by Leigh Goessl

Created on: November 21, 2010

A database management system (DBMS) is software that centralizes and streamlines data into a singular source to retrieve information. There are many business advantages to utilizing database management for company records. In today's competitive business environment, most companies employ some form of electronic data management.

Over the years many businesses have transitioned organizational processes to a modern database management system rather than continue to use antiquated formats which contain segregated systems. When information is segregated across an organization in various departments, this is cumbersome, redundant and can lead to costly mistakes.

Utilizing a centralized DBMS increases speed, improves data management, and over the course of time, decreases costs. In addition to these three advantages, there are other tangible benefits as well. An optimally designed DBMS will eliminate redundancy, increase efficiency and decrease inconsistency. As all business owners and managers know, accuracy and consistency is essential for maintenance of company records.

The DBMS separates the physical information from the logical information, which means that the user can interact with the system without concern of where the data is physically located. Users can retrieve information within views. This is essential to understand because ideally when using a system, users should only be concerned with the task at hand, they do not need to be involved with all the processes occurring within the system, this should happen seamlessly in the eyes of the user.

However in order to design and/or choose a most favorable DBMS, managerial decision makers must first thoroughly examine the company's business processes that are necessary in order to function. Any software selected should be able to effectively meet the needs of the business.

All of the company's information is placed into the DBMS and this system can service all processes and applications. Another tangible advantage of database management is since the data is located in one database, all interested parties can effectively update and communicate with one another. Implementing a DBMS is advantageous to a company because it allows for centralization of key business functions and give an ability to make rapid, real-time decisions, which is often beneficial since information is fresh and current. 

This is not to say the investment does not have some disadvantages. Primary drawbacks to installing a good DBMS is that it will initially be time-consuming and costly, however, if designed correctly and analyzed thoroughly, these costs will pay off over the course of time with savings in manpower, storage, and the opportunity to use the DBMS strategically to increase revenues.

Over time the return of investment will be better realized if the right database management system is chosen.

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