Database

A collection of logically related information organized so that it can be easily accessible, managed, and updated

What is a Database?

A database refers to a collection of logically related information organized so that it can be easily accessible, managed, and updated. Databases are generally accessed electronically from a computer system and are usually controlled by a database management system (DBMS). The database administrator (DBA) is the individual responsible for managing the databases, including database security, access control, backup, and disaster recovery.

 

Database

 

Summary

  • A database refers to a collection of logically related information organized so that it can be easily accessible, managed, and updated. Databases are generally accessed electronically from a computer system and are usually controlled by a database management system (DBMS).
  • Enterprises typically make use of both internal databases and external databases. Internal databases typically include operational databases and data warehouses. External databases refer to databases external to an organization and are generally accessed over the Internet and are owned by other organizations.
  • The five major components to a database are hardware, software, data, procedure, and database access language.

 

What is Data?

Before we get into the concept of a database, we should first get a clear understanding of what data is. Put simply, data are pieces of information or facts related to the object being considered. For example, examples of data relating to an individual would be the person’s name, age, height, weight, ethnicity, hair color, and birthdate. Data is not limited to facts themselves as pictures, images, and files are also considered data.

There are a few key terms that would be useful to help one understand data more, and particularly the relation between data and databases.

Fields: Within a database, a field contains the most detailed pieces of information about events, people, objects, and transactions.

Record: A record is a collection of related fields.

Table: A table is a collection of related records with a unique table name

Database: A database is a collection of related tables.

 

What is the Role of Databases in an Enterprise?

Enterprises typically make use of both internal databases and external databases. Internal databases typically include operational databases and data warehouses. The former, operational databases, refer to databases that are actively used in the operations of the business, such as accounting, sales, finance, and HR.

Data warehouses contain data collected from several sources and the data contained within are generally not used for routine business activities. Instead, data warehouses are usually used for business intelligence purposes. External databases refer to databases external to an organization and are generally accessed over the Internet and are owned by other organizations. An example of external databases is the SEC database.

 

Components of a Database

The five major components of a database are:

 

1. Hardware

Hardware refers to the physical, electronic devices such as computers and hard disks that offer the interface between computers and real-world systems.

 

3. Software

Software is a set of programs that are used to manage and control the database and includes the database software, operating system, network software used to share the data with other users, and the applications used to access the data.

 

3. Data

Data are raw facts and pieces of information which need to be organized and processed to make it more meaningful. Database dictionaries are used to centralize, document, control, and coordinate the use of data within an organization. Put simply, a database is a repository of information about a database (also called metadata).

 

4. Procedures

Procedures refer to the instructions used in a database management system and encompass everything from instructions to setup and install, login and logout, manage the day-to-day operations, take backups of data, and generate reports.

 

5. Database Access Language

Database Access Language is a language used to write commands to access, update, and delete data stored in a database. Users can write commands using Database Access Language before submitting it to the database for execution. Through utilizing the language, users can create new databases, tables, insert data, and delete data.

 

Components of a Database

 

What is a Database Management System (DBMS)?

A Database Management System (DBMS) is a well-known term in data analysis and it refers to a collection of programs that enable its users to access databases and manipulate, maintain, report, and relate data. A DBMS is often used to reduce data redundancy, share data in a controlled way, and reduce data integrity problems. DBMS is not an information system but is simply software.

The relational model, which saves data in table formats, is the most widely used DBMS. The relational DBMS organizes information into rows, columns, and tables, which makes it easier to find relevant information. Relational databases are popular because they are easy to extend and new data categories can be added after the original database is created without large amounts of modification.

The Structured Query Language (SQL) is considered the standard user and application program interface for a relational database, and all relational DBMS software supports SQL. Examples include FileMaker Pro, Microsoft Access, Microsoft SQL Server, MySQL, and Oracle, among others.

 

More Resources

CFI is the official provider of the Business Intelligence & Data Analyst (BIDA)® certification program, designed to transform anyone into a world-class financial analyst.

To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:

  • Distributed Ledgers
  • Business Intelligence
  • Data Warehousing
  • Tableau – Uses in Finance