team for any updates: Dedicated IT teams will put out patches for bugs or update the system automatically; if your IT team isn’t on the call around the clock, you may run into usability issues.
- New features and functions often require added cost to integrate: Similarly, any new features or functions that you find your system needs will have to be built from scratch and rolled out internally. Not so with third-party providers who can add new features seamlessly.
- Outside help is still usually needed: If you have a restaurant or smaller retail store, you’ll likely need to hire freelancers or contract employees to come on and build, update and fix your system.
- Security features will be lacking: Sophisticated security is both necessary for any good system and prohibitively expensive to build as a one-off project. Allowing a third-party to provide security and clearance measures is much more cost-effective.
- Additional hardware or service space is often required: SaaS providers handle all the necessary hardware and server needs, the latter of which is massive and may not be something all businesses are prepared to pay for or even understand.
- Stretching your staff thin: If you have a restaurant, for example, you want to focus on cooking good food, bringing it to customers in a timely manner, maintaining a clean and comfortable environment and generally running a quality establishment. Getting bogged down in data warehousing can take you and your employees away from what you do best.
We all want to have control over as much of our business as we can. Unless you’re willing to match some of the SaaS developers, who invest millions of dollars and thousands of hours into creating quality data warehousing solutions, you may have to be willing to let a third-party handle this aspect of business intelligence for you. A good system is complex enough to make things simple and easy to use, and that’s simply not always a guarantee when doing it yourself. Compare the pros and cons carefully before diving into what could be a make-or-break decision in a competitive global marketplace.
