Chapter 6

Foundations of
Business Intelligence:
Databases and
Information
Management
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Chapter 6 Foundations of Business Intelligence: Databases
and Information Management

NASCAR Races to Manage Its Data

• Problem: Gaining knowledge of customers and making

effective use of fragmented customer data.
• Solutions: Use relational database technology to
increase revenue and productivity.
• Data access rules and a comprehensive customer
database consolidate customer data.
• Demonstrates IT’s role in creating customer intimacy and
stabilizing infrastructure.
• Illustrates digital technology’s role in standardizing how
data from disparate sources are stored, organized, and
managed.

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 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management

Organizing Data in a Traditional File Environment

• File organization concepts

• Computer system uses hierarchies
• Field: Group of characters
• 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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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
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 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 processing (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

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 Management Information Systems
Chapter 6 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
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 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:
• Interfaces between application programs and physical data files
• Separates logical and physical views of data
• Solves problems of traditional file environment
• Controls redundancy
• Eliminated inconsistency
• Uncouples programs and data
• Enables central management and security

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 Management Information Systems
Chapter 6 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 company’s payroll department.

Figure 6-3
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 Management Information Systems
Chapter 6 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
• 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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 Management Information Systems
Chapter 6 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
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 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management

The Database Approach to Data Management

Relational Database Tables (cont.)

Figure 6-4B
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 Management Information Systems
Chapter 6 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
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 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management

The Database Approach to Data Management

• Hierarchical and Network DBMS: Older

systems
• Hierarchical DBMS: Models one-to-many
relationships
• Network DBMS: Models many-to-many
relationships
• Both less flexible than relational DBMS and do not
support ad hoc, natural language

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 Management Information Systems
Chapter 6 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
• Also: Many DBMS have report generation capabilities for
creating polished reports (Crystal Reports)

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 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management

The Database Approach to Data Management

Sample Data Dictionary Report

Figure 6-6
The sample data dictionary
report for a human
resources database
provides helpful
information, such as the size
of the data element, which
programs and reports use it,
and which group in the
organization
is the owner responsible for
maintaining it.

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 Management Information Systems
Chapter 6 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
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Chapter 6 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
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 Management Information Systems
Chapter 6 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
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 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management

Using Databases to Improve Business Performance and Decision Making

• For very large databases and systems, special

capabilities and tools are required for analyzing
large quantities of data and for accessing data
from multiple systems
• Data warehousing
• Data mining
• Tools for accessing internal databases through the Web

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Chapter 6 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
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 Management Information Systems
Chapter 6 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. Harrah’s 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

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Chapter 6 Foundations of Business Intelligence: Databases
and Information Management

Using Databases to Improve Business Performance and Decision Making

Business Intelligence

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. Figure 6-14
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 Management Information Systems
Chapter 6 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
• Enables 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
• OLAP enables rapid, online answers to ad hoc queries

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 Management Information Systems
Chapter 6 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
• Infers rules to predict future behavior
• The patterns and rules are used to guide decision making
and forecast the effect of those decisions
• Popularly used to provide detailed analyses of patterns in
customer data for one-to-one marketing campaigns or to
identify profitable customers.
• Less well known: used to trace calls from specific
neighborhoods that use stolen cell phones and phone
accounts

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 Management Information Systems
Chapter 6 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.
• Data mining seen as challenge to individual
privacy
• Used to combine information from many diverse sources to
create detailed “data image” about each of us—income,
driving habits, hobbies, families, and political interests

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 Management Information Systems
Chapter 6 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 organization’s internal database through the Web using their desktop PCs and Web
browser software.

Figure 6-16
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 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management

Using Databases to Improve Business Performance and Decision Making

The Internet Movie

Database Web site is
linked to a massive
database that
includes summaries,
cast information, and
actor biographies for
almost every film
ever released.

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 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management

Managing Data Resources

• Managing data resources:

• Establishing an information policy
• Information policy: Specifies firm’s rules, procedures, roles for
sharing, standardizing data
• Data administration: Responsible for specific policies and
procedures; data governance
• Database administration: Database design and management
group responsible for defining, organizing, implementing,
maintaining database

• Ensuring data quality

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 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management

Managing Data Resources

• Ensuring data quality

• More than 25% critical data in Fortune 1000 company
databases is inaccurate or incomplete

• Before new database in place, need to identify and

correct faulty data and establish better routines for
editing data once database in operation

• Most data quality problems stem from faulty input

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 Management Information Systems
Chapter 6 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

• Data cleansing:
• Detecting, and correcting data that are incorrect,
incomplete, improperly formatted, or redundant.
• Enforces consistency among different sets of data from
separate information systems
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