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Chapter 3 - Tutorial Solutions

Accounting Information Systems (The University of the South Pacific)

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WEEK 4 - Chapter 3

Data Management, Business Intelligence, and Data Analytics

Review Questions
3.1 Data Management and Database Technologies
1. Describe a database and a database management system (DBMS).
 Database is a collection of data
 Software system for creating and managing databases. (organized way to store, access
and manage data)

3. Why are data in databases volatile?

 Because they change frequently
 Consistently updated

5. Describe the purpose and benefits of data management.

 Plan or procedure used to control, protect and deliver the data
 Benefits:
 Higher security
 Less legal liability
 Improved sales and marketing strategies
 Improved data governance
6. What is a relational database management system?
 Provides access to data using a declarative language. Such as HTML, SQL
 Declarative language simplifies data access by requiring that users only specify what
data they want. Examples are Hypertext Markup Language (HTML) and Structured
Query Language (SQL)

3.2 Centralized and Distributed Database Architectures

1. Describe the data life cycle.

 The data life cycle is a model that illustrates the way data travel through an organization.
 The three principles of data life cycle are principle of diminishing data value, principle of
90/90 data use and principle of data context.
 Principle of diminishing data value- value of data diminish as they age.
 principle of 90/90 data use- after 90days data becomes dirty data
 principle of data context- capability to capture,process,format and distribute data

3. What are the consequences of not cleaning ‘dirty data’?

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 poor judgement
 increase in legal liability
 Loss of business when sales opportunities are missed
 Inability to make proper business decisions
 Costly to the organization in terms of money (cost to prevent and correct errors)

5. Discuss how data ownership and organizational policies affect the quality of an
organization’s data.
 When there is no accountability
 No policies and procedures.
 Inconsistent data format (unstructured)
.

3.3 Data Warehouses

5. What is an advantage of an enterprise data warehouse (EDW)?
 Refine data, eliminating redundant information and improving overall data quality.
 Prevents volatility and data is more stable.
 Enhance data quality
 Quick and easy access to data

7. What types of decisions can benefit from a data warehouse?

 Sales- calculate sales profitability
 Financial- provides real-time data for credit terms
 Marketing – marketing program effectiveness.
 Tactical decision making- marketing and forecasting and sales
 Strategical decision making- forecasting, financing

3.4 Big Data Analytics and Data Discovery

1. Why are human expertise and judgment important to data analytics? Give an example.
 Human expertise is needed to interpret the output of analytics.
 Example in hospital data is interpreted by doctors.

4. How can manufacturers and health care benefit from data analytics?
1. Can be used in research and development processes

8. What are the basic steps involved in text analytics?

1. Exploring – documents are explored, e.g word count in a document collection
2. Preprocessing – before analysis of content, text may need to be preprocessed to
standardize it.
3. Categorizing and modeling- content is then categorized.

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3.5 Business Intelligence and Electronic Records Management

4. What are the steps in a BI governance program? (7)

1. Articulate business strategies
2. Set targets
3. Identify KPIs
4. List KPIs
5. Create a plan
6. Estimate the cost (cost vs benefit analysis)
7. Access and update business strategies

5. What four factors are contributing to increased use of BI?

1. Smart devices everywhere-24/7 access
2. Data is big business- support decisions and actions
3. Advanced BI and Analytics – ask questions
4. Cloud Enabled BI and Analytics- low cost

DISCUSS: Critical Thinking Questions

3. List three types of waste or damages that data errors can cause.
 Loss of business
 Cost to prevent errors
 Cost to correct errors

6. What are the tactical and strategic benefits of big data analytics?
Tactical- prediction about organization (forecasting), reduce overtime, ability to respond
quickly and accurately to changes in market conditions
Strategy- understanding customer behavior so sales can improve and so business can
develop and build new products in the future.

9. Explain the principle of 90/90 data use.

 After 90 days data becomes dirty data.

13. What are the operational benefits and competitive advantages of business
intelligence?
Operational benefits- helps lower level managers to make day to day decisions e.g what to
order and how to order , when payment is due and also helps to avoid stock out
Competitive – it consolidates reports from internal and external sources that will help
mangers to make healthy and proper decisions on the future of the business to remain
competitive in the market

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Business Cases

Case 3.2 Business Case: Big Data Analytics is the “Magic Sauce” for
Revitalizing McDonald’s

1. Explain McDonald’s mission and responsibilities.

 To move from product oriented to customer oriented. (mission)
 Retain its loyal customers (responsibilities)
 Attract new customers (responsibilities)

2. What limitation did McDonald’s face in gaining data that was meaningful to decision
making?
 Average based matrix
 It was solved by a change into tend analytics
3. Describe trend analytics.
 Uses historical data collected over a period of time to predict future trends.
 McDonalds have analyzed and visualized the flaws in individual stores

4. Is McDonald’s product oriented or customer oriented?

 Customer oriented through provision of wi-fi which has helped to retain market
share in the fast-food industry.
5. Why is the ability to identify patterns and relationships critical to McDonald’s
operations?
 Helps to identify issues which have negative impacts on customers. E.g
improvement in the drive through experiences and breakfast menus.

