MIS –

Management
{ Information
System
SECTION – A
Data vs. Information
Data Information
 raw facts  data with context

 no context  processed data

 just numbers and text  value-added to data

 summarized
 organized
 analyzed
Data vs. Information
 Data: 50819
 Information:
 5/08/19 The date of your presentations will
start.
 50819 hopefully the average starting salary
Data  Information  Knowledge
Data

Summarizing the data

Averaging the data
Selecting part of the data
Graphing the data
Adding context
Adding value

Information
Data  Information  Knowledge
Information

How is the info tied to outcomes?

Are there any patterns in the info?
What info is relevant to the problem?
How does this info effect the system?
What is the best way to use the info?
How can we add more value to the info?

Knowledge
An Introduction to Information
Systems
Information System:

An information system is a set of interrelated

components that collect, manipulate, store
data and disseminate information and provide
a feedback mechanism to monitor
performance.
What is an Information System?

An organized combination of
people, hardware, software,
communications networks, and
data resources that collects data,
transforms it, and disseminates
information.
Information Systems
Generic Goal:
 Transform Data into Information

 At the Core of an Information System is a

Database (raw data).
 Information Systems
People – to help support decision making,
coordination, control, analysis, and visualization
in an organization

An
Information
System has all
3 dimensions
Technology – hardware,
working
software, and networks
Process – collects, together
that support the business
processes, stores, and
processes and people
disseminates information
Information Systems (TPS and PCS)

 Data doesn’t just appear,

Capturing Data is really the first step

 These systems help capture data but

they also have other purposes (goals):
1. Transaction Processing Systems (TPS)
2. Process Control Systems (PCS)
Capturing Data
 What are some examples of real TPS’s?

 What kind of data is being capture?

 How is this data transformed into

Information?
Data Processing
 Recall that a basic system is composed of
5 components
 Input, Output, Processing, Feedback, Control
 Typically processing helps transform data
into information.
Input Output
Processing
Raw Data Information
Processing
 Summarizing
 Computing Averages
 Graphing
 Creating Charts
 Visualizing Data
Information System Components
Several components work together to add
value to an organization:
1. Hardware
2. Software Technology
Related Roles
3. Data
4. People
5. Process
Technology

 Hardware – physical components

 Software – instructions that tell the physical components what

to do
 Operating systems – interacts with the hardware
 Application software – interacts with the user

 Data – collection of facts

 Networks – allows the transmission and sharing of data

People
 Also known as users
 Person who uses and operates the
computer or other machine
 All levels of the organization
 Can be your outside partners such
as suppliers
Process
 Series of steps to achieve a desired outcome
 Benefits:
 Increased productivity
 Better decision making ability
 Improved processes using available data
 Within the company
 Externally with suppliers and customers
 Continuous improvement using technology
 Competitive advantage
ROLE OF INFORMATION
SYSTEMS IN BUSINESS
 Management Information Systems

The Role of Information Systems in Business Today

• How information systems are transforming business

– Increase in wireless technology use, Web sites
– Increased business use of Web 2.0 technologies
– Cloud computing, mobile digital platform allow more
distributed work, decision-making, and collaboration
• Globalization opportunities
– Internet has drastically reduced costs of operating on
global scale
– Presents both challenges and opportunities
 Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY

The Role of Information Systems in Business Today

• In the emerging, fully digital firm

– Significant business relationships are digitally
enabled and mediated
– Core business processes are accomplished through
digital networks
– Key corporate assets are managed digitally
• Digital firms offer greater flexibility in organization
and management
– Time shifting, space shifting

© Prentice Hall 2011

 Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY

The Role of Information Systems in Business Today

• Growing interdependence between ability to use

information technology and ability to implement
corporate strategies and achieve corporate goals
• Business firms invest heavily in information systems
to achieve six strategic business objectives:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival

© Prentice Hall 2011

 Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY

The Role of Information Systems in Business Today

• Operational excellence:
– Improvement of efficiency to attain higher
profitability
– Information systems, technology an
important tool in achieving greater
efficiency and productivity
– Walmart’s RetailLink system links suppliers
to stores for superior replenishment
system
 Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY

The Role of Information Systems in Business Today

• New products, services, and business

models:
– Business model: describes how company
produces, delivers, and sells product or service to
create wealth
– Information systems and technology a major
enabling tool for new products, services,
business models
• Examples: Apple’s iPod, iTunes, iPhone, iPad,
Google’s Android OS, and Netflix
 Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY

The Role of Information Systems in Business Today

• Customer and supplier intimacy:

– Serving customers well leads to customers
returning, which raises revenues and profits
• Example: High-end hotels that use computers
to track customer preferences and use to
monitor and customize environment
– Intimacy with suppliers allows them to provide
vital inputs, which lowers costs
• Example: J.C.Penney’s information system
which links sales records to contract
manufacturer
 Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY

The Role of Information Systems in Business Today

• Improved decision making

– Without accurate information:
• Managers must use forecasts, best guesses, luck
• Leads to:
– Overproduction, underproduction of goods and services
– Misallocation of resources
– Poor response times
• Poor outcomes raise costs, lose customers
– Example: Verizon’s Web-based digital dashboard to
provide managers with real-time data on customer
complaints, network performance, line outages, etc.
 Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY

The Role of Information Systems in Business Today

• Operational excellence:
– Improvement of efficiency to attain higher profitability
• New products, services, and business models:
– Enabled by technology
• Customer and supplier intimacy:
– Serving customers raises revenues and profits
– Better communication with suppliers lowers costs
• Improved decision making
– More accurate data leads to better decisions
 Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY

