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The death of data warehousing

by Michael M Carter
March 11th, 2004

In the post-Enron economy, businesses need a better-faster-cheaper way to get at data and turn it into intelligence. The developing regulatory environment will require new levels of openness and transparency for publicly traded corporations of all shapes and sizes.

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The cost, complexity, and utility of the data warehouse will become marginalized as the principles of "distributed intelligence" take hold.

Michael Carter is a co-founder and EVP at CXO Systems, the first fully web services-based business intelligence software provider. CXO provides loosely-coupled intelligence gathering and modeling, enabling organizations to build Business Information Networks and deploy business dashboard applications.

Glossary terms: data warehouse, distributed, loose coupling, XML, lookup tool

The ability to provide that timely openness depends upon business managers being able to access key data points about their business in real-time. End-user organizations must push beyond the historic purveyors of business intelligence and enterprise application infrastructures, and embrace new methods of gathering, extracting, and consuming information based on web services (XML over HTTP).

Historic intelligence
The data warehouse is dead. Age-old methods of gathering and storing data into centralized warehouses, transforming it into information and generating reports, are inadequate and do not deliver either speed or intelligence to the enterprise. The cost to create a data warehouse is estimated to be nearly $5 million, with additional yearly maintenance costs running around 20% of that figure. Add to that the complexity of report generation, married with the inability to easily connect disparate information sources, and you have an information technology phenomenon of unprecedented proportions that is not just costly but mostly irrelevant to the day-to-day needs of business managers.

Truth is, while the data warehouse will not completely disappear like the minicomputer, it will go the way of the mainframe. Meaning, the data warehouse will continue to be utilized for specific functions of information filing and post-mortem analysis. But by 2006-2008, its hold on the daily information needs of management will fall drastically. Today, more than 80% of all organizations over $500 million in revenue have a data warehouse, though 93% of the information contained in the data warehouse goes unconsumed in any given month. The cost, complexity, and utility of the data warehouse will become marginalized as the principles of "distributed intelligence" take hold.

Information visibility
Today, nearly every major organization has a problem accessing and accumulating information about their business. The CEO, CFO, COO, CMO, or CSO ("CxO") wants information on his or her particular function, or certain company performance metrics. The Chief Information Officer (CIO) and the overall IT organization have to make sense of those requests and retrieve the information in a consumable (easily understood) and timely manner. Since the information is contained in application-specific formats, the data has been rolled up into large data stores or warehouses so that traditional business intelligence tools can access it and run complex, technically administered reports.

Therein lies the problem. The data and information contained in the traditional data warehouse environment is difficult to get at, can't be easily created or administered, and is not in real-time.

In order to empower executives and management with the ability to get the information they need in a simple and more timely manner, organizations and the IT industry need to look at a principle that helped usher in many of the large productivity gains of the last thirty years, the principle of "distribution."

Distribution applied to the information supply chain or the vendor-described area of "business intelligence" (BI) will help usher in the transparency revolution, enabling organizations to attain new levels of business visibility.

Real-time distribution
The principle of distribution has been applied to the computing, semiconductor, and network revolutions of the last thirty years, but has yet to be applied to the largest problem facing every major corporation in the world: the problem of information visibility. Names like Intel, Cisco, and Sun were part of the last revolution. Innovators in information visibility will take a new standards-based and technology-agnostic approach.

The technology standards movement brought on by web services (XML over HTTP) will enable organizations to apply the principles of "distribution" in the form of portable and real-time business information networks (BINs). In these BINs, organizations can attain new levels of business visibility that will enable them to more nimbly react to market and business changes, and more profitably serve their employees, customers, and shareholders. Business challenges will be brought to light not at the end of a quarter, but on a daily basis, and communicated from the BINs directly to the business managers that need the information.

The core ability to gain business visibility for management is contingent upon the IT infrastructure where the information is stored and accessed. Now, with the advancements brought on by web services and the ability to create loosely coupled technology environments, organizations can leverage their historic methods, and bring the speed and intelligence that business managers need, both to meet the new regulatory guidelines and to exceed the business expectations of their employees, customers, partners and shareholders.

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