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?

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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.

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Data warehouses

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.)

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Using software tools to extract information from a datawarehouse is sometimes referred to as datamining.

Business Intelligence

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.