CHAPTER 1: INTRODUCTION TO BUSINESS DATA

PROCESSING

1.1 Overview Of Business System

A computerized business system consists of computer hardware, computer software, data processing
,procedures, computer personnel, end user or a non technical individual.
Set of manual and/or computerized components for gathering, storing, and processing business data
items and for converting such data items into useful information

Elements of Computerized Business System :

A computerized business information system can be viewed as a system of the following major six
components:

1. Computer hardware, meaning computer equipment and its peripherals.

2. Computer software, meaning programs that instruct a computer how to manipulate data and
documentation that explains how these programs should be used.

3. Data Are facts that are to be processed by the computer hardware and software.

4. Procedures that govern the activities and treatment of the above items.

5. Computer personnel who prepare data items for computerized input. They write computer
programs, monitor computer operations and distribute the output.

6. End user, a non-technical individual who employs computer resources for performing daily tasks.

1.1.1 Management Functions

Planning is the ongoing process of developing the business' mission and objectives and determining
how they will be accomplished. Planning includes both the broadest view of the organization, e.g., its
mission, and the narrowest, e.g., a tactic for accomplishing a specific goal.
Organizing is establishing the internal organizational structure of the organization. The focus is on
division, coordination, and control of tasks and the flow of information within the organization. It is
in this function that managers distribute authority to job holders.
Staffing is filling and keeping filled with qualified people all positions in the business. Recruiting,
hiring, training, evaluating and compensating are the specific activities included in the function. In
the family business, staffing includes all paid and unpaid positions held by family members including
the owner/operators.
Directing is influencing people's behavior through motivation, communication, group dynamics,
leadership and discipline. The purpose of directing is to channel the behavior of all personnel to
accomplish the organization's mission and objectives while simultaneously helping them accomplish
their own career objectives.
Controlling is a four-step process of establishing performance standards based on the firm's
objectives, measuring and reporting actual performance, comparing the two, and taking corrective or
preventive action as necessary.

1.1.2 Levels of Management

 Top or Strategic Level Management

 Middle Level Management.

 Techno Structure or Specialist Staff

 Operating Staff

 Supporting Staff
Top or Strategic Management
|
Middle Level Management
|
|---------------------------|-----------------------|
Specialist Staff Operating Staff Supporting Staff

 Top or Strategic Level Management- responsible for all the planning and operations of the
firm.

 Middle Level Management-assures that the directions of the top management are carried
out by the operating staff faithfully.

 Techno Structure or Specialist Staff-carries out the research and analysis for the design
work so that the profits are optimized in the organization.

 Operating Staff- will carry out designed task or work appointed by the specialist staff.

 Supporting Staff- these people support the works carried out by operating staff

1.1.3 Information Requirements- For taking certain decisions toplevel managers need
proper information. They have to deal with all aspects of functioning of the organization.

1.2 Profile of data in business system

1.2.1 Large Volumes of Data and Data Handling- A computer can perform work
repeatedly effectively, efficiently , extremely fast and possibly cheaper. The ability to remember
and retrieve information is accurate in computer.
Top or Strategic Management
|
Middle Level Management
|
|---------------------------|-----------------------|
Specialist Staff Operating Staff Supporting Staff

 Top or Strategic Level Management- responsible for all the planning and operations of the
firm.

 Middle Level Management-assures that the directions of the top management are carried
out by the operating staff faithfully.

 Techno Structure or Specialist Staff-carries out the research and analysis for the design
work so that the profits are optimized in the organization.

 Operating Staff- will carry out designed task or work appointed by the specialist staff.

 Supporting Staff- these people support the works carried out by operating staff

1.2.2 Identification of Relevant Data

There are two types of data that must be inputted when processing transactions:

a) Variable data- These are data items that change for each transaction handled or decision mode.

b) Identification data- This is the element of data that uniquely identifies the item being processed.

1.2.3 Classification of Data elements by function

Data elements can be classified by the function performed on them. Thus, data records are of the
following types:

 Mater Data Record- A master data record is a set of data for an individual subject such as a
customer, employee or vendor.
 Transaction Data Record- Transaction data record is used to update the data in master
records in a master file, which contain the subjects of the organization.

 Control Data Record- Control data record is a checkpoint record containing data used to
initiate, modify, or stop a control operation or determine the manner in which data items are
processed.

