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Defining And Differentiating The Notions Of Data, Information And Knowledge

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We come across the word data, information and knowledge numeracy times especially in business organizations. These words have been confused by people and they use them interchangeably as it seems similar. However, they are completely different although they have a relationship with each other. Therefore, one needs to have a clear idea what each word means and the difference between each of them. The following essay is an attempt to explain data, information and knowledge by defining the terms, stating the differences, showing how they are linked to each other and how each of these affects in decision making in a business.

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According to Merriam Webster online dictionary, data means factual information (such as measurements or statistics) used as a basis for reasoning, discussion, or calculation. This definition implies that data are just facts about something. The business dictionary defines data as information in raw or unorganized form (such as alphabets, numbers, or symbols) that refer to, or represent, conditions, ideas, or objects. On the other hand, information is defined by the business dictionary as Data that is accurate and timely, specific and organized for a purpose which is presented within a context that gives it meaning and relevance, and also can lead to an increase in understanding and decrease in uncertainty.

Knowledge is defined as interpreted information or an understanding that germinates from combination of data, information, experience, and individual interpretation. It is also defined as, “Things that are held to be true in a given context and that drive us to action if there were no impediments” (Andre Boudreau). From the above definitions, it is understood that data are facts usually consisting of quantitative or qualitative variables whereas information is processed data. Data remains valueless unless it is processed as nothing changes when a person receives it while information is valuable as it can help in decision making and thereby affecting the outcome. Information gives meaning and context as it makes the data useful. Knowledge is information that can be applied. It is supported by experience and other forms of education and learning. It is what is known to the person and comes from his or her intelligence and the competence.

For example, if a manager is given the data, sales – QR 100, 000, it doesn’t help him to make any kind of decision. It is pure data. It becomes information when the data is brought into context and is understandable. So, information can be sales for the first quarter of 2018 is QR 100, 000. This gives a better idea to the manager about the figure 100, 000. This information becomes knowledge when he realizes that the sales for the first quarter is less compared to the normal sales. This knowledge helps the sales manager in deciding about increasing the sales in the next quarter and thereby increasing the company’s profit based on the information given.

Data, information and knowledge are closely related to each other because they form parts of a chain. Data leads to information and information leads to knowledge which helps the management to take vital decisions regarding different business issues or attain various goals or objectives of the business. The DIKW pyramid explains the relationship between data, information and knowledge and shows us that they are a part of a lager chain. Data is the lowest level of the pyramid and is considered as a building block. If the data is given is false, it leads to wrong information which in turn produces unreliable knowledge that leads to wrong decisions affecting the business. Data needs to be filtered in order to collect useful data only. Then this data needs to be compared and analyzed in order to take out beneficial information. After that information is converted into knowledge based on experience and intelligence in order to make important decisions in business. This also includes checking the reliability, accuracy and relevance of the information.

Data, information and knowledge are used at all the seven different stages of business decision making process as explained below.

  • Identifying the problem: One needs data information and knowledge in order to identify the problem that needs to be solved. Misidentifying problems can lead to unlikely outcomes causing loss of time and resources. Therefore, enough data needs to be collected and processed into information that can be converted into knowledge to identify the exact decision.
  • Gathering information: once the problem has been identified, related data needs to be collected in order to reach the right decision. A decision cannot be made without relevant data and information Too much information can confuse the decision maker. On the other hand, inadequate information can lead to wrong decision.
  • Identifying alternatives: This stage of decision making requires information regarding different alternatives. There might be a lot of alternatives, but the decision maker needs to identify the feasible ones. Here also, data needs to be collected in order to identify various alternatives and choose the best among those.
  • Weighing Evidence: It is at this stage that knowledge is used more than data or information. The decision maker has to analyze the pros and cons of each of the alternatives so that the best course of action can be chosen.
  • Choose among the alternatives: based on the analysis, the decision maker chooses one from among the different alternatives. Knowledge from the interpreted information is vital in this stage. The decision maker uses this knowledge keeping in mind all the potential risks in order to form his decision.
  • Take action: Once the decision is made, the next step is to implement it. In this stage one needs to formulate a plan for implementation and gather the resources needed to get into action. Data and information are required in the process of planning and implementation.
  • Review the decision made: This is one of the important stages of decision making in order to see if the decision made was accurate or needs improvement. Data needs to be collected and the information needs to be interpreted in order to review the decision made.

In conclusion, data, information and knowledge are different words that are closely related to each other. They are parts of a linked chain. Without data, there is no information and thus no knowledge. They are desired at different levels of an organization. They are beneficial to managers or those in leadership positions as they are required at all the phases of the business decision making process in order to have positive results. It is a crucial element in any kind of business because it contributes to the understanding of business issues and supporting the attainments of business objectives.

15 Jun 2020

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