Standard Grade Computing Studies

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STANDARD GRADE COMPUTING STUDIES


COMMERCIAL DATA
PROCESSING NOTES

1


Standard Grade Computing Studies


Topic 5:
COMMERCIAL DATA PROCESSING

Class N
otes


In this
topic

we are
going to look at why large companies use computers, how data is organised, the
hardware and software used and finally the legal aspects of commercial data processing. There's usually
one question in the exam dedicated to commercial data processing and
we h
ope that these notes will
summarise the key learning points and help you prepare for the exam.


1.
W
HY LARGE COMPANIES USE COMPUTERS

Large companies like banks, insurance companies, phone, gas and electricity
suppliers and mail order companies, often have

more than a million
customers.

Each customer generates paperwork every time an order or a
payment is made.


It's much easier to deal with customer accounts with a
computer rather than doing it manually.



Computers can deal with the vast amounts of data
required in each system. A microcomputer is not
powerful enough to handle all that data, so large companies use mainframe computers, which give quick
access to data and handle many thousands of repetitive tasks.


2. THE NEED FOR COMMERCIAL DATA PROCESSING


There are 5 main reasons why organisations need computers for commercial data processing:


2.1
Volume of documents


Large computer systems are used because companies deal w


ith vast amounts of data
so that they may compete in the market place.

For
example, insurance companies,
local councils.



2.2
Speed of processing

Vast amounts of data need to be processed
quickly
so that companies can get facts and
figures immediately.


2.3
Speed of access

Organisations need to be able to access their

data

quick
ly
.

For example, if you were to make a call
about an insurance quote
-

the company can retrieve your details quickly.


2.4
Repetitive tasks

There are tasks that are often boring and repetitive and humans get tired or make mistakes. Using
computers means
that processes can be carried out faster than humans and are more efficient because
they can work longer hours without a break.


2.5
Management Information

Using computers in commercial data processing can make it easier and quicker for
the managers to
extract information.

For example, a supermarket manager will
want to see the takings for a given period (day or week or month) or what item is
selling the best or which salesman has had the best month selling goods.

STANDARD GRADE COMPUTING STUDIES


COMMERCIAL DATA
PROCESSING NOTES

2



3.
THE DATA PROCESSING CYCLE

3.1
Data
collection

How data is collected
-

for example, the gas man reads your meter.


3.2
Data preparation

Converting printed information into data that the computer can understand.


3.3
Data input

The way in which the data is input into the computer.

For
example:




bar codes



mark sense cards



magnetic stripes



smart cards



magnetic ink character recognition (MICR)



optical character recognition (OCR)


3.4
Data processing

Data is then manipulated by the computer
-

for example, to work out how much your gas

bill is.


3.5
Data storage

Data is stored on backing storage
-

hard disk, tape, etc


3.6
Data output

How the data is viewed after it has been processed
-

for example, your gas bill is printed on paper and
sent to you.


3.7
Difference between data and
information

Data

does not mean anything
i.e.
just raw facts that are not processed

e.g. 100809
-

this could mean
anything.

However, information
has meaning and is in context

eg 10 August 2009
-

a date


4
.

DATA

COLLECTION
,
PREPARATION

AND

INPUT


4.1
Bar
codes

Bar codes are the most commonly used method of data input. They can be found on many different
types of goods, e.g. newspapers, books, magazines, food products, etc.


Information stored on a bar code:




country of origin



code of the manufacturer



name and size of product



check digit


STANDARD GRADE COMPUTING STUDIES


COMMERCIAL DATA
PROCESSING NOTES

3



4.2
Mark sense cards

The user puts details in small boxes


lines or crosses which can then be
entered into the computer through a mark sense reader.


For example:

lottery tickets
or
multiple
-
choice questions in a
n

exam
.


4.3
Magnetic strips

These appear on the back of credit cards, bank cards and also some shop reward or
loyalty cards.

Magnetic strips hol
d a small amount of information such as the
account number etc.



4.4
Magnetic ink character recognition
(MICR)


Cheques which have numbers along the foot are printed in magnetic ink.
These can be used in magnetic ink character recognition (MICR) readers,
rather than have an operator type the data in.


4.5
Check digit

This is the last number on a bar code.
The check digit is calculated from
the other numbers before it on the bar code.


