“But today, they’re not enough.” Do you f ind that statement sobering? A n d If timely, hard work isn’t enough, what is?
We’ll begin this book by discussing the key skills that Jennifer (and you) need and explain why this course is the single best course i n all of the business school for teaching you those key skills.
You may find that last statement surprising. I f you are like most students, you have no clear idea of what your MIS class w i l l be about. I f someone were to ask you, “What do you study i n that class?” you might respond that the class has something to do w i t h computers and maybe computer programming . Beyond that , y o u m i g h t be hard-pressed to say more. You might add, “Well , i t has something to do w i t h computers i n business,” or maybe, “We are going to learn to solve business problems w i t h computers using spreadsheets and other programs.” So, how could this course be the most important one i n the business school?
We begin w i t h that question. After you understand how important this class w i l l be to your career, we vwll discuss fundamental concepts. We’ll wrap up w i t h some practice on one of the key skills you need to learn.
Why Is Introduction to MIS the Most Important Class in the Business School? I n t r o d u c t i o n to MIS is the most i m p o r t a n t class i n the business school. That statement was not true i n 2005, and i t may not be true i n 2020. But it is true i n 2012.
Why? The ult imate reason hes i n a principle known as Moore’s Law. I n 1965, Gordon
Moore, cofounder of Intel Corporation, stated that because of technology improve- ments i n electronic chip design and manufacturing, “The number of transistors per square inch on an integrated chip doubles every 18 months.” His statement has been commonly misunderstood to be, “The speed of a computer doubles every 18 months,” w h i c h is incorrect, but captures the sense of his principle.
Because of Moore’s Law, the ratio of price to performance of computers has fallen f rom something like $4,000 for a standard computing device to something around a penny for that same computing device.^ See Figure 1-1.
As a future business professional, however, you needn’t care how fast a computer your company can buy for $100. That’s not the point . Here’s the point :
B e c a u s e of Moore’s Law, the cost of data communicat ions and data storage is essential ly zero.
Think about that statement before you hurry to the next paragraph. What happens when those costs are essentially zero? Here are some consequences:
YouTube iPad Facebook Woot Pandora • Twitter Linkedin Foursquare
None of these was prominent i n 2005, and, i n fact, most didn’t exist i n 2005.
‘• These figures represent the cost of 100,000 transistors, which can roughly be translated into a unit of a computing device. For our purposes, the details don’t matter. If you doubt any of this, just look at your $199 iPhone and realize that you pay $40 a month to use it.
Q1 Why Is Introduction to MIS the Most Important Class In the Business School? 5
_ $3,500.00 – to
m •§ $3,000.00
r $2,500.00 –
I I $2,000.00 –
i $1,500.00 – S. $1,000.00 u
Price/Performance Ratio of Intel Processors
• $3,923.00 Cost perl 00,000 Transistors
Year (2010 dollars) 1983 $3,923.00 1985 $902.95 1988 $314.50 1997 $17.45 2002 $0.97 2005 $0.05 2012 $0.01
I I $17.45
1985 1990 1995 Year
Computer Price/Performance Ratio Decreases
Are There Cost-Effective Business Applications of Faceboolc and Twitter? Of course. GearUp is p r o f i t a b l y us ing t h e m today. Event moderators post announcements via Twitter. GearUp collects those tweets and posts t h e m o n its Facebook page. Total cost to GearUp? Zero.
But ask another question: Are there wasteful, h a r m f u l , useless business applications of Facebook and Twitter? Of course. Do I care to follow the tweets of the mechanic who changes the oil i n my car? I don’t think so.
But there’s the point . Maybe I ‘m not being creative enough. Maybe there are great reasons for the mechanic to tweet customers and I ‘m just not able to th ink of them. Also, Facebook and Twitter are old news now. What’s new on the horizon that GearUp and the mechanic should be th ink ing about? A l l of this leads us to the first reason Introduction to MIS is the most important course in the business school today:
Future b u s i n e s s professionals need to be able to a s s e s s , evaluate, and apply emerging information technology to b u s i n e s s .
You need the knowledge of this course to attain that skill.
How Can I Attain Job Security? Many years ago I had a vnse and experienced mentor. One day I asked h i m about job security, and he to ld me that the only job security that exists is “a marketable skill and the courage to use i t . ” He continued, “There is no security i n our company, there is no security i n any government program, there is no security i n your investments, and there is no security i n Social Security.” Alas, how right he turned out to be.
