Management Information

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Chapter 6
Foundations of Business Intelligence: Database
and Information Management

Learning Objectives
1. What are the problems of managing data resources in a traditional file environment
and how are they solved by a database management system?
2. What are the major capabilities of database management systems (DBMS) and why is
a relational DBMS so powerful?
3. What are some important principles of database design?
4. What are the principal tools and technologies for accessing information from
databases to improve business performance and decision making?
5. Why are information policy, data administration, and data quality assurance essential
for managing the firm’s data resources?

Chapter Outline
6.1 Organizing Data in a Traditional File Environment
File Organization Terms and Concepts

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 Problems with the Traditional File Environment
6.2 The Database Approach to Data Management
Database Management Systems
Capabilities of Database Management Systems
Designing Databases
6.3 Using Databases to Improve Business Performance and Decision Making
The Challenge of Big Data
Business Intelligence Infrastructure
Analytical Tools: Relationships, Patterns, Trends
6.4 Managing Data Resources
Establishing an Information Policy
Ensuring Data Quality

Key Terms
The following alphabetical list identifies the key terms discussed in this chapter. The
page number for each key term is provided.

Analytic platform, 226 Field, 211

Attribute, 211 File, 211
Big data, 224 Foreign key, 217
Data administration, 235 Hadoop, 225
Data cleansing, 237 In-memory computing, 226
Data definition, 219 Information policy, 235
Data dictionary, 219 Key field, 217
Data governance, 236 Non-relational database management systems, 217
Data inconsistency, 213 Normalization, 222
Data manipulation language, 220 Online analytical processing (OLAP), 227
Data mart, 225 Primary key, 217
Data mining, 228 Program-data dependence, 214
Data quality audit, 237 Record, 211
Data redundancy, 213 Referential integrity, 223
Data warehouse, 225 Relational DBMS, 216
Database, 214 Sentiment analysis, 230
Database administration, 236 Structured Query Language (SQL), 220
Database management system (DBMS), 214 Text mining, 230
Database server, 233 Tuple, 217
Entity, 211 Web mining, 230
Entity-relationship diagram, 223

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Teaching Suggestions
The essential message of this chapter is the statement that “How businesses store,
organize, and manage their data has a tremendous impact on organizational
effectiveness.” Data have now become central and even vital to an organization’s
survival.

The opening vignette, “Banco de Credito del Peru Banks on Better Data Management,”
describes the difficulties the organization experienced trying to provide its managers and
employees with accurate, current, and complete information. Most of the trouble was a
result of having isolated systems that were time-consuming and expensive to update and
use. Because the data were not consolidated into one system, many times the same piece
of data were entered multiple times without any consistency. That led to conflicts and
inaccurate reporting.

Only by consolidating and integrating the data were the problems resolved. Most of the
problems this organization faced are common throughout the business world. This
chapter explores how to correct and prevent these kinds of situations and how digital
firms can use database technologies to increase their competitive advantages.

Section 6.1, “Organizing Data in a Traditional File Environment,” introduces basic

key terms like field, record, file, database, entity and attribute. Try using a simple
spreadsheet print-out to demonstrate these terms. The section points out the drawbacks
and difficulties organizations experience with traditional methods of file management.
They are: systems grow independently without a company-wide plan; data redundancy
(duplicate data in multiple data files) and data inconsistency (the same attribute may have
different values); program-data dependence, lack of flexibility in delivering information
when it’s needed; poor security, and the lack of being able to share data and have it easily
available to users.

Section 6.2, “The Database Approach to Data Management” This section introduces
students to more file organization terms and concepts. A database management system is
comprised of three components: a data definition language, data dictionary, and data
manipulation language. If you have access to a relational DBMS during class time, you
can demonstrate several of the concepts presented in this section.

Database design and management requirements for database systems are introduced.
Help your students see how a logical design allows them to analyze and understand the
data from a business perspective, while physical design shows how the database is
arranged on direct access storage devices. At this point, you can use the enrollment
process at your university as an example. Have your students prepare a logical design for
the enrollment process. If you have time and as a class activity, ask your students to
prepare an entity-relationship diagram (using Figure 6-11 as a guide), as well as
normalize the data. Your students will need guidance from you to complete this activity,
but it will help them see and understand the logical design process.

