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Data Warehouse - An Asset, Not a Cost

Information Management

Bill wishes to thank Steve Westmoreland of Bonneville Power Authority for his contribution to this month's column.

When most managers think about a data warehouse, one of their trains of thought is the cost of a data warehouse. Indeed, a data warehouse is something that requires investment. You cannot build a data warehouse without money; you need storage, processors, operating systems, software, ETL (extract, transform and load) and so forth. There's no getting around it - a data warehouse costs money, regardless of whose technology you choose to place it on.

However, there's spending money, and there's spending money. A data warehouse is an asset - not a cost.

In order to understand the difference between an asset and a cost, consider the following example of a cost. You buy a car. You choose to make a down payment on the car. Then, each month you have an obligation. The minute you drive the car off the dealer's lot, the car starts to depreciate. Each month you keep the car, you lose a little more on it. A car is a classic cost.

Now consider an example of an asset. You buy a house. You put some money down and obtain a mortgage. You start making house payments. The minute you (and the bank) start to own the house, the house starts appreciating. You wake up one morning five years later, and the house is worth significantly more than what you paid for it. Unlike a car which is a cost, a house is an asset.

Similar to a house, a data warehouse is an asset, not a cost. The more data you put into a data warehouse, the more users you have, the more applications you have and the more the data warehouse is worth.

In order to illustrate the value of a warehouse, an amusing story was told to me while I was in South America not too long ago. (Disclaimer: do not try this at home.) A bank had a data warehouse. Management was always asking, "Why do we need a data warehouse? Why is the data warehouse always costing us money?" There was a never-ending stream of complaints about the costs of the data warehouse.

One day there was a catastrophic failure of equipment. By some strange circumstance, one or two major processors of the bank went down and just plain died. One of those processors was the one on which the data warehouse was housed. It took 10 days to bring the data warehouse back up.

During those 10 days, there was a cry from the organization - "Where's my data warehouse?" Users the IT department had never heard of were coming out of the woodwork. In fact, one major application user group that had never been brought to the attention of the data warehouse organization was livid. The group was using feeds from the data warehouse (unbeknownst to the data warehouse organization), and they were highly upset when the data warehouse went down. They threatened to go to the president of the bank and complain about the failure and the outage.

No one ever questioned the worth of the data warehouse again. In fact, a data warehouse really is an asset.


Bill Inmon is universally recognized as the father of the data warehouse. He has more than 35 years of database technology management experience and data warehouse design expertise. His books have been translated into nine languages. He is known globally for his seminars on developing data warehouses and has been a keynote speaker for many major computing associations. For more information, visit www.inmongif.com and www.inmoncif.com. Inmon may be reached at (303) 681-6772.

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