Course Code : MCS-052

Course Title : Principles of Management and Information

Systems

Question 1: Explain what you mean by Management Information System (MIS). Discuss the role of MIS in an
organization? Describe the important components of MIS.
Hint: Management information system (MIS) is a system or process that provides information needed to manage
organizations effectively . Management information systems are regarded to be a subset of the overall internal
controls procedures in a business, which cover the application of people, documents, technologies, and procedures used
by management accountants to solve business problems such as costing a product, service or a business-wide strategy.
Management information systems are distinct from regular information systems in that they are used to analyze other
information systems applied in operational activities in the organization. Academically, the term is commonly used to refer
to the group of information management methods tied to the automation or support of human decision making,
e.g. Decision Support Systems, Expert systems, and Executive information systems
Meaning and Definition: 'MIS' is a planned system of collecting, processing, storing and disseminating data in the form of
information needed to carry out the functions of management. According to Phillip Kotler "A marketing information
system consists of people, equipments, and procedures to gather, sort, analyse, evaluate, and distribute needed, timely, and
accurate information to marketing decision makers."
The terms MIS and information system are often confused. Information systems include systems that are not intended for
decision making. MIS is sometimes referred to, in a restrictive sense, as information technology management. That area of
study should not be confused with computer science. IT service management is a practitioner-focused discipline. MIS has
also some differences with Enterprise Resource Planning (ERP) as ERP incorporates elements that are not necessarily
focused on decision support.
Management information system would mean a set of computer based systems and procedures implemented to help
managers in their crucial job of decision making. The actual process of MIS will involve the collection, organization,
distribution and storage of organization-wide information for managerial analysis and control. It is better understood if
these components are understood. Management Information Systems (MIS), sometimes referred to as Information
Management and Systems, is the discipline covering the application of people, technologies, and procedures — collectively
called information systems — to solving business problems. Management Information Systems are distinct from regular
information systems in that they are used to analyze other information systems applied in operational activities in the
organization. Academically, the term is commonly used to refer to the group of information management methods tied to
the automation or support of human decision making, Business computers were used for the practical business of
computing the payroll and keeping track of accounts payable and receivable. As applications were developed that provided
managers with information about sales, inventories, and other data that would help in managing the enterprise, the term
"MIS" arose to describe these kinds of applications. Today, the term is used broadly in a number of contexts and includes
(but is not limited to): decision support systems, resource and people management applications, project management, and
database retrieval application The following are the different types of components in MIS system.
a. Concept of Management
b. Information
c. Information system
The Role of MIS
– Information technology is partly responsible for the PARADIGM shift (A change, a new model,) from
support to contributing to an organizations profitability.
– From efficient data processing shops
– to understanding the goals and objectives of an Organization
– to participating directly in the decision making and strategy formulation
– Knowledge Users: Users take on increased responsibility. Identify applications, and conduct
systems analysis and design.
– Better Applications: More specific, user friendly, functional, lower price, readily available, and
self training. Results: less need for programmers, IS head count and budget decrease as a result.
– Outsourcing: Other, external organizations taking over the management and control of the data
centers. Results:
– cost reductions
– head count reductions
– budget reductions.
– Environmental Scanning: Find out what is happening in the market place
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 – Concentrate on the lines of the business
– Sponsor weekly briefings
– Attend industry meetings with line executives
– Read industry publications
– Hold informal listening sessions
– Become a partner with the line manager

Componet of MIS
Hardware
Input and output devices constitute the hardware components of MIS
Software
The programs and applications that convert data into machine-readable language are known as software
Procedures
Procedures are sets of rules or guidelines, which an organization establishes for the use of a omputer-based information
system
Personnel
The computer experts, managers, users, analysts, programmers, database managers, and many other computer professionals
who utilize the computer-based information systems are the personnel in a management information system

Question 2: Define entrepreneurship. Why is it import to economic development? List the primary steps in starting
a new Business? How the Information Systems can be used and implemented for the healthy growth of a Business.

