What is dbt in Data Engineering, and How to Use It?

May 10, 2024
15 mins

Among the many challenges organizations face today, a significant one is the exponential growth of data volumes and associated complexity. This has complicated data engineering processes, often resulting in considerable inefficiencies and decision-making inaccuracies, such as delayed insights and increased operational costs.

The Data Build Tool (dbt) is a promising solution to these issues. dbt has revolutionized data engineering by streamlining data transformation directly within the data warehouse, optimizing operational speed, and enhancing accuracy for critical business insights.

Let's examine what is dbt in data engineering, its complete installation process, and operational details, starting with a quick overview of the platform.

What is dbt?


Data Build Tool (dbt) is a well-known open-source tool extensively used in the fields of data engineering. Its primary functionality is to transform raw data into a structured format suitable for detailed analysis directly within the data warehouse.

One of dbt’s key features is its support for testable, version-controlled, and manageable SQL code. This allows data engineers to implement data transformation logic using SQL queries efficiently. However, it also supports Python for execution transformation tasks.

Data Build Tool also promotes the reuse of data transformation logic, known as dbt models, across multiple projects and applications. This facilitates code reusability and reduces the overall development effort.

Some of the major benefits of dbt include:

  • Flexibility: dbt supports multiple popular databases such as Google BigQuery, Snowflake, Redshift, and PostgreSQL. This flexibility makes it versatile across multiple environments and projects.
  • Real-time Monitoring: With real-time monitoring and alert features, dbt helps maintain the health of data pipelines by enabling prompt resolutions of issues.
  • Scalability: dbt has a distributed execution model, helping it utilize computing resources efficiently. This allows it to scale up or down instantly based on demand and effectively manage large datasets and complex workflows.

What is dbt in Data Engineering?

Some of the major reasons for utilizing dbt in data engineering and analytics are mentioned below.

  • Data Transformation Engine: dbt serves as a powerful engine for transforming raw data into structured data formats for enhanced analysis. This allows data engineers full control over transformations by defining complex SQL-based logic directly within the data warehouse.
  • Performance Optimization: dbt enhances efficiency by supporting incremental builds. This enables it to process only the recent changes to data made after the last successful run, thereby minimizing computing resource usage and reducing processing times.
  • Automated Testing: dbt offers built-in support for automated data testing. This helps ensure data transformations produce quality and accurate outputs, helping maintain data integrity.
  • Data Warehouse Support: dbt enables you to effortlessly integrate, manage, and analyze your massive data in a centralized location. Its ability to work with multiple data warehouses, such as BigQuery, Redshift, and Snowflake, makes it a preferred solutions for data engineers. 
  • Continuous Integration and Deployment: dbt seamlessly integrates with CI/CD pipelines, deployment tools, and version control systems. This enables data engineering teams to automate testing and data pipeline deployments.

What Are the Key Concepts and Terminologies in dbt?

After having seen what is dbt used for in data engineering, let’s look into some major concepts and terminologies in dbt.

  • Models: dbt arranges data transformations into logical units known as models. These are SQL queries that transform raw data into tables or views, forming the backbone of dbt data pipelines.
  • Sources: dbt sources are a way of declaring tables of the raw datasets collected from multiple data sources, such as files, databases, or any third-party applications.
  • Snapshots: dbt offers incremental tables known as snapshots to capture and store historical changes in the source data over time. This is particularly useful for tracking slowly changing dimensions.
  • Seeds: Seeds are dbt models representing static data, typically from CSV files. They are used for data that does not change frequently, such as dimension tables or lookup tables.
  • Profiles: In dbt, profiles incorporate database connection configurations, managed in a profiles.yml file, which specify how dbt connects to your data warehouse.
  • Packages: dbt packages are reusable components such as hooks, macros, and models. These extend the functionality of dbt and optimize data transformation workflows.
  • Tests: In dbt, tests are assertions that check the quality of transformations to prevent data errors. There are multiple types of tests in dbt, such as data tests, schema tests, and user-defined tests for custom validations.
  • Documentation: This is the automatically generated data from dbt metadata. It provides you with valuable insights into the structure and logic of the data pipelines.
  • Projects: In dbt, projects comprise all the components of a dbt workflow. This includes models, tests, configuration data, and all the relevant information for a specific data transformation. They manage all the data transformation workflows by creating a structured environment.

