chapter 2 data and business - university of manitoba · information systems for ... business...

Information Systems for Management * Chapter 2: Data and Business * Bob Travica ©

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Chapter 2

Data and Business This chapter will discuss essential data management issues. It starts by examining the relationship between data and business process and main categories of organizational data. As organizations today are expanding their IS footprint, while still handling large amounts of paper documents, the electronic and paper data formats will be compared in terms of pros and cons. A concept of organizational culture as it pertains to IS will be introduced in the context of coexistence and tension between the two data formats. The second part of the chapter will focus on organizing data by means of electronic relational database. Related topics of Database Management System, database querying, and Structured Query Language will complete the discussion.

Introduction Modern organizations produce and use lots of data. Organizations record every business-related event that happens in their daily operations. These events are purchase, sale, inventory change, payment, earning, business meeting, and so on. So created new data are then used for understanding what is going on and for making decisions with immediate or future effects. Aside from daily operations, organizations also create work manuals and knowledge documents that guide business on a longer run. In this course, we think of organization as a whole made of organizational/business processes. At this point, it is enough to understand such a process as a part of work that is regularly performed. In Figure 1, a process is represented with an arrow. Business processes use data and create new data. For example, a process for planning daily production in a manufacturing company takes data from a monthly production plan, a report on realized production, and a list of available workers. All these sources are inside the company. This process also produces new data in the form of production schedule.

Categorizing Organizational Data Some data sources are outside the company (Figure 1). For example, a marketing process queries market demands in social media, or an inventory management scans production plans of the company’s supplier. Of course, social media and the supplier are outside the company.


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As Figure 1 shows, all organizational data can be grouped in three categories:

1. Business documentation 2. Professional documentation 3. Communications.

Figure 1. Organizational data

The business documentation reflects ongoing daily processes usually called operations. Examples are purchasing order, and supplier and product lists. The purchasing process uses the supplier and product data to create a purchasing order. The supplier and product data are usually stored in a company’s databases, and sometimes need to be searched for in external sources. Other examples of business documentation are the sales report, inventory report, payment records, income statements, decision records, analyses of finances, markets, human resources and other business aspects, various plans, contracts, and so on. The business documentation serves as the memory of organizational operations. The professional documentation is created at times and then used for a longer time. It includes documents on a company’s products, work manuals, problem solving guides, engineering drawings, patents, and so on. For example, the research and development process (R+D) creates product documents within a period of time. These documents are then used by the production process possibly over years, with occasional updates. The professional documentation serves as the memory of organizational knowledge. The communications category refers to minutes from meetings, paper memos, emails, voice mail, stored chat, content of electronic bulletin boards, company newsletter, and the like. Communication is a big part of any organization. It flows vertically, between managers and sub-ordinated employees as well as between managers at different levels of hierarchy. Communication also runs horizontally, between organizational members who are at the same level (sometimes called peers). When communication is stored in some way, we talk about communications (note the plurals form) to point to the messages exchanged. Communications


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add to the memory of organizational operations and contribute to the memory of management. By reviewing past messages a manager can decision making processes and important events.

Electronic Data and Paper Trail Organizational data can be in the electronic format or stored on paper. The electronic format is also called “digital” since computers physically store data as two discrete states of electricity: the electrical charge either exists or does not exist. These states translate to digits (numbers) of zero and one. Recall from the discussion on basic concepts that combinations of zeroes and ones represent letters, numbers, and other symbols. For example, this is an eight bit set expressed in digital format:

The letter “A” is represented as 01000001, while “a” is 01100001; zero is 00110000, the number one is 00110001, and so on. The paper format of data is older than the electronic. It is popularly called “paper trail.” Examples of paper trail are paper notes, correspondence, forms (structured look and content), and files that can be organized with aid of file folders, cabinets, and archives. A need and desire to keep track of ideas and ongoing life is as old as people. In the far past, people carved stone, wood and clay with drawings and early scripts. Paper was produced in China about 2,000 years ago out of a certain sort of tree (see Figure 2). A similar material, which was called papyrus after the so-called plant, was invented in Egypt some 6,000 years ago. Accounting records, sale bills and other business documents written on papyrus have been discovered. The word “paper” used in many languages comes from “papyrus” although the paper technology is from China.

