What is ETL

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‍Introduction to ETL and Data Engineering

ETL stands for Extract, Transform, and Load, and it plays a crucial role in data integration and consolidation. The ETL process starts by extracting data from its original sources, which can include databases, applications, etc. Once the data is extracted, it is then transformed which includes cleaning it up, deduplicating it, or combining data with it, or just getting it ready for the next stage. Then finally, the transformed data is loaded into the target database, such as Redshift, Azure, or BigQuery.

ELT Process

How ETL Works?

Let's break down each step:

1) Extract:

During the extraction stage, structured and unstructured data is imported and consolidated into a centralised data warehouse. Data extraction is a fundamental process in the ETL cycle, where raw data is pulled from various sources, such as databases, APIs, files, transactional applications like CRM or ERP systems, and IoT sensors collecting readings from production lines or factory operations. The extracted data is typically combined from these diverse sources into a unified dataset, which undergoes validation with any invalid data flagged or removed. Extracted data can exist in multiple formats such as relational databases, XML, JSON, etc. To streamline the process and establish a more efficient and reliable workflow, ETL tools can be employed to automate the extraction process since doing it manually would be time-consuming and may also lead to errors

During the extraction stage, raw data is copied or exported from the source locations to a staging area. This staging area, also known as a landing zone, serves as an intermediate data storage or space where the extracted data is temporarily stored. Typically, the contents of the staging area are erased once the data extraction is complete, although a data archive may be retained for troubleshooting purposes.

The frequency of data extraction from the source system to the target data store depends on the underlying change data capture mechanism. There are three common methods of data extraction:

a) Update Notification: In this data integration method, the source system notifies when a data record changes. Upon receiving the notification, the extraction process is triggered for that specific change. Most databases and web applications offer mechanisms to support this type of data integration.

b) Incremental Extraction: Some sources don't provide update notifications but can identify and extract the relevant data only that has been modified within a specified time period. In this scenario, the system only extracts the modified data after periodically checking for any data changes. The time period can be something like once a week, once a month, at the conclusion of a campaign, etc depending upon the business needs.

c) Full Extraction: Certain systems lack the capability to identify data changes or send notifications. Consequently, reloading all the data becomes the only option. To implement this extraction method, a copy of the previous extract is maintained to determine which records are new. This method is usually only used for small tables.

By effectively executing the extraction phase, businesses can acquire the necessary raw data to proceed with the subsequent steps of transformation and loading, ultimately enabling valuable insights and informed decision-making.

2) Transform:

Transformation plays a vital role in ensuring data quality and compatibility for its intended analytical use. It is during this phase that data undergoes various sub-processes to enhance its integrity and make it readily accessible for analysis and reporting by ensuring the compatibility of raw data with its new destination.

The data transformation phase includes several sub-processes such as:

a) Cleansing: Resolving inconsistencies and missing values in the data and also mapping data to the target format.

b) Standardization: Applying formatting rules to the dataset for uniformity by converting multiple data sources into a consistent format (e.g., character sets, measurement units, date/time values).

c) Deduplication: Removing redundant call data structures and eliminating duplicate records.

d) Verification: Removing unusable data and flagging anomalies.

e) Sorting: Organizing data according to its type.

f) Additional tasks: Applying optional rules to the data values further improve data quality.

Advanced data transformations use business rules to optimize data for analysis, including:

a) Derivation: Calculating new values from existing ones based on business rules.

b) Joining: Linking the same data from different sources to combine data, for consolidation.

c) Splitting: Dividing a column or data attribute into multiple columns.

d) Summarization: Reducing large datasets into smaller subsets for easier analysis.

e) Encryption: Protecting sensitive data through encryption to comply with regulations.

Comprehensive transformation enables organizations to unlock the true potential of their data and make informed decisions based on reliable insights

3) Load ‍
Loading is the final step in the ETL process, where data is delivered and secured for sharing, making it readily available to users and departments within and outside the organization. During the loading phase extract data move, the transformed data is moved from the staging area to the target data warehouse or data lake. This process ensures that business-ready data is accessible for analysis and decision-making.

‍Methods of Data Loading

There are two primary methods for loading data: 

a) Full loading:

In this method, the entire dataset from the source system is transformed and loaded into the data warehouse. This typically occurs during the initial data integration process when data is first migrated from the source system to the cloud data warehouse itself. Full loading is useful for research purposes, but it can lead to exponential dataset growth, making maintenance challenging over time.

2) Incremental Data Loading:

This method is a more manageable approach that compares incoming data with the existing records in the data warehouse. It only adds new and unique information, thus preventing unnecessary duplication. Incremental load processes are scheduled at regular intervals to synchronize the target and source systems efficiently. This approach allows for smaller and less expensive data warehouse while maintaining the ability to manage business intelligence effectively.

Within incremental loading, there are two ways to implement the process: 

a) Streaming incremental loading: 

This is suitable for smaller data volumes, where continual changes are streamed through data pipelines into the target data warehouse. It leverages event stream processing to monitor and process the data streams in real-time, enabling decision-making with the updated data when dealing with large volumes of events per second.

b) Batch incremental load:

This is ideal for handling large data volumes. It involves collecting data changes into batches periodically and synchronizing the data source and target systems during a specific time window. This approach ensures that no actions can occur in either system during the synchronization process, maintaining data integrity and consistency.

With automation, well-defined procedures, and batch-driven execution in the loading stage, organizations can efficiently perform the load step during off-peak hours to minimize any impact on the source systems and the enterprise data warehouse's performance.

