The transactional or routine systems in a business are designed to support fast data entry and retrieval of the basic information to progress the day to day, hour by hour work of the company. They are not usually designed to produce in depth analysis and consolidation reports.
A business or organization has usually three levels of Activities:

• Transaction or Routine or Production processes e.g. order taking
• Tactical processes e.g. operational planning
• Strategic processes e.g. business and market planning

The following diagram which shows these systems, time frames, data flows and where a data warehouse would fit in.

Data warehouses offer organizations the ability to gather and store enterprise information in a single conceptual enterprise repository. Basic data modeling techniques are applied to create relationship associations between individual data elements or data element groups. These associations, or “models,” often take the form of entity relationship diagrams (ERDs). More advanced techniques include the star schema and snowflake data model concepts. Regardless of the technique chosen, the goal is to build a metadata model that conceptually represents the information usage and relationships within the organization.

Leveraging the metadata model, enterprise users can then apply elementary data analysis techniques to gather business knowledge. For example, ad hoc queries can be run against the data warehouse to extract enterprise-level information. These queries would supply information that was impossible to obtain under the legacy system of disparate information silos.
Reasons for a Data Warehouse
There are a few more reasons why a data warehouse should exist:

Components of a Data Warehousing solution