Chapters 5-6 from the textbook, post a 500-word synopsis of your understanding of the concepts reviewed
Chapter Highlights Section I Technical Foundations of Database Management Database Management Fundamental Data Concepts Real World Case: Beyond Street Smarts: Data-Driven Crime Fighting Database Structures Database Development Section II Managing Data Resources Data Resource Management Types of Databases Real World Case: Duke University Health System, Beth Israel Deaconess Medical Center, and Others: Medical IT Is Getting Personal Data Warehouses and Data Mining Traditional File Processing The Database Management Approach Real World Case: Cogent Communications, Intel, and Others: Mergers Go More Smoothly When Your Data Are Ready Real World Case: Applebee’s, Travelocity, and Others: Data Mining for Business Decisions
Learning Objectives 1. Explain the business value of implementing data
resource management processes and technologies in an organization.
2. Outline the advantages of a database manage- ment approach to managing the data resources of a business, compared with a file processing approach.
3. Explain how database management software helps business professionals and supports the operations and management of a business.
4. Provide examples to illustrate each of the follow- ing concepts:
a. Major types of databases. b. Data warehouses and data mining. c. Logical data elements. d. Fundamental database structures. e. Database development.
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CHAPTER 5
DATA RESOURCE MANAGEMENT
M o d u l e I I
Business Applications
Development Processes
Management Challenges
Foundation Concepts
Information Technologies
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SECTION I Technical Foundations of Database Management
Just imagine how difficult it would be to get any information from an information sys- tem if data were stored in an unorganized way or if there were no systematic way to re- trieve them. Therefore, in all information systems, data resources must be organized and structured in some logical manner so that they can be accessed easily, processed ef- ficiently, retrieved quickly, and managed effectively. Data structures and access methods ranging from simple to complex have been devised to organize and access data stored by information systems efficiently. In this chapter, we will explore these concepts, as well as the managerial implications and value of data resource management. See Figure 5.1 . It is important to appreciate from the beginning the value of understanding data- bases and database management. In today’s world, just about every piece of data you would ever want to access is organized and stored in some type of database. The ques- tion is not so much “Should I use a database?” but rather “What database should I use?” Although many of you will not choose a career in the design of databases, all of you will spend a large portion of your time—whatever job you choose—accessing data in a myriad of databases. Most database developers consider accessing the data to be the business end of the database world, and understanding how data are structured, stored, and accessed can help business professionals gain greater strategic value from their organization’s data resources. Read the Real World Case 1 on the use of data for crime fighting and law enforcement. We can learn a lot about the many uses of data assets from this case.
Before we go any further, let’s discuss some fundamental concepts about how data are organized in information systems. A conceptual framework of several levels of data has been devised that differentiates among different groupings, or elements, of data. Thus, data may be logically organized into characters, fields, records, files, and databases , just as writing can be organized into letters, words, sentences, paragraphs, and documents. Examples of these logical data elements are shown in Figure 5.2 .
The most basic logical data element is the character , which consists of a single alphabetic, numeric, or other symbol. You might argue that the bit or byte is a more elementary data element, but remember that those terms refer to the physical storage elements provided by the computer hardware, as discussed in Chapter 3. Using that understanding, one way to think of a character is that it is a byte used to represent a particular character. From a user’s point of view (i.e., from a logical as opposed to a physical or hardware view of data), a character is the most basic element of data that can be observed and manipulated.
The next higher level of data is the field , or data item. A field consists of a grouping of related characters. For example, the grouping of alphabetic characters in a person’s name may form a name field (or typically, last name, first name, and middle initial fields), and the grouping of numbers in a sales amount forms a sales amount field. Specifically, a data field represents an attribute (a characteristic or quality) of some entity (object, person, place, or event). For example, an employee’s salary is an at- tribute that is a typical data field used to describe an entity who is an employee of a business. Generally speaking, fields are organized such that they represent some logi- cal order, for example, last_name, first_name, address, city, state, and zip code.
All of the fields used to describe the attributes of an entity are grouped to form a record . Thus, a record represents a collection of attributes that describe a single instance of an entity . An example is a person’s payroll record, which consists of data
Database Management
Fundamental Data Concepts
Character
Field
Record
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standards for interoperability, and exploiting those digital resources in the most effective manner. The era of data-driven law enforcement began in the early 1990s in New York City. There, police chief William Bratton sought to impress newly elected mayor Rudolph Giuliani with a radical approach to policing that came to be known as Comp- Stat. CompStat put an emphasis on leveraging data—accurate, detailed, and timely—to optimize police work. “Police departments are powerful collectors of data,” says Michael Berkow, president of Altegrity Security Consulting (ASC), a newly launched division of security firm Altegrity. Before joining ASC last month, Berkow was chief of the Savannah-Chatham police department, and before that he was second in command to Bratton in Los Angeles after Bratton left New York to be chief of the Los Angeles Police Department. Police departments were motivated to implement or upgrade IT systems by the Y2K frenzy, Berkow says. “By 2000-2001, everybody had some level of digital informa- tion,” he says. That and CompStat led to a movement known by the initials ILP, which stand for “information-led policing” or, according to some, “intelligence-led policing.” The concept is simple: Leverage data to help position limited police resources where they can do the most good. It’s an effort to be more proactive, to “change the environ- ment,” Berkow says, from the reactive, response-oriented methods of the past. To a great extent, data are about the context of criminal behavior. “We know that the same small group of criminals is responsible for a disproportionate amount of crime,” says Berkow. Police refer to that group as PPOs: persistent prolific offenders. Past criminal behavior, such as domestic violence, can be a strong indicator of potential future problems. When Berkow was chief in Savannah, his department went through data on recent homicide cases and noticed an interesting data point: Of about 20 arrests for homicide, 18 of those people had prior arrests for possession of firearms. “We started this very detailed review of every aspect of our gun arrests,” he says. Law enforcement officials often refer to the need for ac- tionable information. One of the first ways police agencies used incident-report data in digital form was in conjunction with geographical information systems, in support of what’s known as electronic crime mapping, or hot-spot analysis. Police in the city of Edmonton, Alberta, brought in data analysis technology from business intelligence vendor Cognos (now part of IBM) a few years ago. In their first project, police officials concentrated on using the reporting tool in conjunction with a new geographic-based resource deployment model being implemented by the agency. “Our business analytics reports became a key component of how we deployed policemen around the city,” says John Warden, staff sergeant in the business performance section of the Edmonton Police Service.
On a Saturday afternoon last summer, Mark Rasch took his son to his baseball game at a park in Georgetown, Maryland. The ballpark is located in an area that has zone parking with a two-hour limit. Rasch was forced to park in a spot that was a bit of a hike from the ball field. He later eyed an opening closer to the park and moved his car there. The game ended. Rasch packed up and was ready to pull away when he noticed a parking enforcement officer writing tickets. “I’m OK, right?” he asked, assuming that because he had moved his car she wouldn’t know he’d been parked in the zone for more than two hours. Wrong. The officer not only knew that he had moved his car but when and how long he’d been parked within the zone. Fortunately, she didn’t write him a ticket as he was about to pull out. But the encounter left Rasch, who is a lawyer and a cybersecurity consultant, a little spooked at the realization of just how much information law enforcement is generating. If there was a time when law enforcement agencies suf- fered from an information deficit, it has passed. Of the more than 18,000 law enforcement agencies across the United States, the vast majority has some form of technology for collecting crime-related data in digital form. The biggest city agencies have sophisticated data warehouses, and even the most provincial are database savvy. So it’s not surprising that law enforcement and criminal justice agencies are running into the same data-related prob- lems that CIOs have been experiencing for years: ensuring data quality and accessibility, developing and enforcing
Beyond Street Smarts: Data-Driven Crime Fighting
REAL WORLD
CASE 1
Source: © Thinkstock/PunchStock.
Law enforcement agencies have stepped up the use of data in not only fighting, but also preventing, crime.
F IGURE 5.1
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Now the agency is using the data to plot criminal activ- ity according to both geographic area and comparative his- tory. “We’re really delving into those analytics in terms of place and time,” says Warden. The holy grail of informa- tion-led policing is what’s referred to as predictive policing: being able to predict where and when crimes may occur. That’s where Chicago wants to go. The Chicago Police Department operates what Jonathan Lewin, commander of information services, refers to as “the largest police transaction database in the United States.” Costing $35 million, Chicago’s Citizen and Law Enforcement Analysis and Reporting (CLEAR) system processes “all the arrests for all the depart- ments in Cook county—about 120—in real time,” Lewin says, and 450 local, state, and federal law enforcement agencies have query access to it. Lewin’s IT shop has about 100 staffers and employs between 10 and 20 contract workers from Oracle, whose database technology the system is based on. Chicago’s police department is working with the Illinois Institute of Technology (IIT), by way of a $200,000 grant from the National Institute of Justice, on an “initial explora- tion” of a predictive policing model. The grant was awarded partly on the basis of work done by Dr. Miles Wernick of IIT in the area of medical imaging and pattern recognition, and the project involves exploring “nontraditional disci- plines” and how they might apply to crime projection. “We’re going to be using all the data in the CLEAR system,” Lewin says, including arrests, incidents, calls for service, street-gang activity, as well as weather data and community concerns such as reports of streetlights out. “This model will seek to use all these variables in attempting to model future patterns of criminal activity,” he says. SPSS is a name often associated with predictive policing. The statistical-analysis software developer, recently acquired by IBM, has customer histories that tout the success of its tools in the criminal justice environment, such as the Mem- phis, Tennessee, police force, which SPSS says reduced rob- beries by 80 percent by identifying a particular hot spot and proactively deploying resources there. But can software really predict crime? “It’s not a binary yes or no; it’s more of an assessment of risk—how probable something is,” says Bill Haffey, technical director for the public sector at SPSS.
The private sector is also doing its part. CargoNet, the first-ever national database of truck theft information, is a joint project from insurance data provider ISO and the Na- tional Insurance Crime Bureau (NICB). CargoNet will col- lect up to 257 fields of data detailing everything from destination, plate number, and carrier; to the time, data, and location of the theft; to serial numbers and other identifying details on the stolen goods. Refreshed several times per day, CargoNet is expected to track more than 10,000 events per year, driving both a national alerting system and a corre- sponding truck stop watch program. Truck theft happens mostly on weekends, and it’s rife around the Los Angeles basin, Atlanta, Miami, Dallas/Ft. Worth, and Memphis, Tennessee. Trucks and trailers typi- cally slip away in the dark of night from truck stops, rest ar- eas, distribution centers, and transfer points. The goods most often hit are consumer electronics, food, wine and spir- its, clothing, and other items easily sold on the street. These historical patterns are well known, but cops on the beat need up-to-the-minute information on the latest truck stops and distribution centers hit, the time of day per- petrators strike, and the type of goods stolen. Carriers and manufacturers want fresh, nationwide in- formation so they can change the timing of deliveries and avoid specific truck stops and routes. Insurers want a single source of data so they can get a better gauge risk and bring the problem under control nationwide. All this collecting, warehousing, and mining crime- related data begs the question: How much is too much? The Georgetown incident still bothers Rasch. “What it meant was that D.C. was keeping a database of people who are le- gally parked,” says Rasch, which, from a privacy standpoint, is “more intrusive than chalking the tires.” Pertinent questions include: How long do they hold onto that data? And with whom do they share it? It’s an important discussion to have, both in terms of privacy and effective po- lice methods. After all, as Rasch points out, it was a parking ticket that led to the arrest of serial killer Son of Sam.
Source: Adapted from John Soat, “Beyond Street Smarts,” InformationWeek , November 16, 2009; and Doug Henschen, “ National Database Tracks Truck Thefts,” InformationWeek , January 26, 2010.
1. What are some of the most important benefits derived by the law enforcement agencies mentioned in the case? How do these technologies allow them to better fight crime? Provide several examples.
2. How are the data-related issues faced by law enforce- ment similar to those that could be found in companies? How are they different? Where do these problems come from? Explain.
3. Imagine that you had access to the same crime-related information as that managed by police departments. How would you analyze this information, and what actions would you take as a result?
1. The case discusses many issues related to data quality, sharing, and accessibility that both government bodies and for-profit organizations face. Go online and re- search how these issues manifest themselves in compa- nies, and some of the approaches used to manage them. Would those apply to police departments? Prepare a report to share your findings.
2. The case discusses the large volume of very detailed in- formation collected daily by law enforcement agencies. Knowing this, how comfortable do you feel about the storing and sharing of that data? What policies would you put in place to assuage some of those concerns? Break into small groups with your classmates to discuss these issues and arrive at some recommendations.
REAL WORLD ACTIVITIES CASE STUDY QUESTIONS
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fields describing attributes such as the person’s name, Social Security number, and rate of pay. Fixed-length records contain a fixed number of fixed-length data fields. Variable- length records contain a variable number of fields and field lengths. Another way of looking at a record is that it represents a single instance of an entity. Each record in an employee file describes one specific employee. Normally, the first field in a record is used to store some type of unique identifier for the record. This unique identifier is called the primary key . The value of a pri- mary key can be anything that will serve to uniquely identify one instance of an entity, and distinguish it from another. For example, if we wanted to uniquely identify a sin- gle student from a group of related students, we could use a student ID number as a primary key. As long as no one shared the same student ID number, we would always be able to identify the record of that student. If no specific data can be found to serve as a primary key for a record, the database designer can simply assign a record a unique sequential number so that no two records will ever have the same primary key.
A group of related records is a data file (sometimes referred to as a table or flat file ). When it is independent of any other files related to it, a single table may be referred to as a flat file . As a point of accuracy, the term flat file may be defined either narrowly or more broadly. Strictly speaking, a flat file database should consist of nothing but data and de- limiters. More broadly, the term refers to any database that exists in a single file in the form of rows and columns, with no relationships or links between records and fields except the table structure. Regardless of the name used, any grouping of related records in tabular (row-and-column form) is called a file . Thus, an employee file would contain the records of the employees of a firm. Files are frequently classified by the application for which they are primarily used, such as a payroll file or an inventory file, or the type of data they contain, such as a document file or a graphical image file . Files are also classified by their permanence, for example, a payroll master file versus a payroll weekly transaction file . A transaction file, therefore, would contain records of all transactions occurring dur- ing a period and might be used periodically to update the permanent records contained in a master file. A history file is an obsolete transaction or master file retained for backup purposes or for long-term historical storage, called archival storage .
A database is an integrated collection of logically related data elements. A database consolidates records previously stored in separate files into a common pool of data
File
Database
Employee Record 1
Employee Record 2
Employee Record 3
Employee Record 4
Human Resource Database
Payroll File Benefits File
Insurance Field
50,000
SS No. Field
617-87-7915
Name Field
Porter M.L.
Name Field
Jones T. A.
SS No. Field
275-32-3874
Salary Field
20,000
Name Field
Klugman J. L.
SS No. Field
349-88-7913
Salary Field
28,000
Name Field
Alvarez J.S.
SS No. Field
542-40-3718
Insurance Field
100,000
F IGURE 5.2 Examples of the logical data elements in information systems. Note especially the examples of how data fields, records, files, and databases relate.
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elements that provides data for many applications. The data stored in a database are independent of the application programs using them and of the type of storage devices on which they are stored. Thus, databases contain data elements describing entities and relationships among entities. For example, Figure 5.3 outlines some of the entities and relationships in a database for an electric utility. Also shown are some of the business applications (bill- ing, payment processing) that depend on access to the data elements in the database. As stated in the beginning of the chapter, just about all the data we use are stored in some type of database. A database doesn’t need to look complex or technical to be a database; it just needs to provide a logical organization method and easy access to the data stored in it. You probably use one or two rapidly growing databases just about every day: How about Facebook, MySpace, or YouTube? All of the pictures, videos, songs, messages, chats, icons, e-mail addresses, and eve- rything else stored on each of these popular social networking Web sites are stored as fields, records, files, or objects in large databases. The data are stored in such a way to ensure that there is easy access to it, it can be shared by its respective owners, and it can be protected from unauthorized access or use. When you stop to think about how simple it is to use and enjoy these databases, it is easy to forget how large and complex they are. For example, in July 2006, YouTube reported that viewers watched more than 100 mil- lion videos every day, with 2.5 billion videos in June 2006 alone. In May 2006, users added 50,000 videos per day, and this increased to 65,000 videos by July. In January 2008 alone, almost 79 million users watched more than 3 billion videos on YouTube. In August 2006, The Wall Street Journal published an article revealing that YouTube was hosting about 6.1 million videos (requiring about 45 terabytes of storage space), and had about 500 accounts. As of March 2008, a YouTube search turned up about 77.3 million videos and 2.89 million user channels. Perhaps an even more compelling example of ease of access versus complexity is found in the popular social networking Web site Facebook. Some of the basic statistics are nothing short of amazing! Facebook reports more than 200 million users with more than 100 million logging in at least once each day. The average user has 120 friend relationships established. More than 850 million photos, 8 million videos, 1 bil- lion pieces of content, and 2.5 million events are uploaded or created each month. More than 40 language translations are currently available on the site, with more than 50 more in development. More than 52,000 software applications exist in the Face- book Application Directory, and more than 30 million active users access Facebook through their mobile devices. The size of their databases is best measured in petabytes,
F IGURE 5.3 Some of the entities and relationships in a simplified electric utility database. Note a few of the business applications that access the data in the database.
Billing
Meter reading
Payment processing
Service start / stop
Entities:
Customers, meters, bills, payments, meter readings
Relationships:
Bills sent to customers, customers make payments, customers use meters, . . .
Electric Utility Database
Source: Adapted from Michael V. Mannino, Database Application Development and Design (Burr Ridge, IL: McGraw-Hill/Irwin, 2001), p. 6.
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which is equal to one quadrillion bytes. All of this from a database and a simple access method launched in 2004 from a dorm room at Harvard University. The important point here is that all of these videos, user accounts, and information are easily accessed because the data are stored in a database system that organizes it so that a particular item can be found on demand.
The relationships among the many individual data elements stored in databases are based on one of several logical data structures, or models. Database management system (DBMS) packages are designed to use a specific data structure to provide end users with quick, easy access to information stored in databases. Five fundamental database struc- tures are the hierarchical, network, relational, object-oriented, and multidimensional models. Simplified illustrations of the first three database structures are shown in Figure 5.4 .
Database Structures
Source: Adapted from Michael V. Mannino, Database Application Development and Design (Burr Ridge, IL: McGraw-Hill/Irwin, 2001), p. 6.
F IGURE 5.4 Example of three fundamental database structures. They represent three basic ways to develop and express the relationships among the data elements in a database.