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Section 6.3, “Using Databases to Improve Business Performance and Decision
Making” This section focuses on how data technologies are actually used: data
warehouses, data marts, and data mining. It also introduces four new technologies: big
data, Hadoop, and in-memory computing and analytic platforms. Regardless of their
career choice, students will probably use some or all of these in their jobs. Data
warehouses and data marts are critical for those who want to use data mining, which in
turn has many uses in management analysis and business decisions.

Big data refers to the amounts of data captured and analyzed, often in the petabyte and
exabyte range. Typical DBMS systems aren’t able to capture, store, and analyze the
volume of data. Hadoop is an open-source software framework that breaks big data
problems into sub-problems, distributes them to processing nodes, and then combines the
results into data sets.

In-memory computing eliminates bottlenecks that occur with data is retrieved from and
read into traditional, disk-based databases. All data resides entirely in memory and
accelerates processing performance while lowering costs.

Analytic platforms use relational and non-relational technology optimized for large
datasets. Preconfigured hardware-software systems are specifically designed for query
processing and analytics.

Figure 6-12 is an important diagram for illustrating how all these technologies work
together.

Keep in mind as you teach this chapter that managing data resources can be very
technical, but many students will need and want to know the business uses and business
values. In the end, effectively managing data is the goal. Doing it in a way that will
enable your students to contribute to the success of their organization is the reason why
most students are in this course.

Text mining and Web mining are taking on significance as more data and information is
stored in text documents and on the Web. Web mining is divided into three categories:
Web content mining, Web structure mining, and Web usage mining. Each one provides
specific information about patterns in Web data.

Interactive Session: Technology: Big Data, Big Rewards

Case Study Questions:

1. Describe the kinds of “big data” collected by the organizations described in this
case.

British Library: It collects data from typical library resources like books, periodicals,
and newspapers. In addition, it must store and collect data from Web sites that no

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 longer exist but must be preserved for historical purposes. Data from over 6 billion
searches must also be stored.

Law enforcement agencies: Collect data on criminal complaints, national crime

records, and public records.

Vestas Wind Energy: Collects data from 43,000 turbines in 66 countries; collects
location-based data to help determine the best location for turbines; currently stores
2.8 petabytes of data and includes approximately 178 parameters, such as barometric
pressure, humidity, wind direction, temperature, wind velocity, and other company
historical data; plans to add global deforestation metrics, satellite images, geospatial
data, and data on phases of the moon and tides.

Hertz: Gathers data from Web surveys, emails, text messages, Web site traffic
patterns, and data generated at all of Hertz’s 8300 locations in 146 countries.

2. List and describe the business intelligence technologies described in this case.

The British Library and Vestas use Hadoop so it can process large amounts of data
quickly and efficiently. Hertz uses sentiment analysis to determine customer
satisfaction. Law enforcement agencies use Web mining techniques to help determine
potential criminal acts. They also use analytics to predict future crime patterns.

New text-mining software described in the case can shorten data analysis to hours or
minutes and produce better results. Businesses can react faster to solve problems,
satisfy customers, and change work processes. Managers can detect emerging issues
and pinpoint troubled areas of the business at many different managerial levels.
Managers can discover patterns and relationships in the data and summarize the
information more quickly and more easily thereby saving time and money.

3. Why did the companies described in this case need to maintain and analyze big
data? What business benefits did they obtain?

The British Library is able to maintain historical records of events and provide users
with more information about its past. It can now process information requests more
quickly and easily. The technology it uses provides an insight engine that helps
extract, annotate, ad visually analyze vast amounts of unstructured Web data,
delivering the results via a Web browser.

Criminals and criminal organizations are increasingly using the Internet to coordinate
and perpetrate their crimes. New tools allow agencies to analyze data from a wide
array of sources and apply analytics to predict future crime patterns.

Vestas is able to collect more data that can reduce the resolution of its grid patterns
from 17 x 17 miles to 32 x 32 feet to establish exact wind flow patterns at particular
locations. That further increases the accuracy of its turbine placement models.

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 Hertz stores all of its data centrally instead of within each branch, reducing time spent
processing data and improving company response time to customer feedback and
changes in sentiment.

4. Identify three decisions that were improved by using “big data.”

Vestas used its big data to help find the best places to install its wind turbines. It is
able to manage and analyze location and weather data with models that are much
more powerful and precise. The new technology enables the company to forecast
optimal turbine placement in 15 minutes instead of three weeks, saving a month of
development time for a turbine site and enabling customers to achieve a return on
investment much more quickly.