Hint: Entrepreneurship is the act of being an entrepreneur, which is a French word meaning "one who
undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". This may
result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. The
most obvious form of entrepreneurship is that of starting new businesses (referred as Startup Company); however, in recent
years, the term has been extended to include social and political forms of entrepreneurial activity. When entrepreneurship is
describing activities within a firm or large organization it is referred to as intra- premiership and may include corporate
venturing, when large entities spin-off organizations.
According to Paul Reynolds, entrepreneurship scholar and creator of the Global Entrepreneurship Monitor, "by the time
they reach their retirement years, half of all working men in the United States probably have a period of self-employment of
one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business
creation is a common activity among U.S. workers over their course of their careers." And in recent years has been
documented by scholars such as David Audretsch to be a major driver of economic growth in both the United States and
Western Europe.
Entrepreneurial activities are substantially different depending on the type of organization that is being started.
Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings
creating many job opportunities. Many "high value" entrepreneurial ventures seek venture capital or angel funding (seed
money) in order to raise capital to build the business. Angel investors generally seek annualized returns of 20-30% and
more, as well as extensive involvement in the business. Many kinds of organizations now exist to support would-be
entrepreneurs, including specialized government agencies, business incubators, science parks, and some NGOs. In more
recent times, the term entrepreneurship has been extended to include elements not related necessarily to business formation
activity such as conceptualizations of entrepreneurship as a specific mindset (see also entrepreneurial mindset) resulting in
entrepreneurial initiatives e.g. in the form of social entrepreneurship, political entrepreneurship, or knowledge
entrepreneurship have emerged.

Entrepreneurship and economic development are intimately related. Schumpeter opines that entrepreneurial process is a
major factor in economic development and the entrepreneur is the key to economic growth. Whatever be the form of
economic and political set-up of the country, entrepreneurship is indispensable for economic development.
Entrepreneurship is an approach to management that can be applied in start-up situations as well as within more established
businesses. The growing interest, in the area of entrepreneurship has developed alongside interest in the changing role of
small businesses. Small entrepreneurship has a fabulous potential in a developing country like India. So, statistical data and
its analyses of several countries show that small industries have grown faster than large industries over the last couple of
decades. Large industries first lost jobs while small industries created new workplaces. The crux of the article is to examine

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the role of entrepreneurship in economic development. The focus is on small scale industries, which led to the main source
of employment in the country.

7 Essential Steps to Starting a New Business

When you decide to form a small- to medium-sized business, the first steps are obvious: think of something people want,
get a DBA, hire employees, etc. After you have created the company, then it is time to get to work, right? Not necessarily.
In today’s technology age, there are several steps that you should do now.
1) The Business Plan
Developing a business plan is a must, but it doesn’t need to be complex. A few pages outlining your business overview,
industry background, product or service, business model, strategy & team provides the foundation of your plan. Having a
solid business plan is a requirement to get SBA (Small Business Administration) loans. For guidance, take a look at
Score’s business plan template.
2) Raise Capital
It’s not an easy time to raise capital for a new business. Many larger institutions have reduced lending programs for small
businesses and venture capital has seen a downturn over the last couple years. The bright spot in local small business
lending seems to currently be with local credit unions. Able to more intimately assess risk in their local markets, some
credit unions have still been actively underwriting SBA loans.
3) Legal Structure
If you plan on bringing on partners or investors or will be signing contracts, you’ll want to set up a legal structure and
incorporate your company. Your main options setting up as Sole Proprietorship, Partnership, or Corporation. Each
structure has its advantages & benefits. Services such as Legal Zoom provide cost-effective online tools to help guide you
through this process.
4) Protect Your Company’s Name
Securing your brand identity is important, and becomes increasingly so as time goes by. The USPTO website has a section
for trademarks where one can conduct a search to see if another business has an existing name similar to yours, and if they
are in your industry.
5) Establish a Web Presence
Creating a website is essential these days. Your website needs to be much more than a postcard on the web if it’s going to
be a lead generation machine. The cost of choosing a domain and hosting your site has come down dramatically over the
last few years. Not to be ignored are social media options like face book, Twitter and a blog. These can give you a huge
boost to your Google visibility.
6) Phone System
The telephone will be the primary means of sales, support and business relations for your new enterprise. Choosing a toll
free number (such as 1-800-Widgets) will allow you to take calls from across the country. You’ll want to consider getting
a virtual pbx which will provide the power and functionality of a Fortune 500 phone system, but with no hardware to buy or
maintain. Even if your company has only one employee, you can also take advantage of multiple extensions. You can
create virtual departments; make announcements and route calls from any extension to any number—your home,
office, or cell.