Project A Data Element
Department Data Element
Project B Data Element
Employee 1 Data Element
Employee 2 Data Element
Hierarchical Structure
Department A
Project A
Department Table
Deptno Dept A Dept B Dept C
Employee Table
Empno Emp 1 Emp 2 Emp 3 Emp 4 Emp 5 Emp 6
Deptno Dept A Dept A Dept B Dept B Dept C Dept B
Dname Dloc Dmgr Ename Etitle Esalary
Network Structure
Relational Structure
Employee 1
Department B
Project B
Employee 3
Employee 2
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Early mainframe DBMS packages used the hierarchical structure , in which the relation- ships between records form a hierarchy or treelike structure. In the traditional hierarchi- cal model, all records are dependent and arranged in multilevel structures, consisting of one root record and any number of subordinate levels. Thus, all of the relationships among records are one-to-many because each data element is related to only one element above it. The data element or record at the highest level of the hierarchy (the depart- ment data element in this illustration) is called the root element. Any data element can be accessed by moving progressively downward from a root and along the branches of the tree until the desired record (e.g., the employee data element) is located.
The network structure can represent more complex logical relationships and is still used by some mainframe DBMS packages. It allows many-to-many relationships among records; that is, the network model can access a data element by following one of several paths because any data element or record can be related to any number of other data elements. For example, in Figure 5.4 , departmental records can be related to more than one employee record, and employee records can be related to more than one project record. Thus, you could locate all employee records for a particular de- partment or all project records related to a particular employee. It should be noted that neither the hierarchical nor the network data structures are commonly found in the modern organization. The next data structure we discuss, the relational data structure, is the most common of all and serves as the foundation for most modern databases in organizations.
The relational model is the most widely used of the three database structures. It is used by most microcomputer DBMS packages, as well as by most midrange and mainframe sys- tems. In the relational model, all data elements within the database are viewed as being stored in the form of simple two-dimensional tables , sometimes referred to as relations . The tables in a relational database are flat files that have rows and columns. Each row rep- resents a single record in the file, and each column represents a field. The major difference between a flat file and a database is that a flat file can only have data attributes specified for one file. In contrast, a database can specify data attributes for multiple files simultaneously and can relate the various data elements in one file to those in one or more other files. Figure 5.4 illustrates the relational database model with two tables representing some of the relationships among departmental and employee records. Other tables, or relations, for this organization’s database might represent the data element relationships among projects, divisions, product lines, and so on. Database management system pack- ages based on the relational model can link data elements from various tables to provide information to users. For example, a manager might want to retrieve and display an employee’s name and salary from the employee table in Figure 5.4 , as well as the name of the employee’s department from the department table, by using their common de- partment number field (Deptno) to link or join the two tables. See Figure 5.5 . The rela- tional model can relate data in any one file with data in another file if both files share a common data element or field. Because of this, information can be created by retrieving data from multiple files even if they are not all stored in the same physical location.
Hierarchical Structure
Network Structure
Relational Structure
F IGURE 5.5 Joining the employee and department tables in a relational database enables you to access data selectively in both tables at the same time.
Department Table
Deptno Dept A Dept B Dept C
Employee Table
Empno Emp 1 Emp 2 Emp 3 Emp 4 Emp 5 Emp 6
Deptno Dept A Dept A Dept B Dept B Dept C Dept B
Dname Dloc Dmgr Ename Etitle Esalary
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Three basic operations can be performed on a relational database to create useful sets of data. The select operation is used to create a subset of records that meet a stated criterion. For example, a select operation might be used on an employee database to create a subset of records that contain all employees who make more than $30,000 per year and who have been with the company more than three years. Another way to think of the select operation is that it temporarily creates a table whose rows have records that meet the selection criteria. The join operation can be used to combine two or more tables temporarily so that a user can see relevant data in a form that looks like it is all in one big table. Using this operation, a user can ask for data to be retrieved from multiple files or databases with- out having to go to each one separately. Finally, the project operation is used to create a subset of the columns contained in the temporary tables created by the select and join operations. Just as the select operation creates a subset of records that meet stated criteria, the project operation creates a subset of the columns, or fields, that the user wants to see. Using a project operation, the user can decide not to view all of the columns in the table but instead view only those that have the data necessary to answer a particular question or construct a specific report. Because of the widespread use of relational models, an abundance of commercial products exist to create and manage them. Leading mainframe relational database ap- plications include Oracle 10g from Oracle Corp. and DB2 from IBM. A very popular midrange database application is SQL Server from Microsoft. The most commonly used database application for the PC is Microsoft Access.
The multidimensional model is a variation of the relational model that uses multidi- mensional structures to organize data and express the relationships between data. You can visualize multidimensional structures as cubes of data and cubes within cubes of data. Each side of the cube is considered a dimension of the data. Figure 5.6 is an ex- ample that shows that each dimension can represent a different category, such as prod- uct type, region, sales channel, and time. Each cell within a multidimensional structure contains aggregated data related to elements along each of its dimensions. For example, a single cell may contain the total sales for a product in a region for a specific sales channel in a single month. A major benefit of multidimensional databases is that they provide a compact and easy-to- understand way to visualize and manipulate data elements that have many interrelation- ships. So multidimensional databases have become the most popular database structure for the analytical databases that support online analytical processing (OLAP) applica- tions, in which fast answers to complex business queries are expected. We discuss OLAP applications in Chapter 10.
The object-oriented model is considered one of the key technologies of a new genera- tion of multimedia Web-based applications. As Figure 5.7 illustrates, an object con- sists of data values describing the attributes of an entity, plus the operations that can be performed upon the data. This encapsulation capability allows the object-oriented model to handle complex types of data (graphics, pictures, voice, and text) more easily than other database structures. The object-oriented model also supports inheritance ; that is, new objects can be automatically created by replicating some or all of the characteristics of one or more parent objects. Thus, in Figure 5.7 , the checking and savings account objects can inherit both the common attributes and operations of the parent bank account object. Such capabilities have made object-oriented database management systems (OODBMS) popular in computer-aided design (CAD) and a growing number of applications. For example, object technology allows designers to develop product designs, store them as objects in an object-oriented database, and replicate and modify them to create new product de- signs. In addition, multimedia Web-based applications for the Internet and corporate intranets and extranets have become a major application area for object technology.
Relational Operations
Multidimensional Structure
Object-Oriented Structure
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F IGURE 5.6 An example of the different dimensions of a multidimensional database.
Camera
TV
VCR
Audio
Camera
TV
VCR
Audio
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TV VCR TV VCR
F IGURE 5.7 The checking and savings account objects can inherit common attributes and operations from the bank account object.
Checking Account Object
Attributes
Customer Balance Interest
Operations
Deposit (amount) Withdraw (amount) Get owner
Attributes
Number of withdrawals Quarterly statement
Operations
Calculate interest paid Print quarterly statement
Attributes
Credit line Monthly statement
Operations
Calculate interest owed Print monthly statement
Savings Account Object
Bank Account Object
Inheritance Inheritance
Source: Adapted from Ivar Jacobsen, Maria Ericsson, and Ageneta Jacobsen, The Object Advantage: Business Process Reengineering with Object Technology (New York: ACM Press, 1995), p. 65. Copyright © 1995, Association for Computing Machinery. Used by permission.
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Object technology proponents argue that an object-oriented DBMS can work with complex data types such as document and graphic images, video clips, audio segments, and other subsets of Web pages much more efficiently than relational database management systems. However, major relational DBMS vendors have countered by adding object- oriented modules to their relational software. Examples include multimedia object exten- sions to IBM’s DB2 and Oracle’s object-based “cartridges” for Oracle 10g. See Figure 5.8 .
The hierarchical data structure was a natural model for the databases used for the struc- tured, routine types of transaction processing characteristic of many business operations in the early years of data processing and computing. Data for these operations can easily be represented by groups of records in a hierarchical relationship. However, as time pro- gressed, there were many cases in which information was needed about records that did not have hierarchical relationships. For example, in some organizations, employees from more than one department can work on more than one project (refer to Figure 5.4 ). A network data structure could easily handle this many-to-many relationship, whereas a hierarchical model could not. As such, the more flexible network structure became popu- lar for these types of business operations. Like the hierarchical structure, the network model was unable to handle ad hoc requests for information easily because its relation- ships must be specified in advance, which pointed to the need for the relational model. Relational databases enable an end user to receive information easily in response to ad hoc requests. That’s because not all of the relationships among the data elements in a relationally organized database need to be specified when the database is created. Database management software (such as Oracle 11g, DB2, Access, and Approach) cre- ates new tables of data relationships by using parts of the data from several tables. Thus, relational databases are easier for programmers to work with and easier to maintain than the hierarchical and network models. The major limitation of the relational model is that relational database manage- ment systems cannot process large amounts of business transactions as quickly and efficiently as those based on the hierarchical and network models; they also cannot process complex, high-volume applications as well as the object-oriented model. This performance gap has narrowed with the development of advanced relational database software with object-oriented extensions. The use of database management software based on the object-oriented and multidimensional models is growing steadily, as these technologies are playing a greater role for OLAP and Web-based applications.
Evaluation of Database Structures
F IGURE 5.8 Databases can supply data to a wide variety of analysis packages, allowing for data to be displayed in graphical form.
Source : Courtesy of Microsoft®.
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Database Pioneer Rethinks the Best Way to Organize Data
Is there a better way to build a data warehouse? For years, relational databases, which organize data in tables composed of vertical columns and horizontal rows, have served as the foundation of data warehouses. Now database pioneer Michael Stone- braker is promoting a different way to organize them, promising much faster response times. As a scientist at the University of California at Berkeley in the 1970s, Stonebraker was one of the original architects of the Ingres relational database, which spawned several commercial variants. A row-based system like Ingres is great for executing transactions, but a column-oriented system is a more natural fit for data warehouses, Stonebraker now says. SQL Server, Sybase, and Teradata all have rows as their central design point. Yet in data warehousing, faster performance may be gained through a column layout. Stone- braker says all types of queries on “most data warehouses” will run up to 50 times faster in a column database. The bigger the data warehouse, the greater the performance gain. Why? Data warehouses frequently store transactional data, and each transaction has many parts. Columns cut across transactions and store an element of information that is standard to each transaction, such as customer name, address, or purchase amount. A row, by comparison, may hold 20–200 different elements of a transaction. A standard relational database would retrieve all the rows that reflect, say, sales for a month, load the data into system memory, and then find all sales records and gener- ate an average from them. The ability to focus on just the “sales” column leads to improved query performance. There is a second performance benefit in the column approach. Because columns contain similar information from each transaction, it’s possible to derive a compres- sion scheme for the data type and then apply it throughout the column. Rows cannot be compressed as easily because the nature of the data (e.g., name, zip code, and ac- count balance) varies from record to record. Each row would require a different compression scheme. Compressing data in columns makes for faster storage and retrieval and reduces the amount of disk required. “In every data warehouse I see, compression is a good thing,” Stonebraker says. “I expect the data warehouse market to become completely column-store based.”
Source: Adapted from Charles Babcock, “Database Pioneer Rethinks the Best Way to Organize Data,” Information- Week , February 23, 2008.
Database management packages like Microsoft Access or Lotus Approach allow end users to develop the databases they need easily. See Figure 5.9 . However, large or- ganizations usually place control of enterprisewide database development in the hands of database administrators (DBAs) and other database specialists. This delegation im- proves the integrity and security of organizational databases. Database developers use the data definition language (DDL) in database management systems like Oracle 11g or IBM’s DB2 to develop and specify the data contents, relationships, and structure of each database, as well as to modify these database specifications when necessary. Such information is cataloged and stored in a database of data definitions and specifications called a data dictionary , or metadata repository , which is managed by the database man- agement software and maintained by the DBA. A data dictionary is a database management catalog or directory containing metadata (i.e., data about data). A data dictionary relies on a specialized database soft- ware component to manage a database of data definitions, which is metadata about the structure, data elements, and other characteristics of an organization’s databases. For example, it contains the names and descriptions of all types of data records and their interrelationships; information outlining requirements for end users’ access and use of application programs; and database maintenance and security.
Database Development
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The database administrator can query data dictionaries to report the status of any aspect of a firm’s metadata. The administrator can then make changes to the defini- tions of selected data elements. Some active (versus passive ) data dictionaries automati- cally enforce standard data element definitions whenever end users and application programs access an organization’s databases. For example, an active data dictionary would not allow a data entry program to use a nonstandard definition of a customer record, nor would it allow an employee to enter a name of a customer that exceeded the defined size of that data element. Developing a large database of complex data types can be a complicated task. Database administrators and database design analysts work with end users and systems analysts to model business processes and the data they require. Then they determine (1) what data definitions should be included in the database and (2) what structures or relationships should exist among the data elements.
As Figure 5.10 illustrates, database development may start with a top-down data planning process . Database administrators and designers work with corporate and end-user management to develop an enterprise model that defines the basic business process of the enterprise. They then define the information needs of end users in a business process, such as the purchasing/receiving process that all businesses have. Next, end users must identify the key data elements that are needed to perform their specific business activities. This step frequently involves developing entity relationship diagrams (ERDs) that model the relationships among the many entities involved in business processes. For example, Figure 5.11 illustrates some of the rela- tionships in a purchasing/receiving process. The ERDs are simply graphical models of the various files and their relationships, contained within a database system. End users and database designers could use database management or business modeling software to help them develop ERD models for the purchasing/receiving process. This would help identify the supplier and product data that are required to automate their pur- chasing/receiving and other business processes using enterprise resource management (ERM) or supply chain management (SCM) software. You will learn about ERDs and other data modeling tools in much greater detail if you ever take a course in systems analysis and design.
Data Planning and Database Design
F IGURE 5.9 Creating a database table using the Table Wizard of Microsoft Access.
Source : Courtesy of Microsoft®.
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Such user views are a major part of a data modeling process, during which the re- lationships among data elements are identified. Each data model defines the logical relationships among the data elements needed to support a basic business process. For example, can a supplier provide more than one type of product to us? Can a customer have more than one type of account with us? Can an employee have several pay rates or be assigned to several project workgroups? Answering such questions will identify data relationships that must be represented in a data model that supports business processes of an organization. These data mod- els then serve as logical design frameworks (called schema and subschema ). These frame- works determine the physical design of databases and the development of application programs to support the business processes of the organization. A schema is an overall logical view of the relationships among the data elements in a database, whereas the
F IGURE 5.10 Database development involves data planning and database design activities. Data models that support business processes are used to develop databases that meet the information needs of users.
5. Physical Design
Determines the data storage structures and access
methods
Enterprise model of business processes with documentation
Description of users’ needs may be represented in natural
language or using the tools of a particular design methodology
Conceptual Data Models Often expressed as entity
relationship models
Logical Data Models E.g., relational, network,
hierarchical, multidimensional, or object-oriented models
Physical Data Models Storage representations and
access methods
1. Data Planning
Develops a model of business processes
2. Requirements Specification
Defines information needs of end users in a business process
3. Conceptual Design
Expresses all information requirements in the form of a
high-level model
4. Logical Design
Translates the conceptual models into the data model of
a DBMS
F IGURE 5.11 This entity relationship diagram illustrates some of the relationships among the entities (product, supplier, warehouse, etc.) in a purchasing/receiving business process.
SupplierProduct Purchase Order Item
Warehouse Product Stock
Purchase Order
SuppliesOrdered on
C ontains
S tocked as
Holds
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subschema is a logical view of the data relationships needed to support specific end- user application programs that will access that database. Remember that data models represent logical views of the data and relationships of the database. Physical database design takes a physical view of the data (also called the internal view ) that describes how data are to be physically stored and accessed on the storage devices of a computer system. For example, Figure 5.12 illustrates these differ- ent database views and the software interface of a bank database processing system. This figure focuses on the business processes of checking, savings, and installment lending, which are part of a banking services data model that serves as a logical data framework for all bank services.
F IGURE 5.12 Example of the logical and physical database views and the software interface of a banking services information system.
Savings Application
Installment Loan
Application
Checking Application
Installment Loan
Data Model
Checking and Savings
Data Model
Database Management System
Logical User Views
Data elements and relationships (the subschemas) needed for checking, savings, or installment loan processing
Data elements and relationships (the schema) needed for the support of all bank services
Software Interface
The DBMS provides access to the bank’s databases
Physical Data Views
Organization and location of data on the storage media
Banking Services Data Model
Bank Databases
Traditional business intelligence solutions can’t scale to the degree necessary in to- day’s data environment. One solution getting a lot of attention recently: Hadoop, an open-source product inspired by Google’s search architecture. Twenty years ago, most companies’ data came from fundamental transaction systems: Payroll, ERP, and so on. The amounts of data seemed large, but they usually were bounded by well- understood limitations: the overall growth of the company and the growth of the general economy. For those companies that wanted to gain more insight from those systems’ data, the related data warehousing systems reflected the underlying systems’ structure: regular data schema, smooth growth, and well-understood analysis needs. The typi- cal business intelligence constraint was the amount of processing power that could be applied. Consequently, a great deal of effort went into the data design to restrict the amount of processing required to the available processing power. This led to the now
Hadoop: Ready for the Large- Scale Data Sets of the Future
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time-honored business intelligence data warehouses: fact tables, dimension tables, and star schemas. Today, the nature of business intelligence is totally changed. Computing is far more widespread throughout the enterprise, leading to many more systems generat- ing data. Companies are on the Internet, generating huge torrents of unstructured data: searches, click-streams, interactions, and the like. And it’s much harder—if not impossible—to forecast what kinds of analytics a company might want to pursue. Today it might be click-stream patterns through the company Web site. Tomor- row it might be cross-correlating external blog postings with order patterns. The day after it might be something completely different. And the system bottleneck has shifted. In the past, the problem was how much processing power was available, but today the problem is how much data needs to be analyzed. At Internet-scale, a company might be dealing with dozens or hundreds of terabytes. At that size, the number of drives required to hold the data guarantees frequent drive failures, but attempting to centralize the data imposes too much net- work traffic to conveniently migrate data to processors. Hadoop is an open-source product inspired by Google’s search architecture. In- terestingly, unlike previous open-source products that were usually implementations of previously existing proprietary products, Hadoop has no proprietary predecessor. The innovation in this aspect of big data resides in the open-source community, not in a private company. Hadoop creates a pool of computers, each with a special Hadoop file system. A central master Hadoop node spreads data across each machine in a file structure de- signed for large block data reads and writes. It uses a clever hash algorithm to cluster data elements that are similar, making processing data sets extremely efficient. For robustness, three copies of all data are kept to ensure that hardware failures do not halt processing. The advantage of this approach is that very large sets of data can be managed and processed in parallel across the machine pool managed by Hadoop. The power of Hadoop is clear from the way the New York Times used it to convert a 4-terabyte collection of its pages from one format to another.
Source: Adapted from Bernard Golden, “Large Data Set Analysis in the Cloud: Amazon, Cloudera Improve Hadoop,” CIO.com , April 9, 2009.
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SECTION II Managing Data Resources
Data are a vital organizational resource that need to be managed like other important business assets. Today’s business enterprises cannot survive or succeed without quality data about their internal operations and external environment.
