Management Information Systems:

Managing the Digital Firm

Seventeenth Edition

Chapter 6
Foundations of Business
Intelligence: Databases and
Information Management

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
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 (D B M S), and why is a relational D B M S 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?

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Student Learning Objectives

Video Cases
Case 1: Dubuque Uses Cloud Computing and Sensors to Build a
Smarter City
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Case 2: Data Warehousing at REI: Understanding the Customer
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Case 3: Maruti Suzuki Business Intelligence and Enterprise
Databases
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 The Database Approach to Data Management

• Database:
• Collection of related files containing records on people, places, or things.
• Databases allow us to access and analyze the data quickly and efficiently,
making it easier to make informed decisions and gain insights into complex
relationships and patterns within the data.
• Prior to digital databases, business used file cabinets with paper files.
• Entity/Object:
• Generalized category representing object/table such as person, place, thing
on which we store and maintain information
• For example: SUPPLIER, PART, STUDENT, etc.
• Attributes:
• Specific characteristics of each entity:
• SUPPLIER name, address
• PART description, unit price, supplier

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
The Database Approach to Data Management

• Relational database:
• Organize data into two-dimensional tables (relations) with columns
and rows.
• One table for each entity:
• For example: (CUSTOMER, SUPPLIER, PART, SALES)
• Fields (columns) store data representing an attribute.
• Rows store data for separate records, or tuples.
• Key field: uniquely identifies each record.
• Primary key:
• One field in each table
• Cannot be duplicated
• Provides unique identifier for all information in any row

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
The Database Approach to Data Management

A Relational Database Table

A relational database organizes data in the form of two-dimensional tables. Illustrated

here is a table for the entity SUPPLIER showing how it represents the entity and its
attributes. Supplier_Number is the key field.

Figure 6-1

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
The Database Approach to Data Management

The PART Table

Figure 6-2

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 Relational Database Tables

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 Database Management Systems
• Database
– Serves many applications by centralizing data and controlling
redundant data
• Database management system (D B M 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

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Database Management Systems

DBMS

• Specific type of software for creating, storing, organizing, and accessing data
from a database
• Separates the logical and physical views of the data
• Logical view: how end users view data
• Physical view: how data are actually structured and organized
• Examples of DBMS: Microsoft Access, DB2, Oracle Database, Microsoft SQL
Server, MySQL,

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

Human Resources Database with Multiple Views

Figure 6-7

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 TRADITIONAL FILE PROCESSING

The use of a traditional

approach to file processing
encourages each functional
area in a corporation to
develop specialized
applications. 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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 Managing Data in a Traditional File Environment

• Problems with the traditional file environment

(files maintained separately by different
departments)
• Files maintained separately by different departments
– 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
– Poor security
– Lack of data sharing and availability

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 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
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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
The Database Approach to Data Management

• Establishing relationships
• Entity-relationship diagram
• Used to clarify table relationships in a relational database
• Relational database tables may have:
• One-to-one relationship (person – passport)
• One-to-many relationship (supplier – part)

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
The Database Approach to Data Management

A Simple Entity-Relationship Diagram

This diagram shows the relationship between the entities

SUPPLIER and PART.

Figure 6-3

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
The Database Approach to Data Management

The Final Database Design with Sample Records

Figure 6-5

The final design of the

database for suppliers,
parts, and orders has
four tables. The
LINE_ITEM table is a
join table that
eliminates the many-
to-many relationship
between ORDER and
PART.

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
The Database Approach to Data Management

Entity-Relationship Diagram for the Database

with Four Tables

This diagram shows the relationship between the entities SUPPLIER,

ART, LINE_ITEM, and ORDER.

Figure 6-6

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
The Database Approach to Data Management

Sample Order Report

The shaded
areas show
which data
came from the
SUPPLIER,
LINE_ITEM,
and ORDER
tables. The
database does
not maintain
data on
Extended Price
or Order Total
because they
can be derived
from other
data in the
tables.

Figure 6-4

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 Operations of a Relational D B M S
• 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

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 Figure 6.5 The Three Basic
Operations of a Relational D B M S

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

Capabilities of Database Management Systems

• Querying and reporting:

• Data manipulation language
• Structured query language (SQL)
• Microsoft Access query-building tools
• Report generation, for example, Crystal Reports

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

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 6-8.

Figure 6-10
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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Database Management Systems

Access Data Dictionary Features

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.

Figure 6-9

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

An Access Query

Illustrated here is
how the query in
Figure 6-10
would be
constructed using
Microsoft Access
query-building
tools. It shows the
tables, fields, and
selection criteria
used for the
query.

Figure 6-11

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Using Databases to Improve Business Performance and Decision Making

The Challenge of Big Data

• Massive quantities of unstructured and semi-structured data from Internet

and networked services and applications
• Big datasets provide more patterns and insights than smaller datasets, for
example:
• Customer behavior
• Weather patterns
• Requires new technologies and tools

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 The Challenge of Big Data
• Massive quantities of unstructured and semi-structured data
generated from Internet and networked services and applications

The Challenge
• Volume: Big data involves managing vast amounts of data, which can
be difficult to store, process, and analyze using traditional tools and
techniques.
• Velocity: Big data is generated at an incredibly fast pace, making it
challenging to process and analyze in real-time.