Hertz used it data analysis generated from different sources to determine the cause of
delays at its Philadelphia locations and adjusted staffing levels during peak times and
ensuring a manager was present to resolve any issues.

Law enforcement agencies use their data analysis to predict future crime patterns and
become more proactive in its efforts to fight crime and stop it before it occurs.

5. What kinds of organizations are most likely to need “big data” management and
analytical tools? Why?

Organizations that have an active presence on the Web or on social media sites need
to use big data management and analytical tools to process the numerous unstructured
data that can help them make better, more timely decisions. Businesses that generate
big data from manufacturing, retailing, and customer service need the tools that the
technology can provide.

Interactive Session: Organizations: Controversy Whirls Around the Consumer

Product Safety Database

Case Study Questions

1. What is the value of the CPSC database to consumers, businesses, and the U.S.
government?

Consumers: The database provides the public with access to the full repository of
product safety complaints the agency has received. Users can submit complaints
online directly into the database. Visitors to the database can search for products, read
other complaints, and view safety warnings. Complaints in the database include a
description of the product, the harm or risk from the product, the name of the
manufacturer, contact information, and an affirmation that the submitter is telling the
truth.

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 Businesses: S business can access the database to determine if any of its products are
listed or to follow what consumers are saying about its competitors' products.

U.S. Government: It’s cheaper for the government to have consumers enter the data
rather than its own employees. It provides a consolidated location for all the
information about consumer product complaints. It is expensive though for the
government to monitor and track data input.

2. What problems are raised by this database? Why is it so controversial? Why is

data quality an issue?

The database is open to abuse from customers with an axe to grind, or trial lawyers
seeking to tarnish a product or manufacturer’s reputation for personal gain.
Manufacturing companies and members of Congress oppose the open database
because it could contain inaccurate and misleading information and “fictitious slams”
against products. Competitors could enter false claims against company products in
an effort to tarnish the other company's reputation.

Keeping the database free of inaccurate reports is likely to require more time and
hours than the Consumer Product Safety Commission staff will be able to provide.

3. Name two entities in the CPSC database and describe some of their attributes.

Two possible entities in the database are:

• Products: Attributes could include the name, serial number, model number,
manufacturer, and the year it was manufactured.
• Manufacturer: Attributes could include company name, company headquarters
location, similar products it makes, where its factories are located, and
complaints it has received for other products.

4. When buying a crib, or other consumer product for your family, would you use
this database? Why or why not?

Answers will vary based on personal experiences and preferences. However, it’s
likely this kind of database would prove valuable to those consumers who want an
easy, quick way to research products they are contemplating on purchasing.

Section 6.4, “Managing Data Resources” This section introduces students to some of
the critical management issues surrounding corporate data. Students should realize that
setting up the database is only the beginning of the process. Managing the data is the real
challenge. In fact, the main point is to show how data management has changed and the
reason why data must be organized, accessed easily by those who need it, and protected
from the wrong people accessing, modifying, or harming the data.

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Developing a database environment requires much more than selecting database
technology. It requires a formal information policy governing the maintenance,
distribution, and use of information in the organization. The organization must also
develop a data administration function and a data-planning methodology. Data planning
may need to be performed to make sure that the organization’s data model delivers
information efficiently for its business processes and enhances organizational
performance. There is political resistance in organizations to many key database
concepts, especially the sharing of information that has been controlled exclusively by
one organizational group. Data governance, with special emphasis on promoting privacy,
security, data quality, and compliance with government regulations is becoming more
important. If you have time, you might have students brainstorm on a data governance
policy they would like to see implemented in your university. Creating a database
environment is a long-term endeavor requiring large up-front investments and
organizational change.

Review Questions
1. What are the problems of managing data resources in a traditional file
environment and how are they solved by a database management system?

List and describe each of the components in the data hierarchy.

Figure 6-1 shows a sample data hierarchy. The data hierarchy includes bits, bytes,
fields, records, files, and databases. Data are organized in a hierarchy that starts with
the bit, which is represented by either a 0 (off) or a 1 (on). Bits are grouped to form a
byte that represents one character, number, or symbol. Bytes are grouped to form a
field, such as a name or date, and related fields are grouped to form a record. Related
records are collected to form files, and related files are organized into a database.

Define and explain the significance of entities, attributes, and key fields.

• Entity is a person, place, thing, or event on which information is obtained.