With each online mouse click, either a fresh bit of data is created or already-stored data are retrieved from all those business Web sites. All that’s on top of the heavy demand for industrial-strength data storage already in use by scores of big corporations. What’s driving the growth is a crushing imperative for corporations to analyze every bit of information they can extract from their huge data warehouses for competitive advan- tage. That has turned the data storage and management function into a key strategic role of the information age.
That’s why organizations and their managers need to practice data resource management , a managerial activity that applies information systems technologies like database management , data warehousing , and other data management tools to the task of managing an organization’s data resources to meet the information needs of their business stakeholders. This section will show you the managerial implications of using data resource management technologies and methods to manage an organization’s data assets to meet business information requirements. Read the Real World Case 2 on Duke University Health System, Beth Israel Deaconess Medical Center, and others. We can learn a lot from this case about the business value of data analytics in a health care setting. See Figure 5.13.
Continuing developments in information technology and its business applications have resulted in the evolution of several major types of databases . Figure 5.14 illustrates several major conceptual categories of databases that may be found in many organizations. Let’s take a brief look at some of them now.
Operational databases store detailed data needed to support the business processes and operations of a company. They are also called subject area databases (SADB), trans- action databases , and production databases . Examples are a customer database, human resource database, inventory database, and other databases containing data generated by business operations. For example, a human resource database like that shown in Figure 5.2 would include data identifying each employee and his or her time worked, compensation, benefits, performance appraisals, training and development status, and other related human resource data. Figure 5.15 illustrates some of the common opera- tional databases that can be created and managed for a small business using Microsoft Access database management software.
Many organizations replicate and distribute copies or parts of databases to network servers at a variety of sites. These distributed databases can reside on network servers on the World Wide Web, on corporate intranets or extranets, or on other company networks. Distributed databases may be copies of operational or analytical databases, hypermedia or discussion databases, or any other type of database. Rep- lication and distribution of databases improve database performance at end-user worksites. Ensuring that the data in an organization’s distributed databases are con- sistently and concurrently updated is a major challenge of distributed database management. Distributed databases have both advantages and disadvantages. One primary ad- vantage of a distributed database lies with the protection of valuable data. If all of an
Data Resource Management
Types of Databases
Operational Databases
Distributed Databases
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pick the best tests and treatments for patients, remote moni- toring tools that provide close to real-time care, as well as software that helps researchers identify the best candidates to participate in trials or experimental treatments. At Beth Israel Deaconess Medical Center in Boston, helping doctors make better treatment choices and arrive at more accurate diagnoses is a big and growing area of person- alized medicine. One example is clinical support software to help its 1,600 staff and affiliated physicians choose the best radiology tests for patients. When ordering CT scans, MRIs, X-rays, ultrasounds, and other radiology tests, doctors enter a patient’s electronic medi- cal record number into the Anvita Health decision support system. Data from Beth Israel’s records system, such as recent lab tests and allergies, is automatically loaded into the soft- ware. The doctor then adds information on the current com- plaint, such as symptoms, what area of the body is a concern, and the suspected diagnosis, as well as whether the person has any implants that might interfere with radiology treatment. The software analyzes the data and rates the best tests for the patient, giving five stars for the top choices and one for the worst ones based on the risks and benefits of each. It can also recommend that the patient forgo radiological testing. The system can catch details that might otherwise elude a doctor, such as a previous blood test indicating decreased kidney function that could mean the patient can’t metabolize the dyes used in certain radiological tests. It also checks how much radiation the patient has already been exposed to. “Excessive radiation can cause second malignancies,” says Dr. Richard Parker, medical director of Beth Israel’s physician organization. “The system takes that into account when ordering a scan.” For instance, the software might point out that a pa- tient suspected of having pneumonia has enough symptoms and clinical indicators to make that the most likely diagnosis, and that treating the patient for pneumonia would be better than exposing him or her to a chest X-ray. During three years in which the hospital system has used the Anvita software, it has cut out about 5 percent of tests as unnecessary or inappropriate, Parker says. Beth Israel launched a related pilot project six months ago to analyze doctors’ thought processes when ordering radiology tests. When a doctor orders a test, the system asks what diag- nosis the physician is leaning toward, with what percentage of certainty. After the test, the system follows up with an e-mail asking the doctor whether the test confirmed the original diag- nosis. The study aims to gain insight into how doctors decide which tests to use, and in which situations doctors are most likely to prescribe the wrong test for a given set of symptoms. Information technology isn’t just helping doctors choose the right test for a patient; it’s also making more personal- ized medical tests possible. For example, diagnostic testing services provider Quest Diagnostics and Vermillion, a
Duke University Health System, Beth Israel Deaconess Medical Center, and Others: Medical IT Is Getting Personal
REAL WORLD
CASE 2 Personalized medicine brings to mind researchers do-ing complicated analysis of a single patient’s genetic makeup and fine-tuning medicine and other treat- ments to those results. But Duke University Health System is using everyday data from patients’ electronic medical records combined with an analytics tool to personalize its approach to treating patients. County health officials recently asked Duke how many of its patients would need priority access to the H1N1 flu vaccine. Duke used IBM Cognos to sift through information on the more than 20 million patients in its Oracle-based clinical data repository and in an hour was able to identify about 120,000 of them with risk factors, such as age, preg- nancy, respiratory, and other conditions that made them vul- nerable to complications from swine flu. And now that the H1N1 vaccine is available, Duke is letting those patients know that they’re first in line to get it. “We put an analytics engine on top of our clinical reposi- tory and were able to stratify by age and key illnesses millions of records, and streamline who was most at risk,” says Asif Ahmed, diagnostics services CIO for the Duke system, which runs three hospitals and about 100 clinics in the Raleigh/Durham, North Carolina, area and treats more than 1 million patients a year. This is a practical example of how health care IT is be- ing used to personalize medical care in ways that help doc- tors make smarter decisions about patients’ conditions and tailor treatment to an individual’s needs. This evolving field covers a broad range of efforts. Beyond analytics systems like Duke’s, it includes decision-support tools that help doctors
194
FIGURE 5.13
IT is starting to have major impacts on both medical research and patient treatment.
Source: © Jose Luis Pelaez Inc/Blend Images/Getty Images.
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molecular diagnostic test developer, have developed a test to assess the likelihood that women diagnosed with pelvic masses have ovarian cancer as opposed to benign tumors. Its use helps those women most at risk for cancer get to specialists faster. Many of the newest personalized medicine efforts are focused on giving analytics and decision-support tools to doctors and other clinicians. But medical researchers are also still focused on the more complex efforts to analyze genomic data and use the results to create individualized treatments that doctors will use in the future. One such initiative is Cancer Biomedical Informatics Grid, or caBig, a biomedical informatics network that the National Cancer Institute launched in 2004. Its mission is to develop more personalized cancer treatments and get them into doctors’ hands faster. Researchers at the approximately 100 academic and community-based cancer centers that make up caBig use the network to share data and research results. They can make use of the data in analytics, data-mining, decision-support, and other software tools. Members are using the network’s data and software today to identify the best patients to participate in clinical trials of experimental cancer treatments. Multiple myeloma, a cancer that strikes white blood cells and eventually bone marrow, can be difficult to treat. Now, the Dana-Farber Cancer Institute in Boston is harnessing the dual power of business intelligence and Web 2.0-based scientific search tools to gather complex, scattered data to better treat patients and work toward a cure for this formidable disease. Dana-Farber is a treatment, research, and teaching facil- ity affiliated with Harvard Medical School. Its physicians and researchers regularly slog through complex calculations to find connections between data gleaned from tumor biop- sies and other clinical samples and the vast genetic research housed within the organization or spread among three mas- sive public domain databases. Dana-Farber officials are working to leverage grant money and other resources to blend data warehousing capa- bilities with Web-based data-collection tools, since vital connections between patient samples and analytical data will
almost certainly prove the crux of both effective patient treatment and any potential breakthroughs tied to the dis- ease, according to researchers. To make the hunt for precious genetic information easier, Dana-Farber officials have stitched together a system that wraps in Oracle’s Healthcare Transaction Base, a service- oriented architecture that supports the medical industry’s HL7 standard for the electronic exchange of clinical data. Increased use of e-medical records should make more patient data available for research, says Ken Buetow, direc- tor of the center of bioinformatics and IT at the National Cancer Institute. Ultimately, Buetow expects the caBig network, combined with doctors’ growing use of electronic data. will shorten the time it takes for research findings to show up as clinical treat- ments. “We think this could be one of those moments for a big shift,” he says. John Glaser, CIO at Partners Healthcare, which oper- ates several Boston-area hospitals, including Massachusetts General. Brigham, and Women’s, sees that shift coming. As the use of EMRs become more pervasive and the amount of digitized clinical data increases, it will be easier to provide patients with more personalized care, says Glaser, who also is an adviser on the U.S. Department of Health and Human Services’ Health IT Policy Committee. EMRs make data on patients easier to search and analyze. Doctors using them are also more likely to use decision support tools, Glaser says. “Science is moving rapidly,” he says, and health IT helps capture and disseminate to doctors perspective and research findings that are impossible for even the most diligent physi- cians to keep up with. Once the use of EMRs is standard practice, the federal gov- ernment is likely to put greater emphasis on personalized med- icine initiatives, Glaser predicts. In the future, health care providers could be rewarded in terms of patient outcomes, and personalized medical treatments are one of the most likely ways to improve outcomes and improve health care across the board.
Source: Adapted from Marianne Kolbasuk McGee, “Medical IT Gets Personal,” InformationWeek , November 16, 2009; and Jennifer McAdams, “Better BI: Dana-Farber Cancer Institute,” Computerworld , September 1, 2008.
1. What are the benefits that result from implementing the technologies described in the case? How are those different for hospitals, doctors, insurance companies and patients? Provide examples of each from the case.
2. Many of the technologies described in the case require access to large volumes of data in order to be effective. At the same time, there are privacy considerations in- volved in the compiling and sharing of such data. How do you balance those?
3. What other industries that manage large volumes of data could benefit from an approach to technology sim- ilar to the one described in the case? Develop at least one example with sample applications.
1. The legal and regulatory environment of the health care industry has changed significantly in recent times. How does this affect technology development and im- plementation in these organizations. Go online and research new uses of information technology in health care motivated by these developments. Prepare a pres- entation to share your findings.
2. Some of the technologies described in the case verify the diagnostics made by doctors and can sometimes make recommendations of their own. Does this im- prove the quality of care, or are these organizations putting too much faith on a computer algorithm that did not attend medical school? Break into small groups to discuss this and provide some recommendations about what organizations should do before deploying these technologies in the field, if anything.
CASE STUDY QUESTIONS REAL WORLD ACTIVITIES
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organization’s data reside in a single physical location, any catastrophic event like a fire or damage to the media holding the data would result in an equally catastrophic loss of use of that data. By having databases distributed in multiple locations, the negative impact of such an event can be minimized. Another advantage of distributed databases is found in their storage require- ments. Often, a large database system may be distributed into smaller databases based on some logical relationship between the data and the location. For example, a company with several branch operations may distribute its data so that each
F IGURE 5.14 Examples of some of the major types of databases used by organizations and end users.
External Databases
on the Internet and
Online Services
Distributed Databases on Intranets and Other Networks
Client PC
End-User Databases
Data Warehouse
Operational Databases
of the Organization
Network Server
Data Marts
F IGURE 5.15 Examples of operational databases that can be created and managed for a small business by microcomputer database management software like Microsoft Access.
Source : Courtesy of Microsoft®.
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branch operation location is also the location of its branch database. Because mul- tiple databases in a distributed system can be joined together, each location has control of its local data while all other locations can access any database in the com- pany if so desired. Distributed databases are not without some challenges, however. The primary challenge is the maintenance of data accuracy. If a company distributes its database to multiple locations, any change to the data in one location must somehow be updated in all other locations. This updating can be accomplished in one of two ways: replica- tion or duplication . Updating a distributed database using replication involves using a specialized software application that looks at each distributed database and then finds the changes made to it. Once these changes have been identified, the replication process makes all of the distributed databases look the same by making the appropriate changes to each one. The replication process is very complex and, depending on the number and size of the distributed databases, can consume a lot of time and compu- ter resources. The duplication process, in contrast, is much less complicated. It basically identi- fies one database as a master and then duplicates that database at a prescribed time after hours so that each distributed location has the same data. One drawback to the duplication process is that no changes can ever be made to any database other than the master to avoid having local changes overwritten during the duplication process. Nonetheless, properly used, duplication and replication can keep all distributed loca- tions current with the latest data. One additional challenge associated with distributed databases is the extra comput- ing power and bandwidth necessary to access multiple databases in multiple locations. We will look more closely at the issue of bandwidth in Chapter 6 when we focus on telecommunications and networks.
Access to a wealth of information from external databases is available for a fee from commercial online services and with or without charge from many sources on the World Wide Web. Web sites provide an endless variety of hyperlinked pages of mul- timedia documents in hypermedia databases for you to access. Data are available in the form of statistics on economic and demographic activity from statistical databanks, or you can view or download abstracts or complete copies of hundreds of newspapers, magazines, newsletters, research papers, and other published material and periodicals from bibliographic and full-text databases. Whenever you use a search engine like Google or Yahoo to look up something on the Internet, you are using an external database—a very, very large one! Also, if you are using Google, you are using one that averages 112 million searches per day.
The rapid growth of Web sites on the Internet and corporate intranets and extranets has dramatically increased the use of databases of hypertext and hypermedia docu- ments. A Web site stores such information in a hypermedia database consisting of hyperlinked pages of multimedia (text, graphic and photographic images, video clips, audio segments, and so on). That is, from a database management point of view, the set of interconnected multimedia pages on a Web site is a database of interrelated hy- permedia page elements, rather than interrelated data records. Figure 5.16 shows how you might use a Web browser on your client PC to connect with a Web network server. This server runs Web server software to access and trans- fer the Web pages you request. The Web site illustrated in Figure 5.16 uses a hyper- media database consisting of Web page content described by HTML (Hypertext Markup Language) code or XML (Extensible Markup Language) labels, image files, video files, and audio. The Web server software acts as a database management system to manage the transfer of hypermedia files for downloading by the multimedia plug- ins of your Web browser.
External Databases
Hypermedia Databases
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In the perfume business, new products like the recent launch of Kate, a fra- grance Coty branded for supermodel Kate Moss, can make or break a company’s year. But big hits can also lead to big problems. When a product takes off, Coty must respond quickly to keep shelves full, but its ability to ramp up is dependent on glass, packaging, and other suppliers. “If we can’t meet demand . . . it annoys the retailers, the consumers lose interest, and we lose sales,” says Dave Berry, CIO at Coty, whose other brands include Jennifer Lopez, Kenneth Cole, and Vera Wang. Empty shelves are the scourge of manufacturing and retail. Just look at the an- nual shortages of the Christmas season’s hottest toys or the rain checks stores must write regularly on sale items. At any given time, 7 percent all U.S. retail products are out of stock; goods on promotion are out of stock more than 15 percent of the time. That’s why manufacturers and retailers are pushing for the next breakthroughs in demand forecasting, what has emerged as the discipline of “demand-signal manage- ment.” Instead of just relying on internal data such as order and shipment records, manufacturers are analyzing weekly and even daily point-of-sale data from retailers so that they can better see what’s selling where. This sort of timely, detailed data lets manufacturers spot trends much sooner by region, product, retailer, and even by individual store. Handling demand-signal data presents the same problems that real-time data causes in any industry: how to access and integrate high volumes of data, and then com- bine and analyze it alongside historical information. With the advent of highly scal- able data warehouses, low-latency integration techniques, and faster, deeper query and analysis capabilities, the technology is finally here, at a price most can afford. And with easier-to-use business intelligence tools, manufacturers and retailers are pushing analytic tools into the hands of front-line decision makers, most often field sales and marketing people involved in planning, merchandising, and supply chain management. Over the last two years, Coty has pushed the responsibility for developing accu- rate forecasts down to its salespeople. Field-level forecasting makes for more accu- rate and responsive planning, says CIO Berry, who credits an analytics application from vendor CAS with making it easier for salespeople who are new to business in- telligence to analyze point-of-sale data and develop forecasts. An important obstacle to broad adoption of demand-signal analysis has been the lack of standardization in the data supplied by retailers. Coty gets point-of-sale data from the likes of CVS, Target, and Walgreens, but each uses a different format. “The timeliness, accuracy, and depth of the data also varies from retailer to retailer, so it’s tough to bring it into a data warehouse,” says Berry.
Coty: Using Real-Time Analytics to Track Demand
FIGURE 5.16 The components of a Web-based information system include Web browsers, servers, and hypermedia databases.
Web Browser
Web Pages Image Files Video Files Audio Files
Client PCs
The Inter
HTML XML
net Intranets Extranets
Hypermedia Database
Network Server
Web Server
Software
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A data warehouse stores data that have been extracted from the various opera- tional, external, and other databases of an organization. It is a central source of the data that have been cleaned, transformed, and cataloged so that they can be used by managers and other business professionals for data mining, online analytical processing, and other forms of business analysis, market research, and decision sup- port. (We’ll talk in-depth about all of these activities in Chapter 10.) Data ware- houses may be subdivided into data marts , which hold subsets of data from the warehouse that focus on specific aspects of a company, such as a department or a business process. Figure 5.17 illustrates the components of a complete data warehouse system. No- tice how data from various operational and external databases are captured, cleaned, and transformed into data that can be better used for analysis. This acquisition process might include activities like consolidating data from several sources, filtering out un- wanted data, correcting incorrect data, converting data to new data elements, or ag- gregating data into new data subsets. These data are then stored in the enterprise data warehouse, from which they can be moved into data marts or to an analytical data store that holds data in a more useful form for certain types of analysis. Metadata (data that define the data in the data ware- house) are stored in a metadata repository and cataloged by a metadata directory. Finally, a variety of analytical software tools can be provided to query, report, mine, and analyze the data for delivery via Internet and intranet Web systems to business end users. See Figure 5.18 . One important characteristic about the data in a data warehouse is that, unlike a typical database in which changes can occur constantly, data in a data warehouse are
Data Warehouses and Data Mining
FIGURE 5.17 The components of a complete data warehouse system.
Data
Management
Operational, External,
and Other Databases
Data Acquisition (Capture, clean,
transform, transport, load/apply)
Warehouse Design
Data Analysis (Query, report, analyze, mine,
deliver)
Web Information Systems
Analytical Data Store
Enterprise Warehouse
Data Marts
Metadata
Management
Metadata Directory
Metadata Repository
Source: Courtesy of Hewlett-Packard.
That being said, the payoff from early efforts by Coty has been more accurate forecasting, higher on-shelf availability, and more effective promotions. With faster and more detailed insight into demand, manufacturers can ratchet up revenue by 2 percent to 7 percent, which more than justifies any data-related headaches.
Source: Adapted from Doug Henschen, “In A Down Economy, Companies Turn to Real-Time Analytics to Track Demand,” InformationWeek , February 28, 2009.
