Management Information Systems:

Managing the Digital Firm

Chapter 6
Foundations of Business
Intelligence: Databases and
Information Management

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 Learning Objectives
6.1 What are the problems of managing data resources in a
traditional file environment?
6.2 What are the major capabilities of database management
systems (DBMS), and why is a relational DBMS so powerful?
6.3 What are the principal tools and technologies for accessing
information from databases to improve business performance
and decision making?
6.4 Why are data governance and data quality assurance
essential for managing the firm’s data resources?

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 File Organization Terms and Concepts
• Database: Group of related files
• File: Group of records of same type
• Record: Group of related fields
• Field: Group of characters as word(s) or number(s)
• Entity: Person, place, thing on which we store information
• Attribute: Each characteristic, or quality, describing entity

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 Figure 6.1 The Data Hierarchy

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 Figure 6.2 Traditional File Processing

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 Problems with the Traditional File
Environment
• Files maintained separately by different departments
• Data redundancy
• Data inconsistency
• Program-data dependence
• Lack of flexibility
• Poor security
• Lack of data sharing and availability

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 Database Management Systems
• Database
– Serves many applications by centralizing data and controlling
redundant data
• Database management system (DBM S)
– Interfaces between applications 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 centrally manage data and data
security
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 Figure 6.3 Human Resources Database
with Multiple Views

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 Relational DBMS
• Represent data as two-dimensional tables
• Each table contains data on entity and attributes
• 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
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 Figure 6.4 Relational Database Tables

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 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
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 Figure 6.5 The Three Basic
Operations of a Relational DBMS

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 Capabilities of Database Management
Systems
• Data definition
• Data dictionary
• Querying and reporting
– Data manipulation language
 Structured Query Language (SQ L)
• Many DBM S have report generation capabilities for
creating polished reports (Microsoft Access)
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 Figure 6.6 Access Data Dictionary
Features

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 Figure 6.7 Example of an SQL Query

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 Figure 6.8 An Access Query

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 Designing Databases
• Conceptual design vs. physical design
• Normalization
– Streamlining complex groupings of data to minimize redundant
data elements and awkward many-to-many relationships
• Referential integrity
– Rules used by RDBM S to ensure relationships between tables
remain consistent
• Entity-relationship diagram
• A correct data model is essential for a system serving the
business well

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 Figure 6.9 An Unnormalized Relation
for Order

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 Figure 6.10 Normalized Tables
Created from Order

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 Figure 6.11 An Entity-Relationship
Diagram

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 Non-relational Databases, Cloud
Databases, and Blockchain (Slide 3 of 3)
• Blockchain
– Distributed ledgers in a peer-to-peer distributed database
– Maintains a growing list of records and transactions shared by all
– Encryption used to identify participants and transactions
– Used for financial transactions, supply chain, and medical records
– Foundation of Bitcoin, and other crypto currencies

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 The Challenge of Big Data
• Big data
– Massive sets of unstructured/semi-structured data from
web traffic, social media, sensors, and so on
• Volumes too great for typical DBM S
– Petabytes, exabytes of data
• Can reveal more patterns, relationships and anomalies
• Requires new tools and technologies to manage and
analyze
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 Analytical Tools: Relationships,
Patterns, Trends
• Tools for consolidating, analyzing, and providing access to
vast amounts of data to help users make better business
decisions
– Data mining
– Text mining
– Web mining

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 Data Mining
• Finds hidden patterns, relationships in datasets
– Example: customer buying patterns
• Infers rules to predict future behavior
• Types of information obtainable from data mining:
– Associations
– Sequences
– Classification
– Clustering
– Forecasting
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 Figure 6.15 Linking Internal Databases to
the Web

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 Data Quality Assurance
• More than 25 percent of critical data in Fortune 1000
company databases are inaccurate or incomplete
• Before new database is in place, a firm must:
– Identify and correct faulty data
– Establish better routines for editing data once database
in operation
• Data quality audit
• Data cleansing
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