7) Create Your Business Identity

Customizing your own letterhead, business cards, and even e-mail signature with your company name and logo helps
establish credibility and brand recognition. It also helps spread the word. Once you create a company logo, use it
everywhere; on business cards, brochures, letterhead, your website, even in your e-mail signature.
If you do these seven steps before you open for business, it will save you a lot of time in the long run and make your
business run smoother from the get-go. And make sure to join us on Face book, where we are growing our online
conversation with our customers. Find out the latest updates, ask questions, learn tips, and stay connected.

Information Systems can be used and implemented for the healthy growth of a Business.

Management needs of Information

The characteristics of good information are relevance, timeliness, accuracy, cost-effectiveness, reliability, usability,
exhaustiveness, and aggregation level. Information is relevant if it leads to improved decision making. It might also be
relevant if it reaffirms a previous decision. If it does not have anything to do with your problem, it is irrelevant. For

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example, information about the weather conditions in Paris in January is relevant if you are considering a visit to Paris in
January. Otherwise, the information is not relevant.

Timeliness refers to the currency of the information presented to the users. Currency of data or information is the time gap
between the occurrence of an event in the field until its presentation to the user (decision maker). When this amount of time
is very short, we describe the information system as a real-time system.

Accuracy is measured by comparing the data to actual events. The importance of accurate data varies with the type of
decisions that need to be made. Payroll information must be exact. Approximations simply will not suffice. However, a
general estimate of how much staff time was devoted to a particular activity may be all that is needed.

Information has a great impact on decision making, and hence its value is closely tied to the decisions that result from its
use. Information does not have an absolute universal value. Its value is related to those who use it, when it is used, and in
what situation it is used. In this sense, information is similar to other commodities. For example, the value of a glass of
water is different for someone who has lost his way in Arctic glaciers than it is to a wanderer in the Sahara Desert.

Economists distinguish value from cost or price of a commodity incurred to produce or procure the commodity. Obviously,
the value of a product must be higher than its cost or price for it to be cost-effective.

The concept of normative value of information has been developed by economists and statisticians and is derived from
decision theory. The basic premise of the theory is that we always have some preliminary knowledge about the occurrence
of events that are relevant to our decisions. Additional information might modify our view of the occurrence probabilities
and consequently change our decision and the expected payoff from the decision. The value of additional information is,
hence, the difference in expected payoff obtained by reduced uncertainty about the future event.

Information supports decisions, decisions trigger actions, and actions affect the achievements or performance of the
organization. If we can measure the differences in performance, we can trace the impact of information, provided that the
measurements are carefully performed, the relationships among variables are well defined, and possible effects of irrelevant
factors are isolated. The measured difference in performance due to informational factors is called the realistic value or
revealed value of information.

For most information systems, particularly those supporting middle and top management, the resulting decisions often
relate to events that are not strictly defined and involve probabilities that cannot be quantified. The decision-making process
often is obscure and the outcomes are scaled by multiple and incomparable dimensions. In such cases, we may either
attempt to perform a multi attribute analysis or derive an overall subjective value. The subjective value reflects people's
comprehensive impression of information and the amount they are willing to pay for specific information (Ahituv,
Neumann, & Riley, 1994).

