Data federation technology is software that provides an organization with the ability to aggregate data from disparate sources in a virtual database so it can be used for business intelligence (BI) or other analysis.
The virtual database created by data federation technology doesn't contain the data itself. Instead, it contains information about the actual data and its location (see metadata). The actual data is left in place.
This approach is especially useful if some of an organization's data is stored offsite by a third-party cloud service provider. It allows the person performing the analysis to aggregate and organize data quickly without having to request synchronization logic or copy the data until it's absolutely necessary.
Data federation technology can be used in place of a data warehouse to save the cost of creating a permanent, physical relational database. It can also be used as an enhancement to add fields or attributes that are not supported by the data warehouse application programming interface (API).
Making a single call to multiple data sources and then integrating and organizing the data in a middleware layer is also called data virtualization, enterprise information integration (EII) and information-as-a-service, depending on the vendor.