1. Chapter 3 Managing and Using Data
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WHAT WE WILL COVER • What Are Data, Information, and Knowledge? • Decision Making and Problem Solving • Databases: The Primary Data Storage for Organizations • Business Intelligence
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3. WHAT ARE DATA, INFORMATION, AND KNOWLEDGE?
Data are raw unorganized facts, numbers, pictures, etc.
Information is data that have been organized and made useful.
Knowledge is created when experience and judgment are combined with information.
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4. LIFELONG KNOWLEDGE CREATION
There are two types of knowledge that you possess:
Explicit knowledge is knowledge that is readily codified, such as the knowledge in a textbook.
Tacit knowledge is knowledge that you gain through experience, insight, and discovery.
These two types of knowledge are complementary halves of a lifelong knowledge creation process.
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5. KNOWLEDGE WORK COMPONENTS
Discovery is the finding of data, information, and knowledge relevant to a task, problem, issue, or opportunity (the context).
Analysis is breaking down the whole into its more discrete parts to better understand how it works.
Transformation is knowledge work that requires you to use the results of your analysis to deepen your understanding of the data and information.
Synthesis allows you to interpret trends or patterns that seem to explain the past and the present, and may suggest courses of action likely to favourably influence the future.
Communication the ability to share your analyses, ideas, and solutions with others.
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6. Example of Knowledge Work Activity
Manager’s Request
Helpful IT Tools and Activities
Discovery
Find our company’s and our competitors’ weekly sales data.
Use data from check-out/point-of-sale (POS) terminals, search tools (e.g., Google), and Web searching.
Analysis
Compare the sales data for the first week of May to similar data from our company for the previous two months.
Import the data into a database or spreadsheet application, and use its features and tools to organize the data. Find the previous months’ data and import these as well.
Transformation
Identify any trends in the data by week, month, and day of the week. Indicate how our company’s results compare with our competition and with the industry as a whole.
Use the data analysis tools in the spreadsheet application to examine the data from different aspects. Consider what your analysis of the data revealed and combine this with your knowledge of your company’s goals to add focus to your analysis. Search the Web for other analyses of your company, industry, and competitors. Integrate this with your interpretation of the sales data.
Synthesis
Given your analysis of our company’s relative success or failure, suggest ways to capitalize on our strengths and overcome our weaknesses.
With analysis in mind, obtain feedback about specific company products and services. Arrange a brief Web meeting (e.g., with GotoMeeting) of the top sales associates in your company.
Communication
Present your findings and suggestions to management.
Import your spreadsheet data into presentation software. Add the insights gained from your Web meeting.
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7. DECISION MAKING AND PROBLEM SOLVING
Before discussing effective decision making, we need to have a common understanding of what a decision is.
A rational decision is a choice that you make about what actions you will take (or not take) in a given situation after analyzing the consequences of each option.
Often, rational decision making occurs as part of a larger problem-solving process.
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8. CLASSIFYING DECISION TYPES
Structured decisions
Semi-structured decisions
Unstructured decisions
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9. THE DECISION-MAKING PROCESS
To make the best decision you can, you need to carefully consider the quality of the data, information, and knowledge, and put it into proper context.
During the analysis stage, you sort, transform, and organize the data to define options.
The quality of the final output of this process (the decision or solution) will likely be based on the quality of the inputs (the information and analysis you create).
The purpose of decision making is often to solve a problem.
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LEVELS OF DECISIONS
Tactical decisions
Operational decisions
Strategic decisions
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11. PROBLEM-SOLVING TOOLS
Problem solving refers to a series of steps or a process (logical sequence of activities) taken in response to some event or activity.
The first step in problem solving is not only recognizing that a problem exists, but why it exists.
Selection criteria are the factors that you think are important and relevant to solving the problem.
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12. DATABASES: THE PRIMARY DATA STORAGE FOR ORGANIZATIONS
All business information systems rely on the use and storage of data. The primary technology used to store, manage, and allow efficient access to data is the database.
A database consists of interrelated data that are stored in files and organized so that computer programs can quickly and easily access specific pieces of data.
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13. To organize data in a database, most users rely on the data hierarchy.
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RELATIONAL DATA MODEL
Relational data model databases store information about entities, such as suppliers and products for a retailer, and the relationships between those entities. Databases then use these defined relationships to store the connections between the entities, such as which suppliers provide which products.
This has become the standard way of storing large amounts of data.
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15. EXAMPLE OF RELATIONAL DATA MODEL
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16. DESIGNING A RELATIONAL DATABASE
Data modelling is the process of analyzing the data required by the processes of an organization to support it both operationally and strategically.