The Role of Information Systems in Business Today

• Competitive advantage
– Delivering better performance
– Charging less for superior products
– Responding to customers and suppliers in real
time
– Examples: Apple, Walmart, UPS
Improved Decision Making:

• If managers rely on forecasts, best guesses, and luck, they will

misallocate employees, services, and inventory.
• Real-time data improves ability of managers to make decisions.
• Verizon: Web-based digital dashboard to update managers
with real-time data on customer complaints, network
performance, and line outages
Survival:

• Businesses may need to invest in information systems out of

necessity; simply the cost of doing business.
• Keeping up with competitors
• Citibank’s introduction of ATMs
• Federal and state regulations and reporting requirements
• Toxic Substances Control Act and the Sarbanes-Oxley Act
 Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY

The Role of Information Systems in Business Today

The Interdependence Between Organizations and Information Technology

Figure 1.2 In contemporary systems there is a growing interdependence between a firm’s information systems and its
business capabilities. Changes in strategy, rules, and business processes increasingly require changes in
hardware, software, databases, and telecommunications. Often, what the organization would like to do
depends on what its systems will permit it to do.
GLOBALIZATION CHALLENGES
AND OPPORTUNITIES IN
INFORMATION SYSTEMS
Cultural challenge
 cultural differences
 own traditions and culture that may differ
from and not accustomed to other country
 Difficulties in managing people, tastes,
issue with ethics, gestures and specific
groups averse to “Westernisation
 Eg McDonalds
Language challenge
 there is only a fraction of 26.3 percent that
speaks English as opposed to 74.7
percent of non-English speaking countries.
(https://www.statista.com/statistics/262946
/share-of-the-most-common-languages-
on-the-internet/).
The Challenge of distance and
time
 creates delays and disruption with
business transaction which causes
employees and customers located in
different countries to have difficulty with
getting connected
Technological Barrier
 Unavailability of adequate information
technology infrastructures.
 telephone and internet services may have
limited access and even the
 employees are not skilled to handle the
changing technological infrastructure.
Regulation and tariffs
 Countries have different importing
regulations
 The regulations have a variety of issues,
trade secrets, patents, copyrights,
protection of personal or financial data,
and privacy
challenge of differences in
payment mechanism
 Some countries do not have debit or credit
card for online transactions. A country like
Japan avoids using credit card.
 On the contrast the US does not use
mobile payment method which is mobile
payment on method on the cell phone to
do electronic commerce.
Assignment
 Role of IT in Business enhancement

 E – commerce

 E – Government
IS Organizations
and Strategy
THE RELATIONSHIP BETWEEN ORGANIZATIONS AND
INFORMATION TECHNOLOGY

This complex two-way

relationship is
mediated by many
factors, not the least of
which are the
decisions made – or
not made – by
managers. Other
factors mediating the
relationship include the
organizational culture,
structure, politics,
business processes,
and environment.
HOW INFORMATION SYSTEMS IMPACT
ORGANIZATIONS AND BUSINESS FIRMS
 How Information Systems Impact
Organizations and Business Firms

• Economic impacts
– IT changes relative costs of capital and the costs of
information
– Information systems technology is a factor of
production, like capital and labor
– IT affects the cost and quality of information and
changes economics of information
• Information technology helps firms contract in size
because it can reduce transaction costs (the cost of
participating in markets)
– Outsourcing

148
How Information Systems Impact Organizations and Business Firms

• Transaction cost theory

– Firms seek to economize on transaction
costs (the costs of participating in markets)
• Vertical integration, hiring more
employees, buying suppliers and
distributors
– IT lowers market transaction costs for a
firm, making it worthwhile for firms to
transact with other firms rather than grow
the number of employees
149
How Information Systems Impact Organizations and Business Firms
THE TRANSACTION COST THEORY OF THE IMPACT OF INFORMATION
TECHNOLOGY ON THE ORGANIZATION

Firms traditionally grew in size to reduce market transaction costs. IT potentially reduces the firms market
transaction costs. This means firms can outsource work using the market, reduce their employee head
count and still grow revenues, relying more on outsourcing firms and external contractors.

150
How Information Systems Impact Organizations and Business Firms

• Agency theory:
– Firm is nexus of contracts among self-interested
parties requiring supervision
– Firms experience agency costs (the cost of
managing and supervising) which rise as firm
grows
– IT can reduce agency costs, making it possible for
firms to grow without adding to the costs of
supervising, and without adding employees

151
How Information Systems Impact Organizations and Business Firms
THE AGENCY THEORY OF THE IMPACT OF INFORMATION
TECHNOLOGY ON THE ORGANIZATION

As firms grow in size and complexity, traditionally they experience rising agency costs.

152
How Information Systems Impact Organizations and Business Firms

• Organizational and behavioral impacts

– IT flattens organizations
• Decision making pushed to lower levels
• Fewer managers needed (IT enables faster
decision making and increases span of control)
– Postindustrial organizations
• Organizations flatten because in postindustrial
societies, authority increasingly relies on
knowledge and competence rather than formal
positions
153
 How Information Systems Impact Organizations and Business Firms

FLATTENING
ORGANIZATIONS
Information systems can
reduce the number of levels in
an organization by providing
managers with information to
supervise larger numbers of
workers and by giving lower-
level employees more
decision-making authority.

154
How Information Systems Impact Organizations and Business Firms

• Organizational resistance to change

– Information systems become bound up in
organizational politics because they influence
access to a key resource – information
– Information systems potentially change an
organization’s structure, culture, politics, and
work
– Most common reason for failure of large projects
is due to organizational and political resistance to
change
155
 How Information Systems Impact Organizations and Business Firms

ORGANIZATIONAL
RESISTANCE AND THE
MUTUALLY ADJUSTING
RELATIONSHIP BETWEEN
TECHNOLOGY AND THE
ORGANIZATION
Implementing information
systems has consequences for
task arrangements, structures,
and people. According to this
model, to implement change, all
four components must be
changed simultaneously.

