CHAPTER

3
Data and
Knowledge
1. Managing Data
2. The Database Approach Big Data
3. Data Warehouses and Data Marts
4. Knowledge Management
 >>>
1. Discuss ways that common challenges in
managing data can be addressed using data
governance.
2. Discuss the advantages and disadvantages of
relational databases.
3. Define Big Data, and discuss its basic
characteristics.
 >>>
4. Recognize the necessary environment to
successfully implement and maintain data
warehouses.
5. Describe the benefits and challenges of
implementing knowledge management
systems in organizations.
OPENING >
• Flurry Gathers Data
from Smartphone
Users

1. Do you feel that Flurry should be installed on your

smartphone by various app makers without your
consent? Why or why not? Support your answer.
2. What problems would Flurry encounter if
someone other than the smartphone’s owner uses
the device? (Hint: Note how Flurry gathers data.)
3. Can Flurry survive the privacy concerns that are
being raised about its business model?
3.1 Managing Data

• Difficulties of Managing Data

• Data Governance
The Difficulties of Managing
Data

•The amount of data increases

exponentially over time
•Data are scattered throughout
organizations
•Data are generated from multiple
sources (internal, personal, external)
•New sources of data
The Difficulties of Managing
Data (continued)

•Data Degradation
•Data Rot
•Data security, quality, and integrity
are critical
•Legal requirements change
frequently and differ among
countries & industries
 ’S ABOUT BUSINESS 3.1
• New York City
Opens Its Data
to All

1. What are some other creative applications

addressing city problems that could be
developed using NYC’s open data policy?
2. List some disadvantages of providing all city
data in an open, accessible format.
Data Governance
Data Governance: is an approach to managing information across
an entire organization involving a formal set of unambiguous rules for
creating, collecting, handling, and protecting its information.One strategy
for implementing data governance is Master Data Management.

Master Data Management: a strategy for data governance

involving a process that spans all organizational business processes and
applications providing companies with the ability to store, maintain,
exchange, and synchronize a consistent, accurate, and timely for the
company’s master data.

Master Data: a set of core data (e.g., customer, product, employee,

vendor, geographic location, etc.) that span the enterprise information
systems.
● Businesses first adopted computer applications (mid-1950s) until the
early 1970s, organizations managed their data in a file management
environment.

● Each application required its own data, which were organized in a data
file.

● A data file is a collection of logically related records.

● In a file management environment,each application has a specific data

file related to it.

● This file contains all of the data records the application requires.

Using databases eliminates many problems that arose from previous

methods of storing and accessing data, such as file management systems.
3.2 The Database
Approach

• Data File
• Database Systems Minimize &
Maximize Three Things
• The Data Hierarchy
• The Relational Database Model
Database Management
Systems (DBMS) Minimize:
● Data redundancy: The same data are stored in
multiple locations.

• Data isolation: Applications cannot access data

associated with other applications.

• Data inconsistency: Various copies of the data

do not agree.
Database Management
Systems (DBMS) Maximize:
• Data Security: Because data are “put in one place” in
databases, there is a risk of losing a lot of data at once.
Therefore, databases have extremely high security measures
in place to minimize mistakes and deter attacks.

• Data integrity: Data meet certain constraints; for example,

there are no alphabetic characters in a Social Security number
field.

• Data independence: Applications and data are independent of

one another; that is, applications and data are not linked to
each other, so all applications are able to access the same
data.
 ’S ABOUT BUSINESS 3.2
• Google’s Knowledge Graph
1. Refer to the definition of a relational
database. In what way can the Knowledge
Graph be considered a database? Provide
specific examples to support your answer.
2. Refer to the definition of an expert system
in Plug IT In 5. Could the Knowledge Graph
be considered an expert system? If so,
provide a specific example to support your
answer.
3. What are the advantages of the Knowledge
Graph over traditional Google searches?
Figure 3.1: Database
Management System
Data Hierarchy

• Bit
• Byte
• Field
• Record
• Data File (Table)
• Database
Figure 3.2: Hierarchy of Data
for a Computer-Based File
The Relational Database
Model
• Database Management System
(DBMS)
• Relational Database Model
• Data Model
• Entity
• Instance
• Attribute
The Relational Database
Model (continued)

