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Unit
2
Data and Databases
Learning Outcomes:
1. described the differences between data, information, and
knowledge;
2. described why database technology must be used for data resource
management;
3. defined the term database and identify the steps to creating one;
4. described the role of a database management system;
5. described the characteristics of a data warehouse; and
6. defined data mining and describe its role in an organization.

Acquire New Knowledge

Data, Information, and Knowledge

There have been many definitions and theories about data,

information, and knowledge. The three terms are often used
interchangeably, although they are distinct in nature. We
define and illustrate the three terms from the perspective of
information systems.

Data are the raw facts, and may be devoid of context or

intent. For example, a sales order of computers is a piece of
data. Data can be quantitative or qualitative. Quantitative
data is numeric, the result of a measurement, count, or some
other mathematical calculation. Qualitative data is
descriptive. “Ruby Red,” the color of a 2013 Ford Focus, is an
example of qualitative data. A number can be qualitative too:
if I tell you my favorite number is 5, that is qualitative data because it is descriptive,
not the result of a measurement or mathematical calculation.

Information is processed data that possess context, relevance, and purpose.

For example, monthly sales calculated from the collected daily sales data for the
past year are information. Information typically involves the manipulation of raw

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data to obtain an indication of magnitude, trends, in patterns in the data for a

purpose.

Knowledge in a certain area is human beliefs or perceptions about

relationships among facts or concepts relevant to that area. For example, the
conceived relationship between the quality of goods and the sales is knowledge.
Knowledge can be viewed as information that facilitates action.

Once we have put our data into context, aggregated and analyzed it, we can
use it to make decisions for our organization. We can say that this consumption of
information produces knowledge. This knowledge can be used to make decisions,
set policies, and even spark innovation.

Explicit knowledge typically refers to knowledge that can be expressed into

words or numbers. In contrast, tacit knowledge includes insights and intuitions, and
is difficult to transfer to another person by means of simple communications.

Evidently, when information or explicit knowledge is captured and stored in

computer, it would become data if the context or intent is devoid.

The final step up the information ladder is the step from knowledge (knowing
a lot about a topic) to wisdom. We can say that someone has wisdom when they
can combine their knowledge and experience to produce a deeper understanding of
a topic. It often takes many years to develop wisdom on a particular topic, and
requires patience.

Big Data

Almost all software programs require data to do anything useful. For

example, if you are editing a document in a word processor such as Microsoft Word,
the document you are working on is the data. The word-processing software can
manipulate the data: create a new document, duplicate a document, or modify a
document. Some other examples of data are: an MP3 music file, a video file, a
spreadsheet, a web page, a social media post, and an e-book.

Recently, big data has been capturing the attention of all types of
organizations. The term refers to such massively large data sets that conventional
data processing technologies do not have sufficient power to analyze them. For
example, Walmart must process millions customer transactions every hour across
the world. Storing and analyzing that much data is beyond the power of traditional
data management tools. Understanding and developing the best tools and
techniques to manage and analyze these large data sets are a problem that
governments and businesses alike are trying to solve.

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Databases

The goal of many information systems is to transform data into information in

order to generate knowledge that can be used for decision making. In order to do
this, the system must be able to take data, allow the user to put the data into
context, and provide tools for aggregation and analysis. A database is designed for
just such a purpose.

Why Databases?

Data is a valuable resource in the organization. However, many people do

not know much about database technology, but use non-database tools, such as
Excel spreadsheet or Word document, to store and manipulate business data, or
use poorly designed databases for business processes. As a result, the data are
redundant, inconsistent, inaccurate, and corrupted. For a small data set, the use of
non-database tools such as spreadsheet may not cause serious problem. However,
for a large organization, corrupted data could lead to serious errors and destructive
consequences. The common defects in data resources management are explained
as follows.

(1) No control of redundant data

People often keep redundant data for convenience. Redundant data could
make the data set inconsistent. We use an illustrative example to explain why
redundant data are harmful. Suppose the registrar’s office has two separate files
that store student data: one is the registered student roster which records all
students who have registered and paid the tuition, and the other is student grade
roster which records all students who have received grades.

