Chapter 13-1 Prepared by Coby Harmon University of California, Santa Barbara Westmont College...

Chapter 13-1

Prepared by Coby Harmon University of California, Santa BarbaraWestmont College

Prepared by Coby Harmon University of California, Santa Barbara

Westmont College

SECOND EDITION

Chapter 13-2

Data and Databases

Chapter 13-3

1. The need for data collection and storage

2. Methods of storing data and the interrelationship between storage and

processing

3. The differences between batch processing and real-time processing

4. The importance of databases and the historical progression from flat-file

databases to relational databases

5. The need for normalization of data in a relational database

6. Data warehouse and the use of a data warehouse to analyze data

7. The use of OLAP and data mining as analysis tools

8. Distributed databases and advantages of the use of distributed data

9. Controls for data and databases

10. Ethical issues related to data collection and storage, and their use in IT

systems

Study ObjectivesStudy ObjectivesStudy ObjectivesStudy Objectives

Chapter 13-4

Real WorldReal WorldReal WorldReal World Think about the volume of sales transactions

that occur on the Websites of large Internet retailers such

as L.L. Bean, Lands’ End, and J.Crew. These companies each process an average of

approximately 120,000 transactions each day on their Websites. For each of these

transactions, important data must be collected about the customer, location, payment,

and the items sold.

Even more overwhelming is the volume of sales transactions that are processed by Wal-Mart on any given day. In addition to its Web-based sales, consider Wal-Mart’s thousands of retail centers with several check-out lines at each location and long hours of operation. Think about the number of accountants and computers that might be required to manage all of the related records. It is no wonder that Wal-Mart has one of the largest databases of any business organization in the world.

The Wal-Mart database continually grows with new transactions. Some estimate that Wal-Mart adds 1 billion rows of data per day. In addition to the size of the database, it is also growing faster. The company attaches RFID chips to merchandise so that inventory purchases, movement to stores, and sales are tracked in real time. Since the data for these events get added to the database so quickly, the database grows and becomes more useful for immediate analysis. This allows Wal-Mart to more quickly analyze and forecast inventory needs.

Chapter 13-5 SO 1 The need for data collection and storage

The Need for Data Collection and StorageThe Need for Data Collection and StorageThe Need for Data Collection and StorageThe Need for Data Collection and Storage

Data are the set of facts collected from transactions,

whereas information is the interpretation of data that have

been processed.

Main reasons to store transaction data:

1. To complete transactions from beginning to end.

2. To follow up with customers or vendors and to expedite

future transactions.

3. To create accounting reports and financial statements.

4. To provide feedback to management.

Chapter 13-6 SO 1 The need for data collection and storage


Typical storage and processing techniques:

1. The storage media types for data: sequential and random

access

2. Methods of processing data: batch and real time

3. Databases and relational databases

4. Data warehouses, data mining, and OLAP

5. Distributed data processing and distributed databases

Chapter 13-7

Which of the following best describes the relationship

between data and information?

a. Data are interpreted information.

b. Information is interpreted data.

c. Data are more useful than information in decision

making.

d. Data and information are not related.

SO 1 The need for data collection and storage


Concept Check

Chapter 13-8

SO 2 Methods of storing data and the interrelationship between storage and processing

Storing and Accessing DataStoring and Accessing DataStoring and Accessing DataStoring and Accessing Data

Data Storage Terminology

► Character

► Field

► Record

► File

► Database

Exhibit 13-1 Data Hierarchy

Chapter 13-9



Data Storage Media

► Magnetic tape

► Sequential access

Early Days of Mainframe Computers

► Random Access Modern IT Systems

Chapter 13-10



Concept Check

A character is to a field as

a. water is to a pool.

b. a pool is to a swimmer.

c. a pool is to water.

d. a glass is to water.

Chapter 13-11

Magnetic tape is a form of

a. direct access media.

b. random access media.

c. sequential access media.

d. alphabetical access media.



