UNIT – 3
Database Management & Business Intelligence
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TOPICS
• ORGANIZATION OF DATA
• File Organization Terms & Concepts
• Traditional File Environment/Approach
• Drawbacks of Traditional File Approach
• Database Management Approach
• Concept & Capabilities of Database Management Systems (DBMS)
• Concept of RDBMS
• BUSINESS INTELLIGENCE
• Concept of Big Data and its Challenges
• Business Intelligence (BI) Infrastructure & Concept of BI
• Concept of Data Warehouse & Data Marts 3
• Analytical Tools for Decision Making
IMPORTANCE OF DATA MANAGEMENT IN ORGANIZATION
The qualities of information, i.e. Timely availability, Accuracy &
Relevant are key to decision making.
If the data in information systems are poorly organized and
managed then it could lead to incorrect information and overall
operational inefficiencies.
Hence, management of data is extremely essential.
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FILE ORGANIZATION TERMS AND CONCEPTS
A computer system organizes data in a hierarchy that starts
with bits and bytes and progresses to fields, records, files, and
databases.
Bits = A bit represents the smallest unit of data a computer can
handle.
Byte = A group of bits (a letter, number or symbol).
Field = A grouping of characters into a word, a group of words,
or a complete number (such as a person’s name or age)
Record = A group of related fields, for e.g. as the student’s
name, the course taken, the date, and the grade.
File = A group of records of the same type (students record,
employee record, customer record etc.)
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A record describes an entity.
An entity is a person, place, thing, or event on which one can
store and maintain information. For e.g. Product, Customer,
Inventory, etc.
An Entity is referred to as an object or thing that exists in the
real world. It can be either a living or a non-living component.
Each characteristic or quality describing a particular entity is
called an attribute. For example, Student_ID, Course, Date, and
Grade are attributes of the entity COURSE.
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DATA HIERARCHY
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USE OF TRADITIONAL FILE APPROACH & PROBLEMS
• Traditional or conventional approach for storing files and
computerization of manual system.
• In a file system, data is stored in independent files, each
requiring its own data management programs.
• Decentralized approach was taken where each department
stored and controlled its own data with the help of a data
processing specialist. The main role of a data processing
specialist was to create the necessary computer file
structures, and also manage the data within structures and
design some application programs that create reports based
on file data.
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TRADITIONAL FILE PROCESSING
Image Source: MIS – Laudon KC, Laudon JP)
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PROBLEMS/DRAWBACKS OF TRADITIONAL FILE APPROACH
• Decentralization of Files/Data
• Data Redundancy
• Data Inconsistency
• Structural & Data Dependency
• Poor Data Security & Recovery
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WHAT IS DBMS?
WHAT ARE THE ADVANTAGES OF DBMS?
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DATABASE APPROACH TO DATA MANGEMENT
What is Database (DB) and Database Management System
(DBMS)?
Database is a collection of data organized to serve many applications
efficiently by centralizing the data and controlling redundant data.
Rather than storing data in separate files for each application, data
appears to users as being stored in only one location. A single
database services multiple applications. For example, instead of a
corporation storing employee data in separate information systems
and separate files for personnel, payroll, and benefits, the
corporation could create a single common human resources
database.
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✓The Software that is used to create, update and retrieve data is
known as Database Management System (DBMS).
✓A Database Management System (DBMS) is a collection of programs
that manages the database structure and controls access to the data
stored in the database.
✓A Database Management System (DBMS) is software that permits
an organization to centralize data, manage them efficiently, and
provide access to the stored data by application programs.
✓A Database Management System (DBMS) is defined as the software
system that allows users to define, create, maintain and control
access to the database. DBMS makes it possible for end users to
create, read, update and delete data in database. It is a layer
between programs and data. [[Link]]
Some of the common examples of DBMS are MS Access, Oracle,
Ingress, MySQL.
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ADVANTAGES OF DBMS
• Improved Data Sharing: The DBMS helps create an environment
in which end users have better access to more and better-
managed data. Such access makes it possible for end users to
respond quickly to changes in their environment.
• Minimized Data Inconsistency: Data inconsistency exists when
different versions of the same data appear in different places.
For example, data inconsistency exists when a company’s sales
department stores a sales representative’s name as “V. KOHLI”
and the company’s personnel department stores that same
person’s name as “VIRAT P. KOHLI,” or when the company’s
regional sales office shows the price of a product as $45.95 and
its national sales office shows the same product’s price as
$43.95. The probability of data inconsistency is greatly reduced
in a properly designed database.
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• Better Data Integration: Wider access to well-managed data
promotes an integrated view of the organization’s operations and a
clearer view of the big picture. It becomes much easier to see how
actions in one segment of the company affect other segments.
• Improved Data Access: The DBMS makes it possible to produce
quick answers to ad hoc queries. From a database perspective, a
query is a specific request issued to the DBMS for data
manipulation—for example, to read or update the data. Simply put,
a query is a question, and an ad hoc query is a spur-of-the-moment
question. The DBMS sends back an answer (called the query result
set) to the application.
