Chapter 3

Foundations of
Business Intelligence:
Databases and
Information
Management
6.1 2010 by Prentice Hall
 LEARNING OBJECTIVES

Describe how the problems of managing data resources in

a traditional file environment are solved by a database
management system
Describe the capabilities and value of a database
management system
Apply important database design principles
Evaluate tools and technologies for accessing information
from databases to improve business performance and
decision making
Assess the role of information policy, data administration,
and data quality assurance in the management of firms
data resources
6.2 2010 by Prentice Hall
 Can HP Mine Success from an Enterprise Data Warehouse?

Problem: HPs numerous systems unable to deliver the

information needed for a complete picture of business
operations, lack of data consistency
Solutions: Build a data warehouse with a single global
enterprise-wide database; replacing 17 database
technologies and 14,000 databases in use
Created consistent data models for all enterprise data and
proprietary platform
Demonstrates importance of database management in
creating timely, accurate data and reports
Illustrates need to standardize how data from disparate
sources are stored, organized, and managed

6.3 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Organizing Data in a Traditional File Environment

File organization concepts

Computer system organizes data in a hierarchy
Field: Group of characters as word(s) or number
Record: Group of related fields
File: Group of records of same type
Database: Group of related files
Record: Describes an entity
Entity: Person, place, thing on which we store
information
Attribute: Each characteristic, or quality, describing entity
E.g., Attributes Date or Grade belong to entity COURSE

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 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management
Organizing Data in a Traditional File Environment

The Data Hierarchy

A computer system
organizes data in a
hierarchy that starts with the
bit, which represents either
a 0 or a 1. Bits can be
grouped to form a byte to
represent one character,
number, or symbol. Bytes
can be grouped to form a
field, and related fields can
be grouped to form a record.
Related records can be
collected to form a file, and
related files can be
organized into a database.

Figure 6-1
6.5 2010 by Prentice Hall
 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management
Organizing Data in a Traditional File Environment

Problems with the traditional file environment (files

maintained separately by different departments)
Data redundancy and inconsistency
Data redundancy: Presence of duplicate data in multiple files
Data inconsistency: Same attribute has different values
Program-data dependence:
When changes in program requires changes to data accessed by
program
Lack of flexibility
Poor security
Lack of data sharing and availability

6.6 2010 by Prentice Hall

 Data
Data redundancy Presence
redundancy: and inconsistency
of duplicate
data in multiple files so that the same data
are stored in more than one place or
location.
Data redundancy occurs when different
functional areas an organization
independently collect the same piece of data
and store it independently of each other.
Causes : wastes storage resources and
inconsistency

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 Cont...

Data inconsistency: Same

attribute has different values
Shows different values.
May also have different names in
different system.
Coding system: sales, Inventory and
manufacturing system.

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 Cont...
Program-data dependence: When changes in
program requires changes to data accessed by program.
Coupling of data stored in files and the specific programs
required to update and maintain those files such that
changes in programs require changes to the data.
Lack of flexibility:
can deliver routine scheduled reports after
extensive
programming efforts, but it cannot deliver ad hoc
reports or respond to
unanticipated information requirements in a
timely fashion.

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 Cont...

Poor security: Because there is

little control or management of data,
access to and dissemination of
information may be out of control.
Management may have no way of
knowing who is accessing or even
making changes to the organizations
data.

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 Cont...
Lack of data sharing and availability:
Because pieces of information in different
files and different parts of the organization
cannot be related to one another.
it is virtually impossible for information to
be shared or accessed in a timely manner.
Information cannot flow freely across
different functional areas or different parts
of the organization.

6.11 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Organizing Data in a Traditional File Environment

Traditional File Processing

The use of a traditional approach to file processing encourages each functional area in a corporation to
develop specialized applications and files. Each application requires a unique data file that is likely to be a
subset of the master file. These subsets of the master file lead to data redundancy and inconsistency,
processing inflexibility, and wasted storage resources.

Figure 6-2
6.12 2010 by Prentice Hall
 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Database
Collection of data organized to serve many applications by
centralizing data and controlling redundant data
Database management system:
is simply the software that permits an organization to
centralize data, manage them efficiently, and provide
access to the stored data by application programs.

6.13 2010 by Prentice Hall

 Cont...
Interfaces between application programs and physical data
files
Separates logical and physical views of data
Solves problems of traditional file environment
Controls redundancy
Eliminates inconsistency
Uncouples programs and data
Enables organization to central manage data and data security
The logical view: presents data as they would be perceived by end users or
business specialists

physical view: shows how data are actually organized and

structured on physical storage media .

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 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Human Resources Database with Multiple Views

A single human resources database provides many different views of data, depending on the information
requirements of the user. Illustrated here are two possible views, one of interest to a benefits specialist
and one of interest to a member of the companys payroll department.

