FIN3228/HRM3200 : Management Information System

Lesson 04
Databases and Information Management

Learning Objectives
 Identify the limitations of traditional file environment
 Describe how the problems of managing data resources in a traditional file environment are
solved by a database management system (DBMS).
 Analyze how data are stored in relational database
 Describe how the databases can be used to improve business performance and decision making
 Assess the role of information policy, data administration and data quality assurance in the
management of a firm‟s data resources

Chapter Outline
4.1 File Organization Terms and Concepts

4.2 Organizing Data in a Traditional File Environment

Problems with the Traditional File Environment

4.3 The Database Approach to Data Management

Database Management Systems
Relational Database Management Systems

4.4 Using Databases to Improve Business Performance and Decision Making

Data Warehouses
Tools for Business Intelligence
Databases and the Web

4.5Managing Data Resources

Establishing an Information Policy
Ensuring Data Quality

Sound knowledge on the role of databases in managing a firm‟s data is essential for any organization as
databases provides the foundation for business intelligence. Due to the global scale operations of today‟s
organizations it has become impractical to use the time-consuming manual processes to store and handle
data as the companies had in the past. An effective information system provides users with accurate,
timely, and relevant information that help companies to reduce their costs, improve operational efficiency
and decision making, and boost profitability.
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4.1 File Organization Terms and Concepts

A computer system organizes data in a hierarchy that starts with bits and bytes and progresses to fields,
records, files, and databases. The hierarchy starts with the bit, which represents either a 0 or a 1. Bits can
be grouped to form a byte. Bytes can be grouped to form a field, and related fields can be grouped to
form a record. Related records can be collected to form a file, and related files can be organized into a
database.

Bit
A bit represents the smallest unit of data a computer can handle. The term „bit´ is the short form for
binary digit. It can assume either of two possible states and, therefore, can represent either 0 or 1.

Byte
A group of bits, called a byte, represents a single character, which can be a letter, a number, or another
symbol. A byte of information is stored by using several bits in specified combination called „bit
patterns´.

Data Measurement Chart

Data Measurement Size

Bit Single Binary Digit (1 or 0)

Byte 8 bits

Kilobyte (KB) 1,024 Bytes

Megabyte (MB) 1,024 Kilobytes

Gigabyte (GB) 1,024 Megabytes

Terabyte (TB) 1,024 Gigabytes

Petabyte (PB) 1,024 Terabytes

Exabyte (EB) 1,024 Petabytes

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Data Field
A grouping of characters into a word, a group of words, or a complete number (such as a person‟s name
or age) is called a field.

Record
A group of related fields, such as the student‟s name, department, the courses taken, and the grade,
comprises a record. A record is a collection of fields relating to a specific entity. A record describes an
entity, an entity is a person, place, thing, or event on which we store and maintain information.

File
A group of records of the same type is called a file. A file is a collection of related records. For example, the
collection of payroll records of all employees in a company is a payroll file.

Database
A database consists of all the files of an organization. It is structured and integrated to facilitate update of
the files and retrieval of information from them.
All this is called as data hierarchy because databases are composed of files, files are composed of records,
records are composed of filed, fields composed of data bytes and finally, data bytes are a group of bits.

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The Data Hierarchy

Example 1 – Student Database

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Example 2 – Employee Database

4.2 Organizing Data in a Traditional File Environment

Traditional file management techniques make it difficult for organizations to keep track of all of the
pieces of data they use in a systematic way and to organize these data so that they can be easily accessed.
Different functional areas and groups were allowed to develop their own files independently.
Traditionally, in most organizations, systems tended to grow independently without a company-wide
plan. Accounting, finance, manufacturing, human resources, and sales and marketing all developed their
own systems and data files.

Following graphic illustrates a traditional environment, in which different business functions maintain
separate data and applications to store and access that data.

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Traditional File Processing

Problems with the Traditional File Environment

Under traditional file environment, each application required its own files and its own computer program
to operate. For example, the human resources functional area might have a personnel master file, a
payroll file, a medical insurance file, a pension file, a mailing list file, and so forth until tens, perhaps
hundreds, of files and programs existed. In the company as a whole, this process led to multiple master
files created, maintained, and operated by separate divisions or departments. As this process goes on, the
organization is saddled with hundreds of programs and applications that are very difficult to maintain and
manage. The resulting problems are;

Data Redundancy and Inconsistency

Data redundancy is the presence of duplicate data in multiple data files so that the same data are stored in
more than place or location. Data redundancy occurs when different groups in an organization
independently collect the same piece of data and stores it independently of each other. Data redundancy
wastes storage resources and also leads to data inconsistency and confusions, where the same attribute
may have different values and even data can have different meanings in different files.

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Program-Data Dependence
Program-data dependence refers to the tight relationship between data stored in files and the specific
programs required to update and maintain those files such that changes in programs require changes to
the data. Every traditional computer program has to describe the location and nature of the data with
which it works. In a traditional file environment, any change in a software program could require a
change in the data accessed by that program.

