Whether you believe that reverse ETL is a hype or a trend, it is becoming increasingly difficult to escape this topic. Yet as simple as the concept is, the reverse ETL tools on the market are not all created equal.
Embark on a short journey in this post to understand the different categories of reverse ETL, what they offer, and where they could prevent you from reaching your desired destination (AKA result).
Select Your Reverse ETL Tools Like You Would Choose a Car
Get on the Road With Reverse ETL
At its core, the concept of reverse ETL is simple: take the data centralized in your data warehouse and extract it to another system (often a business application).
And while extracting data from a data warehouse is nothing new, what is new is the context in which organizations are considering reverse ETL tools.
Technology has matured. So have the teams who worked hard to get the data in one place, the famous single source of truth. Reverse ETL is now presented as an option to add value to this existing data investment.
Now, imagine that the data warehouse is your starting point and your destination is the personalized customer experience (CX) your marketing team is looking to deliver. How do you get there?
An answer: use reverse ETL. But be careful because, just like cars, not all reverse ETL tools are made equal. You’ll be surprised by the unpredictable conditions should you choose the wrong mode of transportation. Let’s get you on the right path:
|Reverse ETL Companies||Digital Data Integration CDPs||CDPs with Data Sharing Connector||Hybrid CDP|
|Transportation Mode 🚗||The Rideshare||The Standard||The Intermediate||The Hybrid All-Wheel Drive (AWD)|
|Description||Low cost for a short ride||Keep business-as-usual with a data copy in your business applications||Reduce data pipeline management cost||Full control and flexibility, choose where to store and query the data|
|Data Storage||Warehouse-only||Copy to CDP||Cashing to CDP||Hybrid: Warehouse, CDP|
|Query Execution||Warehouse-only||CDP||CDP||Hybrid: Warehouse, CDP|
Reverse ETL Companies: The Rideshare
We can give these software companies credit where credit is due: they have democratized the terminology “reverse ETL.” Where originally all customer data platform (CDP) companies required to copy data in their system to use it, reverse ETL companies took an opposite approach: let’s keep the data where it is, in the data warehouse.
This makes it a solution easy to deploy and even cheap considering they start at $0. But can you really trust a free tool with your enterprise?
The first and biggest flaw in this design — not offering any storage layer — assumes that organizations successfully got all their data into the data warehouse. It usually doesn’t take long to discover a new source that hasn’t made it to the data warehouse yet.
These immature reverse ETL company options come with extra limitations that are difficult to ignore:
- Real-Time: Reverse ETL companies tend to have a hard time accepting that customers these days expect both real-time experiences and omnichannel personalization. For instance, if you send an abandoned cart email seven days later (yes, I’ve seen this example being used) you certainly already missed that revenue opportunity.
- Identity: Having centralized the data in a data warehouse does not mean that the customer identity has been resolved for both anonymous and known profiles.
- Business access: Keeping the data in the data warehouse should not come at the cost of providing governed data access to business users via a self-service interface.
- Domain expertise: You certainly know that technology is not everything. Success will be driven by change management as much as by strategy, operations, and technology. These young reverse ETL companies are lacking support beyond the technology piece.
If a Rideshare option seems like a great low cost tool to get things started, be aware that you will very quickly find that approach limited.
Digital Data Integration CDPs: The Standard
These CDP companies jumped on the bandwagon in November 2022 by announcing reverse ETL connectors. In these announcements, what digital data integration CDPs really announced is a (new?) way to move data into their product.
Don’t get me wrong, this can be an easier option to copy data than using traditional data pipelines. But in reality, there are no fundamental changes in this approach: we are still talking about copying all the data first in order to use the business application, hence this represents a rather standard car option.
CDP with Data Sharing Connectors: The Intermediate
Let’s keep progressing in our reverse ETL tool categories with a quickly growing option: leveraging the data sharing capabilities of cloud data warehouses. The promise here is that organizations don’t need to create a data copy, they can instead provide direct access — and control that access — to the data.
It is a great option to reduce the operational costs associated with the creation and maintenance of data pipelines.
However, if IT is also concerned about the data copy, this solution will fall short. It does require to cache the data outside its original source, the data warehouse, in order to be queried by the business application.
Hybrid CDP: The Hybrid All-Wheel Drive (AWD)
Here comes the last category of reverse ETL tools: the hybrid all-wheel drive. Optionality and control are finally available with this car category. All your data might be stored in your data warehouse and you can connect to it without copying it.
But imagine that you started an important digital transformation project and the migration from an on-premise to a cloud data warehouse is ongoing. You could be looking to connect to the data already migrated, and also need to copy some data sets not yet migrated, to accelerate business needs without impacting performance. In other scenarios, such as a real-time use case, your data warehouse might not provide data access fast enough for your needs.
With reverse ETL tools using a hybrid approach, the philosophy is that business users can interact with the application without having to know where the data is being stored and queried.
While this approach requires more internal conversations with IT to decide which data to keep in the data warehouse versus having a copy in the business application, it provides full control, flexibility and increased opportunities for innovation.
Choose Reverse ETL Tools Without Compromises
A rideshare option is okay to run nearby errands, but inconvenient and cumbersome for longer trips when you could buy and drive an AWD car instead.
When adopting new technologies to increase the value of your existing investments, make sure to choose the option that will give you maximum flexibility and control so you can succeed even in unpredictable environments.
You might not control the weather, but you can choose with how much comfort and safety you’ll get to your destination — in any and all weather conditions.
Learn More About Reverse ETL Tools
Thanks to ActionIQ’s HybridCompute composable architecture, we provide organizations with options: keep the data in your centralized data warehouse and access it via reverse ETL or copy it. At any point, you can revisit your decisions. Let’s enjoy the ride together.
Download The Enterprise Guide to Composable CDPs to learn how you can build a better customer data stack using the AIQ CX Hub.