Difference Between OLAP and OLTP

Introduction

We live in a digital world. Unless one lives under a rock. And space technology has yet to put a man on Mars. So, until then, we live on earth and we are getting highly digital. The rate at which this is happening is almost baffling. One minute you’re figuring out the new features of your phone and the next there is a whole new version of it with more complex features. Believe it or not, technology is shaping our lives today. And we are happily letting it change our lives because it just makes things so much easier. Missing a friend? Skype them. Need to go to their house? Online navigation. No transport? Book an Uber. Out of food? Order food online. Need restaurant recommendations? The food page is still open. Don’t want to go out? Stay in. Don’t know what to watch on TV? Get a Netflix subscription. Need snacks for the movie? The food page can be revisited. Everything can be done online. We needn’t leave our house. Ever.

With data available online, many processing systems have been created to provide us with enough options so that our task becomes simple. It is almost like witchcraft where predictions are made without having sought them. For example, you visit an online shopping website and browse their collection of books but after a long hour of browsing, realize that the bookshelf in your house is simply gathering dust and you should instead look for cleaning supplies. Hence, you shut your phone and go to clean your miserable bookshelf. Once you return to the website, however, a new set of recommendations based on the previous search eagerly await you. And thoroughly impressed by the action and as a way to reward yourself for having cleaned the shelf (if you did indeed clean it) you decide to buy yourself a book. The moment you decide this, a list of options to pay for the book appears. You don’t even need to whip out your wallet! Online wallets and transactions make payment possible. It is that easy. There are various types of underlying systems that make it so.

OLAP vs. OLTP

There are various online processing systems. Their main objective is to process the data continuously as soon as the source data becomes available. An example of how online processing works is as follows – suppose you purchase a pair of pants at a store, the bar code is scanned on the computer and via online processing, the data is immediately updated in the inventory of the store as an item that is sold. It is also updated in the costs and sales report simultaneously. Thus, it just makes the operations much easier and lessens the workload for the employers and employees. Of the many online processing systems, are OLAP and OLTP. OLAP is an Online Analytical Processing system while OLTP is an Online Transaction Processing system. The main difference between the two is that the former is purely analytical while the latter is operational. Other features differentiate the two.

Differences Between OLAP and OLTP in a Tabular Form

PARAMETER	OLAP	OLTP
Meaning	OLAP is an online data analysis and data retrieval system.	OLTP is an online transactional system that manages the databases and their modifications.
Focus	OLAP focuses on retrieving data that can be analyzed for decision-making purposes. It is, thus, used in data mining, analytics etc.	OLTP focuses on the regulation of the database. It includes insertion, updating and deletion of data. It is application-oriented and is thus, used in business tasks.
Data	OLAP has historical data from various databases. It even uses the OLTP databases as its source.	The data in the OLTP database is the only source of data for OLTP.
Amount of data	OLAP has a large amount of data that is mostly stored in TB or PB.	OLTP has a relatively smaller size of data that is archived usually in MB or GB.
Management of data	The data from OLAP is usually managed by a higher authority like the general manager or the CEO.	The data from OLTP is usually managed by clerks and managers.
Operations	The operations performed by OLAP are rarely to write but mostly to read the data.	OLTP performs both reading and writing operations.
Uses	The data from OLAP is used for problem-solving, decision making and planning.	The data from OLTP is used to perform day-to-day tasks.
Transaction	OLAP has lengthy transactions.	OLTP has brief transactions.
Time	The data processing time is long for OLAP in comparison to OLTP.	The data processing time is not as long when compared to OLAP.
Normalization	The tables in the OLAP database are not normalized.	The tables in the OLTP database are normalized.
Integrity	The OLAP database does not get modified as frequently as the OLTP database. Thus, the integrity of the data is not affected.	The OLTP database has to maintain its integrity of the database.
Queries	OLAP processes complex queries.	OLTP processes simple queries.

What is OLAP?

OLAP stands for Online Analytical Processing System. It is a type of software tool that allows the analysis of data for improving decisions. It is a system that performs multiple functions in multiple dimensions at high speeds on a massive data set. The data is most likely gathered from data warehouses or data marts or some other centralized data store.

The source of data for OLAP is the OLAP cube. The OLAP cube is where one can submit a query, analyze the diagnosis and report the multi-dimensional data. The data is known as multi-dimensional data because the data set has multiple elements. For example, a dataset of sales will have elements of the region, product models, time of the year etc.

The OLAP cube extends in layers in a row by column fashion. Using the same example of sales, if the top layer reads sales by region, the subsequent layers of the cube could further have additional layers of state or province or city and the specific stores etc. The data in OLAP is stored in a star schema or a snowflake schema, which are both mechanisms to store data separately and effectively.

Essentially any type of data warehouse system is an OLAP system that allows for data to be retrieved. It solves complex queries and usually takes a long time for processing the data. However, the transactions are comparatively less frequent than OLTP. The tables in the databases are not even normalized.