Figure 2. On the left: Chinese paper book made in 3rd century

One the right: A long papyrus scroll made in Egypt about 10 centuries BC


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The production of paper increased with invention of paper mills in Europe. The invention of mechanical press stimulated the production of books and newspapers. In recent centuries, paper documents became important for organizing and management. As a form of organizing government and business upon formal rules and hierarchy, bureaucracy has depended on paper documents. Each office in the bureaucracy organization was in part defined by the kinds of paper documents it was supposed to create and use. The flow of documents supported management hierarchy in bureaucracy. A properly filled and shaped paper document, containing handwritten signatures of approvers (managers and possibly clerks charged with the approving authority), has become the image of properly operating organization. While bureaucracy has been a modern form of organizing that is still around, unnecessary insisting on “paperwork” came to be known as “bureaucratic” behavior. It means that an office worker is so much focused on paperwork that he/she fails to see the people for whom the paperwork is supposedly being done. The deep roots of paper in our world are also apparent in frequent uses of the term: “white paper,” “term paper,” and “journal paper” are just some examples of misnaming documents that actually are in electronic format. The electronic format was invented in the last century. It was preceded by the electro-mechanical machines and devices. Note that the main difference between electrical and electronic technology is in voltage of electricity. An electro-mechanical machine for accounting, as the one shown in Figure 3, used the same electricity as the kitchen stove or refrigerator. Electrical energy was used for moving parts of the machine and it could not help with data storage – paper cards were used instead. In contrast, electronic technology works with low-voltage electricity as that in batteries for your cell phone or flashlight. This electricity can be stored in various storage technologies, as discussed in the chapter on basic concepts.

Figure 3. Electro-mechanical accounting machine

The development and acceptance of computers made some pundits predict that paper was going to disappear from office. This prediction was made in the 1970s. It is visible in many walks of life that electronic format really keeps expanding. Electronic billing replacing paper bills, online payment and money transfer, mushrooming of electronic publications at the expense of paper publications and of your local library, and growing of electronic documentation and communications in organizations – all these and more are certainly the signs of an electronic age. But completely paperless organizations are still rare. And it appears that paper does not give up. Rather, the electronic expansion appears to be running in parallel with paper trail.


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Electronic and paper formats are in a tension, but they keep coexisting. There are several reasons for this coexistence. One reason is the habit or the used ways of doing business that defines a culture of an organization. Individual preferences play a role too, so some people may be more comfortable with paper than with computers. There may be pressures from the environment as well. For example, government agencies may require that certain documents be provided in paper rather than electronic format. Finally, although electronic technology is superior on a number of counts, the paper counterpart still has some advantages. Table 1 compares the two on several characteristics. Consider the aspect of data creation. Paper documents are filled by hand, helped by some mechanical devices (pen, typewriter). Entering electronic data also requires some manual action, such as typing or screen touching. However, data are also created automatically as the result of an IS processing. Therefore, creating of electronic data can be easier and faster. Table 1. Comparison between paper and electronic data formats

Paper data Electronic data

Creation Manual Manual entry & automatic result of

processing

Access Limited Broad

Search Manual, slow Automatic, fast

Transfer Slow Very fast

Errors Hard to control Automatic control

Space

requirements

Very high Very low

Mobility Higher Moderate, improving

Security • Physical hazard;

• Location related;

• Harder to falsify

• Physical hazard;

• Risks of network access;

• Falsifiable but solutions evolve

Preservation Long term Limited, must migrate to new tech.