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Summary
4.1 Data Management and Database Technologies
 Data management manages the flow of data
 Objectives of data management include maintaining accuracy of data, data security and
legal requirements
 Goal of data management- transform raw data into usable information.
 Benefits of data management – higher security, greater compliance, improved data
governance
 Costs of data management- difficult and expensive since data is scattered, increased
volume of data and redundant data
 Data management technologies include databases, data warehouses, data marts and
business intelligence
 Databases store data
 Data warehouses integrated collection of data.
 Data marts are small scale data warehouses. Subsets of data
 Data centers- facilities containing components that deliver data
 Data mining- searching data in the data warehouse.
 Data dictionary – directory containing metadata
 Metadata- data which has information about other data.
 Business intelligences- process data and do statistical analysis
 DBMSs is a software used to manage and update data
 DBMSs functions include:
 data filtering-inspect data for errors
 data integrity- correct and verify consistency of data
 data access – authorized access to data
 data synchronization- integrate, match or link data
 data security- check and control data integrity
 Stand-alone systems result in data redundancy, inconsistency, and isolation.
 Database management systems help solve the data problems of file based system
 advantages of NoSQL are: -high performance – greater flexibility –easy distribution of
data
 Relational database stored data in rows and columns
 Relational management systems provide access to data using a declarative language.
 Online transaction processing systems- manage transaction data, which are volatile.
 Online analytics processing system -is means of organizing large business databases

4.2 Centralized and Distributed Database Architectures

 2 types of databases are centralized and distributed databases
 Centralized database store data is a single central computer
 Distributed database stores portions of data on multiple computers figure 3.6 & 3.7. pg
74
 Benefits of centralized database are better control over data and better IT security
 Benefits of distributed database is that it allows both local and remote access

 Types of databases :

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 Operational- stores detailed data e.g customer detail and inventory

 Distributed – distributing parts of databases to network servers e.g intranet and
extranet
 External- access online information e.g newspapers using google
 Hypermedia- stores images and videos using hyper media
 Consequences of dirty data include poor decision, cost of finding and fixing the cause of
dirty data.
 Characteristics of dirty data- incomplete, incorrect, outdated, nonstandard
 Data life cycle diagram, steps of data life cycle. Figure 3.8
 Data life cycle – model which illustrates how data travel through an organisations.
 Garbage in Garbage out- data needs to be validated so that it is trusted and dirty data is
removed.
 Cost of Poor-Quality Data = Lost Business + Cost to Prevent Errors + Cost to Correct
Errors
 3 data life cycle principles
 Principle of diminishing data value- value of data diminishes as they age
 Principle of 90/90 data use- after 90 days data becomes dirty data
 Principle of data in context –data should be analyzed and formatted in actionable
information.
 Enterprise data warehouse (EDW) - data warehouses that pull data from databases across
the enterprise.
 Procedures to prepare Enterprise Data Warehouse(3)- extract, transform and load
1. Extract from designated databases
2. Transform by cleaning the data
3. Load into data warehouse.
 Active data warehouse- real time data warehousing and analytics
 ADW provides:
1. Interaction with customer
2. Respond to business events
3. Share up-to-date data with associates
 Big data is large volume of data
 Data analytics – technique of analyzing a data set to revel patterns and trends to enhance
business gains.
 Four V’s of Data analytics
1. Variety – data being pulled from enterprise databases to include big data and
unstructured data
2. Volume- large volume of structured and unstructured data are analyzed
3. Velocity- speed of access
4. Veracity- validating data for successful analytics.
 Human expertise + Data analytics + high quality data =actionable information
 Human expertise include data, information and knowledge.
 Data mining is finding patterns in data and prevents dirty data.
 Electronic Records management – manages electronic documents
 ERM benefits: - accessibility – cuts labor costs –reduces time and effort required to
locate the information –improved security –reduces costs of printing and storing

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 Benefits of BI
 Enhances decision making
 Competitive advantage
 Unites data
 Challenges of BI
 Data quality
 Alignment with business strategy and BI strategy
 Aligning BI strategy with Business strategy (7)
 Start with a roadmap
 Understand line of business needs
 Establish metrics to track performance
 Understand the data and application environment
 Create an analytics committee
 Allow open communication
 Hire a chief data officer

 ERM know the benefits and disadvantages

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