Chapter 6 Database Management and Business Intelligence Introduction to Business Information Systems by James Norrie, Mark Huber, Craig Piercy, And Patrick McKeown

Copyright 2010 John Wiley & Sons Canada Ltd. What We Will Cover ●What are Data, Information, and Knowledge? ●Databases: The Primary Data Storage for Organizations ●Business Intelligence

Student Return on Investment Your investment of time and effort in this course will result in your being able to answer these questions : 1. What are the differences between data, information, and knowledge? 2. In what ways can organizations use IT to store and share data, information, and knowledge? 3. How does business intelligence enhance organizational decision making? Copyright 2010 John Wiley & Sons Canada Ltd.

What are Data, Information, and Knowledge?  Data are raw unorganized facts, numbers, pictures, and so on  Information is data that have been organized and are useful to a person  Knowledge is created when a person combines experience and judgment with information  Wisdom adds insight and ethics to the experience and professional judgment inherent in knowledge Copyright 2010 John Wiley & Sons Canada Ltd.

What are Data, Information, and Knowledge? Copyright 2010 John Wiley & Sons Canada Ltd. Figure 6.1 This knowledge hierarchy shows the relative level of human involvement, cost, and complexity

Lifelong Knowledge Creation  To be successful, always strive to create or acquire new knowledge  Explicit knowledge is readily codified, such as the knowledge in a textbook  Tacit knowledge is gained through experience, insight and discovery Copyright 2010 John Wiley & Sons Canada Ltd.

Knowledge Work Activities ● Discovery ● Analysis ● Transformation ● Synthesis ● Communication

Copyright 2010 John Wiley & Sons Canada Ltd. Discovery  Discovery is the finding of data, information, and knowledge relevant to a task, problem, issue, or opportunity  Search engines are an important part of the discovery process  Intranets contain data about the company that can be searched by employees to find “best practices”

Copyright 2010 John Wiley & Sons Canada Ltd. Knowledge Work Activities

Copyright 2010 John Wiley & Sons Canada Ltd. Analysis  Analysis is the knowledge work activity that involves thoughtful investigation and examination of the available data, information, and knowledge  Spreadsheet software is widely used for the analysis process

Copyright 2010 John Wiley & Sons Canada Ltd. Sales Data for WildOutfitters

Copyright 2010 John Wiley & Sons Canada Ltd. Transformation  Transformation is a knowledge work activity that involves organizing the results of analysis activities  Often this involves transforming data using databases into information that can be used to create business value  Database management systems (DBMS) are important to the transformation process

Copyright 2010 John Wiley & Sons Canada Ltd. Transforming Data Visually

Copyright 2010 John Wiley & Sons Canada Ltd. Synthesis  Synthesis is the discovery of trends or patterns to possibly explain courses of action for the future  Often creating a whole from various parts is one way of synthesizing data into useful information and knowledge  An accurate and complete synthesis of the results of an analysis is essential to solving the right problem and making sound decisions

Copyright 2010 John Wiley & Sons Canada Ltd. Communication  Communication is the sharing of analysis, ideas, and solutions with others  Some communication technologies such as and instant messaging focus on physically sharing a message  Other communication technologies help in scheduling meetings  Presentation and document creation software are also important communication tools

Copyright 2010 John Wiley & Sons Canada Ltd. Examples of Knowledge Work Activities Activity Example DiscoveryFind weekly sales data for our company and for competitors AnalysisIdentify any trends in data and compare to competitor and industry TransformationCompare sales data for one week to similar data for previous months SynthesisSuggest ways to capitalize on company strengths and overcome weaknesses CommunicationPresent findings and suggestions to management

Copyright 2010 John Wiley & Sons Canada Ltd. Databases: The Primary Data Storage for Organizations  All business information systems rely on stored data to make decisions  The primary technology for data storage is the database  A database consists of interrelated data that are stored in files for easy access  A database management system (DBMS) is a collection of software that allows users to create and work with a database

