Information Technology

Unit 1: Types and Purpose of Information

Objectives:
At the end of this unit students will be able to:

1. Differentiate between data and information

2. Categorize various types of data
3. Explain with the aid of examples the various ways organizations use information
4. List sources of information and categorize them as either internal or external
5. List and briefly explain the characteristics of good information

Content Summary
Data is raw facts, used as a basis for reasoning, discussion or calculations.  Information is data that is presented in a
given context, leading to the communication or reception of knowledge or intelligence.

Two types of data are considered here: qualitative data deals with descriptions, it can be observed but not
measured; quantitative data is number-based, it is obtained through well-defined processes.

There are two categories of data:

 Primary – data that you collect yourself through direct observation, surveys or interviews. You can rely on
primary data because you know where it came from and what type of processing was done to it. Primary data is
often expensive and difficult to collect.
 Secondary – data that you get from an external source, e.g. the Internet, news, journals or stories told verbally.
You cannot be certain how accurate it is or whether it is biased by the point of view the author is trying to make.
Secondary data is usually cheaper and easier to obtain.

Organizations use information in many ways to help them become more effective, here is four of the most important
ways:

 Operational support – makes use of the information from their operational support systems to monitor and
control their activities on a day-to-day basis.
 Analysis – does regular processing of its data to identify patterns and trends and to monitor performance.
 Decision making – uses information systems to support decision making when a problem or issue arises and
management need to take action to resolve it.
 Gaining advantage – identifies patterns and trends, this time with the aim of making decisions to benefit from
these events (as oppose to resolving a problem) as and when opportunity arises.

Internal information: within an organization, each department produces information which is of value to other
departments, for example:

 Finance – information about revenues, costs or expenditures, capital items, liabilities, investments, etc
 Purchasing/Manufacturing/Operation – information about resources used, production rates, suppliers, etc
 Sales/Marketing – information about the business’s customers (either individually or grouped into categories),
products and services the business offers, etc
 Personnel – information about the people that the organization employs: contact details, jobs, grades, skills, etc
  Administration – data production tasks mentioned above may be done and/or stored by a central administrative
department

External information: information from outside the organization that can help with its decision making, sources include:

 Government – governments often require organizations to provide them with data, once they have processed
and summarized this data the information can be reused; however, it is not always timely or detailed enough
 Research – consultants with deep knowledge of a particular industry know exactly where to look and to find
needed information; organizations use this external research to improve their decision
 Trade groups – groupings of businesses in the same trade that speed up information gathering and processing
and/or share the cost of research
 Commercially available databases – information businesses take publicly available data, add their own
knowledge of an industry and process that information to provide insights on patterns and trends.

Data/Information is of the most use if it has the following characteristics:

1. Valid – it is unbiased and verifiable

2. Reliable – it comes from a trusted source and is consistent with what you already know
3. Timely – available when it is needed
4. Accessible – easy to obtain and allows you to make calculations with it
5. Cost-effective – the cost of collecting the data should be much less than the value of the decisions made with it
6. Relevant – information must be suited to the purpose for which it is required
7. Sufficiently accurate – must be accurate enough and contain adequate details for the purpose it is required
8. Understandable by the user – it must be at the user’s level

Review Question
Answer the following question as they would relate to an organization or individual in your chosen field of study.

1. Think about an example of data used on a day-to-day basis and answer the final questions:
a. Is it qualitative or quantitative?
b. Is it primary or secondary?
c. What type of information is derived from it?
d. What is the information used for?
e. Who produces the information? Is the source internal or external?
2. Identify and describe an example of the type of information used for
a. Operational support
b. Analysis
c. Decision making
d. Gaining an advantage

Compare the examples identified according to the characteristics of good information in order to determine
which is the most useful

Additional Resources
Data vs Information: People often miss the subtle difference between data and information and use the words
interchangeably.

This video explains the relationship between data, information and knowledge
Data vs. Information : Because the terms Data and Information are important to the selection and use of information
technology it is important that people are able to distinguish between them, this PDF document uses an example to
illustrate the difference between them.

Qualitative vs. Quantitative data: Examine the differences between qualitative and quantitative data.

Sources of data and information: Data and information come from many sources - both internal (inside the business)
and external. This revision note summarizes the main sources.

Characteristics of Information: Good information is that which is used and which creates value. Experience and research
shows that good information has numerous qualities.

Qualities of good information: Not all information is helpful to a business. Alternatively, it might be detailed, but has
been obtained for too much cost. What are the main features of good quality information in a business?