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emerge (see Figure 1.1a). Data and information work the same way. Rules and relationships
can be set up to organize data into useful, valuable information.
(a)
(b)
Figure 1.1
Defining and Organizing
Relationships Among Data
Creates Information
The type of information created depends on the relationships defined among existing
data. For example, you could rearrange the pieces of track to form different layouts. Adding
new or different data means you can redefine relationships and create new information. For
instance, adding new pieces to the track can greatly increase the value—in this case, variety
and fun—of the final product. You can now create a more elaborate railroad layout (see
Figure 1.1b). Likewise, a sales manager could add specific product data to his or her sales
data to create monthly sales information organized by product line. The manager could use
this information to determine which product lines are the most popular and profitable.
Turning data into information is a process, or a set of logically related tasks performed
to achieve a defined outcome. The process of defining relationships among data to create
useful information requires knowledge. Knowledge is the awareness and understanding of a
set of information and the ways that information can be made useful to support a specific
task or reach a decision. Having knowledge means understanding relationships in informa-
tion. Part of the knowledge you need to build a railroad layout, for instance, is the
understanding of how much space you have for the layout, how many trains will run on the
track, and how fast they will travel. Selecting or rejecting facts according to their relevancy
to particular tasks is based on the knowledge used in the process of converting data into
information. Therefore, you can also think of information as data made more useful through
the application of knowledge. Knowledge workers (KWs) are people who create, use, and
disseminate knowledge and are usually professionals in science, engineering, business, and
other areas.7
A knowledge management system (KMS) is an organized collection of people,
procedures, software, databases, and devices used to create, store, and use the organization’s
knowledge and experience.8 Research has shown that the success of a KMS is linked to how
easy it is to use and how satisfied users are with it.9
In some cases, people organize or process data mentally or manually. In other cases, they
use a computer. Where the data comes from or how it is processed is less important than
whether the data is transformed into results that are useful and valuable. This transformation
process is shown in Figure 1.2.
Data
The transformation process
(applying knowledge by
selecting, organizing, and
manipulating data)
Information
Figure 1.2
The Process of Transforming
Data into Information
The Characteristics of Valuable Information
To be valuable to managers and decision makers, information should have the characteristics
described in Table 1.2. These characteristics make the information more valuable to an or-
ganization. Many shipping companies, for example, can determine the exact location of
process
A set of logically related tasks
performed to achieve a defined
outcome.
knowledge
The awareness and understanding
of a set of information and ways that
information can be made useful to
support a specific task or reach a
decision.
6 Part 1 | Information Systems in Perspective
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
inventory items and packages in their systems, and this information makes them responsive
to their customers. In contrast, if an organization’s information is not accurate or complete,
people can make poor decisions, costing thousands, or even millions, of dollars. If an inac-
curate forecast of future demand indicates that sales will be very high when the opposite is
true, an organization can invest millions of dollars in a new plant that is not needed. Fur-
thermore, if information is not relevant, not delivered to decision makers in a timely fashion,
or too complex to understand, it can be of little value to the organization.
Accurate Accurate information is error free. In some cases, inaccurate information is generated because
inaccurate data is fed into the transformation process. (This is commonly called garbage in,
garbage out [GIGO].)
Secure
Simple
Accessible
Information should be simple, not overly complex. Sophisticated and detailed information might not
be needed. In fact, too much information can cause information overload, whereby a decision maker
has too much information and is unable to determine what is really important.
Information should be easily accessible by authorized users so they can obtain it in the right format
and at the right time to meet their needs.
Reliable Reliable information can be trusted by users. In many cases, the reliability of the information depends
on the reliability of the data-collection method. In other instances, reliability depends on the source
of the information. A rumor from an unknown source that oil prices might go up might not be reliable.
Information should be secure from access by unauthorized users.
Relevant Relevant information is important to the decision maker. Information showing that lumber prices
might drop might not be relevant to a computer chip manufacturer.
Complete Complete information contains all the important facts. For example, an investment report that does
not include all important costs is not complete.
Economical
Flexible
Information should also be relatively economical to produce. Decision makers must always balance
the value of information with the cost of producing it.
Flexible information can be used for a variety of purposes. For example, information on how much
inventory is on hand for a particular part can be used by a sales representative in closing a sale,
by a production manager to determine whether more inventory is needed, and by a financial
executive to determine the total value the company has invested in inventory.
Verifiable
Timely
Information should be verifiable. This means that you can check it to make sure it is correct, perhaps
by checking many sources for the same information.
Timely information is delivered when it is needed. Knowing last week’s weather conditions will not
help when trying to decide what coat to wear today.
Characteristics Definitions
Depending on the type of data you need, some quality attributes become more valuable
than others. For example, with market-intelligence data, some inaccuracy and incompleteness
is acceptable, but timeliness is essential. Getco, a Chicago-based stock-trading company,
requires the most timely market information possible so it can place profitable trades.10 Getco
uses an approachcalled high-frequency trading thatrequires powerful and veryfastcomputers
to make its trades. On some days, Getco can account for 10 to 20 percent of the total trading
volume for some stocks. Market intelligence might alert you that competitors are about to
make a major price cut. The exact details and timingof the price cutmightnotbe asimportant
as being warned far enough in advance to plan how to react. On the other hand, accuracy,
verifiability, and completeness are critical for data used in accounting to manage company
assets such as cash, inventory, and equipment.