Figure 3. Example of redundant data

As you can see from the two spreadsheets, this data management system
has problems. The fact that “Student 4567 is Mary Brown, and her major is
Finance” is stored more than once. Such occurrences are called data redundancy.
Redundant data often make data access convenient, but can be harmful. For
example, if Mary Brown changes her name or her major, then all her names and
major stored in the system must be changed altogether. For small data systems,

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such a problem looks trivial. However, when the data system is huge, making
changes to all redundant data is difficult if not impossible. As a result of data
redundancy, the entire data set can be corrupted.

(2) Violation of data integrity

Data integrity means consistency among the stored data. We use the above
illustrative example to explain the concept of data integrity and how data integrity
can be violated if the data system is flawed. You can find that Alex Wilson received
a grade in MKT211; however, you can’t find Alex Wilson in the student roster. That
is, the two rosters are not consistent. Suppose we have a data integrity control to
enforce the rules, say, “no student can receive a grade unless she/he has registered
and paid tuition”, then such a violation of data integrity can never happen.

(3) Relying on human memory to store and to search needed data

The third common mistake in data resource management is the over use of
human memory for data search. A human can remember what data are stored and
where the data are stored, but can also make mistakes. If a piece of data is stored
in an un-remembered place, it has actually been lost. As a result of relying on
human memory to store and to search needed data, the entire data set eventually
becomes disorganized.

To avoid the above common flaws in data resource management, database

technology must be applied. A database is an organized collection of related data.
It is an organized collection, because in a database, all data is described and
associated with other data. For the purposes of this text, we will only consider
computerized databases.

Though not good for replacing databases, spreadsheets can be ideal tools for
analyzing the data stored in a database. A spreadsheet package can be connected
to a specific table or query in a database and used to create charts or perform
analysis on that data.

Data Models and Relational Databases

Databases can be organized in many different ways by using different

models. The data model of a database is the logical structure of data items and
their relationships. There have been several data models. Since the 1980s, the
relational data model has been popularized. Currently, relational database systems
are commonly used in business organizations with few exceptions. A relational data
model is easy to understand and use.

In a relational database, data is organized into tables (or relations). Each

table has a set of fields which define the structure of the data stored in the table. A
record is one instance of a set of fields in a table. To visualize this, think of the
records as the rows (or tuple) of the table and the fields as the columns of the table.

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In the example below, we have a table of student data, with each row
representing a student record, and each column representing one filed of the
student record. A special filed or a combination of fields that determines the
unique record is called primary key (or key). A key is usually the unique
identification number of the records.

Figure 4. Rows and columns in a table

Designing a Database

Suppose a university wants to create a School Database to track data. After

interviewing several people, the design team learns that the goal of implementing
the system is to give better insight into students’ performance and academic
resources. From this, the team decides that the system must keep track of the
students, their grades, courses, and classrooms. Using this information, the design
team determines that the following tables need to be created:

 STUDENT: student name, major, and e-mail.

 COURSE: course title, enrollment capacity.
 GRADE: this table will correlate STUDENT with COURSE, allowing us to have
any given student to enroll multiple courses and to receive a grade for each
course.
 CLASSROOM: classroom location, classroom type, and classroom capacity

Now that the design team has determined which tables to create, they need to
define the specific data items that each table will hold. This requires identifying the
fields that will be in each table. For example, course title would be one of the fields
in the COURSE table. Finally, since this will be a relational database, every table
should have a field in common with at least one other table (in other words, they
should have relationships with each other).