So what is a marketable skill? It used to be that one could name particular skills, such as computer programming, tax accounting, or marketing. But today, because of Moore’s Law, because the cost of data storage and data communications is essentially zero, any routine skill can and w i l l be outsourced to the lowest bidder A n d i f you live i n the United States, Canada, Australia, Europe, or other advanced economy, that is unlikely to be you.
Numerous organizations and experts have studied the question of what skills w i l l be marketable during your career. Consider two of them. First, the RAND Corporation,
6 CHAPTER 1 The Importance of MIS
Figure 1=2 Examples of Critical Skills for Monroutine Cognition
Skill Example Jennifer’s Problem at GearUp
Abstraction Constructs model or representation.
Inability to model the event life cycle.
Model system components and show how components’ inputs and outputs relate to one another.
Confusion about how vendors provide collateral material for events.
Collaboration Develop ideas and plans with others. Provide and receive critical feedback.
Unwilling to work with others on work-in-progress.
Experimentation Create and test promising new alternatives, consistent with available resources.
Fear of failure prohibited discussion of new ideas.
a th ink tank located i n Santa Monica, California, has pubhshed innovative and groundbreaking ideas for more than 60 years, inc luding the i n i t i a l design for the Internet. I n 2004, RAND published a descript ion of the skills that workers i n the twenty-first century w i l l need:
Rapid technological change and increased international competition place the spotlight on the skills and preparation of the workforce, particularly the ability to adapt to changing technology and shifting demand. Shifts in d:ie nature of organizations . . . favor strong nomoutine cognitive skills.^
Whether you’re major ing i n accounting or market ing or finance or i n f o r m a t i o n systems, you need to develop strong nonroutine cognitive skills.
What are such skills? Robert Reich, former Secretary of Labor, enumerates four components:^
• Abstract reasoning • Systems thinking
Collaboration Abil i ty to experiment
Figure 1-2 shows an example of each. Reread the GearUp case that started this chapter, and you’ l l see that Jennifer lost her job because of her inabil i ty to practice these key skills.
Kcsw C&m lic&ffo to MXB Heip’ifoy Learn fto^iroytiin!® S k i l l © ? I n t r o d u c t i o n to MIS is the best course i n the business school for learning these four key skills because every topic w i l l require you to apply and practice t h e m . Here’s how.
Abstract Reasorssng Abstract reasoning is the ability to make and manipulate models. You w i l l work with one or more models i n every course topic and book chapter. For example, later i n this chapter you vdl l learn about a model of the five components of an in format ion
^ Lynn A. Kaoly and Constantijn W. A. Panis, The 21st Century at Work (Santa Monica, CA: RAND Corporation, 2004), p. xiv. 3 Robert B. Reich, The Work of Nations (New York Alfred A. Knopf, 1991), p. 229.
Q1 Why Is Introduction to MIS the Most Important Class in the Business School?
system. This chapter w i l l describe how to use this model to assess the scope of any new informat ion system project; other chapters w i l l bu i ld u p o n this model.
I n this course, you w i l l not just manipulate models that your instructor or I have developed, you vwll also be asked to construct models of your ovm. In Chapter 5, for example, you ‘ l l learn how to create data models, and i n Chapter 10 you ‘ l l learn to make process models.
Systems Thinking Can you go dovm to a groceiy store, look at a can of green beans, and connect that can to U.S. immigrat ion policy? Can you watch tractors dig up a forest of pulp wood trees and connect that woody trash to Moore’s Law? Do you know why Cisco Systems is one of the major beneficiaries of YouTube?
Answers to all of these questions require systems thinking. Systems thinking is the ability to model the components of the system, to connect the inputs and outputs among those components into a sensible whole that reflects the structure and dynamics of the phenomenon observed.
As y o u are about to learn, this class is about i n f o r m a t i o n systems. We w i l l discuss and il lustrate systems; y o u w i l l be asked to cr i t ique systems; y o u w i l l be asked to compare alternative systems; you w i l l be asked to apply different systems to different situations. Al l of those tasks w i l l prepare you for systems t h i n k i n g as a professional.
