A “forward” delta data management technique uses a “sparse” index associated with a delta file to achieve both delta management efficiency and to eliminate read latency while accessing history data. The invention may be implemented advantageously in a data management system that provides real-time data services to data sources associated with a set of application host servers. To facilitate a given data service, a host driver embedded in an application server connects an application and its data to a cluster. The host driver captures real-time data transactions, preferably in the form of an event journal that is provided to the data management system. In particular, the driver functions to translate traditional file/database/block I/O into a continuous, application-aware, output data stream. In an illustrative embodiment, a given application aware data stream is processed through a multi-stage data reduction process to produce a compact data representation from which an “any point-in-time” reconstruction of the original data can be made.