Commercial Data Processing

1. Commercial Data Processing Coatbridge High School

2. Commercial Data Processing • Organisations and businesses need to collect, store, process andoutput large amounts of information each day. They have to gather, check and store information about customers. Banks, for example, have to deal with millions of customers and millions of withdrawals as well as deposits each day. Businesses also need to communicate with their customers on a regular basis by sending out statements, letters or invoices. • CDP is most commonly used in: • • Shopping, particularly Supermarkets and High street stores. • • Mail Order Companies. • • Banking. • • Paying employees.

3. 1. REASONS WHY WE NEED COMMERCIAL DATA PROCESSING A. Volume of Documents A mail order company has to process thousands of application forms, order forms, invoices, payment slips, returned and missing forms every day. B. Speed of Processing The system will greatly speed up processing of this information, given the computer’s ability to store and retrieve data quickly and to perform large numbers of complicated calculations on the data at high speeds.

4. C. Speed of Access The system is able to search through large amounts of data to find what has been requested instantly. This is important when dealing with many thousands of enquiries about payments, orders, or goods in stock. D. Repetitive Tasks Many of the routine tasks that have to be performed in business are extremely repetitive. When faced with such repetitive tasks people tend to get bored, lose interest, get tired and make mistakes. Computer systems are never make mistakes.

5. CREDIT E. Management Information It is crucial for managers to access up to date information. A supermarket manager can check how many customers each checkout has had, what is selling well, what goods need a promotion, what deliveries are expected this week, who’s off ill etc.

6. 2. ADVANTAGES OF USING CDP Computer-based systems are useful because: • They can handle large volumes of information. • They can speed up the processing of information. • They give instant access to information. • They can handle repetitive tasks. • Data entered by one person can be used by lots of people. • Management is made easier by having easy access to information.

7. DISADVANTAGES OF A MANUAL SYSTEM • A manual system needs more people to operate it, costing more in wages. • It will be much slower to process transactions and to access information requested. • It will be more prone to error and data loss. Credit Single entry with multiple use: In a big organisation, information entered once can be used by several departments.

8. 3. THE DATA PROCESSING CYCLE There are 4 stages in the data processing cycle: 1. Data Collection and Preparation Data or information is collected and translated into a form the computer can understand. 2. Data input Data is entered into the computer. 3. Data Processing and Storage Data is processed by the computer e.g.. adding up a bill, stock control, calculating wages. The data that has been processed produces a file of updated information. 4. Data output Results or information is output in a way that is useful to the user, usually a printout. Sometimes this output is used again as data input for a different process.

9. The best way to see how the stages of the Data Processing Cycle are linked is with a diagram. Copy and complete the diagram of the Data Processing Cycle below:- Data _______ Data and _________ _________ Data Data ________ _______ and Storage

10. DATA and INFORMATION: What is the difference between DATA and INFORMATION? DATA: is a collection of letters, numbers text which have no meaning to us. INFORMATION: is something meaningful that we can understand. When information goes into a computer it becomes data because the computer does not understand it. Information has meaning. Data has no meaning. Example: DATA could be AXF151B. If we are told it is a car registration number it become INFORMATION.

11. 4. DATA COLLECTION, PREPARATION AND INPUT DATA COLLECTION AND PREPARATION At the start of the DP cycle, the data which is required has to be collected and put into a form which the computer can understand. We are going to look at some of the most common ways of labelling or preparing data.

12. A. BAR CODES: A series of vertical lines of varying thicknesses representing a particular number often printed underneath. The numbers are for our benefit. The first 2 are for the country of origin, the next 5 describe the manufacturer, the last 5 describe the article (size, colour,). At the till, or Point of Sale Terminal, it is processed directly. Bar codes DO NOT give PRICE details. B. MAGNETIC STRIP CARDS: Magnetic Stripes appear on credit cards (like Access, Visa etc). The stripes contain information about the account of the person who is buying the goods. Data from magnetic stripes is processed by the computer directly. The above 2 methods are used mainly in shops and banking: MARK SENSE CARDS: These are cards that are divided into columns that allow a mark to be made on them. The computer reads the position of the marks on the card. E.g. The lottery. Marks are made on the numbers you wish for the lottery. The computer knows what numbers you have picked by reading the position of the marks on the card.