• Attribute is a piece of information describing a particular entity.
• Key field is a field in a record that uniquely identifies instances of that unique
record so that it can be retrieved, updated, or sorted. For example, a person’s
name cannot be a key because there can be another person with the same
name, whereas a social security number is unique. Also a product name may
not be unique but a product number can be designed to be unique.

List and describe the problems of the traditional file environment.

Problems with the traditional file environment include data redundancy and
confusion, program-data dependence, lack of flexibility, poor security, and lack of
data sharing and availability. Data redundancy is the presence of duplicate data in
multiple data files. In this situation, confusion results because the data can have

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 different meanings in different files. Program-data dependence is the tight
relationship between data stored in files and the specific programs required to update
and maintain those files. This dependency is very inefficient, resulting in the need to
make changes in many programs when a common piece of data, such as the zip code
size, changes. Lack of flexibility refers to the fact that it is very difficult to create new
reports from data when needed. Ad-hoc reports are impossible to generate; a new
report could require several weeks of work by more than one programmer and the
creation of intermediate files to combine data from disparate files. Poor security
results from the lack of control over data. Data sharing is virtually impossible because
it is distributed in so many different files around the organization.

Define a database and a database management system and describe how it solves
the problems of a traditional file environment.

A database is a collection of data organized to service many applications efficiently

by storing and managing data so that they appear to be in one location. It also
minimizes redundant data. A database management system (DBMS) is special
software that permits an organization to centralize data, manage them efficiently, and
provide access to the stored data by application programs.

A DBMS can reduce the complexity of the information systems environment, reduce
data redundancy and inconsistency, eliminate data confusion, create program-data
independence, reduce program development and maintenance costs, enhance
flexibility, enable the ad hoc retrieval of information, improve access and availability
of information, and allow for the centralized management of data, their use, and
security.

2. What are the major capabilities of DBMS and why is a relational DBMS so
powerful?

Name and briefly describe the capabilities of a DBMS.

A DBMS includes capabilities and tools for organizing, managing, and accessing the
data in the database. The principal capabilities of a DBMS include data definition
language, data dictionary, and data manipulation language.
• The data definition language specifies the structure and content 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 SQL, is a specialized language for
accessing and manipulating the data in the database.

Define a relational DBMS and explain how it organizes data.

The relational database is the primary method for organizing and maintaining data in

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 information systems. It organizes data in two-dimensional tables with rows and
columns called relations. 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 contains a key field to uniquely identify each record for retrieval or
manipulation.

List and describe the three operations of a relational DBMS.

In a relational database, three basic operations are used to develop useful sets of data:
select, project, and join.
• Select operation creates a subset consisting of all records in the file that meet
stated criteria. In other words, select creates a subset of rows that meet certain
criteria.
• Join operation combines relational tables to provide the user with more
information that is available in individual tables.
• Project operation creates a subset consisting of columns in a table, permitting
the user to create new tables that contain only the information required.

Explain why non-relational databases are useful.

There are four main reasons for the rise in non-relational databases: cloud computing,
unprecedented data volumes, massive workloads for Web services, and the need to
store new types of data. These systems use more flexible data models and are
designed for managing large data sets across distributed computing networks. They
are easy to scale up and down based on computing needs.

They can process structured and unstructured data captured from Web sites, social
media, graphics. Traditional relational databases aren’t able to process data from most
of those sources. Non-relational databases can also accelerate simple queries against
large volumes of structured and unstructured data. There’s no need to pre-define a
formal database structure or change that definition if new data are added later.

3. What are some important database design principles?

Define and describe normalization and referential integrity and explain how
they contribute to a well-designed relational database.

Normalization is the process of creating small stable data structures from complex
groups of data when designing a relational database. Normalization streamlines
relational database design by removing redundant data such as repeating data groups.
A well-designed relational database will be organized around the information needs
of the business and will probably be in some normalized form. A database that is not
normalized will have problems with insertion, deletion, and modification.

Referential integrity rules ensure that relationships between coupled tables remain
consistent. When one table has a foreign key that points to another table, you may not

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 add a record to the table with the foreign key unless there is a corresponding record in
the linked table.

Define and describe an entity-relationship diagram and explain its role in

database design.

Relational databases organize data into two-dimensional tables (called relations) with
columns and rows. Each table contains data on an entity and its attributes. An entity-
relationship diagram graphically depicts the relationship between entities (tables) in a
relational database. A well-designed relational database will not have many-to-many
relationships, and all attributes for a specific entity will only apply to that entity.
Entity-relationship diagrams help formulate a data model that will serve the business
well. The diagrams also help ensure data are accurate, complete, and easy to retrieve.

