Benefits of databases

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1 Page 1 of 7 Benefits of databases The gathering, processing, and use of information relating to the operations of a business are vital to its success. Even something as simple as a customer mailing list needs to be managed appropriately if it is to be kept up to date and accurate. Therefore, any tools or applications that can make the tasks involved easier and more efficient need to be given serious consideration. The database is one of the cornerstones of information technology, and its ability to organise, process and manage information in a structured and controlled manner is key to many aspects of modern business efficiency. This guide describes the various types of database tool and system available and provides guidance on how to choose the best solution for your business needs. What is a database? A database is a collection of data which has been organised so that a computer program can quickly select desired items. This could be something as straightforward as a list of names in alphabetical order or an ascending list of numeric stock codes. The secret to the successful use of database technology is the way in which data or information is structured to enable efficient processing. Manual filing systems have drawbacks that make them inefficient. Take as an example a simple card file index of customer information. This depends on consistent use to be effective. For example, if the card always has the surname in the top left-hand corner then they are easy to put in alphabetical order. However, if some cards have the postcode in this position instead, the task becomes more complicated. Database tools and applications are designed to help you store and manage data in a controlled and structured manner. Single-card file indexes can be simple, but it is more complex to cross-reference information held in two separate files. The relational database management system (RDBMS) makes use of common "keys" to tie related information together. For example, a customer ID number could be used to identify an individual customer in a large list of customers, or to link a customer with an order for specific goods.

2 Page 2 of 7 Types of database system Databases generally have one of two basic forms - the single-file database or the multi-file relational database. Single-file databases are often called "flat file" systems and relational databases are frequently known as "structured" databases. The type of database system or tool that you require depends on a number of factors, such as: the complexity of the data involved, eg plain text, images, sound files the quantity of data to be stored and processed whether the data needs to be accessed and amended by more than one person simultaneously whether data needs to be imported from, or exported to, other IT systems If your requirements are simple, eg monitoring the names and addresses of around 100 customers, you might find that standard office tools such as a spreadsheet might be all you need. However, if your needs become more complicated you will need to look at more sophisticated and capable packages such as Microsoft Access, FileMaker Pro, Oracle, Sybase or Informix. These are specifically designed to sort and search large amounts of data of a variety of types, for instance allowing you to manage customer names, goods orders and payment histories. Certain business processes are often managed using specialist database products or applications. Packages such as ACT, Maximiser or Time and Chaos are specifically designed for managing and manipulating contact information within a business. Similarly, many business types such as manufacturing, publishing, insurance, etc will have database solutions specifically targeted at their precise needs and requirements. It is worth seeking out any products which address the particular needs of your business sector. You might find them by asking your industry or trade association or trading partners. You can use the Internet to research popular database products. Systems development Databases can benefit practically any business that needs to process large amounts of information. Many database products are actually tools that are used to develop specific applications, such as sales ordering systems, ticket

3 Page 3 of 7 reservation systems, inventory management, etc. Unlike conventional programming languages, database development tools make maintaining and managing structured data files easier. They also impose strict design parameters on developers to ensure that data retains its integrity and accuracy. For example, most database development systems operate on a commit basis - this means that any changes to data are made in such a way that the data will not be corrupted if the system fails. Similarly, professional database development tools allow multiple users to view and use data simultaneously, which greatly improves the efficiency of systems. The primary advantage of using a database development system is that your applications can be specifically tailored to meet your precise requirements. This avoids accepting any compromises by using "off-the-shelf" packages. Specifying your requirements is a specialist task, so you may need to consult a professional system developer. Most modern database development systems use structured query language (SQL) processing, which allows data to be analysed and reports to be generated in a wide variety of different ways. Using SQL you can make "ad hoc" enquiries of its data and often ask highly specific questions. Generating a report that shows all customers who have ordered products on a Friday afternoon, for example, can then be used to gauge the demand for weekend deliveries. SQL requires expertise to use effectively - you may need to consult a professional systems developer. Alternatively, the supplier of your database software may offer consultancy as an add-on. Business benefits For most businesses, the more you know about your customers, your suppliers, and your competitors, the better. Therefore the gathering, storing and processing of information in the form of databases can provide you with a distinct advantage. Many businesses do not have the time or resources available to gather and process large quantities of information. Therefore they may lack information about how their business is performing, how profitable their product lines are, whether customers are making repeat purchases, etc. This information can help deal with specific operational problems or shape future strategy. It is not always obvious what information could be valuable in the future so you should gather as much data as possible.

