Chapter 6

Foundations of Business
Intelligence: Databases
and Information
Management
 Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases
and Information Management
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 firm’s data
resources
 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 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
 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
 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
 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
• Eliminates inconsistency
• Uncouples programs and data
• Enables organization to central manage data and data security
 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
 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
 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
 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
 Management Information Systems
Chapter 6 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
 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
 Management Information Systems
Chapter 6 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
 Management Information Systems
Chapter 6 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
 Management Information Systems
Chapter 6 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 firm’s data for use by specific
population of users
• Typically focuses on single subject or line of business
 Management Information Systems
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
 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
 Management Information Systems
Chapter 6 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.
 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, 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
 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
• Text mining
• Extracts key elements from large unstructured data sets (e.g.,
stored e-mails)
 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
WWW
• E.g., to understand customer behavior, evaluate
effectiveness of Web site, etc.
 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

• 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
 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
 Management Information Systems
Chapter 6 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
 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
• 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