INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

CHAPTER III: DATA MANAGEMENT, DATA ANALYTICS AND BUSINESS

INTELLIGENCE

I. OBJECTIVES
At the end of this chapter, the students should be able to:
 Describe the purpose and benefits of data management and how database technologies
help support business processes.
 Describe the differences between centralized and distributed database architectures and
the importance of creating and maintaining data that can be trusted.
 Understand the concepts of data analytics and data warehousing and evaluate their
tactical and strategic benefits.
 Explain benefits of data and text mining and business intelligence and how they benefit an
organization.
 Describe electronic records management and how it helps companies to meet their
compliance, regulatory, and legal obligations.

II. SUBJECT MATTER

Topic: Data Management, Data Analytics, and Business Intelligence
Subtopic: - Data Management and Database Technologies
- Data Warehouses
- Data Analytics and Data Discovery
- Business Intelligence and Electronic Records Management

III. PROCEDURE
A. Preliminaries
Pre- Assessment
1. Describe the purpose and benefits of data management and how database technologies
help support business processes.
2. Describe the differences between centralized and distributed database architectures and
the importance of creating and maintaining data that can be trusted.
3. Understand the concepts of data analytics and data warehousing and evaluate their
tactical and strategic benefits.
4. Explain benefits of data and text mining and business intelligence and how they benefit an
organization.
5. Describe electronic records management and how it helps companies to meet their
compliance, regulatory, and legal obligations.

1
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

B. Lesson Proper
Database, data warehouse, data analytics, and business intelligence (BI) technologies
interact to create a new biz-tech ecosystem. Data analytics and BI discover insights or
relationships of interest that otherwise might not have been recognized. They make it possible
for managers to make decisions and act with clarity, speed, and confidence. Data analytics is
not just about managing more or varied data. Rather, it is about asking new questions,
formulating new hypotheses, exploration and discovery, and making data-driven decisions.
Ultimately, a big part of data analysis efforts is the use of new analytics techniques. Mining
data or text taken from day-to-day business operations reveals valuable information, such as
customers’ desires, products that are most important, or processes that can be made more
efficient. These insights expand the ability to take advantage of opportunities, minimize risks,
and control costs.

1. Data Management and Database Technologies

Due to the incredible volume of data that the typical organization creates, effective data
management is vital to prevent storage costs from spiraling out of control and controlling data
growth while supporting greater performance. Data management oversees the end-to-end
lifecycle of data from creation and initial storage to the time when it becomes obsolete and is
deleted.
The objectives of data management include the following:

 Mitigating the risks and costs of complying with regulations.

 Ensuring legal requirements are met.
 Safeguarding data security.
 Maintaining accuracy of data and availability.
 Certifying consistency in data that come from or go to multiple locations.
 Ensuring that data conform to organizational best practices for access, storage, backup,
and disposal.
The following data management technologies keep users informed and support the various
business demands:
Databases store data generated by business apps, sensors, operations, and transactionprocessing
systems (TPS). Data in some databases can be extremely volatile. Medium and large enterprises
typically have many databases of various types—centralized and distributed.

2
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

Data warehouses integrate data from multiple databases and data silos across the organization,
and organize them for complex analysis, knowledge discovery, and to support decision-making.
For example, data are extracted from a database, processed to standardize their format, and
then loaded into data warehouses at specific times, such as weekly. As such, data in data
warehouses are nonvolatile—and are ready for analysis.
Data marts are small-scale data warehouses that support a single function or one department.
Enterprises that cannot afford to invest in data warehousing may start with one or more data
marts.
Business intelligence (BI)—tools and techniques process data and do statistical analysis for
insight and discovery—that is, to discover meaningful relationships in the data, keep informed in
real time, detect trends, and identify opportunities and risks.
Database Management Systems and SQL
Database management systems (DBMSs) integrate with data collection systems such as
TPS and business applications; store the data in an organized way; and provide facilities for
accessing and managing that data.
Over the past 25 years, the relational database has been the standard database model
adopted by most enterprises. Relational databases store data in tables consisting of columns and
rows, similar to the format of a spreadsheet.
Relational management systems (RDBMSs) provide access to data using a declarative
language—structured query language (SQL). Declarative languages simplify data access by
requiring that users only specify what data they want to access without defining how access will
be achieved.

3
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

An instance of SQL to access employee information based on date of hire.

DBMS Functions
An accurate and consistent view of data throughout the enterprise is needed so one can
make informed, actionable decisions that support the business strategy.

Online transaction processing (OLTP) systems are designed to manage transaction data, which
are volatile. OLTP is a database design that breaks down complex information into simpler data
tables to strike a balance between transaction-processing efficiency and query efficiency.
Data Life Cycle and Data Principles
The data life cycle is a model that illustrates the way data travel through an organization.
The data life cycle begins with storage in a database, to being loaded into a data warehouse for
analysis, then reported to knowledge workers or used in business apps.

