Chapter 6: Foundations of Business

Intelligence
Databases and Information Management
1. Main Idea of the Chapter
This chapter explains how organizations collect, store, organize, manage, and analyze data.

In modern business, data is one of the most valuable resources. Companies use data to
understand customers, improve operations, reduce costs, identify trends, and make better
decisions.

The chapter mainly discusses databases, database management systems, relational databases, big
data, data warehouses, business intelligence tools, data mining, data governance, and data
quality.

In simple words, this chapter explains how raw data becomes useful information for managers.

Astro Case Study

2. Astro: Leveraging Data for Customer-Driven Services
Astro is Malaysia’s largest satellite TV broadcaster. It provides TV programs, IPTV, broadband,
and digital services.

Astro faced strong competition from companies such as Maxis, Telekom Malaysia, Iflix, and
Netflix. Because of this, Astro needed to understand customers better and provide services
according to customer needs.

The company had data stored in different places. Structured data was stored in a data warehouse,
while unstructured data was stored in cloud services. This created a problem because managers
could not get one complete view of the company’s data.

Astro solved this by investing RM 230 million in technology infrastructure and moving to a
cloud-based data lake using AWS.

The main lesson is that good data management helps companies understand customers, improve
services, and compete better.
Data Organization
3. Field
A field is one piece of information.

For example, Student Name, Student ID, Phone Number, and Grade are fields.

A field is the smallest meaningful data item used in a database.

4. Record
A record is a group of related fields about one person, object, or event.

For example, one student’s full information is a record. It may include Student ID, Name,
Course, and Grade.

A record gives complete information about one entity.

5. File
A file is a collection of related records.

For example, a student file contains records of many students.

Files help organize similar records together.

6. Database
A database is a collection of related files.

For example, a university database may contain student files, course files, teacher files, and fee
files.
A database stores related information in an organized way so it can be accessed and managed
easily.

7. Entity
An entity is a person, place, thing, or event about which data is stored.

Examples include Student, Employee, Customer, Product, Order, and Supplier.

Entities are important because databases are usually designed around them.

8. Attribute
An attribute is a characteristic of an entity.

For example, for the entity “Student,” attributes can be Student ID, Name, Age, Email, and
Grade.

Attributes describe the details of an entity.

9. Data Hierarchy
Data is organized in a hierarchy:

Bit → Byte → Field → Record → File → Database

A bit is the smallest unit of data and can be 0 or 1. A byte represents one character. Fields make
records, records make files, and files make databases.

This hierarchy helps understand how small data units combine to form useful information
systems.

Problems with Traditional File Environment

10. Separate Department Files
In traditional file systems, each department keeps its own files.

For example, sales, accounting, HR, and marketing may all store customer or employee data
separately.

This creates problems because departments may not share the same updated information.

11. Data Redundancy

Data redundancy means the same data is stored in many places.

For example, a customer’s phone number may be stored in sales, billing, and customer service
files.

This wastes storage and increases the work needed to maintain data.

12. Data Inconsistency

Data inconsistency happens when the same data has different values in different files.

For example, one department may have a customer’s old phone number, while another has the
new phone number.

This creates confusion because the company does not know which data is correct.

13. Program-Data Dependence

Program-data dependence means programs are closely connected to how data is stored.

If the data format changes, the program may also need to be changed.

For example, if customer ID changes from 5 digits to 8 digits, old programs may stop working.

14. Lack of Flexibility

Traditional file systems are not flexible when managers need new reports.
For example, if a manager asks for a report combining sales, complaints, and customer locations,
it may be difficult because data is stored separately.

This slows down decision-making.

15. Poor Security

When files are stored separately, it becomes difficult to control who can access what.

For example, an employee may access salary data if file permissions are weak.

Poor security increases the risk of data misuse or leakage.

16. Lack of Data Sharing

Separate files make it difficult for departments to share information.

For example, customer service may not see the latest sales order information.

This reduces service quality and creates communication problems.

Database Management Systems

17. Database Management System
A Database Management System, or DBMS, is software used to create, store, organize, access,
and manage data.

