Managing Data to Improve Business Performance Chapter 3*

Chapter Outline3.1 Data, Master Data, and Data Management3.2 File Management Systems3.3 Database Management Systems3.4 Data Warehouses, Data Marts, and Data Centers3.5 Enterprise Content Management3.6 Managerial Issues*

Learning ObjectivesDescribe how data and document management impact profits and performance.Understand how managers are supported or constrained by data quality.Discuss the functions of databases and database management systems.Understand how logical views of data provide a customized support and improve data security.Describe the tactical and strategic benefits of data warehouses, data marts, and data centers.

*

Learning Objectives contd6. Describe transaction and analytic processing systems.Explain how enterprise content management and electronic records management reduce cost, support business operations, and help companies meet their regulatory and legal requirements.*

IT-Performance Model*

Applebees international learns and earns from ITs dataThe Problem:Over the past decades, business have invested heavily in IT infrastructures (eg. ISs) to capture, store, analyze and communicate data.Creation of ISs to manage and process data and the deployment of communication networks does not generate value, as measured by an increase in profit (profit = revenues expenses)Company realized that Profit increases when employees learn from data and use data to increase revenues, reduce expenses or both.In the learn and earn model., from their data, they can predict what actions will lead to the greatest increase in net earnings. *

Business uncertaintyWhat will be monthly demand for Product X over each of the next 3 months?Knowing demand for Product X means Knowing how much order. Sales quantity and sales revenues are maximized because there are no inventory shortages or lost sales. Expenses are minimized because there is no unsold inventoryWhich marketing promotions for Product Y are customers most likely respond to?Knowing which marketing promotion will get the highest response rate maximizes sales revenues while avoiding the huge expense of a useless promotion.*

Applebees international learns and earns from ITs dataApplebee -- the largest casual dinning enterprise in the world. As of 2008, 2000 Applebees restaurants operating in 49 states and 17 countries, 510 company owned. *** To make difference and to build CUSTOMER LOYALTY (return visits), management wanted customers to experience a good time while having a great meal at attractive prices.To achieve this goal, management had to 1. be able to forecast demand ACCURATELY and 2. to become familiar with customers experiences and regional food preferences.For example, knowing which items to add to the menu based on past food preferences helps motivate return visits. *

ProblemAnother problem is that it is difficult to bring together huge quantities of data located in different databases in a way that creates value.Without efficient processes for managing vast amounts of customers data and turning data into usable knowledge, companies can miss critical opportunities to find insights hidden in the data.*

IT SolutionApplebee implemented an enterprise data warehouse (EDW) from teradata (teradata.com) with data analysis capabilities that helped management acquire and accurate understanding of sales, demand, and costs.EDW is a data repository () whose data are analyzed and used throughout the organization to improve responsiveness (to customer) and ultimately net earnings.Collect data concerning the previous days sales from all point-of-sale (POS) systems located at every company-owned restaurant. Organize this data to report every item sold in 15-min intervals.Reduce time required to collect POS data from 2 weeks to 1 day.Respond quickly to guests needs and respond to changes in guests preferences. Help company provide services that attract customers and build loyalty.*

ResultsManagement can collect and analyze detailed data in near real-time using EDW.Regional managers can select the best menu offerings and operate more efficiently. From customer satisfaction surveys, be able to identify regional preferences, predict product demand and build financial models.Improved customers experience, satisfaction, and loyaltyIncrease earningsTotal sales increased by 3.9% over prior year and opened 16 new restaurants.*

Lessons learned from this caseLearn Importance of timely and detailed data collection, data analysis based on insights from data.Learn that it is necessary to collect vast amount of data, organize and store them PROPERLY in one place and then use the results of analysis to make better marketing and make strategic decisions.*

Applebees International Learns & EarnsProblem: Huge quantities of data in manyDatabases.Solution: Enterprise data warehouse implemented.Results: Improved profitability.*

3.1 Data, Master Data, and Document Management*

3.1 Data, Master Data, and Document ManagementData are an organizations informational assets. (like financial assets which need to identify, control, protect, analyze and invest to maximize their value)Data management is one of the most difficult challenges facing todays organizations.

