What is OLAP?

The term OLAP stands for OnLine Analytical Processing.  OLAP provides for an "online" interactive connection to business information.  The interaction that OLAP provides allows users to ask questions of the database. 

OLAP is defined by the Olap Report as Fast Analysis of Shared Multidimensional Information.

FAST - In general, OLAP queries are very fast.  A typical OLAP database should return data back to the user within 5 seconds.  This allows users the ability to "interact" with the data, since they don't have to wait long between queries.

ANALYSIS - Most OLAP products are excellent at numeric calculations.  (In fact, you can think of an OLAP cube as a huge calculation engine.)  "Speed of thought analysis" is what OLAP provides to users.  This means that users can quickly and easily visualize the data by navigating up and down business hierarchies.  OLAP is key in providing analysis because it allows the user to look at any combination that is available within the database without having to write complex queries.

SHARED - Most OLAP applications allow for the write back of data.  For the most part, OLAP applications are shared on a centralized server across the organization.  This insures that everyone is "looking at the same data set".  Because of its shared nature, most OLAP products contain some sort of user security model.

MULTIDIMENSIONAL - Dimensionality is the key to OLAP.  Multidimensionality allows users to analyze data across multiple axis.  An example of a 5 dimensional cube may be Time, Products, Customer, Salesperson, and Measures.  Within each dimension are "levels" which are hierarchies which organizes the dimension members.  An example of a time hierarchy may be; Years, Quarters, and Months.  OLAP allows users the ability to look at any intersection among the dimensions.

INFORMATION - Information includes all of the stored data and calculations within a cube. 

OLAP databases are often called "Cubes" because of their multidimensional nature.  Organizations will oftentimes have numerous "Cubes" for each functional part of the business.  It is not uncommon to see a single organization have a "Sales Cube", a "Finance Cube", a "Survey Cube", etc.