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One of the most commonly misunderstood terms is OLTP and OLAP. What are OLTP and OLAP?
OLTP means Online Transaction Processing. OLAP means Online Analytical Processing. The
meanings are synonymous with their names. OLTP deals with processing of data from transactional
systems. For example, an application that loads the reservation data of a hotel is an OLTP system.
An OLTP system is designed mainly keeping in the mind the performance of the end application. It
comprises of the application, database & the reporting system that directly works on this database.
The database in an OLTP system would be designed in a manner as to facilitate the improvement
in the application efficiency thereby reducing the processing time of the application. For example,
consider a hotel reservation application. The database of such an application would be designed
mainly for faster inserts of the customer related data. It would also be designed in a manner as to
get a faster retrieval of the hotel room availability information.

Such a database is part of an OLTP system. Whenever a reporting tool is made to

work on such an application database then it forms the OLTP system. Generally, an OLTP
system refers to the type of database a reporting tool works on. During the 1980¶s, many
applications were developed to cater to needs of many upcoming organizations. All the
applications required a database to process, load & extract the data. The entire database
was designed keeping in mind the performance of the end application. As the organizations
developed, they felt the importance of analyzing the data that was collected. The analysis
performed on such data resulted in alarming number of findings that helped the
organizations to make important business decisions. Hence, more need was felt to develop
full reporting solutions. This is the period when more & more reporting tools came into the
market. But the performance of these reporting tools was very poor since they were made
to extract data from a system/database that was mainly developed keeping in mind the
performance of the application.

There were 2 main reasons why a DW came into being

1. Decrease in the performance of front-end applications as more & more data

was collected. A need to isolate older data was felt.

2. Importance of reporting was felt in equal terms among all organizations.

Existing reporting systems were poor since they had to work on
existing application databases.

OLAP systems were mainly developed using data in a warehouse. Having said that
a need was felt to isolate older data, it was necessary to store them in a format that
would be useful in easing out the reporting bottlenecks. A need was felt to isolate
the data & redesign the application data to such a format & structure that this data
repository would be the prime source of business decisions. Coming back to OLAP
systems, these systems were mainly developed on the isolated data. The isolated
data provided a means for faster, easier & efficient reporting. OLAP system need
 not always do reporting from a DW. The criterion is that it must be doing reporting
from a system/database that does not involve ongoing transactions. For example,
some organizations create something called an ODS (Operational Data Store) which
would be a replica of the transactional data. This data store would then be used for
reporting. But generally OLAP is synonymous with a Data Warehouse.

As the saying goes ³If something goes in, it has to come out´, it is
applicable here. Applications put the data in. The reporting systems take the data
out.