4.6
Types of check

There are two main types of check used to validate data entry:


L
ength
: checking the length of a field. For example a field for a network username might be
set to
contain no more than 10 characters. If a user tries to enter 11 characters then the length check on that
field will NOT accept it.


Range
: numbers must be in a certain range. For example a range check on the number of days in a
month would only
allow numbers between 1 and 31 or a range check on number of months in a year
would only allow numbers between 1 and 12


4.7
Smart cards


These are cards which contain a small
microprocessor chip
. Many magnetic stripe cards
are being replaced by smart
cards as they can provide much better security.


4.8
Optical character recognition OCR

This allows you to scan in an image or a page, containing text, and the OCR
software will convert this into editable text. It does this by recognising the shapes
of the

letters and converting them into ASCII text.



4.9
Validation

Data can be validated
-

checked to see that it fits in an acceptable range and is accurate and sensible.
This may involve using a
check digit
, a
length check

or a
range check
.


For example:



num
ber of days in a month
-

only valid between 1 and 31

STANDARD GRADE COMPUTING STUDIES


COMMERCIAL DATA
PROCESSING NOTES

4




number of months in a year
-

only valid between 1 and 12


4.10
Verification

Data may also be verified
-

checked to ensure it is entered correctly. This often involves a
second operator processing the
same data and errors being reported and acted upon.

For example:

When typing in a password you are asked to type it in twice, why? In case
you made a mistake the first time.


5
.

DATA PROCESSING AND STORAGE



5.1
Data

Numbers

and text that have no meaning
e.g. 010220


5.2
File

This is an organised collection of related data.

5.3
Record

A set of information on one single subject (for example, one pupil in your school).


5.4
Field

Part of a record and holds one single item of information (for example, your
date of birth).


5.5
Update

A file is updated when data in the file is changed.


5.6
Backup

Backups are usually made on magnetic tape and kept in a safe place far away from the original computer
system.


5.7
Interactive processing

This involves the
computer responding quickly to any user data input

e.g. using an ATM machine (cash
line).

The computer asks the user a question and processes the resulting input. This is a two
-
way
process between the user and the computer.


5.8
Sequential access

This on
ly allows the data to be read into the computer in the
same order in which it was saved. Magnetic tape is an
example of sequential access.



5.9
Random or direct access

This allows the user to access data or files in any order. Hard
disks, DVDs, CDs and US
B Flash Drives are all examples of
random or direct access.


5.10
Multi
-
user database

This simply means that a
database that can be accessed by many users at the same time. This means
that users can update the data simultaneously

e.g. travel agents booking

holidays



STANDARD GRADE COMPUTING STUDIES


COMMERCIAL DATA
PROCESSING NOTES

5



6
.

DATA OUTPUT


6.1
Paper

After the data has been processed the statement or bill is output to paper.

For example the gas bill is
printed off and sent to the customer
.


6.2
Screen

After the data has been processed the statement or bill is
output to the computer screen.


6.3
File

After the data has been processed the statement or bill is saved to a file.

For example saving the file to
a hard disk


7
.
HARDWARE AND SOFTWARE

The basic hardware used by commercial organisations to process data
is the mainframe computer which
is connected with terminals either locally or remotely.


7.1
Mainframe computer

A large powerful computer used in commercial data processing that can run
many terminals. This allows many operators to input data at the same time.
Large hard disks and tape units are used for storing and backing up data.


7.2
Terminals

Terminals are use
d by the user to communicate with a mainframe computer. A terminal is made up of a
keyboard, mouse and screen. It has no processing power of its own.

Sometimes these are called
dumb
terminals
.


7.3
Remote terminals

are used to communicate with the mainfra
me and are normally situated some
distance away and connected by communication links.


8 SOCIAL IMPLICATIONS


8.1
Effects on business

Computers have replaced humans in many jobs so that fewer humans are needed, which means many
members of staff are made
unemployed.


8.2
Job types and careers





Programmer
: writes code based on the system plan, then tests and debugs the
code until it works.




Systems analyst
: decides how best to computerise a manual system and plans
the proposed system.




Engineer
: maintains the computer hardware, network cabling, repairs etc.




Network manager
: assigns user access rights to data on the network, manages new users,
and
ensures regular backups of data.

Generally oversees the smooth running of the network.

