Saturday, August 29, 2009

Data Vs Information

Business Intelligence has come a long way but the essence of data and information remains the same. To understand BI and Information Systems, one needs to understand the essential difference between “data” and “information”.

I once remember having a debate with a CIO on all systems being called as “data systems” or “information systems”- I do strongly believe that it needs to be called as data systems rather than information systems. I also had a mental debate on google’s mission which is “to organize world’s information and make it universally accessible and useful”- Ideally this is to organize world’s data.

Here is my disconnect- I don’t think so, in today’s dynamic world, we can actually classify “information”. All we are doing is to classify “data” and we never know when it becomes “information”. Its extremely dynamic!

I will illustrate with couple of examples but before going there, lets get in to the fundamental difference between data and information. Traditionally we all know that processed data becomes information- when does it become processed? Based on my know-how, data becomes information when we make a “decision”. Suppose I want to meet a renowned dentist in a new town, I surf the internet and get the relevant contact details so that I can meet that dentist- My decision here is to do a root canal treatment with that dentist and at that time the data on the contact details of the dentist becomes information. Till that time, its just raw data- When I don’t have to do the root canal treatment, I will be least interested in even getting to that data or looking at that data. Does that ring a bell?

Let me take another example- Suppose you run “pizza hut” in India. You get unique 200 customers daily and you store all their relevant details viz., first name, last name, wedding anniversary, birthday, what pizza they like the most etc in a database. Now in this list of details; which one is data and which one is information?- In my mind, all of it is just raw data. Suppose, I suddenly decide to run a promotional campaign to give free pizza’s for “x” number of customers whose birthday falls on some date, then that filtered data becomes information for me as I need to email all of them to come to my place. This decision of running a promotional campaign was all of sudden- I could have taken a decision to send free pizza for people who frequent my place all the time. I can’t document all the decisions that I take all the time as business is dynamic and so are decisions. My decisions are dictated by the dynamic nature of the business! That’s where the real catch lies on data and information. Don’t you agree? Based on my decision, the data that I have stored becomes information. If I don’t create large “data systems”, I never will be able to take information out of them.

Given this logic, I do believe that google is organizing world’s data so that it becomes information in the right time for people when they make a decision.

Business Intelligence all the time is grappling with this dilemma because we cannot document all our decisions based on past history. Based on my business need, my decisions become super dynamic and at that time I cannot be found wanting for data. So in my endeavour to ensure that I have all the relevant data, I capture everything because I don’t know what becomes information and when? I cannot control or tabulate all my present and future decisions but definitely I can invest on storing all types of data because it can become information depending on my need. Given this, real time business intelligence becomes an tricky challenge unless and until we document all our past, present and future decisions.

Don’t you all agree? I would love to hear your views about this…

Then comes the whole angle of “analytics”….Till then


Tarun Sareen said...

Posting Tarun Saree's comment on this over email.

Just a quick thought: it is certainly prudent to distinguish between data and information. I would also take a step further and see if we can distinguish between information and intelligence. Or convert information to intelligence. Perhaps you are using intelligence and information synonymously.

Tarun Sareen

Mohan Narayanan said...

I agree. I guess data is meant to be different from information all the time
and hence we need to accept it.
Good article. Thanks

Sachin said...

Nice Article. I realized that I have not thought of these basic fundamentals in long time

Dave said...

Okay, I get it. Data is the raw material and Information is the processed product. And since one can't know what materials will comprise the final product, one needs to collect all the data. Is that what you're getting at? or, Or, OR are you telling me that those that proffer information can't possibly do so if they can't gather data?

Maheswari said...

I like to know whether the below one is categorised as data or Information:

Suppose if i want to buy a product, google not only throws the details but also its reviews i.e stats of things favourable and unfavourable which in a way determines and influence my buying decision. This is can be extended to "ideas / concepts" say Agile methodologies.

Ajaxus said...

Most of this is valid.
Just wondering though, isn't an Information System named because it can present us with the data we need, which we can then process into information?
I don't think it means that such a system contain information or processes information. I think it just means that it is a source of information and taking that as the definition, I'd have to agree.

Avadhut Joshi said...

Pizza hut may have the information of all the customers who have the birthdays fall in the particular month. But if they have reports run on their system for eample customers who have birhdays agedbetween 15- 25 they can get more insight while targettig these customers .In my view this is BI .
Can google do it at such a granuar level?
Thanks for the good Article.

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