FIGURE 3-9

156
How Information Systems Impact Organizations and Business Firms

• The Internet and organizations

– The Internet increases the accessibility, storage,
and distribution of information and knowledge
for organizations
– The Internet can greatly lower transaction and
agency costs
• Example: Large firm delivers internal manuals
to employees via a corporate Web site, saving
millions of dollars in distribution costs

157
How Information Systems Impact Organizations and Business Firms

• Central organizational factors to consider when

planning a new system:
– Environment
– Structure
• Hierarchy, specialization, routines, business processes
– Culture and politics
– Type of organization and style of leadership
– Main interest groups affected by system; attitudes of
end users
– Tasks, decisions, and business processes the system
will assist
158
 Ethical & Social Issues in IS

159 © Prentice Hall 2011

 Management Information Systems

Understanding Ethical and Social Issues Related to Systems

• Model for thinking about ethical, social, political

issues:
– Society as a calm pond
– IT as rock dropped in pond, creating ripples of new
situations not covered by old rules
– Social and political institutions cannot respond
overnight to these ripples—it may take years to
develop etiquette, expectations, laws
• Requires understanding of ethics to make choices in
legally gray areas

161
 Management Information Systems

Understanding Ethical and Social Issues Related to Systems

THE RELATIONSHIP
BETWEEN ETHICAL,
SOCIAL, AND
POLITICAL ISSUES IN
AN INFORMATION
SOCIETY
The introduction of new
information technology has a
ripple effect, raising new
ethical, social, and political
issues that must be dealt with
on the individual, social, and
political levels. These issues
have five moral dimensions:
information rights and
obligations, property rights and
obligations, system quality,
quality of life, and
accountability and control.

162
 Management Information Systems

Understanding Ethical and Social Issues Related to Systems

• Five moral dimensions of the

information age
1. Information rights and obligations
2. Property rights and obligations
3. Accountability and control
4. System quality
5. Quality of life

163
 Management Information Systems

Understanding Ethical and Social Issues Related to Systems

• Key technology trends that raise ethical issues

1. Doubling of computer power
• More organizations depend on computer systems for
critical operations
2. Rapidly declining data storage costs
• Organizations can easily maintain detailed databases on
individuals
3. Networking advances and the Internet
• Copying data from one location to another and
accessing personal data from remote locations is much
easier
164
 Management Information Systems

Understanding Ethical and Social Issues Related to Systems

• Key technology trends that raise ethical issues (cont.)

4. Advances in data analysis techniques
• Companies can analyze vast quantities of data gathered
on individuals for:
– Profiling
» Combining data from multiple sources to create dossiers
of detailed information on individuals
– Nonobvious relationship awareness (NORA)
» Combining data from multiple sources to find obscure
hidden connections that might help identify criminals or
terrorists

165
 Management Information Systems

Understanding Ethical and Social Issues Related to Systems

NONOBVIOUS
RELATIONSHIP
AWARENESS (NORA)
NORA technology can take
information about people from
disparate sources and find
obscure, nonobvious
relationships. It might discover,
for example, that an applicant
for a job at a casino shares a
telephone number with a
known criminal and issue an
alert to the hiring manager.

166
 Management Information Systems

Ethics in an Information Society

• Basic concepts for ethical analysis

– Responsibility:
• Accepting the potential costs, duties, and obligations for
decisions
– Accountability:
• Mechanisms for identifying responsible parties
– Liability:
• Permits individuals (and firms) to recover damages done to
them
– Due process:
• Laws are well known and understood, with an ability to
appeal to higher authorities

167
 Management Information Systems

Ethics in an Information Society

• Ethical analysis: A five-step process

1. Identify and clearly describe the facts
2. Define the conflict or dilemma and identify the
higher-order values involved
3. Identify the stakeholders
4. Identify the options that you can reasonably
take
5. Identify the potential consequences of your
options

168
 Management Information Systems

Ethics in an Information Society

• Six Candidate Ethical Principles

1. Golden Rule
• Do unto others as you would have them do unto you
2. Immanuel Kant’s Categorical Imperative
• If an action is not right for everyone to take, it is not
right for anyone
3. Descartes’ Rule of Change
• If an action cannot be taken repeatedly, it is not right to
take at all

169
 Management Information Systems

Ethics in an Information Society

• Six Candidate Ethical Principles (cont.)

4. Utilitarian Principle
• Take the action that achieves the higher or greater
value
5. Risk Aversion Principle
• Take the action that produces the least harm or least
potential cost
6. Ethical “no free lunch” Rule
• Assume that virtually all tangible and intangible objects
are owned by someone unless there is a specific
declaration otherwise
170
 Management Information Systems

The Moral Dimensions of Information Systems

• Internet Challenges to Privacy:

– Cookies
• Tiny files downloaded by Web site to visitor’s hard drive to help
identify visitor’s browser and track visits to site
• Allow Web sites to develop profiles on visitors
– Web beacons/bugs
• Tiny graphics embedded in e-mail and Web pages to monitor who
is reading message
– Spyware
• Surreptitiously installed on user’s computer
• May transmit user’s keystrokes or display unwanted ads
• Google’s collection of private data; behavioral
targeting
171
 Management Information Systems

The Moral Dimensions of Information Systems

HOW COOKIES IDENTIFY WEB VISITORS

Cookies are written by a Web site on a visitor’s hard drive. When the visitor returns to that Web site, the
Web server requests the ID number from the cookie and uses it to access the data stored by that server on
that visitor. The Web site can then use these data to display personalized information.

