Information Technology

Dr. Begum Ismat Ara Huq

Professor of Finance, CU
Mobile No. 01716469874
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 Chapter 5
Fundamentals of business
intelligence: database and
information management

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• Chapter-5 (Contents)
- Traditional file management,
- Database management,
- Information tools and technologies to
improve business performance and
decision making,
- Data administration and data quality

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 LEARNING OBJECTIVES
• After reading this chapter , you will be able to answer the
following questions:
• 5- 1 What are the basic file organization concepts and
problems of managing data resources in a traditional file
environment?
• 5- 2 What are the major capabilities of database management
systems (DBMS), and why is a relational DBMS so powerful?
• 5- 3 What are the principal tools and technologies for
accessing information from databases to improve business
performance and decision-making?
• 5- 4 Why are information policy, data administration, and data
quality assurance essential for managing the firm’s data
resources? 4
LEARNING OBJECTIVES

5
 Problems of managing data resources in a
traditional file environment
• An effective information system provides users with
accurate, timely, and relevant information. Accurate
information is free of errors. Information is timely when
it is available to decision-makers when it is needed.
Information is relevant when it is useful and appropriate
for the types of work and decisions that require it.
• You might be surprised to learn that many businesses
don’t have timely, accurate, or relevant information
because the data in their information systems have been
poorly organized and maintained. That’s why data
management is so essential.
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File Organization Terms and Concepts
 Management Information Systems
Chapter 5 Managing Data Resources

ORGANIZING DATA IN A TRADITIONAL FILE ENVIRONMENT

File Organization Terms and Concepts

• Bit: Smallest unit of data; binary digit (0,1)

• Byte: Group of bits that represents a single character

• Field: Group of words or a complete number

• Record: Group of related fields

• File: Group of records of same type

3.8 © 2006 by Prentice Hall

 Problems of managing data resources in a
traditional file environment
• A computer system organizes data in a hierarchy that
starts with bits and bytes and progresses to fields,
records, files, and databases (see Figure 5. 1 ).
• A bit represents the smallest unit of data a computer can
handle.
• A group of bits, called a byte , represents a single
character, which can be a letter, a number, or another
symbol.
• A grouping of characters into a word, a group of words,
or a complete number (such as a person’s name or age) is
called a field .
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 Problems of managing data resources in a
traditional file environment
• A group of related fields, such as the student’s name, the
course taken, the date, and the grade, comprises a record ; a
group of records of the same type is called a file .
• For example, the records in Figure 5. 1 could constitute a
student course file. A group of related files makes up a
database. The student course file illustrated in Figure 5. 1
could be grouped with files on students’ personal histories
and financial backgrounds to create a student database.
• A record describes an entity. An entity is a person, place,
thing, or event on which we store and maintain information.

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 Problems of managing data resources in a
traditional file environment
• Each characteristic or quality describing a particular
entity is called an attribute .
• For example, Student’s ID, Course, Date, and Grade are
attributes of the entity COURSE. The specific values that
these attributes can have are found in the fields of the
record describing the entity COURSE.

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 Management Information Systems
Chapter 5 Managing Data Resources

ORGANIZING DATA IN A TRADITIONAL FILE ENVIRONMENT

File Organization Terms and Concepts (Continued)

• Database: Group of related files

• Entity: Person, place, thing, event about which

information is maintained

• Attribute: Description of a particular entity

• Key field: Identifier field used to retrieve, update,

sort a record

3.12 © 2006 by Prentice Hall

 The Data Hierarchy Figure 5-1
ORGANIZING DATA IN A TRADITIONAL FILE ENVIRONMENT

3.13 © 2006 by Prentice Hall

 ORGANIZING DATA IN A TRADITIONAL FILE ENVIRONMENT

Entities and Attributes

3.14 Figure 5-2 © 2006 by Prentice Hall

 Problems of managing data resources in a
traditional file environment

3.15 © 2006 by Prentice Hall

 ORGANIZING DATA IN A TRADITIONAL FILE ENVIRONMENT

Problems with the Traditional File Environment

Data Redundancy and Inconsistency:

• Data redundancy: The presence of duplicate data

in multiple data files so that the same data are
stored in more than one place or location

• Data inconsistency: The same attribute may have

different values.