The important of data managementhelps companies improve productivity by insuring that people can find what they need without having to conduct a long and difficult search.Provide the infrastructure and tools to transform raw data into usable information of highest quality.

*

Data ManagementBasic rule is that, to maximize earnings, companies invest in data management technologies that increaseThe opportunity to earn revenues. (Customer relationship management)The ability to cut expenses (Inventory management)

To improve business processes and performance, managers and decision makers need rapid access to data. *

Data ManagementData management is about the design of data infrastructures to provide employees with complete, timely, accurate, accessible, understandable, and relevant () data.By definition, Data management is a structured approach for Capturing, Storing, Processing, Integrating, Distributing, Securing, and Archiving data EFFECTIVELY throughout their life cycle.*

Uncertainty: A constraint on managersThe viability of business decisions depends on access to high-quality data,Quality of data depends on effective approaches to data management.Too often, managers and information workers are constrained by data that cant be trusted because they are incomplete, out of context, outdated, inaccurate, inaccessible require weeks to analyzeIn those situations, decision maker is facing too much uncertainty to make intelligent Business decisions.*

Uncertainty: A constraint on managersData errors and inconsistencies lead to mistakes and lost opportunities such as failed deliveries, invoicing blunders (), and problems synchronizing data from multiple locations.Lead to Data analysis errors that resulted from the use of inaccurate formulas or untested models.TransAlta is Canadian power generator company. A spreadsheet mistake led to buying more US power transmission hedging contracts at higher prices. The data error cost US$24 million.In the retail sector, the cost of errors due to unreliable and incorrect data alone is estimated to be as high as $40 billion annuallyIn the healthcare industry, data errors not only increase healthcare costs by billions of dollars, but also cost thousands of lives. (Read A Closer Look 3.1)*

Data Life Cycle*

General Data Principles ()Principle of diminishing data valuePrinciple of 90/90 data usePrinciple of data in context ()*

1. Principle of diminishing data valueThis is a simple, yet powerful, principle.Viewing data in terms of a life cycle focuses on how the value of data diminishes as the data age. The more recent the data, the more valuable they are.Most organizations cannot operate at peak performance with blind spots (lack of data availability) of 30 days or longer.

*

2. Principle of 90/90 data useBeing able to act on real-time or near real-time operational data can have significant advantages.A majority of stored data, as high as 90 percent, is seldom accessed after 90 days (except for auditing purposes). Simply saying, data lose much of their value after 3 months.See Applebee as an example. When you can access to detailed data by the next day, it is most valuable to planning processes.*

3. Principle of data in contextThe capability to Capture, Process, Format, and Distribute data in near real-time or faster requires a huge investment in data management infrastructure to link remote POS systems, to data storage, data analysis systems, and reporting applications.The investment can be justified on the principle that data must be integrated, processed, analyzed, and formatted into Actionable InformationEnd users need to see data in a meaningful format the data guide their decisions and plans.*

Data VisualizationTo format data into meaningful contexts for users, businesses employ data visualization and decision support tools.Present data in ways that are faster and easier for users for users to understand.Data visualization tools are less expensive and easier to manipulate.Read A Closer Look 3.2. The Royal Shakespeare.Table provides more precise data, whereas the graph takes much less time to understand.*

*

Data Management: Problems and ChallengesRemember that dirty data result in poor business decisions, poor customer service, poor product design, wasteful situations.Even if data are accurate, timely, and clean, they might not be usable.Organizations with >1000 workers lose $5.7 millions annually in time wasted by employees reformatting data as they move among applications.Problems about managing, searching for, retrieving data located throughout the enterprise is a major challenge for various reasons*

Data Management: Problems and ChallengesThe volume of data increases exponentially with time. New data are added rapidly.Business records must be kept for a long time for auditing or legal reasons, even though the organization may no longer access them.*

Data are scattered throughout organizations and are collected and created by many individuals using different methods and devices. Data are frequently stored in multiple servers and locations and also in different computing systems, databases, formats, and human and computer languages.Data security, quality, and integrity Legal requirements relating to data differ among countries.Data are created and used offline without going through QC Validity of data is questionable.Data throughout and organization may be redundant and out-of-date, creating a huge maintenance problem.Data Management: Problems and Challenges*