172
 Management Information Systems

The Moral Dimensions of Information Systems

• System Quality: Data Quality and System Errors

– What is an acceptable, technologically feasible level of
system quality?
• Flawless software is economically unfeasible
– Three principal sources of poor system performance:
• Software bugs, errors
• Hardware or facility failures
• Poor input data quality (most common source of
business system failure)

173
 Management Information Systems

• ASSIGNMENT - Cyberbullying

174 © Prentice Hall 2011

SECTION – B
 IT Infrastructure
and Emerging
Technologies

5.176 © 2009 by Prentice Hall

 IT Infrastructure

• Defining IT infrastructure:
• Set of physical devices and software required to operate
enterprise
• Set of firmwide services including:
• Computing platforms providing computing services
• Telecommunications services
• Data management services
• Application software services
• Physical facilities management services
• IT management, standards, education, research and development
services
• “Service platform” perspective more accurate view of value of
investments

5.177 © 2009 by Prentice Hall

 IT Infrastructure

Connection Between the Firm, IT Infrastructure, and

Business Capabilities

The services a firm is

capable of providing to
its customers,
suppliers, and
employees are a direct
function of its IT
infrastructure. Ideally,
this infrastructure
should support the
firm’s business and
information systems
strategy. New
information
technologies have a
powerful impact on
business and IT
strategies, as well as the
services that can be
provided to customers.

5.178 © 2009 by Prentice Hall

 IT Infrastructure
• Evolution of IT infrastructure
• General-purpose mainframe and minicomputer era: 1959 to present
• 1958 IBM first mainframes introduced, eventually used to support thousands
of online remote terminals
• 1965 less expensive DEC minicomputers introduced, allowing decentralized
computing
• Personal computer era: 1981 to present
• 1981 Introduction of IBM PC
• Proliferation in 80s, 90s resulted in growth of personal software
• Client/server era: 1983 to present
• Desktop clients networked to servers, with processing work split between
clients and servers
• Network may be two-tiered or multitiered (N-tiered)
• Various types of servers (network, application, Web)

5.179 © 2009 by Prentice Hall

 IT Infrastructure

• Evolution of IT infrastructure (cont.)

• Enterprise Internet computing era: 1992 to present
• Move toward integrating disparate networks, applications using
Internet standards and enterprise applications
• Cloud Computing: 2000 to present
• Refers to a model of computing where firms and individuals obtain
computing power and software applications over the Internet
• Fastest growing form of computing

5.180 © 2009 by Prentice Hall

 IT Infrastructure

A Multitiered Client/Server Network (N-Tier)

In a multitiered client/server network, client requests for service are handled by different levels of servers.

5.181 © 2009 by Prentice Hall

 IT Infrastructure

• Technology drivers of infrastructure evolution

(cont.)
• Standards and network effects
• Technology standards:
• Specifications that establish the compatibility of products and the
ability to communicate in a network
• Unleash powerful economies of scale and result in price declines
as manufacturers focus on the products built to a single standard

5.182 © 2009 by Prentice Hall

 Infrastructure Components

• IT Infrastructure has 7 main components

• Computer hardware platforms
• Operating system platforms
• Enterprise software applications
• Data management and storage
• Networking/telecommunications platforms
• Internet platforms
• Consulting system integration services

5.183 © 2009 by Prentice Hall

 Infrastructure Components

The IT Infrastructure Ecosystem

There are seven major

components that must be
coordinated to provide the
firm with a coherent IT
infrastructure. Listed here
are major technologies and
suppliers for each
component. Figure 5-10
5.184 © 2009 by Prentice Hall
 Infrastructure Components

• Computer hardware platforms

• Client machines
• Desktop PCs, mobile computing devices – PDAs, laptops
• Servers
• Blade servers: ultrathin computers stored in racks
• Mainframes:
• IBM mainframe equivalent to thousands of blade servers
• Top chip producers: AMD, Intel, IBM
• Top firms: IBM, HP, Dell, Sun Microsystems

5.185 © 2009 by Prentice Hall

 Infrastructure Components

• Operating system platforms

• Operating systems
• Client level: 95% run Microsoft Windows (XP, 2000, CE, etc.)
• Server level: 85% run Unix or Linux
• Enterprise software applications
• Enterprise software applications
• Enterprise application providers: SAP and Oracle
• Middleware providers: BEA

5.186 © 2009 by Prentice Hall

 Infrastructure Components

• Data management and storage

• Database software: IBM (DB2), Oracle, Microsoft (SQL
Server), Sybase (Adaptive Server Enterprise), MySQL
• Physical data storage: EMC Corp (large-scale
systems), Seagate, Maxtor, Western Digital
• Storage area networks: connect multiple storage
devices on dedicated network

5.187 © 2009 by Prentice Hall

 Infrastructure Components

• Networking/telecommunications platforms
• Telecommunication services
• Telecommunications, cable, telephone company
charges for voice lines and Internet access
• AT&T, Verizon
• Network operating systems:
• Windows Server, Novell, Linux, Unix
• Network hardware providers: Cisco, Lucent, Nortel,
Juniper Networks

5.188 © 2009 by Prentice Hall

 Infrastructure Components

• Internet platforms
• Hardware, software, management services to support
company Web sites, (including Web hosting services)
intranets, extranets
• Internet hardware server market: Dell, HP/Compaq,
IBM
• Web development tools/suites: Microsoft (FrontPage,
.NET) IBM (WebSphere) Sun (Java), independent
software developers: Macromedia/Adobe, RealMedia