 Data security- Data security is the protection of data against unauthorized access. Programs
and data can be secured by issuing identification numbers and passwords to all authorized users
of the system.

 Data checking-Data checking is an operation used to verify data quality or data integrity.
The three types of checks that can be performed on the input data:
1.2.4 Classification of Data by Source

Source data are the original data that are handwritten or printed on a source document or typed into
the computer system from the keyboard or terminal.
It can be of the following two types:

c) Raw data –. Raw data is a term for data collected on source which has not been subjected to
processing or any other manipulation. (primary data), it is also known as primary data. They are
those data items that have not been processed or manipulated

d) Derived data- Derived data are the data values that are obtained from the values of various other
data items by using a specified algorithm. After processing of Raw Data Derived data is obtained

1.2.5 Primary and Secondary Data Key

 Primary Key- The record key that is unique to each record is called the primary record key.

 Secondary Key- Secondary record keys are not necessarily unique.

1.2.6 Historical Data for Reference and Analysis

 The form of data that gives an idea of the history of an organization or the formation of a
document comes under historical data for reference and analysis.

 Historical data are stored in archive files.

 These files record data in a serial manner which means that you can retrieve data fields one
after the other in a serial manner.

Validation Checks

Checking the accuracy of data

Confirming the relevance of data

1.2.7 Need For Ensuring Accurate, Reliable and Timely Processing of Data

Computer records must be changed with care in order to protect information.

The business information so achieved should have the following characteristics:

 Brevity

 Accuracy

 Timeliness
 Completeness

 Relevant to the receiver

 Relevant to decision making

1.2.8 Basic Tasks in Business Data Processing

Business data processing uses electronic machines for fast and accurate manipulation of data. The
main purpose of business data processing is to do complex jobs of processing at incredible speed.
A business processing cycle consists of three basic steps:

a. Input cycle- In this cycle we manipulate or combine the inputted data with a storage medium most
suitable for entry into processing machine.

b. Processing cycle- In this cycle we manipulate or combine the inputted data with other data as per
the instructions.

c. Output cycle- Once data are processed, the results are to be bought out in a form most suitable for
the user

1.2.9 Examples of Business Data Processing and Applications

 Accounting: The art of recording, classifying, and summarizing in a significant manner and
in terms of money, transactions and events which are, in part at least, of financial character, and
interpreting the results thereof.

 Payroll: It is the sum of all financial records of salaries, wages, bonuses and deductions.

 Inventory: Inventory management is a comples business activity which includes not only
stock replenishment but also merchandising.

1.3 Computer System as a Potent Tool for Business Data Processing

Needs

1.3.1 Facilities available in computerized Systems for Data Capture

An input device converts input data into binary from acceptable to a computer. The commonly used
input device is keyboard. Several input devices which do not require typing of input information
have been developed. They include:
Mouse, joystick, lightpen, graphic tablet, touch screen and track balls.

1.3.2 Validation of Data Processing and Output

Accuracy of input data is verified either manually or by a computer programme.
Some of the technique used for this purpose are described below:

 Data Validation:

 Using Control tools

 Using built-in checks by the Computer Program

 Processing and Output:

 Missing Numbered Document

 Output

1.3.3 Transmission

The marriage of computers with data communications equipments is one of the most exciting
developments in data. Communication refers to the transfer of information from one computer to
another one. It is a major technology that requires special expertise in both the network and related
hardware and software that controls it.

Facilities available in Computerized Systems for a Data Capture:

• Information in the form of raw data is entered into the computer through input devices.

• Such input devices produce digital signal.

• There are two types of devices:

1.Online devices

2. Offline devices

Online devices:

The devices used to capture data online are:

1. Keyboard
2.Light pen
3.Touch screen
4.Mouse
5. Microphone and Voice Recognition
6. Scanner

1)Keyboard: Programs and data are entered into a computer through a keyboard which is attached to
microcomputer or the terminal of a mini or large computer. It contains alphabets, digits, special
characters, and some control keys. When a key is pressed, an electronic signal is produced which is
detected by an electronic circuit called keyboard encoder.

Light pen: A light pen is a pointing device. It is used to select displayed menu option on the CRT.It
is a photosensitive pen like device. It is capable of sensing a position on the CRT screen when its tip
touches the screen.