Importance of ETL Process

ETL plays a vital role in enabling businesses to harness the power of data effectively. Here's how:

a) Data Integration:

ETL enables the consolidation of data from multiple sources into a centralized and unified data repository. By bringing together data from disparate systems, businesses can gain a holistic view of their operations, customers, and market trends. This comprehensive understanding facilitates better decision-making, as decision-makers have access to a complete and accurate representation of the business landscape.

b) Analytics:

ETL provides a solid foundation for data analytics by ensuring that the data is standardized, cleansed, and transformed into a suitable format. This crucial preprocessing data cleansing step prepares the data for accurate analysis, pattern recognition, and the extraction of meaningful insights. By leveraging ETL, businesses can trust the quality and consistency of their data, leading to more accurate and reliable analytics results.

c) Business Intelligence:

ETL serves as a vital bridge between raw data and business intelligence systems. It feeds the transformed and integrated data into data warehouses or data marts, which act as the backbone of business intelligence. ETL's role in centralizing and organizing data empowers businesses to generate reports, create interactive dashboards, and perform ad-hoc queries. This access to actionable insights enables stakeholders at all levels to make informed decisions, drive business growth, and gain a competitive edge.

Evolution of ETL over Time

ETL has evolved significantly over time, adapting to the changing needs and technological advancements. Initially, ETL processes were manual and time-consuming, involving custom code and scripts. However, with the emergence of ETL tools, the process became more efficient and manageable.

Benefits and Challenges of ETL

ETL offers several benefits, such as:

Enhancing Data Quality Through Cleansing Before Loading

ETL allows businesses to cleanse and validate data before loading it into the target system. By removing inconsistencies, errors, and duplicates, data quality is improved, ensuring reliable data analysis and decision-making.

Recommended Usage Scenarios and Other Data Integration Methods

ETL is suitable for scenarios where data needs to be consolidated, transformed, and loaded into a centralized repository. However, depending on the requirements, other methods such as CDC, data replication, data virtualization, or stream data integration may be more appropriate.

‍Challenges of ETL Process

While ETL is a powerful approach, it also comes with its own set of challenges such as:


As data volumes increase, scalability becomes a crucial consideration. ETL processes should be able to handle growing datasets and accommodate future business needs.

Data Transformation Accuracy

Ensuring the accuracy of data transformations is essential for reliable analysis and decision-making. ETL pipelines should be thoroughly tested and validated to minimize errors and inconsistencies.

Managing Diverse Data Sources

Data from various sources, each with a unique format, structure, and physical data integration methods and requirements, is something that businesses frequently deal with. ETL procedures should be able to effectively handle all the data coming in from such a wide variety of sources.

ETL Tools

The landscape of ETL tools has evolved significantly over time. Let's explore the evolution and key features of ETL tools:

Evolution from Custom ETL Code to Open Source and Commercial Tools

Previously, organizations relied on custom code and scripts for their ETL processes. However, the advent of open-source and commercial ETL tools has revolutionized the industry, providing pre-built functionalities and visual interfaces.

Automation, Visual Interfaces, and Support for Complex Data Management

Modern ETL tools enable both data scientists and engineers to easily construct complex data pipelines thanks to their automation capabilities, visual workflows, and drag-and-drop user interfaces. Additionally, they offer assistance in managing various data types be it structured, semi-structured, or even unstructured.

Types of ETL Tools

Two primary types of ETL tools exist in the market:

Batch Processing ETL Tools

Batch processing ETL tools operate on scheduled intervals, processing data in large batches. They are suitable for scenarios where near-real-time data processing is not required.

Cloud-Native ETL Tools

Cloud-native ETL tools leverage the scalability and agility of cloud platforms.These are designed to handle volumes of data and enable real-time or near-real-time data processing.

ELT - The Next Generation of ETL

In recent years, a new approach called ELT (Extract, Load, Transform) has gained popularity, especially in cloud environments. Let's explore its advantages and how it differs from traditional ETL:

Introduction to ELT (Extract, Load, Transform) Approach

ELT flips the traditional ETL process by loading raw data into the target system first, and then performing transformations within the destination system itself. This approach leverages the power and scalability of modern cloud-based processing engines.

Benefits of ELT, Especially in Cloud Environments

ELT offers several advantages, including reduced data movement, improved scalability, cost-efficiency, and the ability to leverage cloud-native processing capabilities. It allows businesses to harness the elasticity and scalability of cloud platforms for faster data processing.

Comparison Between ETL and ELT

In traditional ETL, transformations occur before loading the data, which may result in increased data movement and processing overhead. In contrast, ELT focuses on leveraging the processing capabilities of the target system, minimizing data movement and simplifying the ETL pipeline.

Adaptability and Scalability of ELT for Cloud-Based Businesses

ELT is particularly well-suited for cloud-based businesses due to its ability to scale horizontally and leverage cloud-native services. It enables organizations to handle large 


In conclusion, the ETL tool plays a vital role in data integration, analytics, and business intelligence. It enables businesses to extract, transform, and load data efficiently, paving the way for accurate analysis, reporting, and decision-making. As technology continues to evolve, ETL tools will undoubtedly play a crucial role in handling the ever-increasing volumes and complexities of data. By understanding the intricacies of ETL, businesses can harness the power of their data and unlock its true potential

Written by
Pranay Janbandhu


What is ETL