5.189 © 2009 by Prentice Hall

 Infrastructure Components

• Consulting and system integration services

• Even large firms do not have resources for full range of
support for new, complex infrastructure
• Software integration: ensuring new infrastructure works
with legacy systems
• Legacy systems: older TPS created for mainframes that
would be too costly to replace or redesign
• Accenture, IBM Global Services, EDS, Infosys, Wipro

5.190 © 2009 by Prentice Hall

 Contemporary Hardware Platform Trends

• While cost of computing is lower, infrastructure costs

have expanded
• More computing, more sophisticated computing, increased
consumer expectations, need for security
• The emerging mobile digital platform
• Cell phones, smartphones (BlackBerry, iPhone) have assumed
data transmission, Web surfing, e-mail and IM duties
• Netbooks: small, low-cost lightweight notebooks optimized for
wireless communication and core computing tasks

5.191 © 2009 by Prentice Hall

 Contemporary Hardware Platform Trends

• Grid computing
• Connects geographically remote computers into a single network
to combine processing power and create virtual supercomputer
• Provides cost savings, speed, agility

• Cloud computing (utility computing)

• Data permanently stored in remote servers, accessed and updated
over the Internet by users
• Organizations using cloud computing need only pay for the
computing power they actually use (on-demand or utility
computing)

5.192 © 2009 by Prentice Hall

 Contemporary Software Platform Trends

• Linux and open-source software

• Open-source software: Produced by community of programmers,
free and modifiable by user
• Linux: Open-source software OS
• Java
• Object-oriented programming language (Sun Microsystems)
• Operating system, processor-independent (Java Virtual Machine)
• Leading programming environment for Web
• Applets, E-commerce applications
• Ajax
• Asynchronous JavaScript and XML
• Allows client and server to exchange small pieces of data without
requiring the page to be reloaded

5.193 © 2009 by Prentice Hall

 Software Platform Trends and Emerging Technologies

• Web Services
• Software components that exchange information using Web
standards and languages
• XML: Extensible Markup Language
• More powerful and flexible than HTML
• Tagging allows computers to process data automatically
• SOAP: Simple Object Access Protocol
• Rules for structuring messages enabling applications to pass data and
instructions
• WSDL: Web Services Description Language
• Framework for describing Web service and capabilities
• UDDI: Universal Description, Discovery, and Integration
• Directory for locating Web services

5.194 © 2009 by Prentice Hall

 • Mashups and widgets
• Mashups: Combinations of two or more online applications, such
as combining mapping software (Google Maps) with local content
• Widgets: small programs that can be added to Web pages or
placed on the desktop to add additional functionality
• Software outsourcing
• Three sources: external commercial vendor, online service
providers, offshore firms
• Software packages: prewitten set of software available
commercially
• Software as a service (SaaS): software delivered over the Internet
• Offshore outsourcing: usually governed by service level agreement

5.195 © 2009 by Prentice Hall

 Management Issues

• Management and governance

– Who controls IT infrastructure
– Centralized/decentralized
– How are costs allocated between divisions,
departments?

5.196 © 2009 by Prentice Hall

 Foundations of
Business Intelligence:
Databases and
Information
Management
5.197 © 2009 by Prentice Hall
 • File organization concepts
• Computer system organizes data in a hierarchy
• Field: Group of characters as word(s) or number
• Record: Group of related fields
• File: Group of records of same type
• Database: Group of related files
• Record: Describes an entity
• Entity: Person, place, thing on which we store
information
• Attribute: Each characteristic, or quality, describing entity
• E.g., Attributes Date or Grade belong to entity COURSE

5.198 © 2009 by Prentice Hall

 The Data Hierarchy

A computer system
organizes data in a
hierarchy that starts with the
bit, which represents either
a 0 or a 1. Bits can be
grouped to form a byte to
represent one character,
number, or symbol. 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.

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 • Problems with the traditional file environment (files
maintained separately by different departments)
• Data redundancy and inconsistency
• Data redundancy: Presence of duplicate data in multiple files
• Data inconsistency: Same attribute has different values
• Program-data dependence:
• When changes in program requires changes to data accessed by
program
• Lack of flexibility
• Poor security
• Lack of data sharing and availability

5.200 © 2009 by Prentice Hall

 Traditional File Processing

The use of a traditional approach to file processing encourages each functional area in a corporation to
develop specialized applications and files. Each application requires a unique data file that is likely to be a
subset of the master file. These subsets of the master file lead to data redundancy and inconsistency,
processing inflexibility, and wasted storage resources.

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 The Database Approach to Data Management

• Database
• Collection of data organized to serve many applications by
centralizing data and controlling redundant data
• Database management system
• Interfaces between application programs and physical data files
• Separates logical and physical views of data
• Solves problems of traditional file environment
• Controls redundancy
• Eliminates inconsistency
• Uncouples programs and data
• Enables organization to central manage data and data security

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 The Database Approach to Data Management
Human Resources Database with Multiple Views

A single human resources database provides many different views of data, depending on the information
requirements of the user. Illustrated here are two possible views, one of interest to a benefits specialist and
one of interest to a member of the company’s payroll department.

5.203 © 2009 by Prentice Hall

 The Database Approach to Data Management

• Relational DBMS
• Represent data as two-dimensional tables called relations or files
• Each table contains data on entity and attributes
• Table: grid of columns and rows
• Rows (tuples): Records for different entities
• Fields (columns): Represents attribute for entity
• Key field: Field used to uniquely identify each record
• Primary key: Field in table used for key fields
• Foreign key: Primary key used in second table as look-up field to
identify records from original table

5.204 © 2009 by Prentice Hall

 The Database Approach to Data Management
Relational Database Tables

A relational database organizes data in the form of two-dimensional tables. Illustrated here are tables for
the entities SUPPLIER and PART showing how they represent each entity and its attributes.
Supplier_Number is a primary key for the SUPPLIER table and a foreign key for the PART table.

