CHAPTER 6

DATABASES
AND DATA
WAREHOUSES

Opening Case
Searching for
Revenue - Google

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Reserved
 6-2

Chapter Six Overview

• SECTION 6.1 – DATABASE FUNDAMENTALS
– Understanding Information
– Database Fundamentals
– Database Advantages
– Relational Database Fundamentals
– Database Management Systems
– Integrating Data Among Multiple Databases

• SECTION 6.2 – DATA WARAEHOUSE FUNDAMENTALS

– Accessing Organizational Information
– History of Data Warehousing
– Data Warehouse Fundamentals
– Business Intelligence
– Data Mining
 SECTION 6.1

DATABASE
FUNDAMENTALS

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Reserved
 6-4

LEARNING OUTCOMES
1. List, describe, and provide an example of
each of the five characteristics of high quality
information

2. Define the relationship between a database

and a database management system

3. Describe the advantages an organization can

gain by using a database.
 6-5

LEARNING OUTCOMES
4. Define the fundamental concepts of the
relational database model

5. Describe the role and purpose of a database

management system and list the four
components of a database management
system

6. Describe the two primary methods for

integrating information across multiple
databases
 6-6

UNDERSTANDING 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
 6-7

Information Quality
• Business decisions are only as good as the
quality of the information used to make the
decisions

• Characteristics of high quality information include:

– Accuracy
– Completeness
– Consistency
– Uniqueness
– Timeliness
 6-8

Information Quality
• Low quality information example
 6-9

Understanding the Costs of

Poor Information
• The four primary sources of low quality
information include:
1. Online customers intentionally enter inaccurate
information to protect their privacy
2. Information from different systems have
different entry standards and formats
3. Call center operators enter abbreviated or
erroneous information by accident or to save
time
4. Third party and external information contains
inconsistencies, inaccuracies, and errors
 6-10

Understanding the Costs of

Poor 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 due to inaccurate
invoices
– Inability to build strong customer relationships
 6-11

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
 6-12

DATABASE FUNDAMENTALS

• 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)
 6-13

E F Codd Rule
• Codd rules were proposed by E.F. Codd which should be satisfied by relational
model.
• Foundation Rule: For any system that is advertised as, or claimed to be, a
relational data base management system, that system must be able to manage data
bases entirely through its relational capabilities.
• Information Rule: Data stored in Relational model must be a value of some cell of a
table.
• Guaranteed Access Rule: Every data element must be accessible by table name,
its primary key and name of attribute whose value is to be determined.
• Systematic Treatment of NULL values: NULL value in database must only
correspond to missing, unknown or not applicable values.
• Active Online Catalog: Structure of database must be stored in an online catalog
which can be queried by authorized users.
• Comprehensive Data Sub-language Rule: A database should be accessible by a
language supported for definition, manipulation and transaction management
operation.
• View Updating Rule: Different views created for various purposes should be
automatically updatable by the system.
 6-14

E. F Codd Contd
• High level insert, update and delete rule: Relational Model should
support insert, delete, update etc. operations at each level of relations.
Also, set operations like Union, Intersection and minus should be
supported.
• Physical data independence: Any modification in the physical location of
a table should not enforce modification at application level.
• Logical data independence: Any modification in logical or conceptual
schema of a table should not enforce modification at application level. For
example, merging of two tables into one should not affect application
accessing it which is difficult to achieve.
• Integrity Independence: Integrity constraints modified at database level
should not enforce modification at application level.
• Distribution Independence: Distribution of data over various locations
should not be visible to end-users.
• Non-Subversion Rule: Low level access to data should not be able to
bypass integrity rule to change data.
 6-15

DATABASE ADVANTAGES

• Database advantages from a business

perspective include
– Increased flexibility
– Increased scalability and performance
– Reduced information redundancy
– Increased information integrity (quality)
– Increased information security
 6-16

