1. Reporting tools can be used against OLTP systems, but in most situations, the use of these tools while transactions are occuring will degrade the performance of the OLTP. This is a major reason why data warehouses are implemented.
2. OLTP (On Line Transaction Processing) and OLAP (On Line Analytical Processing) are two different concepts which require different aspects to database structures and tuning. OLTP, by definition, is transaction based and concerned with only a few rows at a time. OLAP usually involves the retrieval (and analysis) of may rows of data, large sets of data.
3. Indexing is also different between OLAP and OLTP. I'm not sure what you mean by limitations.
BTW, this question would be better suited for the Data Warehousing general discussion forum rather than Cognos.
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Sometimes the grass is greener on the other side because there is more manure there - original.