What Is Data And Why Is It Important?

If data is the new currency, do you know how to use it?

Data will be critical in driving our decision making within the next decade. And in many ways, it already is. 

There was a time when making a graph or doing a few calculations required physical calculators or paper based spreadsheets that took up a lot of time. Now we live in a world where spreadsheet software can complete these tasks in minutes. Almost every industry and discipline has experienced a similar shift. Data analysis is no different. 

Thanks to the suite of business intelligence and data focused applications available, data analysis permeates much of the modern workplace.

Data and words related to it: big data, data analytics, data literacy, data management, data storage, have become buzzwords that we see everywhere. But what does data really mean?

Let’s start with defining data.

Merriam Webster defines data in these three ways:

1. Factual information (such as measurements or statistics) used as a basis for reasoning, discussion, or calculation
2. Information in digital form that can be transmitted or processed
3. Information output by a sensing device or organ that includes both useful and irrelevant or redundant information and must be processed to be meaningful

Let’s define information too.

Merriam Webster defines information as:

1. Knowledge obtained from investigation, study, or instruction
   • the attribute inherent in and communicated by one of two or more alternative sequences or arrangements of something (such as nucleotides in DNA or binary digits in a computer program) that produce specific effects
   • a signal or character (as in a communication system or computer) representing data
   • a quantitative measure of the content of information
2. The communication or reception of knowledge or intelligence

According to these definitions, data contains factual information and information is knowledge gained from investigation, study or instruction. We could have an entire conversation about data versus information. The definitions are similar and feed one into the other. Expanding on the original definitions, here’s how I like to think of data today. 

Data contains raw facts and statistics. There are two types of data: quantitative and qualitative. Data can be a number, it can be a yes/no value, or even your favorite ice cream flavor (I’m a Cookies and Cream gal).

A key difference between data and information is context.

Information offers context through data cleaning, analyzing and interpretation. The process by which raw data becomes information is important because data influences decisions. 

Think about all the ways data exists in your life. For example, the amount of money you spent at the grocery store last week, the hundreds of pictures on your phone, or your preference to go to the gym in the evenings as opposed to the mornings.

As a result when organized, analyzed and interpreted data becomes information that solves problems. 

• The amount of money you spent at the grocery store can be part of a larger decision concerning your monthly budget.
• The hundreds of pictures in your phone from your time in Spain last semester can be organized for a visual storytelling of the importance of study abroad programs.
• Your time preference for visits to the gym can be used to determine whether or not you want to cancel your gym membership.

Ultimately there are a host of reasons why data is important, but I will discuss three. 

1. Problem solving

• Data can allow us to solve current problems. Additionally, in more advanced scenarios, data can also help us predict future problems.

2. Informs our decision making

• Data that is thoughtfully organized and analyzed can serve as justification for a decision.

3. Helps us understand behavior 

• Organizations that can use data to identify the needs and understand the behavior of their audience will have the insight needed to serve their audience better.

Data is a vital asset to the modern business era. Organizations and institutions are constantly taking steps to improve their knowledge of the data they need to solve problems. 

As individuals we can learn a lot from the widespread use of data. If you are looking to build your skills, I discuss a few of the ways I do that in a recent post. Data is everywhere so let’s learn how to use it.

Live abundantly,

Bethany

The views expressed in this post are my own and do not represent the views of my employer.