Examples include Oracle, MySQL, Microsoft SQL Server, PostgreSQL, and Microsoft Access.

A DBMS acts as a bridge between users, application programs, and the actual data stored in the
system.

18. Benefits of DBMS

A DBMS reduces duplicate data and improves consistency.

It also improves data sharing, security, data access, and central management.

For example, instead of every department keeping a separate customer file, the company can use
one central customer database.

19. Logical View and Physical View

A DBMS separates the logical view from the physical view.

The logical view is how users see the data. For example, a manager sees employee names and
salaries in a report.

The physical view is how data is actually stored on storage devices.

This separation makes systems easier to manage and change.

20. Multiple Views of Data

A DBMS can show different views of the same database to different users.

For example, payroll staff may see salary data, while benefits staff may see health care data.

This improves security because users only see the data they need.

Relational Databases
21. Relational DBMS
A relational DBMS stores data in tables.

Tables are made of rows and columns. Rows represent records, and columns represent fields or
attributes.

For example, a Student table may have columns such as Student ID, Name, Course, and Grade.
22. Primary Key
A primary key is a field that uniquely identifies each record in a table.

For example, Student ID can be the primary key in a Student table.

A primary key must be unique and cannot be empty.

23. Foreign Key

A foreign key is a primary key from one table used in another table to create a relationship.

For example, Supplier Number may be the primary key in the Supplier table and a foreign key in
the Part table.

Foreign keys help connect related tables.

24. Importance of Keys

Keys are important because they reduce duplication and connect data correctly.

For example, instead of writing supplier details again and again in every product record, the
product table can store only the Supplier Number.

The system can then use that number to find full supplier details from the Supplier table.

Relational DBMS Operations

25. SELECT
SELECT chooses rows from a table based on a condition.

For example, show all customers from Lahore.

In simple words, SELECT filters records.

26. JOIN
JOIN combines data from two or more tables.

For example, a Supplier table and a Part table can be joined to show which supplier provides
which part.

In simple words, JOIN connects related tables.

27. PROJECT
PROJECT chooses specific columns from a table.

For example, from a Student table, show only Student Name and Grade.

In simple words, PROJECT selects fields or columns.

DBMS Capabilities
28. Data Definition
Data definition is used to define the structure of a database.

It defines tables, fields, data types, field sizes, and relationships.

For example, Customer ID may be defined as a number, while Customer Name may be defined
as text.

29. Data Dictionary

A data dictionary stores information about the data in the database.

It describes tables, fields, data types, field lengths, rules, and relationships.

For example, it may show that Supplier Number is a numeric field and is used as a primary key.
30. Querying and Reporting
A DBMS allows users to ask questions and create reports.

For example, a manager can ask, “Which products sold the most this month?”

This helps users turn stored data into useful information.

31. SQL
SQL stands for Structured Query Language.

It is the standard language used to work with relational databases.

SQL is used to retrieve, insert, update, and delete data.

Database Design
32. Conceptual Design
Conceptual design explains what data should be stored and how different data items are related.

It focuses on business meaning.

For example, a university database may need students, courses, teachers, and enrollments.

33. Physical Design

Physical design explains how the database will actually be stored in the computer system.

It includes storage methods, indexes, file organization, and performance settings.

Conceptual design focuses on the business view, while physical design focuses on technical
storage.
34. Normalization
Normalization is the process of organizing data to reduce duplication and improve consistency.

It breaks one large, messy table into smaller related tables.

For example, instead of repeating supplier name and address in every order record, supplier
details can be stored once in a Supplier table.

Normalization makes updates easier and reduces errors.

35. Referential Integrity

Referential integrity keeps relationships between tables correct.

For example, if a Part table uses Supplier Number as a foreign key, that Supplier Number must
exist in the Supplier table.

This prevents invalid or orphan records.

36. Entity-Relationship Diagram

An Entity-Relationship Diagram, or ERD, visually shows entities and their relationships.

For example, an ERD may show that suppliers provide parts, orders include line items, and line
items contain parts.

ERDs help database designers understand the business structure before building the database.

