What Is ETL? Extract, Transform, and Load Explained

The cloud storage marketplace continues to grow as businesses store an increasing amount of data online. Data lakes, which amass vast amounts of raw data in their native format, are often fed by ETL systems.

But what is ETL, and how can you use this technology to better process your organization’s data? We’ll tell you everything you need to know.

What is ETL?

Extract, Transform, and Load (ETL) is a data integration solution that takes data from multiple sources and reformats it so you can keep it in a single, consistent data store.

ETL plays a crucial role in modern data warehousing. It allows companies to take data from public and private clouds or data created by multiple applications and convert it into a single format that other applications can use.

How does ETL work?

ETL is an essential aspect of data management. The acronym covers the three primary phases of the process:

Extract

Your data management team must first extract the data. It may come from various sources, such as simple SQL or NoSQL servers, flat files, emails, websites, and CRM and ERP systems.

The data sources at this stage may produce clearly structured data or unstructured data that requires processing.

Transform

The next stage in the ETL process is transforming the data. This means filtering and sanitizing it, performing deduplication, validating the data, and performing all necessary checks to ensure the data is accurate, valid, and comes from a source permitted to be added to the ETL data warehouse.

Load

Finally, it's time to load the data into the warehouse. This isn't a one-time occurrence, as the warehouse will receive periodic updates covering any incremental changes or additions to the data. A well-designed ETL pipeline always keeps the warehoused data updated.

ETL versus ELT: What’s the difference?

ETL and ELT are two slightly different methods for achieving the same goal. With ETL, the extracted data is transformed before it’s loaded into the data store. With ELT, the extracted data is loaded in its raw format, and any required transformation is performed later.

If you’re deciding between ETL and ELT, know there’s no wrong answer. Your ideal solution depends on your computing resources and the type and format of the data you're processing.

ELT is becoming popular because it's flexible and well-suited to cloud databases. However, as a relatively new approach, it comes with downsides.

ETL is an efficient method if you can clearly define the data you’re working with and perform the transformation first.

ETL tools

You'll likely use numerous tools within your ETL pipeline. In the past, developers had to create their own ETL tools. This may still be the case if you’re working with complex data and have precise requirements.

However, many open-source and commercial ETL tools are available today that can help you process data. These tools can offer the following:

• At-a-glance views of your data
• Drag-and-drop functionality for creating relationships and importing data
• Encryption
• Assistance in complying with data processing regulations

Benefits and challenges of ETL

ETL technologies help organizations build higher-quality data stores by sanitizing the data before storage. Junk data and duplicates are removed, providing a higher-quality database.

Organizations benefit from a clean, consolidated, and properly integrated data store combining information from several sources. It lets them take a more holistic view and make better decisions.

It isn't always easy, however. Maintaining data quality and integrity is sometimes challenging, especially when data sources are of poor quality or in unforeseen formats. Effective ETL requires meticulous planning and skill on the part of the coders to ensure high-quality performance.

ETL use cases

ETL is applicable in nearly any industry. If you deal with data from multiple sources, ETL can standardize it and make it easier to access in other applications.

ETL provides the following uses in various industries:

Automotive

In the automotive industry, businesses must work with suppliers, market research companies, and internal customer databases. Combining data from multiple sources assists in forecasting demand, managing marketing campaigns, and understanding what customers are looking for. Lead times are long in the automotive industry, so decisions must be made carefully using ample data.

Oil and gas

In the oil and gas industry, demand can fluctuate significantly in a short period. Companies must be aware of current supply levels, prices, and need. ETL solutions can help them combine information about extraction rates, storage capacities, and demand to adjust their output and pricing.

Financial services

The financial services sector also sees rapidly changing data. Depending on the nature of their business, firms may need to take advantage of multiple data feeds to assess fraud risks, understand those of your customers, or identify how much risk borrowers present.

Data protection and security are additional challenges in the financial services industry. Much of the data is personally identifying information, so it must be treated in compliance with local regulations.

Healthcare

Private healthcare providers must process customer information and may use data from other sources relating to health insurance or patient records. This data must be processed in compliance with regulations to protect patients’ privacy.

Telecoms

Telecommunications providers use ETL to better understand their customers. With data from social media, customer databases, calling records, and other sources, they can get a picture of who's using their services, which marketing campaigns work best, and how their services are being used. They can use this knowledge to design better promotions, depending on what customers appear to use the most.

Keep data flowing with ETL and Orderful

When used effectively, ETL is a vital aspect of data management. To share essential data with partners, you’ll need another crucial service: electronic data interchange (EDI).

We offer no-obligation consultations with our EDI experts to help you better understand your organization’s needs and build a plan for streamlining your communications. Schedule a consultation today to begin your EDI journey.