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 visualization platforms.
Terms to learn in this chapter:
Allocation Database management Network model
Big data system (DBMS) Normalization
Business analytics (BA) Database marketing Object-oriented databases
Create, read, update, and Distributed database Online analytical
delete (CRUD) management system processing (OLPA)
(DDBMS)
Data dictionary Encapsulation Online transaction
Data-driven Web site processing (OLTP)
Extraction, transformation, Physical view
Data hierarchy and loading (ETL)
Data mart Foreign key Power BI
Data-mining analysis Fragmentation Primary key
Data model Graph database Relational model
Data warehouse Hierarchical model Query by example (QBE)
Database Indexed sequential access Random access file
method (ISAM) structure
Database administrators Inheritance Replication
(DBA)
Logical view
Source of Information: MIS 10 – Management Information Systems – 10th Edition – Bidgoli -
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Sequential access file Structured Query Tableau
structure Language (SQL)
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 particular 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 management system (DBMS) is used. A DBMS is software for
creating, storing, maintaining, and accessing 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.

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  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 physical 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.
3. Indexed sequential access method (ISAM), records can be accessed sequentially
or randomly, 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 values 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.

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

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 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 management.
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.
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 transaction data.
- Purpose—Used for analytical purposes, whereas data in a database is used for
capturing and managing transactions.

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

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 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 performing 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 different 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 added 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