by Jody Williquette

Created on: September 11, 2010   Last Updated: September 13, 2010

Is data the same thing as information?  Conversely, is information interchangeable with data?  They are often used interchangeably.  That does not mean that they should be used interchangeably.  Practically speaking, they are not the same.  Consumer statistics, economic trends and the average ages of children when they start talking all have one thing in common.  They are all forms of data.  This does not mean that these data sets should be considered to be types of information.  Why are data and information often used interchangeably?  In part, this is due to the fact that the word “information” is used when defining data.  According to The Merriam-Webster dictionary, an Encyclopedia Britannica company, one definition of data is: “information in numerical form that can be digitally transmitted or processed”.  Likewise, from the same source, the definition of information is: “the communication or reception of knowledge or intelligence”.  To a certain degree, this is somewhat contradictory.  According to these definitions, information requires knowledge and understanding, while data is information that can be communicated.  Data should be a component of information versus the other way around.

For practical applications such as business analysis, data becomes information once it has been analyzed and understood.  Without knowledge, understanding and purpose, data is just a set of numbers and words stored somewhere on a computer or server.  Once data has been collected, communicated and understood, then it can be considered to be information.  As mentioned earlier, it should also have a purpose.  As an example, a typical data set might contain one million records and contain a range of variables.  For this example, the data pertains to internet search engine keyword statistics such as:

search engine market share per keyword number of websites containing each keyword search volumes per keyword age statistics for each keyword competition ratios geographic relevance

This data can provide a wealth of information to a search engine optimization consultant that understands the value of the data and knows how to utilize it.  This same data set might not have any value to a person that does not do business via the internet.  In this case, this is just a bunch of data.  It is not information.

Is this distinction important?  The answer is yes.  The availability of data continues to increase on a daily basis.  Companies spend billions of dollars each year researching, capturing and storing data.  Sometimes it is difficult to know when enough is enough.  Data collection efforts can impact resources, costs and profitability which in turn can affect the overall economy.  Understanding the distinction between data and information could lead to more effective strategic planning, better resource utilization, higher efficiencies and improved profitability for small and large companies alike.

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