STANDARD GRADE COMPUTING STUDIES


COMMERCIAL DATA
PROCESSING NOTES

6




8.3
Comp
uter crime

A person uses his position in an organisation to gain information about customers then uses this to
commit crime.


8.4
Fraud

This includes changing, corrupting, or destroying computer data.

Fraud is often carried
out by p
eople who know the passwords of other customers and use them to gain access
illegally to their
data.

This can be carried out on the data by hacking or introducing
viruses. (Computer Misuse Act)



9 TECHNICAL IMPLICATIONS


9.1
E
-
commerce

Selling or buying
of goods and services electronically through the internet.


9.2
Online banking

Customers of the bank can use the banking facilities without going near the bank. The customers can do
this from the comfort of their own home on their computer.


9.3
Online sho
pping

Customers are now choosing to shop online instead of going to the shops.


Advantages for
customers
:



shops are open 24/7 on the internet



they can compare prices from different shops



no travel costs



time
-

shop at your own leisure



global market
available


Advantages for
shops
:



less shop staff



smaller shops


9.4
Electronic fund transfer (EFT)

Electronic Funds Transfer (EFT) is the transfer of money from the customer’s bank account into the
shop's bank account when the customer uses a bank or cred
it card. This transaction is carried out at a
POS (Point of Sale) terminal.


The process of Electronic Funds Transfer is:



the card is swiped



the customer's bank contacted



payment of money is approved



the money is transferred from the customer’s bank
account to the shop's bank account



STANDARD GRADE COMPUTING STUDIES


COMMERCIAL DATA
PROCESSING NOTES

7




9.5
Point of sale (POS)

A terminal used in shops to enter information scanned from bar codes on the goods.


This information helps to:



record all sales and help with the shop's stock control



look up prices on the shop's central database and display on terminal screen



provide a detailed till receipt for the customer


10 ECONOMIC IMPLICATIONS


10.1
Initial costs

The setting up of a CDP system is very expensive.


Costs could include:



hardware
: computer systems, printers, etc



software
: custom programs for the shop



training
: the staff need to be trained in the use of any new system



shop alteration
: the shop may require alterations to cope with the introduction of computer
equipment, eg
electrical sockets, air conditioning, lighting, etc.


10.2
Mass market

CDP applications allow large national companies to compete in the mass global market, both at home
and abroad.


10.3
Running costs

Running costs are costs that are regular and ongoing,
like electricity, paper, ink and staff salaries.
Maintaining the computer systems and software updates are running costs for a company.


11 SECURITY AND PRIVACY IMPLICATIONS


11.1
Accuracy of information

Large companies (i.e. insurance companies) hold data about both their employees and customers. This
data must be accurate and up to date. Data must comply with the
Data Protection Act
. Companies must
show people their own data if they wish to see it and in
form customers if they have data stored about
them.


11.2
Privacy

When companies store data about employees and customers it is essential that this data is kept secure.

11.3
Physical and software security

Information held by companies should always be kept

securely. Companies have a responsibility to do
this.


Physical

security methods:



lock the computer room doors



keypad entry (numbers entered / swipe cards)



biometrics (finger print scans / retina scans / hand scans)

STANDARD GRADE COMPUTING STUDIES


COMMERCIAL DATA
PROCESSING NOTES

8




Software

security methods:



user IDs and passwords



levels of access



11.4
Sale of customer lists

Larger companies may sell customer lists to make money. These lists are then sent out as mail shots
(junk mail) by the other company asking you, the customer, to purchase their
products.

The majority
of junk mail people receive goes straight into the waste basket.


12 ADVANTAGES OF COMMERCIAL DATA PROCESSING


12.1
Comparison with manual system

Introducing a computerised system instead of using a manual system gives
increased
productivity
,
making the company
more competitive
.


12.2
Maintaining contact with and information about a large number of customers

The company would use the information in its database to send out mail shots to all its customers. The
mail shot would infor
m them of new products or current offers on goods.


12.3
Single entry multiple use

On most systems, information is entered once and then used several times.

Examples of single entry multiple use:




A name and address will be entered when the account is s
et up and then used every time the
address is needed for correspondence.




Data on a bar code which is scanned at a till. This data is used to ge
nerate an itemised bill for the
customer, update stock records so that shelves are refilled when necessary, gen
erate orders to
suppliers when an order is running low and provide management with information on profitable and
unprofitable lines.