5. Virtual Data and BI

Knowledge is one of the scarcest of all resources.

Thomas Sowell

Virtual data is the reason why the star schema architecture of the BI data warehouse is such a powerful means of producing new information. Virtual data is the information that is produced on demand rather than stored in a database (see previous post). As the power of the computer creates a greater demand for virtual data, the star schema will become a greater factor in maintaining a company’s competitive advantage.

The star schema data warehouse stores primitive data, representing individual events or transactions, in a form that relates those events to the real-world objects that are they are related to. Each dimension of the star schema’s “multidimensional” architecture represents one of these real-world objects. Customers, business units, dates, and financial accounts are examples of typical dimensions stored in an effective data warehouse.

The many dimensions of a company’s data warehouse allow the user to summarize the events of the company’s history by the real-world objects that the company is related to. The company’s revenue can be summarized by business unit, customer type, product, geographical location, or any other factor that the company has deemed relevant to its analysis.

The factors (real-world objects) can be combined and correlated and the number of combinations and correlations are nearly infinite in number based upon the arithmetic of combinations (a later post).

As the typical twenty-first century business becomes increasingly information-based, its data warehouse will become a more critical factor in its ability to generate new information. The data warehouse will be able to produce more information because information will become increasingly virtual, produced on demand from the primitive atoms that represent the grist for the company’s analytical mill.

See Banking the Past.

1. Information and Decisions

Knowledge is never perfect, and the longer the time between a decision and its consequences, the wider the gray area of uncertainty.
Thomas Sowell

The trading advantage that comes from information is a result of the information’s timeliness as well as its volume. If a party to a trade has as much information as the other trading partners, but his information came after the terms of the trade had been agreed upon, he bargained with a substantial disadvantage and most likely did not get as much profit from the trade as he should have. If an investor has several investment opportunities that are alternatives to each other, he needs to have information prior to making his investment. To have value as intellectual capital, information must not only be relevant and reliable – it must also be timely. See Banking the Past.