Copyright 2010 John Wiley & Sons Canada Ltd. The DBMS Controls Database Access

Copyright 2010 John Wiley & Sons Canada Ltd. The Data Hierarchy 1.Bit 2.Character 3.Field 4.Record 5.File 6.Database The data hierarchy is a way of organizing stored data in progressively larger levels of complexity

Copyright 2010 John Wiley & Sons Canada Ltd. The Relational Data Model  The relational data model stores data in one or more tables corresponding to entities  Tables consist of records that correspond to rows in the tables  A record stores data about a single instance of an entity  A record consists of one or more fields  Fields are often referred to as attributes and correspond to columns of the tables

Copyright 2010 John Wiley & Sons Canada Ltd. The Relational Data Model  The relational data model is a method of logically storing data in a database that is independent of the method used to physically store the data  Relational database management systems (RDBMS) are the most popular way of storing large amounts of data

Copyright 2010 John Wiley & Sons Canada Ltd. ERDs and Logical Data Models  Two types of models are commonly used to design the organization of relational database: The entity-relationship diagram (ERD), which indicates the entities and how they are related The logical data model translates the ERD into a diagram of the tables in the database

Copyright 2010 John Wiley & Sons Canada Ltd. Partial ERD and Data Model for an E-voting System Entity-relationship diagram Logical data model

Copyright 2010 John Wiley & Sons Canada Ltd. Data Flow Diagrams  A data flow diagram is a traditional IS model that depicts how data move through a system  It includes: External entities that send input or receive output from a system Processes that show activities that move or transform data Data stores that usually correspond to tables in the data model Data flows that connect the components

Copyright 2010 John Wiley & Sons Canada Ltd. Data Flow Diagram

Copyright 2010 John Wiley & Sons Canada Ltd. Other Methods to Store Data, Information, and Knowledge  In addition to using databases, there are a number of other ways to store data, information, and knowledge  These include (but are not limited to): Data warehouses Management information systems Knowledge management Collaborative software

Copyright 2010 John Wiley & Sons Canada Ltd. Using Data Warehouses  Databases are not the only or necessarily the best way of storing data for all business needs  A data warehouse is a way of storing and managing data for information access  It consists of transaction data that has been cleaned and restructured to fit the data warehouse model  It is meant to support queries, summary reports, and analysis

Copyright 2010 John Wiley & Sons Canada Ltd. Database versus Data Warehouse DatabaseData Warehouse Supported ActivityOperationalAnalytical Response TimeFastCan be slow Age of DataCurrent transaction Historical data ScopeLimited area within organization Provides view of entire organization Data VariabilityChanges often Infrequent changes SourceTransactionsMultiple sources Data ModelBusiness rules Aligns with overall business structure

Copyright 2010 John Wiley & Sons Canada Ltd. Data Warehouses  Data warehouses work with tools that allow users to deal with vast amounts of data  Data marts are used to extract and reorganize specific data according to needs  Data warehouses often provide support for organizing multidimensional data. Retrieving data organized this was is called slicing- and-dicing

Copyright 2010 John Wiley & Sons Canada Ltd. Using a Data Warehouse  Automatic production of reports and queries  Queries against summary or detailed data  Data mining for detailed data to find trends or patterns in large sets of data  Interfacing with other applications and data stores

Copyright 2010 John Wiley & Sons Canada Ltd. Business Intelligence  Business intelligence (BI) is a process for gaining competitive advantage through the intelligent use of data and information in decision making  Data and information must go through several stages to be used in decision making  IT assists at every step

Copyright 2010 John Wiley & Sons Canada Ltd. Stages of Business Intelligence StageDescription 1. Data sourcing Mining data and information from text documents, images, media files, and web pages 2. Data analysis Producing useful knowledge from collected data and information 3. Situation awareness Culling out and relating the useful facts and knowledge 4. Risk assessment Identifying decision options and evaluating them 5. Decision support Using interactive software tools to identify and select intelligent decisions and strategies

Copyright 2010 John Wiley & Sons Canada Ltd. The Business Intelligence Pyramid

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