Examples of uses of OLAP are as follows:

• Viewing a financial or a budgeting report in business.
• Spotify analyzes the previous songs that the user listened to and offers similar songs as a recommendation.
• Netflix has recommendations depending on the previously viewed content by the user.

Ideally, OLAP can be used for data mining, complex analytical calculations and in businesses for financial analysis, budgeting and forecasting.

What is OLTP?

OLTP is an acronym for an Online Transaction Processing system. It allows for real-time execution of a large number of transactions that can be carried out by a large number of people over the internet. Thus, it provides online transactions in a 3-tier architecture. A 3-tier architecture system is a well-organized system that organizes data into 3 tiers – the presentation tier or the user interface, the application tier that performs the processing of data and the data tier where the data is managed and stored.

OLTP systems make use of relational databases which are databases that store data and can show the relationship between the data. With such databases, OLTP performs the following functions:

• OLTP processes a large sample of data and performs relatively simple actions of insertion of data, updating the data and deletion of data.
• It enables multiple users to access this data while maintaining its integrity.
• The processing in OLTP is very rapid. The response time is calculated in milliseconds.
• Since it normalizes the data, it provides the information in clear indexed sets for quick browsing, retrieval and querying.
• It is available at all times and has constant backups.

Many organizations offer the databases of OLTP as the source of data for OLAP. The database in OLTP undergoes constant updates and thus may encounter a failure during such an update. For this reason, there is strict maintenance of data to ensure its integrity.

OLTP is frequently used in daily online transactions. Other examples of its uses are as follows:

• The ATM uses short transactions that are recorded and modified on the user’s account.
• Online banking and other online facilities like booking movie tickets or flight tickets use OLTP.
• OLTP is also used in online shopping websites.

OLTP can also aid in non-financial transactions such as changing the password or text messaging.

Main Differences Between OLAP and OLTP in Points

Following are the main differences between OLAP and OLTP:

1. OLAP is an online data analysis and retrieval system, whereas OLTP is an online transactional system that modifies and maintains databases.
2. OLAP has the prime focus of retrieving data for analysis. This data is used for improving decision-making processes and is used for data mining and complicated analytics. OLTP, on the other hand, has the prime focus of maintaining the database. This process involves the insertion, updating and deletion of the data and is thus, used in business statistics, analysis, budgeting etc. 
3. OLAP collects data from the various databases and even databases of OLTP, while the databases in OLTP are the source of data for OLTP.
4. The data collected by OLAP is massive and requires a large amount of storage. Hence, it is usually stored in TB or PB. Since the data is regularly updated in OLTP, relatively small size of data is stored in the archives. Thus, its data is stored in MB or GB.
5. OLAP has longer transactions when compared to OLTP.
6. OLAP does not normalize the tables in the database while OLTP normalizes the tables in the databases.
7. OLAP takes a longer time to process data in comparison to OLTP.
8. The databases in OLAP do not get modified frequently. Thus, the integrity of their data is not affected. The databases in OLTP are frequently being modified, which is why the integrity of the data is strictly maintained.
9. OLAP processes complex queries, whereas OLTP processes simple queries.
10. OLAP performs reading operations more than writing operations while OLTP performs both reading and writing operations.

Conclusion

OLAP and OLTP are thus two online processing systems that help in aiding the user and making their life less complicated. OLAP is an analytical processing system that analyses a large amount of data from various databases. Since it works with a massive amount of data, it requires massive storage and it also takes a longer time to process the data when compared to OLTP. It also performs data retrieval helping the user find what they are looking for. It reports to multi-dimensional analytical queries and thus, is used in data mining and answering complex analytical problems. It is also useful in the scope of business for financial analysis, forecasting, budgeting etc. and also in online platforms and applications like Netflix and Spotify for recommendations.

OLTP, on the other hand, is a transactional processing system. It maintains and modifies databases and constantly updates them. The main operation of the OLTP is the insertion, updating and deletion of data in the databases. The process takes place rapidly and is measured in milliseconds. Since it stores less amount of data in its archive, it does not require a lot of storage area. It has multiple uses. OLTP is used in ATMs, online banking services, online shopping services etc. It also finds use in non-financial transactions like changing passwords and text messaging. Both these processes are thus varied in their functions. The choice between OLAP and OLTP depends on the task at hand and the user but it is safe to say that they are both tremendously useful since together they are the driving forces behind our online decisions and transactions that take place in our everyday lives.

References

1. https://www.myaccountingcourse.com/accounting-dictionary/online-processing
2. https://www.ibm.com/in-en/cloud/learn/three-tier-architecture
3. https://www.ibm.com/cloud/blog/olap-vs-oltp
4. https://www.geeksforgeeks.org/difference-between-olap-and-oltp-in-dbms/