5.205 © 2009 by Prentice Hall

 The Database Approach to Data Management
Relational Database Tables (cont.)

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 The Database Approach to Data Management

• Operations of a Relational DBMS

• Three basic operations used to develop useful sets of data
• SELECT: Creates subset of data of all records that
meet stated criteria
• JOIN: Combines relational tables to provide user with
more information than available in individual tables
• PROJECT: Creates subset of columns in table,
creating tables with only the information specified

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 The Database Approach to Data Management
The Three Basic Operations of a Relational DBMS

The select, project, and join operations enable data from two different tables to be combined and only
selected attributes to be displayed.

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 The Database Approach to Data Management

• Object-Oriented DBMS (OODBMS)

• Stores data and procedures as objects
• Capable of managing graphics, multimedia, Java
applets
• Relatively slow compared with relational DBMS for
processing large numbers of transactions
• Hybrid object-relational DBMS: Provide capabilities
of both OODBMS and relational DBMS

5.209 © 2009 by Prentice Hall

 The Database Approach to Data Management

• Capabilities of Database Management Systems

• Data definition capability: Specifies structure of database
content, used to create tables and define characteristics of fields
• Data dictionary: Automated or manual file storing definitions of
data elements and their characteristics
• Data manipulation language: Used to add, change, delete,
retrieve data from database
• Structured Query Language (SQL)
• Microsoft Access user tools for generation SQL
• Many DBMS have report generation capabilities for creating
polished reports (Crystal Reports)

5.210 © 2009 by Prentice Hall

 The Database Approach to Data Management
Example of an SQL Query

Illustrated here are the SQL statements for a query to select suppliers for parts 137 or 150. They produce a
list with the same results as Figure 6-5.

5.211 © 2009 by Prentice Hall

 The Database Approach to Data Management

• Designing Databases
• Conceptual (logical) design: abstract model from business
perspective
• Physical design: How database is arranged on direct-access
storage devices
• Design process identifies
• Relationships among data elements, redundant database
elements
• Most efficient way to group data elements to meet business
requirements, needs of application programs
• Normalization
• Streamlining complex groupings of data to minimize redundant
data elements and awkward many-to-many relationships

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 The Database Approach to Data Management
An Unnormalized Relation for Order

An unnormalized relation contains repeating groups. For example, there can be many parts and suppliers
for each order. There is only a one-to-one correspondence between Order_Number and Order_Date.

5.213 © 2009 by Prentice Hall

 The Database Approach to Data Management
Normalized Tables Created from Order

After normalization, the original relation ORDER has been broken down into four smaller relations. The
relation ORDER is left with only two attributes and the relation LINE_ITEM has a combined, or
concatenated, key consisting of Order_Number and Part_Number.

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 The Database Approach to Data Management

• Entity-relationship diagram
• Used by database designers to document the data model
• Illustrates relationships between entities
• Distributing databases: Storing database in more than
one place
• Partitioned: Separate locations store different parts of database
• Replicated: Central database duplicated in entirety at different
locations

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 The Database Approach to Data Management
An Entity-Relationship Diagram

This diagram shows the relationships between the entities ORDER, LINE_ITEM, PART, and SUPPLIER that
might be used to model the database in Figure 6-10.

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 The Database Approach to Data
Management : Distributing databases

• Distributing databases
• Two main methods of distributing a database
• Partitioned: Separate locations store different parts of
database
• Replicated: Central database duplicated in entirety at
different locations
• Advantages
• Reduced vulnerability
• Increased responsiveness
• Drawbacks
• Departures from using standard definitions
• Security problems

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 The Database Approach to Data Management
Distributed Databases

There are alternative ways of distributing a database. The central database can be partitioned (a) so that each remote
processor has the necessary data to serve its own local needs. The central database also can be replicated (b) at all remote
locations.

5.218 © 2009 by Prentice Hall

 Using Databases to Improve Business
Performance and Decision Making

• Very large databases and systems require special

capabilities, tools
• To analyze large quantities of data
• To access data from multiple systems

• Three key techniques

• Data warehousing
• Data mining
• Tools for accessing internal databases through the Web

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 Using Databases to Improve Business Performance and Decision Making

• Data warehouse:
• Stores current and historical data from many core operational
transaction systems
• Consolidates and standardizes information for use across enterprise,
but data cannot be altered
• Data warehouse system will provide query, analysis, and reporting
tools
• Data marts:
• Subset of data warehouse
• Summarized or highly focused portion of firm’s data for use by
specific population of users
• Typically focuses on single subject or line of business

5.220 © 2009 by Prentice Hall

 Using Databases to Improve Business Performance and Decision Making
Components of a Data Warehouse

The data warehouse extracts current and historical data from multiple operational systems inside the
organization. These data are combined with data from external sources and reorganized into a central
database designed for management reporting and analysis. The information directory provides users
with information about the data available in the warehouse.

5.221 © 2009 by Prentice Hall

 Data Warehouse—
Subject-Oriented
• Organized around major subjects, such as customer,
product, sales
• Focusing on the modeling and analysis of data for
decision makers, not on daily operations or transaction
processing
• Provide a simple and concise view around particular
subject issues by excluding data that are not useful in
the decision support process

5.222 © 2009 by Prentice Hall

 Data Warehouse—
Integrated
• Constructed by integrating multiple, heterogeneous
data sources
– relational databases, flat files, on-line transaction records
• Data cleaning and data integration techniques are
applied.
– Ensure consistency in naming conventions, encoding
structures, attribute measures, etc. among different data
sources
• E.g., Hotel price: currency, tax, breakfast covered, etc.
– When data is moved to the warehouse, it is converted.

