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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Chapter 6: Foundations of Business Intelligence

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
• 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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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
• Same Data stored in more than one place
– Data inconsistency:
• Same attribute(Field name) has different values in
different Files

Data Redundancy leads to data Inconstancy

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Chapter 6: Foundations of Business Intelligence

Managing Data in a Traditional File Environment

Problems with the traditional file environment

(files maintained separately by different
departments)
• Program-Data Dependence:
• Some computer software programs, mainly those written
for large, mainframe computers, require data to be
constructed in a particular way. Because the data are
specific to that program, it can’t be used in a different
program.
• If an organization wants to use the same data in a
different program, it has to reconstruct it. Now the
organization is spending dollars and time to establish and
maintain separate sets of data on the same entities
because of program-data dependence.
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Chapter 6: Foundations of Business Intelligence

Managing Data in a Traditional File Environment

Problems with the traditional file environment

(files maintained separately by different
departments)
• Lack of Flexibility :
• Traditional file system generates routine reports.
• It can not generate customized or ad-hoc reports
required at run time.
• Eg. Production details required by Sales and
Marketing Mangers in specific format/on specific time
may not be generated as it caters to production
manager only.
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Chapter 6: Foundations of Business Intelligence

Managing Data in a Traditional File Environment

Problems with the traditional file environment

(files maintained separately by different
departments)
• Poor Security:
• Because there is little control or management of data,
access and dissemination of information is out of
control.
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Chapter 6: Foundations of Business Intelligence

Managing Data in a Traditional File Environment

Problems with the traditional file environment

(files maintained separately by different
departments)
• Data Sharing and Availability:
• Who, When, Where, What is/are accessing and
updating data.
• Wastage of Storage Space:
• Due to duplication of data
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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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.
Oracle, DB2, MySQL
– 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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

Capabilities of Database Management Systems (DBMSs)

• Non-relational databases Technologies in Cloud:

“NoSQL”
– More flexible data model
– Data sets stored across distributed machines
– Easier to scale up & down
– Handle large volumes of unstructured and structured
data (Web, social media, graphics)
– Eg. MongoDB Open source NOSQL uses 70 administrative
systems MetLife-Claim system

Oracle NoSQL, Amazon DB

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Chapter 6: Foundations of Business Intelligence

Capabilities of Database Management Systems (DBMSs)

• Databases in the cloud

– Amazon Relational Database Service, Microsoft SQL
Azure
– Public clouds
– Unstructured Web data
– For web focused start-ups
– Usage based pricing
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Chapter 6: Foundations of Business Intelligence

Capabilities of Database Management Systems (DBMSs)

Cloud computing service companies provide a way for

you to manage company’s data through Internet
access using a Web browser. Pricing for cloud-based
database services are predicated upon:
• Usage—small databases cost less than larger ones
• Volume of data stored
• Number of input-output requests
• Amount of data written to the database
• Amount of data read from the database
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Chapter 6: Foundations of Business Intelligence

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
Field Name, Description, Type, Size, Format, Validation,
Ownership, authorization, Security
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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

Capabilities of Database Management Systems (DBMSs)

• Capabilities of database management

systems
– 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 is a business
intelligence application, currently marketed to small
businesses by SAP. It is used to design and generate
reports from a wide range of data sources.)
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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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
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Chapter 6: Foundations of Business Intelligence

Capabilities of Database Management Systems (DBMSs)

• Normalization
– The process of creating small stable yet flexible and adaptive
data structures from complex groups of data is called
normalization.
– Streamlining complex groupings of data to minimize redundant
data elements and awkward many-to-many relationships
Goals for creating a good data model are:
– Including all entities and the relationships among them
– Organizing data to minimize redundancy
– Maximizing data accuracy
– Making data easily accessible
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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

Capabilities of Database Management Systems (DBMSs)

• Referential integrity rules

• RDBMS try to enforces Referential Integrity 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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Chapter 6: Foundations of Business Intelligence

AN ENTITY-RELATIONSHIP DIAGRAM

Relationships:
One to One : One Driver One Car, Bank --------------Account
One to Many : One Invoice Many Items
Many To One : Many Students One Course
Many to Many : Many Employees Many Projects/assignments
Zero to Many: Many Applicants Zero(none) selected
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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Chapter 6: Foundations of Business Intelligence

