Data Warehouse vs. Database in ERP: Key Differences Explained

What Is a Database in ERP Systems?

Essentially, a database is - without getting too technical - a collection of structured data stored electronically in a computer system. For an ERP, this could be within the physical server or if it’s on the cloud, within a data center owned by the ERP vendor.

Each database is controlled by a database management system (DBMS). When referring to data, the DBMS, and any other applications used within the system as a whole, it is known as a database system. Most people will just call it a database.

Nowadays the most common way a database presents itself is through rows and columns in a series of tables, which makes managing data a more efficient process. It records real-time information about one particular part of your business. At its foundation, its main job is to process the daily transactions your company makes.

The true definition of a database has become blurry over the years as the systems evolved. From the first known database in the 1960s to present day, the development of the software has allowed data within a database to be flexible in such a way it’s become revolutionary.

Many people still consider a spreadsheet as a database (and they’re not wrong). Spreadsheets such as Excel or Google Sheets are designed to store data; however, like plastic they’re for single users. They have limitations in how much information can be manipulated. Whereas a database is precisely the opposite, it can handle a massive volume of queries and be wielded by multiple users.

One of the key features of how an ERP functions is through its common database. For example, NetSuite has a core database that allows its users to centralize information from all the organization’s departments.

Through this functionality, a business can avoid all manual data entry and the need to merge separate databases from different applications. NetSuite’s database automatically manages the core operational data, to present it in a clear, concise manner. Having a common database enables all decision-makers to have an inclusive view of the company.

What is a Data Warehouse?

Think of a data warehouse as the child and the database the father. A data warehouse is a specific branch of a database that connects and analyzes business data from multiple sources.

GURUS Product Manager, Neil Stolovitsky, provides us with a prime explanation:

“A Data Warehouse is a system that pulls together data from many different sources within an organization for reporting and analysis. The reports created from complex queries within a data warehouse are then used to make business decisions. A data warehouse stores historical data about your business so that you can analyze and extract insights from it. It does not store current information, nor is it updated in real-time.”

The most common data warehouses are:

• A virtual data warehouse: separate databases that are queried together to effectively access data within one place.
• A data mart model: data is aggregated into a specific business area, such as sales or finance.
• An enterprise data warehouse: this is the heart of a company’s information system, which consolidates data from all business departments.

The big question that is often asked when it comes to deciding what direction to take is: why? Why have a data warehouse when it’s clear that a database is also an adaptable platform. A major reason is to create superior reports of your data in order to make even more accurate decisions based on past analytical data for business development.

For those who use an ERP system, such as NetSuite, the need is even greater. NetSuite is a software intended to run the day-to-day operations. Their database will deliver operational reports focused on your core business activities.

The issue becomes apparent when users need to visualize all relevant information. NetSuite’s data limitations then lead decision-makers to do their more strategic and complex reporting outside the ERP platform.

An application like a data warehouse will integrate to your NetSuite system and provide you with augmented views and tables to better analyze your pertinent data. The benefits of a cloud data warehouse are significant and once implemented there is no going back, you’ll see.

Top Benefits of Using a Data Warehouse with ERP

How a data warehouse can benefit an organization lies within its scalability, flexibility, and accessibility, but those are just a few.

Saves Time

If someone gave me a spreadsheet that had over 400,000 rows filled to the brim with vital information for my reports, I might just collapse then and there.

A top advantage of a data warehouse is saving time. Within just a few minutes you can have full access to all the required information you need for your specific project or report.

Cleans Data

There’s nothing quite like basing a target objective on misinformation. A data warehouse eliminates any potential replicated or inadequate data. By transforming data from an array of systems into a shared warehouse, you ensure reliable and quality data.

This guarantees that all your data will be synchronized with all sources. Consistent, standard data goes a long way when projecting operational outcomes.

Secures Data

Data security will (at least for the foreseeable future) always be at the forefront of any business requirement. No client wants their data to be thrown around like dirty laundry for the world to see. An adequate data warehouse enables consolidation and exceptional security.

Trust me when I say having a secure data warehouse is fundamental, especially when data warehouses store large volumes of historical data. You should bear in mind that this historical data will be crucial to your business growth. Without a data warehouse, there’s a higher chance of someone outside your organization attempting to have access.

If you ever want to forecast strategic decisions, without the historical data you will have no leg to stand on. Therefore, you must have secured data warehouses to keep hold of all this data for future growth.

Integrating Data Warehouses with ERP and NetSuite

Whether you’re a current ERP user or not, there’s nothing that should stop you from implementing a data warehouse. The problem when comparing an ERP vs a data warehouse, is that they’re incomparable. They’re separate entities that may appear incompatible, but once they’re synchronized, they’re majestical.

Picture it: the operating system of an ERP alongside the analytic abilities of a data warehouse. Some would say it’s a match made in heaven.

So, if you’re still asking yourself, “why do I need a data warehouse if an ERP already has a database?” then you should contact us and discover how the GURUS Data Warehouse has adapted to each unique company infrastructure to provide an excellent in-house solution.

Frequently Asked Questions on Data Warehouse vs Database

Q1: What is the difference between a database and a data warehouse?
A database is designed to store and manage real-time transactional data, while a data warehouse is used for storing historical data and generating complex analytical reports across multiple data sources.

Q2: Why do I need a data warehouse if my ERP already has a database?
An ERP database handles day-to-day operations, but a data warehouse enables deeper analysis, better reporting, and long-term insights by consolidating data from multiple systems.

Q3: Can I integrate a data warehouse with NetSuite?
Yes. You can integrate a cloud data warehouse with NetSuite to enhance reporting, connect external data sources, and use BI tools like Power BI or Looker for advanced analytics.

Q4: What are the main benefits of using a data warehouse for ERP reporting?
Data warehouses improve scalability, ensure data accuracy, enhance security, and save time by centralizing and cleaning data for reliable business intelligence and decision-making.