Ecological

impact

Kills trees Energy consumption, hardware

must be deposed


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Access to electronic data is broad, open to many users at a time. In modern client-server design, access is limited only by the capabilities of a computer network and a server storing data. In contrast, a paper document is typically accessible to a single person at a time. Searching a paper document or a file cabinet relies on human memory and thinking and is generally slower in comparison with electronic searches. An electronic database can find very specific pieces of data the user seeks within a fraction of second. Data filtering and querying capabilities built into software make this possible. Searches can be applied to multiple databases and even across computer networks, as it is the case with the Internet search. Digital storage is also superior on the speed of transfer. Even very large files are transferred around the globe via computer networks within seconds. Transferring paper, however, takes classical transportation by air, land or waterways, which is performed by postal or courier services (“snail mail”). Electronic transfer speeds up the business. For example, think of financial transactions, comparing mailed cheque or invoice with electronic money and invoice. On the other hand, the speed of electronic transactions reduces the breaks that business sometimes may need. Errors committed in recording data on paper are hard to control. The only control actually rests with the human brain, and so attention and competence are very important. In contrast, automatic controls can be set up at the input part of on a computer-based IS. These can check data types, ranges of numerical data, and content compliance. For example, numbers cannot be entered in a store reserved for text; the salary cannot be entered as $0 or with more than six digits; a store for postal code can be set to take only a specific combination of characters; and so on. Paper storage demands a lot of space. Libraries regularly run out of space, which becomes obvious when they start selling bargain books. In contrast, digital storage takes much less space. The trend of its miniaturization continues. Paper fairs somewhat better on the mobility aspect. Although electronic data can be transferred fast, their use is limited by the availability of hardware and software at destination locations. For a long time, computing was performed just in the data processing centre of a company. When local area networks were introduced, they distributed microcomputers throughout a company and pushed data to dispersed desktop computers. Mobility of electronic content has increased even more with handheld devices, such as personal digital assistants in the past, and tablet devices and cell phones nowadays. And the trend of increasing mobility of the electronic data continues. Digital data are connected with serious security challenges. Several aspects deserve management attention. First, both paper and electronic are subject to destruction caused by nature (fire, water) or people paper trail depends on securing the physical location where they reside. Therefore, there is no difference between them. However, there is a difference between securing a single location of paper documents as opposed to an electronic storage accessible a


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via a computer network. Network access brings up a problem of unauthorized use, change, or destruction of data. While security solutions keep improving, the technology on the attacker side is also developing. Therefore, security of electronic data is a moving target. It could be said in favor of electronic format that it is easier to back up (copy) than paper trail. To increase security, backups should be stored on a separate location. As shown in Table 1, the third aspect of security has to do with falsifying data. Paper is more stable and harder to falsify than electronic documents. Changes made to an original document are hard to hide. With electronic data, the situation is totally opposite. However, solutions against unauthorized change of electronic format do evolve over time. Examples are the content protection of PDF and MS Word files, and digital signature. Digital signature is an advanced solution for authenticating electronic content. If properly applied, digital signature can be even more secure than the handwritten signature. Still, as digital signature is administered by commercial vendors, it creates a recurring cost for the user. Paper has some advantage with regard to preservation. It can be preserved over long time. Digital storage, however, is reliable within a limited period of time. One must migrate to new technologies from time to time. For example, tapes with a magnetized coating can disintegrate, CR-ROMs get scratches, and flash memory has a limited number of data writes (measured in thousands though) before starting to fail. Finally, both data formats bring ecological challenges. As ecology has recently become an important issue with the escalation of human-imposed damage to nature, it has consequences in the area of IS. Paper is produced by using trees, and trees are lungs of the earth. Therefore, the paper production has limits. But electronic format is not problem-free either. IT consumes electrical energy and releases carbon dioxide while working. In addition, discarded computer hardware pollutes the soil unless it is deposed properly. Owners must cover deposition costs. Overall, the electronic format scores higher than its counterpart and it keeps improving. However, management attention should not get relaxed. Particular attention need to vulnerable aspects of electronic data, such as security.