A primary key must be selected for each table in a relational database. This key is a
unique identifier for each record in the table. For example, in the STUDENT table, it
might be possible to use the student name as a way to identify a student. However,

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it is more than likely that some students share the same name. A student’s e-mail
address might be a good choice for a primary key, since e-mail addresses are
unique. However, a primary key cannot change, so this would mean that if students
changed their e-mail address we would have to remove them from the database
and then re-insert them – not an attractive proposition. Our solution is to use
student ID as the primary key of the STUDENT table. We will also do this for the
COURSE table and the CLASSROOM table. This solution is quite common and is the
reason you have so many IDs! The primary key of table can be just one field, but
can also be a combination of two or more fields. For example, the combination of
StudentID and CourseID the GRADE table can be the primary key of the GRADE
table, which means that a grade is received by a particular student for a specific
course.

The next step of design of database is to identify and make the relationships
between the tables so that you can pull the data together in meaningful ways. A
relationship between two tables is implemented by using a foreign key. A foreign
key is a field in one table that connects to the primary key data in the original table.
For example, ClassroomID in the COURSE table is the foreign key that connects to
the primary key ClassroomID in the CLASSROOM table. With this design, not only
do we have a way to organize all of the data we need and have successfully related
all the table together to meet the requirements, but have also prevented invalid
data from being entered into the database. You can see the final database design
in the figure below:

Figure 5. Tables of the student database

Normalization

When designing a database, one important concept to understand is normalization.

In simple terms, to normalize a database means to design it in a way that: 1)
reduces data redundancy; and 2) ensure data integrity.

In the School Database design, the design team worked to achieve these objectives.
For example, to track grades, a simple (and wrong) solution might have been to
create a Student field in the COURSE table and then just list the names of all of the
students there. However, this design would mean that if a student takes two or
more courses, then his or her data would have to be entered twice or more times.
This means the data are redundant. Instead, the designers solved this problem by
introducing the GRADE table.

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In this design, when a student registers into the school system before taking a
course, we first must add the student to the STUDENT table, where their ID, name,
major, and e-mail address are entered. Now we will add a new entry to denote that
the student takes a specific course. This is accomplished by adding a record with
the StudentD and the CourseID in the GRADE table. If this student takes a second
course, we do not have to duplicate the entry of the student’s name, major, and e-
mail; instead, we only need to make another entry in the GRADE table of the second
course’s ID and the student’s ID.97

The design of the School database also makes it simple to change the design
without major modifications to the existing structure. For example, if the design
team were asked to add functionality to the system to track instructors who teach
the courses, we could easily accomplish this by adding a PROFESSOR table (similar
to the STUDENT table) and then adding a new field to the COURSE table to hold the
professors’ ID.

Data Types

When defining the fields in a database table, we must give each field a data
type. For example, the field StudentName is text string, while EnrollmentCapacity is
number. Most modern databases allow for several different data types to be stored.
Some of the more common data types are listed here:

 Text: for storing non-numeric data that is brief, generally under 256
characters. The database designer can identify the maximum length of the
text.
 Number: for storing numbers. There are usually a few different number types
that can be selected, depending on how large the largest number will be.
 Boolean: a data type with only two possible values, such as 0 or 1, “true” or
“false”, “yes” or “no”.
 Date/Time: a special form of the number data type that can be interpreted as
a number or a time.
 Currency: a special form of the number data type that formats all values with
a currency indicator and two decimal places.
 Paragraph Text: this data type allows for text longer than 256 characters.
 Object: this data type allows for the storage of data that cannot be entered
via keyboard, such as an image or a music file.
There are two important reasons that we must properly define the data type of a
field. First, a data type tells the database what functions can be performed with the
data. For example, if we wish to perform mathematical functions with one of the
fields, we must be sure to tell the database that the field is a number data type. For
example, we can subtract the course capacity from the classroom capacity to find
out the number of extra seats available.

The second important reason to define data type is so that the proper amount of
storage space is allocated for our data. For example, if the StudentName field is
defined as a Text(50) data type, this means 50 characters are allocated for each

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name we want to store. If a student’s name is longer than 50 characters, the

database will truncate it.