Question 3: What are Artificial Intelligence Systems and how can they be categorized? Also, discuss the role of these
AI systems in the Management and Marketing.
Hint: Artificial intelligence (AI) is the intelligence of machines and the branch of computer science that aims to create it.
AI textbooks define the field as "the study and design of intelligent agents" where an intelligent agent is a system that
perceives its environment and takes actions that maximize its chances of success. John McCarthy, who coined the term in
1956, defines it as "the science and engineering of making intelligent machines."
The field was founded on the claim that a central property of humans, intelligence—the sapience of Homo sapiens—can be
so precisely described that it can be simulated by a machine. This raises philosophical issues about the nature of
the mind and limits of scientific hubris, issues which have been addressed by myth, fiction and philosophy since
antiquity. Artificial intelligence has been the subject of optimism, but has also suffered setbacks and, today, has become an
essential part of the technology industry, providing the heavy lifting for many of the most difficult problems in computer
science.
AI research is highly technical and specialized, deeply divided into subfields that often fail to communicate with each other.
Subfields have grown up around particular institutions, the work of individual researchers, the solution of specific
problems, longstanding differences of opinion about how AI should be done and the application of widely differing tools.

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The central problems of AI include such traits as reasoning, knowledge, planning, learning, communication, perception and
the ability to move and manipulate objects. General intelligence (or "strong AI") is still among the field's long term goals.

Question 4: Differentiate between Enterprise Resource Planning and Supply Chain Management (SCM). Discuss
some of the important features of ERP.
Hint: Differentiate between Enterprise Resource Planning and Supply Chain Management(SCM):-
Coordination of operations with all the companies involved in the entire sequence of suppliers that contribute to
the creation and delivery of a product or service. Effective supply chain management can provide an important
competitive advantage for a business marketer, resulting in improved communication and involvement among
members of the chain, increased motivation, and decreased costs.
ERP stands for Enterprise Resource Planning. ERP is a way to integrate the data and processes of an organization
into one single system. Usually ERP systems will have many components including hardware and software, in
order to achieve integration, most ERP systems use a unified database to store data for various functions found
throughout the organization. The term ERP originally referred to how a large organization planned to use
organizational wide resources. In the past, ERP systems were used in larger more industrial types of companies.
However, the use of ERP has changed and is extremely comprehensive, today the term can refer to any type of
company, no matter what industry it falls in. In fact, ERP systems are used in almost any type of organization –
large or small.
Important features of ERP:-
1. Improve alignment of strategies and operations
Run your enterprise in accordance with strategy and plans, accessing the right information in real
time to identify concerns early.
Pursue opportunities proactively .
Achieve corporate objectives by aligning workforce and organizational objectives.
Find the best people and leverage their talent in the right job at the right time.
2. Improve productivity and insight
Leverage self-services and analytics across your organization.
Improve operational efficiency and productivity within and beyond your enterprise.
3. Reduce costs through increased flexibility to improve process standardization, efficiency, and adaptability.
Use enterprise services architecture to improve process standardization, efficiency, and adaptability.
Extend transactions, information, information, and collaboration functions to a broad business
community.
4. Support changing industry requirements
Take advantage of the SAP Net Weaver platform’s latest open, Web based technology to integrate your
end-to-end processes seamlessly.
5. Reduce risk
Solve complex business challenges today with SAP, your trusted partner for long-term growth, with 30
years of experience working with organizations of all sizes in more countries than any other vendor.
Join SAP’s world-class partner network, uniquely qualified to support the best business practices in more
than 25 industries.
6. Improve financial management and corporate governance
Gain deep visibility into your organization with financial and management accounting functionality
combined with business analytics.
Increase profitability; improve financial control, and mange risk.
7. Optimize IT spending
Integrate and optimize business processes.
Eliminate high integration costs and the need to purchase third-party software.
Deploy other SAP Business Suite applications incrementally to improve cash flow and reduce costly
borrowing.
8. Gain higher ROI faster
Install SAP ERP using rapid-implementation techniques that cost-less than half what traditional
approaches cost.
Leverage preset defaults and prepackaged versions available for specific industries.
9. Retain top performers
Retain your top performers through clearly defined career and development plans.
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 Link employee’s performance to compensation programs such as variable pay plans and long-term
incentives.

