CHAPTER 3

Data and Business Intelligence

Learning Objectives:
3-1 Define a database and a database management system.
3-2 Explain logical database design and the relational database model.
3-3 Define the five components of a database management system.
3-4 Summarize recent trends in database design and use.
3-5 Analyse the four major components and functions of a data warehouse and their use for
business
3-6 Describe the functions of a data mart.
3-7 Explain business analytics and describe its role in the decision-making process.
3-8 Examine the advantages and challenges of big data and predictive analytics for a business.
3-9 Explain database marketing and its business applications.
3-10 Explain key features of Tableau and Power BI as two popular business intelligence and visu-
alization platforms.

Terms to learn in this chapter:

Allocation Database marketing Object-oriented databases

Big data Distributed database manage- Online analytical processing

ment system (DDBMS) (OLPA)
Business analytics (BA)
Encapsulation Online transaction processing
Create, read, update, and de- (OLTP)
lete (CRUD) Extraction, transformation,
and loading (ETL) Physical view
Data dictionary
Foreign key Power BI
Data-driven Web site
Fragmentation Primary key
Data hierarchy
Graph database Relational model
Data mart
Hierarchical model Query by example (QBE)
Data-mining analysis
Indexed sequential access Random access file structure
Data model method (ISAM)
Replication
Data warehouse Inheritance
Sequential access file structure
Database Logical view
Structured Query Language
Database administrators (DBA) Network model (SQL)
Database management system Normalization Tableau
(DBMS)
Source of Information: MIS 10 – Management Information Systems – 10th Edition – Bidgoli - Cengage
Databases

A database is a collection of related data that is stored in a central location or in multiple locations.
Although a database can consist of only a single file, it is usually a group of files. In a database, a file
is a group of related records, and a record is a group of related fields. This structure is called a data
hierarchy, as shown in Exhibit 3.1.

In a database system, all files are integrated, meaning information can be linked. For example, you
can retrieve the names of all students enrolled in Professor Thomas’s MIS 480 course from the
courses file or look up Professor Thomas’s record to find out other courses he is teaching in a partic-
ular semester.

A database is a critical component of information systems because any type of analysis that is done
is based on data available in the database. To make using databases more efficient, a database man-
agement system (DBMS) is used. A DBMS is software for creating, storing, maintaining, and access-
ing database files.

Advantages of a Database:

 More information can be generated from the same data.

 Complex requests can be handled more easily.
 Data redundancy is eliminated or minimized.
 Programs and data are independent, so more than one program can use the same data.
 Data management is improved.
 A variety of relationships among data can be easily maintained.
 More sophisticated security measures can be used.
 Storage space is reduced.

Methods of accessing files in a database:

1. Sequential access file structure, records in files are organized and processed in numerical or
sequential order, typically the order in which they were entered.
2. Random access file structure, records can be accessed in any order, regardless of their phys-
ical locations in storage media. This method of access is fast and very effective when a small
number of records need to be processed daily or weekly.

Source of Information: MIS 10 – Management Information Systems – 10th Edition – Bidgoli - Cengage
 3. Indexed sequential access method (ISAM), records can be accessed sequentially or ran-
domly, depending on the number being accessed. For a small number, random access is
used, and for a large number, sequential access is used.

Logical Database Design

Two ways information is viewed in a database:

1. The physical view involves how data is stored on and retrieved from storage media, such as
hard disks or magnetic tapes.
2. The logical view involves how information appears to users and how it can be organized and
retrieved.

Components of a data model:

 Data structure—Describes how data is organized and the relationship among records.
 Operations—Describe methods, calculations, and so forth that can be performed on data,
such as updating and querying data.
 Integrity rules—Define the boundaries of a database, such as maximum and minimum val-
ues allowed for a field, constraints (limits on what type of data can be stored in a field), and
access methods.

Many data models are used. The most common, the relational model. Two other common data
models are the hierarchical model, and the network model.

Components of a DBMS

1. Database engine - the heart of DBMS software, is responsible for data storage, manipulation,
and retrieval.
2. Data definition - used to create and maintain the data dictionary and define the structure of
files in a database.
3. Data manipulation - used to add, delete, modify, and retrieve records from a database.
4. Application generation - used to design elements of an application using a database, such as
data entry screens, interactive menus, and interfaces with other programming languages.
5. Data administration - used for tasks such as backup and recovery, security, and change man-
agement.

Recent Trends in Database Design and Use

- Data-Driven Web Sites

- Distributed Databases
- Object-Oriented Databases

Data Warehouses

A data warehouse is a collection of data from a variety of sources used to support decision-making
applications and generate business intelligence.
Source of Information: MIS 10 – Management Information Systems – 10th Edition – Bidgoli - Cengage
Characteristics of a data warehouse:

- Subject oriented— Focused on a specific area, such as the home improvement business or a
university, whereas data in a database is transaction/function oriented.
- Integrated—Comes from a variety of sources, whereas data in a database usually does not.
- Time variant—Categorized based on time, such as historical information, whereas data in a
database only keeps recent activity in memory.
- Type of data—Captures aggregated data, whereas data in a database captures raw transac-
tion data.
- Purpose—Used for analytical purposes, whereas data in a database is used for capturing and
managing transactions.

Tableau and PowerBI

Tableau is a data visualization tool used for generating business intelligence. It is used to analyse
data for generating trends using graphs and charts. Tableau is a powerful platform for perform-
ing visual analytics that helps design visualizations that users with minimal analytics backgrounds
can easily understand and use.

Some of the unique features of Tableau include:

- Superb visualizations: Users can switch between different visualizations in order to zero
in on a particular data point by drilling up and down.
- In-depth insights: Users can explore the visualizations and view the same data from dif-
ferent angles. Users can perform “what-if” analysis in order to explore the impact of
each variable on the entire model.
- User-friendly interface: Most of the features and visualization in Tableau are accessed
by drag-and drop and no programming is needed to use this platform.
- Working with disparate data sources: Users can connect, use, and analyse data from
various data sources including data warehouses, data marts, spreadsheets, and big data
sources.
- Adding data sets to existing data: new data sets from various sources could easily be ad-
ded and blended to the existing data for further analysis.

Power BI is a platform that allows a user to analyse and visualize data from different sources with
different formats.

Source of Information: MIS 10 – Management Information Systems – 10th Edition – Bidgoli - Cengage