What is OLAP (Online Analytical Processing)?

OLAP stands for On-Line Analytical Processing. OLAP is a classification of software

technology which authorizes analysts, managers, and executives to gain insight into information
through fast, consistent, interactive access to a wide variety of possible views of data that has been
transformed from raw information to reflect the real dimensionality of the enterprise as understood
by the clients.

OLAP implement the multidimensional analysis of business information and supports the
capability for complex estimations, trend analysis, and sophisticated data modelling. It is rapidly
enhancing the essential foundation for Intelligent Solutions containing Business Performance
Management, Planning, Budgeting, Forecasting, Financial Documenting, Analysis, Simulation-
Models, Knowledge Discovery, and Data Warehouses Reporting. OLAP enables end clients to
perform ad hoc analysis of records in multiple dimensions, providing the insight and understanding
they require for better decision-making.

Who uses OLAP and Why?

OLAP applications are used by a variety of the functions of an organization.

Finance and accounting:

o Budgeting
o Activity-based costing
o Financial performance analysis
o And financial modeling

Sales and Marketing

o Sales analysis and forecasting

o Market research analysis
o Promotion analysis
o Customer analysis
o Market and customer segmentation

Production

o Production planning
o Defect analysis
OLAP cubes have two main purposes. The first is to provide business users with a data model
more intuitive to them than a tabular model. This model is called a Dimensional Model.

The second purpose is to enable fast query response that is usually difficult to achieve using tabular
models.

How does OLAP work?

Fundamentally, OLAP has a very simple concept. It pre-calculates most of the queries that are
typically very hard to execute over tabular databases, namely aggregation, joining, and grouping.
These queries are calculated during a process that is usually called 'building' or 'processing' of the
OLAP cube. This process happens overnight, and by the time end users get to work - data will
have been updated.

OLAP Guidelines (Dr.E.F.Codd Rule)

Dr E.F. Codd, the "father" of the relational model, has formulated a list of 12 guidelines and
requirements as the basis for selecting OLAP systems:
1) Multidimensional Conceptual View: This is the central features of an OLAP system. By
needing a multidimensional view, it is possible to carry out methods like slice and dice.

2) Transparency: Make the technology, underlying information repository, computing

operations, and the dissimilar nature of source data totally transparent to users. Such transparency
helps to improve the efficiency and productivity of the users.

3) Accessibility: It provides access only to the data that is actually required to perform the
particular analysis, present a single, coherent, and consistent view to the clients. The OLAP system
must map its own logical schema to the heterogeneous physical data stores and perform any
necessary transformations. The OLAP operations should be sitting between data sources (e.g., data
warehouses) and an OLAP front-end.

4) Consistent Reporting Performance: To make sure that the users do not feel any significant
degradation in documenting performance as the number of dimensions or the size of the database
increases. That is, the performance of OLAP should not suffer as the number of dimensions is
increased. Users must observe consistent run time, response time, or machine utilization every
time a given query is run.

5) Client/Server Architecture: Make the server component of OLAP tools sufficiently intelligent
that the various clients to be attached with a minimum of effort and integration programming. The
server should be capable of mapping and consolidating data between dissimilar databases.

6) Generic Dimensionality: An OLAP method should treat each dimension as equivalent in both
its structure and operational capabilities. Additional operational capabilities may be allowed to
select dimensions, but such additional tasks should be grantable to any dimension.

7) Dynamic Sparse Matrix Handling: To adapt the physical schema to the specific analytical
model being created and loaded that optimizes sparse matrix handling. When encountering the
sparse matrix, the system must be easy to dynamically assume the distribution of the information
and adjust the storage and access to obtain and maintain a consistent level of performance.

8) Multiuser Support: OLAP tools must provide concurrent data access, data integrity, and access
security.

9) Unrestricted cross-dimensional Operations: It provides the ability for the methods to identify
dimensional order and necessary functions roll-up and drill-down methods within a dimension or
across the dimension.

10) Intuitive Data Manipulation: Data Manipulation fundamental to the consolidation direction
like as reorientation (pivoting), drill-down and roll-up, and other manipulations to be accomplished
naturally and precisely via point-and-click and drag and drop methods on the cells of the scientific
model. It avoids the use of a menu or multiple trips to a user interface.

11) Flexible Reporting: It implements efficiency to the business clients to organize columns,
rows, and cells in a manner that facilitates simple manipulation, analysis, and synthesis of data.
12) Unlimited Dimensions and Aggregation Levels: The number of data dimensions should be
unlimited. Each of these common dimensions must allow a practically unlimited number of
customer-defined aggregation levels within any given consolidation path.