4. What are the principal tools and technologies for accessing information from
databases to improve business performance and decision making?

Define big data and describe the technologies for managing and analyzing it.

Traditional databases rely on neatly organized content into rows and columns. Much
of the data collected nowadays by companies don’t fit into that mold.

Big data describes datasets with volumes so huge they are beyond the ability of
typical database management system to capture, store, and analyze. The term doesn’t
refer to any specific quantity of data but it’s usually measured in the petabyte and
exabyte range. It includes structured and unstructured data captured from Web traffic,
email messages, and social media content like tweets and status messages. It also
includes machine-generated data from sensors.

Big data contains more patterns and interesting anomalies than smaller data sets. That
creates the potential to determine new insights into customer behavior, weather
patterns, financial market activity and other phenomena.

Hadoop: Open-source software framework that enables distributed parallel processing

of huge amounts of data across inexpensive computers. The software breaks huge
problems into smaller ones, processes each one on a distributed network of smaller
computers, and then combines the results into a smaller data set that is easier to
analyze. It uses non-relational database processing and structured, semi-structured
and unstructured data.

In-memory computing: rather than using disk-based database software platforms, this
technology relies primarily on a computer’s main memory for data storage. It
eliminates bottlenecks that result from retrieving and reading data in a traditional
database and shortens query response times. Advances in contemporary computer
hardware technology makes in-memory processing possible.

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Analytic platforms: Uses both relational and non-relations technology that’s
optimized for analyzing large datasets. They feature preconfigured hardware-software
system designed for query processing and analytics.

List and describe the components of a contemporary business intelligence

infrastructure.

Business intelligence (BI) infrastructures include an array of tools for obtaining

useful information from all the different types of data used by businesses today,
including semi-structure and unstructured big data in vast quantities. Data
warehouses, data marts, Hadoop, in-memory processing, and analytical platforms are
all included in BI infrastructures.

Powerful tools are available to analyze and access information that has been captured
and organized in data warehouses and data marts. These tools enable users to analyze
the data to see new patterns, relationships, and insights that are useful for guiding
decision making. These tools for consolidating, analyzing, and providing access to
vast amounts of data to help users make better business decisions are often referred to
as business intelligence. Principal tools for business intelligence include software for
database query and reporting tools for multidimensional data analysis and data
mining.

Describe the capabilities of online analytical processing (OLAP).

Data warehouses support multidimensional data analysis, also known as online

analytical processing (OLAP), enables users to view the same data in different ways
using multiple dimensions. Each aspect of information represents a different
dimension.

OLAP represents relationships among data as a multidimensional structure, which

can be visualized as cubes of data and cubes within cubes of data, enabling more
sophisticated data analysis. OLAP enables users to obtain online answers to ad hoc
questions in a fairly rapid amount of time, even when the data are stored in very large
databases. Online analytical processing and data mining enable the manipulation and
analysis of large volumes of data from many perspectives, for example, sales by item,
by department, by store, by region, in order to find patterns in the data. Such patterns
are difficult to find with normal database methods, which is why a data warehouse
and data mining are usually parts of OLAP.

Define data mining, describing how it differs from OLAP and the types of
information it provides.

Data mining provides insights into corporate data that cannot be obtained with OLAP
by finding hidden patterns and relationships in large databases and inferring rules
from them to predict future behavior. The patterns and rules are used to guide
decision making and forecast the effect of those decisions. The types of information

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obtained from data mining include associations, sequences, classifications, clusters,
and forecasts.

Explain how text mining and Web mining differ from conventional data mining.

Conventional data mining focuses on data that have been structured in databases and
files. Text mining concentrates on finding patterns and trends in unstructured data
contained in text files. The data may be in email, memos, call center transcripts,
survey responses, legal cases, patent descriptions, and service reports. Text mining
tools extract key elements from large unstructured data sets, discover patterns and
relationships, and summarize the information.

Web mining helps businesses understand customer behavior, evaluate the

effectiveness of a particular Web site, or quantify the success of a marketing
campaign. Web mining looks for patterns in data through:
• Web content mining: Extracting knowledge from the content of Web pages.
• Web structure mining: Examining data related to the structure of a particular
Web site.
• Web usage mining: Examining user interaction data recorded by a Web server
whenever requests for a Web site’s resources are received

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 Describe how users can access information from a company’s internal databases
through the Web.

