Chapter 6 Notes: Valuing and Storing Organizational Information – Databases

Learning Outcomes

• Explain the four primary traits that determine the value of information

• Describe a database, a database management system, and the relational database model

• Identify the business advantages of a relational database

• Explain the business benefits of a data-driven website

• Explain why organizations would want to integrate databases

The Business Benefits of High-Quality Information

• Information is everywhere in an organization

• Employees must be able to obtain and analyze the many different levels, formats, and granularities of organizational information to make decisions

• Successfully collecting, compiling, sorting, and analyzing information can provide tremendous insight into how an organization is performing

Levels, Formats, and Granularities of Information

• Information Levels: Individual, Department, Enterprise

• Information Formats: Document, Presentation, Spreadsheet, Database

• Information Granularities: Detail (Fine), Summary, Aggregate (Coarse)

• Examples by level:

  • Individual level: Letters, memos, faxes, emails, reports, training materials; individual knowledge, goals, strategies

  • Department level: Departmental goals, revenues, expenses, processes, strategies

  • Enterprise level: Enterprise revenues, expenses, processes, strategies

• Example formats by level:

  • Individual: Letters, memos, emails, reports, marketing materials, training materials

  • Department: Product, strategy, process, financial, customer, competitor data

  • Enterprise: Sales, marketing, industry, financial, competitor, customer, and order data

• Granularity examples:

  • Detail: Reports for each salesperson, product, and part

  • Summary: Reports for all sales personnel, all products, all parts

  • Aggregate: Reports across departments, organizations, and companies

Information Type: Transactional and Analytical

• Transactional information: Encompasses all information within a single business process or unit of work; primary purpose is to support daily operational tasks

• Analytical information: Encompasses all organizational information; primary purpose is to support managerial analysis tasks

Information Timeliness

• Timeliness depends on the situation

• Real-time information: Immediate, up-to-date information

• Real-time system: Provides real-time information in response to requests

Information Quality

• Business decisions are only as good as the information used

• Do not use technology to make a bad decision faster

• Characteristics of high-quality information:

  • Accurate, Complete, Consistent, Unique, Timely

• Example of low-quality information (illustrates issues such as missing data, duplicates, and inaccuracies)

  • Missing information, incomplete information (e.g., no first name, no street)

  • Probable duplicate information (similar names, same address/phone)

  • Potential wrong information (e.g., phone and fax numbers mixed up)

  • Incomplete information (missing area codes)

Understanding the Costs of Using Low-Quality Information

• The four primary sources of low-quality information include:

  • Customers intentionally enter inaccurate information to protect privacy

  • Different entry standards and formats

  • Operators enter abbreviated or erroneous information by accident or to save time

  • Third-party and external information contains inconsistencies, inaccuracies, and errors

Potential Business Effects of Low-Quality Information

• Inability to accurately track customers

• Difficulty identifying valuable customers

• Inability to identify selling opportunities

• Marketing to nonexistent customers

• Difficulty tracking revenue

• Inability to build strong customer relationships

Understanding the Benefits of Good Information

• High-quality information can significantly improve the chances of making a good decision

• Good decisions can directly impact an organization's bottom line

Storing Information in a Relational Database

• Information is stored in databases

• Database: maintains information about objects (inventory), events (transactions), people (employees), and places (warehouses)

• Database management systems (DBMS): allows users to create, read, update, and delete data in a relational database

Data Elements, Metadata, and Data Model Components

• Data element: the smallest or basic unit of information

• Data model: logical data structures that detail the relationships among data elements using graphics or pictures

• Metadata: details about data

• Data dictionary: a book that compiles all metadata about the data elements in the data model

Data Elements in Entities and Attributes

• Entity: a person, place, thing, transaction, or event about which information is stored

  • The rows in a table contain entities

• Attribute (field, column): the data elements associated with an entity

  • The columns in each table contain the attributes

• Record: a collection of related data elements

Creating Relationships Through Keys

• Primary key: a field (or group of fields) that uniquely identifies a given entity in a table

