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Understanding Business Intelligence: Transactional vs. Analytical Information

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This chapter explores the critical aspects of business intelligence, delineating between transactional and analytical information. Transactional information is vital for daily operations, while analytical information supports managerial decision-making. We assess the characteristics of high-quality information, emphasizing accuracy, completeness, consistency, uniqueness, and timeliness. Additionally, we discuss the implications of low-quality data, including customer tracking issues and ineffective marketing. Lastly, we introduce data warehousing, multidimensional analysis, and data mining as solutions for improved decision-making and trends discovery.

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Understanding Business Intelligence: Transactional vs. Analytical Information

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  1. CHAPTER SIX DATA: BUSINESS INTELLIGENCE

  2. INFORMATION TYPE: TRANSACTIONAL AND ANALYTICAL • Transactional information – Encompasses all of the information contained within a single business process or unit of work, and its primary purpose is to support the performing of daily operational tasks • Analytical information – Encompasses all organizational information, and its primary purpose is to support the performing of managerial analysis tasks

  3. Information Quality • Characteristics of High-quality Information • Accurate • Complete • Consistent • Unique • Timely

  4. Understanding the Costs of Using Low-Quality Information • Potential business effects resulting from low quality information include • Inability to accurately track customers • Difficulty identifying valuable customers • Inability to identify selling opportunities • Marketing to nonexistent customers • Difficulty tracking revenue • Inability to build strong customer relationships

  5. STORING INFORMATION IN A RELATIONAL DATABASE • Information is everywhere in an organization • Information is stored in databases • Database – maintains information about various types of objects (inventory), events (transactions), people (employees), and places (warehouses)

  6. STORING DATA ELEMENTS IN ENTITIES AND ATTRIBUTES • Entity – A person, place, thing, transaction, or event about which information is stored • The rows in a table contain entities • Attribute (field, column) – The data elements associated with an entity • The columns in each table contain the attributes • Record – A collection of related data elements

  7. CREATING RELATIONSHIPS THROUGH KEYS • Primary keys and foreign keys identify the various entities (tables) in the database • Primary key – A field (or group of fields) that uniquely identifies a given entity in a table • Foreign key – A primary key of one table that appears an attribute in another table and acts to provide a logical relationship among the two tables

  8. DRIVING WEBSITES WITH DATA • Data-driven websites – An interactive website kept constantly updated and relevant to the needs of its customers using a database

  9. THE BUSINESS BENEFITS OF DATA WAREHOUSING • Data warehouse – A logical collection of information – gathered from many different operational databases – that supports business analysis activities and decision-making tasks • The primary purpose of a data warehouse is to aggregate information throughout an organization into a single repository for decision-making purposes

  10. MULTIDIMENSIONAL ANALYSIS • Databases contain information in a series of two-dimensional tables • In a data warehouse and data mart, information is multidimensional, it contains layers of columns and rows • Dimension – A particular attribute of information • Cube – Common term for the representation of multidimensional information

  11. INFORMATION CLEANSING OR SCRUBBING • An organization must maintain high-quality data in the data warehouse • Information cleansing or scrubbing – A process that weeds out and fixes or discards inconsistent, incorrect, or incomplete information

  12. UNCOVERING TRENDS AND PATTERNS WITH DATA MINING • Data mining – The process of analyzing data to extract information not offered by the raw data alone • Data-mining tools – use a variety of techniques to find patterns and relationships in large volumes of information • Classification • Estimation • Affinity grouping • Clustering

  13. UNCOVERING TRENDS AND PATTERNS WITH DATA MINING • Common forms of data-mining analysis capabilities include • Cluster analysis • Association detection • Statistical analysis

  14. THE PROBLEM: DATA RICH, INFORMATION POOR • Businesses face a data explosion as digital images, email in-boxes, and broadband connections doubles by 2010 • The amount of data generated is doubling every year • Some believe it will soon double monthly

  15. THE SOLUTION: BUSINESS INTELLIGENCE • Improving the quality of business decisions has a direct impact on costs and revenue • BI enables business users to receive data for analysis that is: • Reliable • Consistent • Understandable • Easily manipulated

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