Question 5: Explain some of the security threats to information systems? How does encryption ensure data security?
Hint: Security threats in Information System

Management's concern with information system security ranks among the ten most important topics in information
management. The traditional concerns range from threat by forced entry into computer and storage rooms to destruction
fire, earthquake, and hurricane. A more recent concern is the protection of the information system from accidental or
intentional threats that might cause the unauthorized modification, disclosure, or destruction of data. The consequences of
these events, if realized, are degradation or disrupted service to customers. An investigative study was conducted to
determine the executives' concern for each of a list of twelve threats and to place a new and special threat, computer
viruses, in perspective. The results show that these top information systems managers have moved their organizations into
the electronic environment but continue to view threats from a pre-connectivity era

The threat of attacks on critical information systems and the infrastructures that depend on them will, in the foreseeable
future, be almost impossible to eliminate entirely, owing to the fact that attack tools, networks and network control systems
are constantly evolving. As new technologies develop, so too will new attack tools along with the sophistication of the
perpetrators who use them.

CSIS focuses its investigations on threats or incidents where the integrity, confidentiality or availability of critical
information infrastructure is affected. Three conditions must be present in order for CSIS to initiate an "information
operations" investigation. The incident must

 be a computer-based attack;
 appear to be orchestrated by a foreign government, terrorist group, or politically motivated extremists; and
 be done for the purpose of espionage, sabotage, foreign influence, or politically motivated violence (terrorism).

Encryption and Data Security

Data encryption the process of scrambling stored or transmitted information so that it is unintelligible until it is
unscrambled by the intended recipient. Historically, data encryption has been used primarily to protect diplomatic and
military secrets from foreign governments. It is also now used increasingly by the financial industry to protect money
transfers, by merchants to protect credit-card information in electronic commerce, and by corporations to secure sensitive
communications of proprietary information.

All modern cryptography is based on the use of algorithms to scramble (encrypt) the original message, called plaintext, into
unintelligible babble, called ciphertext. The operation of the algorithm requires the use of a key. Until 1976 the algorithms
were symmetric, that is, the key used to encrypt the plaintext was the same as the key used to decrypt the ciphertext. In
1977 the asymmetric or public key algorithm was introduced by the American mathematicians W. Diffie and M. E.
Hellman. This algorithm requires two keys, an unguarded public key used to encrypt the plaintext and a guarded private key
used for decryption of the ciphertext; the two keys are mathematically related but cannot be deduced from one another. The
advantages of asymmetric algorithms are that compromising one of the keys is not sufficient for breaking the cipher and
fewer unique keys must be generated.

In 1977 the Data Encryption Standard (DES), a symmetric algorithm, was adopted in the United States as a federal
standard. DES and the International Data Encryption Algorithm (IDEA) are the two most commonly used symmetric
techniques. The most common asymmetric technique is the RSA algorithm, named after Ronald Rivest, Adi Shami, and
Len Adleman, who invented it while at the Massachusetts Institute of Technology in 1977. Other commonly used
encryption algorithms include Pretty Good Privacy (PGP), Secure Sockets Layer (SSL), and Secure Hypertext Transfer
Protocol (S-HTTP). The National Institute of Standards and Technology (NIST) is working with industry and the

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cryptographic community to develop the Advanced Encryption Standard (AES), a mutually acceptable algorithm that will
protect sensitive government information and will be used by industry on a voluntary basis.

It's your organization's worst nightmare: Someone has stolen backup tapes of your database. Sure, you built a secure
system, encrypted the most sensitive assets, and built a firewall around the database servers. But the thief took the easy
approach: He took the backup tapes, ostensibly to restore your database on a different server, start the database on it, and
then browse the data at his leisure. Protecting the database data from such theft is not just good practice; it's a requirement
for compliance with most laws, regulations, and guidelines. How can you protect your database from this vulnerability?

One solution is to encrypt the sensitive data in the database and store the encryption keys in a separate location; without the
keys, any stolen data is worthless. However, you must strike a balance between two contradictory concepts: the
convenience by which applications can access encryption keys, and the security required to prevent the key theft. And to
comply with company and federal regulations, you need a solution immediately, without any complex coding.