Conventional databases can be linked via middleware to the Web or a Web interface
to facilitate user access to an organization’s internal data. Web browser software on a
client PC is used to access a corporate Web site over the Internet. The Web browser
software requests data from the organization’s database, using HTML commands to
communicate with the Web server. Because many back-end databases cannot
interpret commands written in HTML, the Web server passes these requests for data
to special middleware software that then translates HTML commands into SQL so
that they can be processed by the DBMS working with the database. The DBMS
receives the SQL requests and provides the required data. The middleware transfers
information from the organization’s internal database back to the Web server for
delivery in the form of a Web page to the user. The software working between the
Web server and the DBMS can be an application server, a custom program, or a
series of software scripts.

5. Why are information policy, data administration, and data quality assurance
essential for managing the firm’s data resources?

Describe the roles of information policy and data administration in information

management.

An information policy specifies the organization’s rules for sharing, disseminating,

acquiring, standardizing, classifying, and inventorying information. Information
policy lays out specific procedures and accountabilities, identifying which users and
organizational units can share information, where information can be distributed, and
who is responsible for updating and maintaining the information.

Data administration is responsible for the specific policies and procedures through
which data can be managed as an organizational resource. These responsibilities
include developing information policy, planning for data, overseeing logical database
design and data dictionary development, and monitoring how information systems
specialists and end-user groups use data.

In large corporations, a formal data administration function is responsible for

information policy, as well as for data planning, data dictionary development, and
monitoring data usage in the firm.

Explain why data quality audits and data cleansing are essential.

Data that are inaccurate, incomplete, or inconsistent create serious operational and
financial problems for businesses because they may create inaccuracies in product
pricing, customer accounts, and inventory data, and lead to inaccurate decisions about
the actions that should be taken by the firm. Firms must take special steps to make
sure they have a high level of data quality. These include using enterprise-wide data

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 standards, databases designed to minimize inconsistent and redundant data, data
quality audits, and data cleansing software.

A data quality audit is a structured survey of the accuracy and level of completeness
of the data in an information system. Data quality audits can be performed by
surveying entire data files, surveying samples from data files, or surveying end users
for their perceptions of data quality.

Data cleansing consists of activities for detecting and correcting data in a database
that are incorrect, incomplete, improperly formatted, or redundant. Data cleansing not
only corrects data but also enforces consistency among different sets of data that
originated in separate information systems.

Discussion Questions
1. It has been said that there is no bad data, just bad management. Discuss the
implications of this statement.

Just because a company has a lot of data doesn’t mean it has a lot of information.
Rows and columns of numbers don’t mean much if a company cannot use the data to
its competitive advantage. If data are poorly organized and maintained, a business may
use them poorly and make bad decisions. For instance, if ABC Widgets, Inc., doesn’t
maintain accurate supply costs, it may over- or under-budget its costs for making
purple widgets. Financial reports become useless if that’s the case. If the company
doesn’t maintain accurate customer records, it may end up shipping products to the
wrong address at the wrong time. That could result in losing the customer account. If
the company doesn’t mine its data to find out that customers in the Southwest want
different products at different times than customers in the Northeast, it could lose
valuable sales.

Good data requires good management of it.

2. To what extent should end users be involved in the selection of a database

management system and database design?

End users should be integral players in the selection of a database management

system and the database design. Developing a database environment requires much
more than just selecting the technology. It requires a change in the organization’s
attitude toward information. The organization must develop a data administration
function and a data planning methodology. End-user involvement can be instrumental
in mitigating the political resistance organizations may have to many key database
concepts, especially to sharing information that has been controlled exclusively by
one organizational group.

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3. What are the consequences of an organization not having an information policy?

Without an information policy anyone could:

• Reorganize data.
• Maintain it in non-conforming ways that would make it difficult to use the
data throughout the organization.
• View data even if their job didn’t require it—that leads to data compromise,
misuse, and abuse.
• Change data even if they don’t have a viable reason to.

Well-constructed information policies specify the rules for sharing, disseminating,

acquiring, standardizing, classifying, and inventorying information. Information
policies lay out specific procedures and accountabilities, identifying which users and
units can share information, where information can be distributed, and who is
responsible for updating and maintaining the information. Overall, information
policies can protect one of an organization’s most valuable resources.