Lack of Flexibility
A traditional file system can deliver routine scheduled reports after extensive programming efforts, but it
cannot deliver ad hoc reports or respond to unanticipated information requirements in a timely fashion.
The information required by ad hoc requests is somewhere in the system but may be too expensive to
retrieve. Several programmers might have to work for weeks to put together the required data items in a
new file.

Poor Security
Since there is little control or management of data, access to and dissemination of information may be out
of control. Management may have no way of knowing who is accessing or even making changes to the
organization‟s data.

Lack of Data Sharing and Availability

Since pieces of information in different files and different parts of the organization cannot be related to
one another, it is virtually impossible for information to be shared or accessed in a timely manner.
Information cannot flow freely across different functional areas or different parts of the organization.
If users find different values of the same piece of information in two different systems, they may not want
to use these systems because they cannot trust the accuracy of their data.

4.3 The Database Approach to Data Management

Database technology helps to overcome many limitations of traditional file system. A more rigorous
definition of a database is a collection of data organized to serve many applications efficiently by
centralizing the data and controlling redundant data. Rather than storing data in separate files for each
application, here a single database services multiple applications.

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Database Management System

A Database Management System (DBMS) is software that permits an organization to centralize data,
manage them efficiently, and provide access to the stored data by application programs. The DBMS acts
as an interface between application programs and the physical data files. When the application program
calls for a data item, the DBMS finds this item in the database and presents it to the application program.
A single database provides many different views of data, depending on the information requirements of
the user.

How DBMS Solves the Problems of the Traditional File Environment

A DBMS reduces data redundancy and inconsistency by minimizing isolated files in which the same data
are repeated. Even if the organization maintains some redundant data, using a DBMS eliminates data
inconsistency because the DBMS can help the organization ensure that every occurrence of redundant
data has the same values. The DBMS uncouples programs and data, enabling data to stand on their own.
Access and availability of information will be increased while improving the flexibility of data and the
programs. The DBMS enables the organization to centrally manage data and there by tighten the data
security.

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Relational DBMS (RDBMS)

Contemporary DBMS use different database models to keep track of entities, attributes, and relationships.
The most popular type of DBMS today is the relational DBMS.

Most modern commercial and open-source database applications are relational in nature. The most
important relational database features include an ability to use tables for data storage while maintaining
and enforcing certain data relationships. Relational databases represent data as two-dimensional tables
(called relations). Tables may be referred to as files. Each table contains data on a certain entity.

Tables
o Rows (tuples): Records for different entities
o Fields (columns): Represents attribute for entity
o Primary key: key field to uniquely identify each record for retrieval or manipulation of data.
Relational database tables can be combined easily to deliver data required by users, provided that
any two tables share a common data element.
o Foreign key: Primary key used in second table as look-up field to identify records from original
table

Following graphs illustrate how a relational database organizes data about „suppliers‟ and „input parts‟.

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Operations of a Relational DBMS

Relational database tables can be combined easily to deliver data required by users, provided that any two
tables share a common data element. In a relational database, three basic operations are used to develop
useful sets of data: select, join, and project.

 The select operation creates a subset consisting of all records in the file that meet stated criteria.
 The join operation combines relational tables to provide the user with more information than is
available in individual tables.
 The project operation creates a subset consisting of columns in a table, permitting the user to
create new tables that contain only the information.

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Example of a Student Database;

“STUDENT” Table

Reg No Name NIC Gender DOB Contact No Department

M4533 M.S. Kethaki 924962377V Female 4/6/1992 716595003 FIN

M4534 T.P Kolitha 925673455V Male 29/1/1992 775658210 FIN

M4535 H.N. Fernando 929675423V Male 14/8/1992 772352198 ACC

M4536 K.S. Perera 912658839V Female 2/3/1991 724532010 HRM

M4538 N. Nithya 924922506V Female 5/12/1992 777756820 FIN

“MARKS” Table

Reg No Index No Status MOS1200 FIN1202 MKT1200 ACC1302

M4533 M4583 PASS 56 50 65 68

M4534 M4584 PASS 72 70 76 80

M4535 M4585 PASS 80 65 80 75

M4536 M4586 FAIL 25 32 38 20

M4538 M4588 PASS 49 52 72 58

Requirement: Registration number, Name, Department and the Status of students who obtained more
than 50 marks for MOS1200 subject

Reg No Name Status Department

M4533 M.S. Kethaki PASS FIN

M4534 T.P Kolitha PASS FIN

M4535 H.N. Fernando PASS ACC

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4.4 Using Databases to Improve Business Performance and Decision Making

Businesses use their databases to keep track of basic transactions, such as paying suppliers, processing
orders, keeping track of customers, and paying employees. But they also need databases to provide
information that will help the company run the business more efficiently, and help managers and
employees make better decisions.
In a large company with large databases or large systems for separate functions, such as manufacturing,
sales, and accounting, special capabilities and tools are required for analyzing vast quantities of data and
for accessing data from multiple systems. These capabilities include data warehousing, data mining, and
tools for accessing internal databases through the Web.

Data Warehouses
Suppose someone wants to briefly summarize reliable information about current operations, trends, and
changes across the entire company. If the company in concern is a large company, obtaining this might be
difficult and might have to spend an excessive amount of time locating and gathering the data required, or
the user might be forced to make the decision based on incomplete knowledge. If information about
trends is needed, there might also have trouble in finding data about past events because most firms only
make their current data immediately available. Data warehousing addresses these problems.