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static , which means that once the data are gathered up, formatted for storage, and stored in the data warehouse, they will never change. This restriction is so that queries can be made on the data to look for complex patterns or historical trends that might otherwise go unnoticed with dynamic data that change constantly as a result of new transactions and updates.
Data mining is a major use of data warehouse databases and the static data they con- tain. In data mining, the data in a data warehouse are analyzed to reveal hidden pat- terns and trends in historical business activity. This analysis can be used to help managers make decisions about strategic changes in business operations to gain com- petitive advantages in the marketplace. See Figure 5.19 . Data mining can discover new correlations, patterns, and trends in vast amounts of business data (frequently several terabytes of data) stored in data warehouses. Data
Data Mining
F IGURE 5.18 A data warehouse and its data mart subsets hold data that have been extracted from various operational databases for business analysis, market research, decision support, and data mining applications.
Data Marts
Finance
Marketing
Sales
Accounting
Management reporting
Applications
ERP
Inventory control
Logistics
Shipping
Purchasing
CRM
Data Warehouse
F IGURE 5.19 How data mining extracts business knowledge from a data warehouse.
Target
Data
Data
Warehouse
Patterns Business
Knowledge
Databases
Selection Data
Mining Data Trans- formation
Interpretation/ Evaluation
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mining software uses advanced pattern recognition algorithms, as well as a variety of mathematical and statistical techniques, to sift through mountains of data to extract previously unknown strategic business information. For example, many companies use data mining to:
• Perform market-basket analysis to identify new product bundles. • Find root causes of quality or manufacturing problems. • Prevent customer attrition and acquire new customers. • Cross-sell to existing customers. • Profile customers with more accuracy. We will discuss data mining further, as well as online analytical processing (OLAP) and other technologies that analyze the data in databases and data warehouses to pro- vide vital support for business decisions, in Chapter 10.
Like a muscle car driving 55 mph on the freeway, R.L. Polk & Co.’s new grid-based data warehouse boasts gobs of untapped power under the hood. In 2006, the South- field, Michigan–based automotive industry market research company finished mov- ing its main 4TB customer-facing data warehouse to an Oracle 10g grid comprising Dell PowerEdge servers running Linux. The move has helped R.L. Polk save money and improve data redundancy, availability, and access time. It also supports Polk’s new service-oriented architecture, which is improving customer service. “We are getting more bang for our buck,” notes Kevin Vasconi, the company’s CIO. The data warehouse is doing 10 million transactions a day “without any is- sues.” Encouraged by the experience so far, R.L. Polk is bringing onto the grid other databases, both domestic and overseas, that total 2.5 petabytes of actively managed data. Founded in 1870—the same year the automobile’s predecessor, a motorized handcart, was invented in Germany—R.L. Polk started as a publisher of business directories. It became a car information supplier in 1921 and began to use computer punch cards in 1951. The company is best known to consumers for its Carfax data- base of car histories. Only a tiny portion of the grid is apportioned now to the data warehouse. Much of it is devoted to running R.L. Polk’s new Web-based applications, which both im- port data into the data warehouse from 260 discrete sources, such as car dealers or state licensing boards, and stream it out to paying customers, such as carmakers, car dealers, and parts suppliers. The data warehouse serves as R.L. Polk’s “single source of truth” on a massive database that includes 500 million individual cars, or almost 85 percent of all cars in the world as of 2002. It also includes data on 250 million households and 3 billion transactions. R.L. Polk cleanses the names and addresses of all incoming records, adds loca- tion data such as latitude and longitude, and, in the case of the 17-digit vehicle identification numbers unique to every car, extrapolates each car’s individual fea- tures and styling. Looking forward, Vasconi says data already stored on vehicles’ on-board computers—such as engine-trouble history, GPS-based location history, and average speeds—will soon also be imported into the data warehouse if privacy issues can be resolved. It’s a complicated process, but as his team continues to tweak the Oracle grid engine, he expects to be able to shorten the importation time to less than 24 hours. “The car is a gold mine of consumer information,” notes Vasconi.
Source: Adapted from Eric Lai, “Auto Market Researcher Revs Up Oracle Grid for Massive Data Warehouse,” Computerworld , October 19, 2006.
R.L. Polk & Co.: Cars Are a Gold Mine of Information
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How would you feel if you were an executive of a company and were told that some information you wanted about your employees was too difficult and too costly to obtain? Suppose the vice president of information services gave you the following reasons:
• The information you want is in several different files, each organized in a differ- ent way.
• Each file has been organized to be used by a different application program, none of which produces the information you want in the form you need.
• No application program is available to help get the information you want from these files.
That’s how end users can be frustrated when an organization relies on file process- ing systems in which data are organized, stored, and processed in independent files of data records. In the traditional file processing approach that was used in business data processing for many years, each business application was designed to use one or more specialized data files containing only specific types of data records. For example, a bank’s checking account processing application was designed to access and update a data file containing specialized data records for the bank’s checking account custom- ers. Similarly, the bank’s installment loan-processing application needed to access and update a specialized data file containing data records about the bank’s installment loan customers. See Figure 5.20 .
F IGURE 5.20 Examples of file processing systems in banking. Note the use of separate computer programs and independent data files in a file processing approach to the savings, installment loan, and checking account applications.
Checking
Account
Processing
Customer
Statements
Checking
Account
Program
Checking
File
Update
Savings
Processing Customer
Receipts
Savings
Program
Savings
File
Update
Installment
Loan
Processing
Loan Analysis
Reports
Installment
Loan
Program
Installment
Loan File
Update
Customer
Transactions
Traditional File Processing
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The file processing approach finally became too cumbersome, costly, and inflexible to supply the information needed to manage modern business and, as we shall soon see, was replaced by the database management approach . Despite their apparent logic and simplicity, file processing systems had the following major problems:
Data Redundancy. Independent data files included a lot of duplicated data; the same data (such as a customer’s name and address) were recorded and stored in several files. This data redundancy caused problems when data had to be updated. Separate file maintenance programs had to be developed and coordinated to ensure that each file was properly updated. Of course, this coordination proved difficult in practice, so a lot of inconsistency occurred among data stored in separate files.
Lack of Data Integration . Having data in independent files made it difficult to provide end users with information for ad hoc requests that required accessing data stored in several different files. Special computer programs had to be written to retrieve data from each independent file. This retrieval was so difficult, time-consuming, and costly for some organizations that it was impossible to provide end users or management with such information. End users had to extract the required information manually from the various reports produced by each separate application and then prepare customized reports for management.
Data Dependence . In file processing systems, major components of a system—the organization of files, their physical locations on storage hardware, and the application software used to access those files—depended on one another in significant ways. For example, application programs typically contained references to the specific format of the data stored in the files they used. Thus, changes in the format and structure of data and records in a file required that changes be made to all of the programs that used that file. This program maintenance effort was a major burden of file processing systems. It proved difficult to do properly, and it resulted in a lot of inconsistency in the data files.
Lack of Data Integrity or Standardization. In file processing systems, it was easy for data elements such as stock numbers and customer addresses to be defined dif- ferently by different end users and applications. This divergence caused serious in- consistency problems in the development of programs to access such data. In addition, the integrity (i.e., the accuracy and completeness) of the data was suspect because there was no control over their use and maintenance by authorized end us- ers. Thus, a lack of standards caused major problems in application program devel- opment and maintenance, as well as in the security and integrity of the data files needed by the organization.
When Joe wanted to find love, he turned to science. Rather than hang out in bars or hope that random dates worked out, the 34-year- old aerospace engineer signed up for eHarmony.com , an online dating service that uses detailed profiles, proprietary matching algorithms, and a tightly controlled communi- cations process to help people find their perfect soul mate. Over a three-month period, Joe found 500 people who appeared to fit his criteria. He initiated contact with 100 of them, corresponded with 50, and dated 3 before finding the right match. The “scientific” matching services, such as eHarmony, PerfectMatch, and Chemistry.com , attempt to identify the most compatible matches for the user by asking anywhere from a few dozen to several hundred questions. The services then assemble a personality profile and use that against an algorithm that ranks users
Online Dating: The Technology Behind Finding Love
Problems of File Processing
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To solve the problems encountered with the file processing approach, the database management approach was conceived as the foundation of modern methods for managing organizational data. The database management approach consolidates data records, formerly held in separate files, into databases that can be accessed by many different application programs. In addition, a database management system (DBMS) serves as a software interface between users and databases, which helps users easily ac- cess the data in a database. Thus, database management involves the use of database management software to control how databases are created, interrogated, and main- tained to provide information that end users need. For example, customer records and other common types of data are needed for several different applications in banking, such as check processing, automated teller systems, bank credit cards, savings accounts, and installment loan accounting. These data can be consolidated into a common customer database, rather than being kept in separate files for each of those applications. See Figure 5.21 .
A database management system (DBMS) is the main software tool of the database management approach because it controls the creation, maintenance, and use of the databases of an organization and its end users. As we saw in Figure 5.16 , microcom- puter database management packages such as Microsoft Access, Lotus Approach, or Corel Paradox allow you to set up and manage databases on your PC, network server, or the World Wide Web. In mainframe and server computer systems, the database management system is an important system software package that controls the development, use, and maintenance of the databases of computer-using organizations.
The Database Management Approach
Database Management System
within a set of predefined categories; from there, the system produces a list of appropriate matches. The technology that powers these dating sites ranges from incredibly simple to incredibly complicated. Unsurprisingly, eHarmony has one of the most sophisticated data centers. “The company stores 4 terabytes of data on some 20 million registered users, each of whom has filled out a 400-question psychological profile,” says Joseph Essas, vice president of technology at eHarmony. The company uses proprietary al- gorithms to score that data against 29 “dimensions of compatibility”—such as values, personality styles, attitudes, and interests—and match up customers with the best possible prospects for a long-term relationship. A giant Oracle 10g database spits out a few preliminary candidates immediately after a user signs up, to prime the pump, but the real matching work happens later, after eHarmony’s system scores and matches up answers to hundreds of questions from thousands of users. The process requires just under 1 billion calculations that are processed in a giant batch operation each day. These operations execute in paral- lel on hundreds of computers and are orchestrated using software written to the open-source Hadoop software platform. Once matches are sent to users, the users’ actions and outcomes are fed back into the model for the next day’s calculations. For example, if a customer clicked on many matches that were at the outset of his or her geographical range—say, 25 miles away—the system would assume distance wasn’t a deal-breaker and next offer more matches that were just a bit farther away. “Our biggest challenge is the amount of data that we have to constantly score, move, apply, and serve to people, and that is fluid,” Essas says. To that end, the archi- tecture is designed to scale quickly to meet growth and demand peaks around major holidays. The highest demand comes just before Valentine’s Day. “Our demand dou- bles, if not quadruples.”
Source: Adapted from Robert L. Mitchell, “Online Dating: The Technology Behind the Attraction,” Computerworld , February 13, 2009.
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FIGURE 5.21 An example of a database management approach in a banking information system. Note how the savings, checking, and installment loan programs use a database management system to share a customer database. Note also that the DBMS allows a user to make direct, ad hoc interrogations of the database without using application programs.
Customer Database
Checking Account Program
Savings Account Program
Installment Loan
Program
Customer Transaction Processing
Database Management System
Inquiry
Checking Account Data Savings Account Data Installment Loan Data Other Customer Data
F IGURE 5.22 Database management software like MySQL, a popular open-source DBMS, supports the development, maintenance, and use of the databases of an organization.
Source: Courtesy of MySQL.com .
Examples of popular mainframe and server versions of DBMS software are IBM’s DB2 Universal Database, Oracle 10g by Oracle Corp., and MySQL, a popular open-source DBMS. See Figure 5.22 . Common DBMS components and functions are summarized in Figure 5.23 .
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Source: Michael V. Mannino, Database Application Development and Design (Burr Ridge, IL: McGraw-Hill/Irwin, 2001), p. 7.
F IGURE 5.23 Common software components and functions of a database management system.
Common DBMS Software Components
• Database Definition Language and graphical tools to define entities, relationships, integrity con- straints, and authorization rights.
• Nonprocedural Access Language and graphical tools to access data without complicated coding. • Application Development Graphical tools to develop menus, data entry forms, and reports. • Procedural Language Interface Language that combines nonprocedural access with full capabilities of a pro-
gramming language.
• Transaction Processing Control mechanisms to prevent interference from simultaneous users and recover lost data after a failure.
• Database Tuning Tools to monitor and improve database performance.
F IGURE 5.24 The three major uses of DBMS software are to create, maintain, and use the databases of an organization.
Operating System
Database Management
System
Application Programs
Databases
Database Management
Create: Database and Application Development Maintain: Database Maintenance Use: Database Interrogation
The three major functions of a database management system are (1) to create new databases and database applications, (2) to maintain the quality of the data in an or- ganization’s databases, and (3) to use the databases of an organization to provide the information that its end users need. See Figure 5.24 . Database development involves defining and organizing the content, relation- ships, and structure of the data needed to build a database. Database application development involves using a DBMS to develop prototypes of queries, forms, re- ports, and Web pages for a proposed business application. Database maintenance involves using transaction processing systems and other tools to add, delete, update, and correct the data in a database. The primary use of a database by end users involves employing the database interrogation capabilities of a DBMS to access the data in a da- tabase to selectively retrieve and display information and produce reports, forms, and other documents.
A database interrogation capability is a major benefit of the database management ap- proach. End users can use a DBMS by asking for information from a database using a query feature or a report generator . They can receive an immediate response in the form of video displays or printed reports. No difficult programming is required. The query language feature lets you easily obtain immediate responses to ad hoc data requests: You merely key in a few short inquiries—in some cases, using common sentence structures just like you would use to ask a question. The report generator feature allows you to specify a report format for information you want presented as a report. Figure 5.25 illustrates the use of a DBMS report generator.
SQL Queries. SQL (pronounced “see quill”), or Structured Query Language , is an international standard query language found in many DBMS packages. In most cases,
Database Interrogation
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SQL is the language structure used to “ask a question” that the DBMS will retrieve the data to answer. The basic form of a SQL query is:
SELECT . . . FROM . . . WHERE . . .
After SELECT, you list the data fields you want retrieved. After FROM, you list the files or tables from which the data must be retrieved. After WHERE, you specify conditions that limit the search to only those data records in which you are interested. Figure 5.26 compares a SQL query to a natural language query for information on customer orders.
Boolean Logic. To fully access the power of SQL, a database user needs to have a basic understanding of the concepts behind Boolean logic . Developed by George Boole in the mid-1800s, Boolean logic allows us to refine our searches for specific information such that only the desired information is obtained. Boolean logic consists of three logical operators: (1) AND, (2) OR, and (3) NOT. Using these operators in conjunction with the syntax of a SQL query, a database user can refine a search to ensure that only the desired data are retrieved. This same set of logical operators can be used to refine searches for information from the Internet (which is really nothing more than the world’s largest database). Let’s look at an exam- ple of how the three logical operators work. Suppose we are interested in obtaining information about cats from the Internet. We could just search on the word cats, and a large number of potentially useful Web sites would be retrieved. The problem is that in addition to the Web sites about cats, we would also retrieve Web sites about cats and dogs, pets in general (if the site in- cludes the word cats ), and probably even sites about the Broadway musical titled Cats .
F IGURE 5.25 Using the report generator of Microsoft Access to create an employee report.
Source: Courtesy of Microsoft®.
F IGURE 5.26 Comparing a natural language query with a SQL query.
Operations Support Systems
A Sample Natural Language-to-SQL Translation for Microsoft Access
Natural Language
What customers had no orders last month? SQL
SELECT [Customers].[Company Name],[Customers].[Contact Name] FROM [Customers] WHERE not Exists {SELECT [Ship Name] FROM [Orders] WHERE Month {[Order Date]}�l and Year {[Order Date]}�2004 and [Customers].
[Customer ID]�[Orders].[Customer ID]}
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To avoid having to sift through all the sites to find what we want, we could use Boolean logic to form a more refined query:
Cats OR felines AND NOT dogs OR Broadway
By using this search query, we would retrieve any Web site with the word cats or felines but exclude any site that also has the words dogs or Broadway . Using this ap- proach, we would eliminate any reference to cats and dogs or to the Broadway musical titled Cats . This query therefore would result in a more refined search and eliminate the need to look at Web sites that do not pertain to our specific interest.
Graphical and Natural Queries. Many end users (and IS professionals) have diffi- culty correctly phrasing SQL and other database language search queries. So most end-user database management packages offer GUI (graphical user interface) point- and-click methods, which are easier to use and are translated by the software into SQL commands. See Figure 5.27 . Other packages are available that use natural language query statements similar to conversational English (or other languages), as illustrated in Figure 5.26 .
The database maintenance process is accomplished by transaction processing systems and other end-user applications, with the support of the DBMS. End users and infor- mation specialists can also employ various utilities provided by a DBMS for database maintenance. The databases of an organization need to be updated continually to re- flect new business transactions (e.g., sales made, products produced, inventory shipped) and other events. Other miscellaneous changes also must be made to update and correct data (e.g., customer or employee name and address changes) to ensure the accuracy of the data in the databases. We introduced transaction processing systems in Chapter 1 and will discuss them in more detail in Chapter 7.
In addition, DBMS packages play a major role in application development . End users, systems analysts, and other application developers can use the internal 4GL program- ming language and built-in software development tools provided by many DBMS packages to develop custom application programs. For example, you can use a DBMS to develop the data entry screens, forms, reports, or Web pages of a business applica- tion that accesses a company database to find and update the data it needs. A DBMS also makes the job of application software developers easier, because they do not have to develop detailed data-handling procedures using conventional programming lan- guages every time they write a program. Instead, they can include features such as data manipulation language (DML) statements in their software that call on the DBMS to perform necessary data-handling activities.
Database Maintenance
Application Development
F IGURE 5.27 Using the Query Wizard of the Microsoft Access database management package to develop a query about employee health plan choices.
Source: Courtesy of Microsoft ® .
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• Data Resource Management. Data resource manage- ment is a managerial activity that applies information technology and software tools to the task of managing an organization’s data resources. Early attempts to manage data resources used a file processing approach in which data were organized and accessible only in specialized files of data records that were designed for processing by specific business application programs. This approach proved too cumbersome, costly, and inflexible to supply the information needed to manage modern business processes and organizations. Thus, the database management approach was developed to solve the problems of file processing systems.
• Database Management. The database management approach affects the storage and processing of data. The data needed by different applications are consoli- dated and integrated into several common databases in- stead of being stored in many independent data files. Also, the database management approach emphasizes updating and maintaining common databases, having users’ application programs share the data in the data- base, and providing a reporting and an inquiry/response capability so that end users can easily receive reports and quick responses to requests for information.
• Database Software. Database management systems are software packages that simplify the creation, use, and maintenance of databases. They provide software tools so that end users, programmers, and database adminis- trators can create and modify databases; interrogate a database; generate reports; do application development; and perform database maintenance.