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Database Management Systems

Figure 6. Open Office Database Management System

Open Office Database Management System

To the computer, a database looks like one or more files. In order for the data in the
database to be stored, read, changed, added, or removed, a software program must
access it. Many software applications have this ability: iTunes can read its database
to give you a listing of its songs (and play the songs); your mobile-phone software
can interact with your list of contacts. But what about applications to create or
manage a database? What software can you use to create a database, change a
database’s structure, or simply do analysis? That is the purpose of a category of
software applications called database management systems (DBMS).

DBMS packages generally provide an interface to view and change the design of the
database, create queries, and develop reports. Most of these packages are
designed to work with a specific type of database, but generally are compatible with
a wide range of databases.

A database that can only be used by a single user at a time is not going to meet the
needs of most organizations. As computers have become networked and are now
joined worldwide via the Internet, a class of database has emerged that can be
accessed by two, ten, or even a million people. These databases are sometimes
installed on a single computer to be accessed by a group of people at a single
location. Other times, they are installed over several servers worldwide, meant to
be accessed by millions. In enterprises the relational DBMS are built and supported
by companies such as Oracle, Microsoft SQL Server, and IBM Db2. The open-source
MySQL is also an enterprise database.

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Microsoft Access and Open Office Base are examples of personal database-
management systems. These systems are primarily used to develop and analyze
single-user databases. These databases are not meant to be shared across a
network or the Internet, but are instead installed on a particular device and work
with a single user at a time. Apache OpenOffice.org Base (see screen shot) can be
used to create, modify, and analyze databases in open-database (ODB) format.
Microsoft’s Access DBMS is used to work with databases in its own Microsoft Access
Database format. Both Access and Base have the ability to read and write to other
database formats as well.

Structured Query Language

Once you have a database designed and loaded with data, how will you do
something useful with it? The primary way to work with a relational database is to
use Structured Query Language, SQL (pronounced “sequel,” or simply stated as S-
Q-L). Almost all applications that work with databases (such as database
management systems, discussed below) make use of SQL as a way to analyze and
manipulate relational data. As its name implies, SQL is a language that can be used
to work with a relational database. From a

simple request for data to a complex update operation, SQL is a mainstay of

programmers and database administrators. To give you a taste of what SQL might
look like, here are a couple of examples using our School database:

The following query will retrieve the major of student John Smith from the STUDENT
table:

SELECT StudentMajor
FROM STUDENT
WHERE StudentName = ‘John Smith’;
The following query will list the total number of students in the STUDENT
table:

SELECT COUNT(*)
FROM STUDENT;

SQL can be embedded in many computer languages that are used to develop
platform-independent web-based applications. An in-depth description of how SQL
works is beyond the scope of this introductory text, but these examples should give
you an idea of the power of using SQL to manipulate relational databases. Many
DBMS, such as Microsoft Access, allow you to use QBE (Query-by-Example), a
graphical query tool, to retrieve data though visualized commands. QBE generates
SQL for you, and is easy to use. In comparison with SQL, QBE has limited
functionalities and is unable to work without the DBMS environment.

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Other Types of Databases

The relational database model is the most used database model today.
However, many other database models exist that provide different strengths than
the relational model. The hierarchical database model, popular in the 1960s and
1970s, connected data together in a hierarchy, allowing for a parent/child
relationship between data. The document-centric model allowed for a more
unstructured data storage by placing data into “documents” that could then be
manipulated.

Perhaps the most interesting new development is the concept of NoSQL (from
the phrase “not only SQL”). NoSQL arose from the need to solve the problem of
large-scale databases spread over several servers or even across the world. For a
relational database to work properly, it is important that only one person be able to
manipulate a piece of data at a time, a concept known as record-locking. But with
today’s large-scale databases (think Google and Amazon), this is just not possible. A
NoSQL database can work with data in a looser way, allowing for a more
unstructured environment, communicating changes to the data over time to all the
servers that are part of the database.