13. Advantages: • Increases the speed at which till operators process goods. This means shorter queues at the checkout. • The shop can offer a greater range of goods with less chance of running out. If an item gets below a certain level (the reorder level) the computer warns that the stock is running low and that more must be ordered. • The shopper gets an itemised bill and there is less chance of mistakes. • Provides management with information such as: items which are not selling well, items which have been in stock for too long and the speed with which shop assistants are dealing with each customer.

14. Disadvantages: • It is easier for shops to alter prices with out the customer realising. • Redundancies because fewer people are needed.

15. D. CHARACTER RECOGNITION: Computers can sometimes recognise characters. There are two types of character recognition :- (i) Magnetic Ink Character Recognition (MICR) Characters are printed on a cheque with a special magnetic ink. A MICR reader sorts out the cheques. As the cheques are processed, the amounts spent are automatically totalled and the account is adjusted accordingly.

16. (ii) Optical Character Recognition (OCR) One of the quickest and most convenient ways of getting information into the computer would be to read the printed page directly into it. The OCR reader reads characters by matching their letter patterns with those stored in memory. OCR readers can be used to read normal printed characters like those produced by a typewriter. They are fast and accurate. The post office has OCR readers to read postcodes on letters, but it can’t accurately read handwritten addresses.

17. E. Smart Cards A smart card is like a credit card with a “brain”. The brain on the card is a small computer chip. This chip can be programmed to store information, or programmed to perform certain tasks. The computer chip on a smart card has much less space and processing power than your desktop computer. Smart cards are used in telephone cards and bank cards. You may have heard of ‘chip-and-PIN’ which means that all purchases with smart cards must be verified with a PIN.

18. Advantages of Smart Cards • Can hold much more information than a magnetic stripe. • Is much safer from unauthorised alterations • Is more reliable than a magnetic stripe • Is compatable with computers

19. DATA INPUT After the data has been prepared, it can then be entered into the computer in one of the following ways :- A. DIRECT DATA ENTRY: (i) Key-to-disc: data is read from a form by an operator and entered at a keyboard. Once it has been entered, checked and if necessary corrected, it is temporarily stored on disc before being processed. (ii) Data can be entered directly from the source (e.g. bar codes, OCR and MICR). In this type of direct data entry there is no typing, which makes it faster and has less mistakes than key-to-disc. This is the more common use of the term direct data entry.

20. DATA INPUT (cont.) B. REMOTE DATA ENTRY: Most organisations have a central mainframe computer which is linked to all of its branches via a WAN. When data is entered at a terminal it updates the mainframe computer records remotely.

21. Checking DATA – Which ever method is used to input the data, steps must be taken to make sure that it has been entered correctly. A. Check Digits These consist of extra digits added to a number to act as a check that the number is entered correctly. They are very common on bar-codes and ISBN numbers on every book. Computers can perform a calculation on a series of numbers to check that the number is correct. e.g. Account No = 234564 2 +3+4+5+6 = 20/5 = 4 Check Digit = 4 If the account number is entered incorrectly the check digit will not equal 4 and the computer will recognise the mistake.

22. Credit • B. COMPUTER CHECK - VALIDATION: • The computer can check: • The type of the data e.g.. numeric or alphabetic. • If the data is within an allowed range of numbers / letters, (range check) • The length of the data e.g.. number of characters, (length check) • The computer can give the user a list of options to choose from, (restricted choice) • If any of these are wrong, the computer knows that a mistake has been made and can warn the operator.