Figure 6-3
6.15 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Relational DBMS
Represent data as two-dimensional tables called relations or files
Each table contains data on entity and attributes
Information in more than one file can be easily extracted and
combined.
Table: grid of columns and rows
Rows (tuples): Records for different entities
Fields (columns): Represents attribute for entity
Key field: Field used to uniquely identify each record
Primary key: Field in table used for key fields
Foreign key: Primary key used in second table as look-up field to
identify records from original table
6.16 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Relational Database Tables

A relational database organizes data in the form of two-dimensional tables. Illustrated here are tables for
the entities SUPPLIER and PART showing how they represent each entity and its attributes.
Supplier_Number is a primary key for the SUPPLIER table and a foreign key for the PART table.

Figure 6-4A
6.17 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Relational Database Tables (cont.)

Figure 6-4B
6.18 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Operations of a Relational DBMS

Three basic operations used to develop useful sets of data
SELECT: Creates subset of data of all records that
meet stated criteria
JOIN: Combines relational tables to provide user with
more information than available in individual tables
PROJECT: Creates subset of columns in table,
creating tables with only the information specified

6.19 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

The Three Basic Operations of a Relational DBMS

The select, project, and join operations enable data from two different tables to be combined and only
selected attributes to be displayed.

Figure 6-5
6.20 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Capabilities of Database Management Systems

Data definition capability: Specifies structure of database
content, used to create tables and define characteristics of fields
Data dictionary: Automated or manual file storing definitions of
data elements and their characteristics
Data manipulation language: Used to add, change, delete,
retrieve data from database
Structured Query Language (SQL)
Microsoft Access user tools for generation SQL
Many DBMS have report generation capabilities for creating
polished reports (Crystal Reports)

6.21 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Microsoft Access Data Dictionary Features

Figure 6-6
Microsoft Access has a
rudimentary data dictionary
capability that displays
information about the size,
format, and other
characteristics of each field
in a database. Displayed
here is the information
maintained in the SUPPLIER
table. The small key icon to
the left of Supplier_Number
indicates that it is a key field.

6.22 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Example of an SQL Query

Illustrated here are the SQL statements for a query to select suppliers for parts 137 or 150. They produce a
list with the same results as Figure 6-5.

Figure 6-7
6.23 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

An Access Query

Illustrated here is how the query in Figure 6-7 would be constructed using query-building tools in the
Access Query Design View. It shows the tables, fields, and selection criteria used for the query.

Figure 6-8
6.24 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Designing Databases
Conceptual (logical) design: abstract model from business
perspective
describes how the data elements in the database
are to be grouped.
Physical design: How database is arranged on direct-access
storage devices
The design process identifies relationships among data
elements and the most efficient way of grouping data
elements to meet information requirements.

6.25 2010 by Prentice Hall

 Cont..

Design process identifies

Relationships among data elements, redundant database
elements
Most efficient way to group data elements to meet
business requirements, needs of application programs

Normalization
Streamlining complex groupings of data to minimize
redundant data elements and awkward many-to-many
relationships
normalization: The process of creating small, stable, yet flexible
and adaptive data structures from complex groups of data

6.26 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

An Unnormalized Relation for Order

An unnormalized relation contains repeating groups. For example, there can be many parts and suppliers
for each order. There is only a one-to-one correspondence between Order_Number and Order_Date.

Figure 6-9
6.27 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Normalized Tables Created from Order

After normalization, the original relation ORDER has been broken down into four smaller relations. The
relation ORDER is left with only two attributes and the relation LINE_ITEM has a combined, or
concatenated, key consisting of Order_Number and Part_Number.

Figure 6-10
6.28 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Entity-relationship diagram
Used by database designers to document the data model
Illustrates relationships between entities
Distributing databases: Storing database in more than
one place
Partitioned: Separate locations store different parts of database
Replicated: Central database duplicated in entirety at different
locations

6.29 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

An Entity-Relationship Diagram

This diagram shows the relationships between the entities ORDER, LINE_ITEM, PART, and SUPPLIER that
might be used to model the database in Figure 6-10.

Figure 6-11
6.30 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Distributing databases
Two main methods of distributing a database
Partitioned: Separate locations store different parts of
database
Replicated: Central database duplicated in entirety at
different locations
Advantages
Reduced vulnerability
Increased responsiveness
Drawbacks
Departures from using standard definitions
Security problems
6.31 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
The Database Approach to Data Management

Distributed Databases

There are alternative ways of distributing a database. The central database can be partitioned (a) so that each remote
processor has the necessary data to serve its own local needs. The central database also can be replicated (b) at all remote
locations.

Figure 6-12
6.32 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Very large databases and systems require special

capabilities, tools
To analyze large quantities of data
To access data from multiple systems
Three key techniques
Data warehousing
Data mining
Tools for accessing internal databases through the
Web

6.33 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Data warehouse:
Stores current and historical data from many core operational
transaction systems
Consolidates and standardizes information for use across
enterprise, but data cannot be altered
Data warehouse system will provide query, analysis, and reporting
tools
Data marts:
Subset of data warehouse
Summarized or highly focused portion of firms data for use by
specific population of users
Typically focuses on single subject or line of business

6.34 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Components of a Data Warehouse

The data warehouse extracts current and historical data from multiple operational systems inside the
organization. These data are combined with data from external sources and reorganized into a central
database designed for management reporting and analysis. The information directory provides users
with information about the data available in the warehouse.