• Foreign key: a primary key of one table that appears as an attribute in another table and provides a logical relationship among the two tables

Using a Relational Database for Business Advantages

• Database advantages from a business perspective include:

  • Increased Flexibility

  • Increased Scalability and Performance

  • Reduced Information Redundancy

  • Increased Information Integrity

  • Increased Information Security

Increasing Flexibility

• A well-designed database should:

  • Handle changes quickly and easily

  • Provide users with different views

  • Have only one physical view but multiple logical views

• Physical view: deals with the physical storage of information on storage devices

• Logical view: focuses on how individual users logically access information to meet their own business needs

Increasing Scalability and Performance

• A database must scale to meet increased demand while maintaining acceptable performance

• Scalability: how well a system can adapt to increased demands

• Performance: how quickly a system performs a process or transaction

Reducing Information Redundancy

• Databases reduce information redundancy (duplication of data across locations)

• Inconsistency is a primary problem arising from redundant data

Increasing Information Integrity (Quality)

• Information integrity: measures the quality of information

• Integrity constraint: rules that help ensure information quality

• Examples: relational integrity constraints, business-critical integrity constraints

Increasing Information Security

• Information is an organizational asset and must be protected

• Database security features include:

  • Password authentication

  • Access level controls

  • Access control specifying types of user access (e.g., read-only)

Driving Websites with Data

• Data-driven websites: interactive sites kept constantly updated and relevant to customers using a database

• Core roles:

  • Content creator

  • Content editor

• Information characteristics:

  • Static information vs dynamic information

  • Dynamic catalog

• Data-driven website advantages:

  • Easy to manage content

  • Easy to store large amounts of data

  • Easy to eliminate human errors

Driving Websites with Data: Example Context

• Example focus: Zappos as a data-driven site

• Typical workflow: search query -> database -> results -> web server -> dynamic display of products (e.g., BestMobile, New Arrivals, Best Sellers)

• Data relationships include: customers, orders, products, categories, suppliers, and related transaction data

• Practical elements on pages may include a shopping cart, navigation, categories, and related products

Data-Driven Website: Practical Visuals (Illustrative)

• A data-driven page may show a single web page with a shopping cart and dynamic product listings

• PivotTable and product sales data may illustrate:

  • Best-selling product for the day

  • Revenue totals (e.g., Grand Total)

  • Example rows include products, prices, and sales figures

Building a Connected Corporation Through Integrations

• Integration: allows separate systems to communicate directly with each other, eliminating manual data entry into multiple systems

• Types:

  • Application integration

  • Data integration

  • Forward integration

  • Backward integration

Integration Example

• Visual scenario: multiple systems (Sales, Order Entry, Order Fulfillment, Billing) interact

• Forward integration: sharing customer information downstream (toward fulfillment/billing)

• Backward integration: sharing customer information upstream (toward sales/entry)

• Central information repository as a potential hub for integrated data

Integration Tools

• Enterprise system: provides enterprisewide support and data access for operations and processes

• Enterprise Application Integration (EAI): connects plans, methods, and tools to integrate separate enterprise systems

• Middleware: software layers that sit between and connect two or more applications

• Enterprise application integration middleware: packaging commonly used applications to speed integration across vendors

Learning Outcome Review

• Review the chapter’s learning outcomes in your text to consolidate understanding

• Focus on how databases, data quality, and integration support business decisions and operational efficiency

Quick Formulas and Key Concepts

• Information types: $$ ext{Information Types} = ig{ ext{Transactional}, ext{Analytical} igig

• Keys in relational databases:

  • Primary key: unique identifier for a record in a table

  • Foreign key: reference to a primary key in another table to establish relationships

• Relational integrity constraints: rules ensuring data validity across relations

• Data management goals: high-quality information drives better decisions and performance

Note on Illustrative Examples from the Slides

• Real-time and analytical decision-making examples show how timely data supports operational and managerial tasks

• Data-driven site examples illustrate the impact of well-structured data on content management, product catalogs, and user experience

• Integration diagrams emphasize how data flows between systems and how central repositories can improve data consistency across the organization