• Improved Decision Making: Better-managed data and improved
data access make it possible to generate better-quality information,
on which better decisions are based. The quality of the information
generated depends on the quality of the underlying data.
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Prepared By: [Link] Shelat
Source: Cengage Learning
How a DBMS Solves the Problems of the Traditional
File Environment?
✓ Reduces Data Redundancy
✓ Reduces Data Inconsistency
✓ Easy Access and Availability of information
✓ Centralization of Data
✓ Improves Data Security
✓ Data Independency
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WHAT IS RELATIONAL DATABASE MANAGEMENT SYSTEMS (RDBMS)?
The most popular type of DBMS today for PCs as well as for larger
computers and mainframes is the Relational DBMS. Relational
databases represent data as two-dimensional tables (called relations).
✓Relational database design (RDD) models’ information and data into
a set of tables with rows and columns. Each row of a relation/table
represents a record, and each column represents an attribute of data.
The Structured Query Language (SQL) is used to manipulate relational
databases. [[Link]]
Tables may be referred to as files. Each table contains data on an entity
and its attributes.
Microsoft Access is a relational DBMS for desktop systems, whereas
DB2, Oracle Database, and Microsoft SQL Server are relational DBMS
for large mainframes and midrange computers. MySQL is a popular
open source DBMS, and Oracle Database Lite is a DBMS for mobile
computing devices.
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RELATIONAL DATABASE TABLES
Source: MIS – Laudon KC, Laudon JP
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CAPABILITIES OF DATABASE MANAGEMENT SYSTEMS (RDBMS)
A DBMS includes capabilities and tools for organizing, managing,
and accessing the data in the database. The most important are :
Data Definition Capability: It specifies the structure of the content
of the database. It would be used to create database tables and to
define the characteristics of the fields in each table. This information
about the database is stored in data dictionary – which is an
automated or manual file that stores definitions of data elements
and their characteristics.
Data Manipulation Capability: Most DBMS have a specialized
language called a data manipulation language that is used to add,
change, delete, and retrieve the data in the database. The most
prominent language used to manipulate the data is Structured
Query Language or SQL.
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❑USING DATABASES TO IMPROVE BUSINESS
PERFORMANCE AND DECISION MAKING
❑BUSINESS INTELLIGENCE INFRASTRUCTURE
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CONCEPT OF BIG DATA AND ITS CHALLENGES
Rise of Big Data:
Traditional Scenario → Structured Data (Rows/Columns)
Contemporary Scenario → Unstructured / Semi Structured Data (Not
suitable for the relational database to organize/store in the form of
rows/columns)
The term big data can be used to describe these datasets with
volumes so huge that they are beyond the ability of typical DBMS to
capture, store, and analyze.
Businesses are interested in big data because they can reveal more
patterns and interesting anomalies than smaller data sets, with the
potential to provide new insights into customer behavior, weather
patterns, financial market activity, or other phenomena. However, to
derive business value from these data, organizations need new
technologies and tools capable of managing and analyzing non-
traditional data along with their traditional enterprise data.
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CONCEPT OF DATA WAREHOUSE
✓A Data Warehouse is a database that stores current and historical data
of potential interest to decision makers throughout the company.
✓Data Warehouse are central repository of integrated data from one or
more disparate sources.
✓A Data Warehouse is a solution that helps aggregate enterprise data
from multiple sources. It organizes them in a relational database to
support querying, analysis, and eventually data-driven business
decisions.
✓Data warehouses are typically used for business intelligence (BI),
reporting and data analysis.
✓A Data Warehouse System enables an organization to run powerful
analytics on large amounts of data (petabytes and petabytes) in ways
that a standard database cannot. [[Link]]
✓Its analytical capabilities allow organizations to derive valuable
business insights from their data to improve decision-making.
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A Data Warehouse, also called an enterprise data warehouse
(EDW), is an enterprise data platform used for the analysis
and reporting of structured and semi-structured data from
multiple data sources, such as point-of-sale transactions,
marketing automation, customer relationship management,
and more. [[Link]]
A Data Warehouse is a data management system which
aggregates large volumes of data from multiple sources into a
single repository of highly structured and unified historical
data. The centralized data in a warehouse is ready for use to
support business intelligence (BI), data analysis, artificial
intelligence, and machine learning needs to inform decision
making and improve organizational performance. [[Link]]
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OVERVIEW OF DATA WAREHOUSE
Image Source: Data Warehousing (Book by Paulraj Ponniah)
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STRUCTURE OF DATA WAREHOUSE
Image Source: [Link]
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COMPONENTS OF A DATA WAREHOUSE
Image Source: MIS – Book By - Laudon KC, Laudon JP
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Data warehouses make it possible to quickly and easily
analyze business data uploaded from operational systems
such as point-of-sale systems, inventory management
systems, or marketing or sales databases. Data may pass
through an operational data store and require data cleansing
to ensure data quality before it can be used in the data
warehouse for reporting. [[Link]]
Bill Inmon, considered to be the father of data warehousing,
provides the following definition: “A Data Warehouse is a
subject oriented, integrated, nonvolatile, and time variant
collection of data in support of management’s decisions.”