Collaboration Collaboration is the activity of two or more people work ing together to achieve a common goal, result, or work product. Chapter 2 vwll teach you collaboration skills and illustrate several sample collaboration i n f o r m a t i o n systems. Every chapter of this book includes collaboration exercises that you may be assigned i n class or as homework.
Here’s a fact that surprises many students: Effective col laborat ion isn’t about being nice. In fact, surveys indicate the single most i m p o r t a n t skil l for effective collaboration is to give and receive critical feedback. Advance a proposal i n business that challenges the cherished program of the VP of market ing, and y o u ‘ l l quickly learn that effective collaboration skills differ f r o m party manners at the neighbor- hood barbeque. So, how do you advance your idea in the face of the VP’s resistance? A n d wi thout losing your job? I n this course, you can learn both skills and informat ion systems for such col laboration. Even better, y o u w i l l have many opportunit ies to practice them.
Ability to Experiment “I’ve never done this before.” ” I don’t know how to do i t . ” “But w i l l it work?” “Is it too weird for the market?”
Fear of failure: the fear that paralyzes so many good people and so many good ideas. In the days when business was stable, when new ideas were just different verses of the same song, professionals could allow themselves to be l imited by fear of failure.
But t h i n k again about the apphcat ion of social ne tworking to the o i l change business. Is there a legitimate appl icat ion of social ne twork ing there? If so, has anyone ever done it? Is there anyone in the wor ld who can tell you what to do? How to proceed? No. As Reich says, professionals i n the twenty-first century need to be able to experiment.
Successfid experimentation is not throwing buckets of money at every crazy idea that enters your head. Instead, experimentation is making a reasoned analysis of an opportunity , envisioning potent ia l solutions, evaluating those possibilities, and developing the most promising ones, consistent v«th the resources you have.
• CHAPTER 1 The Importance of MIS
I n this course, y o u w i l l be asked to use products w i t h w h i c h y o u have no famil iar i ty . Those products m i g h t be Microsof t Excel or Access, or they m i g h t be features and functions of Blackboard that you’ve not used. Or, you may be asked to collaborate using Office 365 or SharePoint or Google Docs. W i l l your ins tructor explain and show every feature of those products that you ‘ l l need? You should hope not . You should hope your ins t ructor w i l l leave i t u p to y o u to experiment , to envision new possibilit ies o n your own, and experiment w i t h those possibilities, consistent w i t h the t ime you have available.
The bot tom line? This course is the most important course i n the business school because
1. It will give you the background you need to a s s e s s , evaluate, and apply emerging information s y s t e m s technology to b u s i n e s s .
2. It can give you the ultimate in job security—marketable sk i l ls—by helping you learn abstraction, s y s t e m s thinking, collaboration, and experimentation.
W i t h that introduction, let’s get started! Welcome aboard.
. What Is MIS? We’ve used the term MIS several times, and you may be wondering exactly what it is. MIS stands for management information systems, w h i c h we define as the management and use of information systems that help businesses achieve their strategies. This definit ion has three key elements: management and use, information systems, and strategies. Let’s consider each, starting first w i t h information systems and their components.
f ~ ~ ‘ ‘i’mn System A system is a group of components that interact to achieve some purpose. As you might guess, an information system (IS) is a group of components that interact to produce information. That sentence, although true, raises another question: What are these components that interact to produce information?
Figure 1-3 shows the five-component framework—a model of the components of an i n f o r m a t i o n system: computer hardware, software, data, procedures, and people. These five components are present i n every i n f o r m a t i o n system, f r o m the simplest to the most complex. For example, when you use a computer to write a class report, you are using hardware (the computer, storage disk, keyboard, and monitor) , software (Word, WordPerfect, or some other word-processing program), data (the words, sentences, and paragraphs i n your report), procedures (the methods y o u use to start the program, enter your report, p r i n t i t , and save and back u p your file), and people (you).
Consider a more complex example, say an airl ine reservation system. It, too, consists of these five components, even though each one is far more complicated. The hardware consists of dozens or more computers l inked together by data communica- tions hardware. Further, hundreds of different programs coordinate communications among the computers, and still other programs perform the reservations and related services. Additionally, the system must store mill ions u p o n mil l ions of characters of data about flights, customers, reservations, and other facts. Hundreds of different procedures are followed by airline personnel, travel agents, and customers. Finally, the in format ion system includes people, not only the users of the system, but also
Figure 1 ‘ Five-Component Framework
Five Components rTI~I~~TTT~~~Tr~Tr~~~Tr~r” i o of an Information System | Hardware | Software | Data | Procedures | People
Q2 What Is MIS? 9
those who operate and service the computers, those who maintain the data, and those who support the networks of computers.
