Traditional File Processing

• Each business application was designed to use one or more specialized data files containing only specific types of data records.
• The data are organized, stored, and processed in independent files of data record
• Programs are customized to process the data.

However, there are few disadvantages of Traditional File Processing:-
1) Data redundancy
2) Lack of data integration
3) Data dependence
4) Lack of data integrity/standardization

Example of traditional file processing in a general company

The use of a traditional approach to file processing encourages each functional area in a corporation to develop specialized applications and files. Each application requires a unique data file that is likely to be a subset of the master file. These subsets of the master file lead to data redundancy and inconsistency, processing inflexibility, and wasted storage resources.

Data Management Approach

• Consolidates data into databases that can be accessed by different programs.
• Use a database management systems (DBMS)
• DBMS “is a set of computer programs that controls the creation, maintenance, and the use of the database with computer as a platform or of an organization and its end users.”
• A DBMS is a system software package that helps the use of integrated collection of data records and files known as databases.
• DBMS also allows different user application programs to easily access the same database.
• It may use any of a variety of database models, such as the network model or relational model.
• In large systems, a DBMS allows users and other software to store and retrieve data in a structured way.
  

Example of a database management approach in a banking system

Database management systems

Data Warehouses

• Data warehouses is a central repository for all or significant parts of the data that an enterprise's various business systems collect.
• A data warehouses is housed on an enterprise mainframe server. Data from various online transaction processing (OLTP) applications and other sources is selectively extracted and organized on the data warehouse database for use by analytical applications and user queries.
• Data warehouses emphasizes the capture of data from diverse sources for useful analysis and access, but does not generally start from the point-of-view of the end user or knowledge worker who may need access to specialized, sometimes local databases.
• Data warehouses may be divided into data marts.
• Data marts is a subsets of data that focus on specific aspects of a company (department/business process).
  

Phases in preparing and using a data warehouse

Components of a data warehouse

The data warehouse extracts current and historical data from multiple operational systems inside the organization. These data are combined with data from external sources and reorganized into a central database designed for management reporting and analysis. The information directory provides users with information about the data available in the warehouse.