Learning stage One

Keynote session-3

The Concept of Information

 Objectives of session
Upon completion of this chapter, the student
should be able to:
• Explain what is the concept of information;
• Identify the difference between data and
Information;
• Explain, Parameters of Quality information;
• Describe the General Model of a Human as an
Information Processor.
 The Concept of Information
• All individuals, companies and, in general, all
organizations are continuously capturing data,
many of which are of no significance to them
at all.
• However, other data are available that would
afford them a better understanding of their
own environment and of themselves.
• For this reason, the right amount of
information at the right time is a key factor for
every organization.
 Concepts of information cont….
• Company managers take decisions, prepare
plans and control their company’s activities
using information that they can obtain either
from formal sources or through informal
channels such as face-to-face conversations,
telephone calls, social contacts, etc.
• Managers are challenged by an increasingly
complex and uncertain environment. In these
circumstances, managers should theoretically
be able to define and obtain the type of
information they require.
• Most decisions are therefore made in the
absence of absolute knowledge, either because
the information is not available or because
access to it would be very costly.
• Despite the difficulties in obtaining information,
managers need relevant information on which to
base their planning, control and decision-making
functions. Although the terms data and
information are sometimes used
indiscriminately, they do have different
meanings.
The process of reflecting on and understanding
information is what allows the message to have
different meanings for different people.
This process also implies that the data analyzed,
summarized or processed to produce messages will
only become information if its recipient understands
its meaning.
According to Menguzzato and Renau (1991),
information costs can be estimated by taking the
following into account:
• The information content required.
• How urgently the information is needed.
• The amount of information needed.
• How accessible the information is.
 Data and Information
• Today, information is one of an organization's
most important and valuable resources.
• Organizational information systems contain
information about people, places, things, ideas
and events within the organization and in the
environment surrounding it.
• Data are therefore the raw facts for producing
information.
• The information systems process data in
unusable form into a usable form that is
information for intended recipient.
 Data and information con’t…
• As the simplified e.g shown in the Figure, the
student name, ID number, semester, course
codes, and course grades all represent data. The
computer processes the data to produce the
grade information (report).
• Data represents real-world facts, such as an
employee's name, weekly sales, customer
numbers, or product inventory.
• Data items are organized for processing purpose
into data structures, file structure, database, and
data warehouse.
 Data vs information con’t..
The value of information might be measured in
following three dimensions:
• Content -- information should be accurate,
relevant, and complete
• Time -- information should be timely and
current
• Form -- information should be provided at the
appropriate level of detail and in the
most appropriate form.
 The characteristics of valuable information
I. being accurate,
II. Verifiable
III. Timely,
IV. Organized,
V. meaningful,
VI. Useful,
VII.cost effective.
 Parameters of Quality
• The parameters of a good quality are difficult to
determine, however, the information can be termed
as of a good quality if it meets the norms of
impartiality, validity, reliability, consistency and age.
• The quality of information has another dimension of
utility from the user’s point of view.
• Therefore, if one can develop information with due
regards to these parameters, one can easily control
the outgoing quality of the information with the
probable exception of the satisfaction at the user’s
end.
 Parameters of Quality con’t…
i. Impartiality
• Impartial information contains no bias and has
been collected without any distorted view of the
situation.
ii. Validity
• The validity of the information relates to the
purpose of the information. In other words, it is
the answer to the question dose the information
meet the purpose of decision making for which it
is being collected?
iii. Reliability
• It is connected to the representation and the
accuracy of what is being described. For
example, if the organization collects the
information on the product acceptance in the
selected market segment, the size of the
sample and the method of selection of the
sample will decide the reliability.
• The reliability is also affected from the right
source.
• The information is termed as inconsistent if it is derived
from a data which does not have a consistent pattern of
period. Somewhere, the information must relate to a
consistent base or a pattern.
• For example, you have collected the information on the
quantity of production for the last twelve months to fix
the production norms.
• If in this twelve months period, the factory has worked
with variable shift production, the production statistics of
the twelve months for comparison is inconsistent due to
per shift production.
• The consistency can be brought in by rationalizing the
data to per shift production per month. The regularity in
providing the information also helps in assessing the
consistency in the information.
iv. Consistency
• The information is termed as inconsistent if it is
derived from a data which does not have a
consistent pattern of period.
• Somewhere, the information must relate to a
consistent base or a pattern.
v. Age
• If the information is old, it is not useful today.
The currency of the information makes all the
difference to the users.
 Classification of the Information
The information can be classified in a number of
ways provide to a better understanding.
John Dearden of Harvard University classified
information in the following manner:
I. Action versus no-action information
The information which induces action is called action
information. The information which communicates only
the status of a situation is no-action information.
II. Recurring versus non-recurring information
• The information generated at regular intervals
is recurring information. The monthly sales
reports, the stock statements, the trial
balance, etc. are recurring information.
• The financial analysis or the report on the
market research study is non-recurring
information.
Classification of the Information cont…
III. Internal versus external information
• The information generated through the
internal sources of the organization is termed
as internal information, while the information
generated through the Government reports,
the industry surveys, etc. is termed as external
information, as the sources of the data are
outside the organization
 Value of the Information
• The information is called perfect information,
if it wipes out uncertainty or risk completely.
• However, perfect information is a myth.
• The value of the additional information making the
existing information perfect (VPI) is: VPI = (V2 – V1) –
(C2 – C1)
• Where V is the value of the information and C is the
cost of obtaining the information. V1 and C1 relate to
one set of information and V2, C2 relate to the new
set. If the VIP is very high, then it is beneficial to
serve the additional information need.
 General Model of a Human as an
Information Processor
• A manager or a decision maker uses his sensory
receptors, normally eyes and ears, to pick up
information and transmit them to brain for processing
and storage.
• While processing the information for a managerial
response, the manager also uses accumulated
knowledge from memory.
• The manager in such a situation adopts the method of
filtering the information. Filtering is a process whereby
a manager selectively accepts that much input, which
his/her mental ability can manage to process
DIKW Hierarchy (Data, Information,
Knowledge and Wisdom)
• DIKW refers to data, information, knowledge
and wisdom; it is an information hierarchy
where each layer adds certain attributes over
and above the previous one.
• Data is the most basic level; Information adds
context; Knowledge adds how to use it; and
wisdom adds when to use it
 Creating Information
• Processing data is necessary to place them
into a meaningful context so that they can be
easily understood by the recipient.
• A number of different data processes can be
used to transform data into information.
• Data processes are sometimes also known as
“transformation processes”.
Creating information cont….
 Data processes
Some examples of data processes include the
following:
• Classification: This involves placing data into
categories.
• Rearranging/sorting: This involves organizing
data so that items are grouped together or
placed into a particular order.
• Aggregating: This involves summarizing data,
for example by calculating averages, totals or
subtotals.
 Data process cont..
• Performing calculations: An example might be
calculating an employee’s gross pay by
multiplying the number of hours worked by the
hourly rate of pay.
• Selection: This involves choosing or discarding
items of data base don a set of selection criteria.
A sales organization, for example, might create a
list of potential customers by selecting those
with incomes above a certain level.
 Data, information, knowledge and
wisdom Framework
Level Definition Learning process Outcome

Data Raw facts Accumulating truths Memorization (Data

Bank)
Information Meaningful, Useful Giving form and Comprehension
data Functionality (Information Bank)
Knowledge Clear understanding of Analysis and Synthesis Understanding
Information (Knowledge
Bank)
Wisdom Using knowledge to Discerning judgments Better living/success
establish and achieve and (Wisdom Bank)
goals taking appropriate
action