23. C. VERIFICATION: This involves the same data being typed from the source document by two people, or one person typing in data twice. The system notices the differences in what is typed and asks the second typist to decide what the correct input should be. This process for double typing obviously doubles the time for data entry. The Tax Office and the Department of Social Security check data this way. When you change your password you have to type it in twice. This is called verifying your password.

24. 5. PROCESSING AND STORAGE OF DATA Data can be subdivided into the following groups: 1.FIELDS (smallest amount of information) 2. RECORDS 3. FILES (largest amount of information) A KEY FIELD is a field which is unique to each record.

25. Data is processed using INTERACTIVE PROCESSING: Data is processed or updated as the transaction is entered and any enquiries are replied to immediately. Example: This sort of system is required when it is important to have as much up-to-date information as possible, e.g.. When booking seats in a cinema or on an aircraft. Advantages: • The data is always up to date. Disadvantages: • Expensive: Interactive processing requires direct access so a hard disc is required. • Can only do one job at a time because all the power of the CPU is needed.

26. Time to revise your HARDWARE notes There are 2 ways of accessing data once it is stored on disk or tape:- DIRECT ACCESS: This is the type of access used with magnetic disc and CD ROMs. this type of access is quick. Direct access is used when there’s a small number of transactions to be done compared to the amount of records on the master file. (ie. 5000 records on the master file and only 20 transactions to be done.) When files are accessed DIRECTLY the MASTER FILE is changed.

27. SEQUENTIAL ACCESS: This is the type of access used with magnetic tape. Sequential access is used when most records on the master file are going to be accessed and there is no need to go quickly to certain records. Records need to be sorted into order when sequential access is being used. The transaction tape needs to be sorted before it is merged into the master tape.

28. 6. OUTPUT Visual Display Unit (VDU) In CDP the output can appear on the screen. A monitor is used to verify data and to browse through files. Hard Copy: The user may need to take the output away and study it therefore the need to get a printed output on paper. It could be an order form, a bill or a list of everything sold. Sometimes special paper is used called pre-printed stationery. Details that are not going to change can be printed on the paper before it is bought.

29. Credit File: Sometimes the data that is output after processing is not visible to the user and is stored as a FILE. These files are usually used as input at a later stage in the processing.

30. Commercial data processing requires a mainframe computer this includes: 1. A terminal for entering data. A terminal has a keyboard and a monitor but no processor (CPU). Terminals are connected to the CPU of the mainframe computer via a network. 2. A Central Processing Unit to do all the processing. It has to be fast and able to address a large amount of memory. 3. A set of hard disk drives for storage. For use in interactive processing. 4. A set of tape units for storage. For transaction files and backup files. 5. A printer for output.

31. Credit Remote Terminals The computer terminals do not have to be in the same building as the mainframe computer. They can be some distance away from the mainframe computer and are called remote terminals. They would be connected by a telephone lines and would be part of a WAN.

32. 7. IMPLICATIONS A. SOCIAL (i) Effects on Business: The use of CDP systems make businesses more efficient because they can process data very quickly. All operations are carried out at speed, accurately. (ii) Job Types and Careers: The types of jobs that people do will change. Some jobs are disappearing because computers can now do the work faster than people can. There are some new jobs now that exist because of computer.

33. 1. Systems Analyst : • The job of systems analysis is to see how a system works at the moment and decide what can be improved and how to improve it. It can involve • Designing programs to do jobs that used to be done manually. • Decide on the software and hardware required for a particular application. • 2. Programmer: • Working with the systems analyst to correct faults found in the system. • Writing the programs for any new computer system the systems analyst has designed.

34. 3. Engineer: Engineers are needed to design, build and repair computers. Engineers look after the hardware. Network Manager: Network managers are needed to ensure that all users can log on and access their work on the network. Also that users have access to the peripherals they need, e.g. printers, scanner etc. The manager must take care of the financial side of operating a network, working within a budget etc.

