Building Business Intelligence
Now that we've introduced the major concepts defining relational databases it is time to understand them in context. Knowledge is power in business. Managers who take advantage of ebusiness tools to manage and manipulate all kinds of information relevant to their business create business intelligence. They can use this information to make timely and effective managerial decisions.
Where does data come from?
Data that is relevant to a business decision may come from anywhere. The most important sources of data include:
- master data: this is data that is collected (usually once and once only) to define the entities in an ebusiness system (customer file, product file, account codes, pricing codes, etc...)
- configuration data: as the term implies this is data that defines the nature of the system itself. The system is configured to reflect the nature and needs of the business.
- operations data (OLTP): also known as activity this data is generated by daily business activities such as sales orders, purchase orders, invoices, accounting entries, and so on.
- information systems (OLAP): these are sophisticated applications that collect information from various internal and external sources to analyze data and distill meaningful information.
How does the data become useful?
As we reviewed elsewhere, an ebusiness application relies on an underlying relational database to turn raw data into persistent structured collections of information. In addition to managing information a database defines the relationships within an ebusiness system.
Database Management System (DBMS)
DBMSs are the technology tools that directly support managing organizational data. With a DBMS you can create a database including its logical structure and constraints, you can manipulate the data and information it contains, or you can directly create a simple database application or reporting tool. Human administrators, through a user interface, perform certain tasks with the tool such as creating a database, converting an existing database, or archiving a large and growing database. Business applications, which perform the higher level tasks of managing business processes, interact with end users and other applications and, to store and manage data, rely on and directly operate their own underlying database through a standard programming interface like ODBC. The following diagram illustrates the five components of a DBMS.
Data warehouses are logical collections of information gathered from many different operational databases used to perform detailed analysis of all available data. They might be used to compare various departments (Canada vs. Europe, East vs. West, Toronto office vs. Montreal office etc.), seemingly disparate pieces of data (revenue vs. stock price, revenue vs. weather, revenue during an ad compaign, revenue on days of competitor sales promotion, and so on) or historical trends (sales year-to-date vs. last year, vs ten years ago, etc.)
Using software tools to extract information from a datawarehouse is sometimes referred to as datamining.
Business Intelligence is a term that refers to the sum total, or effect, of gathering and processing data, building rich and relevant information, and feeding it back into daily operations so that managers can make timely, effective decisions and better plans for the future.
Posted by Mark Hemphill on March 8, 2004 | Permalink
Thanks again for including diagrams in the post! I find it always makes things so much easier to understand. I also found all of the definitions of the different types of data to be very useful. It is much easier to understand the key concepts if you can understand the terms!
Posted by: Jen | Apr 4, 2006 12:08:08 AM
I agree with Jen, diagrams help undstand things. Databases are a hard thing to get your head around especially with what that has to do with business. Using the data in a business world can be very important. I understand much better now how and what you can do with data in a business.
Posted by: Dave Adams | Apr 5, 2006 4:18:32 PM
Databases are one of the most important tools for business to market, and to target today’s vastly segmented consumer base. They allow marketers to gain invaluable knowledge of the market in a cost effective manner. Advertising agencies have gone through massive layoffs in the passed years purely based on the rate of new technologies have transformed the traditional mass media into the single customer orientated market, which exists today. Furthermore, Databases have allowed small businesses to act like big businesses, and the companies that are ignoring this trend will be forgotten. As business students, we must be able to understand the capabilities and possibilities of these new technologies to be successful in the future.
Posted by: Adam | Apr 5, 2006 10:13:12 PM
I really think that having diagrams in the posts helps in making it easier to understand...the same for the post on relational databases. I didn't quite get it until I looked at the chart and it made sense!
Posted by: Neil Matheson | Apr 7, 2006 12:29:21 AM
I like having diagrams in the posts too, although sometimes I have difficulty with understanding the diagrams with the written material. I now understand what a DBMS is (or at least I think I do:D), but I'm having trouble comparing what I understand to the diagrams. Maybe if there were notes attached to the diagrams to discribe what its talking about would help. See you all at the test today!
Posted by: David McKenna | Apr 7, 2006 12:23:48 PM
so, in a data warehouse it is a massive collection of data from other databases? So if this is true they could then use this to answer questions regarding say inventory in a store or questions regarding the sales of a product in differernt areas of the country or world. I think this is a Huge advantage in business because it answers questions that would save or make the business money!
Posted by: Joel Mac Neill | Nov 24, 2007 7:55:33 PM
I find it interesting how Managers use Business Intelligence to help them make major decisions. I guess you could call the BI as the "finished product" because it uses gathering and processing data, building information and ect. I doubt that 30 years ago,managers back then thought they would be using technology to help them make major decisions!
Posted by: Katelyn Murnaghan | Nov 25, 2007 8:21:33 PM
Alright, another question! I really find databases interesting because as you it is the data layer that brings an ebusiness system to life. I am really understanding that more and more all the time and their is way more to a database than I ever understood. I knew they were complex and I know their is still way more than I can imagine but I can see it more and more. So, when we look at the five components of a DBMS are you referring to data definition, data manipulation, application generation, data administration, and data dictionary? The stuff on the left is just explanations and those are the five things, right?
Posted by: Krista Mackenzie | Dec 1, 2007 4:31:19 PM
Relational databases have really become comparative advatages for some businesses. It takes a lot of risk out of making big decisions that used to take a lot of research. Relational databases can be used to make important decisions on everything from inventory to employees to expansion
Posted by: Nathan Snowie | Dec 2, 2007 11:29:15 PM
Is the functions of information system(LOAP) and data warehouse are very simillar?
Posted by: XiaoJiang | Dec 4, 2007 3:34:25 PM
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