← Back to Blog
Tuesday, April 18 2023

Modern Data Stack: What It Is | How It Works | Use Cases | How to Implement | The Definitive Guide

Modern Data Stack MDS integrates a set of tools and techniques to aid to efficient store data, build data pipeline, manage data flows and more.

In today’s data-driven world, businesses are increasingly looking to harness the power of data to make informed decisions and gain a competitive edge. This has led to the rise of the modern data stack, a set of tools and technologies designed to help organizations collect, store, process, analyze, and visualize data. This article will explore the components, benefits, and use cases of modern data stacks, as well as offer guidance on how to implement them effectively.

What is Modern Data Stack (MDS)

A Modern Data Stack (MDS) is a flexible and scalable data platform that enables organizations to efficiently manage and process their company’s data. By leveraging today’s cloud platforms, MDS integrates a variety of tools and components, such as data pipelines, data ingestion tools, and ETL tools, to streamline data flows from multiple sources.

With a focus on data management and transformation processes, MDS allows for the seamless storage and handling of collected data, enabling businesses to build their own data stacks tailored to their unique needs.

Visualization tools and server logs, along with other specialized tools, provide insights into data models, while software development practices and cloud-based data warehouses support the overall data-driven infrastructure.

Definition of the Modern Data Stack MDS

The MDS refers to a collection of complementary tools & platforms that are easy to integrate, are largely scriptable, and, collectively, solve challenges primarily related to data ingestion, storage and application:

  • Storing the data in a cost efficient manner;
  • Publishing it for use by humans, batch-processes and other platforms;
  • Transforming it to increase usability and efficiency;
  • Facilitating business value creation from it via intelligence tools (BI, ML, AI), and 
  • Enabling clear observability & organizational security.

Together, the various MDS tools facilitate:

  • Data Discovery – connect to, find and explore the data
  • Data Sharing / Collaboration – share data collections with the team/organization
  • Secure Governance – discover and share in a secure and transparent manner
  • Workflows – combine (often repetitive) tasks into workflows 
  • Personalized Exploration – easily discover and work with the data/analyses/scripts that matter to them
  • Data Products – using all the features of the tool(s) to generate insights and deploy those insights into action in the form of data products (dashboards, apps, APIs)

Here is an exhaustive diagram of the toolsets in the MDS and their use cases. There is a good reason why it’s called a “stack”!

Modern Data Stack - Detailed Version - Modern Data Stack (Detailed System Diagram)
Adapted on Emerging Architectures for Modern Data Infrastructure — by partners @ a16z

What Separates a Modern Data Stack from a Legacy Data Stack?

Legacy data stacks were built on older technologies and methodologies that often led to inefficiencies and limitations in data processing and analytics. Some of the key differences between modern data stacks and legacy data stacks include:

  • Cloud-based Infrastructure: A modern data stack is fundamentally different from a legacy data stack in terms of its architecture, scalability, and flexibility. Modern data stacks take advantage of cloud computing resources, which provide scalability, flexibility, and cost efficiency. Legacy stacks were typically built on-premises and required significant investments in hardware and maintenance.
  • ELT vs. ETL: One of the key distinctions between a modern data stack and a legacy data stack is the way in which data is collected, stored, and processed. In a legacy data stack, data would typically be stored in a relational database or a data warehouse, with Extract, Transform, Load (ETL) processes used to move and transform data between systems. This approach can be slow and cumbersome, and it often requires significant engineering resources to maintain and manage. Modern data stacks use the Extract, Load, Transform (ELT) approach, allowing for raw data to be loaded into a data warehouse before being transformed. This shift in approach enables greater flexibility and scalability in data processing.
  • Data Storage: Today’s modern data stack is built around the concept of a data lake, which provides a more flexible and scalable storage solution for raw data from multiple sources. Data is ingested into the data lake using data pipelines, which are responsible for collecting, cleaning, and transforming data as it is moved between systems. Data can then be processed using a variety of modern tools, including business intelligence (BI) tools, data analytics platforms, and machine learning (ML) frameworks.
  • Ease of Integration: Modern data stacks are designed to integrate easily with a wide range of data sources and applications. Legacy stacks often required custom-built connectors and integrations, which could be time-consuming and costly to maintain.
  • Advanced Analytics Capabilities: Modern data stacks enable organizations to take advantage of advanced analytics capabilities such as machine learning and artificial intelligence. These technologies were not readily available or easily integrated into legacy stacks.

