Data and Information

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Lecture 2

• Data and Information
• Information Systems

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Lecture objectives

• At the end of this lecture you should understand
  
• What are data and information
• The value of information
• Characteristics of information quality

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Data and Information

• The terms 'data' and 'information' are used
  interchangeably in everyday speech. The terms do
  have different meanings
• - DATA are facts, events, transactions, etc
  which have been recorded.
• They are the input raw materials from which
  information is produced.
• - INFORMATION is data that have been processed
  in such a way as to be useful to the receiver.

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Data

• Raw facts or observations that have little or no
  value
• E.g. todays date, measurement of temperature,
  records of business transactions

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Characteristics of Data

• Data are facts obtained by observation, counting,
  measuring, weighing etc., which are then
  recorded.
• Frequently called raw data or basic data, they
  record the day to day transactions of the
  organisation.
• Data are derived from both internal and external
  sources.
• Data quality is as important as the processing
  methods for the data.

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Information

• Data that has been processed so that they are
  meaningful
• Data that has been processed for a purpose
• Data that has been interpreted and understood by
  the recipient
• Information acts to reduce uncertainty about a
  situation or an event.

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Data
Transformation process
Information
e.g. bank statements Sales forecasts A telephone
directory
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Data Processing

• Classification
• Rearranging / sorting
• Aggregating
• Performing calculations
• Selection

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Value of Information

• Tangible value
• A value or benefit that can be measured directly,
  usually in monetary terms
• Calculation to determine the value of a given item

Value of information cost of gathering the
information
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• Intangible value
• A value or benefit that is difficult or
  impossible to quantify
• E.g. measurement of the extent to which
  information can improve decision behaviour
• Calculation

Improved decision behaviour cost of gathering
information
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Sources of Information

• Formal communication presenting information in
  a structured and consistent manner
• Informal communication less well structured
  information that is transmitted by informal means
  e.g. casual conversation.

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Characteristics of Information

• If an organisation is to be successful then there
  is a need for the data to be relevant and the
  processing to be meaningful in order for the
  information to be of value.
• The value of information itself cannot be
  guaranteed, but there are certain characteristics
  of information that must be present if the
  information is to be useful.
• Information should be
• Relevant, Accurate, Timely, Complete,
  Verifiable and Consistent

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Relevant
When deciding on a course of action or making a
plan, the information needs to be relevant. For
example, when a power station is deciding to
purchase oil for it to burn in order to generate
electricity, it needs to know what the current
price of oil is and not what the price of oil was
ten years ago. When deciding on a courses of
action or making a plan, the information needs
to be relevant.
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Accurate
Naturally if decision makers goes to the trouble
of identifying some information that will help
reduce the uncertainty in the decision
environment, then they will need to be confident
of the accuracy of that information. For example,
when a power station is deciding to purchase oil
for it to burn in order to generate electricity,
it needs to know what the current price of oil
is. If it pays too much for the oil then it could
go out of business. When deciding on a course of
action or making a plan, the information needs
to be accurate.
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Timely
For information to be effective it must be
timely. For example, when a power station is
deciding to purchase oil for it to burn in order
to generate electricity, it needs to have that
information at hand and not have to wait several
days for someone to retrieve the information.
When deciding on a course of action or making
a plan, the information needs to be timely.
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Complete
For information to be effective it must be as
complete as possible. For example, when a power
station is deciding to purchase oil for it to
burn in order to generate electricity, it needs
to know the complete price of the oil and not the
price to the nearest 10,000 pounds. When deciding
on a course of action or making a plan, the
information needs to be as complete as possible.
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Verifiable
Increasingly managers are being asked to justify
the decision that they have made. For this reason
all information that the manager uses in making a
decision needs to be verifiable. For example,
when a manager of a power station is deciding to
purchase oil for it to burn in order to generate
electricity that manager must be able to verify
that the price that is being quoted is the
current price and not an inflated one. When
deciding on a course of action or making a
plan, the information needs to be verifiable.
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Consistent
For information to be effective it must be
consistent. For example, when a power station is
deciding to purchase oil for it to burn in order
to generate electricity, it needs to have a
consistent price of the oil and not two widely
different prices. When deciding on a course of
action or making a plan, the information needs
to be Consistent.
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Additional Characteristics

• Confidence in the source
• Reliability
• Appropriate
• Received by the correct person
• Sent by the correct channels.

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Information Systems (Chaffey,02)

• An information system is a group of interrelated
  components that work collectively to carry out
  input, processing, output, storage, and control
  actions in order to convert data into information
  products that can be used to support forecasting,
  planning, control, coordination, decision making
  and operational activities in an organisation.

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Resources that support IS

• People resources
• Hardware resources
• Software resources
• Communications resources
• Data resources
• (Chaffey,02)

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Applications of IS

• Transaction processing
• Office automation systems
• Information reporting systems
• Decision support systems
• Executive information systems

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Summary

• After the first two lectures you should now
  understand
• What is the role of management
• The levels of management in a typical
  organisation
• The difference between data and information
• What is an information system
• Types of information systems