Laudon Emis12e Inppt 06

Chapter 6
Foundations of Business
Intelligence: Databases
and Information
Management
6.1 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

Essentials of Management Information Systems
Chapter 6 Foundations of Business Intelligence: Databases and
Information Management
Student Learning Objectives
• What is a database and how does a

relational database organize data?
• What are the principles of a database

management system?

• 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?

Learning Tracks
1. Database Design, Normalization, and Entity-Relationship
Diagramming
2. Introduction to SQL
3. Hierarchical and Network Data Models
Video Cases
Case 1: Dubuque Uses Cloud Computing and Sensors to
Build a Smarter City
Case 2: : Brooks Brothers Closes In on OmniChannel Retail
Case 3: Maruti Suzuki Business Intelligence and Enterprise
Databases

Better Data Management Helps the
US Postal Service Rebound
• Problem:
• Online alternatives to postal mail
• Revenues declining
• Outdated data management technology
• Solution:
• Expand Intelligent bar code system (IMB)
• Gather data on millions of postal packages
• Centralized data base to analyze flow of mail
and packages
• Optimize deliveries, detect fraud

• USPS super computing center

• 400 billion record database
• Hadoop database software
• In memory processing
• Demonstrates IT’s role in successful data
management and organizational innovation


What is a database and how does a relational database organize data?
• Database:
• Collection of related files containing records on people,
places, or things.
• Prior to digital databases, business used file cabinets with
paper files.
• Entity:
• Generalized category representing person, place, thing on
which we store and maintain information
• E.g., SUPPLIER, PART
• Attributes:
• Specific characteristics of each entity:
• SUPPLIER name, address
• PART description, unit price, supplier
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

• Relational database:
• Organize data into two-dimensional tables (relations) with
columns and rows.
• One table for each entity:
• E.g., (CUSTOMER, SUPPLIER, PART, SALES)
• Fields (columns) store data representing an attribute.
• Rows store data for separate records, or tuples.
• Key field: uniquely identifies each record.
• Primary key:
• One field in each table
• Cannot be duplicated
• Provides unique identifier for all information in any row

A Relational Database Table
A relational database organizes data in the form of two-dimensional tables.

Illustrated here is a table for the entity SUPPLIER showing how it represents the
entity and its attributes. Supplier_Number is the key field.
Figure 6.2

The PART Table
Data for the entity PART

have their own separate
table. Part_Number is
the primary key and
Supplier_Number is the
foreign key, enabling
users to find related
information from the
SUPPLIER table about
the supplier for each
part.
Figure 6.3

The Database Approach to Data Management
• Establishing relationships
• Entity-relationship diagram
• Used to clarify table relationships in a relational
database
• Relational database tables may have:
• One-to-one relationship
• One-to-many relationship
• Many-to-many relationship
• Requires “join table” or intersection relation
that links the two tables to join information

A Simple Entity-Relationship Diagram
This diagram shows the relationship between the entities

SUPPLIER and PART.
Figure 6.4

The Database Approach to Data Management
• Normalization
• Process of streamlining complex groups of data to:
• Minimize redundant data elements.
• Minimize awkward many-to-many relationships.
• Increase stability and flexibility.
• Referential integrity rules
• Used by relational databases to ensure that relationships
between coupled tables remain consistent.
• E.g., when one table has a foreign key that points to
another table, you may not add a record to the table with
foreign key unless there is a corresponding record in the
linked table.
The shaded
Sample Order Report
areas show
which data
came from
the
SUPPLIER,
LINE_ITEM,
and ORDER
tables. The
database
does not
maintain
data on
Extended
Price or
Order Total
because they
can be
derived from
other data in
the tables. Figure 6.5
The Final Database Design with Sample Records
Figure 6.6
The final design of

the database for
suppliers, parts,
and orders has four
tables. The
LINE_ITEM table is
a join table that
eliminates the many-
to-many
relationship
between ORDER
and PART.

Entity-Relationship Diagram for the Database

with Four Tables
This diagram shows the relationship between the entities

SUPPLIER, ART, LINE_ITEM, and ORDER.
Figure 6.7

What are the principles of a database management system?
DBMS
• Specific type of software for creating, storing,

organizing, and accessing data from a database
• Separates the logical and physical views of the data
• Logical view: how end users view data
• Physical view: how data are actually structured and
organized
• Examples of DBMS: Microsoft Access, DB2, Oracle
Database, Microsoft SQL Server, MySQL,

Human Resources Database with Multiple Views

Figure 6.8
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.

