Chapter 6 - Foundations of Business Intelligence: Databases and Information Management

Chapter 6 identified some of the problems associated with managing data resources in a traditional file environment and how are they solved by a database management system.  The typical file management techniques make it hard for firms to keep track of the pieces of data they use in a systematic way and to organize the data so that it can be easily accessed.  In order to develop their own files independently different functional areas and groups were created.  As time progressed the traditional file management environment created problems like data redundancy and inconsistency, program data dependence, poor security, inflexibility and lack of data sharing and availability.  Database management system (DBMS) helps solve these problems with software that permits centralization of data and data management so that businesses have a single consistent source for all their needs.

Some of the major capabilities of DBMS include data definition, data dictionary and a data manipulation language.  The data definition capability 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 manipulation language such as SQL, is a specialized language for accessing and manipulating data in the database.  The relational database is the primary method for organizing and maintaining data today in informational systems because it is so flexible and easily accessible.  

There are some important database design principles.  Designs should include both a logical and physical design.  The logical design should model the database from a business perspective.  The model should reflect an organizations main business processes and decision making requirements.  A well designed relational database will not include many-to-many relationships, and all attributes for a specific entity will only apply to that entity.  It should try to enforce the referential integrity rules to ensure that relationships between coupled tables will remain consistent.

Some principle tools and technologies for accessing information from databases to improve business performance and decision making are data warehouses. They consolidate current and historical data from many different operational systems in a central database designed for reporting and analysis.  Data warehouses support multidimensional data analysis, also known as online analytical processing (OLAP).   OLAP represents relationships among data as a multidimensional structure, which can be visualized as cubes of data and cubes of data within data, which enables more sophisticated data analysis.

When developing a database environment it is crucial to require policies for managing organizational data as well as a good data model and database technology.  A formal information policy should govern maintenance, distribution and use of information in the organization.  In larger companies a formal data administration function is responsible for the information policy.  Inaccurate, incomplete and inconsistent data creates a serious operational and financial problem.  Companies must take whatever steps necessary to ensure they have a high level of data quality.