Data Refers To Raw, Unevaluated Facts, Figures, Symbols, Objects, Events, Etc. Data May Be A

Basic concepts
Data versus Information
Data refers to raw, unevaluated facts, figures, symbols, objects, events, etc. Data may be a
collection of facts lying in storage, like a telephone directory or census records.
Information is data that have been put into a meaningful and useful context and communicated to a
recipient who uses it to make decisions. Information involves the communication and reception of
intelligence or knowledge. It appraises and notifies, surprises and stimulates, reduces uncertainty,
reveals additional alternatives or helps eliminate irrelevant or poor ones, and influences individuals
and stimulates them to action. An element of data may constitute information in a specific context;
for example, when you want to contact your friend, his or her telephone number is a piece of
information; otherwise, it is just one element of data in the telephone directory.
Computers have made the processing function much easier. Large quantities of data can be
processed quickly through computers aiding in the conversion of data to information. Raw data
enter the system and are transformed into the system's output, that is, information to support
managers in their decision making.
Characteristics of Information
The characteristics of good information are relevance, timeliness, accuracy, cost-effectiveness,

reliability, usability, exhaustiveness, and aggregation level. Information is relevant if it leads to
improved decision making. It might also be relevant if it reaffirms a previous decision. If it does not
have anything to do with your problem, it is irrelevant. For example, information about the weather
conditions in Paris in January is relevant if you are considering a visit to Paris in January.
Otherwise, the information is not relevant.
Timeliness refers to the currency of the information presented to the users. Currency of data or
information is the time gap between the occurrence of an event in the field until its presentation to
the user (decision maker). When this amount of time is very short, we describe the information
system as a real-time system.
Accuracy is measured by comparing the data to actual events. The importance of accurate data
varies with the type of decisions that need to be made. Payroll information must be exact.
Approximations simply will not suffice. However, a general estimate of how much staff time was
devoted to a particular activity may be all that is needed.
Value of Information
Information has a great impact on decision making, and hence its value is closely tied to the
decisions that result from its use. Information does not have an absolute universal value. Its value is
related to those who use it, when it is used, and in what situation it is used. In this sense, information
is similar to other commodities. For example, the value of a glass of water is different for someone
who has lost his way in Arctic glaciers than it is to a wanderer in the Sahara Desert.
Economists distinguish value from cost or price of a commodity incurred to produce or procure the
commodity. Obviously, the value of a product must be higher than its cost or price for it to be cost-
effective.
The concept of normative value of information has been developed by economists and statisticians
and is derived from decision theory. The basic premise of the theory is that we always have some
preliminary knowledge about the occurrence of events that are relevant to our decisions. Additional
information might modify our view of the occurrence probabilities and consequently change our
decision and the expected payoff from the decision. The value of additional information is, hence,
the difference in expected payoff obtained by reduced uncertainty about the future event.
Information supports decisions, decisions trigger actions, and actions affect the achievements or
performance of the organization. If we can measure the differences in performance, we can trace the
impact of information, provided that the measurements are carefully performed, the relationships
among variables are well defined, and possible effects of irrelevant factors are isolated. The
measured difference in performance due to informational factors is called the realistic
value or revealed value of information.
For most information systems, particularly those supporting middle and top management, the
resulting decisions often relate to events that are not strictly defined and involve probabilities that
cannot be quantified. The decision-making process often is obscure and the outcomes are scaled by
multiple and incomparable dimensions. In such cases, we may either attempt to perform a
multiattribute analysis or derive an overall subjective value. The subjective value reflects people's
comprehensive impression of information and the amount they are willing to pay for specific
information (Ahituv, Neumann, & Riley, 1994).
Information as an Aid to Decision Making
Simon (1977) describes the process of decision making as comprising four steps: intelligence,
design, choice, and review. The intelligence stage encompasses collection, classification,
processing, and presentation of data relating to the organization and its environment. This is
necessary to identify situations calling for decision. During the decision stage, the decision maker
outlines alternative solutions, each of which involves a set of actions to be taken. The data gathered
during the intelligence stage are now used by statistical and other models to forecast possible
outcomes for each alternative. Each alternative can also be examined for technological, behavioural,
and economic feasibility. In the choice stage, the decision maker must select one of the alternatives
that will best contribute to the goals of the organization. Past choices can be subjected
to review during implementation and monitoring to enable the manager to learn from mistakes.
Information plays an important role in all four stages of the decision process. Figure 1 indicates the
information requirement at each stage, along with the functions performed at each stage and the
feedback loops between stages.

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Basic concepts

Data versus Information

The characteristics of good information are relevance, timeliness, accuracy, cost-effectiveness,

Information as an Aid to Decision Making

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