Data Processing Concept

2.1 Introduction

Each organisation, regardless of its size or purpose, generates data to keep a record of events and transactions that take place within the business. Generating and organising this data in a useful way is called data processing. In this lesson, we shall discuss about various terms such as data, information, data processing and data processing system.

 

2.2 Data

The word "data" is the plural of datum, which means fact, observation, assumption or occurrence. More precisely, data are representations of facts pertaining to people, things, ideas and events. Data are represented by symbols such as letters of the alphabets, numerals or other special symbols.

2.3 Data Processing

Data processing is the act of handling or manipulating data in some fashion. Regardless of the activities involved in it, processing tries to assign meaning to data. Thus, the ultimate goal of processing is to transform data into information. Data processing is the process through which facts and figures are collected, assigned meaning, communicated to others and retained for future use. Hence we can define data processing as a series of actions or operations that converts data into useful information. We use the term 'data processing system' to include the resources that are used to accomplish the processing of data.

2.4 Information

Information, thus can be defined as “data that has been transformed into a meaningful and useful form for specific purposes”. In some cases data may not require any processing before constituting information. However, generally, data is not useful unless it is subjected to a process through which it is manipulated and organised, its contents analyzed and evaluated. Only then data becomes information. There is no hard and fast rule for determining when data becomes information. A set of letters and numbers may be meaningful to one person, but may have no meaning to another. Information is identified and defined by its users. For example, when you purchase something in a departmental store, a number of data items are put together, such as your name, address articles you bought, the number of items purchased, the price, the tax and the amount you paid. Separately, these are all data items but if you put these items together, they represent information about a business transaction.

2.5 Data Processing Activities

As discussed above, data processing consists of those activities which are necessary to transform data into information. Man has in course of time devised certain tools to help him in processing data. These include manual tools such as pencil and paper, mechanical tools such as filing cabinets, electromechanical tools such as adding machines and typewriters, and electronic tools such as
calculators and computers. Many people immediately associate data processing with computers. As stated above, a computer is not the only tool used for data processing, it can be done without computers also. However, computers have outperformed people for certain tasks. There are some other tasks for which computer is a poor substitute for human skill and intelligence. Regardless to the type of equipment used, various functions and activities which need to be performed for data processing can be grouped under five basic categories as shown in Fig. 2.1

(a) Collection

Data originates in the form of events transaction or some observations. This data is then recorded in some usable form. Data may be initially recorded on paper source documents 2.2 and then converted into a machine usable form for processing. Alternatively, they may be recorded by a direct input device in a paperless, machine-readable form. Data collection is also termed as data capture.

(b) Conversion

Once the data is collected, it is converted from its source documents to a form that is more suitable for processing. The data is first codified by assigning identification codes. A code comprises of numbers, letters, special characters, or a combination of these. For example, an employee may be allotted a code as 52-53-162, his category as A class, etc. It is useful to codify data, when data requires classification. To classify means to categorize, i.e., data with similar characteristics are placed in similar categories or groups. For example, one may like to arrange accounts data
according to account number or date. Hence a balance sheet can easily be prepared. After classification of data, it is verified or checked to ensure the accuracy before processing starts.
After verification, the data is transcribed from one data medium to another. For example, in case data processing is done using a computer, the data may be transformed from source documents to machine sensible form using magnetic tape or a disk.

(c) Manipulation

Once data is collected and converted, it is ready for the manipulation function which converts data into information. Manipulation consists of following activities:

Sorting

It involves the arrangement of data items in a desired sequence. Usually, it is easier to work with data if it is arranged in a logical sequence. Most often, the data are arranged in alphabetical sequence. Sometimes sorting itself will transform data into information. For example, a simple act of sorting the names in alphabetical order gives meaning to a telephone directory. The directory will be practically worthless without sorting. Business data processing extensively utilises sorting technique. Virtually
all the records in business files are maintained in some logical sequence. Numeric sorting is common in computer-based processing systems because it is usually faster than alphabetical sorting.

Calculating

Arithmetic manipulation of data is called calculating. Items of recorded data can be added to one another, subtracted, divided or multiplied to create new data as shown in fig. 2.2(a). Calculation is an integral part of data processing. For example, in calculating an employee's pay, the hours worked multiplied by the hourly wage rate gives the gross pay. Based on total earning, income-tax deductions are computed and subtracted from gross-pay to arrive at net pay.

Summarizing

To summarize is to condense or reduce masses of data to a more usable and concise form as shown in fig. 2.2(b). For example, you may summarize a lecture attended in a class by writing small notes in one or two pages. When the data involved is numbers, you summarize by counting or accumulating the totals of the data in a classification or by selecting strategic data from the mass of data being processed. For example, the summarizing activity may provide a general manager with sales-totals by
major product line, the sales manager with sales totals by individual salesman as well as by the product line and a salesman with sales data by customer as well as by product line.

Comparing

To compare data is to perform an evaluation in relation to some known measure. For example, business managers compare data to discover how well their compaines are doing. They many compare current sales figures with those for last year to analyze the performance of the company in
the current month.

(d) Managing the Output Results

Once data has been captured and manipulated following activities may be carried out :

Storing
 

To store is to hold data for continued or later use. Storage is essential for any organised method of processing and re-using data. The storage mechanisms for data processing systems are file cabinets in a manual system, and electronic devices such as magnetic disks/magnetic tapes in case of computer based system. The storing activity involves storing data and information in organised manner in order to facilitate the retrieval activity. Of course, data should be stored only if the value of having them
in future exceeds the storage cost

Retrieving
 

To retrieve means to recover or find again the stored data or information. Retrieval techniques use data storage devices. Thus data, whether in file cabinets or in computers can be recalled for further processing. Retrieval and comparison of old data gives meaning to current information.

(e) Communication

Communication is the process of sharing information. Unless the information is made available to the users who need it, it is worthless. Thus, communication involves the transfer of data and information
produced by the data processing system to the prospective users of such information or to another data processing system. As a result, reports and documents are prepared and delivered to the users. In electronic data processing, results are communicated through display units or terminals.

(f) Reproduction

To reproduce is to copy or duplicate data or information. This reproduction activity may be done by hand or by machine.