• Primary Key
• Secondary Key
• Foreign Key
Figure 3.3: Student
Database Example
3.3 Big Data

• Defining Big Data

• Characteristics of Big Data
• Issues with Big Data
• Managing Big Data
• Putting Big Data to Use
Defining Big Data

• Gartner (www.gartner.com)
• Big Data Institute
Defining Big Data: Gartner

• Diverse, high volume, high-velocity

information assets that require new
forms of processing to enable
enhanced decision making, insight
discovery, and process optimization.
Defining Big Data: The Big
Data Institute (TBDI)
• Vast Datasets that:
– Exhibit variety
– Include structured, unstructured, and
semi-structured data
– Generated at high velocity with an uncertain
pattern
– Do not fit neatly into traditional, structured,
relational databases
– Can be captured, processed, transformed, and
analyzed in a reasonable amount of time only
by sophisticated information systems.
 Examples of Big Data
Big Data generally consists of the following:-
• Traditional enterprise data—examples are customer information from
customer relationship management systems, transactional enterprise
resource planning data, Web store transactions, operations data, and
general ledger data.

• Machine-generated/sensor data—examples are smart meters;

manufacturing sensors; sensors integrated into smartphones, automobiles,
airplane engines, and industrial machines; equipment logs; and trading
systems data.

• Social data—examples are customer feedback comments; microblogging

sites such as Twitter; and social media sites such as Facebook, YouTube,
and LinkedIn.

• Images captured by billions of devices located throughout the world,

from digital cameras and camera phones to medical scanners and security
cameras.
Characteristics of Big Data
• Volume: incredible volume of data.

• Velocity: The rate at which data flow into an organization is rapidly

increasing and it is critical because it increases the speed of the
feedback loop between a company and its customers.

• Variety: Big Data formats change rapidly and can include include
satellite imagery, broadcast audio streams, digital music files, Web page
content.
Issues with Big Data
● Big Data can come from untrusted sources.

● Big Data is dirty: Dirty data refers to inaccurate, incomplete, incorrect,

duplicate, or erroneous data.

● Big Data changes, especially in data streams: Organizations must be

aware that data quality in an analysis can change, or the data itself can
change, because the conditions under which the data are captured can
change.
Managing Big Data

• Big Data can reveal valuable

patterns, trends, and information
that were previously hidden:
– tracking the spread of disease
– tracking crime
– detecting fraud
Managing Big Data
(continued)

• First Step:
– Integrate information silos into a
database environment and develop
data warehouses for decision making.
• Second Step:
– making sense of their proliferating
data.
Managing Big Data
(continued)

• Many organizations are turning to

NoSQL databases to process Big
Data
 ’S ABOUT BUSINESS 3.3
• The MetLife Wall
1. Describe the problems that MetLife was
experiencing with customer data before it
implemented the MetLife Wall.
2. Describe how these problems originated.
Leveraging Big Data:Ways to
leverage big data to gain
value

• Making Big Data Available

• Enabling Organizations to Conduct
Experiments
• Micro-Segmentation of Customers
• Creating New Business Models
• Organizations Can Analyze Far More
Data
Making Big Data Available: Making Big Data available for relevant stakeholders
can help organizations gain value.

Enabling Organizations to Conduct Experiments: Big Data allows

organizations to improve performance by conducting controlled experiments. For
example, Amazon (and many other companies such as Google and LinkedIn)
constantly experiments by offering slight different “looks” on its Web site.

Micro-Segmentation of Customers: Segmentation of a company’s customers

means dividing them up into groups that share one or more characteristics.

