# 2.2 The functional value of information

We are currently living in the ‘information age’. Advances in digital and mobile technologies have allowed people to have access to almost any information they want at literally the touch of a button. However, has all this information actually made us any smarter? Is it allowing organisations and governments to make better decisions? Is it creating and expanding value?

Figure 3

These questions do not have easy answers. However, it is important to distinguish data from information. Data is simply bits of information – facts and figures about people and things. Information is the purposeful analysing and contextualising of this data. Put differently, data is the raw material and information is the finished product. In this context, value creation can be seen as the transformation of raw data into valuable information.

The creation of informational value can be applied to different aspects and functions of organisational value. Data can be gathered and analysed about customers, employees, partners, and managers. Likewise, each business function will provide organisations with its own data and information. The table below briefly highlights some of the data and information offered by different business functions.

## Table 4 Informational value of business functions

Business Function | Data | Information
--- | --- | ---
Human Resources | Employee and recruitment retention. Employee wellbeing. Employee wages. Employee anxiety. Employee productivity and efficiency. Employee benefits. | How well an organisation recruits and retains its talented workforce. How engaged and committed its workforce is to their job and organisational mission. How benefits can be used to improve employee wellbeing and their overall productivity.
Marketing | Sales of different products and services. Public desire for specific goods and services. Customer reactions to different marketing campaigns. Effectiveness of branding. Relationship between organisational goals and public perception. | How well an organisation is selling its goods and services in relation to other providers. How much demand there is for a prospective good or service. How attractive an organisation is making their goods and services to the public.
Operation Management | The processes of how a good or service is produced. The cost and effectiveness of suppliers. The quality of goods and services being produced. The quantity of goods and services being produces. The stock of materials (including human resources) for the production of goods and services. | Which process (e.g. flexible specialisation, lean production, mass customisation, agile manufacturing, etc.) is best for maximising your value. How you can enhance the quality of your goods and services. Ensuring that you have the materials and capacity to produce the goods and services you need.
Financial Accounting | Monetary inflow and outflows. Allocation of monetary resources to different organisational functions. Organisational costs relative to similar organisations. Projected costs. | How an organisation can better allocate its financial resources and increase its overall revenue. The projected financial resources an organisation will have for its future plans.

It is critical for any organisation to properly analyse and contextualise its data, so that it can valuably exploit it. In this contemporary period, many organisations (and individuals!) suffer from what can be termed ‘informational overload’ – where they are overwhelmed by the amount of data and information they have. Putting in proper processes for analysing data, and understanding what information you want from it, is therefore essential in avoiding this problem. New technologies linking digital communication, artificial intelligence, and big data can help organisations use data and information to make better and more valuable decisions – often referred to as ‘business intelligence’.

## Activity 4 The functional value of information

Allow around 30 minutes for this activity

Watch the video interview of Professor Devandra Kodwani (Executive Dean of the Faculty of Business and Law at the Open University) as he talks about the potential of expanding organisational value in the 21st century. As you watch, make some notes about these questions.

1. How does Professor Kodwani create value across business functions?
2. How does he integrate varied information for this purpose?

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Video 2 Expanding organisational value
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OpenLearn - Understanding organisational value
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