Touch Screen: It is a computer screen designed or modified to recognize the location of a touch on
its surface. By touching the screen, the user can make a selection or move a cursor.
The simplest type of touch screen is made up of a grid of sensing lines, which determine the location
of a touch by matching vertical and horizontal contacts.

Microphone and Voice Recognition Software:

This is an input device, consisting of a microphone or telephone that converts human speech into
electrical signals. A signal pattern obtained in this manner is transmitted to the computer where it is
matched against pre-stored patterns to identify the input. These systems are used where a person
wants to input data to a computerized system in situations where his hands are busy, or his eyes have
to remain fixed on a measuring instrument or some other objects.

Mouse (Puck): A mouse is also a pointing device. It is held in one hand and moved across a flat
surface. Two rotating wheels or the underside of the mouse detects its movement and direction of the
movement. When a user moves the mouse across the flat surface, the cursor on the CRT screen also
moves in the direction of the mouse’s movement.

Scanners: Scanners are a kind of input devices. They are capable of entering information directly
into the computer. The main advantage of direct entry of information is that users do not have to key
in the information. This provides faster and more accurate data entry.

Magnetic Ink Character Recognition:(MICR):

Magnetic Ink Character Recognition, or MICR, is a character recognition technology used primarily
by the banking industry to facilitate the processing of cheques. The technology allows computers to
read information (such as account numbers) off of printed documents. Unlike barcodes or similar
technologies, however, humans can easily read MICR codes.

Optical Character Reader (OCR):

These scanning devices are capable of detecting alphabetic and numeric characters printed on paper.
These characters may be either typewritten or printed on paper. In case of handwritten characters,
special care has to be taken to ensure that the characters are of standard size, lines making up the
characters are connected and no stylish loops etc. are used.
Offline devices: Offline data entry involves devices through which data are recorded on some media
and then fed or transferred into the computer later.

Offline devices are:

1.Key-to-Tape

2. Key-to- Floppy

3. Key-to- Disk

Key – to – tape:
A key to tape device, also known as magnetic tape encoder is designed to record keyed data directly
onto magnetic tape. An operator keys in the source data electronically using a typewriter like
keyboard. The data are stored temporarily by the device and typically displayed on a CRT for visual
checking of the correctness of entered data before being transferred to magnetic tape. Magnetic tape
encoders are available for recording data magnetically on reels, cassettes and on tap cartridges.

Key- to – Floppy:
These data entry machines have been introduced as low-cost data recording systems. They are used
to store data directly on flexible risks, called diskettes or floppies that are inexpensive and reusable.
A key- to – floppy data entry system consists of a typewriter keyboard with additional control keys
and a display screen, which displays each character keyed in.

Key – to – disk:
Key – to – disk devices are used as data recording stations in systems where data from different
points has to be recorded for processing at one point. Typically, from 8 to 64 keyboard stations are
linked to a small special-purpose computer to record source data on a disk. Each station has a
keyboard and a monitor display

Payroll:
A paycheck is traditionally a paper document issued by an employer to pay an employee for services
rendered. In recent times, the physical paycheck has been increasingly replace by electronic direct
deposit to bank accounts. In most countries with a developed wire transfer system, using a physical
check for paying wages and salaries has been uncommon for the past several decades. Some
company payrolls both the paper check and stub, in which case an electronic image of the stub is
available on an Internet website.

Inventory:
Inventory is a list for goods and materials, or those goods and materials themselves, held available in
stock by a business. It is also used for a list of the contents of a household and for a list for
testamentary purposes of the possessions of someone who has died. In accounting inventory is
considered an asset.
Inventory is required at different locations within a facility or within multiple locations of a supply
network to protect the regular an Inventory management is primarily about specifying the size and
placement of stocked goods.
Financial Accounting:
Financial accountancy (or financial accounting) is the field of accountancy concerned with the
preparation of financial statements for decision makers, such as stockholders, suppliers, banks,
employees, government agencies, owners, and other stakeholders. The fundamental need for
financial accounting is to reduce principal-agent problem by measuring and monitoring agents'
performance and reporting the results to interested users.Financial accountancy is used to prepare
accounting information for people outside the organization or not involved in the day to day running
of the company.

Questions:

1) What is Business Data Processing?

2) What is difference between merging and sorting?

3) Why is Data Validation necessary? Explain various types of data validation checks that are kept in
a programme.