Computer Applications in Business

Lecture Notes

ACHARYA INSTITUTE OF GRADUATE STUDIES

DEPARTMENT OF MANAGEMENT
EVEN SEMESTER 2012 - 2013

1. Concepts of Information and Database

Information plays a vital role for the survival of business firms. This information helps
business firms to grow and take decisions and actions.
Data:
Data is the raw material from which useful information is derived. The word Data is
derived from the Latin word Datum which means to give. It is defined as raw facts
or observations, typically about physical phenomenon or business transactions. So it can
be a character, symbol or a word.
Information:
The data which has been converted into a useful and meaningful form is information. The
word Information is derived from a Latin word Infomare which means Instruct.
According to Davis and Olson information is defined as, data that have been processed
into a form that is meaningful to the recipient & is of real or perceived value in current or
prospective action or decision.

Features of Information
Information adds to a representation:

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Info is a collection of data which is useful and meaningful. The data represents or
describes a picture or model or statue or a thing which has meaning and useful.
It corrects or confirms previous information:
Info is considered as a processed data. It corrects or confirms about the previous
info or action taken place.
It has value:
When information is edited or processed to correct the previous info, it adds value
to the info.
It reduces uncertainty:
When there is a collection of data in the database, this helps to predict the future.
It helps in decision making:
When there is a correct info in the database, this helps in making decisions at the
appropriate time.
It is reusable:
As info is a collection of data and will be stored in the databanks it can be used as
and when required.
Difference between Data and Information
Data refers to a character or a symbol or a word but information is a collection of
data which gives meaning to it.
Data are facts but info is based on data & is not a fact.

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All data cannot become info but information arises from data. There is a lot of
selective filtration of data before processing them into info.
Data are the result of routine recording of events and activities taking place.
Generation of information is user driven which is not always automatic.
Data are independent of users whereas info is user dependent. Info reports will be
designed to meet the anticipated info needs of a user or group of users.
Data is representation of info whereas info is an interpreted data.
Input to any system may be treated as Data but Output after processing in the
system is Information.
Data must be processed to understand whereas Information is already in
understandable form; it may be processed further to make it more understandable.
Examples for data can be Statistics, numbers, characters, images but examples for
information can be Reports, Knowledge.
Dimensions of Information
Information has many facets and some of these facets or dimensions of interest to
information system people are:
Economic Dimension
Business Dimension
Technical Dimension
Economic Dimension:
The economic dimension includes both the cost of the information and its benefits from
use. The cost of information consists of the cost to acquire data, cost to maintain data,
cost for generating and communicating information. The cost is related to accuracy, speed
of generation of information. Cost is also related to the response time required to generate
information and communicate it. If the response time is low, the costs are very high.

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Business Dimension:
The characteristics of information required by managers at different levels of hierarchy
are different. The characteristics of information for top management are in striking
contrast with those of operating level management. The top level management is
concerned with strategic planning and giving direction to the organization. So, it requires
information that is future oriented, external and unstructured but whereas the operating
level management requires information about the operations just finished or just to be
started. So, they mostly need information that is historical, internal and structured.
Technical Dimension:
The technical dimension of information depends on the quality and reliability of
technology used for data processing and info communication. The technical
considerations of database are its capacity, response time, data interrelationship, security
and validity.
Capacity:
This refers to the content of info. Info reports should be concise and clear. It should not
overload the user with unnecessary details.
Security:
This aspect emphasizes the privacy and security of data. Information systems must have
adequate safeguards against unauthorized access, hacking and other misuse of database
and facilities.
Validity:
The data must be validated before they enter the database. The quality and quantity of
input data determine the quality of information. Adequate procedures must be built into
the applications for validation of input data at data entry points.