• Types of Databases. Several types of databases are used by business organizations, including operational,
distributed, and external databases. Data warehouses are a central source of data from other databases that have been cleaned, transformed, and cataloged for busi- ness analysis and decision support applications. That includes data mining, which attempts to find hidden patterns and trends in the warehouse data. Hypermedia databases on the World Wide Web and on corporate intranets and extranets store hyperlinked multimedia pages on a Web site. Web server software can manage such databases for quick access and maintenance of the Web database.
• Data Access. Data must be organized in some logical manner on physical storage devices so that they can be efficiently processed. For this reason, data are com- monly organized into logical data elements such as characters, fields, records, files, and databases. Database structures, such as the hierarchical, network, relational, and object-oriented models, are used to organize the relationships among the data records stored in data- bases. Databases and files can be organized in either a sequential or direct manner and can be accessed and maintained by either sequential access or direct access processing methods.
• Database Development. The development of data- bases can be easily accomplished using microcomputer database management packages for small end-user applications. However, the development of large corporate databases requires a top-down data planning effort that may involve developing enterprise and entity relationship models, subject area databases, and data models that reflect the logical data elements and rela- tionships needed to support the operation and manage- ment of the basic business processes of the organization.
S u m m a r y
1. Data dependence (203)
2. Data dictionary (188)
3. Data integration (203)
4. Data integrity (203)
5. Data mining (200)
6. Data modeling (190)
7. Data redundancy (203)
8. Data resource management (193)
9. Database administrator (DBA) (188)
10. Database interrogation (206)
11. Database management approach (204)
12. Database management system (DBMS) (204)
13. Database structures (183) a. Hierarchical structure (184) b. Multidimensional model (185) c. Network structure (184) d. Object-oriented model (185) e. Relational model (184)
14. Duplication (197)
15. File processing (202)
16. Logical data elements (178) a. Attribute (178) b. Character (178) c. Database (181)
K e y Te r m s a n d C o n c e p t s
These are the key terms and concepts of this chapter. The page number of their first explanation is in parentheses.
d. Entity (178) e. Field (178) f. File (181) g. Record (178)
17. Metadata (188)
18. Replication (197)
19. Structured Query Language (SQL) (206)
20. Types of databases (193) a. Data warehouse (199) b. Distributed (193) c. External (197) d. Hypermedia (197) e. Operational (193)
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1. The use of integrated collections of data records and files for data storage and processing.
2. Data in independent files made it difficult to provide answers to ad hoc requests and required special computer programs to be written to perform this task.
3. A specialist in charge of the databases of an organization.
4. A nonprocedural computer language used to interrogate a database.
5. Defines and catalogs the data elements and data relationships in an organization’s database.
6. A feature of database systems that uses queries or report generators to extract information.
7. The main software package that supports a database management approach.
8. Databases that are dispersed over the Internet and corporate intranets and extranets.
9. Databases that organize and store data as objects.
10. Databases of hyperlinked multimedia documents on the Web.
11. The management of all the data resources of an organization.
12. Processing data in a data warehouse to discover key business factors and trends.
13. Developing conceptual views of the relationships among data in a database.
14. A customer’s name.
15. A customer’s name, address, and account balance.
16. The names, addresses, and account balances of all of your customers.
17. An integrated collection of all of the data about your customers.
18. Business application programs that use specialized data files.
19. A treelike structure of records in a database.
20. A tabular structure of records in a database.
21. Records organized as cubes within cubes in a database.
22. Databases that support the major business processes of an organization.
23. A centralized and integrated database of current and historical data about an organization.
24. Databases available on the Internet or provided by commercial information services.
25. A problem in the file processing approach where major components of a system are dependent on each other to a large degree.
26. Different approaches to the logical organization of individual data elements stored in a database.
27. The most basic logical data element corresponding to a single letter or number.
28. A feature of distributed databases that identifies changes in one database and then makes appropri- ate changes in the others.
29. A characteristic of data that refers to their accu- racy and completeness.
30. Data that describe the structure and characteristics of databases.
31. A characteristic or quality of some entity used to describe that entity.
32. Includes, among others, operational, distributed, and hypermedia databases.
33. The existence of duplicate data among different files in an organization.
34. An approach to distributed databases that copies the complete content of a master database to others at a prescribed time of the day.
35. An object, person, place, event, and so on that is of interest to an organization and thus included in a database.
36. An approach to database structure that improves on the hierarchical model by allowing many-to- many relationships.
37. Different levels of data groupings that exist in a database.
R e v i e w Q u i z
Match one of the key terms and concepts listed previously with one of the brief examples or definitions that follow. Try to find the best fit for answers that seem to fit more than one term or concept. Defend your choices.
1. How should a business store, access, and distribute data and information about its internal operations and exter- nal environment?
2. What role does database management play in managing data as a business resource?
3. What are the advantages of a database management ap- proach to the file processing approach? Give examples to illustrate your answer.
4. Refer to the Real World Case on Data-Driven Crime Fighting in the chapter. Given the very decentralized
D i s c u s s i o n Q u e s t i o n s
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nature of law enforcement, with more than 18,000 units in the United States alone, what can be done to encour- age sharing information across organizational boundar- ies? Would an ad-hoc approach suffice, or is a central coordinating body needed? What are the implications of creating such an organization?
5. What is the role of a database management system in a business information system?
6. In the past, databases of information about a firm’s in- ternal operations were the only databases that were considered important to a business. What other kinds of databases are important for a business today?
7. Refer to the Real World Case on Medical IT in the chapter. What do these automated or semi-automated
technologies spell for the future of medicine? How much of this discipline can be captured using these al- gorithms. What about pharmacy?
8. What are the benefits and limitations of the relational database model for business applications today?
9. Why is the object-oriented database model gain- ing acceptance for developing applications and managing the hypermedia databases on business Web sites?
10. How have the Internet, intranets, and extranets affected the types and uses of data resources available to business professionals? What other database trends are also affecting data resource management in business?
1. Joining Tables You have the responsibility for managing technical training classes within your organization. These classes fall into two general types: highly technical training and end-user training. Software engineers sign up for the former, and administrative staff sign up for the latter. Your supervisor measures your effectiveness in part according to the average cost per training hour and type of training. In short, your supervisor expects the best training for the least cost. To meet this need, you have negotiated an exclusive on-site training contract with Hands-On Technology Transfer (HOTT) Inc. ( www.traininghott.com ), a high- quality technical training provider. Your negotiated rates are reproduced below in the pricing table. A separate table contains a sample list of courses you routinely make available for your organization.
a. Using these data, design and populate a table that includes basic training rate information. Designate the “Technical” field type as “Yes/No” (Boolean).
b. Using these data, design and populate a course table. Designate the CourseID field as a “Primary Key” and allow your database to automatically generate a value for this field. Designate the “Technical” field type as “Yes/No” (Boolean).
c. Prepare a query that lists each course name and its cost per day of training.
d. Prepare a query that lists the cost per student for each class. Assume maximum capacity and that you will schedule two half-day classes on the same day to take full advantage of HOTT’s per-day pricing schedule.
Pricing Table Technical Price per Day Capacity
Yes $2,680 15 No $2,144 30
Course Table
Course ID Course Name Duration Technical
1 ASP Programming 5 Yes 2 XML Programming 5 Yes 3 PHP Programming 4 Yes 4 Microsoft Word–Advanced .5 No 5 Microsoft Excel–Advanced .5 No . . .
2. Training-Cost Management Having determined the cost per student for each of the classes in the previous problem, you now must carefully manage class registration. Because you pay the same flat rates no matter how many students attend (up to capacity), you want to do all you can to ensure maxi- mum attendance. Your training provider, Hands-On Technology Transfer Inc., requires two weeks’ notice in the event that you need to reschedule a class. You should make sure your classes are at least two-thirds full before this deadline. You should also make sure you send timely reminders to all attendees so that they do not forget to show up. Use the database you created in Problem 1 to perform the following activities:
a. Using the information provided in the sample below, add a course schedule table to your training data- base. Designate the ScheduleID field as a “Primary Key” and allow your database program to generate a value for this field automatically. Make the CourseID field a number field and the StartDate field a date field.
b. Using the information provided in the sample below, add a class roster table to your training database. Make the ScheduleID field a number field. Make the Reminder and Confirmed fields both “Yes/No” (Boolean) fields.
A n a l y s i s E x e rc i s e s
Complete the following exercises as individual or group projects that apply chapter concepts to real-world businesses.
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c. Because the Class Schedule table relates to the Course Table and the Course Table relates to the Pricing Table, why is it appropriate to record the Price per Day information in the Class Schedule table too?
d. What are the advantages and disadvantages of using the participant’s name and e-mail address in the Class Roster table? What other database design might you use to record this information?
e. Write a query that shows how many people have registered for each scheduled class. Include the class name, capacity, date, and count of attendees.
Class Schedule Schedule Course Price per ID ID Location Start Date Day 1 1 101-A 7/12/2008 $2,680 2 1 101-A 7/19/2008 $2,680 3 1 101-B 7/19/2008 $2,680 4 4 101-A&B 7/26/2008 $2,144 5 5 101-A . . . B 8/2/2008 $2,144 . . .
Class Roster Schedule ID Participant e-mail Reminder Confirmed 1 Linda adams.l@ . . . Yes Yes? Adams 1 Fatima ahmad.f@ . . . Yes No? Ahmad 1 Adam Alba alba.a@ . . . Yes Yes 4 Denys Alyea alyea.d@ . . . No No 4 Kathy Bara bara.k@ . . . Yes No . . .
3. Selling the Sawdust Selling Information By-Products
Sawmill operators are in the business of turning trees into lumber. Products include boards, plywood, and veneer. For as long as there have been sawmills, there have been sawmill operators who have tried to solve the problem of what to do with their principal by-product: sawdust. Numerous creative examples abound. Likewise, businesses often generate tremendous amounts of data. The challenge then becomes what to
do with this by-product. Can a little additional effort turn it into a valuable product? Research the following:
a. What are your college’s or university’s policies regarding student directory data?
b. Does your college or university sell any of its stu- dent data? If your institution sells student data, what data do they sell, to whom, and for how much?
c. If your institution sells data, calculate the revenue earned per student. Would you be willing to pay this amount per year in exchange for maintaining your privacy?
4. Data Formats and Manipulation Importing Formatted Data into Excel
Ms. Sapper, a marketing manager in a global account- ing firm, was this year’s coordinator for her firm’s an- nual partner meeting. With 400 partners from around the world, Sapper faced daunting communications tasks that she wanted to automate as much as possible. Sapper received a file containing all partners’ names, as well as additional personal information, from her IT department. The file ended with the extension “CSV.” She wondered to herself what to do next. The CSV, or comma separated values format, is a very basic data format that most database applications use to import or export data. As a minimum, the CSV format groups all fields in a record into a single line of text. It then separates each field within a line with a comma or other delimiter. When the text information contains commas, the format requires this text information to be placed within quotes. Sapper needed to get these data into Excel. Given how busy the IT guys appeared, she decided to do this herself.
a. Download and save “partners.csv” from the MIS 10e OLC. Open the file using Microsoft Word. Remem- ber to look for the “csv” file type when searching for the file to open. Describe the data’s appearance.
b. Import the “partner.csv” file into Excel. Remember to look for the “csv” file type when searching for the file to open. Does Excel automatically format the data correctly? Save your file as “partner.xls.”
c. Describe in your own words why you think database manufacturers use common formats to import and export data from their systems.
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that come to us,” he says. As such, he keeps a healthy amount of generic racking, generic cabling, extra bandwidth on the network, and generic power. “I go generic because I probably won’t know what servers, how many slots, or what type of power we’ll need beforehand. With generic, I can configure whatever I need in minutes, he says. For instance, he uses a universal busway for power so that he doesn’t have to be concerned about the particular electrical needs of the acquired equipment. “We acquired a company and needed to integrate them in a short period of time because their building lease was up and they had to get out of there,” Musilli says. One team was sent ahead of time and spent a year trying to identify each server on 30–40 racks. “None of their applications matched our operating systems,” he says. As time dwindled, Musilli told them to pack up all the servers and send them to him. “In the end, it took two man- days to move them intact and get them up and running in our data center,” he says. As companies begin to contemplate future mergers or acquisitions, they must look inward at their own processes and procedures. “Just as important as technology is docu- mentation of processes—you have to know what people are doing with the systems,” says EMA’s Mann. He warns that one of the first obstacles to having a successful merger or acquisition is the reliance on what he refers to as tribal knowledge. Companies that have data centers where the em- ployees hold all the knowledge suffer greatly when, after a merger or acquisition, those people are let go. “You have to document the knowledge from those peo- ple and figure out how to make the processes work with only a handful of employees,” he says. Mann recommends creat- ing a workflow chart that outlines who’s responsible for each part of the data center. He suggests considering who handles network management, systems management, application management, and storage. “This will also help you spot re- dundancies in skill sets or areas where you are lacking in the event of a merger,” he says. John Burke, senior analyst at Nemertes Research in Minneapolis, says that in addition to knowing who is responsible, IT groups must know which systems perform which processes. “You have to have really good information about what goes on in your data center in terms of systems and how they interact with each other and how they interface with the business. You should always know what services you offer and how much it costs to offer them, “ Burke says. As part of this effort, many organizations employ a configuration man- agement database and asset management tool to help track elements within the data center. “You need a clear and con- cise view of the data flow within the data center. If you don’t know what has to move together, you might disrupt business during a merger or acquisition,” he says. Companies must also develop guidelines for governance to be referenced during a merger. For instance, if two law
W hen Cogent Communications eyes a company to acquire, it goes into battle mode. Two miles north of the Pentagon, across the Potomac in Washington, Cogent sets up what it calls the War Room, where it marshals eight top executives to evaluate the target company. Among those on the due diligence squad are the IS director and IT infrastructure manager. Cogent, a midsize Internet service provider, understands what far too many companies do not: Its ability to integrate and, in some cases, adopt an acquired company’s IT systems and operations can determine whether a merger flourishes or founders. For one thing, unanticipated IT integration costs can offset merger savings. Imagine the business lost when orders vanish, accounts payable go uncollected, and customer information goes AWOL because the acquiring company gave short shrift to the IT challenge ahead. As 2006 came to a close, it broke records for the number of mergers and acquisitions, but now IT managers have to step up and make sure their data centers can help make those deals a reality. “A well-run data center with reduced complexity makes mergers and acquisitions much easier,” says Andi Mann, senior analyst at Enterprise Management Associates (EMA). More than 11,700 deals were done. As the dust clears, experts and IT managers agree that companies will feel the full impact of this merger and acquisition (M&A) frenzy di- rectly in their data centers. So they advise organizations to prep now or risk experiencing downtime if they have to merge mission-critical assets. “Today, the most downtime companies can afford for critical data center infrastructure is measured in minutes.” Merged and acquired infrastructure “has to be available right away,” says Ryan Osborn of AFCOM, a data center industry group. Observers agree that the key to M&A success from a data center perspective is to focus on virtualization, docu- mentation, and logistics. Osborn says these three areas will help companies get ahead of the game and turn a time of crisis into one of op- portunity. “You won’t spend your time just moving infra- structure from one data center to another. You can actually do a technology refresh, get newer equipment and come out ahead,” he says. For John Musilli, data center operations manager at Intel in Santa Clara, California, the most critical piece is knowing about basic logistics. “I don’t always have to know what a server does, but I do have to know how to keep it alive,” he says. “It’s getting something moved from Point A to Point B and it doesn’t matter whether the logistics deals with putting servers on a truck or transferring data over a line.” Musilli has been through a handful of acquisitions in his eight years at Intel, and he says that he has it down to a sci- ence. “As part of the acquiring company, it’s my job to pro- vide the skeletal environment to accept any company’s assets
Cogent Communications, Intel, and Others: Mergers Go More Smoothly When Your Data Are Ready
REAL WORLD
CASE 3 Chapter 5 / Data Resource Management ● 213
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firms are merging and have competing clients, then IT groups must ensure that data are protected and there is suf- ficient access control. AFCOM’s Osborn says that good documentation helps the discovery process that companies go through before a merger or acquisition. “If the company you are acquiring has good documenta- tion and good processes in place, the acquisition goes much more smoothly,” he says. “In some cases, you might be able to lower your software costs if you use a more robust server with fewer processors, but if the application license doesn’t allow for that, then you can’t,” Osborn says, and adds: “How much money you’re going to have to spend to merge technology can weigh heav- ily on the decision to acquire a company.” Nemertes’ Burke suggests that one major step to M&A success is to make sure your data center has virtualization tools running on both servers and storage. Virtualization is important not only for scaling the data center but also for creating a standardized execution environment. “With a well-virtualized data center, you can hide the fact that things are moving around multiple ser- vers and storage devices,” Burke says. Rob Laurie, CEO at virtualization-software provider Dunes Technologies in Stamford, Connecticutt, says that virtualization is useful for
companies that want to test application and infrastructure integration before they put their merged or acquired as- sets into production. It’s also helpful for companies that must integrate assets that can’t be physically moved, he says. He warns, however, that for virtualization to be most effective, merging companies must decide on a uniform platform for their virtual environ- ment. “That way, whatever is virtualized in one company could run in the other company’s data center without problems,” he says. If they don’t have the same environment, they must at least have a compatible data format to gain any benefit. Intel’s Musilli suggests that IT’s natural attention to detail can sometimes overcomplicate matters. “Mergers and acquisi- tions aren’t always as difficult as people make them. They’re simply about the ability to assimilate any two environments,” he says. M&As create stress for both acquirer and acquiree, but early involvement by IT can minimize the trauma. Other- wise, you’ll need to do too much in too little time. As software engineering guru Frederick Brooks once said, “You can’t make a baby in a month using nine women. Plan ahead.”
Source: Adapted from Sandra Gittien, “Mergers Go Smoother with a Well-Prepped Data Center,” Computerworld , July 28, 2007, and Eric Chabrow, “IT Plays Linchpin Role in High-Stake M&As,” InformationWeek , June 26, 2006.
1. Place yourself in the role of a manager at a company undergoing a merger or acquisition. What would be the most important things customers would expect from you while still in that process? What role would IT play in meeting those expectations? Provide at least three examples.
2. Focus on what Andi Mann in the case calls “tribal knowledge.” What do you think is meant by that, and why is it so important to this process? What strategies would you suggest for companies that are faced with the extensive presence of this issue in an acquired organiza- tion? Develop some specific recommendations.
3. Most of the discussion on the case focused on hardware and software issues. However, these are essentially ena- blers for underlying business processes developed by each of the companies involved. What different alterna- tives do companies have for merging their business proc- esses, and what role would IT play in supporting those activities? Pay particular attention to data management and governance issues.
1. The case extensively discusses the idea of “ virtualiza- tion” and the role it plays in the merger process. Go online to research this concept and prepare a report about what it entails, how it works, what are its advan- tages and disadvantages, and other applications in addi- tion to those noted in the case.