Increased Flexibility
• A well-designed database should:
– Handle changes quickly and easily
– Provide users with different views
– Have only one physical view
• Physical view – deals with the physical storage of
information on a storage device
– Have multiple logical views
• Logical view – focuses on how users logically
access information
 6-17

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
 6-18

Reduced Redundancy

• Databases reduce information

redundancy
– Redundancy – the duplication of information
or storing the same information in multiple
places

• Inconsistency is one of the primary

problems with redundant information
 6-19

Increased Integrity (Quality)

• Information integrity – measures the quality of

information

• Integrity constraint – rules that help ensure the

quality of information
– Relational integrity constraint – rule that enforces
basic and fundamental information-based constraints
– Business-critical integrity constraint – rule that
enforce business rules vital to an organization’s success
and often require more insight and knowledge than
relational integrity constraints
 6-20

Increased Security
• Information is an organizational asset and must
be protected

• Databases offer several security features

including:
– 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
 6-21

RELATIONAL DATABASE
FUNDAMENTALS
• Entity – a person, place, thing, transaction, or
event about which information is stored
– The rows in each table contain the entities
– In Figure 6.5 CUSTOMER includes Dave’s Sub Shop
and Pizza Palace entities

• Entity class (table) – a collection of similar

entities
– In Figure 6.5 CUSTOMER, ORDER, ORDER LINE,
DISTRIBUTOR, and PRODUCT entity classes
 6-22

RELATIONAL DATABASE
FUNDAMENTALS
• Attributes (fields, columns) – characteristics
or properties of an entity class
– The columns in each table contain the attributes
– In Figure 6.5 attributes for CUSTOMER include:
• Customer ID
• Customer Name
• Contact Name
• Phone
 6-23

RELATIONAL DATABASE
FUNDAMENTALS
• Primary keys and foreign keys identify the
various entity classes (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
 6-24

Potential relational
database for Coca-
Cola
 6-25

DATABASE MANAGEMENT SYSTEMS

• Database management systems (DBMS) –
software through which users and application
programs interact with a database
 6-26

DATABASE MANAGEMENT SYSTEMS

• Four components of a DBMS

6-27
 6-28

Application Generation and Data

Administration Components

• Application generation component – includes

tools for creating visually appealing and easy-
to-use applications

• Data administration component – provides

tools for managing the overall database
environment by providing faculties for backup,
recovery, security, and performance

• IT specialists primarily use these components

 6-29

OPENING CASE QUESTIONS

Google
1. How did the Web site RateMyProfessors.com
solve its problem of low-quality information?

2. Review the five common characteristics of high-

quality information and rank them in order of
importance to Google’s business

3. What would be the ramifications to Google’s

business if the search information it presented to
its customers was of low quality?
 6-30

OPENING CASE QUESTIONS

Google
Describe the different types of databases. Why
should Google use a relational database?

Identify the different types of entity, entity

classes, attributes, keys, and relationships that
might be stored in Google’s AdWords
relational database
 SECTION 6.2

DATA
WAREHOUSE
FUNDAMENTALS

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Reserved
 6-32

LEARNING OUTCOMES

7. Describe the roles and purposes of data

warehouses and data marts in an
organization

8. Compare the multidimensional nature of

data warehouses (and data marts) with
the two-dimensional nature of databases
 6-33

LEARNING OUTCOMES

9. Identify the importance of ensuring the

cleanliness of information throughout an
organization

10. Explain the relationship between

business intelligence and a data
warehouse
 6-34

HISTORY OF DATA WAREHOUSING

• Data warehouses extend the transformation of

data into information

• In the 1990’s 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
 6-35

DATA WAREHOUSE FUNDAMENTALS

• 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
 6-36

DATA WAREHOUSE FUNDAMENTALS

• 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
 6-37

DATA WAREHOUSE FUNDAMENTALS

 6-38

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
 6-39

Multidimensional Analysis
• Cube – common term for the representation
of multidimensional information
 6-40

Multidimensional Analysis
• Data mining – the process of analyzing data to
extract information not offered by the raw data
alone

