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.
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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