Modern Database Technologies

37. NoSQL Databases
NoSQL databases store data in flexible formats instead of traditional tables.

They are useful for large, flexible, and unstructured data.

For example, social media posts, videos, comments, images, and sensor data may be stored in
NoSQL databases.

NoSQL is useful when data does not fit neatly into rows and columns.

38. Cloud Databases

Cloud databases are hosted on cloud platforms instead of company-owned servers.

Examples include Amazon RDS and Microsoft SQL Azure.

Cloud databases reduce hardware cost, support scalability, allow remote access, and are easier to
deploy.

For example, a small e-commerce business can use a cloud database instead of buying its own
servers.

39. Distributed Databases

A distributed database stores data in multiple physical locations.

For example, a company may store data in servers located in Asia, Europe, and North America.

This improves speed, reliability, and availability because users can access nearby servers.

40. Blockchain
Blockchain is a shared digital ledger maintained by many computers.

It stores transactions in a way that is difficult to secretly change.

Blockchain uses encryption and peer-to-peer networks to verify transactions.

It can be used in financial transactions, supply chains, and medical records.

Big Data and Business Intelligence

41. Big Data
Big data refers to extremely large datasets that traditional systems cannot easily manage.

It comes from websites, social media, sensors, mobile apps, online transactions, machines,
images, videos, and customer interactions.

Big data is useful because it can reveal hidden patterns, trends, and unusual activities.

42. Three Vs of Big Data

Big data is described by three main characteristics:

V Meaning
Volume Large amount of data
Velocity Fast speed of data creation and processing
Variety Different types of data

For example, social media creates huge amounts of text, images, videos, likes, and comments
very quickly.

43. Business Intelligence Infrastructure

Business intelligence infrastructure includes tools and technologies used to store, process, and
analyze data.

It includes data warehouses, data marts, Hadoop, in-memory computing, and analytical
platforms.

These tools help companies convert data into useful business knowledge.

44. Data Warehouse

A data warehouse stores current and historical data from many systems.

It is mainly used for reporting and analysis.

For example, a company may combine sales, accounting, HR, inventory, and customer service
data in one data warehouse.

Managers can use it to analyze trends over several years.

45. Data Mart

A data mart is a smaller part of a data warehouse.

It focuses on one department or subject.

For example, a marketing data mart may store campaign data, while a finance data mart may
store budget and revenue data.

A data warehouse is enterprise-wide, while a data mart is department-specific.

46. Hadoop
Hadoop is used to process big data across many inexpensive computers.

Instead of one powerful computer doing all the work, Hadoop divides the work among many
computers.

It is useful for analyzing huge datasets such as website clicks, social media data, and sensor data.

47. In-Memory Computing

In-memory computing processes data in RAM instead of using slower disk storage.

RAM is much faster than disk storage, so analysis can be done very quickly.

For example, a retail company can analyze millions of sales transactions in seconds.

48. Analytical Platforms

Analytical platforms are high-speed systems designed to analyze large and complex datasets.
They help businesses perform advanced analysis quickly.

For example, a telecom company can analyze call records, billing data, customer complaints, and
network traffic together.

Analytical Tools
49. OLAP
OLAP stands for Online Analytical Processing.

It allows users to analyze data from different dimensions.

For example, a manager can view sales by product, region, time period, and actual versus
projected sales.

OLAP helps answer complex questions quickly.

50. Multidimensional Data Model

The multidimensional data model is often shown as a cube.

It allows managers to view data from different angles.

For example, sales can be analyzed by product, region, and month.

This makes it easier to compare performance and identify trends.

51. Data Mining

Data mining finds hidden patterns and relationships in large datasets.

For example, a supermarket may discover that customers who buy diapers also buy baby wipes.

Data mining helps companies predict customer behavior and make better decisions.
52. Types of Data Mining Results
Associations show items that occur together.
Example: Customers who buy laptops often buy laptop bags.

Sequences show events that happen in order.

Example: A customer buys a phone, then buys a cover, then buys earphones.

Classification assigns items to predefined groups.

Example: A bank classifies customers as low-risk or high-risk.