• To perform data mining users need data-mining

tools
– Data-mining tool – uses a variety of techniques to
find patterns and relationships in large volumes of
information and infers rules that predict future
behavior and guide decision making
 6-41

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
 6-42

Information Cleansing or Scrubbing

• Contact information in an operational system
 6-43

Information Cleansing or Scrubbing

• Standardizing Customer name from Operational Systems
 6-44

Information Cleansing or Scrubbing

 6-45

Information Cleansing or Scrubbing

• Accurate and complete information
 6-46

BUSINESS INTELLIGENCE

• Business intelligence – information that

people use to support their decision-
making efforts

• Principle BI enablers include:

– Technology
– People
– Culture
 6-47

DATA MINING
• Data-mining software includes many forms of AI such
as neural networks and expert systems
 6-48

DATA MINING

• Common forms of data-mining analysis

capabilities include:
– Cluster analysis
– Association detection
– Statistical analysis
 6-49

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

• CRM systems depend on cluster analysis to

segment customer information and identify
behavioral traits
 6-50

Association Detection
• Association detection – reveals the
degree to which variables are related
and the nature and frequency of these
relationships in the information
– Market basket analysis – analyzes such
items as Web sites and checkout scanner
information to detect customers’ buying
behavior and predict future behavior by
identifying affinities among customers’
choices of products and services
 6-51

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
 6-52

OPENING CASE QUESTIONS

Google
6. How could Google use a data warehouse to
improve its business operations?

7. Why would Google need to scrub and cleanse

the information in its data warehouse?

8. Identify a data mart that Google’s marketing

and sales department might use to track and
analyze its AdWords revenue
 6-53

CLOSING CASE ONE

Fishing for Quality
1. Explain the importance of high-quality information
for the Alaska Department of Fish and Game

2. Review the five common characteristics of high

quality information and rank them in order of
importance for the Alaska Department of Fish
and Game

3. How could data warehouses and data marts be

used to help the Alaska Department of Fish and
Game improve the efficiency and effectiveness of
its operations?
 6-54

CLOSING CASE ONE

Fishing for Quality
4. What two data marts might the Alaska
Department of Fish and Game want to build to
help it analyze its operational performance?

5. Do the managers at the Alaska Department of

Fish and Game actually have all of the
information they require to make an accurate
decision? Explain the statement “it is never
possible to have all of the information required
to make the best decision possible”
 6-55

CLOSING CASE TWO

Mining the Data Warehouse
1. Explain how Ben & Jerry’s is using
business intelligence tools to remain
successful and competitive in a
saturated market

2. Identify why information cleansing and

scrubbing is critical to California Pizza
Kitchen’s business intelligence tool’s
success
 6-56

CLOSING CASE TWO

Mining the Data Warehouse
3. Illustrate why 100 percent accurate and
complete information is impossible for
Noodles & Company to obtain

4. Describe how each of the companies above is

using BI from their data warehouse to gain a
competitive advantage
 6-57

CLOSING CASE THREE

Harrah’s
1. Identify the effects poor information might have
on Harrah’s service-oriented business strategy

2. How does Harrah’s uses database

technologies to implement its service-oriented
strategy?

3. Harrah’s was one of the first casino companies

to find value in offering rewards to customers
who visit multiple Harrah’s locations. Describe
the effects on the company if it did not build
any integrations among the databases located
at each of its casinos
 6-58

CLOSING CASE THREE

Harrah’s
4. Estimate the potential impact to Harrah’s
business if there is a security breach in
its customer information

5. Identify three different types of data

marts Harrah’s might want to build to
help it analyze its operational
performance
 6-59

CLOSING CASE THREE

Harrah’s
6. What might occur if Harrah’s fails to clean or
scrub its information before loading it into its
data warehouse?

7. Describe cluster analysis, association detection,

and statistical analysis and explain how Harrah’s
could use each one to gain insights into its
business