Informatics Practices · Ch 5 — Understanding Data
Importance of Data
Importance of Data
Data matters for two distinct reasons. First, human beings rely on data whenever they make decisions. Second — and this is the deeper point — when a large amount of data is processed with the help of a computer, it reveals possibilities and hidden traits that are simply not visible to a human looking at the data directly. Computers do not just store our facts; they surface patterns we could never spot ourselves.
A knowledge base is a store of information consisting of facts, assumptions and rules which an AI system can use for decision making.
Data at work in daily life and business
Ordinary services quietly depend on continuously maintained, continuously updated data:
- When you withdraw money from an ATM, the bank must debit the withdrawn amount from the linked account — so the bank has to maintain account data and update it as and when required.
- Meteorological offices continuously monitor satellite data, watching for any upcoming cyclone or heavy rain.
In a competitive business environment, organisations cannot afford to guess. They continuously monitor and analyse market behaviour with respect to their products and act on what the analysis shows. They also identify customer demands and feedback, and modify their products or services accordingly.
Pricing gives especially vivid examples of decisions driven by data:
- Dynamic pricing by airlines and railways sets ticket prices based on the relationship between demand and supply.
- Cab booking apps raise or lower the fare depending on the demand for cabs at that particular time.
- Restaurants offering "happy hours" decide when to offer a discount and how much by analysing their sales data across different time periods.
Other fields where data drives decisions
Beyond business, stored and analysed data underpins decision making in many other scenarios:
- Elections — electronic voting machines record the votes cast; the voting data from all machines is then accumulated to declare results in a short time, compared with the slow manual counting of ballot papers.
- Science — scientists record data while performing experiments so that results can be calculated and compared.
- Medicine — pharmaceutical companies record data while trying out a new medicine to judge its effectiveness.
- Libraries — libraries maintain data about the books they hold and about library membership. …