Defining Information

Content

• Data, Information and Knowledge

• Transforming Data into Information
• Characteristics of Valuable Information
• Summary
• References

Data, Information and Knowledge

In practice and presumably as a result of ease of explication, clear distinctions have been drawn between data,
information and knowledge. Although understandable and at times useful, such distinctions can be unhelpful in
that they indicate the presence of a simple linear progression from data as the least important element, through to
knowledge as the higher-level concept. In fact things are rather more complicated than this, with all the elements
being of real value in appropriate circumstances. It can be useful to regard these concepts as being on a scale or
continuum where one concept phases in to another and where movement in both directions is possible, with for
example, one person's data being information to somebody else. With these qualifications, let us briefly consider
each of the elements in the continuum.

Distinctions between data, information and knowledge

Data: Customarily defined as observations of the state of the world, as facts about events, or records of transactions
such as amounts sold or purchased (Davenport & Prusak 1998). Although data can be qualitative as well as
quantitative, the term usually applies to symbols that can be stored in a computer. Data is easily structured, captured
and transferred. Data is nonetheless a form of information, one that when properly stored and structured can be
communicated easily. However, it is information in a minimal form and in this sense can be regarded as representing
the raw material of information and the basis for future action.

Information: Can be described as data put into some kind of context or, alternatively, as data endowed with
relevance and purpose. Information can thus be regarded as some form of processed data, as data to which, through
human intervention, some form of value has been added. One example would be the reordering and analysis of raw
census data by age, social class and gender in order to build mailing lists for potential purchasers of products or
services. Alternatively, information can be regarded as some form of communication, as a message extracted from
data by an individual for transmission to a receiver, a message that can take any number of forms including text,
sound, image, computer file or multimedia. For such messages to be effective some consensus on meaning between
sender and receiver is required.
Knowledge: A somewhat more complex concept whose definition depends on how the relationship between data,
information and knowledge is perceived. Hence:

• Knowledge is similar to data and information but is richer, deeper and more valuable than the others.
• Knowledge is information that enables actions or decisions. For example recognising that a 'phone number
belongs to a good client, who needs to be called once a week to get orders.
• Knowledge is intrinsically different from information. Knowledge in an area comprises justified beliefs
about relationships among concepts relevant to that particular area. These beliefs are justified by
understanding, theory and practice (Becerra-Fernandez et al 2004).

Types of Data

Data represents real-world things, according to Stair & Reynolds (2013). Several types of data can be used to
represent facts such as:

• Alphanumeric Data: Numbers, letters and other characters

• Image Data: Graphic images and pictures
• Audio Data: Sound, noise, or tones
• Video Data: Moving images or pictures

Types of information

The type of information created depends on the relationships defined among existing data. According to Chaffey &
White (2011) information can be defined as four forms (shown in Figure 3-2):

• Structured information: presented in reports, tables and graphs

• Unstructured information: delivered verbally or on an ad-hoc basis
• Formal information: part of established reporting and communication
• Informal information: ad-hoc communication such as conversations or email

Types of knowledge

Among the more important categorisations of knowledge are three sets of contrasting types namely, declarative or
procedural knowledge, tacit or explicit knowledge and general or specific knowledge (Becarra-Fernandez et al
2004).

• Declarative and Procedural Knowledge

o Declarative Knowledge: Know-what knowledge. Deals with facts and focuses on beliefs about
relationships between variables. It can be stated in the form of propositions, expected correlations or
formulae relating concepts represented as variables.
o Procedural Knowledge: Know-how knowledge. Focuses on beliefs relating to sequences of steps or
actions to desired (or undesired) outcomes -such as riding a bike.

• Explicit and Tacit and Knowledge

o Explicit knowledge: Formal, identifiable and easy to capture and transmit. Knowledge that has been
expressed in words or numbers and that can be shared formally and systematically in the form of
data, specifications, manuals, drawings, audio and video, computer programs and so on.
 o Tacit knowledge: Informal, tied to the senses and innate personal skills and not always possible to
articulate. Such knowledge is considered tacit unless it can be verbalised in the form of a document
that others can use (Martin 2008).

• General and Specific Knowledge

o General knowledge: Possessed by a large number of individuals and easily transferred across them.
An example would be an understanding of the rules of football or knowledge of teams in a football
competition.
o Specific knowledge: Knowledge possessed by a limited number of individuals and expensive to
transfer. This can include 'technically-specific knowledge', which is a deep knowledge of a particular
area, its tools and techniques, such as say, knowledge of computer engineering. (Becarra-Fernandez
et al 2004).

Transforming Data into Information

Turning data into information is a process, or a set of logically related tasks performed to achieve a defined
outcome (shown in Figure 3-1) (Stair & Reynolds 2013). The process of defining relationships among data to
create useful information requires an understanding of a set of information and the ways that information can be
made useful to support a specific task or reach a decision. What is important is not so much where the data comes
from or how it is processed, but whether the results are useful and valuable.