4
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

Master Data and Master Data Management

As data become more complex and their volumes explode, database performance degrades. One
solution is the use of master data and master data management (MDM). MDM processes
integrate data from various sources or enterprise applications to create a more complete
(unified) view of a customer, product, or other entity.

2. Data Warehouses

Data warehouses are the primary source of cleansed data for analysis, reporting, and
business intelligence (BI). Often the data are summarized in ways that enable quick responses to
queries. Data warehouses store data from various source systems and databases across an
enterprise in order to run analytical queries against huge datasets collected over long time
periods. The high cost of data warehouses can make them too expensive for a company to
implement.
Data marts are lower-cost, scaled-down versions of a data warehouse that can be
implemented in a much shorter time, for example, in less than 90 days. Data marts serve a
specific department or function, such as finance, marketing, or operations.

5
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

Enterprise data warehouses (EDWs) is a data warehouse that integrates data from
databases across an entire enterprise.
Procedures to Prepare EDW Data for Analytics
1. Extracted from designated databases.
2. Transformed by standardizing formats, cleaning the data, integrating them.
3. Loaded into a data warehouse.
These three procedures—extract, transform, and load—are referred to by their initials ETL.

Building a Data Warehouse

6
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

As shown, the data warehouse architecture defines the flow of data that starts when data are
captured by transaction systems; the source data are stored in transactional (operational)
databases; ETL processes move data from databases into data warehouses or data marts, where
the data are available for access, reports, and analysis.
Data Warehouse Applications by Industry

3. Big Data Analytics and Data Discovery

Big data is an extremely large data set that is too large or complex to be analyzed using
traditional data processing techniques.
Data analytics is a technique of qualitatively or quantitatively analyzing a data set to reveal
patterns, trends, and associations that often relate to human behavior and interactions, to
enhance productivity and business gain.
Big data analytics process of examining large and varied data sets to identify hidden patterns and
correlations, market trends, customer preferences and other useful information to enable better
business decisions.
Human Expertise and Judgment are Needed
Human expertise and judgment are needed to interpret the output of. Data are worthless if you
cannot analyze, interpret, understand, and apply the results in context. This brings up several
challenges:

7
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

Data need to be prepared for analysis: For example, data that are incomplete or duplicated need
to be fixed.
Dirty data degrade the value of analytics: The “cleanliness” of data is very important to data
mining and analysis projects. Analysts have complained that data analytics is like janitorial work
because they spend so much time on manual, error-prone processes to clean the data. Large data
volumes and variety mean more data that are dirty and harder to handle.
Data must be put into meaningful context: If the wrong analysis or datasets are used, the output
would be nonsense, as in the example of the Super Bowl winners and stock market performance.
Stated in reverse, managers need context in order to understand how to interpret traditional and
big data.
Data and Text Mining
Data and text mining are different from DBMS and data analytics. Data mining software
enables users to analyze data from various dimensions or angles, categorize them, and find
correlations or patterns among fields in the data warehouse. Up to 75% of an organization’s data
are nonstructured word-processing documents, social media, text messages, audio, video, images
and diagrams, faxes and memos, call center or claims notes, and so on.
Text mining is a broad category that involves interpreting words and concepts in context.
Any customer becomes a brand advocate or adversary by freely expressing opinions and attitudes
that reach millions of other current or prospective customers on social media. Text mining helps
companies tap into the explosion of customer opinions expressed online.
Text Analytics Procedure

 Exploring: First, documents are explored. This might occur in the form of simple word
counts in a document collection, or by manually creating topic areas to categorize
documents after reading a sample of them.
 Preprocessing: Before analysis or the automated categorization of content, the text may
need to be preprocessed to standardize it to the extent possible. As in traditional analysis,
up to 80% of preprocessing time can be spent preparing and standardizing the data.
 Categorizing and modeling: Content is then ready to be categorized. Categorizing
messages or documents from information contained within them can be achieved using
statistical models and business rules. As with traditional model development, sample
documents are examined to train the models.

4. Business Intelligence and Electronic Records Management

8
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

Continuing developments in data analytics and business intelligence (BI) make it

increasingly necessary for organizations to be aware of the differences between these terms and
the different ways in which they add value in an organization.
Business intelligence (BI) is a set of tools and techniques for acquiring and transforming
raw data into meaningful and useful information for business analysis purposes in the forms of
reports, dashboards, or interactive visualizations.
Business Benefits of BI
BI provides data at the moment of value to a decision-maker—enabling it to extract
crucial facts from enterprise data in real time or near real time. A BI solution with a well-designed
dashboard, for example, provides retailers with better visibility into inventory to make better
decisions about what to order, how much, and when in order to prevent stock-outs or minimize
inventory that sits on warehouse shelves.
Electronic Records Management
All organizations create and retain business records. A record is documentation of a
business event, action, decision, or transaction. Examples are contracts, research and
development, accounting source documents, memos, customer/client communications, hiring
and promotion decisions, meeting minutes, social posts, texts, e-mails, website content, database
records, and paper and electronic files. Most records are kept in electronic format and
maintained throughout their life cycle—from creation to final archiving or destruction by an
electronic records management system (ERMS).
Electronic records management system (ERMS) consists of hardware and software that
manage and archive electronic documents and image paper documents; then index and store
them according to company policy.
ERM Benefits
An ERM can help a business to become more efficient and productive by the following:

 Enabling the company to access and use the content contained in documents.
 Cutting labor costs by automating business processes.
 Reducing the time and effort required to locate information the business needs to support
decision-making.
 Improving the security of content, thereby reducing the risk of intellectual property theft.
 Minimizing the costs associated with printing, storing, and searching for content.