To deal with these difficulties, organizations invest in data management solutions.It is inefficient or even impossible for queries to use traditional data management methods. Eg. Applebees caseData management support transaction processing by organizing data in one location.Data Management: Problems and Challenges*

Master Data Managementis a process whereby companies integrate data from various sources or enterprise applications to provide a more unified view of the data. ()In reality, MDM cant create a single unified version of data. Realistically MDM consolidates data from various sources into a master reference file, which then feeds data back to the applications.A master data reference file is based on data entity.A data entity is anything real or abstract about which a company wants to collect and store data. Common data entities in business include customer, vendor, product, and employee.Master data entities are the main entities of a company such as customers, products, suppliers, employees, and assets.Each department has distinct master data needs.Eg. Marketing pricing, brand, packaging, whereas Production costs and schedules*

Benefits of a unified view of customersBetter, more accurate customer data to support marketing, sales, support and serviceBetter responsiveness to ensure that all employees who deal with customers have up-to-date, reliable information on customersBetter revenue management and more responsive business decisions.*

Transforming data into knowledgeBusinesses do not run on raw data, but run on data that have been processed into information and knowledge.Learned in Chapter 2*

Transforming Data into KnowledgeExtract, Transform and Load*

Data quality and integrityData collection process that can create problems concerning quality of data being collected.Regardless of how the data are collected, they need to be validated so users know they can trust them.Garbage in, Garbage outGarbage in, Gospel out risker poor-quality data are trusted and used for planning.DQ is a measure of the datas usefulness as well as the quality of decisions based on data.Accuracy, Accessibility, Relevance, Timeliness and Completeness*

*

Data Privacy and Ethical UseBusinesses that collect data about employees, customers, or anyone else have the duty to protect data.Data should be accessible only to authorized people.Securing data Difficult and ExpensiveTo invest in data securities, the government has imposed enormous fines and penalties for data breaches as you will see in Chapter 5*

Document ManagementBusiness records contracts, research, accounting documents, memos, customer/client communications and meeting minutes.Document Management is the automated control of imaged and electronic documents, spreadsheets, voice and email, word processing documents from INITIAL creation to FINAL archiving or destruction.Document management system (DMS) consist of HW, SW that manage and archive E-documents and convert paper document to E-documents and then index and store them according to policy. Eg. Keep emails for 7 years, Promotions for 1 year and then discards.

*

DMSDMS have query and search capabilities so they can be identified and accessed like data in a database.Help reduce costs paperless officeDMS help business become more efficient and productive byEnabling the company to access and use the content contained in the documentsCutting labor cost by automating business processesReducing time and effort required to locate information needed to support decision makingImproving the security of the content, reducing risk of intellectual property theftMinimizing the costs associated with printing, storage, and searching for content*

DMSMajor Document Management tools are workflow software (), authoring tools (), scanners, databases.When workflow are digital, productivity increases, costs decrease, green computing become possible. (Conserve our valuable natural resources by reducing the effects of our computer usage on the environment)*

3.2 File Management SystemRecords, FileBit, ByteDatabase Primary key, Secondary key, Foreign key

*

Figure 3.5Example of primary and foreign keys.*

Figure 3.6Hierarchy of data for a computer-based file.*

Accessing Records From Computer FilesSequential File Organization Files are organized on Tapes. Data Records must be retrieved in the same physical sequence in which they are stored.Direct file organization or Random file organization, records can be accessed directly regardless of their location on the storage medium. Eg. Magnetic disks*

Figure 3.7Indexed sequential access method*

LimitationsData Redundancy Different programmers create different data-manipulating applications, the same data could be duplicated in several files. Data inconsistency Actual data values are not synchronized across various copies of data. For example, Customers with serveral loans, for each loan there is a file containing customer fields (name, address, email, phone), then a change to a customerss address in only one file creates inconsistencies.Data isolation File organization creates silos of data that make it extremely difficult to access data from different applications. For example, wants to know which product customers bought and which customers own more than 1000, To get results, have to filter and integrate data manually from multiple files.