As stated earlier, the relational database model does not scale well. The term
scale here refers to a database getting larger and larger, being distributed on a
larger number of computers connected via a network. Some companies are looking
to provide large-scale database solutions by moving away from the relational
model to other, more flexible models. For example, Google now offers the App
Engine Datastore, which is based on NoSQL. Developers can use the App Engine
Datastore to develop applications that access data from anywhere in the world.
Amazon.com offers several database services for enterprise use, including Amazon
RDS, which is a relational database service, and Amazon DynamoDB, a NoSQL
enterprise solution.

Sidebar: What Is Metadata?

The term metadata can be understood as “data about data.” Examples of metadata
of database are:

 number of records
 data type of field
 size of field
 description of field
 default value of field
 rules of use.
 When a database is being designed, a “data dictionary” is created to hold the
metadata, defining the fields and structure of the database.

Finding Value in Data: Business Intelligence

With the rise of Big Data and a myriad of new tools and techniques at their
disposal, businesses are learning how to use information to their advantage. The

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term business intelligence is used to describe the process that organizations use to
take data they are collecting and analyze it in the hopes of obtaining a competitive
advantage. Besides using their own data, stored in data warehouses (see below),
firms often purchase information from data brokers to get a big-picture
understanding of their industries and the economy. The results of these analyses
can drive organizational strategies and provide competitive advantage.

Data Visualization

Data visualization is the graphical representation of information and data.

These graphical representations (such as charts, graphs, and maps) can quickly
summarize data in a way that is more intuitive and can lead to new insights and
understandings. Just as a picture of a landscape can convey much more than a
paragraph of text attempting to describe it, graphical representation of data can
quickly make meaning of large amounts of data. Many times, visualizing data is the
first step towards a deeper analysis and understanding of the data collected by an
organization. Examples of data visualization software include Tableau and Google
Data Studio.

Data Warehouses

As organizations have begun to utilize databases as the centerpiece of their

operations, the need to fully understand and leverage the data they are collecting
has become more and more apparent. However, directly analyzing the data that is
needed for day-to-day operations is not a good idea; we do not want to tax the
operations of the company more than we need to. Further, organizations also want
to analyze data in a historical sense: How does the data we have today compare
with the same set of data this time last month, or last year? From these needs arose
the concept of the data warehouse.

The concept of the data warehouse is simple: extract data from one or more of the
organization’s databases and load it into the data warehouse (which is itself another
database) for storage and analysis. However, the execution of this concept is not
that simple. A data warehouse should be designed so that it meets the following
criteria:

 It uses non-operational data. This means that the data warehouse is using a
copy of data from the active databases that the company uses in its day-to-
day operations, so the data warehouse must pull data from the existing
databases on a regular, scheduled basis.
 The data is time-variant. This means that whenever data is loaded into the
data warehouse, it receives a time stamp, which allows for comparisons
between different time periods.
 The data is standardized. Because the data in a data warehouse usually
comes from several different sources, it is possible that the data does not use
the same definitions or units. For example, each database uses its own
format for dates (e.g., mm/dd/yy, or dd/mm/yy, or yy/mm/dd, etc.). In order
for the data warehouse to match up dates, a standard date format would
have to be agreed upon and all data loaded into the data warehouse would

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have to be converted to use this standard format. This process is called

extraction-transformation-load (ETL).

There are two primary schools of thought when designing a data warehouse:
bottom-up and top-down. The bottom-up approach starts by creating small data
warehouses, called data marts, to solve specific business problems. As these data
marts are created, they can be combined into a larger data warehouse. The top-
down approach suggests that we should start by creating an enterprise-wide data
warehouse and then, as specific business needs are identified, create smaller data
marts from the data warehouse.

Data Warehouse Process diagram

Figure 7. Data Warehouse Process (top-down)

Benefits of Data Warehouses

Organizations find data warehouses quite beneficial for a number of reasons:

 The process of developing a data warehouse forces an organization to better

understand the data that it is currently collecting and, equally important,
what data is not being collected.
 A data warehouse provides a centralized view of all data being collected
across the enterprise and provides a means for determining data that is
inconsistent.
 Once all data is identified as consistent, an organization can generate “one
version of the truth”. This is important when the company wants to report
consistent statistics about itself, such as revenue or number of employees.
 By having a data warehouse, snapshots of data can be taken over time. This
creates a historical record of data, which allows for an analysis of trends.
 A data warehouse provides tools to combine data, which can provide new
information and analysis.

