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Q1-5 What Is Information? Q1-5 What Is Information? 53

Based on our earlier discussions, we can now define an information system as an assembly of
hardware, software, data, procedures, and people that interact to produce information. The only
term left undefined in that definition is information, and we turn to it next.

Definitions Vary

Information is one of those fundamental terms that we use every day but that turns out to be
surprisingly difficult to define. Defining information is like defining words such as alive and truth. We
know what those words mean, we use them with each other without confusion, but nonetheless,
they are difficult to define.
In this text, we will avoid the technical issues of defining information and will use common,
intuitive definitions instead. Probably the most common definition is that information is
knowledge derived from data, whereas data is defined as recorded facts or figures. Thus, the facts
that employee James Smith earns $70.00 per hour and that Mary Jones earns $50.00 per hour are
data. The statement that the average hourly wage of all the graphic designers is $60.00 per hour is
information. Average wage is knowledge derived from the data of individual wages.
Another common definition is that information is data presented in a meaningful context. The
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fact that Jeff Parks earns $30.00 per hour is data. The statement that Jeff Parks earns less than
half the average hourly wage of the company’s Web designers, however, is information. It is data
presented in a meaningful context.
Another definition of information that you will hear is that information is processed data or,
sometimes, information is data processed by summing, ordering, averaging, grouping, comparing, or other
similar operations. The fundamental idea of this definition is that we do something to data to produce
information.
There is yet a fourth definition of information, which was set out by the great research
psychologist Gregory Bateson. He defined information as a difference that makes a difference.
For the purposes of this text, any of these definitions of information will do. Choose the
definition of information that makes sense to you. The important point is that you discriminate
between data and information. You also may find that different definitions work better in different
situations.

Where Is Information?

Suppose you create a graph of Amazon.com’s stock price and net income over its history, like that
shown in Figure 1-9. Does that graph contain information? Well, if it shows a difference that

Amazon Stock Price and Net Income
$1,400
$1,200
$1,000
$800
$600
$400
$200
$
$(200)
$(400)
$(600)
Figure 1-9 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
amazon.com Stock Price and net Net Income (millions) Stock Price
Income