Concept Check

Chapter 13-12 SO 3 The differences between batch processing and real-time processing

Data Processing TechniquesData Processing TechniquesData Processing TechniquesData Processing Techniques

Exhibit 13-2Comparison of Batch and Real-Time Processing

Batch Processing

Real-time Processing

Chapter 13-13

Which of the following is not an advantage of using real-time

data processing?

a. Quick response time to support timely record keeping

and customer satisfaction

b. Efficiency for use with large volumes of data

c. Provides for random access of data

d. Improved accuracy due to the immediate recording of

transactions

SO 3 The differences between batch processing and real-time processing

Data Processing TechniquesData Processing TechniquesData Processing TechniquesData Processing Techniques

Concept Check

Chapter 13-14

SO 4 The importance of databases and the historical progression from flat-file databases to relational databases

DatabasesDatabasesDatabasesDatabases

Data stored in a form that allows the data to be easily accessed, retrieved, manipulated, and stored.

Exhibit 13-3Traditional File-Oriented Approach

Data redundancy

Concurrency

Chapter 13-15



Database Management System (DBMS) is software that manages the database and controls the access and use of data by individual users and applications.

Exhibit 13-3Database Approach

Relationships

One-to-One

One-to-Many

Many-to-Many

Chapter 13-16 SO 4

The History of DatabasesThe History of DatabasesThe History of DatabasesThe History of Databases

Flat File Database ModelExhibit 13-4Database Table

► 1950s and 1960s

► Text format, sequential order

► Sequential processing

► Large volumes of similar

transactions

► Single record not easily

retrieved or stored

Chapter 13-17


Hierarchical Database Model

► Inverted tree structure

► Parent–child, represent one-to-many relationships

► Record pointer Exhibit 13-5Linkages in a Hierarchical Database

SO 4

Chapter 13-18



Network Database Model

► Inverted tree structure

► More complex relationship linkages by use of shared

branches

► Not very popular, rarely used

Chapter 13-19



Relational Database Model

► Developed in 1969

► Stores data in two-dimensional tables

► Most widely used database structure today

► Examples include; IBM DB2, Oracle Database, and

Microsoft Access®

Chapter 13-20



Concept Check

If a company stores data in separate files in its different

departmental locations and is able to update all files

simultaneously, it would not have problems with

a. attributes.

b. data redundancy.

c.industrial espionage.

d.concurrency.

Chapter 13-21



Concept Check

When the data contained in a database are stored in large,

two-dimensional tables, the database is referred to as a

a. flat file database.

b. hierarchical database.

c. network database.

d. relational database.

Chapter 13-22



Concept Check

Database management systems are categorized by the data

structures they support. In which type of database

management system is the data arranged in a series of

tables?

a. Network

b. Hierarchical

c. Relational

d. Sequential

Chapter 13-23

The Need for Normalized DataThe Need for Normalized DataThe Need for Normalized DataThe Need for Normalized Data

Relational databases consist of several small tables. Small tables can be joined in ways that represent relationships among the data.

SO 5 The need for normalization of data in a relational database

Bolded field is the primary key.

Exhibit 13-6Relational Database in Microsoft Access

Chapter 13-24


Relational database has flexibility in retrieving data. Structured query language (SQL) has become the industry standard.

SO 5

Exhibit 13-7Relational Database in Microsoft Access

SELECT Customers.CustomerID, Customers.CompanyName,Orders.OrderID, Orders.ShippedDate FROM Customers INNERJOIN Orders ON Customers.CustomerID Orders.CustomerID;

Chapter 13-25


The process of converting data into tables that meet the

definition of a relational database is called data

normalization.

► Seven rules of data normalization, additive.

► Most relational databases are in third normal form.

► First three rules of data normalization are:

1. Eliminate repeating groups

2. Eliminate redundant data

3. Eliminate columns not dependent on primary key.


Chapter 13-26

Trade-offs in Database Storage

Relational database

►Not most efficient way to store data that will be used

in other ways.

►Most organizations are willing to accept less

transaction processing efficiency for better query

opportunities.



Chapter 13-27



Concept Check

Which of the following statements is not true with regard to

a relational database?

a. It is flexible and useful for unplanned, ad hoc

queries.

b. It stores data in tables.

c. It stores data in a tree formation.

d. It is maintained on direct access devices.

Chapter 13-28

Use of a Data Warehouse to Analyze DataUse of a Data Warehouse to Analyze DataUse of a Data Warehouse to Analyze DataUse of a Data Warehouse to Analyze Data

SO 6 Data warehouse and the use of a data warehouse to analyze data

Exhibit 13-8The Data Warehouse and Operational Databases

Management often needs data from several fiscal periods

from across the whole organization.