Another significant difference between modern and legacy data stacks is the emphasis on data democratization, enabling business users and data professionals alike to access and analyze data more easily. Modern data stacks prioritize user-friendly interfaces, self-service capabilities, and real-time access to data, empowering individuals throughout an organization to make data-driven decisions.

In the following sections, we will explore the various components and benefits of modern data stacks in more detail, as well as discuss how they can be implemented effectively to support a data-driven organization.

Benefits and Data Culture of Modern Data Stacks

There are numerous benefits associated with adopting a modern data stack, including improved scalability, flexibility, and performance. By leveraging cloud-based data storage and processing solutions, modern data stacks can easily scale to accommodate growing data volumes and workloads. This is in stark contrast to legacy data stacks, which often require costly and time-consuming infrastructure upgrades to meet increasing demands.

One of the most significant advantages of a modern data stack is its ability to provide real-time access to data, allowing organizations to make more informed decisions quickly. With a modern data stack, data scientists, analysts, and other data professionals can easily access and analyze data as it is collected, enabling them to uncover valuable insights and drive more informed decision-making.

In addition to these technical benefits, modern data stacks also support a more collaborative and inclusive data culture within an organization. By empowering business users and data professionals alike to access and analyze data, modern data stacks help to break down silos and encourage cross-functional collaboration. This, in turn, can lead to more informed decision-making, improved business outcomes, and a stronger competitive advantage.

A robust data culture is essential for any organization looking to become truly data-driven. In this context, a modern data stack can play a critical role in fostering a culture of data-driven decision-making and continuous learning. By providing the tools and technologies needed to collect, store, process, and analyze data, a modern data stack enables organizations to not only harness the power of their data but also empower their employees to make better decisions based on that data.

In the next section, we will delve deeper into the components and functions of modern data stacks, exploring the various tools and technologies that make up these powerful and versatile data processing platforms.

Components and Functions of Data Stacks

Modern data stacks consist of several interconnected components that work together to support the efficient processing, storage, and analysis of data. These components can be broadly grouped into three main categories: data sources, data storage and processing, and data analysis and visualization tools.

Data Sources

The foundation of any data stack is the data itself, which typically originates from multiple sources within an organization. These data sources can include transactional databases, log files, application data, third-party APIs, and more. Data integration plays a critical role in ensuring that data from these disparate sources is effectively ingested, cleaned, and transformed into a consistent format that can be easily stored and analyzed.

Data Storage and Processing

Once data has been ingested and integrated, it must be stored in a way that enables efficient processing and analysis. Modern data stacks typically leverage cloud-based data warehouses and data lakes for this purpose, as these storage solutions provide the necessary scalability, flexibility, and performance required to accommodate today’s data-driven organizations.

In addition to data storage, modern data stacks also include tools and technologies for processing and transforming data. This may involve data pipelines for moving data between storage systems, data transformation tools for cleaning and preparing data for analysis, and data governance solutions for ensuring data quality and consistency.

Data Analysis and Visualization Tools

Finally, modern data stacks include a range of tools and technologies for analyzing and visualizing data, including business intelligence (BI) platforms, data science tools, and machine learning frameworks. These tools enable data professionals and business users to uncover valuable insights from their data and make more informed decisions based on those insights.

Data Activation Platform

In the next part, we’ll explore data integration and transformation in more detail, including the various tools and technologies used to support these critical processes within a modern data stack.

What’s missing in the current Modern Data Stack?

What’s missing in the MDS is a “data activation” tool. Data Activation is defined as the ability (including ease and speed) to discover, explore, derive meaningful insights, and put those insights into action.

It is critical for businesses to go beyond charts, dashboards and Business Intelligence tools to foster collaboration, efficient discussion and effective decision making. But, the true application of data beings only after the decision making as those insights are put to use to improve business performance in the form of ML algorithms, process improvements, experiments etc.

Most Modern Data Stack solutions today are missing such a data activation platform that enables organizations to go beyond just charts and dashboards, enabling them to traverse the journey from data to business impact while ensuring deep collaboration between data teams, managers and stakeholders, all on the same platform

Noteable is one such data activation platform built to support the entire data lifecycle for all the use cases of a business, from BI to ML and AI.