The important point here is that the five components i n Figure 1-3 are c o m m o n to all i n f o r m a t i o n systems, f r o m the smallest to the largest. As you t h i n k about any information system, including a new one like social networking by mechanics, learn to look for these five components. Reahze, too, that an information system is not just a computer and a program, but rather an assembly of computers, programs, data, procedures, and people.
As we w i l l discuss later i n this chapter, these five components also mean that many different skills are required besides those of hardware technicians or computer programmers when bui lding or using an information system. People are needed w h o can design the databases that ho ld the data and w h o can develop procedures for people to follow. Managers are needed to train and staff the personnel for using and operating the system. We w i l l return to this five-component framework later i n this chapter, as well as many other times throughout this book.
Before we move forward, note that we have defined an i n f o r m a t i o n system to inc lude a computer . Some people w o u l d say that such a system is a computer- based information system. They w o u l d note that there are i n f o r m a t i o n systems that do not include computers, such as a calendar hanging o n the wall outside of a conference r o o m that is used to schedule the room’s use. Such systems have been used by businesses for centuries. A l t h o u g h this p o i n t is true, i n this book we focus on computer-based i n f o r m a t i o n systems. To s impli fy and shorten the book, we w i l l use the t e r m information system as a s y n o n y m for computer-based information system.
The next element i n our def in i t ion of MIS is the management and use of in format ion systems. Here, we define management to mean develop, m a i n t a i n , and adapt. Informat ion systems do not pop up like mushrooms after a hard rain; they must be developed. They must also be maintained and, because business is dynamic, they must be adapted to new requirements.
You may be saying, “Wait a minute, I ‘m a finance (or accounting or management) major, no t an i n f o r m a t i o n systems major, I don’t need to know how to manage informat ion systems,” If you are saying that, you are like a lamb headed for fleecing. Throughout your career, i n whatever field you choose, in format ion systems w i l l be b u i l t for your use, and sometimes under your direct ion. To create an i n f o r m a t i o n system that meets your needs, you need to take an active role i n that system’s develop- ment . Even i f you are not a programmer or a database designer or some other IS professional, you must take an active role in specifying the system’s requirements and i n managing the system’s development project. Without active involvement on your part, i t will only be good luck that causes the new system to meet your needs.
As a business professional, you are the person who understands business needs and requirements. If you want to apply social networking to your products, you are the one who knows how best to obtain customer responses. The technical people who b u i l d networks, the database designers who create the database, the IT people w h o configure the computers—none of these people know what is needed and whether the system you have is sufficient or whether it needs to be adapted to new requirements. You do!
In addition to management tasks, you w i l l also have important roles to play i n the use of i n f o r m a t i o n systems. Of course, you w i l l need to learn how to employ the system to accomplish your goals. But you w i l l also have important ancillary functions as well . For example, when using an information system, you w i l l have responsibilities for protect ing the security of the system and its data. You may also have tasks for backing up data. When the system fails (most do, at some point) , you w i l l have tasks to perform while the system is down as well as tasks to accomplish to help recover the system correctly and quickly.
Security is critically important when using information systems re da-.. You’ll learn much n:a ::l:z:a it in Chapter 12.3: ‘; :: need to knou ^ r : : – ~j>ig passwords an J:; use now, before you ^i’ :mi chapter. Read and”: the password Guide OK-.:.-i<es 22-23.
10 CHAPTER 1 The Importance of MIS
AGhievJng Strategies The last part of the def ini t ion of MIS is that informat ion systems exist to help busi- nesses achieve their strategies. First, realize that this statement hides an important fact: Businesses themselves do not “do” anything. A business is not alive, and it cannot act. It is the people w i t h i n a business who sell, buy, design, produce, finance, market, account, and manage. So, i n f o r m a t i o n systems exist to help people w h o work i n a business to achieve the strategies of that business.
In format ion systems are not created for the sheer joy of exploring technology. They are not created so that the company can be “modern” or so that the company can show i t has a social networking presence on the Web. They are not created because the information systems department thinks i t needs to be created or because the company is “falling behind the technology curve.”