• Variety: Big data comes in various forms, including structured,

unstructured, and semi-structured data, which requires advanced tools
and techniques to manage and analyze.

• Veracity/Accuracy: Big data is often incomplete, inaccurate, or

inconsistent, making it difficult to rely on for making important
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The Challenge of Big Data

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 Business Intelligence - Definition

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6.0 © Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall
 Uses of big data for organizations
• Business Intelligence: Big data can provide organizations with valuable
insights into consumer behavior, market trends, and other key
performance indicators.

• Personalization: Big data enables organizations to personalize their products

and services to meet the unique needs and preferences of individual
customers.

• By analyzing customer data, organizations can create personalized marketing

campaigns, improve customer engagement, and increase customer loyalty.

• Operational Efficiency: Big data can help organizations optimize their

operations and reduce costs. By analyzing operational data, organizations can
identify inefficiencies, streamline processes, and improve overall performance.
This can lead to significant cost savings and increased profitability.

• Riske Management, Product Development, Predictive Analytics, Customer

Experience, Supply Chain Management, Healthcare Management, and more

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6.0 © Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall
 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Using Databases to Improve Business Performance and Decision Making

Business Intelligence Infrastructure

• Modern databases can store enormous amounts of information.
• Consider that PhotoBucket has 80 billion photos on tap! Yet making sense out of all
this data is a challenge for managers. What’s needed are tools to organize the data,
analyze, and describe what’s happening in the real world based on the data
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• Array of tools for obtaining useful information from internal and
external systems and big data
• Data Source
• Data Integration – Extract, Transform, and Load (ETL)
• Analytical Tool
• Data warehouses
• Data marts

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Using Databases to Improve Business Performance and Decision Making

Contemporary Business Intelligence Infrastructure

A contemporary business
intelligence infrastructure
features capabilities and
tools to manage and
analyze large quantities
and different types of data
from multiple sources.
Easy-to-use query and
reporting tools for casual
business users and more
sophisticated analytical
toolsets for power users
are included.

Figure 6-12

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Using Databases to Improve Business Performance and Decision Making

Data Warehouses

• Data warehouse:
• Consolidates data from many systems, operational and transactional
databases
• https://www.youtube.com/watch?v=AHR_7jFCMeY
• Data mart:
• Subset of data warehouses that is highly focused and isolated for a
specific population of users

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Using Databases to Improve Business Performance and Decision Making

Analytical Tools: Relationships, Patterns, Trends

• Once data gathered, tools are required for

consolidating, analyzing, and insight to improve
decision making
• Software for database querying and reporting
• Multidimensional data analysis (OLAP)
• Data mining

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 Essentials of 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, enabling users to view the same

data in different ways using multiple dimensions
• Each aspect of information—product, pricing, cost, region, or time
period—represents a different dimension
• Enables users to obtain online answers to ad hoc questions such as these in
a fairly rapid amount of time

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6.0 © Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall
 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Using Databases to Improve Business Performance and Decision Making
Data Mining

• Finds hidden patterns and relationships in large databases

and infers rules from them to predict future behavior
• Types of information obtainable from data mining
• Associations: occurrences linked to single event
• Purchase one item affect other – corn chips purchase with cola 85%
• Classifications: patterns describing a group an item belongs to
• A bank loan officer wants to analyze the data in order to know which customer (loan applicant) are risky or
which are safe.

• Clustering: discovering as yet unclassified groupings – cluster group of customers

based on demographic and personal investment.
• Sequencing: events are linked over time. When new house is purchase new furniture
also purchase within two weeks 65% of time

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Using Databases to Improve Business Performance and Decision Making

• Text Mining
• Unstructured data (mostly text files) accounts for 80 percent of an
organization’s useful information.
• Text mining allows businesses to extract key elements from, discover
patterns in, and summarize large unstructured data sets.
• Mines online text comments or in e-mail, memos, call center transcripts,
blog, responses, customer interactions, etc. to measure customer
sentiment (feeling/reaction/opinion)

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 Essentials of Management Information Systems
Chapter 6 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
the Web
• For example: to understand customer behavior, evaluate
Web site, quantify success of marketing
• Content mining—mines content of Web sites
• Usage mining—mines user interaction data gathered by Web
servers

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Using Databases to Improve Business Performance and Decision Making

Databases and the Web

• Firms use the Web to make information from their internal databases
available to customers and partners.
• Middleware and other software make this possible
• Web server
• Application servers or CGI
• Database server
• Web interfaces provide familiarity to users and savings over redesigning
legacy systems.

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 Essentials of 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 6-14

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Managing Data Resources

Establishing an Information Policy

• To Make sure the data for your business remains accurate, reliable,
and available to those who need them, then your business need:
• Information policy
• States organization’s rules for organizing, managing, storing, sharing
information
• Data administration
• Responsible for specific policies and procedures through which data
can be managed as a resource
• Database administration
• Database design and management group responsible for defining and
organizing the structure and content of the database, and maintaining
the database.

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 Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Managing Data Resources

Ensuring Data Quality

• Poor data quality: major obstacle to successful customer

relationship management
• Data quality problems: caused by
• Redundant and inconsistent data produced by multiple
systems
• Data input errors
• Data quality audit: structured survey of the accuracy and
completeness of data
• Data cleansing: detects and corrects incorrect, incomplete,
improperly formatted, and redundant data

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