Learn how Noteable can help boost your data team’s productivity →

Data Integration and Transformation in Modern Data Stacks

One of the key challenges in building a modern data stack is ensuring that data from various sources can be seamlessly integrated and transformed into a format suitable for analysis. This process typically involves several stages, including data ingestion, data transformation, and data loading.

Data Ingestion

Data ingestion involves the process of collecting, importing, and processing data from various sources into a central data storage system. This can be achieved using a variety of data ingestion tools that support the extraction, transformation, and loading (ETL) of data. These tools help organizations connect to their data sources, extract the necessary data, and perform any required transformations before loading the data into a data warehouse or data lake.

Data Transformation

Once data has been ingested, it often needs to be transformed into a format that can be more easily analyzed. This can involve cleaning and filtering the data, enriching it with additional information, or aggregating it to provide a higher-level view of the data. Data transformation tools play a crucial role in this process, enabling data engineers and data professionals to create complex transformation workflows that can be automated and executed at scale.

Data transformation can also involve a process known as ELT (extract, load, transform), where data is first loaded into a data warehouse or data lake, and transformations are performed directly within the storage system. This approach can offer improved performance and scalability, particularly when working with large volumes of data.

Data Loading

Finally, once data has been transformed into the desired format, it must be loaded into the appropriate storage system for analysis. This can involve loading data into a cloud data warehouse, a data lake, or a more specialized storage system, depending on the specific needs and requirements of the organization.

In the next part, we’ll explore the different components and technologies used to build modern data stacks, as well as the various use cases and examples of how these stacks can be implemented within an organization.

Implementing and Monitoring Modern Data Stacks

Implementing a modern data stack requires careful planning, configuration, and integration of various components. Some factors to consider when setting up a modern data stack include:

Data Governance

Ensuring data quality, accuracy, and consistency across your data stack is crucial. Implementing data governance policies and practices can help maintain data integrity and prevent data breaches.

Data Orchestration

Managing the flow of data between different components of your data stack can be complex. Data orchestration tools like Apache Airflow, Prefect, and Dagster can help automate data pipelines, ensuring data is processed and moved efficiently.

Monitoring and Security

Monitoring the performance and health of your data stack is essential for maintaining optimal performance and quickly identifying issues. Implementing monitoring solutions, security measures, and access controls can help safeguard your data and infrastructure.

Once your modern data stack is in place, it’s essential to continuously monitor and optimize its performance. This can involve:

Version Control

Using version control systems like Git to track changes to your data stack’s configuration, code, and infrastructure can help maintain a historical record of changes, making it easier to identify and revert problematic updates.

Performance Tuning

Regularly analyzing the performance of your data stack can help identify bottlenecks and areas for improvement. Adjusting configurations, scaling resources, or optimizing data processing tasks can lead to significant performance improvements.

Data Quality

Continuously monitoring and improving data quality is crucial for ensuring accurate, reliable insights. Implementing data validation, data profiling, and data cleansing processes can help maintain high data quality levels.

In the next part, we’ll explore various use cases and examples of modern data stack setups, showcasing how organizations can tailor their data stacks to meet specific needs.

Use Cases and Examples of Modern Data Stack Setups

Modern data stacks can be customized to fit a wide range of use cases and organizational needs. Below are some examples of how different organizations might set up their modern data stacks:

Data-Driven Start-Up

A start-up focused on data-driven decision-making might choose a cloud-based data warehouse like Snowflake or BigQuery, using Fivetran or Stitch for data integration. They could then use dbt for data transformation and Noteable / Looker / Tableau for business intelligence and data visualization.

Enterprise with Complex Data Requirements

An enterprise with more complex data requirements might opt for a hybrid data stack, combining data lakes and cloud data warehouses to store and process both structured and unstructured data. They could use tools like Talend, Informatica, or Azure Data Factory for data integration and transformation, while leveraging Noteable or Power BI or Qlik for business intelligence.

Machine Learning and AI Use Case

A company focused on developing machine learning models and AI applications might build a data stack incorporating tools like Databricks, Apache Spark, or Hadoop for data processing and model training. They could also use TensorFlow, PyTorch, or Scikit-learn for building and deploying machine learning models, and MLflow or Kubeflow for model management.

