Traditional Vs. Cloud Data Warehousing Explained
(Photo : Freepik)

Amazingly, by the year 2025, it's estimated that we will have amassed over 175 zettabytes worth of data. Bet you've never heard that word before, have you? 

Well, the good news for all you data scientists out there is that this unprecedented collection of data is expected to drive the industry to be worth between $77 - 103 billion by the end of 2023. And with the global data sphere expanding at such an exponential rate, companies of all shapes and sizes are turning to data warehousing solutions in search of an effective way to store, process, and analyze their immense data stores.

However, not all data warehouses are born equal. If you're looking for a solution for your company, there are some key differences you need to be aware of, such as the difference between a traditional (inhouse) solution and a cloud data warehouse. On that note, let's take a deeper dive into these two data warehousing options and see what they both entail.

Traditional data warehouses

For those who aren't aware, a data warehouse is a type of data management system specifically designed for reporting and data analysis. It acts as a central repository of information that can be analyzed to make more informed decisions about your business, which can help boost its productivity and profitability.

Before cloud computing capabilities came along, most companies had to establish on-premises solutions that required a provision of IT resources such as servers and software. As you might expect, doing this is relatively expensive, especially for smaller businesses that simply can not afford to allocate extensive resources to such a project. This created a significant barrier to entry for many business owners, who were forced to live without a sophisticated data warehouse solution and the ability to gain a competitive edge on their rivals.

Furthermore, on top of their expense and difficulty to set up, traditional data warehouses presented several problems to business owners, such as a lack of scalability, time-consuming reporting: data quality issues, low speeds, and security issues due to data breaches.

Cloud data warehouses

So, what is a cloud data warehouse? As the name implies, a cloud data warehouse is a facility that integrates and stores data from a range of data sources using the space and computing resources provided by a cloud provider.

They assist in collecting, storing, and analyzing data in a cloud environment without the need for hardware or IT personnel. As a result, even small companies can incorporate cloud data systems and analyze massive data sets, lowering the barrier to entry for these services. With that in mind, let's look at some of the main advantages of cloud-based data warehouses over conventional data warehouses.

Low cost of ownership

As previously stated, the cloud enables any organization of any scope and scale to handle vast amounts of data without investing in a large server. Furthermore, with a cloud-based solution, you won't have to worry about repairs, outages, network updates, or anything else that can take up your time and money. This makes the overall cost of ownership for a cloud warehouse to be orders of magnitude lower than that of a traditional server.


A lot of new cloud data warehouses are set up to be elastic. So what does this mean? Well, an elastic data warehouse allocates computational capacity dynamically based on what you require from it. In other words, a cloud-based data warehouse is much more efficient as you will not have to spend money on unnecessary resources, collecting data that you will never use. 


With traditional data warehouses, the price of storing and analyzing your data usually increases with the amount of data you hold on the in-house system. This made storing large amounts of data costly as if you wanted to increase the size of your data warehouse, you had to migrate over to a larger server. 

Scaling is a much more straightforward process with the cloud, as you don't need to wait (or pay) for a new server every time you want to upgrade. In most cases, it's as simple as a phone call to your provider or upgrading your requirements online. 

Improved access and integration

One big advantage the cloud has over traditional data warehouses is its ability to handle various data types simultaneously. These days, businesses must handle a wide range of data types, including structured, semi-structured, and unstructured.

Fortunately, the cloud allows you to do just that, making it much easier for data analysts to integrate data sources. Armed with this functionality, your other applications can deliver faster, smarter insights and will boost your overall productivity. 

Final word

At the time of writing, it's estimated that around 81% of companies have a mix of traditional and modern cloud data warehousing technologies. This goes to show the rapid transition between the older, more rigid models to the newer cloud solutions that offer a variety of benefits such as improved speed, scalability, elasticity, and of course, a lower cost. 

This allows companies of all sizes access to data warehousing solutions, granting them the ability to access relevant insights into their business from across the organization.

ⓒ 2021 All rights reserved. Do not reproduce without permission.