This point may seem so obvious that you might wonder why we mention it . Every day, however, some business somewhere is developing an information system for the wrong reasons. Right now, somewhere i n the world, a company is deciding to create a Facebook presence for the sole reason that “every other business has one.” This company is not asking questions such as:
“What is the purpose of our Facebook page?” “What is it going to do for us?” “What is our pohcy for employees’ contributions?” “What should we do about critical customer reviews?” “Are the costs of maintaining the page sufficiently offset by the benefits?”
But that company should ask those questions! Chapter 3 addresses the relationship between i n f o r m a t i o n systems and strategy i n more depth. Chapter 8 addresses social media and strategy specifically.
Again, MIS is the development and use of information systems that help businesses achieve their strategies. Already you should be realizing tliat there is much more to this class than buying a computer, working vrith a spreadsheet, or creating a Web page.
i How Can Ybu Use the Five-Component Model? The f i v e – c o m p o n e n t m o d e l i n Figure 1-3 can help guide your l e a r n i n g and t h i n k i n g about IS, b o t h n o w and i n the f u t u r e . To u n d e r s t a n d this f r a m e w o r k better, f i rs t note i n Figure 1-4 tha t these five c o m p o n e n t s are s y m m e t r i c . The o u t e r m o s t components , hardware and people, are b o t h actors; they can take actions. The software and procedure components are b o t h sets of instruct ions : Software is instruct ions for hardware, and procedures are instructions for people. Finally, data is the bridge between the computer side on the left and the h u m a n side on the r ight .
Hardware I Software I Data I Procedures | People
Computer Side Human Side
Automation moves worl̂ from human side to computer side
Characteristics of the Five Components
Increasing degree of difficulty of change
Q3 How Can You Use the Five-Component IVlodel? 11
Now, when we automate a business task, we take work that people are doing by fo l lowing procedures and move it so that computers w i l l do that work, fo l lowing instructions i n software. Thus, the process of automation is a process of moving work f rom the right side of Figure 1-4 to the left.
i—YOU You are part of every in format ion system that you use. When you consider the five components of an information system, the last component, people, includes you. Your m i n d and your thinking are not merely a component of the information systems you use, they are the most important component.
Consider an example. Suppose you have the perfect i n f o r m a t i o n system, one that can predict the future. No such informat ion system exists, but assume for this example that i t does. N o w suppose that o n December 14, 1966, your perfect i n f o r m a t i o n system tells you that the next day, Walt Disney w i l l die. Say y o u have $50,000 to invest; you can either buy Disney stock or you can short i t (an investment technique that w i l l net you a positive return i f the stock value decreases). Given your perfect in format ion system, how do you invest?
Before you read on, th ink about this question. If Walt Disney is going to die the next day, w i l l the stock go up or down? Most students assume that the stock w i l l go down, so they short it, on the theory that the loss of the founder w i l l mean a dramatic drop in the share price.
I n fact, the next day, the value of Disney stock increased substantially. Why? The market viewed Walt Disney as an artist; once he died, he w o u l d no longer be able to create more art. Thus, the value of the existing art w o u l d increase because of scarcity, and the value of the corpora t ion that owned that art w o u l d increase as wel l .
Here’s the point : Even if you have the perfect informat ion system, if you do not know what to do w i t h the data that i t produces, you are wasting your t ime and money. The quality of your thinking is a large part of the quality of the information system. Substantial cognitive research has shown that al though you cannot increase your basic IQ, you can dramatically increase the quahty of your th ink ing . You cannot change the computer i n your brain, so to speak, but you can change the way you have programmed your brain to work.
High-Tech Versus Low-Tech Information Systems Information systems differ in the amount of work that is moved from the human side (people and procedures) to the computer side (hardware and programs). For example, consider two different versions of a customer support information system: A system that consists only of a file of email addresses and an email program is a very low-tech system. Only a small amount of work has been moved from the human side to the computer side. Considerable human work is required to determine when to send which emails to which customers.
I n contrast, a customer support system that keeps track of the equipment that customers have and the maintenance schedules for that equipment and then automatically generates email reminders to customers is a higher-tech system. This simply means that more work has been moved f rom the human side to the computer side. The computer is providing more services on behalf of the humans.