What Is a Data Warehouse?

A data warehouse is a database that stores current and historical data of potential interest to decision
makers throughout the company. The data originate in many core operational transaction systems, such as
systems for sales, customer accounts, and manufacturing, and may include data from Web site
transactions. The data warehouse consolidates and standardizes information from different operational
databases so that the information can be used across the enterprise for management analysis and decision
making.
The data warehouse makes the data available for anyone to access as needed, but it cannot be altered. A
data warehouse system also provides a range of ad hoc and standardized query tools, analytical tools, and
graphical reporting facilities. Many firms use intranet portals to make the data warehouse information
widely available throughout the firm.

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Tools for Business Intelligence

Once data have been captured and organized in data warehouses and data marts, they are available for
further analysis using tools for business intelligence. Business intelligence tools enable users to analyze
data to see new patterns, relationships, and insights that are useful for guiding decision making.
Principal tools for business intelligence include software for database querying and reporting, tools for
multidimensional data analysis (online analytical processing- OLAP), and tools for data mining.

Data Mining
Another business intelligence tool driven by databases is data mining. Traditional database queries
answer such questions as, “How many units of product number 403 were shipped in February 2010?”
OLAP, or multidimensional analysis, supports much more complex requests for information, such as
“Compare sales of product 403 relative to plan by quarter and sales region for the past two years.” With
OLAP and query-oriented data analysis, users need to have a good idea about the information for which
they are looking.

Data mining is more discovery-driven. Data mining provides insights into corporate data that cannot be
obtained with OLAP by finding hidden patterns and relationships in large databases and inferring rules
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from them to predict future behavior. The patterns and rules are used to guide decision making and
forecast the effect of those decisions.

These systems perform high-level analyses of patterns or trends, but they can also drill down to provide
more detail when needed. There are data mining applications for all the functional areas of business, and
for government and scientific work. One popular use of data mining is to provide detailed analyses of
patterns in customer data for one-to-one marketing campaigns or for identifying profitable customers.

Text Mining and Web Mining

Business intelligence tools deal primarily with data that have been structured in databases and files.
However, unstructured data is believed to account for over 80 percent of an organization‟s useful
information.

Text mining tools are available to help businesses analyze these unstructured data. These tools are able
to extract key elements from large unstructured data sets, discover patterns and relationships, and
summarize the information. Businesses might turn to text mining to analyze transcripts of calls to
customer service centers to identify major service and repair issues.

Web is another rich source of valuable information, some of which can now be mined for patterns, trends,
and insights into customer behavior. The discovery and analysis of useful patterns and information from
the World Wide Web is called Web mining. Businesses might turn to Web mining to help them
understand customer behavior, evaluate the effectiveness of a particular Web site, or quantify the success
of a marketing campaign.

Big Data Challenge

Big data is the term for a collection of data sets so large and complex that it becomes difficult to process
using on-hand database management tools or traditional data processing applications. Organizations that
are competent in analyzing Big data, create competitive advantage in new business spaces opening up
new opportunities.

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4.5 Managing Data Resources

Establishing an Information Policy

Information policy has become a prominent component in any firm due to the shift from an industrial
society to an information society. In a digital environment it is more difficult to ensure that information
remains complete, authentic and accessible. Thus firms need to have rules on how information is to be
organized and maintained. It is important to develop a sound information policy as it establishes methods
for protecting the database and other informational resources of the firm from accidental or malicious
destruction of data or damage to the database infrastructure.

An information policy specifies the organization‟s rules for sharing, disseminating, acquiring,
standardizing and classifying information. Information policy lays out specific procedures and
accountabilities, identifying which users and organizational units can share information, where
information can be distributed, and who is responsible for updating and maintaining the information. For
example, a typical information policy would specify that only selected members of the payroll and human
resources department would have the right to change and view sensitive employee data and that these
departments are responsible for ensuring that such employee data are accurate.

Ensuring Data Quality

A well-designed database and information policy will go a long way toward ensuring that the business
has the information it needs. However, additional steps must be taken to ensure that the data in
organizational databases are accurate and remain reliable. Data those are inaccurate, untimely, or
inconsistent with other sources of information lead to incorrect decisions, product recalls, and financial
losses.
Before a new database is in place, organizations need to identify and correct their faulty data and
establish better routines for editing data once their database is in operation. Analysis of data quality often
begins with a data quality audit/ survey, which is a structured survey of the accuracy and level of
completeness of the data in an information system. Data quality audits can be performed by surveying
entire data files, surveying samples from data files, or surveying end users for their perceptions of data
quality.

Data cleansing, also known as data scrubbing, consists of activities for detecting and correcting data in a
database that are incorrect, incomplete, improperly formatted, or redundant. Data cleansing not only
corrects errors but also enforces consistency among different sets of data that originated in separate
information systems. Specialized data-cleansing software is available to automatically survey data files,
correct errors in the data, and integrate the data in a consistent company-wide format.
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