*

LimitationsData security Securing data is difficult in the file environment because new applications are added to the system. As the number of applications increases, so does the number of people who can access data

Lack of data integrity In the file environment it is harder to enforce data integrity rules (), which include preventing data input errors, eg. SSN

Data concurrency At the same time, one is updating record, another may be accessing that record cant get the most current update. To prevent a concurrency problem, applications and data need to be independent of one another. In file environment, they are dependent.*

Figure 3.8

Computer-based files of this type cause problems such as redundancy,inconsistency, and data isolation.*

3.3 Database and DBMSDatabase helps minimize data redundancy, data isolation and data inconsistency.Data can be shared among usersSecurity and data integrity are easier to control and application are independent of the data they process.There are two basic types of databases: Centralized and Distributed.*

Figure 3.9 (a) Centralized database. (b) Distributed database with complete or partial copies of the central database in more than one location.*

Centralized DatabasesStores all related files in one location More consistentFiles are not accessible except via the centralized host computer, where they can be protected more easily from unauthorized access or modification.Vulnerable () to a single point of failure.Computer fails, all users are affected.When users are widely dispersed and must perform data manipulations from distances, they often experience transmission delays.

*

Distributed DatabasesA replicated database store complete copies of the entire database in multiple location. This arrangement provides backup in case of a failure of problems with the centralized database.Improve the response time (local users)Much more expensive to set up and maintain because each replica must be updated as records are added to, modified in and deleted from any of the databases.The updates may be done at the end of the day, otherwise the various databases will contain conflicting data.*

Distributed DatabasesA partitioned database is divided up so that each location has a portion of the entire database usually the portion that meets users local needs.Provide response speed of localized files without the need to replicate all changes in multiple locations.Advantage: data can be entered more quickly and kept more accurate by the users immediately responsible for data*

DBMSA program that provide access to databasesDBMS permits an organization to centralize data, manage them efficiently and provide access to the stored data.Range from simple Microsoft Access to full-featured Oracle and DB2*

Major Functions of DBMSData filtering and profiling inspect data for errors, inconsistency, redundancy, incomplete informationData quality correcting, standardizing, verifying the integrity of dataData synchronization Integrating, matching or linking data from disparate sourcesData enrichment Enhancing data using information from internal and external data sourcesData maintenance Checking and controlling data integrity over time*

Copyright 2010 John Wiley & Sons, Inc.*

3.4 Data Warehouses, Data Marts and Data CentersIts not necessarily the biggest companies that are the most successful, but the smartest ones.Being a smart company means having on-demand access to relevant data, understanding them (data visualization), and using what you learn from them to increase productivity and profitability. Data warehouses support and help them make smartest decision*

Data WarehousesDW is a repository () (a type of database) in which data are organized so that they can be readily analyzed using methods such as data mining, decision support, querying and other applications.Examples are revenue management, CRM, Fraud detection, payroll-management applicationsDatabases are designed and optimized to store data whereas data warehouses are designed and optimized to respond to analysis questions that are critical for a business.*

Data WarehousesDatabases are online transaction processing (OLTP) systems in which every transaction is recorded quickly. For example, withdrawns from a bank ATM, these transactions must be recorded and processed as they occur in real-time. Databases systems for banking are designed to ensure that every transaction get recorded immediately.Database are volatile () because data are constantly added, edited or updated.The volatility caused by transaction processes makes data analysis too difficult.To overcome this, data are Extracted from designated databases, Transformed and Loaded into a data warehouse.These data are read-only data. They remain the same until the next scheduled ETL.Warehouse data are not volatile so data warehouse are designed as online analytical processing (OLAP) system*

Trend towards more real-time support from data warehouseModern business world is experiencing a growing trend toward real-time data warehousing and analytics.In the past, it did not require instant response time, direct customer interaction. Companies with an active data warehouse will be able to interact appropriately with a customer to provide superior customer service enhance companies revenues.