5.223 © 2009 by Prentice Hall

 Data Warehouse—
Time Variant
• The time horizon for the data warehouse is significantly
longer than that of operational systems
– Operational database: current value data
– Data warehouse data: provide information from a historical
perspective (e.g., past 5-10 years)
• Every key structure in the data warehouse
– Contains an element of time, explicitly or implicitly
– But the key of operational data may or may not contain “time
element”

5.224 © 2009 by Prentice Hall

 Data Warehouse—
Nonvolatile
• A physically separate store of data transformed
from the operational environment
• Operational update of data does not occur in the
data warehouse environment
– Does not require transaction processing, recovery, and
concurrency control mechanisms
– Requires only two operations in data accessing:
• initial loading of data and access of data
5.225 © 2009 by Prentice Hall
 Data Warehouse vs.
Heterogeneous DBMS
• Traditional heterogeneous DB integration: A query driven approach
– Build wrappers/mediators on top of heterogeneous databases

– When a query is posed to a client site, a meta-dictionary is used to

translate the query into queries appropriate for individual heterogeneous
sites involved, and the results are integrated into a global answer set

– Complex information filtering, compete for resources

• Data warehouse: update-driven, high performance

– Information from heterogeneous sources is integrated in advance and
stored in warehouses for direct query and analysis

5.226 © 2009 by Prentice Hall

 Why Separate Data Warehouse?
• High performance for both systems
– DBMS— tuned for OLTP: access methods, indexing, concurrency control,
recovery
– Warehouse—tuned for OLAP: complex OLAP queries, multidimensional
view, consolidation
• Different functions and different data:
– missing data: Decision support requires historical data which operational
DBs do not typically maintain
– data consolidation: DS requires consolidation (aggregation,
summarization) of data from heterogeneous sources
– data quality: different sources typically use inconsistent data
representations, codes and formats which have to be reconciled
• Note: There are more and more systems which perform OLAP
analysis directly on relational databases
5.227 © 2009 by Prentice Hall
 Using Databases to Improve Business Performance and Decision Making

• Business Intelligence:
• Tools for consolidating, analyzing, and providing access
to vast amounts of data to help users make better
business decisions
• E.g., Harrah’s Entertainment analyzes customers to
develop gambling profiles and identify most profitable
customers
• Principle tools include:
• Software for database query and reporting
• Online analytical processing (OLAP)
• Data mining

5.228 © 2009 by Prentice Hall

 Using Databases to Improve Business Performance and Decision Making
Business Intelligence

A series of analytical tools

works with data stored in
databases to find patterns
and insights for helping
managers and employees
make better decisions to
improve organizational
performance.

5.229 © 2009 by Prentice Hall

 What is OLAP?

• The term OLAP (“online analytical

processing“) was coined in a white paper
written for Arbor Software Corp. in 1993

– Interactive process of creating, managing,

analyzing and reporting on data
– Analyzing large quantities of data in real-time

5.230 © 2009 by Prentice Hall

 Using Databases to Improve Business Performance and Decision Making

• Online analytical processing (OLAP)

• Supports multidimensional data analysis
• Viewing data using multiple dimensions
• Each aspect of information (product, pricing, cost,
region, time period) is different dimension
• E.g., how many washers sold in East in June
compared with other regions?
• OLAP enables rapid, online answers to ad hoc queries

5.231 © 2009 by Prentice Hall

 OLAP

• Data is perceived and manipulated as

though it were stored in a „multi-
dimensional array“

• Ideas are explained in terms of

conventional SQL-styled tables

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 Data aggregation

• Data aggregation (agregação) in many

different ways

• The number of possible groupings quickly

becomes large
– The user has to consider all groupings
– Analytical processing problem

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 What is a Data Cube?

• A data cube, such as sales, allows data to be

modeled and viewed in multiple dimensions
– Dimension tables, such as
• item(item_name, brand, type)
• time(day, week, month, quarter, year) ...hierarchy

– Fact table contains measures (numerical values, such

as dollars_sold) and keys to each of the related
dimension tables

5.234 © 2009 by Prentice Hall

 Cuboid (Data Mining Definition)

• Names in data warehousing literature:

• The n-D cuboid, which holds the lowest level of

summarization, is called a base cuboid .. {{A},{B},..}

• The top most 0-D cuboid, which holds the highest-level of

summarization, is called the apex cuboid .. {}

• The lattice of cuboids forms a data cube

5.235 © 2009 by Prentice Hall

 Hierarchies
• Independent variables are often related in
hierarchies (taxonomy)
– Determine ways in which dependent data can be
aggregated
• Temporal hierarchy
– Seconds, minutes, hours, days, weeks, months, years
• Same data can be aggregated in many different
ways
– Same independent variable can belong to different
hierarchies

5.236 © 2009 by Prentice Hall

 Multidimensional Data

• Sales volume as a function of product,

month, and region
Dimensions: Product, Location, Time
Hierarchical summarization paths

Industry Region Year

Product

Category Country Quarter

Product City Month Week

Month Office Day

5.237 © 2009 by Prentice Hall

 Measures of Data Cube:
Three Categories
(Depending on the aggregate functions)
• Distributive: if the result derived by applying the function to
n aggregate values is the same as that derived by applying
the function on all the data without partitioning
• E.g., count(), sum(), min(), max()
• Algebraic: if it can be computed by an algebraic function
with M arguments (where M is a bounded integer), each of
which is obtained by applying a distributive aggregate
function
• E.g., avg(), min_N(), standard_deviation()
• Holistic: if there is no constant bound on the storage size
needed to describe a subaggregate.
• E.g., median(), mode(), rank()
5.238 © 2009 by Prentice Hall
 Drill up and down
• Drill up:
– going from a lower level of aggregation to a higher
• Drill down:
– means the opposite