Figure 3-1: Transformation process between data and information (Stair & Reynolds 2013)

Tiwana (2000) summarizes the five C's model which was originally suggested by Davenport & Prusak in 1998.
The five C's model illustrates the conversion process between data and information shown in Figure 3-2 below.

Figure 3-2: The five C's (Tiwana 2000, p. 61)

The five C's model differentiates data from information and illustrates the different ways of creating information
by adding meaning to data.

• Condensed: data is summarized in more concise form and unnecessary depth is eliminated.
• Contextualized: we know why the data was collected.
• Calculated: analysed data, similar to condensation of data.
• Categorized: the unit of analysis is known.
• Corrected: errors have been removed, missing 'data holes' have been accounted for.

Characteristics of Valuable Information

As described in Stair & Reynolds (2013), for information to be valuable to managers and decision makers, it should
have the following characteristics:

• Accurate: Accurate information is error free. In some cases, inaccurate information is generated because
inaccurate data is fed into the transformation process.
• Complete: Complete information contains all the important facts. For example, an investment report that
does not include all important costs is not complete.
• Economical: Information should also be relatively economical to produce. Decision makers must always
balance the value of information with the costs of producing it.
• Flexible: Flexible information can be used for a variety of purposes. For example, information on how much
inventory is on hand for a particular part can be used by a sales representative in closing a sale, by a
production manager to determine whether more inventory is needed, and by a financial executive to
determine the total value the company has invested in inventory.
• Reliable: Reliable information can be depended on. In many cases, the reliability of the information depends
on the reliability of the data collection method. In other instances, reliability depends on the source of the
information. A rumour from an unknown source that oil prices might go up may not be reliable.
• Relevant: Relevant information is important to the decision maker. Information that lumber prices might
drop is unlikely to be relevant to a computer chip manufacturer.
• Simple: Information should also be simple and not overly complex. Sophisticated and detailed information
may not always be needed. In fact, too much information can cause information overload, where a decision
maker has too much information and is unable to determine what is really important.
• Timely: Timely information is delivered when it is needed. Knowing last week's weather conditions will not
help when trying to decide what coat to wear today.
• Verifiable: Information should be verifiable. This means that you can check it to make sure it is correct,
perhaps by cross-checking many sources for the same information.
• Accessible: Information should be easily accessible by authorized users to be obtained in the right format
and at the right time to meet their needs.
• Secure: Information should be secure from access by unauthorized users Depending on the requirements of
a particular decision-maker, some of these characteristics may be more valuable than others.

The value of information is directly linked to how it helps decision makers achieve their organisation's goals.
Valuable information can help people in their organisation perform tasks more efficiently and effectively. Valuable
information can also help mangers decide whether to invest in additional information systems and technology. Let
us now consider some different organisational perspectives on information.

Summary
Highly successful organisations today are typically those that are most effectively collecting, storing, distributing,
and using information. More than facilities, equipment, or even products, it is the information a company has and
how it uses it that defines organisation survival and success. Top managers look for ways to manage, leverage, and
protect what is rapidly becoming the most valuable asset of any organisation: information. To manage information
effectively, organisations need information technologies and systems. We will discuss IT/IS in a future topic.
References
Becerra-Fernandez, I, Gonzalez, A & Sabherwal, R 2004, Knowledge management: challenges,
solutions and technologies, Pearson Prentice Hall, Upper Saddle River, NJH

Chaffey, D & White, G 2011, Business information management, 2nd edn, Pearson Education,
Essex, England

Davenport, TH & Prusak, L 1998, Working knowledge: How organizations manage what they
know. Harvard Business School Press, Boston.

Drucker, PF 1992, The new society of organizations, Harvard Business Review, September-
October, pp. 95-104

Encyclopaedia of Global Industries 2003, 3rd edn, Amanda C. Quick, Ed., Thomson Gale,
Framlington, MA.

Haag, S & Cummings, M 2009, Information systems essentials, 3rd edn, McGraw-Hill, New York.

Martin, B 2008, ‘Knowledge management’, In, Blaise Cronin, Ed., Annual Review of Science and
Technology, vol. 42, pp.371-421, Information Today, Inc, Medford, NJ.

Stair R & Reynolds, G 2013, Fundamentals of Information Systems, 7th edn, Course Technology,
Cengage Learning, Boston, MA.

Tiwana, A 2000, The knowledge management toolkit: practical techniques for building a
knowledge management system, Prentice Hall PTR, Upper Saddle River, NJ.

Turner, C 2002, The information e-conomy: business strategies for competing in the global age,
Kogan Page Limited, London.