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Chapter 5:
Business Intelligence

Lecturer: MsC. Hiep Tuan Nguyen

University of Transport HCMC (UTH)

Study questions

Q1 What do business professionals need to know

about database & database processing?
How Are Data Models Used for Database
Development?

Q2 What is Data Warehouse?

Q3 What is Data Mining? (Skip)

Q4 How to use Data for Logistics and Decision

Making?
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Q1 What do business
professionals need to know
about database & database
processing?

Presented by M sC. Hiep Tuan Nguyen

What Is the Purpose of a Database?

Ø It keeps track of things.

Ø A spreadsheets can do it also, but they still have disadvantages

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spreadsheets

Spreadsheets
combine
• Storage
• Logic
• Processing
• Display

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Spreadsheets

Ø They also keep track of things.

Ø They are mostly associated with single user applications, as soon
as you need to share data the possibility of error increases

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Spreadsheets - Problems

Spreadsheet Used for

Assignment of Sheet
Music

Source: textbook [1],

pg 164

Data redundancy A lot of data is duplicated.

Inefficiency Searching records, changing
Inconsistency Different values in same field
Integrity Data can disappear.

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Data Shown from a Database

Student Data has

multiple themes:
• student grades
• student emails
• student office
visits

Source: textbook [1], pg 133

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General Rule

Ø Lists of data involving a single theme can be stored in a

spreadsheet
Ø lists that involve data with multiple themes require a database

the purpose of a database is to keep

track of things that involve more
than one theme.

Presented by M sC. Hiep Tuan Nguyen

What is a Database?

Ø Database:
§ A self-describing collection of integrated records
§ In databases, bytes are grouped into columns, such as Student Number
and Student Name. Columns are also called fields. Columns or fields, in
turn, are grouped into rows, which are also called records.

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Characters, Fields, and Records

Source: textbook [1], pg 133

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Hierarchy of Data Elements

Source: textbook [1], pg 134

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Structure of a Database

Source: textbook [1], pg 134

Metadata describes the structure of the Database, what

values are allowed, who can access it, what can be deleted

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Relationships Among Rows

Source: textbook [1], pg 135

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Relationship Special Terms

Ø Key (Primary key)

§ A column or group of columns that identifies a unique row in a table.
§ Student Number is the key of the Student table.
§ Every table must have a key.
§ Sometimes more than one column is needed to form a unique
identifier. In a table called City, for example, the key would consist of
combination of columns (City, State).

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Relationship Special Terms

Ø Foreign keys
§ These are keys of a different (foreign) table than the table in which they
reside.
Ø Relational databases
§ Relationships among tables are created by using foreign keys.
Ø Relation
§ Formal name for a table

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What Is a Database Management

System (DBMS)?

Ø Program used to create, process, and administer a

database.
Ø Licensed from vendors such as IBM (DB2), Microsoft
(Access and SQL Server), Oracle (Oracle
Database), and others.
Ø MySQL - open source.

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Processing the Database

Four DBMS operations

1. Read (E.g: SELECT)
2. Insert (E.g: INSERT INTO)
3. Modify (E.g: UPDATE)
4. Delete data (E.g: DELETE FROM)

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Processing the Database

• Structured Query Language - SQL (see-quell)
– International standard
– Used by most popular DBMS

INSERT INTO Student

([Student Number], [Student Name], HW1, HW2, MidTerm)
VALUES (1000, ‘Franklin, Benjamin’, 90, 95, 100)

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Administering the Database

Ø Used to set up a security system involving user accounts,

passwords, permissions, and limits for processing.
Ø Permissions can be limited in very specific ways.
Ø Backing up database data, adding structures to improve
performance of database applications, removing unwanted data.
Ø most organizations dedicate one or more employees to the role of
database administration

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Database Administration Tasks

Source: textbook
[1], pg 142

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Elements of Database Applications

Elements Functions

View data;, insert new, update existing,

Forms
and delete existing data
Structured presentation of data using
Reports sorting, grouping, filtering, and other
operations
Search based upon data values
Queries
provided by the user
Provide security, data consistency, and
Application
special purpose processing, e.g., handle
Programs
out-of-stock situations

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How do applications make databases

more useful?
Source: textbook
[1], pg 143

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Example of a Student Report

Sample Query Form

Used to Enter Phrase
for Search Sample Query
Results of Query
Operation

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How Are Data Models Used

for Database Development?

