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OLAP (online analytic processing)

OLAP (online analytic processing) is a term used in analytics to describe tools or technology that arranges data into what are called "information cubes."


An OLAP "cube" is a set of information which includes one or more dimensions (rows and columns) and then data elements (called measures).

For example, historically OLAP was used for financial data - ie. revenue is a measure in dollars.  But we may want to look at revenue by product,
and each product is part of a product family, and the product family might be part of another grouping or hierarchy (like color). Another dimensions may be time - this week, this month, last month, last quarter, etc.  Each of these dimensions has a hierarchy of some kind (second, minute, hour, day, week, month, quarter, year). 

Then the data itself (revenue) is called a "measure."  

The technology dynamically computes all the little intersections of dimensions very quickly.

So what OLAP tools do is let you load data into this "cube" or database, and then quickly analyze it by traversing around the hierarchy.  So one may say "let's look at product revenue for the red versions of product X by quarter."  Then we may say let's look at this by month, and compare with blue products.  The OLAP technology dynamically drills and aggregates data to make this very fast and easy.

Software tools which use OLAP technology include Excel Pivot Tables, MicroStrategy, BusinessObjects, Hyperion, Tableau, and many others.

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