Data Mining and Machine Learning

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Data mining is the process of analyzing data to find previously unknown and
interesting trends, patterns, and associations in order to make decisions. Generally,
data mining is accomplished through automated means against extremely large
data sets, such as a data warehouse. Some examples of data mining include:

 An analysis of sales from a large grocery chain might determine that milk is
purchased more frequently the day after it rains in cities with a population of
less than 50,000.
 A bank may find that loan applicants whose bank accounts show particular
deposit and withdrawal patterns are not good credit risks.
 A baseball team may find that collegiate baseball players with specific
statistics in hitting, pitching, and fielding make for more successful major
league players.

One data mining method that an organization can use to do these analyses is
called machine learning. Machine learning is used to analyze data and build models
without being explicitly programmed to do so. Two primary branches of machine
learning exist: supervised learning and unsupervised learning.

Supervised learning occurs when an organization has data about past activity
that has occurred and wants to replicate it. For example, if they want to create a
new marketing campaign for a particular product line, they may look at data from
past marketing campaigns to see which of their consumers responded most
favorably. Once the analysis is done, a machine learning model is created that can
be used to identify these new customers. It is called “supervised” learning because
we are directing (supervising) the analysis towards a result (in our example:
consumers who respond favorably). Supervised learning techniques include
analyses such as decision trees, neural networks, classifiers, and logistic regression.

Unsupervised learning occurs when an organization has data and wants to

understand the relationship(s) between different data points. For example, if a
retailer wants to understand purchasing patterns of its customers, an unsupervised
learning model can be developed to find out which products are most often
purchased together or how to group their customers by purchase history. Is it called
“unsupervised” learning because no specific outcome is expected. Unsupervised
learning techniques include clustering and association rules.

Privacy Concerns

The increasing power of data mining has caused concerns for many,
especially in the area of privacy. In today’s digital world, it is becoming easier than
ever to take data from disparate sources and combine them to do new forms of
analysis. In fact, a whole industry has sprung up around this technology: data
brokers. These firms combine publicly accessible data with information obtained
from the government and other sources to create vast warehouses of data about
people and companies that they can then sell. This subject will be covered in much
more detail in chapter 12 – the chapter on the ethical concerns of information
systems.

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Sidebar: What is data science? What is data analytics?

The term “data science” is a popular term meant to describe the analysis of large
data sets to find new knowledge. For the past several years, it has been considered
one of the best career fields to get into due to its explosive growth and high
salaries. While a data scientist does many different things, their focus is generally
on analyzing large data sets using various programming methods and software
tools to create new knowledge for their organization. Data scientists are skilled in
machine learning and data visualization techniques. The field of data science is
constantly changing, and data scientists are on the cutting edge of work in areas
such as artificial intelligence and neural networks.

TAKE A BREAK!

Assess your Knowledge

1. Explain the importance of databases in information systems and

decision-making. Discuss common issues in data resource
management, such as redundant data, data integrity, and reliance
on human memory.

2. Provide an overview of data models and explain how a relational

database organizes data into tables.

What I Learned from this Unit

1. Discuss the concept of Database Management Systems (DBMS).

Explain the role of DBMS in creating, modifying, and analyzing
databases. Compare personal database management systems,
such as Microsoft Access and Open Office Base, with enterprise-
level relational DBMS like Oracle and Microsoft SQL Server.

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2. Examine the concept of business intelligence and its role in

organizational decision-making. Discuss the process of deriving
insights from data using tools and techniques.

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Laudon, K.C. and Laudon, J. P. (2012). Management Information Systems, twelfth
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Marquis, J. (2012, July 16) What is the Post-PC World? Online Universities.com.
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Mcleod and Schell (2017) Management Information Systems Tenth Edition
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