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Components of the Entity-Relationship

Data Model

• Something users want to track

Entities • Order, customer, salesperson, item,
volunteer, donation

• Describe characteristics of an entity

Attributes • OrderNumber, CustomerNumber,
VolunteerName, PhoneNumber

• Uniquely identifies one entity instance

Identifier from other instances
• Student_ID_Number

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Student Data Model Entities

Source: textbook [1], pg 148

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Example of Department, Adviser, and

Student Entities and Relationships

Source: textbook [1], pg 148

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Sample of Relationships―Version
1

Crow’s
Feet

1:N N:M
Source:
textbook [1],
One department can An adviser may
pg 149 have many advisers, have many
but an adviser may be students, and one
in only one student may many
department advisers

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Sample of Relationships─Version
2

“Crow’s
Foot”

Source: N:M 1:N

textbook [1], A department has A student has
pg 149 many advisors, and only one advisor,
an advisor may but an adviser
advise for more than may advise many
one department students

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Crow’s-Foot Diagram Version

Maximum cardinality─maximum number of

entities involved in a relationship. Vertical bar on
a line means that at least one entity is required.

Source:
textbook [1],
pg 150 Minimum cardinality—minimum number of
entities in a relationship. Small oval means entity
is optional; relationship need not have an entity
of that type.

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How Is a Data Model Transformed into a

Database Design?
• Normalization
§ Converting poorly structured tables into two or more well-structured tables.
• Goal
§ Construct tables with data about a single theme or entity.
• Purpose
§ To minimize data integrity problems.

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Data Integrity Problems

• Data integrity problems produce incorrect and inconsistent
information, users lose confidence in information, and the system
gets a poor reputation.
• Can only occur if data are duplicated.

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Poorly Designed Employee Table

Causes Data Integrity Problem

Source: textbook [1], pg 151

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Two Normalized Tables

Single
Themes

Source: textbook [1], pg 151

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Summary of Normalization

Source: textbook [1], pg 152

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Representing 1:N Relationships

Source: textbook [1], pg 153

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Representing an N:M Relationship:

Strategy for Foreign Keys

Source: textbook [1], pg 154

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the Users’ Role in the Development of

Databases?
Ø Users are the final judges of:
§ What data database should contain.
§ How tables should be related.
Ø Users review data model to ensure it accurately reflects users’
view of the business.
Ø Mistakes will come back to haunt them.

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Q2 What is Data Warehouse?

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Business Intelligence and Data Warehousing

Ø BI used to be
everything related to
use of data for
managerial decision
support
Ø Now, it is a part of
Business Analytics
§ BI = Descriptive
Analytics

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What is a Data Warehouse?

Ø A physical repository where relational data are specially

organized to provide enterprise-wide, cleansed data in a
standardized format
Ø A relational database? (so what is the difference?)
Ø “The data warehouse is a collection of integrated, subject-
oriented databases designed to support DSS functions, where
each unit of data is non-volatile and relevant to some
moment in time”

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Characteristics of DWs

Ø Subject oriented
Ø Integrated
Ø Time-variant (time series)
Ø Nonvolatile
Ø Summarized
Ø Not normalized
Ø Metadata
Ø Web based, relational/multi-dimensional
Ø Client/server, real-time/right-time/active...

