Chapter & Foundations of Business Intelligence: Databases and Information Management 267 INTERACTIVE SESSION: MANAGEMENT Societe Generale Builds an Intelligent System to Manage Information Flow Societe Generale is France's largest bank and the third largest bank in the European Union. In 2016 the bank reported revenues of €25 billion, and a net income of C4 billion. Societe Generale has offices in 76 countries and more than 33 million custom- ers across the globe. Like many banks in Europe, Societe Generale is still struggling from the near collapse of the global financial system in 2008, and is burdened by a large volume of underperforming and non-performing loans and financial instruments, Extremely low interest rates in the past four years have also reduced the bank's traditional source of revenues, which is lending money to consumers and firms alike, Like many large money-center banks in Europe and the U.S,, Societe Generale has adopted a univer sal banking model, a one-stop shop for whatever its clients want, It operates in three banking segments: retail banking for consumers, international banking to service corporate clients, and investment banking for wealthy clients and other sources of capital like pension funds, insurance firms, and sovereign off- shore funds, Asa global universal bank, Societe Generale sells hundreds of financial products to its customers, and this in curn generates tens of millions of daily trans- actions including account deposits, checks, credit card charges, ATM cash dispensing, financial instru- ‘ment trades, and local payments. ‘These transac tions are stored in over 1,500 files (generally along product lines). These 1,500 files are sent each day to its “back office” operations group for storage and processing, Ukimately, the information in the files is used to update the bank's operational database applications that maintain the general ledger and sub-ledgers. In this sense, banks such as Societe Generale are industrial-scale information processing. factories that are required to deliver bank services and products to customers with minimal errors. But before the main databases are updated, the information streaming into the back office needs to be verified. Why does this basic information need to be verified? As it turns out, the data is often ‘dirty’: record count and the amounts recorded can change as information flows between and across systems. Duplicate files are sometimes created, and sometimes the files needed for a business process are not present, A third problem is ensur- ing the correct information is being produced for downstream applications and the general ledger system in particular, Sometimes, files and records are out of sequence or incomplete, and that causes a downstream application to close down, There are hundreds of downstream applications relying on the transaction data In the past, the process of verification was han- dled manually by hundreds of employees checking files and records, dealing with errors, omissions, and system error messages on the fly, as they occurred. Given the critical nature of the verificx- tion process and the size and complexity of the task, Societe Generale senior management decided to find an automated solution that would capture the. knowledge of its employees and then apply that knowledge to the verification process, which would operate in real time, What Societe Generale needed. ‘was an “intelligent system" to take over the work of many employees, or at least reduce the burden and the inherent chance far errors. After evaluating several vendors, the chose Infogix, a French-based database firm that specializes in running data-intensive business environments, ‘The Infogix Enterprise Data Platform monitors incoming transactions, provides balancing and rec. onciliation and identifies and predicts fraud and cus- tomer behavior ‘The Infogix Platform is a rule-based. system allowing development of complex business rules for validating integrity, ‘To implement this sys- tem, Infogix had to identify the rules and procedures that humans follow can when verifying the data, and then implement those rules in computer code. The firm identified over 220 business rules that employ- ees had invented over many years of experience. With the Infogix platform in operation, transac- tions are verified several times a day, enabling the bank to validate the accuracy of millions of transac tions and about 1,500 files daily. The cost of verifi- cation and data management has been drastically reduced along with error rates and system shut downs, Humans are still needed to handle new situ ations or critical errors the system cannot decide. In the event of critical errors that disrupt the opera- tion of important bank systems, the bank's produc- tion support team swings into action and, using the tools available on the Infogix platform, are able to solve the problem in much less time than with the ‘manual system, Since automating the transaction268 Part Two Information Technology Infrastructure process, the bank has reassigned employees to other tasks or to backing up the automated system. Sources: David Jolly, Société Générale Profit Rises Despive Weak: ines in Investment Banking,” New York Tames, May 4, 2016; “Societe CASE STUDY QUESTIONS 1, Why did Societe Generale's managers decide to develop an automated transaction processing system? Generale Group Results Full Year 2016," Annusl Report, socete ‘generale com, March 15, 2017, Enhancing the Accuracy of Pronto Back Office Information Flow" Infogix com, 2016, Noemie Bsserb, ‘Société Générale Shares Plunge After Profit Warning," Agence France-Presse, February 1, 2016 3. What is the role of human decision makers in the new system? 4. Why did managers select the Infogix platform? 2. Why did managers decide they needed an “intelli gent system?” In what way was the new system “intelligent?” Review Summary 6-4 What are the problems of managing data resources in a traditional fie environment? ‘Traditional file management techniques make it difficult for organizations to keep track of all of the. pieces of data they use in a systematic way and to organize these data so that they can be easily -d. Different functional areas and groups were allowed to develop their own files indepen- dently. Over time, this traditional file management environment creates problems such as data redun- dancy and inconsistency, program-data dependence, inflexibility, poor security, and lack of data sharing and availability. A database management system (DBMS) solves these problems with software that permits centralization of data and data management so that businesses have a single consistent source for all their data needs, Using a DBMS minimizes redundant and inconsistent files. 6-2 What are the major capabilities of DBMS, and why is a relational DBMS so powerful? ‘The principal capabilities of a DBMS include a data definition capability, a dats dictionary capabil- ity, and a data manipulation language. The data definition capability specifies the structure and con- tent of the database. The data dictionary is an automated or manual file that stores information about the data in the database, including names, definitions, formats, and descriptions of data elements, The data manipulation language, such as SOL, is a specialized language for accessing and manipulating the data in the database ‘The relational database has been the primary method for organizing and maintaining data in infor- mation systems because it is so flexible and accessible, It organizes data in two-dimensional tables called relations with rows and cokimns, Each table contains data about an entity and its attributes. Each row represents a record, and each column represents an attribute or field, Each table also con- tains a key field to uniquely identify each record for retrieval or manipulation. Relational database tables can be combined easily to deliver data required by users, provided that any two tables share a common data element. Non-relational databases are becoming popular for managing types of data that can't be handled easily by the relational data model. Both relational and non-relational database prod ucts are available as cloud computing servic Designing a database requires both a logical design and a physical design. The logical design mod- els the database from a business perspective. The organization's data model should reflect its key business processes and decision-making requirements. The process of creating small, stable, flexible, and adaptive data structures rom complex groups of data when designing a relational database is termed normalization. A well-designed relational database will not have many-to-many relationship: and all attributes for a specific entity will only apply to that entity. It will try to enforce referential integrity rules to ensure that relationships between coupled tables remain consistent. An entity- relationship diagram graphically depicts the relationship between entities (tables) in a relational database