Information Systems and Organizational Culture Organizational culture has a big influence on the tension between paper and electronic data formats. This influence may be stronger than individual preferences. Even if a new employee prefers working with paper trail, such an employee is likely to change if the organization’s culture favors electronic format. When studying IS, it is important to understand organizational culture. You may have learned about this topic in some other course. Here is a quick review of the concept of organizational culture in relation to IS. Organizational culture refers to deep, stable beliefs and accustomed practices (behaviors) shared by employees in an organization. From the IS perspective, relevant


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beliefs and behaviors are those that have to do with data, information, knowledge, IT, and IS. Preferences for electronic or paper data are a good example of this approach. One organizational culture may be paper focused, where paper documents are regularly produced and digital equivalents are gradually introduced. Examples are in public organizations, such as schools and medical institutions. Another organizational culture may be electronic. An example is Oncogene Science, an American supplier of products for the health industry. The company turned all documentation and communications into electronic format. Beliefs of superiority of the electronic format have moved this company to introduce various electronic IS across its operations. Not only different companies may have different organizational cultures. Cultural differences can characterize different departments or professional groups within the same company. So for example, accountants usually believe that financial data should be managed according to rules, and so accounting practices are rules-driven. We can say that this is the professional culture of accountants. If they are organized in a separate department, the rules-driven culture is the organizational culture of the accounting department. In contrast, professionals whose job is to come up with new, creative ideas do prefer fewer rules. This applies to those working on research and development, innovation, product promotion, and similar less structured jobs. The relationship between IS and organizational culture is a large topic, and it will be discussed again in other chapters.

Information System and Electronic Database Electronic data do not reside in an IS in a loose manner. Rather, the data are organized into files and databases. File is a collection of related data that are stored under a single name. An example of file is this MS Word file you are reading, named “Ch2-DataAndBusiness.pdf.” A database is a complex collection of data that are organized so that they reflect business and meet technology requirements. For example, an accounting database contains pieces of data that reflect payments a company has to make, and these data are stored in tables. To understand the organization of data in an electronic database, think of a paper file cabinet for tracking payments. The cabinet is entitled with Accounts Payable, and it translates into an electronic database with the same name. The cabinet has a few drawers labeled as Invoices, Taxes, and Loans. These drawers translate into tables in the database. A particular invoice is stored as a paper file in drawer Invoice. This translates into a row in the database. These ideas behind the organization of electronic database are depicted in Figure 4.


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Figure 4. The organization of electronic database

The database that organizes data in tables as in the example above is called relational database (Figure 4). You can create such a database by using MS Access software. Other types of databases are the library catalog, full-text databases, and some others that support a variety of data types created in the era of the Internet, social media, and mobile devices. This course is focused on the relational database. In current information systems data are typically organized in relational databases. To show this fact we need to look at a somewhat different concept of IS. It is shown in Figure 5, where the abbreviation “DB” stands for “database.” Recall that Chapter 1 defined IS in terms of data, computer hardware and software, and procedures. A new concept of IS will involve the database item, instead of data. It was previously said that data were the heart of an IS. We can now be more precise and say that data organized in databases are at the heart of an IS. The other parts of IS will be specified in terms of their purposes. Figure 5 depicts these parts as functionality and user interface. Functionality refers to the operations IS can perform, the useful work it can do for the user. Application software is the most responsible for this functionality. User Interface is the connection between the user and IS. We touched on it from the perspective of input/output hardware and the systems software that controls this hardware. Let us explore relational database in more detail.

Figure 5. Information system view with databases


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Relational database In a relational database, data are organized in tables, as it is described above. Technical name for table is “relation,” and that is why this type of database is called “relational.” A table is a two-dimensional structure with rows and columns. Sometimes, rows are called records, and columns are called fields. Tables reflect objects that are important for business. Examples include invoice, supplier, employee, product, customer, and customer order. Tables are connected to reflect associations between business objects. For example, table Customer is associated with table Customer Order as a real customer is associated with orders he/she places. Relational databases are the foundation of basic types of IS – Transaction Processing System (TPS), and Management Information System (MIS). If you learn how to practically use MS Access, the exercises are typically about creating simple TPS and MIS. Figure 6 depicts a table PetAnimal that may be part of a database in a pet store. Each row describes one particular instance of animals on stock; for example, row 7 describes a cat called Bombay. A row consists of pieces of data that can be read column-wise – animal, name, animal category, breed, and so on. These are called attributes. A specification of an attribute (a piece of data) is called value; for example, the value of attribute Name in row number 7 is “Bombay.” The first column in the table in Figure 6 is the attribute that serves for identifying each particular row. The content of it is integer numbers, running sequentially so that a particular number never repeats. Because of this identification purpose, this attribute is called key attribute, primary key, or just key. Primary key is defined as the attribute that uniquely identifies each row in a table. A database can be set so that values of the key attribute are automatically created, and so users cannot err by duplicating a key value.

