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

Information is becoming as important a business resource as money, material, and people. Even though a company compiles millions of pieces of data doesn’t mean it can produce information that its employees, suppliers, and customers can use. Businesses are realizing the advantage of compiling useful information, not just DATA.

Problems occur in managing data resources in a traditional file environment such as: data redundancy, program-data dependence, inflexibility, poor data security, and inability to share data among applications.

To illustrate these problems, let’s say you move and change addresses, you notify everyone of your new address including your bank. Everything is okay with receiving your monthly statements. All of a sudden, at the end of the year, the bank sends a Christmas Card to the old address. Why? Because the Bank changed the address in “one” database; the address was not changed in the separate Christmas Card database.  You are now a victim of data redundancy.

Managers and employees must know and understand how databases are constructed so they know how to use the information resource to their advantage.

Database Management Systems have three critical components: the data definition language, the data manipulation language, and the data dictionary. Managers should ensure that all three receive attention. There are three types of databases: hierarchical, network, and relational. Relational databases have been the most popular because they are easier to work with, change, and serve more organizational needs.

When designing a database one should think long and hard about how the information will be used in different situations. Consider how it is organized, stored, and used. Then imagine how this information could be organized better and more easily used. Involve as many end users in the planning stage as possible; they are the ones who will prosper or suffer because of the decisions made.

As organizations want and need more information about their company, their products, and their customers, the concept of data warehousing has become very popular. No, data warehouses are not big buildings with shelves and shelves of stuff; they are huge computer files that store old and new data that companies want to maintain information on. Using a data warehouse correctly can give management a tremendous amount of information that can be used to trim costs, reduce inventory, and attract new customers.

Ask any manager what their resources are and they will likely list people, equipment, buildings, and money. Very few managers will include INFORMATION on the list, yet it can be more valuable than some of the others.

Bottom Line: Information is power. The more information users have in an easy to use form, the more they can accomplish. Managers need to consider information as an important resource for which everyone has a responsibility.