– Difference between drill up and roll up

• Roll up: creating the desired groupings or aggregations
• Drill up: accessing the aggregations

– Example for drill down:

• Given the total shipment quantity, get the total quantities for
each individual supplier

5.239 © 2009 by Prentice Hall

 A Sample Data Cube
Date Total annual sales
2Qtr of TV in Portugal
1Qtr 3Qtr 4Qtr sum
TV
PC Portugal
VCR
sum
Spain

Country
Germany

sum

5.240 © 2009 by Prentice Hall

 Browsing a Data
Cube

• Visualization
• OLAP capabilities
• Interactive manipulation
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 Typical OLAP Operations
• Roll up (drill-up): summarize data
– by climbing up hierarchy or by dimension reduction
• Drill down (roll down): reverse of roll-up
– from higher level summary to lower level summary or
detailed data, or introducing new dimensions
• Slice and dice: project and select
• Pivot (rotate):
– reorient the cube, visualization, 3D to series of 2D planes
• Other operations
– drill across: involving (across) more than one fact table
– drill through: through the bottom level of the cube to its
back-end relational tables (using SQL)
5.242 © 2009 by Prentice Hall
 Multidimensional Data Analysis Techniques

• Data are processed and viewed as part of a

multidimensional structure
• Augmented by the following functions:
– Advanced data presentation functions
– Advanced data aggregation, consolidation, and
classification functions
– Advanced computational functions
– Advanced data modeling functions

5.243 © 2009 by Prentice Hall

 • Databases contain information in a series of
two-dimensional tables

• In a data warehouse and data mart,

information is multidimensional, it contains
layers of columns and rows
– Dimension – a particular attribute of
information

5.244 © 2009 by Prentice Hall

 OLTP vs. OLAP
OLTP OLAP
users clerk, IT professional knowledge worker
function day to day operations decision support
DB design application-oriented subject-oriented
data current, up-to-date historical,
detailed, flat relational summarized, multidimensional
isolated integrated, consolidated
usage repetitive ad-hoc
access read/write lots of scans
index/hash on prim. key
unit of work short, simple transaction complex query
# records accessed tens millions
#users thousands hundreds
DB size 100MB-GB 100GB-TB
metric transaction throughput query throughput, response

5.245 © 2009 by Prentice Hall

 Using Databases to Improve Business Performance and Decision Making

Data mining:
• More discovery driven than OLAP
• Finds hidden patterns, relationships in large databases and infers
rules to predict future behavior
• E.g., Finding patterns in customer data for one-to-one marketing
campaigns or to identify profitable customers.
• Types of information obtainable from data mining
• Associations
• Sequences
• Classification
• Clustering
• Forecasting

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 Using Databases to Improve Business Performance and Decision Making

• Predictive analysis
• Uses data mining techniques, historical data, and
assumptions about future conditions to predict
outcomes of events
• E.g., Probability a customer will respond to an offer or
purchase a specific product
• Text mining
• Extracts key elements from large unstructured data sets
(e.g., stored e-mails)

5.262 © 2009 by Prentice Hall

 Using Databases to Improve Business Performance and Decision Making

• Web mining
• Discovery and analysis of useful patterns and information
from WWW
• E.g., to understand customer behavior, evaluate
effectiveness of Web site, etc.
• Techniques
• Web content mining
• Knowledge extracted from content of Web pages
• Web structure mining
• E.g., links to and from Web page
• Web usage mining
• User interaction data recorded by Web server

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 Databases and the Web
Databases and the Web
• Many companies use Web to make some internal
databases available to customers or partners
• Typical configuration includes:
• Web server
• Application server/middleware/CGI scripts
• Database server (hosting DBM)
• Advantages of using Web for database access:
• Ease of use of browser software
• Web interface requires few or no changes to database
• Inexpensive to add Web interface to system

5.264 © 2009 by Prentice Hall

 Using Databases to Improve Business Performance and Decision Making

Linking Internal Databases to the Web

Users access an organization’s internal database through the

Web using their desktop PCs and Web browser software.

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 Managing Data
Resources
• Establishing an information policy
• Firm’s rules, procedures, roles for sharing, managing, standardizing
data
• E.g., What employees are responsible for updating sensitive
employee information
• Data administration: Firm function responsible for specific policies
and procedures to manage data
• Data governance: Policies and processes for managing
availability, usability, integrity, and security of enterprise data,
especially as it relates to government regulations
• Database administration : Defining, organizing, implementing,
maintaining database; performed by database design and
management group

5.266 © 2009 by Prentice Hall

 Managing Data Resources

• Ensuring data quality

• More than 25% of critical data in Fortune 1000
company databases are inaccurate or incomplete
• Most data quality problems stem from faulty input
• Before new database in place, need to:
• Identify and correct faulty data
• Establish better routines for editing data once
database in operation

5.267 © 2009 by Prentice Hall

 Managing Data Resources

• Data quality audit:

• Structured survey of the accuracy and level of
completeness of the data in an information system
• Survey samples from data files, or
• Survey end users for perceptions of quality
• Data cleansing
• Software to detect and correct data that are incorrect,
incomplete, improperly formatted, or redundant
• Enforces consistency among different sets of data from
separate information systems

5.268 © 2009 by Prentice Hall