Clustering groups similar items without predefined categories.

Example: Customers are grouped into budget buyers and premium buyers.

Forecasting predicts future values.

Example: A company predicts next month’s sales.

53. Text Mining

Text mining extracts useful information from unstructured text.

Sources include emails, reviews, social media comments, documents, and customer feedback.

For example, a restaurant can analyze customer reviews to find common complaints.

Sentiment analysis is part of text mining. It identifies whether text is positive, negative, or
neutral.

54. Web Mining

Web mining analyzes useful patterns from the web.

Web content mining studies the content of web pages.

Web structure mining studies links between web pages.

Web usage mining studies user behavior on websites.

For example, an online store can analyze which pages customers visit before buying a product.
Databases and the Web
55. Web Database Access
Many companies connect internal databases to websites.

For example, when a customer checks order status online, the website retrieves order data from
the company database.

This allows customers, employees, and partners to access selected data easily.

56. Web Server, Application Server, and Database Server

A web database system usually has three main parts.

The web server receives requests from the browser.

The application server processes business logic and connects the website to the database.

The database server stores and manages the actual data.

For example, when a student checks exam results online, the system verifies login, retrieves
results from the database, and shows them on the website.

Data Governance and Data Quality

57. Data Governance
Data governance means rules and policies for managing data as an organizational resource.

It decides who owns data, who can access it, how data should be used, and how it should be
protected.

For example, a company may decide that only HR managers can view employee salary data.

Data governance prevents misuse, duplication, and confusion.

58. Data Quality
Data quality means data is accurate, complete, consistent, timely, and reliable.

Poor data quality creates poor decisions.

For example, if customer addresses are wrong, deliveries may fail and customers may become
unhappy.

Good data quality is necessary for good business intelligence.

59. Data Quality Audit

A data quality audit checks whether data is accurate, complete, and consistent.

For example, an audit may find duplicate customers, missing email addresses, or wrong phone
numbers.

This helps organizations identify data problems before they cause bigger issues.

60. Data Cleansing

Data cleansing means correcting bad data.

It includes removing duplicates, fixing spelling mistakes, correcting formats, updating missing
values, and standardizing data.

For example, “Lahore,” “LHR,” and “Lahor” can be standardized as “Lahore.”

Data cleansing improves the accuracy and usefulness of data.

Important Differences to Remember

Concept Difference
Database is the stored data. DBMS is the software used to manage
Database vs. DBMS
it.
Field vs. Record Field is one item of data. Record is a group of related fields.
 Concept Difference
Primary Key vs. Foreign Primary key uniquely identifies records. Foreign key connects
Key tables.
SELECT vs. JOIN vs. SELECT chooses rows. JOIN connects tables. PROJECT chooses
PROJECT columns.
Data Warehouse vs. Data Data warehouse is enterprise-wide. Data mart is department-
Mart specific.
Relational vs. NoSQL Relational stores data in tables. NoSQL stores flexible/unstructured
Database data.
OLAP analyzes data from different dimensions. Data mining
OLAP vs. Data Mining
discovers hidden patterns.
Data Governance vs. Data Governance creates rules for data. Data quality ensures data is
Quality accurate and useful.

Final Exam-Ready Summary

Chapter 6 explains how organizations manage data and use it for business intelligence.

Data is organized into fields, records, files, and databases. Traditional file systems create
problems such as data redundancy, inconsistency, poor security, and lack of sharing.

Database management systems solve these problems by centralizing data, improving security,
reducing duplication, and allowing different users to access different views of the same data.

Relational databases store data in tables using primary keys and foreign keys. Important
operations include SELECT, JOIN, and PROJECT.

Good database design requires normalization, referential integrity, and entity-relationship

diagrams.

Modern organizations also use NoSQL databases, cloud databases, distributed databases, and
blockchain.

Big data is large, fast, and varied. Business intelligence tools such as data warehouses, data
marts, Hadoop, OLAP, data mining, text mining, and web mining help organizations find
patterns and make better decisions.

The main lesson is that good data management helps organizations make accurate, fast, and
intelligent business decisions.