3.16 © 2006 by Prentice Hall

 ORGANIZING DATA IN A TRADITIONAL FILE ENVIRONMENT

Problems with the Traditional File Environment (Continued)

Program-data dependence:
• The 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:
• A traditional file system 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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 Management Information Systems
Chapter 5 Managing Data Resources

ORGANIZING DATA IN A TRADITIONAL FILE ENVIRONMENT

Problems with the Traditional File Environment (Continued)

• Poor security:
• Because there is little control or management of data,
management will have no knowledge of who is
accessing or even making changes to the
organization’s data.
• Lack of data sharing and availability:
• Information cannot flow freely across different
functional areas or different parts of the organization.
Users find different values of the same piece of
information in two different systems, and hence they
may not use these systems because they cannot trust
the accuracy of the data.
3.18 © 2006 by Prentice Hall
 Traditional File Processing (5.3)

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
3.19 wasted storage resources. © 2006 by Prentice Hall
20
 THE DATABASE APPROACH TO DATA MANAGEMENT
Database Management System (DBMS)
• A database management system (DBMS) is software
that permits an organization to centralize data, manage
them efficiently, and provide access to the stored data
through application programs.
• Software for creating and maintaining databases
• Permits firms to rationally manage data for the entire firm
• Acts as the interface between application programs and
physical data files
• Separates logical and design views of data
• Solves many problems of the traditional data file
approach ,
• The database management software makes the physical
database available for different logical views required by
users.
 THE DATABASE APPROACH TO DATA MANAGEMENT
Database Management System (DBMS)
• The human resources database illustrated in Figure
5. 4 , a benefits specialist might require a view
consisting of the employee’s name, social security
number, and health insurance coverage. A payroll
department member might need data such as the
employee’s name, social security number, gross
pay, and net pay. The data for all these views are
stored in a single database, where they can be
more easily managed by the organization.
 THE DATABASE APPROACH TO DATA MANAGEMENT Figure 5-4
The Contemporary Database Environment

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.
 THE DATABASE APPROACH TO DATA MANAGEMENT

• Objectives of a Database:
• 1. Centrally Controlled: A database must be
centrally controlled. It is possible that the data of a
particular system may be spread in different
branches of a company, but it must be controlled
from one central location.
• 2. Logically Organised: The database must be
organised in a logical manner. For example, if the
user wants to see the name of person whose basic
salary is greater than ` 5000 and is working in EDP
Dept., the database must be organised in that logical
order so that the data can be accessed faster.
 THE DATABASE APPROACH TO DATA MANAGEMENT
Database Management System (DBMS)
• Objectives of a Database:
3. Shared: In a multi-user application, the database is
designed such that the data can be shared or
accessed by different users. The sharing of data is
possible, only if the database is integrated.
4. Data independence: The most important objective
of a database is the provision of data independence.
Most of the present-day applications are generally
data-dependent.
 What are the major capabilities of
DBMS, and why is a relational DBMS
so powerful?
Components of DBMS:

• The principal capabilities of a DBMS include

• a data definition capability,
• a data dictionary capability,
• and a data manipulation language.

3.26 © 2006 by Prentice Hall

 What are the major capabilities of
DBMS, and why is a relational DBMS
so powerful?

• Data definition language: Specifies content and

structure of database and defines each data element

• Data manipulation language: such as SQL, is a

specialized language for accessing and manipulating
the data in the database.

• Data dictionary: The data dictionary is an automated or

manual file that stores information about the data in the
database, including names, definitions, formats, and
descriptions of data elements.
3.27 © 2006 by Prentice Hall
 What are the major capabilities of DBMS, and why
is a relational DBMS so powerful?

• A DBMS reduces data redundancy and inconsistency by

minimizing isolated files in which the same data are
repeated. The DBMS may not enable the organization to
eliminate data redundancy entirely, but it can help control
redundancy.
• Even if the organization maintains some redundant data,
using a DBMS eliminates data inconsistency because the
DBMS can help the organization ensure that every
occurrence of redundant data has the same values. The
DBMS uncouples programs and data, enabling data to
stand on their own.
• The description of the data used by the program does not
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have to be specified in detail each time a different
© 2006 by Prentice Hall
 What are the major capabilities of DBMS, and why
is a relational DBMS so powerful?

• is written. Access and availability of information will

be increased and program development and
maintenance costs reduced because users and
programmers can perform ad hoc queries of the
database for many simple applications without
having to write complicated programs.
• The DBMS enables the organization to centrally
manage data, their use, and security. Data sharing
throughout the organization is easier because the
data are presented to users as being in a single
location rather than fragmented in many different
3.29 systems and files. © 2006 by Prentice Hall
 DBMS

Hierarchical
Relational Object oriented
& Networking

Represents data in Represents data Represents data by

Two-dimensional in a using
tables treelike multimedia
structure

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 Management Information Systems
Chapter 5 Managing Data Resources

THE DATABASE APPROACH TO DATA MANAGEMENT

Types of Databases:

• Relational DBMS

• Hierarchical and network DBMS

• Object-oriented databases

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 Management Information Systems
Chapter 5 Managing Data Resources

THE DATABASE APPROACH TO DATA MANAGEMENT

• Represents data as two-dimensional tables called

relations
• Tables may be referred to as files. Each table contains
data on an entity and its attributes. Microsoft Access is a
relational DBMS for desktop systems, whereas DB2,
Oracle Database, and Microsoft SQL Server are
relational DBMS for large mainframes and midrange
computers. MySQL is a popular open-source DBMS.
• Relates data across tables based on the common data
element
• Examples: DB2, Oracle, MS SQL Server

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 Management Information Systems
Chapter 5 Managing Data Resources

The Relational Data Model

3.33 Figure 5-5 © 2006 by Prentice Hall

 Management Information Systems
Chapter 5 Managing Data Resources

THE DATABASE APPROACH TO DATA MANAGEMENT

Operations of a Relational DBMS

Three Basic Operations in a Relational Database:
• Select: Creates subset of rows that meet specific
criteria

• Join: Combines relational tables to provide users

with information

• Project: Enables users to create new tables

containing only relevant information

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 Management Information Systems
Chapter 5 Managing Data Resources
Figure 5-6

THE DATABASE APPROACH TO DATA MANAGEMENT

The Three Basic Operations of a Relational DBMS

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Chapter 5 Managing Data Resources

THE DATABASE APPROACH TO DATA MANAGEMENT

Hierarchical and Network DBMS

Hierarchical DBMS:

• Organizes data in a tree-like structure

• Supports one-to-many parent-child relationships

• Prevalent in large legacy systems

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 Management Information Systems
Chapter 5 Managing Data Resources

THE DATABASE APPROACH TO DATA MANAGEMENT

A Hierarchical Database for a Human Resources System

3.37 Figure 5 - 7 © 2006 by Prentice Hall

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Chapter 5 Managing Data Resources

THE DATABASE APPROACH TO DATA MANAGEMENT

Hierarchical and Network DBMS

Network DBMS:

• Depicts data logically as many-to-many

relationships

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THE DATABASE APPROACH TO DATA MANAGEMENT

The Network Data Model

3.39 Figure 5-8 © 2006 by Prentice Hall

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Chapter 5 Managing Data Resources

THE DATABASE APPROACH TO DATA MANAGEMENT

Hierarchical and Network DBMS

Disadvantages:

• Outdated

• Less flexible compared to RDBMS

• Lack support for ad-hoc and English language-

like queries

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 Management Information Systems
Chapter 5 Managing Data Resources

THE DATABASE APPROACH TO DATA MANAGEMENT

Object-Oriented Databases:

• Object-oriented DBMS: Stores data and

procedures as objects that can be retrieved and
shared automatically

• Object-relational DBMS: Provides capabilities of

both object-oriented and relational DBMS

3.41 © 2006 by Prentice Hall

 Management Information Systems
Chapter 5 Managing Data Resources

CREATING A DATABASE ENVIRONMENT

• Designing Databases:To create a database, you must

understand the relationships among the data, The type of
data that will be maintained in the database, how the data
will be used, and how the organization will need to change
to manage data from a companywide perspective.
• The database requires both
• Conceptual design: or logical, design of a database is an
abstract model of the database from a business perspective,
Physical design: Detailed description of business
information needs ie. the physical design shows how the
database is actually arranged on direct-access storage
devices.
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CREATING A DATABASE ENVIRONMENT

Designing Databases: (Continued)

• Entity-relationship diagram: Methodology for
documenting databases illustrating relationships
between database entities
• Normalization: Process of creating small stable data
structures from complex groups of data
• To use a relational database model effectively, complex
groupings of data must be streamlined to minimize
redundant data elements and awkward many to-many
relationships. The process of creating small, stable, yet
flexible and adaptive data structures from complex groups of
3.43 data is called normalization . © 2006 by Prentice Hall
 Management Information Systems
Chapter 5 Managing Data Resources

CREATING A DATABASE ENVIRONMENT Figure 5-9

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.
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CREATING A DATABASE ENVIRONMENT

Normalized Tables Created from ORDER

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CREATING A DATABASE ENVIRONMENT

An Entity-Relationship Diagram

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CREATING A DATABASE ENVIRONMENT

Distributing Databases
Centralized database:
• Used by single central processor or multiple
processors in client/server network
• There are advantages and disadvantages to having all
corporate data in one location.
• Security is higher in central environments, risks lower.
• If data demands are highly decentralized, then a
decentralized design is less costly, and more flexible.