Hands-On MIS Projects

Management Decision Problems

1. Emerson process management: The data warehouse was full of inaccurate and
redundant data gathered from numerous transaction processing systems. The design
team assumed all users would enter data the same way. Users actually entered data in
multiple ways. Assess the potential business impact of these data quality problems.
What decisions have to be made and steps taken to reach a solution?

Managers and employees can’t make accurate and timely decisions about customer
activity because of inaccurate and redundant data. The company could be wasting
resources pursuing customers it shouldn’t and neglecting its best customers. The
company could be experiencing financial losses resulting from the inaccurate data.

Managers, employees, and data administrators need to identify and correct the faulty
data and then establish better routines for editing data when it’s entered. The
company should perform a data quality audit by surveying entire data files, surveying
samples from data files, or surveying end users for perceptions of data quality. The
company needs to perform data cleansing operations to correct errors and enforce
consistency among the different sets of data at their origin.

2. Industrial supply company: The company wants to create a single data warehouse
by combining several different systems. The sample files from the two systems that
would supply the data for the data warehouse contain different data sets.

1. What business problems are created by not having these data in a single standard
format?

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 Managers are unable to make good decisions about the company’s sales and
products because of inconsistent data. Managers can’t determine which products
are selling the best world-wide; they can only determine product sales by region.

2. How easy would it be to create a database with a single standard format that could
store the data from both systems? Identify the problems that would have to be
addressed.

It may not be too hard to create a database with a single standard format if the
company used middleware to pull both data sets into the consolidated database.
The company should use specialized data-cleansing software that would
automatically survey data files, correct errors in the data, and integrate the data in
a consistent company-wide format. Problems that may occur would stem from
inconsistent data names like the Territory and Customer ID in the old sets and
data element names like Division in the new set. Data administrators, managers,
and employees may have to track the data conversion and manually convert some
data.

3. Should the problems be solved by database specialist or general business

managers? Explain.

Both the database specialist and general business managers should help solve the
problems. Data administrators are responsible for developing information policy,
planning for data, overseeing logical database design and data dictionary
development, and monitoring how information system specialists and end-user
groups use data. However, end-users and business managers have the final
decision-making authority and responsibility for the data.

4. Who should have the authority to finalize a single company-wide format for this
information in the data warehouse?

Owners and managers are the only ones who have the authority to finalize the
format for the information in the data warehouse. They could develop an
information policy that specifies the organization’s rules for sharing,
disseminating, acquiring, standardizing, classifying, and inventorying
information.

Achieving Operational Excellence, Building a Relational Database for Inventory

Management

Software skills: Database design, querying and reporting

Business skills: Inventory management

This exercise requires that students know how to create queries and reports using
information from multiple tables. The solutions provided were created using the query

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wizard and report wizard capabilities of Access. Students can, of course, create more
sophisticated reports if they wish.

The answers to the following questions can be found in the Microsoft Access File named:
MIS13ch06solutionfile.mdb.

1. Prepare a report that identifies the five most expensive bicycles. The report should list
the bicycles in descending order from most expensive to lease expensive, the quantity
on hand for each, and the markup percentage for each.

2. Prepare a report that lists each supplier, its products, their quantities on hand, and
associated reorder levels. The report should be sorted alphabetically by supplier.
Within each supplier category, the products should be sorted alphabetically.

3. Prepare a report listing only the bicycles that are low in stock and need to be
reordered. The report should provide supplier information for the items identified.

4. Write a brief description of how the database could be enhanced to further improve
management of the business. What tables or fields should be added? What additional
reports would be useful?

Improving Decision Making: Searching Online Databases for Overseas Business

Resources

Software skills: Online databases

Business skills: Researching services for overseas operations

List the companies you would contact to interview on your trip to determine
whether they can help you with these and any other functions you think vital to
establishing your office.

Student answers will vary based on the companies they choose to contact.

Rate the databases you used for accuracy of name, completeness, ease-of-use, and
general helpfulness.

The U.S. Department of Commerce Web site contains a fair amount of economic
information. However, it may be simpler to direct your students to go to www.aol.com.
The Web site for the Nationwide Business Directory of Australia is
www.nationwide.com.au.

What does this exercise tell you about the design of databases?

Students may not understand that the World Wide Web is one massive data warehouse,
but in nontechnical terms that is exactly what it is. Remind them of this when they are

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completing this assignment. This assignment may best be accomplished in groups, where
they can consolidate their findings into a written or oral presentation.