2. Search the Internet for reports of merger and acquisi- tion cases where IT issues played an important role, either positive or negative. How did different organiza- tions handle IT-related matters in the situations you found? What was the ultimate outcome of the process? Prepare a presentation to share your findings with the class.
REAL WORLD ACTIVITIES CASE STUDY QUESTIONS
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unstructured comments so that it can better monitor and re- spond to customer service issues. The online travel site has begun to install new text ana- lytics software that will be used to scour some 40,000 verba- tim comments from customer satisfaction surveys, 40,000 e-mails from customers, and 500,000 interactions with the call center that result in comments to surface potential cus- tomer service issues. “The truth is that it is very laborious and extremely expensive to go through all that verbatim cus- tomer feedback to try to extract the information we need to have to make business decisions,” notes Don Hill. Travelocity’s director of customer advocacy. “The text mining capability . . . gives us the ability to go through all that verbatim feedback from customers and ex- tract meaningful information. We get information on the nature of the comments and if the comments are positive or negative.” Travelocity will use text analytics software from Attensity to automatically identify facts, opinions, requests, trends, and trouble spots from the unstructured data. Travelocity will then link that analysis with structured data from its Teradata data warehouse so the company can identify trends. “We get to take unstructured data and put it into structured data so we can track trends over time,” adds Hill. “We can know the fre- quency of customer comments on issue ‘x’ and if comments on that topic are going up, going down, or staying the same.” Unlike other text analytics technology, which requires manual tagging, sorting, and classifying of terms before analysis of unstructured data, Attensity’s technology has a natural language engine that automatically pulls out impor- tant data without a lot of predefining terms, notes Michelle de Haaff, vice president of marketing at the vendor. This al- lows companies to have an early warning system to tackle issues that need to be addressed, she added. VistaPrint Ltd., an online retailer based in Lexington, Massachusetts, which provides graphic design services and custom-printed products, has boosted its customer conver- sion rate with Web analytics technology that drills down into the most minute details about the 22,000 transactions it processes daily at 18 Web sites. Like many companies that have invested heavily in on- line sales, VistaPrint found itself drowning, more than a year ago, in Web log data tracked from its online operations. Analyzing online customer behavior and how a new feature might affect that behavior is important, but the retrieval and analysis of those data were taking hours or even days using an old custom-built application, says Dan Malone, senior manager of business intelligence at VistaPrint. “It wasn’t sustainable, and it wasn’t scalable,” Malone says. “We realized that improving conversion rates by even a few percentage points can have a big impact on the bottom line.” So VistaPrint set out to find a Web analytics package that could test new user interfaces to see whether they could
R andall Parman, database architect at restaurant chain Applebee’s International and head of Teradata’s user group, opened Teradata’s annual user conference in Las Vegas with a warning to those who aren’t making the best use of their data. “Data are like gold,” Parman noted. “If you don’t use the gold, you will have someone else who will come along and take the opportunity,” speaking to a room packed with almost 3,900 attendees. Parman drew an analogy to the story about Isaac Newton’s discovery of gravity after he was hit on the head with an apple. “What if Newton had just eaten the apple?” he asked. “What if we failed to use the technology available, or failed to use these insights to take action?” Applebee’s, which has 1,900 casual dining restaurants worldwide and grossed $1.34 billion in revenue last year, has a four-node, 4-terabyte data warehouse system. Although the company has a staff of only three database administrators working with the system, “we have leveraged our information to gain insight into the business,” he said. “Some of those insights were unexpected, coming out of the blue while we were looking in a completely different direction.” For example, Applebee’s had been using the data ware- house to analyze the “back-of-house performance” of restau- rants, including how long it took employees to prepare food in the kitchens. “Someone had the unanticipated insight to use back-of-house performance to gauge front-of-house performance,” he said. “From looking at the time the order was placed to when it was paid for by credit card and sub- tracting preparation meal time, we could figure out how long servers were spending time with customers.” Parman added that the information is being used to help the com- pany improve customer experiences. Applebee’s has also advanced beyond basic business deci- sions based on data—such as replenishing food supplies ac- cording to how much finished product was sold daily—to developing more sophisticated analyses. His department, for example, came up with a “menu optimization quadrant” that looks at how well items are selling so that the company can make better decisions about not only what to order, but about what products to promote. Meanwhile, technology vendors see untapped poten- tial for businesses to spend money on software and hard- ware that lets them use data to make more sophisticated business decisions. “Companies who operate with the greatest speed and intelligence will win,” says Teradata CEO Michael Koehler. Like many companies, Travelocity.com has lots of un- structured data contained in e-mails from customers, call center representative notes, and other sources that contain critical nuggets of information about how customers feel about the travel site. To offset the inability of business intel- ligence tools to search for unstructured data, Travelocity has launched a new project to help it mine almost 600,000
Applebee’s, Travelocity, and Others: Data Mining for Business Decisions
REAL WORLD
CASE 4 Chapter 5 / Data Resource Management ● 215
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increase conversion rates (the percentage of online visitors who become customers), find out why visitors left the site, and determine the exact point where users were dropping off. The search first identified two vendor camps. One group offered tools that analyzed all available data, without any up- front aggregation. The other offered tools that aggregated everything upfront but required users to foresee all the que- ries they wanted to run, Malone says. “If you have a question that falls outside the set of questions you aggregated the data for, you have to reprocess the entire data set.” The company finally turned to a third option, selecting the Visual Site application from Visual Sciences Inc. Visual Site uses a sampling method, which means VistaPrint can still query the detailed data. but “it is also fast because you’re getting responses as soon as you ask a question. It queries through 1% of the data you have, and based on that . . . it gives you an answer back. It assumes the rest of the 99% [of the data] looks like that. Because the data has been rand- omized, that is a valid assumption,” notes Malone. VistaPrint, which has been using the tool for just over a year, runs it alongside the 30–40 new features it tests every three weeks. For example, the company was testing a four- page path for a user to upload data to be printed on a busi-
ness card. The test showed that the new upload path had the same conversion rate as the control version. “We were a lit- tle disappointed because we put in a lot of time to improve this flow,” he adds. When the company added Visual Site to the operation, it found that although the test version was better than the control in three out of four pages, the last page had a big drop-off rate. “We were able to tell the usability team where the problem was,” Malone says. VistaPrint also re- duced the drop-offs from its sign-in page after the Visual Site tool showed that returning customers were using the new customer-registration process and getting an error no- tice. The company fixed the problem, and “the sign-in rate improved significantly and led to higher conversions,” he says. While Malone concedes that it is hard to measure an exact return on the investment, the company estimates that the tool paid for itself several months after installation.
Source: Adapted from Heather Havenstein, “Use Web Analytics to Turn Online Visitors into Paying Customers,” Computerworld , September 17, 2007; Mary Hayes Weier, “Applebee’s Exec Preaches Data Mining for Business Decisions,” InformationWeek , October 8, 2007; and Heather Havenstein, “ Travelocity.com Dives into Text Analytics to Boost Customer Service,” Computerworld , November 14, 2007.
1. What are the business benefits of taking the time and effort required to create and operate data warehouses such as those described in the case? Do you see any disadvantages? Is there any reason that all companies shouldn’t use data warehousing technology?
2. Applebee’s noted some of the unexpected insights ob- tained from analyzing data about “back-of-house” per- formance. Using your knowledge of how a restaurant works, what other interesting questions would you sug- gest to the company? Provide several specific examples.
3. Data mining and warehousing technologies use data about past events to inform better decision making in the future. Do you believe this stifles innovative think- ing, causing companies to become too constrained by the data they are already collecting to think about unex- plored opportunities? Compare and contrast both view- points in your answer.
1. Go online to the Web site of Attensity ( www.attensity. com ) and research which other products are offered by the company that complement those discussed in the case. What other examples can you find of companies that have benefited from using these technologies? Prepare a report to summarize your findings.
2. In the opening of the case, Randall Parman of Applebee’s International compared data to gold. Although it is easy to figure out the value of gold at any time, valuing data has always been subject to controversy. Search the Inter- net for alternative methodologies to putting a price tag on the data assets of a company. Contrast different approaches and share your findings with the class.
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Chapter Highlights Section I The Networked Enterprise Networking the Enterprise The Concept of a Network Real World Case: DLA Piper, MetLife, PepsiCo, and Others: Telepresence Is Finally Coming of Age Trends in Telecommunications The Business Value of Telecommunications Networks The Internet Revolution The Role of Intranets The Role of Extranets Section II Telecommunications Network Alternatives Telecommunications Alternatives A Telecommunications Network Model Real World Case: Brain Saving Technologies, Inc. and the T-Health Institute: Medicine through Videoconferencing Types of Telecommunications Networks Digital and Analog Signals Telecommunications Media Wired Technologies Wireless Technologies Telecommunications Processors Telecommunications Software Network Topologies Network Architectures and Protocols Bandwidth Alternatives Switching Alternatives Network Interoperability Real World Case: Metric & Multistandard Components Corp.: The Business Value of a Secure Self-Managed Network for a Small-to-Medium Business Real World Case: Starbucks and Others: The Future of Public Wi-Fi
Learning Objectives 1. Understand the concept of a network. 2. Apply Metcalfe’s law in understanding the value
of a network. 3. Identify several major developments and trends
in the industries, technologies, and business applications of telecommunications and Internet technologies.
4. Provide examples of the business value of Internet, intranet, and extranet applications.
5. Identify the basic components, functions, and types of telecommunications networks used in business.
6. Explain the functions of major components of telecommunications network hardware, software, media, and services.
7. Explain the concept of client/server networking. 8. Understand the two forms of peer-to-peer
networking. 9. Explain the difference between digital and analog
signals. 10. Identify the various transmission media and
topologies used in telecommunications networks. 11. Understand the fundamentals of wireless network
technologies. 12. Explain the concepts behind TCP/IP. 13. Understand the seven layers of the OSI network
model.
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CHAPTER 6
TELECOMMUNICATIONS AND NETWORKS
M o d u l e I I
Business Applications
Development Processes
Management Challenges
Foundation Concepts
Information Technologies
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SECTION I The Networked Enterpr ise
When computers are networked, two industries—computing and communications— converge, and the result is vastly more than the sum of the parts. Suddenly, computing applications become available for business-to-business coordination and commerce, and for small as well as large organizations. The global Internet creates a public place without geo- graphic boundaries—cyberspace—where ordinary citizens can interact, publish their ideas, and engage in the purchase of goods and services. In short, the impact of both computing and communications on our society and organizational structures is greatly magnified.
Telecommunications and network technologies are inter-networking and revolution- izing business and society. Businesses have become networked enterprises. The Inter- net, the Web, and intranets and extranets are networking business processes and employees together and connecting them to their customers, suppliers, and other business stakeholders. Companies and workgroups can thus collaborate more crea- tively, manage their business operations and resources more effectively, and compete successfully in today’s fast-changing global economy. This chapter presents the tele- communications and network foundations for these developments. Read the Real World Case 1 on the future of virtual business meeting. We can learn a lot about the possibilities offered by new telecommunication developments from this case. See Figure 6.1 .
Because of our focus on information systems and technologies, it is easy for us to think of networks in terms of connected computers. To understand the value of connecting computers fully, however, it is important to understand the concept of a network in its broader sense. By definition, the term network means an interconnected or interrelated chain, group, or system. Using this definition, we can begin to identify all kinds of networks: a chain of hotels, the road system, the names in a person’s address book or PDA, the railroad system, the members of a church, club, or organization. The examples of net- works in our world are virtually endless, and computer networks, though both valua- ble and powerful, are just one example of the concept. The concept of networks can be expressed as a mathematical formula that calculates the number of possible connections or interactions in a one-way communication envi- ronment: N ( N � 1), or N 2 � N . In the formula, N refers to the number of nodes (points of connection) on the network. If only a few nodes exist on a network, the number of possible connections is quite small. Using the formula, we see that three nodes result in only 6 possible connections. A network of 10 nodes results in a somewhat larger number—90 connections. It’s when a large number of nodes are connected that the pos- sible number of connections grows to significant proportions. A network with 100 nodes has 9,900 possible connections, and a network with 1,000 nodes has 999,000 possible connections. This type of mathematical growth is called exponential. This term just means that the growth in number of connections is many times greater than the number of nodes. Adding only one more node to a network makes the number of connections grow many times greater. Think of the effect of adding a new entry and exit ramp on a highway system that connects 30,000 cities and towns. How many more connections does that one new ramp create? Maybe more relevant is the effect of adding one addi- tional person as a friend to your Facebook, MySpace, or Plaxo account. If you have 100 unique friends who each have 100 unique friends and the new friend has 100 unique friends—well, you get the picture. That’s what the next section is all about.
Robert Metcalfe founded 3Com Corp. and designed the Ethernet protocol for com- puter networks. He used his understanding of the concept of networks to express the exponential growth in terms of potential business value. Metcalfe’s law states that the
The Networked Enterprise
The Concept of a Network
Metcalfe’s Law
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Jaycox says he has observed attorneys working together via telepresence conferences, and he was struck to see two workgroups formed at either end of the telepresence table, just as they might be if they were all working around the same physical table. “You had the sense all these people were in the same strategy room,” he says. With the economy in a downturn, it’s no surprise that companies have been slashing travel budgets. But at MetLife, officials say the focus is also on employees’ quality of life, keeping them home as much as possible. As a result, the in- surance giant has recently made a big push into telepresence technology. MetLife is using Cisco Telepresence in three dedicated conference rooms in Chicago, New York, and New Jersey, and soon plans to expand to other offices nationally and in- ternationally. “Instead of having to take people away from their families, you walk down to the room and turn on the lights and have your three-hour meeting and it’s extremely effective,” says Anthony Nugent, executive vice president of employee benefits sales. He regularly uses telepresence to communicate with his direct reports in Chicago and Somerset, New Jersey, and the clarity is so good that he says with a laugh, “Everyone jokes around that they can reach a Coke across the table” from one location to another. MetLife has seen a direct cost savings as well as better employee time efficiency and a way to help the company meet its “green initiative” goal of reducing its carbon emis- sions by 20 percent this year, says Nugent. The company finished its initial telepresence rollout a year ago and hasn’t yet determined an exact savings, but Nugent estimates the use of the systems will provide double-digit ROI in travel savings alone. At MetLife, the three Cisco telepresence systems cost just under $1 million to install, according to Paul Galvin, vice president of enterprise services in the information technology group. Nugent says he uses both videoconfer- encing and telepresence, depending on his needs. Videocon- ferencing is a better choice for one-on-one situations, such as “if someone is going to do a quick presentation to me,” he says, but telepresence is ideal for meetings where partici- pants are located in multiple offices. Telepresence gives him face-to-face contact with a broader group, “So it allows me to get to know people bet- ter,” Nugent says. He runs an organization with people based all around the country and used to require that his di- rect reports come to New York for quarterly reviews. Now they can stay in their offices and he can discuss business with a wider range of employees. “Using telepresence allows me to see and virtually inter- act with more people on my team instead of just my direct reports,” says Nugent. “When we use telepresence for meet- ings, people who wouldn’t normally be asked to travel to New York have the opportunity to make presentations and
S prawling international law firm DLA Piper has up-graded from videoconferencing to telepresence, which will save the firm nearly $1 million per year in reduced travel costs and lost productivity. The conferencing gear that simulates across-the-table meetings has “a provable and achievable return on investment over five years, and may actually pay for itself before then,” says Don Jaycox, CIO of DLA Piper U.S. This involves an “immersive video experience,” or tech- nology that provides high-end, high-definition visual and audio communications in a completely integrated environ- ment. The goal is to make anyone involved in these meet- ings feel as if they’re actually in the room with the other meeting participants, regardless of where everyone is physi- cally based. “Rescheduling half the firm’s in-person board meetings as telepresence conferences and relying on at least two at- torneys per week to use telepresence rather than travel ac- counts for significant savings when lost productivity for travel time is factored in,” says Jaycox. “If I look at my total telepresence project cost, which includes equipment, room construction, implementation services, maintenance contract, financing costs, etc., then amortize that over the expected five-year life of the system, it works out to be just a hair under $500,000 per year for our six U.S. sites,” he says. “Our early experience suggests that a more accurate number of avoided trips is closer to four or five per week, so the $970,000 projection almost certainly underestimates our actual savings,” he notes. The sites were selected so they put 80 percent of the at- torneys within a one-hour drive of a telepresence room.
DLA Piper, MetLife, PepsiCo, and Others: Telepresence Is Finally Coming of Age
REAL WORLD
CASE 1
Source: Courtesy of Hewlett-Packard Company.
Telepresence technology provides a high-definition alternative to business travel.
F IGURE 6.1
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get valuable exposure to executive management. It really fa- cilitates face-to-face interaction with a broader cross-section of employees on an economically efficient basis.” MetLife is considering putting a telepresence system at a business processing plant in India to avoid having employees fly over to see it. The company is also looking at ways to utilize telepresence with salespeople across the country. The idea is to have as many people using the system as possible, Nugent says. “Flying out of Boston for a meeting when I was 20 sounded great, but the sales pitch I always give is we’re re- specting the time of the employee,” he says. “So if we can give a person the effectiveness of being there and then be home with his family, it’s two wins.” PepsiCo is deploying Cisco Telepresence systems in its major offices worldwide. PepsiCo CIO Robert Dixon says that using telepresence “will reinvent the way we work” while cutting down on travel, which, in turn, improves pro- ductivity and reduces the company’s environmental foot- print. “In this day and age, it’s simply a smarter way of going about our business,” he adds. PepsiCo sells products from 18 different product lines in 200 countries and employs nearly 200,000 workers. The law firm of Lathrop & Gage, LLP, is using both high-definition videoconferencing and telepresence. Em- ployees conduct more than 300 meetings every month at the firm’s Kansas City, Missouri, headquarters. “It’s a more meaningful way to conduct meetings than over the phone,” says CEO Joel Voran, who uses the system about three times a week. Although he still tries to make it to all of the
firm’s offices twice a year, Voran says use of the Polycom systems has significantly reduced the need for lawyers to fly to Kansas City. “The clarity has been impressive,” Voran says. “At one of our very first meetings at one of our offices I could see the brand of the beverage someone was drinking and that made the partner sit up and take notice.” “This is a billable-hour profession,” notes Ben Weinberger, CIO at Lathrop & Gage, who adds that one attorney alone can save more than $1,500 in travel expenses and productiv- ity loss by not having to fly somewhere to attend a meeting. Because many lawyers travel monthly, the Polycom system could represent a savings of more than $30,000 in annual travel expenses and productivity loss for a single attorney, he estimates. Weinberger differentiates between high-end videocon- ferencing and telepresence by the size of the screens. The rooms that have 50-plus-inch screens and run high-quality, high-definition cameras are utilizing telepresence, he says. Making it possible for far-flung attorneys to work closely together via telepresence helps emphasize that the firm has offices around the world and should have an international focus—a benefit of the system that can’t be quantified in dol- lars and cents. “When you work in one location, you tend to draw inward. We want people to think globally,” says Jaycox.