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 Management Information Systems
Chapter 5 Managing Data Resources

CREATING A DATABASE ENVIRONMENT

METHODS OF
DISTRIBUTING
DATA

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Chapter 5 Managing Data Resources

CREATING A DATABASE ENVIRONMENT

Distributed database:

• Databases can be decentralized either by

partitioning or by replicating

• Partitioned database: Database is divided into

segments or regions. For example, a customer
database can be divided into Eastern customers
and Western customers, and two separate
databases maintained in the two regions.

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CREATING A DATABASE ENVIRONMENT

• Duplicated database: The database is completely

duplicated at two or more locations. The
separate databases are synchronized in off hours
on a batch basis.

• Regardless of which method is chosen, data

administrators and business managers need to
understand how the data in different databases
will be coordinated and how business processes
might be effected by the decentralization.

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Chapter 5 Managing Data Resources

CREATING A DATABASE ENVIRONMENT

Distributed Databases

3.51 Figure 5-12 © 2006 by Prentice Hall

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CREATING A DATABASE ENVIRONMENT

Ensuring Data Quality:

• To ensure data quality it need to place data,

organization need to identify and correct their
faulty data and establish better routines for
ending once the database is in operation

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CREATING A DATABASE ENVIRONMENT

Ensuring Data Quality: (Continued)

• The quality of decision making in a firm is directly
related to the quality of data in its databases.

• Data Quality Audit: Structured survey of the

accuracy and level of completeness of the data in
an information system

• Data Cleansing: Consists of activities for

detecting and correcting data in a database or file
that are incorrect, incomplete, improperly
formatted, or redundant
3.53 © 2006 by Prentice Hall
 Analytical Tools: Relationships, Patterns,
Trends

• Once data have been captured and

organized using the business intelligence
technologies we have just described, they are
available for further analysis using software
for database querying and reporting,
multidimensional data analysis (OLAP), and
data mining.

3.54 © 2006 by Prentice Hall

 Analytical Tools: Relationships, Patterns,
Trends - Database Trends/Developments

Multidimensional Data Analysis

Online Analytical Processing (OLAP): 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.
• Supports manipulation and analysis of large volumes of
data from multiple dimensions/perspectives
• OLAP enables users to obtain online answers to ad hoc
questions such as these in a fairly rapid amount of time,
even when the data are stored in very large databases,
such as sales figures for multiple years.
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DATABASE TRENDS

Multidimensional Data Model

3.56 Figure 5 -13 © 2006 by Prentice Hall

 • Figure 5. 13 shows a multidimensional model that
could be created to represent products, regions,
actual sales, and projected sales. A matrix of
actual sales can be stacked on top of a matrix of
projected sales to form a cube with six faces. If
you rotate the cube 90 degrees one way, the face
showing will be product versus actual and
projected sales. If you rotate the cube 90 degrees
again, you will see region versus actual and
projected sales.

3.57 © 2006 by Prentice Hall

 Management Information Systems
Chapter 3 Managing Data Resources

DATABASE TRENDS

Data Warehousing and Data Mining

Data warehouse:
• Supports reporting and query tools
• Stores current and historical data
• Consolidates data for management analysis and
decision making
Benefits of Data Warehouses:
• Improved and easy accessibility to information

• Ability to model and remodel the data

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DATABASE TRENDS

Components of a Data Warehouse

3.59 Figure 5-14 © 2006 by Prentice Hall

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DATABASE TRENDS
Data mart:
• Subset of data warehouse
• Contains summarized or highly focused portion
of data for a specified function or group of users
Data mining: Data mining is a technique to find the hidden file
patters and relationship in pools of data and infer rules.
• Tools for analyzing large pools of data
• Find hidden patterns and infer rules to predict trends
• Data mining provides insights into corporate data that cannot be
obtained with OLAP by finding hidden patterns and relationships in
large databases and inferring rules from them to predict future
behavior. The patterns and rules are used to guide decision making
and forecast the effect of those decisions. The types of information
obtainable from data mining include associations, sequences,
classifications, clusters, and forecasts.
3.60 © 2006 by Prentice Hall
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DATABASE TRENDS

Databases and the Web

The Web and Hypermedia database:
• Organizes data as network of nodes : Many companies
now use the web to make some of the information in their
internal databases available to customers and business
partners.
• Links nodes in pattern specified by user

• Supports text, graphic, sound, video, and executable

programs

3.61 © 2006 by Prentice Hall

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DATABASE TRENDS

Databases and the Web

Database server:
• Computer in a client/server environment runs a
DBMS to process SQL statements and perform
database management tasks.

