OLAP Vs OLTP: What Is The

Difference?

Few can deny the growing importance of big data in modern commerce. But as
more and more companies embrace and transition to digital, data-centric
processes, developing a thorough understanding of the tools used to process all
that big data has grown more important, too.

Two powerful, interrelated data processing tools—online analytical processing, or

OLAP, and online transaction processing, or OLTP— play an especially critical
part in helping companies gain transparency into, and control over, their data and
spend.

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A Tale of Two Online Processing Tools
To understand the relationship between OLAP and OLTP, it’s necessary to
understand the role each plays in data processing.

OLAP is the classification given to a specific type of software tools designed to

analyze data (often from multiple database systems at once) in order to provide
actionable insights.

These insights can be strategic or tactical, and touch on everything from problem
solving (e.g., “Which vendors consistently provide full contract compliance?”) to
planning and decision-making (e.g., “Which processes will yield the most value
and cost savings from automation?”).

OLAP systems are what’s known as data warehouse systems, as compared to their
simpler database-driven counterparts.

ASPECT DATA WAREHOUSE DATABASE

Ideal Workload: Analytics and reporting Processing transactions
Multiple diverse data Drawn from a single
Source of Data and
sources, either discrete source, e.g. a
Amount of Data:
or interconnected transaction system
Complex and relatively High volume, simple,
Query Types:
few and short. (Fast query.)
Designed for
continuous and
immediate updating to
Data Collection: Bulk batch jobs
speed transaction
processing and
accuracy.

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 Star Schema or
Static schemas
Data Normalization: Snowflake Schema
(normalized)
(Denormalized)
Uses columnular Focused on single-row
storage to simplify and blocks for fast and
Storage:
speed both access and frequent data
query results. additions.
High volumes of fast
and frequent small
Focused on minimal
inputs, e.g.
input/output and
transactions; data is
maximum throughput;
Access: accessed and modified
data is accessed as
quickly and frequently,
required, but rarely
requiring exceptional
modified.
response times (often
in milliseconds).
Data warehousing is ideal for OLAP systems, because the goal is effective and
accurate analysis of a large amount of data from multiple sources in order to
produce insights that drive further actions and guide future decisions.

OLAP systems collects huge volumes of current and historical data on day-to-day
transactions from OLTP databases.

For procurement teams, OLAP is a powerful ally in achieving accurate and

complete spend analysis, as well as financial planning and reporting.

It analyzes data collected and stored through the use of OLTP processes to
produce large-scale, strategic improvements that benefit not just procurement,
but the business as a whole.

OLAP databases can be used to create what is known as an OLAP cube. Unlike a

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Rubik’s Cube, which presents a challenge to be solved, an OLAP cube assists with
problem solving by rendering the complex, inter-related data contained within the
connected databases of an OLAP data warehouse as a user-friendly three-
dimensional cube.

Rendering the data in this way lets end users “slice and dice” information to
explore data relationships and gain insights that might not be readily apparent
otherwise.

For example, procurement pros will most often encounter this cube during spend
cube analysis, where the relationships between (for example) spend data, supplier
compliance and performance, and cost center analysis can be used to achieve
more strategic sourcing through process refinement and the removal of
redundant or under-performing suppliers.

By comparison, OLTP shifts the emphasis away from “analysis” and toward
“processing.” If OLAP is largely strategic, OLTP is tactical and transactional,
focusing as it does on fundamental business tasks such as:

Automated messaging and reminders

Order entry and approval processing (e.g., automated P2P processes)
Approving and issuing payments

An OLTP system has a more immediate and tactical use in procurement

automation than OLAP does, as it focuses on consistent, frequent, and relatively
simple processes.

OLTP systems produce the data OLAP systems rely on to achieve strategic
improvements.

OLTP systems store information in the transactional databases it creates,

manages, and modifies.

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They don’t rely on data warehousing, but are instead traditional database
management systems (DBMS). These systems focus on inserting, updating, and
deleting information as required, and are focused on speed, accuracy, and data
integrity.

To help ensure data integrity, OLTP databases have atomicity and concurrency.

The former ensures that the failure of any single step within a transaction will
prevent it from continuing, while the latter prevents multiple users from
modifying the same information at the same time.

Information is moved from OLTP systems to OLAP systems using extract,

transform, and load (ETL) processes.

Extract functions isolate and collect the desired data in a given database.
Transform functions manipulate the collected data for analysis.
Load functions either add the desired data to an existing database, or
create a new one as required.

The goal of effective OLTP is maximum efficiency and accuracy in transactional

processing, as well as absolute data integrity in support of ETL, rather than deep
data analysis used to answer complex queries.

An OLTP system has a more immediate and tactical use in procurement

automation than OLAP does, as it focuses on consistent, frequent, and relatively
simple queries. OLTP systems produce the data OLAP systems rely on to
achieve strategic improvements.

OLAP vs OLTP: Which is Right for Your

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Business?
Because OLTP systems provide the transactional databases OLAP applications
rely on, trying to decide between the two is something of a false choice.

A better approach is to consider how best to put each of these database

management technologies to work within your company’s business processes and
workflows.

A direct comparison, with context, is most useful when considering the issue of
OLTP vs OLAP:

1. Database Design:
OLAP systems are designed to retrieve and analyze large volumes of data
from disparate sources. They are rarely modified, and not normalized.
Queries are complex, large, and often multidimensional. OLAP data
integrity is not a concern, but does rely upon the inherent integrity of
OLTP data.
OLTP systems are designed to manage and modify transactional
databases through a large number of small, frequent updates in real time.
They are the source of data for OLAP applications. Data integrity is
paramount, as inaccurate or incomplete data can skew insights produced
through OLAP analysis.

2. Database Applications
OLAP systems are designed to provide insights and business intelligence
for planning, decision support, and solving complex problems. Examples
include financial planning, strategic sourcing, spend analysis and
management, etc.
OLTP systems are built to support and execute fundamental business

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 tasks. Examples include automating the P2P process, inventory
management, etc.

3. Potential Challenges
Data warehousing has traditionally been complex and expensive to build,
requiring specialized training to achieve maximum utility.
Sub-optimal OLTP design can compromise the efficacy of OLAP through
incomplete or incorrect data.

As you can see, to get the most out of OLAP’s business intelligence, you need
rock-solid, reliable, and current data from OLTP.

An effective solution for many companies is to choose a procurement solution that

includes database management and process optimization tools that work together
to provide optimal OLTP data for OLAP analysis.

Data Analysis Drives Smarter Spending

and Better Decision-Making
Two sides of the same data mining coin, OLAP and OLTP are essential tools for
any company hoping to successfully tame the dragon of big data.

Knowing how best to leverage their individual capabilities while effectively

integrating them as part of your overall business process management plan is
key—as is choosing a procurement solution that supports such an integration
flawlessly.

With OLAP and OLTP, you can manage your entire data stream more effectively at
all levels and achieve your goals for not just lower costs and higher profits, but
process improvement, competitive advantage, and strategic growth.

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