Operations of a Relational DBMS

• Select:
• Creates a subset of all records meeting stated criteria
• Join:
• Combines relational tables to present the server with more
information than is available from individual tables
• Project:
• Creates a subset consisting of columns in a table
• Permits user to create new tables containing only desired
information

The Three Basic Operations of a Relational DBMS
Figure
5-8
Figure 6.9 The select, project, and join operations enable data from
two different tables to be combined and only selected
attributes to be displayed.
Capabilities of Database Management Systems

• Data definition capabilities:
• Specify structure of content of database.
• Data dictionary:
• Automated or manual file storing definitions of data elements
and their characteristics.
• Querying and reporting:
• Data manipulation language
• Structured query language (SQL)
• Microsoft Access query-building tools
• Report generation, e.g., Crystal Reports

Access Data 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 6.10

Example of an SQL Query
Illustrated here are the SQL statements for a query to select

suppliers for parts 137 or 150. They produce a list with the
same results as Figure 6.9.
Figure 6.11
An Access Query
Illustrated here
is how the
query in Figure
6-10 would be
constructed
using
Microsoft
Access query-
building tools.
It shows the
tables, fields,
and selection
criteria used
for the query.
Figure 6.12

Non-Relational Databases
• Developed to handle large data sets of data that is not
easily organized into tables, columns, and rows
• “NoSQL”: Non-relational database technologies
• Non-relational DBMS
• Use more flexible data model
• Don’t require extensive structuring
• Can manage unstructured data, such as social
media and graphics
• E.g. Amazon’s SimpleDB

Cloud Databases
• Relational database engines provided by cloud computing services,
such as Amazon
• Pricing based on usage
• Appeal to Web-focused businesses, small or medium-sized
businesses seeking lower costs than developing and hosting in-
house databases
• E.g. Amazon Relational Database Service
• Offers MySQL, Microsoft SQL Server, Oracle Database
engines
• Private clouds

Using Databases to Improve Business Performance and Decision Making
The Challenge of Big Data

• Massive quantities of unstructured and semi-
structured data from Internet and networked
services and applications
• Big datasets provide opportunity more patterns
and insights than smaller datasets, e.g.
• Customer behavior
• Weather patterns
• Requires new technologies and tools

Business Intelligence Infrastructure
• Array of tools for obtaining useful

information from internal and external
systems and big data
• Data warehouses
• Data marts
• Hadoop
• In-memory computing
• Analytical platforms

Data Warehouses
• Data warehouse:
• Database that stores current and historical data that may be
of interest to decision makers
• Consolidates and standardizes data from many systems,
operational and transactional databases
• Data can be accessed but not altered
• Data mart:
• Subset of data warehouses that is highly focused and isolated
for a specific population of users

Hadoop
• Open-source software framework from Apache
• Designed for big data
• Breaks data task into sub-problems and
distributes the processing to many inexpensive
computer processing nodes
• Combines result into smaller data set that is easier
to analyze
• Key services
• Hadoop Distributed File System (HDFS)
• MapReduce

In-Memory Computing
• Relies on computer’s main memory (RAM) for data
storage
• Eliminates bottlenecks in retrieving and reading
data from hard-disk based databases
• Dramatically shortens query response times
• Enabled by
• High-speed processors
• Multicore processing
• Falling computer memory prices
• Lowers processing costs

Analytic Platforms
• Preconfigured hardware-software systems
• Designed for query processing and analytics
• Use both relational and non-relational technology
to analyze large data sets
• Include in-memory systems, NoSQL DBMS
• E.g. IBM Netezza
• Integrated database, server, storage
components

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 6-13
Analytical Tools: Relationships, Patterns, Trends
• Once data gathered, tools are required for

consolidating, analyzing, and insight to
improve decision making
• Software for database querying and
reporting
• Multidimensional data analysis (OLAP)
• Data mining

Online Analytical Processing (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
• E.g., comparing sales in East in June versus May and July
• Enables users to obtain online answers to ad

hoc questions such as these in a fairly rapid
amount of time
Multidimensional Data Model
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 6.14
Data Mining
• Finds hidden patterns and relationships in large
databases and infers rules from them to predict
future behavior
• Types of information obtainable from data mining
• Associations: occurrences linked to single event
• Sequences: events linked over time
• Classifications: patterns describing a group an item
belongs to
• Clustering: discovering as yet unclassified groupings
• Forecasting: uses series of values to forecast future values

Interactive Session: People

New York City Embraces Data-Driven Crime Fighting
• Read the Interactive Session and then discuss the following questions:
1. What are the benefits of data-driven prosecution for crime fighters and
the general public?
2. What problems does this approach to crime

fighting pose?
3. What people, organization, and technology issues should be

considered when setting up information systems for intelligence-driven
prosecution?