Figure 1: How Transparent Data Encryption works

With this encrypted data, if the data on the disk is stolen, it can't be retrieved without the master key, which is in the wallet
and not part of the stolen data. Even if the wallet is stolen, the master key can't be retrieved from it without the wallet
password. Hence, the thief can't decrypt the data, even if he steals the disks or copies the data files. This satisfies the
compliance requirements for many regulations and directives. And all of this is done without changing the application or
writing complex encryption and key management systems.

Question 6: List some the important Business Intelligence Tools currently available. Also, explain different the
role of business intelligence tools in different management levels.
Hint: Business intelligence (BI):-
Business intelligence(BI) refers to skills, knowledge, technologies, applications,, quality, risks, security issues and practices
used to help a business to acquire a better understanding of market behavior and commercial context. For this purpose it
undertakes the collections, integration, analysis, interpretation and presentation of business information. By extension, ―
business intelligence ‖may refer to the collected information itself or the explicit knowledge developed form the
information.
BI applications provide historical, current, and predictive views of business operations, most often using data already
gathered into a data warehouse or a data mart and occasionally working form operational data. Software elements support
the use of this information by assisting in the extraction, analysis, and reporting of information. Common functionality of
business intelligence applications includes reporting, OLAP, analytics, dashboards, scorecards, data mining, corporate
performance management (CPM), and predictive analysis.
Business intelligence tools:-

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Business intelligence tools are a type of application software designed to report, analyze and present data. The tools
generally read data that been previously stored, often, though not necessarily, in a data warehouse or data mart.
Intelligence Types of Business Tools:-
The key general categories of business intelligence tools are:-
Spreadsheets
Reporting and querying software – are tools that extract, soft, summarize and present selected data
OLAP
Digital Dashboards
Data mining
Process mining
.Business performance management
Except for spreadsheets, these tools are sold as standalone tools, suites of tools, components of ERP systems, or as
components of software targeted to a specific industry. The tools are sometimes packaged into data warehouse appliances.
Roll of Business intelligence tools in different management levels:-
Business Intelligence can help the 3PLs in three ways:
1. Service Improvement:- Traditionally 3PLs have been providing services like transportation management;
warehouse and inventory management; and value added services like light assembly, kitting, etc. Business
Intelligence can improve the effectiveness of these services by in-depth analysis and reports on various
functions involved in these services by in-depth analyses and reports on various functions involved in these
services.
2. Provide Information Technology Based Services:- With the help of BI, 3PLs can provided their clients
with analysis and reports specific to their supply chain. These can significantly help the customers increase
their responsiveness and time to market.
3. Improve Organizational Support Functions:- BI can significantly improve organizational support
functions like HR and financial management by providing an integrated view of these functions and
supporting their specific decision making requirements.

Question 7: Write short notes on the following:

(i) Customer Relationship Management

Hint: CRM (customer Relationship Management) is an information industry term for methodologies,
software, and usually Internet capabilities that help an enterprise manage customer relationships in an
organized way. For example, an enterprise might build a database about its customers that described
relationships in sufficient detail so that management, salespeople, people providing service, and perhaps
the customer directly could access information , match customer needs with product plans and offerings,
remind customers of service requirements, know what other products a customer had purchased, and so
forth.

According to one industry view, CRM consists of:

Helping an enterprise to enable its marketing departments to identify and target their best customers, manage
marketing campaigns with clear goals and objectives, and generate quality leads for the sales team.
Assisting the organization to improve telesales, account ,and sales management by optimizing information shared by
multiple employees, and streamlining existing processes (for example, taking orders using mobile devices);
Allowing the formation of individualized relationships with customers, with the aim of improving customer
satisfaction and maximizing profits ; identifying the most profitable customers and providing them the highest level of
service.
Providing employees with the information and processes necessary to know their customer understand their needs, and
effectively build relationships between the company, its customer base, and distribution partners .
Difference between CRM and ERP:-
1) CRM is a customer-facing solution, whereas ERP is a backend solution.
2) CRM is business driven and IT supported, whereas ERP implementations are typically driven by IT and supported
by business.

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 3) The traditional implementation methodology, like ASAP, may not be suitable in an SAP CRM implementation. You
may have to consider other implementation methodologies, like cycle methodology or conference-room
methodology based on the business requirements.
4) Business process change management is one of the most critical success factors in an SAP CRM Implementation.