Application server:
• Software handling all application operations

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DATABASE TRENDS

Linking Internal Databases to the Web

3.63 Figure 5-15 © 2006 by Prentice Hall

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DATABASE TRENDS

Linking Internal Databases to the Web

Figure 5. 15 illustrates how that customer might

access the retailer’s internal database over the web.
The user accesses the retailer’s website over the
Internet using a web browser on his or her client PC
or mobile device. The user’s web browser software
requests data from the organization’s database,
using HTML commands to communicate with the
web server. Apps provide even faster access to
corporate databases.
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DATABASE TRENDS

Databases and the Web - Advantages

• There are a number of advantages to using the web
to access an organization’s internal databases.
• First, web browser software is much easier to use
than proprietary query tools.
• Second, the web interface requires few or no
changes to the internal database. It costs much less
to add a web interface in front of a legacy system
than to redesign and rebuild the system to improve
user access.

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 Management Information Systems
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• In order to make sure that the data for your business

remain accurate, reliable, and readily available to those
who need them, your business will need special policies
and procedures for data management.

• Establishing an Information Policy:

• Every business, large and small, needs an information

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policy. You need to have rules on how the data are to be
© 2006 by Prentice Hall
 Management Information Systems
Chapter 5 Managing Data Resources
• 5- 4 : Essential of information policy, data
administration, and data quality assurance

• organized and maintained and who is allowed to view the

data or change them. An information policy specifies the
organization’s rules for sharing, disseminating, acquiring,
standardizing, classifying, and inventorying information.

• Information policy lays out specific procedures and

accountabilities, identifying which users and organizational
units can share information, where information can be
distributed, and who is responsible for updating and
maintaining the information.
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 Management Information Systems
Chapter 5 Managing Data Resources
• 5- 4 : Essential of information policy, data
administration, and data quality assurance
• In a small business, the information policy would be
established and implemented by the owners or managers. In
a large organization, managing and planning for
information as a corporate resource often require a formal
data administration function.

• Data administration is responsible for the specific policies

and procedures through which data can be managed as an
organizational resource. These responsibilities include
developing an information policy, planning for data,
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overseeing logical database design and data dictionary
© 2006 by Prentice Hall
 • 5- 4 : Essential of information policy, data
administration, and data quality assurance

• development, and monitoring how information systems

specialists and end user groups use data.
• Data governance , promoted by IBM, deals with the
policies and processes for managing the availability,
usability, integrity, and security of the data employed in an
enterprise with special emphasis on promoting privacy,
security, data quality, and compliance with government
regulations.
• A large organization will also have a database design and
management group within the corporate information
systems division that is responsible for defining and
organizing the structure and content of the database and
3.69 maintaining the database. © 2006 by Prentice Hall
 • 5- 4 : Essential of information policy, data
administration, and data quality assurance

• In close cooperation with users, the design group

establishes the physical database, the logical
relations among elements, and the access rules and
security procedures. The functions it performs are
called database administration .
• Ensuring Data Quality : A well-designed database
and information policy will go a long way toward
ensuring that the business has the information it
needs. However, additional steps must be taken to
ensure that the data in organizational databases are
accurate and remain reliable.
3.70 © 2006 by Prentice Hall
 • 5- 4 : Essential of information policy, data
administration, and data quality assurance

• Data that are inaccurate, incomplete, or inconsistent

create serious operational and financial problems for
businesses because they may create inaccuracies in
product pricing, customer accounts, and inventory
data and lead to inaccurate decisions about the
actions that should be taken by the firm.
• Firms must take special steps to make sure they have
a high level of data quality. These include using
enterprise-wide data standards, databases designed
to minimize inconsistent and redundant data, data
quality audits, and data cleansing software.
3.71 © 2006 by Prentice Hall
 Management Opportunities,
Challenges & Solution
• Opportunities:
I. Improve their Decision making
II. Increasing the efficiency of their business process
III. How company can better use of their data.
IV. Investing of data mining
V. To make customer relationship
VI. Inter dept data exchanging.

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 Management Opportunities,
Challenges & Solution
• Challenges:
I. Organizational obstacles(Need for Cooperation)
II. Cost/Benefit Consideration
III. Requires widespread organizational change in the
role of information.
IV. Need to allocation of power at senior levels,
ownership and sharing of information.
V. Challenges the existing power arrangements.
VI. Generates political resistance

3.73 © 2006 by Prentice Hall

 Management Opportunities,
Challenges & Solution
• Solution Guidelines:
I. Data administration
II. Database technology and management
III. Data-planning and modeling methodology
IV. Users friendly environment.

3.74 © 2006 by Prentice Hall