1. Data: Business Intelligence Chapter 6 McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter 6 6-2 CHAPTER OVERVIEW SECTION 6.1 – Data, Information, Databases  The Business Benefits of High-Quality Information  Storing Information Using a Relational Database Management System  Using a Relational Database for Business Advantages  Driving Websites with Data SECTION 6.2 – Business Intelligence  The Business Benefits of Data Warehousing  Performing Business Analysis with Data Marts  Uncovering Trends and Patterns with Data Mining  Supporting Decisions with Business Intelligence

3. Chapter 6 6-3 SECTION 6.1 DATA, INFORMATION, AND DATABASES

4. Chapter 6 6-4 LEARNING OUTCOMES 1. Explain the four primary traits that determine the value of information 2. Describe a database, a database management system, and the relational database model 3. Identify the business advantages of a relational database 4. Explain the business benefits of a data-driven website

5. Chapter 6 6-5 THE BUSINESS BENEFITS OF HIGH- QUALITY INFORMATION Information is everywhere in an organization Employees must be able to obtain and analyze the many different levels, formats, and granularities of organizational information to make decisions Successfully collecting, compiling, sorting, and analyzing information can provide tremendous insight into how an organization is performing

6. Chapter 6 6-6 THE BUSINESS BENEFITS OF HIGH- QUALITY INFORMATION Levels, Formats, and Granularities of Information

7. Chapter 6 6-7 Information Type: Transactional and Analytical Transactional information – Encompasses all of the information contained within a single business process or unit of work, and its primary purpose is to support the performing of daily operational tasks Analytical information – Encompasses all organizational information, and its primary purpose is to support the performing of managerial analysis tasks

8. Chapter 6 6-8 Information Type: Transactional and Analytical

9. Chapter 6 6-9 Information Timeliness Timeliness is an aspect of information that depends on the situation  Real-time information – Immediate, up-to-date information  Real-time system – Provides real-time information in response to requests

10. Chapter 6 6-10 Information Quality Business decisions are only as good as the quality of the information used to make the decisions You never want to find yourself using technology to help you make a bad decision faster

11. Chapter 6 6-11 Information Quality Characteristics of High-quality Information  Accurate  Complete  Consistent  Unique  Timely

12. Chapter 6 6-12 Information Quality Low Quality Information Example

13. Chapter 6 6-13 Understanding the Costs of Using Low-Quality Information The four primary sources of low-quality information include 1. Customers intentionally enter inaccurate information to protect their privacy 2. Different entry standards and formats 3. Operators enter abbreviated or erroneous information by accident or to save time 4. Third party and external information contains inconsistencies, inaccuracies, and errors

14. Chapter 6 6-14 Understanding the Costs of Using Low-Quality Information Potential business effects resulting from low- quality information include  Inability to accurately track customers  Difficulty identifying valuable customers  Inability to identify selling opportunities  Marketing to nonexistent customers  Difficulty tracking revenue  Inability to build strong customer relationships

15. Chapter 6 6-15 Understanding the Benefits of Good Information High-quality information can significantly improve the chances of making a good decision Good decisions can directly impact an organization's bottom line

16. Chapter 6 6-16 STORING INFORMATION IN A RELATIONAL DATABASE Information is everywhere in an organization Information is stored in databases  Database – maintains information about various types of objects (inventory), events (transactions), people (employees), and places (warehouses)

17. Chapter 6 6-17 STORING INFORMATION IN A RELATIONAL DATABASE Database management systems (DBMS) – Allows users to create, read, update, and delete data in a relational database

18. Chapter 6 6-18 STORING INFORMATION IN A RELATIONAL DATABASE Data element – The smallest or basic unit of information Data model – Logical data structures that detail the relationships among data elements using graphics or pictures Metadata – Provides details about data Data dictionary – Compiles all of the metadata about the data elements in the data model

19. Chapter 6 6-19 Storing Data Elements in Entities and Attributes Entity – A person, place, thing, transaction, or event about which information is stored  The rows in a table contain entities Attribute (field, column) – The data elements associated with an entity  The columns in each table contain the attributes Record – A collection of related data elements

20. Chapter 6 6-20 Creating Relationships Through Keys Primary keys and foreign keys identify the various entities (tables) in the database  Primary key – A field (or group of fields) that uniquely identifies a given entity in a table  Foreign key – A primary key of one table that appears an attribute in another table and acts to provide a logical relationship among the two tables

21. Chapter 6 6-21 USING A RELATIONAL DATABASE FOR BUSINESS ADVANTAGES Database advantages from a business perspective include  Increased flexibility  Increased scalability and performance  Reduced information redundancy  Increased information integrity (quality)  Increased information security

22. Chapter 6 6-22 Increased Flexibility A well-designed database should  Handle changes quickly and easily  Provide users with different views  Have only one physical view o Physical view – Deals with the physical storage of information on a storage device  Have multiple logical views o Logical view – Focuses on how individual users logically access information to meet their own particular business needs

23. Chapter 6 6-23 Increased Scalability and Performance A database must scale to meet increased demand, while maintaining acceptable performance levels  Scalability – Refers to how well a system can adapt to increased demands  Performance – Measures how quickly a system performs a certain process or transaction

24. Chapter 6 6-24 Reduced Data Redundancy Databases reduce data redundancy  Data redundancy – The duplication of data or storing the same information in multiple places Inconsistency is one of the primary problems with redundant information

