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What is OLAP?

By David White
Updated May 16, 2024
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One of the effects of business growth is a mountain of data that has to be manufactured, stored, tracked, and interpreted. A growing business needs sophisticated methods of data processing. One of the ways that businesses do this is to use OLAP.

OLAP stands for On Line Analytical Processing, a series of protocols used mainly for business reporting. Using OLAP, businesses can analyze data in all manner of different ways, including budgeting, planning, simulation, data warehouse reporting, and trend analysis. A main component of OLAP is its ability to make multidimensional calculations, allowing a wide and lightning-fast array of possibilities. In addition, the bigger the business, the bigger its business reporting needs. Multidimensional calculations enable a large business to complete in seconds what it otherwise would have waited a handful of minutes to receive.

One main benefit of OLAP is consistency of calculations. No matter how fast data is processed through OLAP software or servers, the reporting that results is presented in a consistent presentation, so executives always know what to look for where. This is especially helpful when comparing information from previous reports to information contained in new ones and projected future ones. "What if" scenarios are some of the most popular uses of OLAP software and are made eminently more possible by multidimensional processing.

Another benefit of multidimensional data presentation is that it allows a manager to pull down data from an OLAP database in broad or specific terms. In other words, reporting can be as simple as comparing a few lines of data in one column of a spreadsheet or as complex as viewing all aspects of a mountain of data. Also, multidimensional presentation can create an understanding of relationships not previously realized. All of this, of course, can be done in the blink of an eye.

Producers of OLAP software are familiar, including Oracle, IBM, and Hyperion Solutions. Oracle, which has a reputation for being different, refers to OLAP software as Business Intelligence. IBM and Hyperion Solutions, wishing to remain consistent with industry standards, call their software OLAP.

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Discussion Comments
By everetra — On May 07, 2011

@Mammmood – OLTP deals with the back-end (databases) and OLAP deals with the front-end. That’s an over-simplification, I suppose, but that’s what it boils down to. If you’re an analyst you’ll be working with OLAP. If you’re a DBA, you’ll be dealing with OLTP.

By Mammmood — On May 05, 2011

What is the difference between OLTP vs OLAP? I get the two confused.

By nony — On May 03, 2011

@ allenJo - Multidimensional OLAP is amazing! I use it too where I work. It took me awhile to get used to using SQL to create the multidimensional views of the data. We use Oracle 10g for the back-end but Microsoft has their own product too I believe.

By allenJo — On Apr 30, 2011

This is a good birds-eye view of the subject. I’m not an expert, but I did have to do some reporting for the executives at my old company. We had two days of training in business intelligence OLAP software. It was some pretty impressive stuff. I was able to use cubes, metrics, graphs and other visual graphics that really blew away the big guns at corporate. I wasn’t directly responsible for OLAP reporting, but was one of five users in our department.

I.T. managed the data warehousing end of the OLAP system. I think they were using Oracle at the time. I was just involved in the OLAP analysis and had to deliver the ad hoc reports to the executives.

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