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Data Mart

A departmental small-scale “DW” that stores only limited/relevant

data
Ø Dependent data mart
A subset that is created directly from a data warehouse
Ø Independent data mart
A small data warehouse designed for a strategic business unit or
a department

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D W for Data-Driven Decision Making

• An example of a DW supporting data-driven decision making in

automotive industry

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A Generic DW Framework

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A Web-based D W Architecture

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Analysis of Data in DW
Ø OLTP vs. OLAP…
Ø OLTP (Online Transaction Processing)
§ Capturing and storing data from ERP, CRM, POS, …
§ The main focus is on efficiency of routine tasks
Ø OLAP (Online Analytical Processing)
§ Converting data into information for decision support
§ Data cubes, drill-down / rollup, slice & dice, …
§ Requesting ad hoc reports
§ Conducting statistical and other analyses
§ Developing multimedia-based applications
§ …more in the book

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OLAP vs. OLTP

Table 3.5 A Comparison between OLTP and OLAP

Criteria O LTP O LA P
Purpose To carry out day-to-day business To support decision making and
functions provide answers to business and
management queries
Data source Transaction database (a normalized Data warehouse or DM (a
data repository primarily focused on nonnormalized data repository
efficiency and consistency) primarily focused on accuracy and
completeness)
Reporting Routine, periodic, narrowly focused Ad hoc, multidimensional, broadly
Reports focused reports and queries
Resource requirements Ordinary relational databases Multiprocessor, large-capacity,
specialized databases
Execution speed Fast (recording of business Slow (resource intensive, complex,
transactions and routine reports) large-scale queries)

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DW Administration and Security

Ø Data warehouse administrator (DWA)

§ DWA should…
o have the knowledge of high-performance software, hardware, and
networking technologies
o possess solid business knowledge and insight
o be familiar with the decision-making processes so as to suitably
design/maintain the data warehouse structure
o possess excellent communications skills
Ø Security and privacy is a pressing issue in DW
§ Safeguarding the most valuable assets
§ Government regulations (HIPAA, etc.)
§ Must be explicitly planned and executed

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The Future of D W

• Sourcing…
– Web, social media, and Big Data
– Open source software
– SaaS (software as a service)
– Cloud computing
– Data lakes

• Infrastructure…
– Columnar
– Real-time DW
– Data warehouse appliances
– Data management practices/technologies
– In-database & In-memory processing New DBMS
– New DBMS, Advanced analytics, …
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Business Performance Management (1 of

2)

Ø Business Performance Management (BPM) is…

A real-time system that alerts managers to potential
opportunities, impending problems, and threats, and then
empowers them to react through models and collaboration
Ø Also called corporate performance management (CPM by
Gartner Group), enterprise performance management (EPM by
Oracle), strategic enterprise management (SEM by SAP)

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Business Performance Management (2 of

2)

Ø BPM refers to the business processes, methodologies, metrics,

and technologies used by enterprises to measure, monitor, and
manage business performance.
Ø BPM encompasses three key components
§ A set of integrated, closed-loop management and analytic
processes, supported by technology …
§ Tools for businesses to define strategic goals and then
measure/manage performance against them
§ Methods and tools for monitoring key performance
indicators (KPIs), linked to organizational strategy

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A Closed-Loop Process to Optimize

Business Performance

• Process Steps

1. Strategize
2. Plan
3. Monitor/analyze
4. Act/adjust
Each with its own sub-
process steps

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1 - Strategize: Where Do We Want to Go?

• Strategic planning
– Common tasks for the strategic planning process:
1. Conduct a current situation analysis
2. Determine the planning horizon
3. Conduct an environment scan
4. Identify critical success factors
5. Complete a gap analysis
6. Create a strategic vision
7. Develop a business strategy
8. Identify strategic objectives and goals
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2 - Plan: How Do We Get There?

Ø Operational planning
§ Operational plan: plan that translates an organization’s
strategic objectives and goals into a set of well-defined
tactics and initiatives, resource requirements, and expected
results for some future time period (usually a year).
Ø Operational planning can be
§ Tactic-centric (operationally focused)
§ Budget-centric plan (financially focused)

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3 - Monitor/Analyze: How Are We

Doing?
Ø A comprehensive framework for monitoring performance
should address two key issues:
§ What to monitor?
o Critical success factors
o Strategic goals and targets
§ How to monitor?