These examples illustrate how modern data stacks can be tailored to suit specific use cases and requirements. By selecting the right combination of tools and technologies, organizations can build a data stack that enables them to efficiently manage, process, and analyze data, driving better decision-making and business outcomes.

In the next part, we’ll discuss how to build a custom modern data stack that will fit your business needs.

Building a Custom Modern Data Stack

When building a custom modern data stack, consider the following steps:

Define your data needs and goals

Understand your organization’s data requirements, types of data sources, and the insights you aim to derive from the data.

Choose the right components

Select the appropriate data storage, integration, transformation, and visualization tools based on your needs and use cases.

Build a strong team of data professionals

Assemble a team of data engineers, data scientists, and data analysts who can effectively manage and maintain your modern data stack.

Ensure data governance and security

Implement data governance practices to maintain data quality, privacy, and compliance with relevant regulations.

Establish a data culture within your organization

Encourage data-driven decision-making, foster collaboration between data teams and other departments, and provide training to empower business users to analyze data and gain insights.

Monitor and optimize your data stack

Continuously evaluate the performance of your data stack and make improvements as needed to ensure it remains efficient and effective.

Building a custom modern data stack requires careful planning, execution, and ongoing maintenance. By following these steps and selecting the right combination of tools and technologies, you can create a robust data infrastructure that supports your organization’s data-driven initiatives and drives better business outcomes.

In the next part, we’ll discuss how to choose the right components for your organization and establish a data culture.

Choosing the Right Components of Your Own Data Stack

Selecting the appropriate components for your modern data stack is crucial to ensure its effectiveness and efficiency. Consider the following factors when choosing your data stack components:


Ensure the selected tools and technologies integrate seamlessly with your existing infrastructure and can handle the specific data types and sources you work with.


Choose components that can scale with your organization’s growth, both in terms of data volume and complexity of analytics requirements.


Opt for tools with user-friendly interfaces, especially for business intelligence and data visualization, to empower non-technical users to analyze data and make data-driven decisions.


Consider the overall cost of ownership, including licensing fees, hardware and infrastructure costs, and the cost of hiring and training staff to manage the data stack.

Security and compliance

Evaluate the security features of each component and ensure they comply with relevant data protection regulations.

Establishing a Data Culture

Establishing a data culture within your organization is another critical aspect of implementing a modern data stack. A strong data culture involves:

  • Fostering a mindset of data-driven decision-making across all departments.
  • Encouraging collaboration between data teams and other business units.
  • Providing training and resources to empower business users to analyze data and gain insights.
  • Implementing data governance practices to maintain data quality and integrity.

By choosing the right components for your organization and cultivating a data-driven culture, you can maximize the value of your modern data stack and drive better business outcomes.

In the next part, we’ll explore how a modern data stack solution can help overcome challenges faced by organizations today.

Overcoming Challenges with a Modern Data Stack Solution

As organizations face various challenges in implementing a modern data stack, finding a comprehensive solution that addresses these issues is essential. A modern data stack solution should help you:

Simplify data integration

Choose a solution that streamlines the data ingestion and integration process, allowing you to connect to multiple data sources and formats easily.

Enhance data transformation

Opt for a solution that provides powerful data transformation tools, enabling you to clean, prepare, and transform raw data into actionable insights.

Improve data governance

Implement a solution that supports robust data governance practices, including version control, data quality management, and data access control.

Facilitate collaboration

Select a solution that fosters collaboration among data professionals, business users, and other stakeholders, enabling them to share insights, visualizations, and data analyses.

Optimize resource utilization

A modern data stack solution should help you optimize the use of engineering resources, allowing your data teams to focus on high-impact tasks, such as developing machine learning models and strategic data initiatives.

Ensure security and compliance

Choose a solution that guarantees data security and compliance with relevant regulations, minimizing the risk of data breaches and potential legal issues.

Empower decision-makers

Implement a solution that enables business users to access, analyze, and visualize data easily, driving data democratization and empowering them to make informed decisions.

By leveraging a modern data stack solution that addresses these challenges, your organization can harness the full potential of its data assets and become a truly data-driven organization, gaining a competitive edge in today’s fast-paced business landscape.

Struggling with your outdated data tool?

florian klauer mk7D 4UCfmg unsplash