Creating New Business Models:

• Companies are able to use Big Data to create new business models.
• For example, a commercial transportation company operated a large fleet of
large, long-haul trucks. The company recently placed sensors on all its
trucks. These sensors wirelessly communicate large amounts of information
to the company, a process called telematics. The sensors collect data on
vehicle usage (including acceleration, braking, cornering, etc.), driver
performance, and vehicle maintenance.
• By analyzing this Big Data, the transportation company was able to improve
the condition of its trucks through near-real-time analysis that proactively
suggested preventive maintenance.
Organizations Can Analyze Far More Data: In some cases, organizations can
even process all the data in a population relating to a particular phenomenon,
meaning that they do not have to rely as much on sampling.
3.4 Data Warehouses and
Data Marts

• Describing Data Warehouses and

Data Marts
• A Generic Data Warehouse
Environment
Describing Data
Warehouses and Data Marts

• Organized by business dimension or

Use online analytical processing
(OLAP)
• Integrated
• Time variant
• Nonvolatile
• Multidimensional
Data Warehouse: a repository of historical data that are organized by
subject to support decision makers in the organization.

Data Mart: a low-cost, scaled-down version of a data warehouse that is

designed for the end-user needs in a strategic business unit (SBU) or an
individual department.

Basic Characteristics of Data Warehouses and Data Marts:

Organized by business dimension or subject - Data are organized by
subject. For example, by customer, vendor, product, price level, and region.
This arrangement differs from transactional systems, where data are
organized by business process, such as order entry, inventory control, and
accounts receivable.

Use online analytical processing (OLAP): involves analysis of

accumulated data by end users.

Integrated - Data are collected from multiple systems and then integrated
around subjects.
Time variant - Data warehouses and data marts maintain historical data (i.e.,
data that include time as a variable).

Nonvolatile - Data warehouses and data marts are nonvolatile—that is,

users cannot change or update the data.

Multidimensional - Typically the data warehouse or mart uses a

multidimensional data structure. Recall that relational databases store data in
two-dimensional tables.
A Generic Data Warehouse
Environment
• Source Systems
• Data Integration
• Storing the Data
• Metadata
• Data Quality
• Governance
• Users
Figure 3.4: Data Warehouse
Framework
Source Systems: Systems that provide a source of organizational data.
Common Examples of Source Systems Include:
• operational/transactional systems
• enterprise resource planning (ERP) systems
• Web site data
• third-party data (e.g., customer demographic data)
• operational databases

Data Integration: reflects the growing number of ways that source system
data can be handled. Typically organizations need to Extract, Transform,
and Load (ETL) data from source system into a data warehouse or data
mart.

Storing the Data: A variety of architectures can be used to store

decision-support data and the most common architecture is one central
enterprise data warehouse, without data marts.

Metadata: data maintained about the data within the data warehouse.
(e.g., database, table, and column names; refresh schedules; and
data-usage measures.
Data Quality: quality of the data in the warehouse must meet users’
needs. If it does not, users will not trust the data and ultimately will not use
it. Some of the data can be improved with data-cleansing software, but the
better, long-term solution is to improve the quality at the source system
level.

Governance: To ensure that BI is meeting their needs, organizations must

implement governance to plan and control their BI activities. Governance
requires that people, committees, and processes be in place.

Users: There are many potential BI users, including IT developers;

frontline workers; analysts; information workers; managers and executives;
and suppliers, customers, and regulators.

Example: To demonstrate difference between Relational database and

Multidimensional data warehouses and data marts
Figure 3.5: Relational
Databases
Figure 3.6: Multidimensional
database as Data Cube
Figure 3.7: Equivalence Between
Relational and Multidimensional
Databases
 ’S ABOUT BUSINESS 3.4
Data Warehouse Gives
Nordea Bank a Single
Version of the Truth
1. What are other advantages (not mentioned
in the case) that Nordea Bank might realize
from its data warehouse?
2. What recommendations would you give to
Nordea Bank about incorporating Big Data
into their bank’s data management? Provide
specific examples of what types of Big Data
you think Nordea should consider.
 MANAGING DATA RESOURCES
Need:ESTABLISHING AN INFORMATION POLICY
● Every business, large and small, needs an information policy.
● Firm’s data are an important resource
● Need to have rules on how the data are to be organized and
maintained, and who is allowed to view the data or change
them.