• Text Mining
• Unstructured data (mostly text files) accounts for 80
percent of an organization’s useful information.
• Text mining allows businesses to extract key
elements from, discover patterns in, and
summarize large unstructured data sets.
• Sentiment analysis
• Mines online text comments online or in e-mail
to measure customer sentiment

• Web Mining
• Discovery and analysis of useful patterns and
information from the Web
• E.g. to understand customer behavior, evaluate Web
site, quantify success of marketing
• Content mining – mines content of Web sites
• Structure mining – mines Web site structural elements,
such as links
• Usage mining – mines user interaction data gathered
by Web servers

Databases and the Web

• Firms use the Web to make information from their
internal databases available to customers and
partners.
• Middleware and other software make this possible
• Web server
• Application servers or CGI
• Database server
• Web interfaces provide familiarity to users and
savings over redesigning legacy systems.

Linking Internal Databases to the Web
Users access an organization’s internal database through the

Web using their desktop PCs and Web browser software .
Figure 6.15

Why are information policy, data administration, and data quality assurance
essential for managing the firm’s data resources?
Establishing an Information Policy

• Information policy
• States organization’s rules for organizing, managing, storing,
sharing information
• Data administration
• Responsible for specific policies and procedures through
which data can be managed as a resource
• Database administration
• Database design and management group responsible for
defining and organizing the structure and content of the
database, and maintaining the database.

Managing Data Resources
Ensuring Data Quality

• Poor data quality: major obstacle to successful
customer relationship management
• Data quality problems: caused by
• Redundant and inconsistent data produced by
multiple systems
• Data input errors
• Data quality audit: structured survey of the accuracy and
completeness of data
• Data cleansing: detects and corrects incorrect,
incomplete, improperly formatted, and redundant data

Managing Data Resources
Interactive Session: People

Driving ARI Fleet Management With Real-Time Analytics
• Read the Interactive Session and then discuss the following
questions:
1. Why was data management so problematic at ARI?
2. Describe ARI’s earlier capabilities for data analysis and reporting and
their impact on the business.
3. Was SAP HANA a good solution for ARI? Why or why not?
4. Describe the changes in how ARI and its customers ran their
businesses as a result of adopting HANA.
5. Describe two decisions that were improved by
adopting HANA.

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permission of the publisher. Printed in the United States of America.

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Chapter 6

6.1 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

Student Learning Objectives

• What is a database and how does a

• What are the principles of a database

6.2 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

Student Learning Objectives

• What are the principal tools and

• Why are information policy, data

6.3 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

Student Learning Objectives

6.4 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

6.5 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

• USPS super computing center

6.6 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

6.7 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

What is a database and how does a relational database organize data?

What is a database and how does a relational database organize data?

The Data Hierarchy

6.9 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

What is a database and how does a relational database organize data?

6.10 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

What is a database and how does a relational database organize data?

A Relational Database Table

A relational database organizes data in the form of two-dimensional tables.

6.11 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

What is a database and how does a relational database organize data?

The PART Table

Data for the entity PART

6.12 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

The Database Approach to Data Management

6.13 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

What is a database and how does a relational database organize data?

A Simple Entity-Relationship Diagram

This diagram shows the relationship between the entities

6.14 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

The Database Approach to Data Management

What is a database and how does a relational database organize data?

What is a database and how does a relational database organize data?

The Final Database Design with Sample Records

The final design of

6.17 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

What is a database and how does a relational database organize data?

Entity-Relationship Diagram for the Database

This diagram shows the relationship between the entities

6.18 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

What are the principles of a database management system?

• Specific type of software for creating, storing,

6.19 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

What are the principles of a database management system?

Human Resources Database with Multiple Views

6.20 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

What are the principles of a database management system?

Operations of a Relational DBMS

6.21 © Copyright © 2017 Pearson Education, Inc. publishing as Prentice

What are the principles of a database management system?

The Three Basic Operations of a Relational DBMS

What are the principles of a database management system?

Capabilities of Database Management Systems