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 organizing this data in a useful way is called data processing. In this post, we shall discuss about data processing activities and the data processing cycle.
The word “data” is the plural of datum which means fact, observation, assumption or occurrence. The data processing cycle is the process through which facts and figures are collected, assigned meaning, communicated to other and retained for future use. It is a series of actions or operations that converts data into useful information. In a data processing cycle, we include the resources that are used to accomplish the processing of data.
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.
Data processing activities are grouped under following five basic categories:
(i) 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.
(ii) 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.
(iii) 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, calculating, summarizing and comparing.
(iv) Storage and retrieval
Once data has been captured and manipulated following activities may be carried out: storing and retrieving.
(v) Communication
The various steps involved in data processing cycle are as follows:
(i) Data input
The term input refers to the activities required to record data and to make it available for processing. The input can also include the steps necessary to check, verify and validate data contents.
(ii) Data processing
The term processing denotes the actual data manipulation techniques such as classifying, sorting, calculating, summarizing, comparing, etc. that convert data into information.
(iii) Output
It is a communication function which transmits the information, generated after processing of data, to persons who need the information. Sometimes output also includes decoding activity which converts the electronically generated information into human-readable form.
(iv) Storage
It involves the filing of data and information for future use. The above mentioned four basic functions are performed in a logical sequence as shown above (see data processing cycle figure) in all data processing systems.
For more notes on data processing, view a comprehensive excerpt here.