Chapter 6

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Foundations of Business Intelligence:
Databases and
Information Management

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
Organizing Data in a Traditional File
Environment

•File organization concepts

Database: Group of related files

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File: Group of records of same type
Record: Group of related fields
Field: Group of characters as word(s) or number
Describes an 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: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
Organizing Data in a Traditional File
Environment
THE DATA
HIERARCHY

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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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Organizing Data in a Traditional File
Environment

•Problems with the traditional file environment (files maintained

separately by different departments)

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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: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
Organizing Data in a Traditional File
Environment
TRADITIONAL FILE PROCESSING

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The use of a traditional approach to file processing encourages each functional area
FIGURE 6-2 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.
Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management
•Database
Serves many applications by centralizing data and controlling

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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 centrally manage data and data
security

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management
HUMAN RESOURCES DATABASE WITH MULTIPLE VIEWS

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A single human resources database provides many different views of data,
FIGURE 6-3 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.
Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management

•Relational DBMS
Represent data as two-dimensional tables called relations or

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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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The Database Approach to Data
Management

•Operations of a Relational DBMS

Three basic operations used to develop useful sets of data

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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: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management
THE THREE BASIC OPERATIONS OF A RELATIONAL DBMS

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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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The Database Approach to Data
Management

•Object-Oriented DBMS (OODBMS)

Stores data and procedures as objects

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Objects can be graphics, multimedia, Java applets
Relatively slow compared with relational DBMS for processing
large numbers of transactions
Hybrid object-relational DBMS: Provide capabilities of both
OODBMS and relational DBMS
•Databases in the cloud
Typically less functionality than on-premises DBs
Amazon Web Services, Microsoft SQL Azure

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The Database Approach to Data
Management

•Capabilities of Database Management Systems

Data definition capability: Specifies structure of database

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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
Many DBMS have report generation capabilities for creating
polished reports (Crystal Reports)

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management

MICROSOFT
ACCESS DATA

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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 6-6
Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management
EXAMPLE OF AN SQL QUERY

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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.

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management
AN ACCESS
QUERY

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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.

FIGURE 6-8

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management
•Designing Databases
Conceptual (logical) design: Abstract model from business
perspective

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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

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management
AN UNNORMALIZED RELATION FOR ORDER

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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.

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management
NORMALIZED TABLES CREATED FROM ORDER

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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 6-10

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management

•Entity-relationship diagram
Used by database designers to document the data model

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Illustrates relationships between entities
•Distributing databases: Storing database in more than one place
Partitioned: Separate locations store different parts of database
Replicated: Central database duplicated in entirety at different
locations

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management
AN ENTITY-RELATIONSHIP DIAGRAM

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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.

FIGURE 6-
11

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
Using Databases to Improve Business
Performance and Decision Making

•Very large databases and systems require special capabilities, tools

To analyze large quantities of data

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To access data from multiple systems
•Three key techniques
Data warehousing
Data mining
Tools for accessing internal databases through the Web

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
Using Databases to Improve Business
Performance and Decision Making
•Data warehouse:
Stores current and historical data from many core operational

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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: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management
COMPONENTS OF A DATA WAREHOUSE

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FIGURE 6-12

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.
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Using Databases to Improve Business
Performance and Decision Making

•Business Intelligence:
Tools for consolidating, analyzing, and providing access to vast

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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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Using Databases to Improve Business
Performance and Decision Making

•Online analytical processing (OLAP)

Supports multidimensional data analysis

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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 the East in June compared
with other regions?
OLAP enables rapid, online answers to ad hoc queries

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The Database Approach to Data
Management
MULTIDIMENSIONAL DATA MODEL

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The view that is showing
is product versus region.
If you rotate the cube 90
degrees, the face that
will show is 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

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
Using Databases to Improve Business
Performance and Decision Making
•Data mining:
More discovery driven than OLAP

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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: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
Using Databases to Improve Business
Performance and Decision Making

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Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
Using Databases to Improve Business
Performance and Decision Making

•Web mining
Discovery and analysis of useful patterns and information from

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WWW
E.g., to understand customer behavior, evaluate effectiveness
of Web site, etc.
Web content mining
Knowledge extracted from content of Web pages
Web structure mining
E.g., links to and from Web page
Web usage mining
User interaction data recorded by Web server

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
Using Databases to Improve Business
Performance and Decision Making

•Databases and the Web

Many companies use Web to make some internal databases

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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: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
The Database Approach to Data
Management
LINKING INTERNAL DATABASES TO THE WEB

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

FIGURE 6-14

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon
Managing Data Resources

•Establishing an information policy

Firm’s rules, procedures, roles for sharing, managing,
standardizing data

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Data administration:
Firm function responsible for specific policies and procedures
to manage data
Data governance:
Policies and processes for managing availability, usability,
integrity, and security of enterprise data, especially as it
relates to government regulations
Database administration:
Defining, organizing, implementing, maintaining database;
performed by database design and management group

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Managing Data Resources

•Ensuring data quality

More than 25% of critical data in Fortune 1000 company

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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

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© Prentice Hall 2011
Managing Data Resources

•Data quality audit:

Structured survey of the accuracy and level of completeness of

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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

Management Information Systems: Managing the Digital Firm, 12e Authors: Kenneth C. Laudon and Jane P. Laudon