Data Warehouse Architecture: Types, Layers & Components

It’s no secret that data warehousing has become increasingly popular among agencies. They rely on
a single source of truth to make smart, data-driven decisions.
But to get the best out of your data warehouse, you need to choose the right architecture type when
building it.

There are three different data warehouse architecture types to choose from. However, each has its own
distinct characteristics that are suitable for the purposes of different agencies.
In this article, you’ll learn all about data warehouse architecture types, including layers, components and
characteristics. This will help you choose the right one for your agency.
But first, let’s take a look at what data warehousing architecture is.

Data Warehouse Architecture

Data warehouse architecture is a framework that defines the data warehouse design. It enables a proper
data communication process, starting from the processing of the data until it gets to the end-user.

It focuses on finding the most efficient method of taking information from raw data and converting it into
simple, digestible information that enables valuable business insights.

What’s more, data warehouse architecture helps you understand the different layers and components of
a data warehouse by providing an overview of how all the components interact with each other and what
their purpose is.

Once you have a well-developed data warehouse architecture in place, you get a clearer picture of the
things required to build an enterprise-wide information system that can act as a central repository for
various types of data.

3 Types of Data Warehouse Architecture

There are three common data warehouse architecture types typically used for building a data warehouse:
 Single-Tier Architecture
 Two-Tier Architecture
 Three-Tier Architecture

Each type of data warehouse architecture has its own benefits and limitations. Let’s explore the unique
characteristics of each one of them.

1. Single-Tier Architecture

The single-tier data warehouse architecture reduces the amount of data stored in a data warehouse
by building a more compact data set. Its advantage is that it helps remove data redundancies and
improves the quality of your data.

However, it isn’t the ideal solution for agencies that own large volumes of data and operate with multiple
data streams because it’s inefficient.

The single-tier architecture has three layers:

 A source layer
 A data warehouse layer
 An analysis layer
In the single-tier architecture, only the source layer is physical. The data warehouse layer is virtual and
provides data in a multidimensional view, created by an intermediate processing layer.
One drawback of the single-tier architecture is the lack of separation between analytical and transactional
processing. And that’s why this type of data warehouse architecture is not used frequently.

To overcome this challenge, we need…

2. Two-Tier Architecture

Unlike the single-tier architecture, the two-tier architecture contains a data staging area that ensures any
data you load into the warehouse is cleansed and in the right format. It’s found between the source layer
and the data warehouse layer, as depicted in the image below.

Most businesses that use data marts as a server make use of the two-tier data warehouse architecture,
which is also made up of two tiers:

1. The Data Tier

This is the layer where actual data is stored after various ETL processes have been used to load data into
the data warehouse.

It’s also made up of three layers:

 A source layer
 A data staging layer
 A data warehouse layer

2. The Client Tier

This layer is where clients can use data stored in the data warehouse to generate insights for making
informed, data-driven decisions. You can modify or transform this layer based on the data trends that you
discover from your analysis reports.
And it’s made up of a single layer:
 An analysis layer

Some disadvantages of the two-tier architecture are that it’s not scalable, has network limitations, and
only supports a small number of users.
3. Three-Tier Architecture

The three-tier architecture is what most organisations go for when building a data warehouse system.
It solves the connectivity problems that the two-tier architecture commonly faces.

The three-tier architecture is made up of:

 A source layer
 A reconciled layer
 A data warehouse layer

The three-tier architecture is useful for extensive, enterprise-wide systems. But its disadvantage is the
additional storage space it uses through the redundant, reconciled layer.

The three-tier architecture also has three tiers:

 A bottom tier
 A top tier
 A middle tier

These three tiers are commonly called the layers of a data warehouse architecture. Let’s take an in-
depth look at these layers.

Layers of a Data Warehouse Architecture

1. Bottom Tier

The bottom-tier, also called the data warehouse layer, is where data
is extracted, transformed and loaded into the data repository using backend tools.

2. Middle Tier

The middle tier is responsible for arranging data into a more suitable structure for complex querying and
analysis. This process is done with an Online Analytical Processing (OLAP) server and it’s implemented
using two models:
 The Relational OLAP model (also called ROLAP), which assigns multidimensional data
processes to standard relational operations.
 The Multidimensional OLAP (also called MOLAP) model, which implements
multidimensional information and operations.

3. Top Tier

The top-tier is basically the front-end layer that houses various tools and APIs (Application
Programming Interfaces) you can use for high-level data analysis, querying, reporting and data mining.
It’s where end-users can access, interact and extract data from the warehouse.
5 Main Components of a Data Warehouse Architecture

Every data warehouse is different. However, all of them are characterised by a specific set of components.

Here are the five main components of the data warehouse architecture and their functions.

1. ETL Tools

The data coming from the source layer is in different formats. As such, it needs to be normalised and
cleansed before going into the data warehouse.

That’s the job of ETL Tools, an acronym for Extraction, Transformation and Loading tools.
ETL tools extract data from multiple sources, transform it into a suitable format, and load it into the data
warehouse.
2. Database

This is the central repository of a data warehouse architecture where data from the various data sources is
stored and made accessible for analysis and reporting.

When building a data warehouse, you can choose from any of these four database types:

 Relational databases (Microsoft SQL Server, SAP),

 Analytics databases (Teradata, Greenplum),
 Cloud-based databases (Amazon Redshift, Microsoft Azure SQL), or
 Data warehouse applications (SAP Hana, Oracle Exadata).

3. Metadata

Metadata, in simple words, is “data about data”. Its function is to describe the structure of data in a
warehouse and how it’s related to other data in the warehouse.

4. Bus & Data Marts

A data bus determines how data flows in a data warehouse. A data marts, on the other hand, is a subset of
a data warehouse used for segmenting information into categories for a specific group of users.

5. Access Tools

Access tools are used to tap into a data warehouse and uncover insights from the data you have. They can
be divided in four categories depending on the use for the tools:

Querying & Reporting tools: these are used for querying the database for specific data users need and
generating reports based on certain requirements.

OLAP tools: these give users a multidimensional view of the data contained in a data warehouse and
analyse complex datasets.

Data mining tools: these automate the process of mining large amounts of data to discover patterns,
trends and relevant links between datasets.

Application Development tools: these help users create custom reports for reporting purposes when
analytical tools fall short.

Characteristics of a Good Data Warehouse Architecture

Now, let’s look at some characteristics of a good data warehouse architecture that allow agencies to get
more out of their data warehouse.

 High security: As it’s often claimed, data is the new gold. That’s why it’s crucial to have a highly
secure data warehouse that will help you monitor and prevent unauthorised users from accessing your
data.

 Simple Administration: The data warehouse management structure should be as simple as

possible so it’s easy to maintain the data warehouse.

 Scalability: Every data warehouse architecture should be scalable. In other words, your hardware
and software platforms should scale as the needs of your organisation grow. They should be able to meet
your analytics requirements without the need for a complete overhaul to save you resources in the long
run.
Effective Datawarehouse Services

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To summarise:

 Data warehouse architecture defines the overall architecture of data communication, from
processing the data to presenting it to clients.

 There are three main data warehouse architecture types: single-tier, two-tier and three-tier data
warehouses.

 Every data warehouse has the same vital components within its architecture, namely: ETL tools,
databases, metadata, bus & data marts and access tools.

 To get the best out of your data warehouse, it should have high security, simple administration and
scalability.