Data, Information and Knowledge
It is usual to exchange these words as if they were synonyms. When we work with Business IntelligenceWith ETL processes and data warehouses, when we build reports and dashboards, it is convenient to be clear about the difference and relationship between them.
The Knowledge Hierarchy
The Knowledge Hierarchy is a known pyramid-shaped model, emphasizing hierarchical and 'structural' relationships, from the most basic to the most complex.
- Information is defined in terms of Data.
- Knowledge is defined in terms of Information.
Occasionally a fourth plant is included in the pyramid, which is wisdom. It is therefore defined in terms of Knowledge. This model is known as DIKW hierarchywith the initials Data, Information, Knowledge and Wisdom.
The pyramid is not the only model to represent the relationships between data, information and knowledge. Platforms and chains are well-known examples. It is useful to visualize the sequence in which the 'raw material' changes in form and application.
Defining Data, Information and Knowledge
A datum is a concept that refers to the minimum semantic unit. It is represented by a symbol, such as a number or a letter, and can also be quantitative or qualitative. Data alone do not provide anything, however, a large set of data provides information through the interpretation of them.
In short, the data complies with the following premises:
- They are symbolic representations.
- They don't transmit a message.
- They have no semantic meaning.
- They describe a specific event.
Some examples are Red, Date that, by themselves, do not provide information.
The concept of information refers to a set of data in such a way that, when the latter are processed, a message is obtained that influences decision making.
Like the data, the information complies with the premises of:
- Organized and processed data set.
- Transmit a message.
- It makes semantic sense.
- Help in the decision-making process
In context, we interpret data and load it with meaning. Contexts, category, calculations and corrections are ways of processing data into information.
A red flag on the beach indicates that bathing is dangerous. A birthday is a date when we celebrate a particular event in a proper way (with gifts and a birthday cake)
Information reduces uncertainty.
The framework of knowledge is the sum of the experience and values of the person regarding information.
Following the example of the date, we know which cake to choose, from previous experience and recommendations from other guests at the birthday party.
What does all this have to do with BI?
Within the area of Business Intelligence, the three concepts mentioned above must be taken into account and known. As for data, it is not necessary to have many of them to make decisions but it is necessary to have the right data because if they are not contextualized, they do not contribute anything.
We return once again to Peter Drucker and his contribution to business management. His ideas on the "knowledge society" are the basis of the modern corporation. The increasing transfer of information changes the way business activities are conducted, and not only. Drucker calls it the "knowledge society. It's not a real society, more like a utopia, but it does convey the reality that we have more data than ever before at our fingertips.
Keep in mind that "Information is power". Bill Gates
If we return once more to the knowledge hierarchy, we can place Business Intelligence in the upper half of the pyramid.
That is why we say that the objectives of Business Intelligence are the integration and optimization of the information available to the company to facilitate informed decision making.
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