Categorized | Database Development

Information Technology 6.6. Database Development

For many businesses, their most valuable asset is information; it is no accident that “IT” begins with the word “information.” Some of this information is valuable because it is necessary, such as employee information or client phone numbers. Some of this information is valuable because it is actionable, i.e., it provides a foundation for making strategic and tactical business decisions. And some of this information is just plain valuable, such as a customer list. The more information you have on your customers―who they are, where they live, what they buy, when they buy it, and any other information you might have―is worth real money to other companies, and not just your competitors. Customer information databases are often a substantial asset in some company’s financial balance sheets―that’s how valuable information can be!

Finally, as with all IT projects, information has value in terms of competitive advantage. If you have information that your competitors do not have―or you are able to do new things with information―you can steal customers away from your competition. For instance, Progressive Insurance made its fortune by targeting high-risk drivers. Instead of asking drivers a dozen or so questions to put them into risk pools, they asked them sixty or more questions. This allowed them to determine risk much more precisely, so they were able to drain away the safest high-risk drivers from other carriers by offering them the best insurance deal. This left other insurance carriers with the least safe high-risk drivers, so they had to raise their rates. Pretty neat, huh? With better information about their customers, Progressive was able to underprice their competition and force the competition to raise their prices! That’s the competitive advantage.

Getting and managing information, then, is a value-creating function for your business. Databases are the foundation for managing information and they come in two major types:

  • Transactional―transactional databases simply record data. Somebody does something that creates information and that information is then recorded to the database. An orders database attached to an e-commerce site is a transactional database. Your iTunes application is a transactional database. QuickBooks is a transactional database. A transactional database is primarily oriented around recording all relevant information about a transaction; its main design principle is efficiency, i.e., avoiding redundancy. (Don’t let the term, “transaction,” mislead you. It has nothing to do with transactions as you understand them; it’s about how information gets saved. A “transaction” application, which includes email applications, only saves information that is new or changed; a “file-based” application resaves the entire file if information is added or changed.)
  • Warehouse―a data warehouse is a database (or set of databases) that takes some, but not all, information from transactional databases to allow business users to explore that data for trends and actionable relationships. A data warehouse is primarily oriented around the needs of the people searching the database for information; its main design principle is completeness, i.e., making sure all information that is important to searchers is in the database and relatable to other information in the way that all business stakeholders need.

Your business will be surrounded with transactional databases at practically every step. They allow you to do your business―examples include accounting software (yes, a transaction database), project management software (another transaction database), payroll, human resources, e-commerce applications, and so on. Even iTunes is really nothing but a database. No matter what these guys look like on the outside, on the inside they’re all transactional databases.

You’re less likely to have a data warehouse attached to your business; when you need to query or mine data, chances are you’ll do it directly on your transactional database. This isn’t the best practice―querying and data mining a transactional database takes resources away from its primary function of recording data―but many database applications, such as project management, accounting, and e-commerce software, offer you limited querying and reporting directly from your transactional database.

The great virtue of a data warehouse is that it can aggregate data from several different databases―your customer email list, project management software, accounting software, e-commerce software, and Web analytics software―to produce integrated data that allow you to answer basic business questions (see section 6.8. for more detailed discussion of database querying and data mining). These might be questions like, “If I send out an email offer, how many people respond and what’s the average monetary value of the response? Who are the best people to target with an email campaign and how much do they spend?” Those are questions that the myriad of your transactional databases probably cannot answer, but a well-designed data warehouse can.

The strategic issues involved in your total database picture, then, boil down to only two:

  • Decision-making―you need to determine what information will help you make all the business decisions you’ll be faced with. In other words, what kinds of questions do you intend to ask of the data your business generates? Making a comprehensive list of all the kinds of questions that will help you make business decisions is the first step when considering custom databases for your business.
  • Competitive advantage―what kinds of questions do you think your competition is not asking of the data they have? What new information about your business, industry, or customers might give you an advantage over your competitors?

You don’t think in terms of databases and database design; you think in terms of decision-making and competitiveness. When you hire an outsource firm to develop your database, that firm needs to have the competence to determine your information and business needs. Their job is to ask you a lot of questions at the beginning; any firm that simply listens to what you have to say and starts working is probably going to waste your money.

Like ASPs, your foray into the world of database design will involve an alphabet soup of solutions. “We can design in MySQL or SQL Server, blah, blah, blah.” In essence, every database is the same: they’re just a bunch of spreadsheets that are connected to each other. For the most part, all the tables in a database can be transferred, often fairly easily, to another database. So the differences between databases have to do with the following:

  • Platform―you may or may not be interested in the platform the database runs on; you will definitely be interested if the database is tied to your Web site―the platform has to match the system your site is on. Some databases run only on Windows (SQL Server), some only on UNIX (MySQL), and some run on both.
  • Session manager―as you might imagine, databases can have information coming at them from all directions at the same time. The database has a session manager to keep everything straight and not get things mixed up as it adds to and changes the database. The more people who are adding, changing, or accessing information on the database, the more complex the session manager has to be. So some databases only allow a few people to access the database at one time (Access); others have session managers that allow thousands or millions of transactions to occur (Oracle) and are more suited to high-volume environments, like So you need to match up your expected load with what the database application can handle.
  • Cost―Some databases are free (MySQL, which is open source), some will burn a huge hole in your wallet (Oracle). ‘Nuff said.

Without delving into the differences, here is a short list of databases that an outsource provider can specialize in:

  • Oracle
  • SQL Server
  • MySQL
  • PostgreSQL
  • FileMaker
  • Access
  • Lotus Approach
  • Alpha Five
  • Paradox
  • QuickBase

6.6.1. Foraker Design

Foraker Design concentrates on Web-based applications and databases, but can also provide broader database services for small- and medium-sized businesses. With a well-developed needs-requirements process, they focus on Web-based database technologies, such as SQL Server, MySQL, PostgreSQL, and Oracle. Custom databases start at around $10,000, but systems that integrate with other applications may cost $50,000 or more, and some can go over $100,000 if there are complex integration issues.

6.6.2. Database Development Services, Inc.

Specializing in Filemaker, Database Development Services build custom databases and software for small- and medium-sized businesses to help them manage information and make better business decisions. They will also participate in strategic consulting to help you better manage your business information.

6.6.3. Virtual Gal Friday

A virtual assistance firm (see 5.3.13.), Virtual Gal Friday also specializes in Access databases customized to your business needs and offers a skilled but low-price database development alternative. The database, reports, and queries are designed around a needs assessment; the database can be stand-alone or Web-based. Monthly maintenance is a separate service.

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