(ii) OLAP in decision-making

Hint: OLAP(Online Analytical Processing) technology brings the data in a business intelligence system to life. OLAP
―cubes‖ serve data to interactive reports, and empower the user of the report by allowing them to interact with the data they
see on the screen. Through actions like ―drilling‖ or ―slicing and dicing‖, OLAP reports give business people a way to see
not only that something is happening, but what is causing it. When a sales manager views an OLAP report showing
declining sales in a region, they can dive into that region straight from the report to see which salespeople are not making
quotas. Optionally, from the same report, the reader could also see which customers are not buying or which products are
not selling in that region.
OLAP technology works closely with data warehouses to serve both summarized and historical information. With OLAP
technology and a warehouse working together, that product report form 2004 doesn’t languish in a filing cabinet or
someone’s spreadsheet; it remains a valuable contributor to your organization’s ongoing knowledge and awareness.
OLAP technology also results in fast reports. Your monthly accounting trial balance report that runs directly against your
company’s General Ledger may be slow; your accountants may have to wait while accounting reports are processed,
slowing the delivery of each month-end close in the process. These same reports in OLAP are available online all the time,
and offer excellent response time without impaction your General Ledger system. Since OLAP technology stores both your
business’s detailed information (such as accounting entries) and aggregated information, the results aggregated to the
highest level of large multinational corporations are available quickly.
Of course, the uses of OLAP are not limited to accounting. OLAP can be used to provide reports and analysis over any of
your business data that generate aggregated information. Other examples of OLAP uses are sales data, purchasing data,
budgets, and forecasts, to name a few.

Technology Overview:- Online Analytical Processing(OLAP) reporting enhances BI solutions by making up for many of
the inefficiencies of reporting from a relational database. Like relational reports, OLAP reports show data at various levels
of detail, for instance the individual lines of sales invoices as well as summarized sales data for the whole company. The
difference between relational and OLAP reporting is in speed and flexibility.

Figure:

Application database store granular data. To build a report that shows less detailed data (for instance sales data for a
region), you must group and aggregate. Optionally, you could build and update aggregate tables to service that particular
report. Either approach is inefficient; the first has relatively slow response time, while the second requires extra
development, support, and administration. OLAP databases work with relational databases to make ―rolled up‖ business
data available without incremental development or administration.
OLAP databases come in different flavors to enable maximum flexibility in analytical reporting scenarios:
Multidimensional OLAP (MOLAP) databases store data aggregations directly in a multidimensional database,
providing very quick report time.
Relational OLAP (ROLAP) databases have an OLAP structure for reporting flexibility, but fetch data at runtime
through dynamic SQL queries, resulting in very quick build times and very low latency.
Hybrid OLAP (HOLAP) cubes are a mixture of MOLAP and ROLAP, storing data that is used most often and
querying less used information only when needed. Thus provides a mix of quick response time, short build time,
and low latency.
Since data aggregation is resource-intensive, you would expect the amount of aggregation that OLAP databases
perform to require a lot of time and storage space. OLAP technology benefits from a multidimensional data
structure that provides excellent aggregation and storage performance through matrix math and dimensional
indexing. OLAP therefore provides superior report response times with quick build times. The latest OLAP
platforms, such as SQL Server Analysis Services 2005, have options to make the OLAP database available nearly
24x7. As such, OLAP technology complements the raw data storage capabilities of relational databases to provide
quick response times over a large volume of data.

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Traditional reports tend to be static, not easily enabling the user to ―drill into‖ the data or easily change the
structural layout of a report. OLAP databases provided data through a flexible framework that facilitates the
―drilling‖ and ―slicing and dicing‖ of a grid of data. This framework is multidimensional in nature, and is modeled
after the dimensions of a business rather than by referential rules. Using OLAP, reports showing product
information by customer over a year can be modified to show the quarterly sales of a product group very quickly.
OLAP queries also draw form a single source of metrics and calculations; business calculations can be defined in
OLAP, and reused for each query that requires them, rather than being rewritten in each report.

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