INFORMATION POLICY
● An information policy specifies the organization’s rules for
sharing, disseminating, acquiring, standardizing, classifying,
and inventorying 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.
● In a small business, the information policy would be
established and implemented by the owners or managers.
● In a large organization, managing and planning for information
as a corporate resource often requires a formal data
administration function.

Data administration
● It is responsible for the specific policies and procedures
through which data can be managed as an organizational
resource.
● These responsibilities include developing information policy,
planning for data, overseeing logical database design and data
dictionary development, and monitoring how information
systems specialists and end-user groups use data.
Data governance used to describe many of these activities.
Data governance
● Deals with the policies and processes for managing the
availability, usability, integrity, and security of the data
employed in an enterprise, with special emphasis on
promoting privacy, security, data quality, and compliance with
government regulations.
● A large organization will also have a database design and
management group within the corporate information systems
division that is responsible for defining and organizing the
structure and content of the database, and maintaining the
database.
● In close cooperation with users, the design group establishes
the physical database, the logical relations among elements,
and the access rules and security procedures. The functions
it performs are called database administration.
 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 that are inaccurate, untimely, or inconsistent with other
sources of information lead to incorrect decisions, product
recalls, and financial losses. Inaccurate data in criminal justice
and national security databases might even subject you to
unnecessarily surveillance or detention.
● Database must be properly designed and enterprise-wide data
standards established, so that the duplicate or inconsistent data
elements should be minimal.
● Most data quality problems, however, such as misspelled
names, transposed numbers, or incorrect or missing codes,
stem from errors during data input. The incidence of such errors
is rising as companies move their businesses to the Web and
allow customers and suppliers to enter data into their Web sites
that directly update internal systems.
● 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, 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.
● Data quality problems are not just business
problems. They also pose serious problems for
individuals, affecting their financial condition and
even their jobs.
● The Interactive Session on Organizations describes
some of these impacts, as it details the data quality
problems found in the companies that collect and
report consumer credit data.
● As you read this case, look for the management,
organization, and technology factors behind this
problem, and whether existing solutions are
adequate.
3.5 Knowledge
Management

• Concepts and Definitions

• Knowledge Management Systems
• The KMS Cycle
Concepts and Definitions

• Knowledge Management
• Knowledge
• Explicit and Tacit Knowledge
• Knowledge Management Systems
• The KMS Cycle
Knowledge management (KM): a process that helps organizations manipulate
important knowledge that comprises part of the organization’s Knowledge:
information that is contextual, relevant, and useful. It is information in action.
Intellectual capital (or intellectual assets) is another term for knowledge.
Explicit Knowledge: more objective, rational, and technical knowledge. In an
organization, explicit knowledge consists of the policies, procedural guides,
reports, products, strategies, goals, core competencies, and IT infrastructure of
the enterprise.
Tacit Knowledge: the cumulative store of subjective or experiential learning. In
an organization, tacit knowledge consists of an organization’s experiences,
insights, expertise, know-how, trade secrets, skill sets, understanding, and
learning. It is generally imprecise and costly to transfer.
Knowledge management systems (KMSs): refer to the use of modern
information technologies—the Internet, intranets, extranets, databases—to
systematize, enhance, and expedite intra-firm and inter-firm knowledge
management. KMSs are intended to help an organization cope with turnover,
rapid change, and downsizing by making the expertise of the organization’s
human capital widely accessible.
The KMS Cycle Consists of Six Steps:
Create knowledge: Knowledge is created as people determine new ways of
doing things or develop know-how. Sometimes external knowledge is brought
in.
Capture knowledge: New knowledge must be identified as valuable and be
represented in a reasonable way.
Refine knowledge: New knowledge must be placed in context so that it is
actionable. This is where tacit qualities (human insights) must be captured
along with explicit facts.
Store knowledge: Useful knowledge must then be stored in a reasonable
format in a knowledge repository so that other people in the organization can
access it.
Manage knowledge: Like a library, the knowledge must be kept current. It
must be reviewed regularly to verify that it is relevant and accurate.
Disseminate knowledge: Knowledge must be made available in a useful
format to anyone in the organization who needs it, anywhere and anytime.
Figure 3.8: The Knowledge
Management System Cycel