Online Analytical Processing in Accounting

Abstract

In this chapter we ascertain the significance of OLAP (On-line Analytical Processing) and its various tools useful for Accounting. We start with a brief history of OLAP. Then we define OLAP. We move on to analyze various types of OLAP- the Relational OLAP (ROLAP), the Multi-dimensional OLAP (MOLAP), the Hybrid OLAP (HOLAP) and the Desktop OLAP (DOLAP). We discuss some applications of OLAP tools in various areas of accounting. Finally, through a series of comparisons, we evaluate the different types of OLAP and select the type that could suit your needs.

An accountant commonly faces questions such as, “What is the profitability for fourth quarter across the X region for main products A and B?” This type of question requires multiple dimensions or perspectives on the data, such as time, region, and products. Multidimensional analysis is the process of analyzing data across multiple dimensions, such as sales per month for each product in each region, product performance by city by store, etc. Compared to the spreadsheet, which allows analysis of only two dimensions at a time, multidimensional analysis allows users to analyze data from an infinite number of viewpoints. An OLAP system would allow multidimensional analysis enabling you to gain insight into data through fast, consistent, interactive access to a wide variety of possible views of information. It allows you to view your data in the same way you think of your business and to see what is ultimately driving your business.