Often, w h e n considering different i n f o r m a t i o n systems alternatives, i t w i l l be helpful to consider the low-tech versus high-tech alternatives in light of the amount of work that is being moved from people to computers.
We discuss thinking skills in an MIS book, because improving your thinking improves the quality of every information system that you use. The Guide on pages 20-21 presents ideas from cognitive science and applies them to business situations.
‘ r, ‘ ‘ f New The five-component framework can also be used when assessing the scope of new systems. When i n the future some vendor pitches the need for a new technology to you, use the five components to assess how big of an investment that new technology
Q4 Why Is the Difference Between Information Technology and Information Systems Important? 13
represents. What new hardware w i l l you need? What programs w i l l y o u need to license? What databases and other data must you create? What procedures w i l l need to be developed for b o t h use and adminis trat ion of the i n f o r m a t i o n system? A n d , finally, what w i l l be the impact of the new technology o n people? W h i c h jobs w i l l change? Who w i l l need training? How vwU the new technology affect morale? Wi l l you need to hire new people? W i l l you need to reorganize?
Components Ordered by DsffscuSty and Disruption Finally, as you consider the five components keep in m i n d that Figure 1-4 shows them i n order of ease of change and the amount of organizational disruption. It is a simple matter to order additional hardware. Obtaining or developing new programs is more difficult. Creating new databases or changing the structure of existing databases is still more diff icult . Changing procedures, requiring people to work i n new ways, is even more di f f icul t . Finally, changing personnel responsibilities and report ing relation- ships and hir ing and terminating employees are both very diff icult and very disruptive to the organization.
The Ethics Guide in each chapter of this book considers the ethics of information systems use. These guides challenge you to think deeply about ethical standards, and they provide for some interesting discussions with classmates. The Ethics Guide on pages 16-17 considers the ethics of using data that is not intended for you.
C : Why Is the Difference Between Information Technology and Information Systems Important? Informat ion technology and informat ion systems are two closely related terms, but they are different. Information technology (IT) refers to the products, methods, inventions, and standards that are used for the purpose of producing information. IT pertains to the hardware, software, and data components. I n contrast, an information system (IS) is an assembly of hardware, software, data, procedures, and people that produces information.
I n f o r m a t i o n technology drives the development of new i n f o r m a t i o n systems. Advances i n i n f o r m a t i o n technology have taken the organizations f r o m the days of punched cards to e-commerce and social media, and such advances w i l l continue to take the industry to the next stages and beyond.
Why does this difference matter to you? Knowing the difference between IT and IS can help you avoid a common mistake: You cannot buy an IS.
You can buy IT; you can buy or lease hardware, you can license programs and databases, and you can even obtain predesigned procedures. Ultimately, however, it is your people who execute those procedures to employ that new IT.
For any new system, y o u w i l l always have t ra in ing tasks (and costs), y o u vril l always have the need to overcome employees’ resistance to change, and you w i l l always need to manage the employees as they util ize the new system. Hence, you can buy IT, but you cannot buy IS.
Consider a simple example. Suppose your organizat ion decides to develop a Facebook page. Facebook provides the hardware and programs, the database structures, and standard procedures. You, however, provide the data to fill your p o r t i o n of their database, and y o u must extend the ir standard procedures w i t h your o w n procedures for keeping that data current . Those procedures need to provide, for example, a means to review your page’s content regularly and a means to remove content that is judged inappropr ia te . Furthermore , you need to t r a i n employees o n h o w to fo l low those procedures and manage those employees to ensure that they do.
Managing your o w n Facebook page is as s imple an IS as exists. Larger, more comprehensive IS that involve many, even dozens, of departments and thousands of employees require considerable work. Again, you can buy IT, but you can never buy an IS!
Q5 What Is Information? 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 w i t h each other without confusion, but nonetheless, they are difficult to define.
I n this text, we w i l l avoid the technical issues of defining information and w i l l use common, intuitive definitions instead. Probably the most common definit ion is that information is knowledge derived f r o m data, whereas data is defined as recorded facts or figures. Thus, the facts that employee James Smith earns $17.50 per hour and that Mary Jones earns $25.00 per horn- are data. The statement that the average hourly wage of all the aerobics instructors is $22.37 per hour is information. Average wage is knowledge that is derived from the data of individual wages.