Source: Adapted from Esther Shein, “Telepresence Catching on, but Hold onto Your Wallet,” Computerworld , January 22, 2010; Matt Hamblen, “PepsiCo to Deploy Telepresence from Cisco and BT Globally,” Computer- world , February 2, 2010; and Tim Greene, “Telepresence Cuts Near $1M in Travel Costs for Law Firm,” Network World , October 7, 2009.
1. Implementing telepresence seems to have other, less tangible, advantages beyond travel cost savings. What are some of those? How do you quantify them to make the case for investing in the technology? Provide at least two fully developed examples.
2. DLA Piper, MetLife, and the other companies featured in the case are very optimistic about the technology. However, other than its cost, what are some potential disadvantages of implementing telepresence in organizations?
3. Do you think meetings conducted through telepresence technology will be similar to face-to-face ones as the technology becomes more pervasive? How would the rules of etiquette change for telepresence meetings? Which type of meeting would you like best?
1. Telepresence is described in the case as a green tech- nology because it replaces air travel with a more envi- ronmentally friendly alternative. Recently, many organizations are looking to IT to help them cut their carbon footprint. What other technologies can be helpful in this regard?
2. Go online and research different ways in which the “green IT” movement is catching on. Prepare a report to share your findings.
3. The organizations featured in the case are not too keen on the future of business travel. Despite the high qual- ity of current and future telepresence systems, do you believe these companies are missing something by not having people meet face to face? Why or why not? Break into small groups with your classmates to discuss this issue.
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FIGURE 6.2 Major trends in business telecommunications.
Application trends
Technology trends
Industry trends Toward more competitive vendors, carriers, alliances, and network services, accelerated by deregulation and the growth of the Internet and the World Wide Web.
Toward the pervasive use of the Internet, enterprise intranets, and interorganizational extranets to support electronic business and commerce, enterprise collaboration, and strategic advantage in local and global markets.
Toward extensive use of Internet, digital fiber-optic, and wireless technologies to create high-speed local and global internetworks for voice, data, images, audio, and videocommunications.
usefulness, or utility, of a network equals the square of the number of users. In other words, every time you add a new user to a network, the value of the network, in terms of potential connections amongst its members, doubles! Metcalfe’s law becomes easy to understand if you think of a common piece of tech- nology we all use every day: the telephone. The telephone is of very limited use if only you and your best friend have one. If a whole town is on the system, it becomes much more useful. If the whole world is wired, the utility of the system is phenomenal. Add the number of wireless telephone connections, and you have a massive potential for value. To reach this value, however, many people had to have access to a telephone— and they had to have used it. In other words, telephone use had to reach a critical mass of users. So it is with any technology. Until a critical mass of users is reached, a change in technology affects only the technology. Once critical mass is attained, however, social, political, and economic systems change. The same is true of digital network technologies. Consider the Internet. It reached critical mass in 1993, when there were roughly 2.5 million host computers on the network; by November 1997, the vast network contained an esti- mated 25 million host computers. According to Internet World Stats, the number of users on the Internet in September 2009 topped 1.7 billion! More important, that represents only slightly more than 25 percent of the estimated world population. With computing costs continuing to drop rapidly (remember Moore’s law from Chapter 3) and the Internet growing exponentially (Metcalfe’s law), we can expect to see more and more value—conceivably for less cost—virtually every time we log on. The Inter- net is kind of a big deal, and it’s getting bigger even as we write.
Telecommunications is the exchange of information in any form (voice, data, text, im- ages, audio, video) over networks. The Internet is the most widely visible form of tel- ecommunications in your daily lives. Early telecommunications networks did not use computers to route traffic and, as such, were much slower than today’s computer- based networks. Major trends occurring in the field of telecommunications have a significant impact on management decisions in this area. You should thus be aware of major trends in telecommunications industries, technologies, and applications that significantly increase the decision alternatives confronting business managers and pro- fessionals. See Figure 6.2 .
The competitive arena for telecommunications service has changed dramatically in recent years. The telecommunications industry has changed from government-regulated
Trends in Telecom- munications
Industry Trends
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mono polies to a deregulated market with fiercely competitive suppliers of telecommuni- cations services. Numerous companies now offer businesses and consumers a choice of everything from local and global telephone services to communications satellite channels, mobile radio, cable television, cellular phone services, and Internet access. See Figure 6.3 . The explosive growth of the Internet and the World Wide Web has spawned a host of new telecommunications products, services, and providers. Driving and re- sponding to this growth, business firms have dramatically increased their use of the Internet and the Web for electronic commerce and collaboration. Thus, the service and vendor options available to meet a company’s telecommunications needs have in- creased significantly, as have a business manager’s decision-making alternatives.
Open systems with unrestricted connectivity, using Internet networking technologies as their technology platform, are today’s primary telecommunications technology drivers. Web browser suites, HTML Web page editors, Internet and intranet servers and network management software, TCP/IP Internet networking products, and net- work security firewalls are just a few examples. These technologies are being applied in Internet, intranet, and extranet applications, especially those for electronic com- merce and collaboration. This trend has reinforced previous industry and technical moves toward building client/server networks based on an open-systems architecture. Open systems are information systems that use common standards for hardware, software, applications, and networking. Open systems, like the Internet and corporate intranets and extranets, create a computing environment that is open to easy access by end users and their networked computer systems. Open systems provide greater con- nectivity, that is, the ability of networked computers and other devices to access and communicate with one another easily and share information. Any open-systems archi- tecture also provides a high degree of network interoperability. That is, open systems enable the many different activities of end users to be accomplished using the different varieties of computer systems, software packages, and databases provided by a variety of interconnected networks. Frequently, software known as middleware may be used to help diverse systems work together. Middleware is a general term for any programming that serves to glue together or mediate between two separate, and usually already existing, programs. A common application of middleware is to allow programs written for access to a particular database (e.g., DB2) to access other databases (e.g., Oracle) without the need for custom coding. Middleware is commonly known as the plumbing of an information system be- cause it routes data and information transparently between different back-end data
Technology Trends
Entertainment
Information Transactions
Communications
Full Service Spectrum
Broadcast TV High-definition TV Enhanced pay-per-view Video-on-demand Interactive TV Interactive video games Video catalog shopping Distance learning Multimedia services Image networking Transaction services Internet access Telecommuting Videoconferencing Video telephony Wireless access Cellular/PCS systems? POTS—Plain old telephone service
Categories F IGURE 6.3 The spectrum of telecommunications-based services available today.
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sources and end-user applications. It’s not very interesting to look at—it usually doesn’t have much, if any, visible “front end” of its own—but it is an essential component of any IT infrastructure because it allows disparate systems to be joined together in a common framework. Telecommunications is also being revolutionized by the rapid change from analog to digital network technologies. Telecommunications systems have always depended on voice-oriented analog transmission systems designed to transmit the variable elec- trical frequencies generated by the sound waves of the human voice. However, local and global telecommunications networks are rapidly converting to digital transmis- sion technologies that transmit information in the form of discrete pulses, as comput- ers do. This conversion provides (1) significantly higher transmission speeds, (2) the movement of larger amounts of information, (3) greater economy, and (4) much lower error rates than with analog systems. In addition, digital technologies allow telecom- munications networks to carry multiple types of communications (data, voice, video) on the same circuits. Another major trend in telecommunications technology is a change from reliance on copper wire–based media and land-based microwave relay systems to fiber-optic lines and cellular, communications satellite, and other wireless technologies . Fiber-optic transmission, which uses pulses of laser-generated light, offers significant advantages in terms of reduced size and installation effort, vastly greater communication capacity, much faster transmission speeds, and freedom from electrical interference. Satellite transmission offers significant advantages for organizations that need to transmit mas- sive quantities of data, audio, and video over global networks, especially to isolated areas. Cellular, mobile radio, and other wireless systems are connecting cellular phones, PDAs, and other wireless appliances to the Internet and corporate networks.
The changes in telecommunications industries and technologies just mentioned are causing a significant change in the business use of telecommunications. The trend toward more vendors, services, Internet technologies, and open systems, and the rapid growth of the Internet, the World Wide Web, and corporate intranets and extranets, dramatically increases the number of feasible telecommunications applications. Thus, telecommunications networks are now playing vital and pervasive roles in Web-enabled e-business processes, e-commerce, enterprise collaboration, and other business appli- cations that support the operations, management, and strategic objectives of both large and small business enterprises.
We cannot leave our overview of trends in telecommunications without reiterating that the Internet sits firmly in the center of the action. Despite its importance and seemingly unexplored boundaries, we are already embarking on the next generation of the “network of networks.” Internet2 is a high-performance network that uses an entirely different infrastructure than the public Internet we know today. Already, more than 300 universities and scientific founding institutions and 60,000 member institutions throughout the United States and the rest of the world are part of the Internet2 net- work. One big misconception about Internet2 is that it’s a sequel to the original Internet and will replace it someday. It never will, because it was never intended to replace the Internet. Rather, its purpose is to build a road map that can be followed during the next stage of innovation for the current Internet. The ideas being honed, such as new ad- dressing protocols and satellite-quality streaming video, will likely be deployed to the Internet, but it might take close to 10 years before we see them. Furthermore, the Internet2 network may never become totally open; it might remain solely in the domain of universities, research centers, and governments. To be sure, the lightning-fast technologies in use by Internet2 right now must eventually be turned over to the public Internet. For now, the Internet2 project lives for the purpose of sharing, collaborating, and trying new high-speed communication ideas— interestingly, many of the same goals that shaped the early history of today’s Internet.
Business Application Trends
Internet2
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F IGURE 6.4 Examples of the business value of business applications of telecommunications networks.
Strategic Capabilities e-Business Examples Business Value
Overcome geographic barriers: Capture information about business transactions from remote locations.
Overcome time barriers: Provide information to remote locations immediately after it is requested.
Overcome cost barriers: Reduce the cost of more traditional means of communication.
Overcome structural barriers: Support linkages for competitive advantage.
Use the Internet and extranets to transmit customer orders from traveling salespeople to a corporate data center for order processing and inventory control.
Credit authorization at the point of sale using online POS networks.
Desktop videoconferencing between a company and its business partners using the Internet, intranets, and extranets.
Business-to-business electronic commerce Web sites for transactions with suppliers and customers using the Internet and extranets.
Provide better customer service by reducing delay in filling orders and improves cash flow by speeding up the billing of customers.
Credit inquiries can be made and answered in seconds.
Reduce expensive business trips; allow customers, suppliers, and employees to collaborate, thus improving the quality of decisions reached.
Fast, convenient services lock in customers and suppliers.
Most of the institutions and commercial partners on the Internet2 network are connected via Abilene, a network backbone that will soon support throughput of 10 gigabits per second (Gbps). Several international networks are also plugged into Abilene’s infrastructure, and as the project grows, more and more networks will be able to connect to the current framework. The one common denominator among all of the Internet2 partners is their active participation in the development and testing of new applications and Internet protocols with an emphasis on research and collabora- tion, focusing on things such as videoconferencing, multicasting, remote applications, and new protocols that take advantage of the many opportunities megabandwidth pro- vides. In short, Internet2 is all about high-speed telecommunications and infinite bandwidth. To give you an idea of exactly how fast this network of the future is, an interna- tional team of researchers has already used it to set a new landspeed record. At the end of 2002, the team sent 6.7 gigabytes of data across 6,821 miles of fiber-optic network in less than one minute. That’s roughly two full-length DVD-quality movies traveling a quarter of the way around the earth in less than one minute at an average speed of 923 million bits per second! It’s also approximately 410,000 miles per hour. The same team is already hard at work, attempting to break its own record. As we are exploring new ways to gain business advantage through the Internet, a significant effort is being made to make the Internet bigger and faster. In 2009, Inter- net2 celebrated its 13th anniversary and has significantly expanded in breadth, speed, and storage capacity since its inception in 1996. We’ll look at Internet2 again later in this chapter when we discuss Internet-addressing protocols.
What business value is created when a company capitalizes on the trends in telecom- munications we have just identified? Use of the Internet, intranets, extranets, and other telecommunications networks can dramatically cut costs, shorten business lead times and response times, support e-commerce, improve the collaboration of work- groups, develop online operational processes, share resources, lock in customers and suppliers, and develop new products and services. These benefits make applications of telecommunications more strategic and vital for businesses that must increasingly find new ways to compete in both domestic and global markets. Figure 6.4 illustrates how telecommunications-based business applications can help a company overcome geographic, time, cost, and structural barriers to business
The Business Value of Telecom- munications Networks
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success. Note the examples of the business value of these four strategic capabilities of telecommunications networks. This figure emphasizes how several e-business applications can help a firm capture and provide information quickly to end users at remote geographic locations at reduced costs, as well as support its strategic organi- zational objectives. For example, traveling salespeople and those at regional sales offices can use the Internet, extranets, and other networks to transmit customer orders from their lap- tops or desktop PCs, thus breaking geographic barriers. Point-of-sale terminals and an online sales transaction processing network can break time barriers by supporting immediate credit authorization and sales processing. Teleconferencing can be used to cut costs by reducing the need for expensive business trips, allowing customers, sup- pliers, and employees to participate in meetings and collaborate on joint projects without traveling. Finally, business-to-business e-commerce Web sites are used by businesses to establish strategic relationships with their customers and suppliers by making business transactions fast, convenient, and tailored to the needs of the busi- ness partners involved.
The explosive growth of the Internet is a revolutionary phenomenon in computing and telecommunications. The Internet has become the largest and most important network of networks today and has evolved into a global information superhighway. We can think of the Internet as a network made up of millions of smaller private networks, each with the ability to operate independent of, or in harmony with, all the other mil- lions of networks connected to the Internet. When this network of networks began to grow in December 1991, it had about 10 servers. In January 2004, the Internet was estimated to have more than 46 million connected servers with a sustained growth rate in excess of 1 million servers per month. In January 2007, the Internet was estimated to have more than 1 billion users with Web sites in 34 languages from English to Icelandic. Now that is some growth! The Internet is constantly expanding as more and more businesses and other or- ganizations and their users, computers, and networks join its global Web. Thousands of business, educational, and research networks now connect millions of computer systems and users in more than 200 countries. Internet users projected for 2010 are expected to top the 2 billion user mark, which still only represents approximately one- third of the worldwide population. Apply these numbers to Metcalfe’s law, and you can see that the number of possible connections is extraordinary. The Net doesn’t have a central computer system or telecommunications center. There are, however, 13 servers called root servers that are used to handle the bulk of the routing of traffic from one computer to another. Each message sent has a unique ad- dress code, so any Internet server in the network can forward it to its destination. Also, the Internet does not have a headquarters or governing body. International advisory and standards groups of individual and corporate members, such as the Internet Soci- ety ( www.isoc.org ) and the World Wide Web Consortium ( www.w3.org ), promote use of the Internet and the development of new communications standards. These com- mon standards are the key to the free flow of messages among the widely different computers and networks of the many organizations and Internet service providers (ISPs) in the system.
One of the unique aspects of the Internet is that nobody really owns it. Anyone who can access the Internet can use it and the services it offers. Because the Internet cannot be accessed directly by individuals, we need to use the services of a company that spe- cializes in providing easy access. An ISP, or Internet service provider , is a company that provides access to the Internet to individuals and organizations. For a monthly fee, the service provider gives you a software package, user name, password, and access
The Internet Revolution
Internet Service Providers
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phone number or access protocol. With this information (and some specialized hard- ware), you can then log onto the Internet, browse the World Wide Web, and send and receive e-mail. In addition to serving individuals, ISPs serve large companies, providing a direct connection from the company’s networks to the Internet. These ISPs themselves are connected to one another through network access points. Through these connections, one ISP can easily connect to another ISP to obtain information about the address of a Web site or user node.
The most popular Internet applications are e-mail, instant messaging, browsing the sites on the World Wide Web, and participating in newsgroups and chat rooms. Inter- net e-mail messages usually arrive in seconds or a few minutes anywhere in the world and can take the form of data, text, fax, and video files. Internet browser soft- ware like Netscape Navigator and Internet Explorer enables millions of users to surf the World Wide Web by clicking their way to the multimedia information re- sources stored on the hyperlinked pages of businesses, government, and other Web sites. Web sites offer information and entertainment and are the launch sites for e-commerce transactions between businesses and their suppliers and customers. As we will discuss in Chapter 9, e-commerce Web sites offer all manner of products and services via online retailers, wholesalers, service providers, and online auctions. See Figure 6.5 . The Internet provides electronic discussion forums and bulletin board systems formed and managed by thousands of special-interest newsgroups. You can partici- pate in discussions or post messages on a myriad of topics for other users with the same interests. Other popular applications include downloading software and infor- mation files and accessing databases provided by a variety of business, government, and other organizations. You can conduct online searches for information on Web sites in a variety of ways by using search sites and search engines such as Yahoo!, Google, and Fast Search. Logging on to other computers on the Internet and hold- ing real-time conversations with other Internet users in chat rooms are also popular uses of the Internet.
Internet Applications
F IGURE 6.5 Popular uses of the Internet.
• Surf. Point-and-click your way to thousands of hyperlinked Web sites and resources for multimedia information, entertainment, or electronic commerce.
• e-Mail. Use e-mail and instant messaging to exchange electronic messages with col- leagues, friends, and other Internet users.
• Discuss. Participate in discussion forums of special-interest newsgroups, or hold real- time text conversations in Web site chat rooms.
• Publish. Post your opinion, subject matter, or creative work to a Web site or Weblog for others to read.
• Buy and Sell. Buy and sell practically anything via e-commerce retailers, wholesalers, service providers, and online auctions.
• Download. Transfer data files, software, reports, articles, pictures, music, videos, and other types of files to your computer system.
• Compute. Log onto and use thousands of Internet computer systems around the world.
• Connect. Find out what friends, acquaintances, and business associates are up to. • Other Uses. Make long-distance phone calls, hold desktop videoconferences, listen to
radio programs, watch television, play video games, explore virtual worlds, etc.
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As Figure 6.6 illustrates, business use of the Internet has expanded from an electronic information exchange to a broad platform for strategic business applications. Notice how applications such as collaboration among business partners, providing customer and vendor support, and e-commerce have become major business uses of the Inter- net. Companies are also using Internet technologies for marketing, sales, and cus- tomer relationship management applications, as well as for cross-functional business applications, and applications in engineering, manufacturing, human resources, and accounting. Let’s look at a real-world example.