Characteristics of OLAP
In the FASMI characteristics of OLAP methods, the term derived from the first letters of the
characteristics are:

Fast

It defines which the system targeted to deliver the most feedback to the client within about five
seconds, with the elementary analysis taking no more than one second and very few taking more
than 20 seconds.

Analysis

It defines which the method can cope with any business logic and statistical analysis that is relevant
for the function and the user, keep it easy enough for the target client. Although some
preprogramming may be needed we do not think it acceptable if all application definitions have to
be allow the user to define new Adhoc calculations as part of the analysis and to document on the
data in any desired method, without having to program so we excludes products (like Oracle
Discoverer) that do not allow the user to define new Adhoc calculation as part of the analysis and
to document on the data in any desired product that do not allow adequate end user-oriented
calculation flexibility.

Share

It defines which the system tools all the security requirements for understanding and, if multiple
write connection is needed, concurrent update location at an appropriated level, not all functions
need customer to write data back, but for the increasing number which does, the system should be
able to manage multiple updates in a timely, secure manner.

Multidimensional

This is the basic requirement. OLAP system must provide a multidimensional conceptual view of
the data, including full support for hierarchies, as this is certainly the most logical method to
analyze business and organizations.

Information

The system should be able to hold all the data needed by the applications. Data sparsity should be
handled in an efficient manner.

The main characteristics of OLAP are as follows:

1. Multidimensional conceptual view: OLAP systems let business users have a dimensional
and logical view of the data in the data warehouse. It helps in carrying slice and dice
operations.
2. Multi-User Support: Since the OLAP techniques are shared, the OLAP operation should
provide normal database operations, containing retrieval, update, adequacy control,
integrity, and security.
3. Accessibility: OLAP acts as a mediator between data warehouses and front-end. The
OLAP operations should be sitting between data sources (e.g., data warehouses) and an
OLAP front-end.
4. Storing OLAP results: OLAP results are kept separate from data sources.
5. Uniform documenting performance: Increasing the number of dimensions or database
size should not significantly degrade the reporting performance of the OLAP system.
 6. OLAP provides for distinguishing between zero values and missing values so that
aggregates are computed correctly.
7. OLAP system should ignore all missing values and compute correct aggregate values.
8. OLAP facilitate interactive query and complex analysis for the users.
9. OLAP allows users to drill down for greater details or roll up for aggregations of metrics
along a single business dimension or across multiple dimension.
10. OLAP provides the ability to perform intricate calculations and comparisons.
11. OLAP presents results in a number of meaningful ways, including charts and graphs.

Benefits of OLAP
OLAP holds several benefits for businesses: -

1. OLAP helps managers in decision-making through the multidimensional record views that
it is efficient in providing, thus increasing their productivity.
2. OLAP functions are self-sufficient owing to the inherent flexibility support to the
organized databases.
3. It facilitates simulation of business models and problems, through extensive management
of analysis-capabilities.
4. In conjunction with data warehouse, OLAP can be used to support a reduction in the
application backlog, faster data retrieval, and reduction in query drag.

Motivations for using OLAP

1) Understanding and improving sales: For enterprises that have much products and benefit a
number of channels for selling the product, OLAP can help in finding the most suitable products
and the most famous channels. In some methods, it may be feasible to find the most profitable
users. For example, considering the telecommunication industry and considering only one
product, communication minutes, there is a high amount of record if a company want to analyze
the sales of products for every hour of the day (24 hours), difference between weekdays and
weekends (2 values) and split regions to which calls are made into 50 region.

2) Understanding and decreasing costs of doing business: Improving sales is one method of
improving a business, the other method is to analyze cost and to control them as much as suitable
without affecting sales. OLAP can assist in analyzing the costs related to sales. In some methods,
it may also be feasible to identify expenditures which produce a high return on investments
(ROI). For example, recruiting a top salesperson may contain high costs, but the revenue
generated by the salesperson may justify the investment.
Difference between OLTP and OLAP

OLTP (online transaction Processing) is featured by a large number of short online transactions
(INSERT, UPDATE, and DELETE). The primary significance of OLTP operations is put on very
rapid query processing, maintaining record integrity in multi-access environments, and
effectiveness consistent with the number of transactions per second. In the OLTP database, there
is an accurate and current record, and the schema used to save the transactional database is the
entity model (usually 3NF).

OLAP (Online Analytical Processing) is represented by a relatively low volume of transactions.

