When business owners are talking about investing in Business Intelligence systems they often start with implementation and execution. As a result, the basics are left for later. This can lead to a lot of problem when analyzing the results. One of the most important aspect that every owner must understand is the difference between data and information. Lack of knowledge in this regard will not only result in bad business decisions.
So, here are a few key differences that a businessperson needs to be aware of:
Facts and Interpreted Facts
This is, perhaps, the most basic difference between data and information. Data is the raw collection of facts and figures that people collect based on their experiences and observations. When it comes to a business, data comes in all shapes and sizes. From a customer’s history to your product’s history—the data accumulated by a business is vast.
However, the question arises, is it possible to take business decisions on raw data? Of course it’s not! Why? Well, it’s because you can take decisions on pieces of information and on bulks of data. For example, consider that you—a businessman of shoes—have a piece of information that your customers favor a certain brand of shoe. What will you do with this piece of “information”? You’ll stock more on that brand of shoe, right? However, how did you come up with such an insight? Through an analysis of the consumer trends using the sales receipts, right? Could you have taken a decision based on the sales receipts alone? You couldn’t, because they needed to be processed and interpreted first.
Meaningless and Meaningful
Picking up from our previous example, how much meaning does a bulk of sales receipts hold for you and your business? None, if you think about it. Why? Well, it’s because those sales receipts cannot tell anything about your business unless they are analyzed. To put it simply: they are nothing short of meaningless on their own!
The piece of information that we derived from them, on the other hand, about the instance of consumers preferring a certain brand was nothing short of helpful, right? It contained such meaning and insight that it spurred you to take a business decision on the base of it. Or, in other words, it was meaningful on its own. That’s the thing about information: it can be understood by most individuals while a large chunk of data cannot be processed successfully by many.
Historical and Predictive
When it comes to a business, forecasts and projections of its performance play a key role in deciding the value of the business and whether it will be profitable in the future or not. But, may I ask, how do you come with these projections? Based on the data of the historical performance of the company, right? This is, perhaps, the perfect example that a businessman is bound to understand: data is the historical facts and figures about the performance of your business, while information is the predictions that you make based on it.
Analyzing data, for the purpose of converting it into information, is tough, to say the least. It requires expertise and data analytics and many man hours to complete and even then, the possibility of human errors always exists. It’s advisable, therefore, for businesses to benefit from the various BI reporting systems that are available. If you aren’t aware of how you can make the most of Business Intelligence, iDeskHub would love an opportunity to be of assistance.