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4 - Act and Adjust: What Do We Need to

Do Differently?
Ø Success (or mere survival) depends on new projects: creating
new products, entering new markets, acquiring new customers
(or businesses), or streamlining some process.
Ø Many new projects and ventures fail!
Ø What is the chance of failure?
§ 60% of Hollywood movies fail
§ 70% of large IT projects fail, …

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Performance Measurement

Ø Performance measurement system

A system that assists managers in tracking the implementations
of business strategy by comparing actual results against
strategic goals and objectives
§ Comprises systematic comparative methods that indicate
progress (or lack thereof) against goals

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K PIs and Operational Metrics

• Key performance indicator (KPI)

A KPI represents a strategic objective and metrics that
measure performance against a goal
• Distinguishing features of KPIs
– Strategy
– Targets
– Ranges
– Encodings
– Time frames
– Benchmarks

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Performance Measurement 2

• Key performance indicator (KPI)

Outcome KPIs Driver KPIs

(lagging indicators e.g., revenues) (leading indicators e.g., sales leads)

• Operational areas covered by driver KPIs

– Customer performance
– Service performance
– Sales operations
– Sales plan/forecast

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Performance Measurement System

• Balanced Scorecard (BSC)

A performance measurement and management methodology
that helps translate an organization’s financial, customer,
internal process, and learning and growth objectives and
targets into a set of actionable initiatives
“The Balanced Scorecard: Measures That Drive Performance”

(HBR, 1992)

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Balanced Scorecard

The meaning of “balance”?

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Six Sigma as a Performance

Measurement System (1 of 2)
Ø Six Sigma
A performance management methodology aimed at reducing
the number of defects in a business process to as close to zero
defects per million opportunities (DPMO) as possible

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Six Sigma as a Performance

Measurement System (2 of 2)
Ø The DMAIC performance model
A closed-loop business improvement model that encompasses
the steps of defining, measuring, analyzing, improving, and
controlling a process
Ø Lean Six Sigma
§ Lean manufacturing / lean production
§ Lean production versus six sigma?

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Comparison of BSC and Six Sigma (1 of 2)

Table 3.7 Comparison of the Balanced Scorecard and Six Sigma

Balanced Scorecard Six Sigma

Strategic management system Performance measurement system
Relates to the longer-term view of the business Provides snapshot of business’s performance and
identifies measures that drive performance toward
Profitability
Designed to develop a balanced set of measures Designed to identify a set of measurements that
impact profitability
Identifies measurements around vision and values Establishes accountability for leadership for wellness
and profitability
Critical management processes are to clarify Includes all business processes—management and
vision/strategy, communicate, plan, set targets, operational
align strategic initiatives, and enhance feedback

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Comparison of BSC and Six Sigma (2 of 2)

Table 3.7 [continued]

Balanced Scorecard Six Sigma

Balances customer and internal operations without a Balances management and employees’ roles;
clearly defined leadership role balances costs and revenue of heavy processes
Emphasizes targets for each measurement Emphasizes aggressive rate of improvement for each
measurement, irrespective of target
Emphasizes learning of executives based on feedback Emphasizes learning and innovation at all levels
based on process feedback; enlists all employees’
Participation
Focuses on growth Focuses on maximizing profitability
Heavy on strategic content Heavy on execution for profitability
Management system consisting of measures Measurement system based on process management

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Effective Performance Measurement Should

Ø Measures should focus on key factors.

Ø Measures should be a mix of past, present, and future.
Ø Measures should balance the needs of shareholders,
employees, partners, suppliers, and other stakeholders.
Ø Measures should start at the top and flow down to the bottom.
Ø Measures need to have targets that are based on research and
reality rather than arbitrary.

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