Queries are very difficult and involve aggregations. For OLAP operations, response time is an
effective measure. OLAP applications are generally used by Data Mining techniques. In the OLAP
database there is aggregated, historical information, stored in multi-dimensional schemas
(generally star schema).

Following are the differences between OLAP and OLTP systems.

1) Users: OLTP systems are designed for office workers while OLAP systems are designed for
decision-makers. Therefore while an OLTP method may be accessed by hundreds or even
thousands of clients in a huge enterprise, an OLAP system is suitable to be accessed only by a
select class of managers and may be used only by dozens of users.

2) Functions: OLTP systems are mission-critical. They provide the day-to-day operations of an
enterprise and are largely performance and availability-driven. These operations carry out simple
repetitive operations. OLAP systems are management-critical to support the decision of enterprise
support tasks using detailed investigation.

3) Nature: Although SQL queries return a set of data, OLTP methods are designed to step one
record at a time, for example, data related to the user who may be on the phone or in the store.
OLAP system is not designed to deal with individual customer records. Instead, they include
queries that deal with data at a time and provide summary or aggregate information to a manager.
OLAP applications include data stored in data warehouses that have been extracted from many
tables and possibly from more than one enterprise database.

4) Design: OLTP database operations are designed to be application-oriented

while OLAP operations are designed to be subject-oriented. OLTP systems view the enterprise
record as a collection of tables (possibly based on an entity-relationship model). OLAP operations
view enterprise information as multidimensional).

5) Data: OLTP systems usually deal only with the current status of data. For example, a record
about an employee who left three years ago may not be feasible on the Human Resources System.
The old data may have been achieved on some type of stable storage media and may not be
accessible online. On the other hand, OLAP systems needed historical data over several years since
trends are often essential in decision-making.

6) Kind of use: OLTP methods are used for reading and writing operations while OLAP methods
usually do not update the data.

7) View: An OLTP system focuses primarily on the current data within an enterprise or
department, which does not refer to historical data or data in various organizations. In contrast,
an OLAP system spans multiple versions of a database schema, due to the evolutionary process
of an organization. OLAP system also deals with information that originates from different
organizations, integrating information from many data stores. Because of their huge volume, these
are stored on multiple storage media.

Major Features and Functions of OLAP

OLAP (Online Analytical Processing) is a technology that enables users to interactively analyze
multidimensional data from different perspectives. It's commonly used in data warehousing
environments for complex querying and reporting. Here are the major features and functions of
OLAP:

1. Multidimensional Analysis: OLAP allows users to view data from multiple dimensions
or perspectives simultaneously, such as time, geography, product, and customer. This
multidimensional view enables deeper analysis and better decision-making.

2. Aggregation: OLAP systems can quickly aggregate and summarize large volumes of data
across different dimensions. Aggregated data can be viewed at various levels of
granularity, such as totals, averages, and percentages.
3. Drill-Down and Roll-Up: Users can drill down into detailed data or roll up to higher-level
summaries to explore data hierarchies. For example, users can drill down from yearly sales
to quarterly, monthly, and daily sales data, or roll up from individual product sales to
product categories or regions.

4. Slicing and Dicing: OLAP allows users to slice and dice data by selecting specific
dimensions and attributes. Slicing involves filtering data along one dimension, while dicing
involves analyzing data by multiple dimensions simultaneously. This flexibility enables
users to perform ad-hoc analysis and explore data in different ways.

5. Advanced Calculations: OLAP systems support a wide range of advanced calculations

and operations, including mathematical functions, statistical analysis, and custom
calculations. Users can create calculated measures, ratios, and key performance indicators
(KPIs) to derive meaningful insights from the data.

6. Interactive Reporting: OLAP provides interactive reporting capabilities, allowing users

to create custom reports, dashboards, and visualizations. Users can dynamically adjust
parameters, drill down into details, and visualize data using charts, graphs, and pivot tables.

7. Predictive Analysis: Some OLAP systems offer advanced analytics features, such as
predictive modeling and data mining. These capabilities enable users to forecast future
trends, identify patterns, and make data-driven predictions based on historical data.

8. Scalability and Performance: OLAP systems are designed for scalability and high
performance, enabling fast query response times even when analyzing large datasets.
OLAP cubes, which store pre-aggregated data, help improve query performance and
optimize data retrieval.

9. Data Integration: OLAP systems can integrate data from multiple sources, including
relational databases, data warehouses, and external data sources. This integrated approach
enables users to analyze data from across the organization and gain a comprehensive view
of business operations.