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Response time:
This is the time taken by the system to respond to the user requests for information or
support. The response time depends on the technical capacity of the system and the
volume of such transactions to be processed by the system per unit of time.
Information Overload:
It is a state when users are presented with too much of information. In such a case, it will
be impossible for the users to find out which information is relevant to the problem
context and which is not. This overload causes a barrier to understand the information
presented and confuses the user. This problem is the result of unfocused and irrelevant
information. And also leads to poor presentation of information.
Information Filtering:
It is a technique that trims or cut shorts the irrelevant information before it reaches the
managers. The main purpose of information filtering is to avoid overloading of superiors
with irrelevant information. It permits managers in exercising control over the
information flow in the organization. It also minimizes the pressure on communication
channels and the expenditure of money and time. This can also be harmful to the
organization as some vital information may not reach the superiors.
Business Data Processing:
It is a major application of computers. It is concerned with abstracting meaningful
information from large volumes of data. In business data processing, huge quantity of
data forms input and the processing results in collapsing the data into a small quantity of
meaningful information to the users.
Eg: COBOL- programming language developed in1960s to address the needs of business
data processing
.
INPUT

PROCESSOR

OUTPUT
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DATA

Lecture Notes
PROCESSING

INFORMATION

DATA
STORAGE

Steps in Data Processing:

Once the information needs are identified, there is a need to follow certain steps to locate
data sources, generate information and communicate it. The basic steps are;
Identifying the data

Designing forms

Entering data

Validation

Storage

Processing the data

Generating reports
and communicating
them
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Identifying the data:

Accuracy of information depends on accurate data input. Once certain information
needs are determined, the data for generating that information need to be
identifies. The first step in data processing, therefore, is to locate data sources for
the required information. Accurate, adequate and relevant data must be used as
input.
Designing forms:
The next step is to design forms for data entry. The forms are linked to databases
so that it becomes easy to enter data into the system.
Entering data:
Once the input forms are designed, the actual data must be keyed into the forms.
Data entry personnel do this task. This task is monotonous, but the work has to be
done very carefully to avoid any correct data.
Validation:
The data entered must be valid. Certain validation procedures may be built into the
code so that input forms do not accept any incorrect data.
Storage:
The next step is to organize and store the data in appropriate databases to facilitate
easy storage and retrieval of data. It should also take care of data security,
particularly in a multi-user environment.
Processing the data:
The next step is to retrieve the appropriate data for the information required and
process them. The operations to be performed to generate information depend on
the nature of data and the information required.
Generating reports and communicating them:

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The information must be meaningfully presented to the users. Applications must

be developed to generate reports for the users. The report may be presented in the
form of print-out, on screen display etc.
Database
A database is a set of logically connected data files that have common access methods
between them. The word data bank is sometimes used to mean a collection of databases.
A database is an organized collection of data for one or more purposes, usually in digital
form. The data are typically organized to model relevant aspects of reality (for example,
the availability of rooms in hotels), in a way that supports processes requiring this
information (for example, finding a hotel with vacancies).
Database system
A database system is a term that is typically used to encapsulate the constructs of a data
model, database Management system (DBMS) and database. It gives centralized control
over the database resources.
Components of Database System
The common database components are:
Database files: The database files store the transaction .
DBMS: It is a set of programs that manages the databases. It performs a number
of tasks like controlling access to the database, making security checks etc.
Host level language interface system: This system interacts with application
programs and interprets their data requests that are issued in high-level language.
Natural language interface: DBMS needs to process queries and data requests
issued to it in natural languages called English-like language. The natural language
interface performs interpreting the queries and requests in natural language. It also

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facilitates managerial interaction with the database for decision support

applications.
Application programs: The application programs request for data from the
database. The data independence permits the applications to use the data for a
variety of purposes.
Data Dictionary: Data dictionary is an electronic document that contains data
definition and data use for every data type in the database. It describes the data and
their characteristics such as their location, size and type. It identifies data origin,
use, ownership and methods of accessing and security of data.
Report generator: The system generates output for users in the form of query
response or reports. It might also produce documents like invoice and process adhoc queries and special report requests.
Advantages of Database system:
The database system approach has the following advantages:
Data independence: The data are logically designed into databases and they are
independent of applications. Since the data are program-independent, any
application can use them without any modification to the code.
Data shareability: Database permits simultaneously multiple accesses to the
database. Thus, multiple users can share the same data at the same time.
Data integrity: Access to the database is controlled by the database management
system. The system authorises personnel for entering, editing and deleting the
data. It also authorises people to access data for various data processing activities.
Since the database stores one data item only in one place and updates it with fresh
transaction data automatically, there is little chance of inconsistency in the
database.

