Databases are valuable resources that enable a myriad of business tools and practices, such as customer relationship management, efficiency analyses and projection reports, to name a few. Still, many people have difficulty conceptualizing what exactly a database is. A database is an organized collection of often vast amounts of related information that can be readily accessed and used as input to a range of applications that may present new or deeper insight into the business or enable new competitive advantages. In one sense databases can be likened to spreadsheets, containing fields and records of related but separate information that can be accessed for analysis. In fact databases and spreadsheets can in some cases be used in lieu of one other, but spreadsheets mainly answer inquiries about numerical data while databases are likely to contain more complex items such as images, dates, links, text, and numbers. The range of information that can be contained within and accessed by databases makes them indispensable for business data retention, compilation and interpretation.

To understand a database, first understanding some basic database related terminology is helpful. A field is a single aspect of the data contained within the database, while a record is the collection of data for one item in the database. Assume we are creating an employee information database that will contain employee names, addresses and telephone numbers. The employee name ‘Rebecca Smith’ could theoretically be contained within a field, while Rebecca’s name, address and telephone number would constitute one complete record. The single collection of all of the employees’ contact information represents a table, and multiple tables may be linked to other related tables, creating a relational database.

Planning is an important stage in database development to ensure that necessary information can easily be retrieved and utilized. Assume our employee information database above contains the first and last name of each employee in a field designated for employee name, with the complete address stored in the address field. Now suppose we need to create an alphabetical list of all employees by last name who live within ten miles of the office. For a well planned database, this would be a basic task. But for this example, how could the database distinguish between first name and last name, and how would it interpret the jumble of information we call ‘address’? It wouldn’t, which is what makes database planning so important. By anticipating how information would need to be retrieved in the future, we could have eliminated this problem by structuring separate fields for first name, last name, street address, city, state and zip code.

Databases do not only store information, they typically provide an interface through which users can collect and analyze information with ease. Most databases provide users with a means of establishing the data structure, form tools for easy data entry, a query engine which allows us to request information from the database and a report function for outputting the results of queries.

For businesses, information is power. Databases give companies unprecedented means of retrieving and analyzing important data that allows them to continuously improve and streamline processes for increased efficiency and ultimately, increased profitability.