4 Page 4 of 7 However, you must also make sure that your use of any personal data you gather and hold on clients complies with data protection legislation. See our guide on how to comply with data protection legislation. Using a sophisticated relational database management system allows you to do this, and the store of data that is built up over time can become increasingly useful and valuable. For example, historical data can show you business trends, or sales records can identify valuable customers. In addition, the disciplines required to gather, enter and process such data can help to ensure that your business is run in a regulated and properly managed way. Some of the advantages of using database technology in your business include: reducing the amount of time spent managing data giving you the ability to analyse data in a variety of ways promoting a disciplined approach to data management turning disparate information into a valuable resource improving the quality and consistency of information Availability and costs Whether your business would benefit from database technology largely depends on volume. A small business with half a dozen customers, fewer than a hundred product lines and five suppliers will not need a sophisticated relational database management system (RDBMS) to manage its data. Many small businesses manage very well with the limited database capabilities in a standard spreadsheet package. However, as the volumes of data begin to increase, the limitations of relying solely on a spreadsheet package for database facilities start to become apparent. The modern RDBMS is capable of handling millions of records and is designed to cope with very large processing requirements. The other major factor affecting your decision is the number of people you need to be able to share information with simultaneously. While a spreadsheet may be viewed by several people at once, generally only one person at a time can make amendments to it. With an RDBMS several people can access and amend different individual records at the same time. This makes the data store more of a shared resource. Small flat file database packages can be bought for very little, possibly around 50, but they are limited. Usually only one person can access and amend the data at a time. In addition, while it is possible to store data in multiple files, a simple database system is unlikely to offer sophisticated data processing or manipulation. Therefore, if you need a large or powerful database application you

5 Page 5 of 7 should consider an RDBMS. RDBMS packages range in price from a few hundred pounds to several thousand pounds, often with licensing fees based on the number of simultaneous users that are able to access the data. The bigger the system, and the more users accessing it, the more you will have to pay. Most packages allow you to start off quite modestly with for example, a licence for five users which you can increase as your requirements grow. Potential drawbacks One of the main benefits of relational database management system (RDBMS) technology is the ability to build applications that are tailored to your business requirements. However, the development of RDBMS applications can be expensive and time-consuming. You can develop your own applications in-house - however, the skills required are often quite extensive. You may not have the necessary skills available to undertake your own systems development and will have to consider employing outside help. The basic tasks required to build an RDBMS solution include: initial consultancy analysis of requirements system specification database design programming testing implementation training ongoing maintenance Building an RDBMS solution is unlikely to be a quick process and because there are so many steps involved the costs can escalate. You should also consider the risk to your business operations if the RDBMS solution fails to meet your specific requirements. The risks are especially high if the solution is intended to be used for your core day-to-day business operations. You should avoid committing yourself to a system which looks good on paper but which is totally unproven in practice. You could make use of an off-the-shelf solution to provide the core functions of your system, for example the standard financial accounting needs, and build on your own specific requirements in the

6 Page 6 of 7 form of extra modules for functions such as sales order processing or supply chain management. That way you are minimising the overall risk to your business. Questions to ask a database supplier For many businesses a relational database management system (RDBMS) can be a large investment. Therefore it is important to choose your supplier carefully - choosing the wrong one could be very expensive and might even jeopardise your business. You will be using the information contained in your RDBMS to run your day-to-day operations, so it will be very important for your business success. Before implementing a solution based on RDBMS technology, you might find it useful to ask any potential suppliers the following key questions: How long has the supplier been established? What are the specific costs associated with its product, ie a one-off purchase price, an annual renewable licence, a charge per user, etc? How much is charged for technical support? Does the supplier provide consultancy and, if so, at what rates? Is the system scalable? If you suddenly increase your product line by 200 per cent could the system grow automatically to cope with the expansion? Can the supplier recommend any third-party developers that make use of their RDBMS? Is there an active independent user group? Can the supplier provide references for businesses in your industry sector using their software? Does the supplier offer training in the RDBMS and, if so, at what typical cost? Related guides on businesslink.gov.uk Computer software: the basics Make the right IT choices Basic IT skills Get the most from IT in your business Choose and manage your IT supplier Keeping your systems and data secure Comply with data protection legislation

7 Page 7 of 7 Planning for e-commerce Supply chain software Business continuity planning in IT Related web sites you might find useful Find out about database applications and examples at the Made to Measure Software website Find a course on database software at the learndirect website Read about RDBMS on the Computer Technology Documentation Project website Read tips on using database technology more effectively at the Database Journal website Read reviews of database development tools at the Home Office Reports website Access a database to discover which large companies pay suppliers promptly at the PaymentScorer website Read about business continuity management at the Continuity Central website You can find this guide on by navigating to: Home > IT & e-commerce > Business applications > Benefits of databases Crown copyright 2007

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