Chapter 13-29

Management often needs data from several fiscal periods

from across the whole organization.

► Build the data warehouse

► Identify the data

► Standardize the data

► Cleanse, or scrub, the data

► Upload the data



Chapter 13-30



Concept Check

A collection of several years’ nonvolatile data used to

support strategic decision-making is a(n)

a. operational database.

b. data warehouse.

c. data mine.

d. what-if simulation.

Chapter 13-31

Data mining is the process of searching for identifiable

patterns in data that can be used to predict future behavior.

Online Analytical Processing (OLAP) is a set of software

tools that allow online analysis of the data within a data

warehouse. Analytical methods in OLAP usually include:

Data Analysis ToolsData Analysis ToolsData Analysis ToolsData Analysis Tools

SO 7 The use of OLAP and data mining as analysis tools

1. Drill down

2. Consolidation

3. Pivoting

4. Time series analysis

5. Exception reports

6. What-if simulations

Chapter 13-32

Data Analysis ToolsData Analysis ToolsData Analysis ToolsData Analysis Tools

SO 7 The use of OLAP and data mining as analysis tools

Concept Check

Data mining would be useful in all of the following situations

except

a. identifying hidden patterns in customers’ buying

habits.

b. assessing customer reactions to new products.

c. determining customers’ behavior patterns.

d. accessing customers’ payment histories.

Chapter 13-33

Early days

Centralized processing

Centralized databases

Distributed Data ProcessingDistributed Data ProcessingDistributed Data ProcessingDistributed Data Processing

SO 8 Distributed databases and advantages of the use of distributed data

Today’s IT Environment

Distributed data processing (DDP)

Distributed databases (DDB)

Chapter 13-34

Real WorldReal WorldReal WorldReal World McDonald’s has restaurants, warehouses, and

offices located throughout the world; yet its

corporate headquarters is in Oakbrook, Illinois. If McDonald’s management

decided that all data, including prices, must be stored in a database at

corporate headquarters, what would have to happen when you order a

cheeseburger at a McDonald’s in Los Angeles? The cash register system

would have to read pricing data from the database in Oakbrook, Illinois. This

would be inefficient for several reasons. First, each McDonald’s restaurant

would be trying to read the same database simultaneously in order to fill

customer orders all around the world. Each of the McDonald’s restaurants

would need to be networked to that data in Illinois and would need to be able

to read price data quickly in order to process the sale. This would generate

so much network traffic that it would very likely overwhelm the network and

computer system. In addition, if prices are stored only at corporate

headquarters, it would become more difficult for each location to set its own

prices. Certainly, it would be much more efficient for McDonald’s to maintain

pricing data at the local restaurants or in regional centers.

SO 8

Chapter 13-35



Distributing the processing and data offers the following

advantages:

1. Reduced hardware cost

2. Improved responsiveness

3. Easier incremental growth

4. Increased user control and user involvement

5. Automatic integrated backup

The most popular type of distributed system is a

client/server system.

Chapter 13-36



Concept Check

A set of small databases where data are collected,

processed, and stored on multiple computers within a

network is a

a. centralized database.

b. distributed database.

c. flat file database.

d. high-impact process.

Chapter 13-37

Cloud-Based DatabasesCloud-Based DatabasesCloud-Based DatabasesCloud-Based Databases

SO 09 Cloud-based databases

Providers of cloud-based database services include companies

like Amazon (Amazon Elastic Compute Cloud), Google (Google

Cloud Storage), Microsoft (Windows Azure), and IBM (IBM

Smart-Cloud).

A company can buy data storage from these providers.

Arrangement is Database as a Service (DaaS).

Cloud provider generally provides

► data storage space and

► software tools to manage and control the database.

Chapter 13-38

Real WorldReal WorldReal WorldReal World

The best-selling jet airplane of the Boeing Corporation is the 737. In

2011, Boeing rolled out a new function called “737 Explained,” a

cloud-based database and application using Microsoft Azure cloud

storage. This cloud database stores 20,000 high-resolution photos of

the Boeing 737, which are accessible by the Boeing salespeople who

may be traveling to any location in the world to seek customers. 737

Explained can show 360-degree tours of the airplane, as well as

individual parts and features. The director of marketing at Boeing

said, “737 Explained is one of the best marketing tools I’ve seen

because it allows us to show prospective customers the new features

and improvements without bringing them to an airport.”