25. Chapter 6 6-25 Increase Information Integrity (Quality) Information integrity – measures the quality of information Integrity constraint – rules that help ensure the quality of information  Relational integrity constraint  Business-critical integrity constraint

26. Chapter 6 6-26 Increased Information Security Information is an organizational asset and must be protected Databases offer several security features  Password – Provides authentication of the user  Access level – Determines who has access to the different types of information  Access control – Determines types of user access, such as read-only access

27. Chapter 6 6-27 DRIVING WEBSITES WITH DATA Data-driven websites – An interactive website kept constantly updated and relevant to the needs of its customers using a database

28. Chapter 6 6-28 DRIVING WEBSITES WITH DATA

29. Chapter 6 6-29 DRIVING WEBSITES WITH DATA Data-driven website advantages  Easy to manage content  Easy to store large amounts of data  Easy to eliminate human errors

30. Chapter 6 6-30 DRIVING WEBSITES WITH DATA

31. Chapter 6 6-31 SECTION 6.2 BUSINESS INTELLIGENCE

32. Chapter 6 6-32 LEARNING OUTCOMES 5. Define a data warehouse and provide a few reasons it can make a manager more effective 6. Explain ETL and the role of a data mart in business 7. Define data mining and explain the three common forms for mining structured and unstructured data 8. Identify the advantages of using business intelligence to support managerial decision making

33. Chapter 6 6-33 THE BUSINESS BENEFITS OF DATA WAREHOUSING Data warehouses extend the transformation of data into information In the 1990s, executives became less concerned with the day-to-day business operations and more concerned with overall business functions The data warehouse provided the ability to support decision making without disrupting the day-to-day operations

34. Chapter 6 6-34 THE BUSINESS BENEFITS OF DATA WAREHOUSING Data warehouse – A logical collection of information – gathered from many different operational databases – that supports business analysis activities and decision-making tasks The primary purpose of a data warehouse is to aggregate information throughout an organization into a single repository for decision-making purposes

35. Chapter 6 6-35 PERFORMING BUSINESS ANALYSIS WITH DATA MARTS Extraction, transformation, and loading (ETL) – A process that extracts information from internal and external databases, transforms the information using a common set of enterprise definitions, and loads the information into a data warehouse Data mart – Contains a subset of data warehouse information

36. Chapter 6 6-36 PERFORMING BUSINESS ANALYSIS WITH DATA MARTS

37. Chapter 6 6-37 Multidimensional Analysis Databases contain information in a series of two-dimensional tables In a data warehouse and data mart, information is multidimensional; it contains layers of columns and rows  Dimension – A particular attribute of information  Cube – Common term for the representation of multidimensional information

38. Chapter 6 6-38 Multidimensional Analysis Cubes of Information

39. Chapter 6 6-39 Information Cleansing or Scrubbing An organization must maintain high-quality data in the data warehouse Information cleansing or scrubbing – A process that weeds out and fixes or discards inconsistent, incorrect, or incomplete information

40. Chapter 6 6-40 Information Cleansing or Scrubbing Contact Information in an Operational System

41. Chapter 6 6-41 Information Cleansing or Scrubbing Standardizing Customer Name from Operational Systems

42. Chapter 6 6-42 Information Cleansing or Scrubbing Information Cleansing Example

43. Chapter 6 6-43 Information Cleansing or Scrubbing Cost of Accurate and Complete Information

44. Chapter 6 6-44 UNCOVERING TRENDS AND PATTERNS WITH DATA MINING Data mining – The process of analyzing data to extract information not offered by the raw data alone Data-mining tools – use a variety of techniques to find patterns and relationships in large volumes of information  Classification  Estimation  Affinity grouping  Clustering

45. Chapter 6 6-45 UNCOVERING TRENDS AND PATTERNS WITH DATA MINING Structured data – Data already in a database or a spreadsheet Unstructured data – Data does not exist in a fixed location and can include text documents, PDFs, voice messages, emails Text mining – Analyzes unstructured data to find trends and patterns in words and sentences Web mining – Analyzes unstructured data associated with websites to identify consumer behavior and website navigation

46. Chapter 6 6-46 UNCOVERING TRENDS AND PATTERNS WITH DATA MINING Common forms of data-mining analysis capabilities include  Cluster analysis  Association detection  Statistical analysis

47. Chapter 6 6-47 Cluster Analysis Cluster analysis – A technique used to divide an information set into mutually exclusive groups such that the members of each group are as close together as possible to one another and the different groups are as far apart as possible

48. Chapter 6 6-48 Association Detection Association detection – Reveals the relationship between variables along with the nature and frequency of the relationships  Market basket analysis

49. Chapter 6 6-49 Statistical Analysis Statistical analysis – Performs such functions as information correlations, distributions, calculations, and variance analysis  Forecast – Predictions made on the basis of time-series information  Time-series information – Time- stamped information collected at a particular frequency

50. Chapter 6 6-50 The Problem: Data Rich, Information Poor Businesses face a data explosion as digital images, email in-boxes, and broadband connections doubles by 2010 The amount of data generated is doubling every year Some believe it will soon double monthly

51. Chapter 6 6-51 The Solution: Business Intelligence Improving the quality of business decisions has a direct impact on costs and revenue BI enables business users to receive data for analysis that is:  Reliable  Consistent  Understandable  Easily manipulated

52. Chapter 6 6-52 The Solution: Business Intelligence BI Can Answer Tough Questions