What is OLAP?

OLAP is a specialized database management technology that enables workers to interactively query historical data from a company’s operational databases in order to make well-informed business decisions. For example, a grocery chain manager might use the query “What are the unit sales and revenues of each brand of paper towels over the course of 1998?” to decide which brand to purchase the following year. OLAP falls under the heading of business intelligence, a catch-all term for techniques that summarize information collected in a company’s day-to-day operations and get it to decision makers who can use it.

The historical data analyzed in OLAP systems comes from data warehouses, relational databases built by culling data from operational databases throughout the enterprise. An extraction, transformation, and load (ETL) system maintains the data warehouse by periodically loading new data from a company’s operational databases. The ETL system must resolve inconsistencies among the various input databases (e.g., different column-naming conventions, different units of measure for particular fields) and discard or summarize information to compress the typically enormous volumes of input data. ETL systems are often created with specialized ETL development tools and generally must be custom-built for each company.