Figure 6. Table PetAnimal in a pet store’s database

In a relational database, tables are associated so that a primary key column in one table is replicated in another table. The replicated attribute is called foreign key. Therefore, the foreign


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key is created by “exporting” a key from its home table to another, associated table. The formal definition is: Foreign key is the attribute that is the primary key in another table. Figure 7 shows these concepts. Table Supplier has Supplier_Number as the key. The same attribute appears in table Part as the foreign key. By connecting tables this way, it is possible to see which supplier supplies which part. For example, supplier number 8259 called CBM Inc. supplies parts 137, 152 and 178 (or Door latch, Door lock, and Door handle, respectively).

Figure 7. Two tables associated via primary key and foreign key Database Management System Databases are created by using software called Database Management System (DBMS). Examples of DBMS are MS Access by Microsoft and Oracle produced by Oracle Corporation. Do not mix up concepts of database and DBMS. DBMS is a complex software package for creating database, storing data, retrieving them according to users’ questions, and for overall management of data. Actually, DBMS can be used to develop an entire IS. A DBMS has several components, in addition to functionality for creating tables. Here are some of more important ones. A DBMS contains a search engine whose role is to run the users’ queries in the database. From the business perspective, this is when the value of a database materializes. (More below.) DBMS also has a module called report writer. It can be used to program a highly organized and formatted output called report directly out of tables or from queries. DBMS manages access to a database. This includes assigning privileges for data read, write, update, and deletion. Database access by many users at the same time, so that everybody works with correct data, is also managed by DBMS.


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Querying Querying refers to acquiring an answer from a database. The user with a business question in mind needs to figure out which tables could answer the question, and to set search conditions. For example, the question is: what part does CBM Inc. supply? The user looking at a whole database needs to realize that tables Supplier and Part may provide the answer. Then the user needs to specify that search be run just for that particular supplier identified by its number (key value). We define query as a statement that expresses user question in a technically appropriate manner. Here is an example of query:

SELECT Part.Part_Name FROM Part, Supplier WHERE Supplier_Number=8259 Output: Door latch, Door lock, and Door handle

The statement above is written in Structured Query Language (SQL). Using SQL for writing the query is the technically appropriate manner suitable for retrieving relational databases. At the first look, SQL resembles a programming language. But it is simpler and its role is limited to data manipulation. Acquiring knowledge of SQL takes concentrated study. Fortunately, querying can also be done through a convenient visual facility, as the one MS Access providers.

Question for Review and Study 1. How are organizational data and organizational/business processes related? 2. What are the categories of organizational data? 3. Compare on similarities and contrast each category of organizational data. (Hint: For similarities, think of what the particular data do for an organization.) 4. How is paper technology connected with modern organization and management? 5. What are the reasons for maintaining paper trail when powerful computer technology is available? 6. What advantage does the electronic format have over the paper format? 7. Compare the paper and electronic formats on the mobility aspect.


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8. What security challenges do apply to the electronic format? 9. What is organizational culture and what role does it play regarding the tension between electronic and paper formats? 10. Explain the concept of IS that includes databases. Compare it with the concept of IS discussed in Chapter 1. 11. How are data organized in a relational database? 12. Define and compare primary key and foreign key. 13. What is the relationship between database and DBMS? 14. What does it mean that a query on a relational database has to be written in a technically appropriate manner?

chapter 2 data and business - university of manitoba · information systems for ... business...

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