Modeling? Why Is Data Modeling

¶ … modeling? Why is data modeling an important part of strategic planning [in an enterprise you are familiar with]?

A data model is a data-oriented technological structure (Amber, 2002). Data modeling is a way of modeling information through the creation of a computer database system to make it useful. For example, a dance company may create a database of donors that can be accessed, according to the data model, via last names, last time the donors attended a performance, how much money the donors gave during the last fundraiser, etc. Most enterprises keep track of customers' purchasing patterns and demographic data to determine, for example, if McDonald's customers in the Midwest prefer beef entries vs. The chicken entries popular amongst customers in the South. Organizing this data can enable the company to know where in the nation to launch a new type of sandwich or offer special promotions.

Today, an Internet credit card consumer must often provide a variety of data to a company that can gives insight to the enterprise about the customer's buying patterns, similar to that of a computerized fast food register. A strong data model will allow such customer data to be accessible through a variety of 'search' techniques. For example, a data model should enable McDonald's to track and forecast buying patterns in different regions in the country, favored promotions by young consumers in the past that increased revenue, and high and low-traffic times in different stores, a crucial part of its strategic planning (McGinn, 2002). McDonald's may decide to increase its profits through popular Happy Meal sales, or set a benchmark for its managers to find ways to increase late-night sales in its 24-hour stores open in suburban areas throughout the nation. The data regarding consumer buying patterns and store revenue may be the same in the data warehouse, but an effective data model allows the enterprise to access it different ways that are useful at different times during the strategic planning process.

Your company wants to increase revenues from its existing customers. How can data mining be used to accomplish this objective [and how has this impacted results in an enterprise you are familiar with]?

Data mining is the use of software to conduct more sophisticated forms of forecasting, or predicting industry trends. It involves the process of analyzing data from different perspectives and using the information in a variety of useful ways, such as to increase revenue or cuts costs. "Data mining software is one of a number of analytical tools for analyzing data. It allows users to analyze data from many different dimensions or angles, categorize it, and summarize the relationships identified. Technically, data mining is the process of finding correlations or patterns among dozens of fields in large relational databases" (Palace, 1996).

One common example of using data mining is that of store inventory, such as a Midwest grocery chain called Kroger that used the data mining capacity software to discover: "that when men bought diapers on Thursdays and Saturdays, they also tended to buy beer. Further analysis showed that these shoppers typically did their weekly grocery shopping on Saturdays. On Thursdays, however, they only bought a few items. The retailer concluded that they purchased the beer to have it available for the upcoming weekend. The grocery chain could use this newly discovered information in various ways to increase revenue. For example, they could move the beer display closer to the diaper display. and, they could make sure beer and diapers were sold at full price on Thursdays" (Palace, 1996)