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FEATURES/CHARACTERISTICS OF DATA WAREHOUSE
SUBJECT-ORIENTED DATA
INTEGRATED DATA
TIME-VARIANT DATA
NON-VOLATILE DATA
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What is a Data Mart?
A Data Mart is a subset of a data warehouse in which a
summarized or highly focused portion of the organization’s data
is placed in a separate database for a specific population of
users.
A Data Mart is a simple form of a data warehouse that is
focused on a single subject or line of business, such as sales,
finance, or marketing. [[Link]]
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What is a ETL & ELT?
Extract, Transform, Load (ETL) and Extract, Load, Transform
(ELT) are 2 methods/approaches of loading data into a system.
➢In Extract, Transform, Load (ETL), data is extracted from
source systems, typically transactional systems, transformed
into a format suitable for analysis, and then loaded onto the
data warehouse.
➢In Extract, Load, Transform (ELT), fetches data from various
data sources and loads it directly into the target system. The
system then transforms the data as needed for analysis.
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ANALYTICAL TOOLS FOR DECISION MAKING
What is OLAP?
OLAP (online analytical processing) is software for performing
multidimensional analysis at high speeds on large volumes of
data from unified, centralized data store, such as a data
warehouse.
OLAP tools are designed for multidimensional analysis of data
in a data warehouse, which contains both historical and
transactional data. Common uses of OLAP include data mining
and other business intelligence apps, complex analytical
calculations, and predictive scenarios, as well as business
reporting functions like financial analysis, budgeting, and
forecast planning. [[Link]]
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OLAP, or online analytical processing, is
technology for performing high-speed
complex queries or multidimensional analysis
on large volumes of data in a data
warehouse, data lake or other data
repository. OLAP is used in business
intelligence (BI), decision support, and a
variety of business forecasting and reporting
applications. [[Link]]
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CONCEPT OF BUSINESS INTELLIGENCE
What is Business Intelligence (BI)?
“Business intelligence (BI)” is a term used by hardware and software
vendors and information technology consultants to describe the
infrastructure for warehousing, integrating, reporting, and analyzing
data that comes from the business environment, including big data.
✓Business Intelligence (BI) is a term that “includes the applications,
infrastructure and tools, and best practices that enable access to
and analysis of information” [Gartner].
✓The term Business Intelligence refers to technology, application and
practices for the collection, integration, analysis and presentation of
business information.
✓A contemporary infrastructure for business intelligence has an array
of tools for obtaining useful information from all the different types
of data used by businesses today, including semi-structured and
unstructured big data in vast quantities. These capabilities include
data warehouses and data marts, Hadoop, in-memory computing,
and analytical platforms.
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BUSINESS INTELLIGENCE ENVIRONMENT
There are six elements in this business intelligence
environment:
1) Data from the business environment
2) Business intelligence infrastructure
3) Business analytics toolset
4) Managerial users and methods
5) Delivery platform—MIS, DSS, ESS
6) User interface
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The foundation infrastructure (databases, data warehouses,
data marts, Hadoop, and analytic platforms) collects, stores,
cleans, and makes relevant information available to managers.
Image Source: MIS – Book By - Laudon KC, Laudon JP
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CHARACTERISTICS OF BUSINESS INTELLIGENCE
1. It collects, integrates, stores, analyses and provides access to
business information.
2. It is an environment in which business users get reliable,
secure, consistent, comprehensible, easily manipulated and
timely information.
3. It provides business insights that lead to better, faster, more
relevant decision.
4. It is a combination of skills, processes, technologies,
application and practices.
5. It combines background data along with the reporting tools;
simply an extension of executive support system.
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BENEFITS OF BUSINESS INTELLIGENCE
1. Enhanced Decision Making: BI enables organizations to
make informed decisions based on facts rather than
assumptions or intuition.
2. Increasing Operational Efficiency: BI streamlines
operations by identifying bottlenecks, optimizing process,
and highlighting areas for improvement.
3. Gain Competitive Advantage: BI equips businesses with
actionable insights about market enabling them to make
strategic moves and stay ahead in the competition.
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SELF-STUDY QUESTIONS:
➢ What is Business Analytics?
➢ What is a Balance Scorecard
Method or Balance Scorecard
Framework?
➢ What is Data Visualization?
➢ What is Group Decision Support
Systems (GDSS)?
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REFERENCES & SOURCES
Managing the Digital Firm by K. C. Laudon & J. P. Laudon
Managing Information Technology in the Business Enterprise by O’Brien J
[Link]
System
[Link]
RDMS
[Link]
[Link]
[Link]
[Link]
[Link]
[Link]
[Link] 40
