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Target Rows as Update or Insert Option in the Target

Scenario:

When you have the option to treat target rows as update or Insert option in the target why do you need lookup transformation. I mean why do you need a look up transformation with update strategy in a mapping to mark the records for update or Insert when you have update else Insert option in the target? Is there any difference between both? Can someone please let me know what is the difference and when to use which option? 

Solution:

In slowly growing targets (Delta loads) target is loaded incrementally.
You need to know a particular record is existing or not in target target.
Look up is used to cache the Target records and compare the incoming records
with the records in Target.
If incoming record is new it will be insert in target otherwise not.
Expression is used to flag a record whether it is a new or existing.
If it is new Record is flagged as 'I' with the sense of Insert.

In Slowly Changing Dimensions(SCD), History of dimension is maintained.
Hence if a record exists in the Target and if it needs to update then it
will be flagged as 'U' with sense of Update.

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