9
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

ACTIVITY 1: CRITICAL THINKING QUESTIONS

Based on the discussion, answer each questions and / or statements briefly. Write on the spaces
provided below.

1. What are the functions of databases and data warehouses?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

2. Why is master data management (MDM) important in companies with multiple data
sources?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
3. Why would a company invest in a data mart instead of a data warehouse?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

10
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

ACTIVITY 2: CASE STUDY

Business Case: Big Data Analytics is the “Secret Sauce” for Revitalizing McDonald’s
(Sources: Compiled from Van Rijmenam (2016) and McDonald’s (2017))
With 62 million daily customers and an annual revenue of $27 billion, McDonald’s has a
virtually unrivaled amount of data at its disposal to analyze. In order to dominate the market,
retain its loyal customers, and attract new customers who are skeptical of McDonald’s practices
and quality, it lends itself to its data, becoming an “information centric organization.” What does
it mean to be information centric? Instead of using a fixed process of production, service, etc. as a
business plan that is product driven, McDonald’s uses customer data to dictate its next move as a
customer-driven corporation. During the inception of McDonald’s in 1940, the McDonald
brothers derived a product-driven business centered around fast service and tasty food. While
that method was successful before other restaurants entered the fast food market, growth was
stunted due to a lack of innovation and change. So, the organization began to collect customer
data as a means to monitor successful products, customer demands, and the results of marketing
campaigns.
This venture led to McDonald’s becoming the premier fast food chain across the United
States in the 1980s. Soon after becoming a customer-driven corporation, McDonald’s introduced
the Happy Meal so families with small children could reduce costs and waste at dinner time,
released the Egg McMuffin as the most successful breakfast item of all time, equipped
professionals and teenagers with free Wi-Fi to expand its customer segmentation, and provided
nutrition details to become the most transparent fast food chain at the time. All of these
improvements derived from McDonald’s using its immense amount of data to set its chain apart
from the rest.
In 2008, to further improve its ability to leverage big data, McDonald’s made the
transition from average-based metrics to trend analytics. The issue with average-based metrics is
that it is hard to compare regions and stores. A store could be growing in its sales and
productivity but have the same average metrics as a store that is declining. Using trend analytics
allowed McDonald’s to combine multiple datasets from multiple data sources to visualize and
understand cause-and-effect relationships in individual stores and regions. The correlations it
found enabled its analysts to prescribe solutions to problems in sales, production, turnover, and
supply chain management to reduce costs and save time. The variables it studies allows
McDonald’s to create a standardized experience across the world. However, analyzing local data
in each store produces minor changes around the organization. For example, most McDonald’s
locations look the same, but each restaurant is slightly different and optimized for the local
market.

11
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

A great example of McDonald’s big data analysis in action is its updated drive-thru system.
All fast food chains have bottlenecks in their drive-thru lanes, but McDonald’s average customer
wait time is about 3 minutes, which is close to the industry’s longest wait time of 214 seconds.
One of the most prominent issues in its drive-thru was that customers going through the line for
dinner, ordering large meals and searching over the menu for an extended period of time,
created a negative experience for each car in line behind them. In response, McDonald’s
optimized the drive-thru across three components: design, information, and people. Design
focused on the improvements to the drive-thru, including better speaker quality and higher
resolution, digital menu boards. Information centered around what was on the menu board. In
order to decrease order times, McDonald’s removed about 40% of the drive-thru menu board.
In its third aspect, people, the fast food chain attempted to reduce the negative
experiences for those in line by creating a second drive-thru line with a designated order taker for
each line, a third drive-thru window, and two production lines.
Another example showing McDonald’s commitment to being a customer-driven
corporation is its introduction of all day breakfast, which was the highest priority for customers
across the United States. Being the corporation with by far the largest share of the fast food
market, McDonald’s will continue to use its growing data sets to provide the best experience and
food to its customers (van Rijmenam, 2016).

REVIEW QUESTION:
1. Explain McDonald’s mission and responsibilities.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

2. What limitation did McDonald’s face in gaining data that was meaningful to decision-
making?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

12
INFORMATION SYSTEMS ANALYSIS AND DESIGN MODULE 3

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

3. Why is the ability to identify patterns and relationships critical to McDonald’s operations?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

13