Data serves as the fundamental building blocks that information systems process and transform into useful information for decision-making, operations, and insights.
Understanding Data and Information
Data, according to the reference, are simply the raw facts – the unprocessed material. This could be anything from a single number, a name, a measurement, or a date.
- Examples of Data:
- A sales transaction amount ($150)
- A customer's name (Jane Doe)
- A product code (SKU-123)
- A date (2023-10-27)
Information, on the other hand, is what is obtained from processing, organizing, and structuring this raw data. It provides context and meaning.
- Examples of Information derived from Data:
- The total daily sales revenue (summing multiple transaction amounts)
- A list of customers who purchased a specific product (filtering customer names by product code)
- The sales trend over a period (analyzing sales amounts and dates)
Information systems bridge the gap between raw data and usable information.
The Role of Data in Information Systems
Information systems are designed to collect, store, process, and deliver information. A crucial component for this is the storage mechanism. As stated in the reference, Information systems use data stored in computer databases to provide needed information.
Data Storage: The Database Foundation
A database is the organized collection where raw data resides. The reference defines it as "an organized collection of interrelated data reflecting a major aspect of a firm's activities."
- Key Characteristics of Databases:
- Organized: Data is structured in a way that makes it easy to access and manage (e.g., tables, records, fields).
- Interrelated: Different pieces of data can be linked together (e.g., linking a customer record to their order records).
- Reflects Activities: It captures details about essential operations or aspects of an organization (sales, inventory, customers, employees, etc.).
Transforming Data into Information
The core function of an information system using data is this transformation process:
- Data Input/Collection: Raw data is entered into the system.
- Data Storage: The data is stored in a database.
- Data Processing: The system applies logic, calculations, sorting, filtering, and analysis to the stored data.
- Information Output: The processed data is presented as meaningful information to users in various formats (reports, dashboards, alerts, screen displays).
How Data Enables Information Systems
Data is the essential ingredient that fuels the capabilities of information systems. Without data, systems would have nothing to process or report on.
| Data (Raw Facts) | Information (Processed Data) |
|---|---|
| A single sale amount | Total sales for the day |
| A customer's address | List of customers in a specific region |
| Inventory quantity '5' | Report showing low-stock items needing reorder |
By processing and analyzing the raw facts stored in databases, information systems enable organizations to:
- Track Performance: Monitor sales, expenses, production levels.
- Make Decisions: Identify trends, predict demand, assess risks.
- Manage Operations: Control inventory, schedule tasks, handle transactions.
- Communicate: Generate reports for stakeholders.
In essence, information systems leverage organized data from databases to generate the critical insights and knowledge needed for effective business functions.