Figure 6-13
6.35 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

The IRS Uncovers Tax Fraud with a Data Warehouse

Read the Interactive Session: Organizations, and then
discuss the following questions:
Why was it so difficult for the IRS to analyze the taxpayer data
it had collected?
What kind of challenges did the IRS encounter when
implementing its CDW? What management, organization, and
technology issues had to be addressed?
How did the CDW improve decision making and operations at
the IRS? Are there benefits to taxpayers?
Do you think data warehouses could be useful in other areas
of the federal sector? Which ones? Why or why not?

6.36 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Business Intelligence:
Tools for consolidating, analyzing, and providing access
to vast amounts of data to help users make better
business decisions
E.g., Harrahs Entertainment analyzes customers to
develop gambling profiles and identify most profitable
customers
Principle tools include:
Software for database query and reporting
Online analytical processing (OLAP)
Data mining

6.37 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Business Intelligence

Figure 6-14
A series of analytical tools
works with data stored in
databases to find patterns
and insights for helping
managers and employees
make better decisions to
improve organizational
performance.

6.38 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Online analytical processing (OLAP)

Supports multidimensional data analysis
Viewing data using multiple dimensions
Each aspect of information (product, pricing, cost,
region, time period) is different dimension
E.g., how many washers sold in East in June
compared with other regions?
OLAP enables rapid, online answers to ad hoc queries

6.39 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Multidimensional Data Model

Figure 6-15
The view that is showing is
product versus region. If
you rotate the cube 90
degrees, the face that will
show is product versus
actual and projected sales. If
you rotate the cube 90
degrees again, you will see
region versus actual and
projected sales. Other views
are possible.

6.40 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Data mining:
More discovery driven than OLAP
Finds hidden patterns, relationships in large databases and
infers rules to predict future behavior
E.g., Finding patterns in customer data for one-to-one
marketing campaigns or to identify profitable customers.
Types of information obtainable from data mining
Associations
Sequences
Classification
Clustering
Forecasting

6.41 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Predictive analysis
Uses data mining techniques, historical data, and
assumptions about future conditions to predict
outcomes of events
E.g., Probability a customer will respond to an offer or
purchase a specific product
Text mining
Extracts key elements from large unstructured data sets
(e.g., stored e-mails)

6.42 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Web mining
Discovery and analysis of useful patterns and information
from WWW
E.g., to understand customer behavior, evaluate
effectiveness of Web site, etc.
Techniques
Web content mining
Knowledge extracted from content of Web pages
Web structure mining
E.g., links to and from Web page
Web usage mining
User interaction data recorded by Web server

6.43 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Databases and the Web

Many companies use Web to make some internal
databases available to customers or partners
Typical configuration includes:
Web server
Application server/middleware/CGI scripts
Database server (hosting DBM)
Advantages of using Web for database access:
Ease of use of browser software
Web interface requires few or no changes to database
Inexpensive to add Web interface to system

6.44 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Using Databases to Improve Business Performance and Decision Making

Linking Internal Databases to the Web

Users access an organizations internal database through the

Web using their desktop PCs and Web browser software.

Figure 6-16
6.45 2010 by Prentice Hall
 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Managing Data Resources

The Databases Behind MySpace

Read the Interactive Session: Technology, and then

discuss the following questions:
What kind of databases and database servers does MySpace
use?
Why is database technology so important for a business such
as MySpace?
How effectively does MySpace organize and store the data on
its site?
What data management problems have arisen? How has
MySpace solved or attempted to solve these problems?

6.46 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Managing Data Resources

Establishing an information policy

Firms rules, procedures, roles for sharing, managing, standardizing
data
E.g., What employees are responsible for updating sensitive
employee information
Data administration: Firm function responsible for specific policies
and procedures to manage data
Data governance: Policies and processes for managing
availability, usability, integrity, and security of enterprise data,
especially as it relates to government regulations
Database administration : Defining, organizing, implementing,
maintaining database; performed by database design and
management group

6.47 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Managing Data Resources

Ensuring data quality

More than 25% of critical data in Fortune 1000
company databases are inaccurate or incomplete
Most data quality problems stem from faulty input
Before new database in place, need to:
Identify and correct faulty data
Establish better routines for editing data once
database in operation

6.48 2010 by Prentice Hall

 Management Information Systems
Chapter 3 Foundations of Business Intelligence: Databases
and Information Management
Managing Data Resources

Data quality audit:

Structured survey of the accuracy and level of
completeness of the data in an information system
Survey samples from data files, or
Survey end users for perceptions of quality
Data cleansing
Software to detect and correct data that are incorrect,
incomplete, improperly formatted, or redundant
Enforces consistency among different sets of data from
separate information systems
6.49 2010 by Prentice Hall