Video Cases
You will find a video case illustrating some of the concepts in this chapter on the Laudon
Web site at www.pearsonhighered.com/laudon along with questions to help you
analyze the case.

Collaboration and Teamwork: Identifying Entities and Attributes in An

Online Database

With your team of three or four students, select an online database to explore, such
as AOL Music, iGo.com or the Internet Movie Database. Explore one of these Web
sites to see what information it provides. Then list the entities and attributes that the
company running the Web site must keep track of in its databases. Diagram the
relationship between the entities you have identified. If possible, use Google Sites to
post links to Web pages, team communication announcements, and work
assignments; to brainstorm; and to work collaboratively on project documents. Try
to use Google Docs to develop a presentation of your findings for the class.

There are hundreds of Internet Movie Databases so students will have to select the one
that interests them. The Web sites for AOL Music and iGo.com are:

http://music.aol.com/
http://igo.com/

In their analysis, students should explain that many of these sites use the same entities
and attributes to keep track of their data. Some of the entities that AOL Music tracks
include artists, videos, songs, radio, pictures, news, lyrics, and concerts. The Web site
tracks the following attributes for the artist entity: popularity ranking of each artist,
number of people that have viewed a particular album by the artist, the genre (country,
pop, rock, etc.), a biography, who the artist is most influenced by, photos, videos, all the
albums the artist has published, lyrics of each song, and ringtones users can send to their
cellphones.

Case Study: Asking the Customer by Asking the Database

1. Why would a customer database be so useful for the companies described in this
case? What would happen if these companies had not kept their customer data
in databases?

Monster uses personalized email, direct mail, social engagement, and prioritized
telemarketing using IBM’s Unica enterprise marketing management tools. The
database maintains data on when the email campaigns ran, email recipients, who
responded to the email messages, and who clicked through to its Web site from the

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 emails. The technology generates mailing lists based on certain criteria that promise
greater returns on marketing efforts.

By not using these tools Monster would probably waste a lot of its marketing dollars
targeting customers who typically wouldn’t respond to its advertising efforts.

Diapers.com began its business without any historical data upon which it could mine
its best, most profitable customers. Rather, it relied on first-hand knowledge of
pregnant women and what products they are most interested in. Over time, the
company gathered sales data and demographic information about its customers and
began using predictive analytics to calculate how much each buyer will spend over
that person’s lifetime as a customer. The analytic data drive the company’s marketing
budget for different customer demographics.

If the company didn’t use proper data analysis it would use scarce marketing dollars
trying to attract customers that would not return a profit.

Target retail chain uses predictive analysis to incorporate scientific findings about
habit formation. It gathers data about customer coupon and credit card use, refunds,
surveys, email responses, Web site visits, or calls to customer help lines. Data shows
that 45 percent of choices people make every day are based on habits rather than
conscious decision-making. However, when a customer makes a major life change,
like moving or switching jobs, their shopping habits become more flexible and open
to intervention. It’s helpful to Target to know when those events happen so the
retailer can push new products to the customer.

Without the data analysis Target could miss opportunities to market new products to
customers or to increase its sales of regularly purchased products.

2. How did better data management and analytics improve each company's
business performance? Give examples of two decisions that were improved by
mining these customer databases.

Monster’s sales force targets prioritized telemarketing follow-up calls to customers

who have opened and clicked on more than one email knowing that the customer is
probably more receptive to a sales pitch because he has shown interest in the
company’s services.

Diapers.com uses its data to determine which customers are more likely to continue
purchasing products through their lifetime. A customer generally costs the company
$40 to acquire, but that person would contribute an average of $70 to the company’s
bottom line over the lifetime of purchases from the company. Not knowing which
customers are the most profitable could have a serious detrimental effect on the
company’s profit margins.

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3. Are there any ethical issues raised by mining customer databases? Explain your
answer.

Sometimes companies can learn too much about customers and end up making them
feel their privacy has been compromised. That’s what happened when Target mined
its data so closely that it could predict when a woman became pregnant. Rather than
making blatant sales pitches to potential customers and increasing customer concerns
over privacy issues, it “hides” the knowledge by including advertisements for
products other than what a pregnant woman is most interested in.

Concerns over privacy issues are increasing with the more sophisticated data mining
and analysis tools available to marketers. So while companies may know quite a bit
about their customers they may not want to exploit it too much and turn customers
away.

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