Chapter 6

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

Learning Objectives

• What are the problems of managing data resources in a

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

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BEA systems

• BEA Systems is the UK’s largest manufacturing

company – aircraft parts
• With sales, manufacturing and support sites
throughout the world
• Using Computer-aided design (CAD) and computer-
aided manufacturing (CAM) software
→Need accurate information for production of aircraft,
scheduling, and reporting.
But data is fragmented in isolated files

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BAE Systems

• Problem: Accessing data from many systems is a complex

task
• Solution: A single repository for CAD?CAM data that also
facilitates the integration of the data held in its legacy systems
• BAE implemented Siemens’ Teamcenter product lifecycle
management software and Dassault Systemes’ CATIA
CAM/CAM software
• Demonstrates IT’s role in successful data management
• Illustrates digital technology’s ability to lower costs while
improving performance

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Managing Data in a Traditional File Environment

• File organization 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
– Record:
• Describes an entity (person, place, thing on which we store
information)
• Attribute: Each characteristic, or quality, describing entity
Example: Attributes DATE or GRADE belong to entity
COURSE
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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 database.

FIGURE 6-1

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Managing Data in a Traditional File Environment

• Problems with the traditional file environment

(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
– Lack of flexibility
– Poor security
– Lack of data sharing and availability

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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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Capabilities of Database Management Systems (DBMSs)

• Database
– Serves many applications by centralizing data and
controlling redundant data
• Database management system (DBMS)
– 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 central manage data and data security

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HUMAN RESOURCES DATABASE WITH MULTIPLE VIEWS

FIGURE 6-3 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.

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Capabilities of Database Management Systems (DBMSs)

• 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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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 6-4

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Capabilities of Database Management Systems (DBMSs)

• 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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THE THREE BASIC OPERATIONS OF A RELATIONAL DBMS

FIGURE 6-5 The select, join, and project operations enable data from two different tables to be combined and only selected
attributes to be displayed.

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Capabilities of Database Management Systems (DBMSs)

• Non-relational databases: “NoSQL”

– More flexible data model
– Data sets stored across distributed machines
– Easier to scale
– Handle large volumes of unstructured and structured
data (Web, social media, graphics)
• Databases in the cloud
– Typically, less functionality than on-premises DBs
– Amazon Relational Database Service, Microsoft SQL
Azure
– Private clouds

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Capabilities of Database Management Systems (DBMSs)

• Blockchain: a distributed database

technology
• Smart
contract

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Capabilities of Database Management Systems (DBMSs)

• 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 generating SQL
– Many DBMS have report generation capabilities for creating
polished reports (Crystal Reports)

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MICROSOFT ACCESS DATA DICTIONARY FEATURES

FIGURE 6-6 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.

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EXAMPLE OF AN SQL QUERY

FIGURE 6-7 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.

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AN ACCESS QUERY

FIGURE 6-8 Illustrated here is how the query in Figure 6-7 would be constructed using Microsoft Access query building
tools. It shows the tables, fields, and selection criteria used for the query.

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Capabilities of Database Management Systems (DBMSs)

• Designing Databases
– Conceptual (logical) design: abstract model from business perspective
– Physical design: How database is arranged on direct-access storage
devices

• Design process identifies:

– Relationships among data elements, redundant database elements
– Most efficient way to group data elements to meet business
requirements, needs of application programs

• Normalization
– Streamlining complex groupings of data to minimize redundant data
elements and awkward many-to-many relationships

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AN UNNORMALIZED RELATION FOR ORDER

FIGURE 6-9 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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NORMALIZED TABLES CREATED FROM ORDER

FIGURE 6-10 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.

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Capabilities of Database Management Systems (DBMSs)

• Referential integrity rules

• Used by RDMS to ensure relationships between tables
remain consistent
• Entity-relationship diagram
– Used by database designers to document the data model
– Illustrates relationships between entities
– Caution: If a business doesn’t get data model
right, system won’t be able to serve business
well

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AN ENTITY-RELATIONSHIP DIAGRAM

FIGURE 6-11 This diagram shows the relationships between the entities SUPPLIER, PART, LINE_ITEM, and ORDER that
might be used to model the database in Figure 6-10.