SO 10 Controls for data and databases

Chapter 13-39

IT Controls for Data and DatabasesIT Controls for Data and DatabasesIT Controls for Data and DatabasesIT Controls for Data and Databases

SO 10 Controls for data and databases

To ensure integrity (completeness and accuracy) of data in

the database, IT application controls should be used. These

controls are

► input,

► processing, and

► output controls such as

1. data validation,

2. control totals and reconciliation, and

3. reports that are analyzed by managers.

Chapter 13-40

Ethical Issues Related to Data CollectionEthical Issues Related to Data CollectionEthical Issues Related to Data CollectionEthical Issues Related to Data Collection

SO 11 Ethical issues related to data collection and storage, and their use in IT systems

Ethical Responsibilities of the Company

Data collected and stored in databases in many instances

consist of information that is private between the

company and its customer.

Ten privacy practices for online companies:

1. Management

2. Notice

3. Choice and consent

4. Collection

5. Use and retention

6. Access

7. Disclosure to third parties

8. Security for privacy

9. Quality

10. Monitoring and enforcement

Chapter 13-41

Real WorldReal WorldReal WorldReal World

No matter how extensive the controls in place, it is never possible to

completely eliminate unauthorized access. In April of 2011, Netflix

disclosed that it had fired an unnamed call center employee for

stealing credit card information from customers he had spoken with

on the phone. The company declined to disclose the number of

customers affected. The “monitoring and enforcement” mention

above is intended to help discover problems such as this and to fix

them quickly. In this case, a Netflix spokesperson said, “We do

everything we can to safeguard our members’ personal data and

privacy, and when there’s an issue like this, we deal with it swiftly

and decisively.”


Chapter 13-42


Ethical Responsibilities of Employees

Employees have an ethical obligation to avoid misuse of any

private or personal data about customers.

There are no specific IT controls that would always prevent

authorized employees from disclosing private

information.


Chapter 13-43


Ethical Responsibilities of Customers

Customers have an obligation to

► provide accurate and complete information.

► keep any known company information confidential.

► avoid improper use of data that they gain from accessing

a database as a customer.


Chapter 13-44

Real WorldReal WorldReal WorldReal World Near Lexington, Kentucky, the breeding and

racing of thoroughbred horses is a significant industry. Tracking the

bloodlines of the thoroughbreds used as studs in breeding is important

information to those who breed and race these horses. During the 1970s, a

company named Bloodstock began maintaining a database of stud horse and

mare bloodlines and race handicapping data. Breeders and others could

establish an account with Bloodstock and access this computer database in

choosing a stud horse to use for breeding or for handicapping races.

Eventually, this database became a Web-based resource called BRISNET. In

1997, someone began establishing and using fictitious customer accounts to

access the BRISNET database. Over a period of months, this person

accessed and downloaded BRISNET data. He then posted these data to his

own database and Website and began selling the data at prices below those

charged by Bloodstock. Upon discovery of this unethical act, the United

States Attorney of the district, surprisingly, declined to charge the violator

with federal crimes. However, Bloodstock settled out of court with the violator

for an undisclosed dollar amount.

SO 11

Chapter 13-45



Concept Check

Each of the following is an online privacy practice recommended

by the AICPA Trust Services Principles Privacy Framework

except:

a. Redundant data should be eliminated from the database.

b. Notification of privacy policies should be given to

customers.

c. Private information should not be given to third parties

without the customer’s consent.

d. All of the above.

Chapter 13-46

CopyrightCopyrightCopyrightCopyright

Copyright © 2013 John Wiley & Sons, Inc. All rights reserved.

Reproduction or translation of this work beyond that permitted in

Section 117 of the 1976 United States Copyright Act without the

express written permission of the copyright owner is unlawful.

Request for further information should be addressed to the

Permissions Department, John Wiley & Sons, Inc. The purchaser

may make back-up copies for his/her own use only and not for

distribution or resale. The Publisher assumes no responsibility for

errors, omissions, or damages, caused by the use of these

programs or from the use of the information contained herein.

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