*

Example :: Capital OneTrack each customers profitability and use that score to determine the level of customer service. When a customer calls and is asked to to enter the credit card number, which is linked to a profitability score.Low-profit customers get a voice response unit only; high-profit customers get a live person a customer service representative*

Example :: CharlesHe is calling the customer service center because of frequent dropped cell calls. Through the call center application (attached to the active data warehouse), the CSR accesses not only the complete history of Charless calls to the company but also a full view of all services to which he subscribes DSL, Internet, Cellular along with his customer profitability score, which lets the CSR know how profitable he is to the company.Called Intelligent Customer Service.The company try to minimize the risk of losing him as a customer.*

Benefits of data warehouseBenefits are both business and IT-relatedFrom business perspective, companies can make better decisions because they have access to better information.From IT perspective, DWs deliver information more effectively and efficiectly.

*

Benefits of data warehouseMarketing Use DW for product introductions, product information access, marketing program effectiveness and product line profitability. Maximize per customer profitabilityPricing and contracts Use data to calculate costs accurately to optimize pricing. Too low or too high.Forecasting Visibility of end customer demandSales Determine sales profitability and productivity for all territories and regions.Financial Use daily, weekly or monthly results for improved financial management.*

Characteristics of Data WarehouseOrganization : data are organized by subject (customer, vendor, product, price level and region)Consistency : Data in different databases may be encoded differently. In WH, they are coded in consistent manner. Eg. 0/1 or M/FTime variant : The data are kept for many years so they can be used for identifying trends, forecasting and making comparisons over timeNonvolatile : Once the data are entered into WH, they are not updated.Relational : Data DW uses relational structure.

*

Characteristics of Data WarehouseClient/Server : Data WH uses client/server architecture mainly to provide the end user an easy access to its dataWeb-based : Data WH are designed to provide an efficient computing environment for Web-based applicationsIntegration : Data from various sources are integrated. Web services are used to support integration.Real-time : Provide real-time capabilities

*

*

Building a Data WarehouseVery large and expensiveNeed to address a series of basic questionsDoes top management support Data WH?Do users support Data WH?Do users want access to broad range of data? Single repository or a set of standalone data marts?Do users want data access and analysis tools?Do users understand how to use the data WH to solve business problems?Does the unit have one or more power users who can understand data WH technologies?

*

Building a Data Warehouse11*

SuitabilityData WH is appropriate for organizations that have some of following characteristicsEnd users need to access large amount of dataOperational data are stored in different systemsOrganization employ an information-based approach to management.Organization serves a large, diverse customer base.Same data are represented differently in different systemsData are store in highly technical formats that are difficult to decipher.Extensive end-user computing is performed (many end users performing many activities)*

Data Warehouse vs Database (Data Warehouse) () (Data Base) () (data marts)

*

Data Warehouse vs Database schema (schema primary key, foreign key ) schema . *

Data Warehouse vs Database schema () primary key ( ) (query)

*

*

Data martsData warehouse Too expensive for a company to implementAs an alternative, many firms create a lower-cost, scaled down version of a data warehouse called a data mart.Data marts are designed for a strategic business unit, or a single departmentAllow for local rather than central control.Contain less information than Data WHRespond more quickly and easier to understand*

Multidimensional DatabasesFrom tables to cubesA data WH can be based on a multidimensional model called a multidimensional database that views data in the form of a data cube.*

Example . nuts, screws, bolts Washers (East), (West) (Central) 2001, 2002 2003 (Relational database) (Product, Region Sales) Screw*

Example -- Multidimensional Database*

Example -- Multidimensional Database Regions, Products Years*

Relational & Multidimensional Databases 2001*

Relational & Multidimensional Databases 2002*

*

Data Centeris the name given to the newer facilities containing mission-critical ISs and components that deliver data and IT services to the enterprise.Integrate networks, computer systems and storage devices.Insure the availability of power and provide physical and data security.Newest data centers include temperature and fire controls, physical and digital security, redundant power supplies as uninterruptible power sources (UPS), redundant data communications connections.*

Enterprise Content ManagementBecome an important data management technology, particularly for large and medium-sized organizations.Includes electronic document management, web content management, digital asset management and electronic records management (ERM).ERM infrastructures help reduce costs, easily share content across the enterprise, minimize risk, automate expensive time-intensive and manual processes and consolidate multiple web sites onto a single platform.*

4 key forces4 key forces are driving organizations to adopt a strategic, enterprise-level approach to planning and deploying content systems ( Content Systems).Compounding growth of content generated by organizationsThe need to integrate that content within business processesThe need to support increasing sophistication () for business user content access and interaction.The need to maintain governance () and control over content to ensure regulatory compliance and preparedness for legal discovery ( ).*