How to Use dbt?

Follow these steps to install and set up dbt on your system.

  • Check the Python version installed on your system by running the following command.

python --version

If Python isn’t installed, download the latest version from the official Python website.

  • Using the following command, create a virtual environment to isolate your dbt installation.

python3 -m venv dbt-env

Activate it on Windows using this command:


Or on macOS/Linux using:

source dbt-env/bin/activate

  • On successful activation of the virtual environment, install the dbt Core using pip.

pip install dbt-core

  • Install the adapter plugin for your database. If your database is Snowflake, use the below command.

pip install dbt-snowflake

Similarly, modify this command for different databases.

  • Create a .dbt directory in your home folder and place the profiles.yml file inside the folder. This file should contain your database connection settings.
  • Check for the successful installation of dbt by running the following command to check its version.

dbt --version

Connecting dbt with Different Data Platforms

dbt is highly flexible and can integrate with multiple data platforms such as databases, data warehouses, and query engines. 

Let's have a look at its interaction with all these data platforms.


dbt offers effortless interactions with various relational databases such as PostgreSQL, MySQL, Microsoft SQL Server, and SQLite. With its simple configuration process within the profiles.yml file, you can easily set up connections with any of these databases. 

After successfully connecting to the required database, you can use SQL-based queries to perform various tasks such as data modeling, transformation, and analysis.

Data Warehouses

With the growing demand for data analytics, there is also an increase in the demand and usage of cloud-based data warehouses. dbt offers integration with leading data warehousing platforms such as Snowflake, Amazon Redshift, Google BigQuery, and Microsoft Azure Synapse Analytics. 

Configuring connections within the profiles.yml file allows you to utilize these platforms' scalability and robust features easily. This facilitates efficient data management, transformation, analysis, and data model building according to your requirements.

Query Engines

While dbt is primarily used with databases and data warehouses, it can also interact with query engines such as Apache Drill and Presto through custom adapters. This allows you to apply SQL queries to query data across multiple sources.

You can leverage the robust data modeling and transformation capabilities of dbt by setting up your connections to these query engines within the profiles.yml file. This leads to optimized data analysis and enhanced workflows.

How Can You Integrate Airbyte with dbt to Streamline Data Transformations?


To enhance data analysis through streamlined transformations, you can integrate dbt with Airbyte, a robust platform for data extraction. Airbyte is one of the most user-friendly platforms for building ELT pipelines. It helps extract data from multiple data sources and consolidate it in your chosen destination. Airbyte allows you to connect to a wide range of data sources without requiring you to bother about the data formats. 

After loading the data into a data warehouse, you can configure dbt to perform SQL-based transformations on this data. dbt will leverage the data provided by Airbyte and apply complex transformations to prepare it for analysis.

Some of Airbyte's key features are mentioned below.

  • Built-in Connectors: Airbyte offers 350+ built-in connectors. If you can’t find the required connector, you can create custom connectors using its Connector Development Kit (CDK) for seamless data integration.
  • Ease of Use: Airbyte offers a user-friendly interface with intuitive workflows. This ensures that individuals with minimal technical knowledge can also easily operate it. Airbyte offers multiple easy-to-use options, such as API, UI, Terraform Provider, and PyAirbyte, ensuring simple operability.


Now that you’ve read through what is dbt in data engineering, it’s evident that the use of dbt revolutionizes data management and transformation. It provides a robust platform for data modeling and transformation, utilizing modular, reusable, and version-controlled SQL scripts. This enhances performance, improves team collaboration, and optimizes data pipelines. 

dbt is also capable of integrating with multiple data platforms such as data warehouses like Snowflake and Google BigQuery, relational databases, and query engines. This allows data engineers to build scalable data pipelines, ensuring the accuracy of the processed data.

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