The Value of Information
The value of information is directly linked to how it helps decision makers achieve their
organization’s goals. Valuable information can help people in their organizations perform
Table 1.2
Characteristics of Valuable
Information
An Introduction to Information Systems in Organizations | Chapter 1 7
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

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The Characteristics of Valuable Information

  • 1. emerge (see Figure 1.1a). Data and information work the same way. Rules and relationships can be set up to organize data into useful, valuable information. (a) (b) Figure 1.1 Defining and Organizing Relationships Among Data Creates Information The type of information created depends on the relationships defined among existing data. For example, you could rearrange the pieces of track to form different layouts. Adding new or different data means you can redefine relationships and create new information. For instance, adding new pieces to the track can greatly increase the value—in this case, variety and fun—of the final product. You can now create a more elaborate railroad layout (see Figure 1.1b). Likewise, a sales manager could add specific product data to his or her sales data to create monthly sales information organized by product line. The manager could use this information to determine which product lines are the most popular and profitable. Turning data into information is a process, or a set of logically related tasks performed to achieve a defined outcome. The process of defining relationships among data to create useful information requires knowledge. Knowledge is the awareness and understanding of a set of information and the ways that information can be made useful to support a specific task or reach a decision. Having knowledge means understanding relationships in informa- tion. Part of the knowledge you need to build a railroad layout, for instance, is the understanding of how much space you have for the layout, how many trains will run on the track, and how fast they will travel. Selecting or rejecting facts according to their relevancy to particular tasks is based on the knowledge used in the process of converting data into information. Therefore, you can also think of information as data made more useful through the application of knowledge. Knowledge workers (KWs) are people who create, use, and disseminate knowledge and are usually professionals in science, engineering, business, and other areas.7 A knowledge management system (KMS) is an organized collection of people, procedures, software, databases, and devices used to create, store, and use the organization’s knowledge and experience.8 Research has shown that the success of a KMS is linked to how easy it is to use and how satisfied users are with it.9 In some cases, people organize or process data mentally or manually. In other cases, they use a computer. Where the data comes from or how it is processed is less important than whether the data is transformed into results that are useful and valuable. This transformation process is shown in Figure 1.2. Data The transformation process (applying knowledge by selecting, organizing, and manipulating data) Information Figure 1.2 The Process of Transforming Data into Information The Characteristics of Valuable Information To be valuable to managers and decision makers, information should have the characteristics described in Table 1.2. These characteristics make the information more valuable to an or- ganization. Many shipping companies, for example, can determine the exact location of process A set of logically related tasks performed to achieve a defined outcome. knowledge The awareness and understanding of a set of information and ways that information can be made useful to support a specific task or reach a decision. 6 Part 1 | Information Systems in Perspective Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
  • 2. inventory items and packages in their systems, and this information makes them responsive to their customers. In contrast, if an organization’s information is not accurate or complete, people can make poor decisions, costing thousands, or even millions, of dollars. If an inac- curate forecast of future demand indicates that sales will be very high when the opposite is true, an organization can invest millions of dollars in a new plant that is not needed. Fur- thermore, if information is not relevant, not delivered to decision makers in a timely fashion, or too complex to understand, it can be of little value to the organization. Accurate Accurate information is error free. In some cases, inaccurate information is generated because inaccurate data is fed into the transformation process. (This is commonly called garbage in, garbage out [GIGO].) Secure Simple Accessible Information should be simple, not overly complex. Sophisticated and detailed information might not be needed. In fact, too much information can cause information overload, whereby a decision maker has too much information and is unable to determine what is really important. Information should be easily accessible by authorized users so they can obtain it in the right format and at the right time to meet their needs. Reliable Reliable information can be trusted by users. In many cases, the reliability of the information depends on the reliability of the data-collection method. In other instances, reliability depends on the source of the information. A rumor from an unknown source that oil prices might go up might not be reliable. Information should be secure from access by unauthorized users. Relevant Relevant information is important to the decision maker. Information showing that lumber prices might drop might not be relevant to a computer chip manufacturer. Complete Complete information contains all the important facts. For example, an investment report that does not include all important costs is not complete. Economical Flexible Information should also be relatively economical to produce. Decision makers must always balance the value of information with the cost of producing it. Flexible information can be used for a variety of purposes. For example, information on how much inventory is on hand for a particular part can be used by a sales representative in closing a sale, by a production manager to determine whether more inventory is needed, and by a financial executive to determine the total value the company has invested in inventory. Verifiable Timely Information should be verifiable. This means that you can check it to make sure it is correct, perhaps by checking many sources for the same information. Timely information is delivered when it is needed. Knowing last week’s weather conditions will not help when trying to decide what coat to wear today. Characteristics Definitions Depending on the type of data you need, some quality attributes become more valuable than others. For example, with market-intelligence data, some inaccuracy and incompleteness is acceptable, but timeliness is essential. Getco, a Chicago-based stock-trading company, requires the most timely market information possible so it can place profitable trades.10 Getco uses an approachcalled high-frequency trading thatrequires powerful and veryfastcomputers to make its trades. On some days, Getco can account for 10 to 20 percent of the total trading volume for some stocks. Market intelligence might alert you that competitors are about to make a major price cut. The exact details and timingof the price cutmightnotbe asimportant as being warned far enough in advance to plan how to react. On the other hand, accuracy, verifiability, and completeness are critical for data used in accounting to manage company assets such as cash, inventory, and equipment. The Value of Information The value of information is directly linked to how it helps decision makers achieve their organization’s goals. Valuable information can help people in their organizations perform Table 1.2 Characteristics of Valuable Information An Introduction to Information Systems in Organizations | Chapter 1 7 Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.