The entity-relationship diagram (ERD) and the logical data model are the two most commonly used models for designing the organization of a relational database.
A data flow diagram (DFD) is a traditional IS model that depicts how data move or flow through a system.
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17. STORING AND ACCESSING DATA, INFORMATION, AND KNOWLEDGE
Databases are not the only, nor necessarily the best, form of storage for all business needs.
A data warehouse is a means of storing and managing data for information access, typically composed of data from one or more transaction databases. It thus consists of transaction data, cleaned and restructured to fit the data warehouse model and to support queries, summary reports, and analysis.
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18. A COMPARISON OF DATABASE AND DATA WAREHOUSE TECHNOLOGY
Supported Activity
Operational (transactions)
Analytical (knowledge work)
Response Time
Fast response time (seconds)
Can be slower (minutes, sometimes hours)
Age of Data
Mostly data for current transactions
A lot of historical data
Scope
May support a limited area within the organization
Should provide view of entire organization
Data Variability
Mostly dynamic, changes often
Mostly static, infrequent changes
Source
Transactions from operational domain; business rules
Combined from multiple sources (including operational databases)
Data Model
Based on business rules of operational application
Aligns with overall business structure
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Data warehouses often provide support for organizing multi-dimensional data, such as the three dimensions for retail sales as shown below.
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20. BUSINESS INTELLIGENCE
A process for gaining competitive advantage through the intelligent use of data and information in decision making
To enable businesses to reach intelligent decisions, data and information must go through several stages.
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21. STAGES OF BUSINESS INTELLIGENCE
Description
1. Data sourcing (Acquisition)
Mining data and information from text documents, databases, images, media files, and web pages
2. Data analysis (Organization)
Producing useful knowledge from the collected data and information, using tools such as data mining and text/image analysis techniques
3. Situation awareness (Analysis)
Culling out and relating the useful facts and knowledge, while filtering out irrelevant data
4. Risk assessment (Analysis)
Identifying decision options and evaluating them based on expectations of risk and reward
5. Decision support (Decision)
Using interactive software tools to identify and select intelligent decisions and strategies
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22. THE BUSINESS INTELLIGENCE PYRAMID
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23. DECISION SUPPORT SYSTEMS (DSS)
Decision support systems (DSS) help businesses use communications technologies, knowledge, and models to organize and access data to perform decision-making activities.
There are 5 types of DSS.
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TYPES OF DSS
Type of DSS
Description
Communications-driven DSS
Focuses on communications, collaboration, and shared decision making
Data-driven DSS
Emphasizes access to and manipulation of internal company data and sometimes external data
Document-driven DSS
Focuses on retrieval and management of unstructured documents
Knowledge-driven DSS
Provides special problem-solving tools that help decision making by suggesting or recommending actions to users
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25. KNOWLEDGE MANAGEMENT SYSTEMS
Of the three informational resources—data, information, and knowledge—knowledge is the most difficult to share and store.
Explicit knowledge includes anything that can be written down, stored, and codified (e.g., business plans, patents and trademarks, and market research). Tacit knowledge includes the know-how that people have through learning and experience, which is difficult to write down and share.
To support tacit knowledge, knowledge management systems often rely on collaborative software, which supports teamwork with technologies that enable communication and sharing of data and information.
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26. COLLABORATIVE SOFTWARE CATEGORIES
Communication tools
• Facilitate the sharing of information and data with tools that enable people to send messages, documents, files, and data between each other (e.g., , text messaging, voice mail, and Web publishing)
Conferencing tools
• Provide a more interactive facility for the sharing of information
• At a minimum, can provide real-time text discussions and a common “whiteboard” that each participant can edit
• Can also enable voice and/or video using special equipment or computer networks
• Some organizations build special facilities for conferencing supported by these tools
Collaborative management tools
• Can help manage and facilitate the activities of a team (e.g., electronic calendars or scheduling events and automatically notifying participants)
• Shared workspaces can be provided to store and share work products that group members may modify
• May overlap with project management systems to keep the group aware of a project’s status
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27. BUSINESS INTELLIGENCE TOOLS
SAS
BI offerings allow companies to integrate and visualize organizational data.
Dashboard provides critical information to business users at a glance.
Balanced scorecard is a measurement framework that added strategic non-financial performance measures to traditional financial metrics.
Visual analytics extends a dashboard by enabling a user to examine data in-depth, re-organize it dynamically, and change information parameters to do “what-if analysis.”
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RECAP
What are the differences between data, information, and knowledge?
How do the structure, quality, and presentation of information influence the nature of the decisions made by business professionals?
How does business intelligence enhance organizational decision making?
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