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Tools for Improving Business Performance and Decision Making

• Big data
• Massive sets of unstructured/semi-structured data
from Web traffic, social media, sensors, and so on
• Petabytes (106 GB), exabytes (109 GB) of data
• Volumes too great for typical DBMS
• Can reveal more patterns and anomalies

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Tools for Improving Business Performance and Decision Making

• Business intelligence infrastructure

– Today includes an array of tools for separate
systems, and big data
• Contemporary tools:
– Data warehouses
– Data marts
– Hadoop
– In-memory computing
– Analytical platforms
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Tools for Improving 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
– Provides analysis and reporting tools
• Data marts:
– Subset of data warehouse
– Summarized or focused portion of data for use by specific
population of users
– Typically focuses on single subject or line of business

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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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Tools for Improving Business Performance and Decision Making

• Hadoop
– Enables distributed parallel processing of big data
across inexpensive computers
– Key services
• Hadoop Distributed File System (HDFS): data storage
• MapReduce: breaks data into clusters for work
• Hbase: NoSQL database
– Used by Facebook, Yahoo, NextBio

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Tools for Improving Business Performance and Decision Making

• In-memory computing
– Used in big data analysis
– Uses computers main memory (RAM) for data
storage to avoid delays in retrieving data from disk
storage
– Can reduce hours/days of processing to seconds
– Requires optimized hardware
• Analytic platforms
– High-speed platforms using both relational and non-
relational tools optimized for large datasets
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Interactive Session: Technology

Driving ARI Fleet Management with Real-Time Analytics

Read the Interactive Session and discuss the following questions

• Why was data management so problematic at ARI?

• Describe ARI’s earlier capabilities for data analysis
and reporting and their impact on the business.
• Was SAP HANA a good solution for ARI? Why or
why not?
• Describe the changes in the business as a result of
adopting HANA.
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Tools for Improving Business Performance and Decision Making

• Analytical tools: Relationships, patterns,

trends
– Tools for consolidating, analyzing, and providing
access to vast amounts of data to help users make
better business decisions
• Multidimensional data analysis (OLAP)
• Data mining
• Text mining
• Web mining

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Tools for Improving Business Performance and Decision Making

• Online analytical processing (OLAP)

– Supports multidimensional data analysis
• Viewing data using multiple dimensions
• Each aspect of information (product, pricing, cost,
region, time period) is different dimension
• Example: How many washers sold in the East in June
compared with other regions?
– OLAP enables rapid, online answers to ad hoc
queries

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MULTIDIMENSIONAL DATA MODEL

The view that is showing is

product versus region. If you
rotate the cube 90 degrees, the
face that will show product
versus actual and projected
sales. If you rotate the cube 90
degrees again, you will see
region versus actual and
projected sales. Other views are
possible.

FIGURE 6-13

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Tools for Improving Business Performance and Decision Making

• 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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Tools for Improving Business Performance and Decision Making

• Text mining
– Extracts key elements from large unstructured data
sets
• Stored e-mails
• Call center transcripts
• Legal cases
• Patent descriptions
• Service reports, and so on
– Sentiment analysis software
• Mines e-mails, blogs, social media to detect opinions

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Tools for Improving Business Performance and Decision Making

• Web mining
– Discovery and analysis of useful patterns and
information from Web
– Understand customer behavior
– Evaluate effectiveness of Web site, and so on
– Web content mining
• Mines content of Web pages
– Web structure mining
• Analyzes links to and from Web page
– Web usage mining
• Mines user interaction data recorded by Web server

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Tools for Improving 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 DBMS)
– 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

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LINKING INTERNAL DATABASES TO THE WEB

FIGURE 6-14 Users access an organization’s internal database through the Web using their desktop PCs and Web browser
software.

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Managing the Firm’s Data Resources

• Establishing an information policy

– Firm’s rules, procedures, roles for sharing, managing,
standardizing data
– Data administration
• Establishes policies and procedures to manage data
– Data governance
• Deals with policies and processes for managing availability,
usability, integrity, and security of data, especially regarding
government regulations
– Database administration
• Creating and maintaining database

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Managing Data Resources

• Ensuring data quality

– More than 25 percent of critical data in Fortune
1000 company databases are inaccurate or
incomplete
– Redundant data
– Inconsistent data
– Faulty input
– Before new database in place, need to:
• Identify and correct faulty data
• Establish better routines for editing data once database
in operation
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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

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Interactive Session: Management

American Water Keeps Data Flowing

Read the Interactive Session and discuss the following questions

• Discuss the role of information policy, data administration,

and efforts to ensure data quality in improving data
management at American Water.
• Describe roles played by information systems specialists and
end users in American Water’s systems transformation
project.
• Why was the participation of business users so important? If
they didn’t play this role, what would have happened?

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Interactive Session: Management

American Water Keeps Data Flowing (cont.)

Read the Interactive Session and discuss the following questions

• How did implementing a data warehouse help

American Water move toward a more centralized
organization?
• Give some examples of problems that would have
occurred at American Water if its data were not
“clean”?
• How did American Water’s data warehouse improve
operations and management decision making?
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