35. Credit (iii)Computer Crime and Fraud: Access to files held on mainframes must be protected to prevent information falling into the wrong hands. If people could access the bank mainframe and get into someone else’s account they could “steal” money. This is an example of fraud. READ The section on ‘Computer Crime’ in the ‘Standard Grade Computing Studies’ text book, pages 180 - 181.

36. TECHNICAL E-commerce Much more business is being performed over the internet. Goods can be bought and sold over the internet. There are 2 forms of e-commerce:- 1 Online banking 2 Online shopping

37. 1. Online Banking Customers not longer need to travel to their bank office or wait until it opens. A customer can log-on the bank’s mainframe computer from the comfort of their own home. The customer would type in their account number and their password (PIN number) to gain access to their account details.

38. Online shopping Customers can access a web site that is a shop’s on-line catalogue. A customer clicks on the items that they want and enter the details (size, colour, etc). The customer then gives the company their credit card details and their address. The goods are then sent to the customer’s address and the cost is charged on the customers credit card. This type of web site is known as a secure site.

39. (ii) Electronic Funds Transfer (EFT): EFT is a modern banking system that transfers money from one place to another. It works instantly so it saves time in clearing cheques and doing paperwork. Using an EFT system a person’s salary can be transferred electronically to theirbank. With the use of a plastic card containing a magnetic strip (e.g. switch card) and a special electronic funds transfer point of sales terminal (EFTPOS), goods can be bought without using cash. The cost is automatically deducted from a person’s bank account through the computer network and credited to the shop’s account.

40. C. ECONOMIC (i) Initial Cost: The initial costs of setting up a Commercial Data Processing application (like a payroll) are expensive. You need: hardware, software, printers, backing storage, consumables, furniture, telephones and building to house everything. CDP applications happen on a very large scale and involve a large number of people - this is called a mass market. (ii) Running Costs: • Maintenance costs. • Replacement costs, hardware & software. • Wages. • Cost of Consumables.

41. Mass Market Due to e-commerce businesses are able to sell their products all over the world using the internet. This means small local businesses are able to sell their products to anyone on the planet that has access to the internet. The company now has access to millions of customers, a mass market.

42. (iii) Security & Privacy a. Physical Files should be kept locked up. People that work with computers should have identification badges so that other people cannot get into computer areas. Security locks on doors. Terminals with no floppy disc drives. b. Software: • Multiple passwords. Level of access dependent on position in organisation. • Software which can trace the history of a transaction. • Encoding data. Without the code information is garbage.

43. c. Accuracy of Information: As part of the Data Protection Act,companies have a legal obligation to ensure that the data they store on computer is accurate. d. Privacy Companies also have a legal obligation not to infringe on people privacy when obtaining the information and that they do not disclose anyone’s private information HOWEVER…………..

44. e. Customer Lists When giving your details to a company e.g credit card company, catalogue you have to fill in a form. On that form you will be asked if you DO NOT wish your details to be sold on to other companies, (this is normally in very small type so most people miss it). The original company can sell you name and address to other companies in order to regain some of the costs it took to get the information in the first place. Other companies would buy the lists to get specific people’s addresses e.g. a list of all people who bought golf equipment.

45. (v) Current Legislation The Data Protection Act (1984),extended in 1998 and the Computer Misuse Act (1990) have been introduced to protect the rights of the general public.

46. In general terms the Data Protection Act states that personal data shall: • be collected and processed fairly and lawfully • only be held for a specified, lawful and registered purpose • only be used for registered purposes or disclosed to registered recipients • be adequate and relevant for the purposes for which it is held • be accurate and, where necessary, kept up-to-date • be held no longer than is necessary for the stated purpose • have appropriate security surrounding it. These are the parts of the Data Protection Act which refer to the Data Controller i.e. the person / company keeping and using the data and Data Processor ie the people and companies processing the data

47. People who the data is about or Data Subjects in the ACT have the right: • to know whether personal data is held about them • to see the data • to challenge it if it is wrong • to gain compensation for unlawful disclosure of personal data or inaccurate data