Tools for Improving Business Performance and Decision Making

• Big data
• Big Data are datasets with volumes so huge that they
are beyond the ability of typical DBMS/RDBMS to
Capture, Store and analyze.
• Massive sets of unstructured/semi-structured data
from Web traffic, social media, sensors, and so on
• Petabytes, exabytes of data
• Volumes too great for typical DBMS
• Can reveal more patterns and interesting anomalies
(abnormal unexpected trends)
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Chapter 6: Foundations of Business Intelligence

Tools for Improving Business Performance and Decision Making

• Big data
• According to International Data Center(IDC)
technology research firm….data is more than doubling
every two year so the amount of data available to
organization is skyrocketing.
• Twitter generates 8 terabytes on daily
• Single jet engine generates 10 terabytes of data in just
30 minutes, imagine the more than 25000 flights each
day…
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Chapter 6: Foundations of Business Intelligence

Tools for Improving Business Performance and Decision Making

• Business intelligence infrastructure

– 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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Chapter 6: Foundations of Business Intelligence

Tools for Improving Business Performance and Decision Making

• Data warehouse:
– Structured/Semi structured data from various transactions
– Stores current and historical /Legacy data
– Data collected from Internal & external sources
– Consolidates and standardizes information for use across
enterprise, but data cannot be altered
– Provides analysis and reporting tools
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Chapter 6: Foundations of Business Intelligence

Tools for Improving Business Performance and Decision Making

• Data marts:
– Subset of data warehouse
– Summarized or focused related portion of data for use by
specific population of users
– Typically focuses on single subject or line of business
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Chapter 6: Foundations of Business Intelligence

Tools for Improving Business Performance and Decision Making

• Hadoop
– Its an Open source software framework manages by
Apache Software foundation
– Enables distributed parallel processing of big data
(Structured, semi and Unstructured) across inexpensive
computers
– Key services
• Hadoop Distributed File System (HDFS): data storage
• MapReduce: breaks data into clusters for parallel processing
• Hbase: NoSQL database
– Used by Facebook, Yahoo, Bing, NextBIO
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Chapter 6: Foundations of Business Intelligence

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 – Advance Chip technology, multicore
processing, lower price for RAM

• Analytic platforms
– Pre-Configured Hardware & Software system designed for query
processing and analytics for relational and non relational data sets.
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Chapter 6: Foundations of Business Intelligence

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
 Management Information Systems
Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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
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Chapter 6: Foundations of Business Intelligence

Tools for Improving Business Performance and Decision Making

Types of information obtainable from

data mining:
• Associations: Occurrences linked to single event
– Burger+ french fries+ coke, pizza+cola
• Sequences: Events linked over time
– House purchase->TV->Refrigerator->Washing Machine-
>Microwave->furniture->wardrobe
• Classification: Recognizes patterns that describe group
to which item belongs
– High net worth individual (HNI) clients | Casual ------
>Banks/Credit cards
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Chapter 6: Foundations of Business Intelligence

Tools for Improving Business Performance and Decision Making

Types of information obtainable from

data mining:
• Clustering: Similar to classification when no groups
have been defined; finds groupings within data
– With in HNI sub-groups on the basis of demography/type of
investment

• Forecasting: Uses series of existing values to forecast

what other values will be
– Based on passed patterns and trends predict future value
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Chapter 6: Foundations of Business Intelligence

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
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Chapter 6: Foundations of Business Intelligence

Tools for Improving Business Performance and Decision Making

• Text mining
– Sentiment analysis software
• Mines e-mails, blogs, social media to detect opinions
• Favorable and unfavorable opinions about certain
subjects
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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

LINKING INTERNAL DATABASES TO THE WEB

CGI SCRIPT----------Application Prog.------Client server Applications

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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Chapter 6: Foundations of Business Intelligence

Managing the Firm’s Data Resources

• Establishing an information policy

– Firm’s rules, procedures, roles for sharing, managing,
standardizing data
– Data governance
• Deals with framing policies and processes for managing
availability, usability, integrity, and security of data, especially
regarding government regulations
– Data administration
• Implementation….Doing part
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Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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
 Management Information Systems
Chapter 6: Foundations of Business Intelligence

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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Chapter 6: Foundations of Business Intelligence

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?