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Data availability: The database is centrally and access to data is permitted

through an authorisation scheme. The data resources are therefore available to the
users in the organisation subject to the security restrictions enforced.
Data Evolveability: The database is flexible and can store huge quantity of data.
It can evolve as the number of applications and queries increases to meet their data
requirements for information generation.

Database Management System

A database management system (DBMS) is a software package with computer programs
that control the creation, maintenance, and use of a database. It allows organizations to
conveniently develop databases for various applications by database administrators
(DBAs) and other specialists. A DBMS allows different user application programs to
concurrently access the same database. DBMSs may use a variety of database models,
such as the relational model or object model, to conveniently describe and support
applications. A DBMS provides facilities for controlling data access, enforcing data
integrity, managing concurrency control, and recovering the database after failures and
restoring it from backup files, as well as maintaining database security.
Types of DBMS
There are three main types of Database Management System (DBMS) and these are
based upon their management of database structures. In other words, the types of DBMS
are entirely dependent upon how the database is structured by that particular DBMS.
Hierarchical DBMS
A DBMS is said to be hierarchical if the relationships among data in the database are
established in such a way that one data item is present as the subordinate of another one.
Here subordinate means that items have 'parent-child' relationships among them. Direct
relationships exist between any two records that are stored consecutively. The data
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structure "tree" is followed by the DBMS to structure the database. No backward

movement is possible / allowed in the hierarchical database. Hierarchical databases were
difficult to handle because rolling of operations was highly tedious.
Network DBMS
A DBMS is said to be a Network DBMS if the relationships among data in the database
are of type many-to-many. The relationships among many-to-many appear in the form of
a network. Thus the structure of a network database is extremely complicated because of
these many-to-many relationships in which one record can be used as a key of the entire
database. A network database is structured in the form of a graph that is also a data
structure. Though the structure of such a DBMS is highly complicated however it has two
basic elements i.e. records and sets to designate many-to-many relationships. Mainly
high-level languages such as Pascal, COBOL and FORTRAN etc. were used to
implement the records and set structures.
Relational DBMS
A DBMS is said to be a Relational DBMS or RDBMS if the database relationships are
treated in the form of a table. A statistical table that is composed of rows and columns is
used to organize the database and its structure and is actually a two dimension array in
the computer memory. A number of RDBMSs are available; some popular examples are
Oracle, Sybase, Ingress, Informix, Microsoft SQL Server, and Microsoft Access.
Data warehouse
A data warehouse (DW) is a database used for reporting and analysis. The data stored in
the warehouse is uploaded from the operational systems. The data may pass through an
operational data store for additional operations before it is used in the DW for reporting.
A data warehouse maintains its functions in three layers: staging, integration, and
access. Staging is used to store raw data for use by developers. The integration layer is

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used to integrate data and to have a level of abstraction from users. The access layer is for
getting data out for users.
Benefits of a data warehouse
A data warehouse maintains a copy of information from the source transaction systems.
This architectural complexity provides the opportunity to:

Maintain data history, even if the source transaction systems do not.

Integrate data from multiple source systems, enabling a central view across the
enterprise. This benefit is always valuable, but particularly so when the
organization has grown by merger.

Improve data quality, by providing consistent codes and descriptions, flagging or

even fixing bad data.

Present the organization's information consistently.

Provide a single common data model for all data of interest regardless of the data's
source.

Restructure the data so that it makes sense to the business users.

Restructure the data so that it delivers excellent query performance, even for
complex analytic queries, without impacting the operational systems.

Add value to operational business applications, notably customer relationship

management (CRM) systems.

Data Mart
A data mart is the access layer of the data warehouse environment that is used to get data
out to the users. The data mart is a subset of the data warehouse which is usually oriented
to a specific business line or team.
Data mining
It is the step of the knowledge discovery in databases process. The goal of data mining is
to extract knowledge from a data set in a human-understandable structure. It is the young
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Lecture Notes

and interdisciplinary field of computer science is the process of discovering new patterns
from large data sets involving methods at the intersection of artificial intelligence,
machine learning, statistics and database systems.

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