Business Use of the Internet
If you’re in the business of making a few million pairs of blue jeans a year, not much is more important than getting “blue” exactly right. It’s why a jeans designer at VF Corp. will express mail swatches dipped in dye back and forth with factories around the world as many times as necessary to make sure designers and manufacturers agree on just the right shade. And it’s part of the reason it takes as long as nine months to design a new pair of jeans and get them on the shelves. VF, the world’s largest apparel maker with brands such as Lee Jeans, Vanity Fair lingerie, and North Face outdoor gear, expects that getting new styles to shoppers faster will make it more competitive. To do that, it’s creating an IT platform of col- laborative design tools that can draw on a database of information such as material characteristics, costs, colors, and templates of past designs. The company has de- ployed the tools across its five U.S. divisions and built real-time ties to its manufac- turers around the world, because 90 percent of its manufacturing is outside the United States. The ability to share the information via the Internet makes it feasible for the company to collaborate in real time with offshore factories and other supply- chain partners in fairly remote regions. VF believes finding a more efficient way to agree on blue, and other technology- enabled improvements in how it designs new products and manages logistics could save it $100 million a year and cut months off the time to get a new design to market. “If you look at the cycle times from design to retail shelf, about two- thirds is spent in product development,” says Boyd Rogers, VF’s vice president of supply chain and technology. “The new system has the potential to remove months from the production cycle, depending on how many iterations are made to get the correct color.” Two key elements are the color-technology software from GretagMacbeth LLC to speed electronic collaborating on color choices and the custom-built Strategic Interaction Development Environment, or Stride, which contains graphic tools to manage garment details, a raw-materials database to house garment specifications, and more. Using the integrated systems, a design team will be able to input product ideas and attach a sketch or set of design specifications. If a similar design exists, the de- signer can save time by copying the information from another product line and reus- ing the template. The color-technology system will tie into the Stride system. And the two will let information be shared more easily—for example, in real time with VF’s sourcing office in Hong Kong, which contracts with third-party manufacturers throughout Asia to sew the clothes that VF designs. In the future, VF will let raw- material suppliers and manufacturers connect to the Stride system for real-time in- teraction on issues related to materials and specifications. “We think $100 million annually over the next five years is absolutely doable,” Rogers says. “It’s becoming increasingly important to collaborate tightly with our divisions and partners around the world to cut cycle times.”
Source: Adapted from Laurie Sullivan, “Designed to Cut Time,” InformationWeek , February 28, 2005.
VF Corporation: Designing Clothes While Sharing Information
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The Internet provides a synthesis of computing and communication capabilities that adds value to every part of the business cycle.
What business value do companies derive from their business applications on the Internet? Figure 6.7 summarizes how many companies perceive the business value of the Internet for e-commerce. Substantial cost savings can arise because applications that use the Internet and Internet-based technologies (like intranets and extranets) are typically less expensive to develop, operate, and maintain than traditional systems. For example, an airline saves money every time customers use its Web site instead of its customer support telephone system. It is estimated that for certain types of transactions, the transaction cost savings are significant for online versus more traditional channels. For example, booking a reserva- tion over the Internet costs about 90 percent less for the airline than booking the same reservation over the telephone. The banking industry has also found significant cost sav- ings via the Internet. A typical online banking transaction (payments, balance inquiry, check payment) is estimated to cost anywhere from 50 percent to 95 percent less than its bricks-and-mortar counterpart. Generally speaking, anytime you convert a business process from a manual one to a software-based version, the transaction costs associated with that process can be expected to go down by the order of several magnitudes. Other primary sources of business value include attracting new customers with in- novative marketing and products, as well as retaining present customers with improved customer service and support. Of course, generating revenue through e-commerce applications is a major source of business value, which we will discuss in Chapter 9. To
The Business Value of the Internet
Business Partners
Business partners can use the Internet for e-mail, file
transfer, discussion forums, and extranet access to
intranet resources.
Inventory Management
Systems
THE INTERNET
Customers
Customers can shop at e-commerce Web sites
for products and services with interactive
service and support.
Headquarters
Internet Web sites enable interactive marketing and electronic commerce and
collaboration with customers, prospects, and
business partners.
Remote Offices
Intranet links with remote employee sites connect
virtual teams for interactive communications,
collaboration, and computing.
Suppliers
Extranets for electronic commerce enable suppliers to
assess inventory, replenish stock, and send documents
over secure Internet links.
F IGURE 6.6 Examples of how a company can use the Internet for business.
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summarize, most companies are building e-business and e-commerce Web sites to achieve six major business values:
• Generate new revenue from online sales. • Reduce transaction costs through online sales and customer support. • Attract new customers via Web marketing and advertising and online sales. • Increase the loyalty of existing customers via improved Web customer service and
support. • Develop new Web-based markets and distribution channels for existing products. • Develop new information-based products accessible on the Web.
Many companies have sophisticated and widespread intranets, offering detailed data retrieval, collaboration tools, personalized customer profiles, and links to the Internet. Investing in the intranet, they feel, is as fundamental as supplying employees with a telephone.
Before we go any further, let’s redefine the concept of an intranet, to emphasize specifically how intranets are related to the Internet and extranets. An intranet is a network inside an organization that uses Internet technologies (such as Web browsers and servers, TCP/IP network protocols, HTML hypermedia document publishing and databases, and so on) to provide an Internet-like environment within the enter- prise for information sharing, communications, collaboration, and the support of business processes. An intranet is protected by security measures such as passwords, encryption, and firewalls, and thus can be accessed by authorized users through the Internet. A company’s intranet can also be accessed through the intranets of custom- ers, suppliers, and other business partners via extranet links. Just think of an intranet as a private version of the Internet.
Organizations of all kinds are implementing a broad range of intranet uses. One way that companies organize intranet applications is to group them conceptually into a few categories of user services that reflect the basic services that intranets offer to their users. These services are provided by the intranet’s portal, browser, and server software, as well as by other system and application software and groupware that are part of a com- pany’s intranet software environment. Figure 6.8 illustrates how intranets provide an
The Role of Intranets
The Business Value of Intranets
Generate New
Revenue Sources
Reduce Costs of Doing
Business
Develop New Markets and Channels
Develop New Web-Based
Products
Attract New
Customers
Increase Customer
Loyalty and Retention
F IGURE 6.7 How companies are deriving business value from their e-business and e-commerce applications.
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enterprise information portal that supports communication and collaboration, Web publishing, business operations and management, and intranet portal management. Notice also how these applications can be integrated with existing IS resources and applications and extended to customers, suppliers, and business partners via the Inter- net and extranets.
Communications and Collaboration. Intranets can significantly improve commu- nications and collaboration within an enterprise. For example, you can use your in- tranet browser and your PC or NC workstation to send and receive e-mail, voice mail, pages, and faxes to communicate with others within your organization, as well as ex- ternally through the Internet and extranets. You can also use intranet groupware fea- tures to improve team and project collaboration with services such as discussion groups, chat rooms, and audio and videoconferencing.
Web Publishing. The advantage of developing and publishing hyperlinked multime- dia documents to hypermedia databases accessible on World Wide Web servers has moved to corporate intranets. The comparative ease, attractiveness, and lower cost of publishing and accessing multimedia business information internally via intranet Web sites have been the primary reasons for the explosive growth in the use of intranets in business. For example, information products as varied as company newsletters, techni- cal drawings, and product catalogs can be published in a variety of ways, including
Existing e-Mail, Voice- Mail Systems
Existing Databases
and Enterprise
Applications
HTML, MS Office, XML, Java, and Other Document
Types
Existing Hardware
and Networks
Intranet Portal Management
Web Publishing
Business Operations
and Management
Communication and
Collaboration
Communicate and collaborate with e-mail,
discussion forums, chat, and conferencing
Employees
Intranet
Enterprise
Information
Portal
F
I
R
E
W
A
L
L
Extranet
Internet
Everyone
Customers, Suppliers,
and Partners
Secure, universal access to view
and use corporate and external data
Author, publish, and share hypermedia
documents
Centrally administer clients, servers,
security, directory, and traffic
F IGURE 6.8 Intranets can provide an enterprise information portal for applications in communication and collaboration, business operations and management, Web publishing, and intranet portal management.
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hypermedia Web pages, e-mail, and net broadcasting, and as part of in-house business applications. Intranet software browsers, servers, and search engines can help you eas- ily navigate and locate the business information you need.
Business Operations and Management. Intranets have moved beyond merely mak- ing hypermedia information available on Web servers or pushing it to users via net broadcasting. Intranets are also being used as the platform for developing and deploy- ing critical business applications to support business operations and managerial deci- sion making across the inter-networked enterprise. For example, many companies are developing custom applications like order processing, inventory control, sales man- agement, and enterprise information portals that can be implemented on intranets, extranets, and the Internet. Many of these applications are designed to interface with and access existing company databases and legacy systems. The software for such busi- ness uses is then installed on intranet Web servers. Employees within the company or external business partners can access and run such applications using Web browsers from anywhere on the network whenever needed.
Intranet Portal Management. Organizations must employ IT and IS professionals to manage the functions of the intranet along with maintaining the various hardware and software components necessary for successful operations. For example, a network administrator must manage the access of users via passwords and other security mech- anisms to ensure that each user is able to use the intranet productively while simulta- neously protecting the integrity of the data resources. Included in this job are issues related to protection against unauthorized access, computer viruses, directory man- agement, and other highly important functions. Now let’s look at one company’s use of an intranet in more detail to get a better idea of how intranets are used in business.
Audi is a brand synonymous with sporty, progressive, and sophisticated cars that embody technological perfection. On the back of the company’s year-on-year record growth since 2004—including 30 percent growth in Australia in 2008—the company needed to position itself, and its national dealer network, to manage its future growth. Audi Australia has a network of 30 dealerships across Australia. It needed to com- municate with a range of people within its dealer network and ensure that different roles within the dealership were given access to the right information. There was a complex network of stakeholders who required access: the solution needed to cater to 500 users who were broken into 90 different user groups. Audi had an existing portal solution that has been built on an open-source solu- tion. Audi’s business had outgrown this solution which had become unreliable and required a lot of technical management. Audi only has one in-house IT staff mem- ber, and it needed a solution that could be administered and maintained by nontech- nical staff, without intervention from a third-party supplier. “The old portal wasn’t letting us provide all the information we wanted to the dealers. We just couldn’t update it frequently enough,” says Wolf-Christian Vaross, IT Specialist for Audi Australia. “Administration of the old site wasn’t easy—to make changes we had to get a programmer to do it. The software might have been free initially but we didn’t have the expertise to support it in house, and we didn’t want to keep paying someone outside the company to maintain it.” Audi chose the iD solution because it was able to deliver all the features they re- quired out of the box. Another important component of the project was that the
Intranet Dashboard Revs Up Audi Australia
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As businesses continue to use open Internet technologies [extranets] to improve communi- cation with customers and partners, they can gain many competitive advantages along the way—in product development, cost savings, marketing, distribution, and leveraging their partnerships.
As we explained previously, extranets are network links that use Internet technologies to interconnect the intranet of a business with the intranets of its customers, suppliers, or other business partners. Companies can establish direct private network links among themselves or create private, secure Internet links called virtual private networks (VPNs). (We’ll look more closely at VPNs later in this chapter.) Or a company can use the unsecured Internet as the extranet link between its intranet and consumers and others but rely on the encryption of sensitive data and its own firewall systems to pro- vide adequate security. Thus, extranets enable customers, suppliers, consultants, sub- contractors, business prospects, and others to access selected intranet Web sites and other company databases. See Figure 6.9 . As shown in the figure, an organization’s extranet can simultaneously link the or- ganization to a wide variety of external partners. Consultants and contractors can use the extranet to facilitate the design of new systems or provide outsourcing services. The suppliers of the organization can use the extranet to ensure that the raw materials nec- essary for the organization to function are in stock or delivered in a timely fashion. The customers of an organization can use the extranet to access self-service functions such as ordering, order status checking, and payment. The extranet links the organization to the outside world in a manner that improves the way it does business. The business value of extranets is derived from several factors. First, the Web browser technology of extranets makes customer and supplier access of intranet re- sources a lot easier and faster than previous business methods. Second, as you will see in two upcoming examples, extranets enable a company to offer new kinds of interac- tive Web-enabled services to their business partners. Thus, extranets are another way that a business can build and strengthen strategic relationships with its customers and suppliers. Also, extranets can enable and improve collaboration by a business with its
The Role of Extranets
dealer portal had to meet Audi’s scrupulous design standards to match Audi’s distinc- tive branding. As part of the implementation, Audi involved the general managers from across five key departments including sales, corporate communications, and finance to find out what information they needed to share with dealers. This ensured that the broader business would be involved in creating and maintaining the dealer portal and had buy-in of the project. “The preparation process that iD took us through made it easy—they gave us an understanding of how to structure it,” says Vaross. “Now when someone from a dealership logs in, they’ll see the latest news rele- vant to them, and it will only take one mouse click for them to find what they’re looking for. It was important to give them the easiest possible route to the informa- tion they need,” adds Vaross. Audi’s dealer portal was launched on February 1, 2009, and enjoyed rapid uptake by its dealer users. The number of users increased by 450 percent in the second month of use. “As users have discovered that the new portal is easy to use and offers relevant information, they are already beginning to access more information via the portal,” says Vaross. “We have seen the number of pages they visit increase by 300% in the second month of operation.”
Source: Adapted from Intranet Dashboard Case Study , “Intranet Dashboard Revs Up Audi Australia,” Intranet Journal , October 22, 2009.
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Chapter 6 / Telecommunications and Networks ● 233
customers and other business partners. Extranets facilitate an online, interactive prod- uct development, marketing, and customer-focused process that can bring better- designed products to market faster.
F IGURE 6.9 Extranets connect the inter-networked enterprise to consumers, business customers, suppliers, and other business partners.
Partners,
Consultants,
Contractors
The Inter-networked
Enterprise
Suppliers and Distributors
Business Customers
Consumers
Joint Design Outsourcing Customer Self-Service
Online Sales and Marketing Sales Force Automation Built-to-Order Products Just-in-Time Ordering
Distributor Management Supply Chain Management Procurement
Highway engineers around the sprawling state of Texas want all the accident data they can get. With 800,000 crashes a year in the state, lives can be saved with a new left- turn lane here or a guardrail there, or perhaps a traffic light over a once-quiet rural intersection. Engineers need to analyze accident patterns to know where to spend limited highway-safety funds. Until 2005, however, engineers in the Department of Transportation’s 25 district offices could not get the data. To view accident records, they had to go to Austin and pore through reels of microfilm in the state archives, trying to find reports relevant to particular stretches of highway. Even if they found what they were looking for, the information was at least three years out of date be- cause of the backlog of accident reports awaiting microfilming. That all changed in May 2005 when the state fired up its new Crash Records Information System with digitized police and highway patrol accident reports avail- able through a business intelligence extranet. Traffic engineers around the state are now able to access and analyze the data from their offices, equipped with nothing more than a browser and a password. Making reports available over the Web “will help us save lives,” says Carol Rawson, deputy director for traffic operations. Supersol, a 160-store Israeli supermarket chain, has found that sharing business intelligence with suppliers means fresher goods and fewer products sitting in ware- houses. Previously, suppliers had to visit stores and eyeball what was sitting on the shelves or call a Supersol purchasing manager to find out what to deliver. Now 10 key suppliers check stocks by tapping into Supersol’s inventory data warehouse to learn what the supermarket chain has in its Tel Aviv distribution center. The data warehouse is built on NCR’s Teradata system with Panorama Software’s business intelligence software for accessing and analyzing information. When sup- pliers can see inventory data, it’s easier to eliminate out-of-stocks and overstocking. “The transparency of information is good for both sides,” CIO Isaac Shefer says.
Extranets: Collaboration Speeds Information
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Similarly, ArvinMeritor Inc., which manufactures car parts for automakers, ser- vice companies such as Midas and Meinke, and retailers like AutoZone, has used an extranet for about 18 months to make production schedules and inventory data avail- able to its suppliers. They check inventory levels of the materials they supply to ArvinMeritor and consult production schedules to anticipate needs. “They have access to weekly and monthly data on what we plan to produce,” says CIO and senior VP Perry Lipe. “That information is extremely key to them. It’s one reason why our plants are on schedule and able to meet production forecasts. In ad- dition to helping the just-in-time manufacturing model succeed, making data avail- able to suppliers takes excess inventory out of the supply chain and reduces costs.” “Back in Texas, the Department of Transportation is planning to make the Crash Records Information System available to the public and insurance company repre- sentatives who want copies of accident reports,” says Catherine Cioffi, Crash Records Information System’s project manager. The extranet also will be used to alert local law-enforcement agencies where speeding and drunken-driving offenses occur with greater frequency. Business intelligence extranets, says deputy director for traffic op- erations Rawson, “help us all do our jobs better.”
Source: Adapted from Charles Babcock, “Collaboration Speeds Information,” InformationWeek , January 24, 2005.
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Chapter 6 / Telecommunications and Networks ● 235
SECTION II Telecommunicat ions Network Alternat ives Telecommunications is a highly technical, rapidly changing field of information sys- tems technology. Most business professionals do not need a detailed knowledge of its technical characteristics. However, it is necessary that you understand some of the important characteristics of the basic components of telecommunications networks. This understanding will help you participate effectively in decision making regarding telecommunications alternatives. Read the Real World Case 2 about the impacts of videoconferencing applications on health care. We can learn a lot about the value of network-enabled applications from this case. See Figure 6.10 .
Figure 6.11 outlines key telecommunications component categories and examples. Re- member, a basic understanding and appreciation, not a detailed knowledge, is suffi- cient for most business professionals. Before we begin our discussion of telecommunications network alternatives, we should understand the basic components of a telecommunications network . Generally, a communications network is any arrangement in which a sender transmits a message to a receiver over a channel consisting of some type of medium . Figure 6.12 illustrates a simple conceptual model of a telecommunications network, which shows that it con- sists of five basic categories of components:
• Terminals, such as networked personal computers, network computers, net boxes, or information appliances. Any input/output device that uses telecommunications networks to transmit or receive data is a terminal, including telephones and the various computer terminals that were discussed in Chapter 3.
• Telecommunications processors, which support data transmission and reception between terminals and computers. These devices, such as modems, switches, and routers, perform a variety of control and support functions in a telecommunications network. For example, they convert data from digital to analog and back, code and decode data, and control the speed, accuracy, and efficiency of the communications flow between computers and terminals in a network.
• Telecommunications channels over which data are transmitted and received. Telecommunications channels may use combinations of media, such as copper wires, coaxial cables, or fiber-optic cables, or use wireless systems like microwave, communications satellite, radio, and cellular systems to interconnect the other components of a telecommunications network.
• Computers of all sizes and types are interconnected by telecommunications networks so that they can carry out their information processing assignments. For example, a mainframe computer may serve as a host computer for a large network, assisted by a midrange computer serving as a front-end processor, while a microcomputer may act as a network server in a small network.
• Telecommunications control software consists of programs that control telecommunications activities and manage the functions of telecommunications networks. Examples include network management programs of all kinds, such as telecommunications monitors for mainframe host computers, network operating systems for network servers, and Web browsers for microcomputers.
No matter how large and complex real-world telecommunications networks may appear to be, these five basic categories of network components must be at work to support an organization’s telecommunications activities. This is the conceptual frame- work you can use to help you understand the various types of telecommunications networks in use today.
Telecom- munications Alternatives
A Telecom- munications Network Model
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