Discovery or the request for informationNearly 90 percent of US corporations become engaged in lawsuitsThe average $1 billion company in US faces 147 lawsuitsEach lawsuit will involve discovery or the request for information (almost always involves the request for email and other electronic communications).*

DiscoveryDiscovery is the process of gathering information in preparation for trial, legal or regulatory investigations, or administrative action as required by law.Electronic information is involved; the process is called E-Discovery.Serveral cases where a company incurred huge costs for not responding to e-discovery are followings:Failure to save emails results in a $2.75 million fine for Phillip MorrisFailure to respond to e-discovery requests cost Bank of America $10 millionFailure to produce backup tapes and deleted emails results in a $29.3 million jury verdict against USB Warburg.*

Managerial IssuesReducing uncertainty Requires a data infrastructure that can capture, process and report information in near real-time.Cost-benefit issues and justification Some solutions are expensive and justifiable only in large corporations. Smaller ones can make solutions cost effective if they make use of existing databases rather than creating new ones.Where to store data physically Should data be distributed close to their users? This arrangement could speed up data entry and updating, but it could also generate replication and security risks. Should data be centralized for easier control, security and disaster recovery? This offers fewer communications and single-point-of failure risks.*

Managerial IssuesLegal issues Failure to manage electronic records exposes companies to fines from the courts and regulatory agencies such as IRS.Internal or External Should a firm invest internally or externally?Disaster recovery Can an organizations business processes (dependent on databases and data WH) recover after an information system disaster?Data security and ethics Are the companys customer and other competitive data safe from snooping () and sabotage ()? Are confidential data, such as personnel details safe from improper or illegal access?

*

Managerial IssuesPrivacy Storing data in a WH, and conducting data mining may result in the invasion () of individual privacy. What will the company do to protect individuals?The legacy data problem Data in older, perhaps obsolete, databases still need to be available to newer database management systems. Many of legacy application programs used to access the older data cannot be converted into new computing environment without expense. Two approaches to solve this problemCreate a database front end that can act as a translator from the old system to the new.Integrate the older applications into the new system so that data can be seamlessly accessed in the original format.

*

Managerial IssuesData Delivery Moving data around an enterprise efficiently is often a major problem.*

QuizWhat is the goal of data management?

Explain how having detailed real-time or near real-time data can improve productivity and decision quality.

How are organizations using their data warehouses to improve consumer satisfaction and the companys profitability?*

***Click Applebees image for link to company historic chronology.

Click Teradata for link (solution implemented by Applebees)

*Informational slide. A record needs a unique identifier to avoid data redundancy. A computer system essentially organizes data into a hierarchy that begins with bits & proceeds to bytes, fields, records, files & databases.*Informational slide. Figure illustrates primary & foreign keys.*Informational slide. Indexed sequential access method (ISAM) uses an index of key fields to locate individual records.*Data management problems arising from the file environment approach led to the development of databases & database management systems (DBMS).

Why?

Data redundancy same data duplicated in several files creating silos.

Data inconsistency data values are not synchronized across various copies of the data such as problems faced by Applebees & Dartmouth.

Data isolation file organization creates silos of data that make it extremely difficult to access data from different applications.

Data security difficult because new applications are added on an ad hoc basis. Applications increase as the number of people who can access the data.

Lack of data integrity much harder to enforce the rules.

Data concurrency accessing & recording of data may be going on at the exact same time.*Centralized database stores all related files in one physical location. Why is this negative? Natural & unnatural disasters could be catastrophic.

Redundancy to avoid disasters is extremely expensive.*DBMS answers backup, integrity, security, silos, inconsistency & replication issues. Discuss students experiences.*Students should expand, or at least give examples of organizations in each industry who have apparently utilized effectively.

American Airlines; Talbots; AT&T to begin.*Task students to come with counters for each reason.

A few examples:

Clearly communicate & involve users avoids unrealistic expectations.

Outsource when not core competency avoids lack of development expertise.

Secure top management support & have champion avoids lack of effective project sponsorship.*