Whether you use the internet to learn about a certain topic, complete financial transactions online, order food, etc., data is being generated every single second. The use of social media, online shopping and video streaming services have all added to the increase in the amount of data. And in order to utilize and get insights from such a huge amount of data - data processing comes into play. Moving forward, let us understand what is data processing.

What Is Data Processing?

Data in its raw form is not useful to any organization. Data processing is the method of collecting raw data and translating it into usable information. It is usually performed in a step-by-step process by a team of data scientists and data engineers in an organization. The raw data is collected, filtered, sorted, processed, analyzed, stored, and then presented in a readable format.

Data processing is essential for organizations to create better business strategies and increase their competitive edge. By converting the data into readable formats like graphs, charts, and documents, employees throughout the organization can understand and use the data.

Now that we’ve established what we mean by data processing, let’s examine the data processing cycle.

All About the Data Processing Cycle

The data processing cycle consists of a series of steps where raw data (input) is fed into a system to produce actionable insights (output). Each step is taken in a specific order, but the entire process is repeated in a cyclic manner. The first data processing cycle's output can be stored and fed as the input for the next cycle, as the illustration below shows us.


Fig: Data processing cycle (source)

Generally, there are six main steps in the data processing cycle:

Step 1: Collection

The collection of raw data is the first step of the data processing cycle. The type of raw data collected has a huge impact on the output produced. Hence, raw data should be gathered from defined and accurate sources so that the subsequent findings are valid and usable. Raw data can include monetary figures, website cookies, profit/loss statements of a company, user behavior, etc.

Step 2: Preparation

Data preparation or data cleaning is the process of sorting and filtering the raw data to remove unnecessary and inaccurate data. Raw data is checked for errors, duplication, miscalculations or missing data, and transformed into a suitable form for further analysis and processing. This is done to ensure that only the highest quality data is fed into the processing unit. 

The purpose of this step to remove bad data (redundant, incomplete, or incorrect data) so as to begin assembling high-quality information so that it can be used in the best possible way for business intelligence.

Step 3: Input

In this step, the raw data is converted into machine readable form and fed into the processing unit. This can be in the form of data entry through a keyboard, scanner or any other input source. 

Step 4: Data Processing

In this step, the raw data is subjected to various data processing methods using machine learning and artificial intelligence algorithms to generate a desirable output. This step may vary slightly from process to process depending on the source of data being processed (data lakes, online databases, connected devices, etc.) and the intended use of the output.

Also Read: Top 10 Machine Learning Algorithms For Beginners

Step 5: Output

The data is finally transmitted and displayed to the user in a readable form like graphs, tables, vector files, audio, video, documents, etc. This output can be stored and further processed in the next data processing cycle. 

Step 6: Storage

The last step of the data processing cycle is storage, where data and metadata are stored for further use. This allows for quick access and retrieval of information whenever needed, and also allows it to be used as input in the next data processing cycle directly.

Now that we have learned what is data processing and its cycle, now we can look at the types.

What is Data Processing: Types of Data Processing

There are different types of data processing based on the source of data and the steps taken by the processing unit to generate an output. There is no one-size-fits-all method that can be used for processing raw data.



Batch Processing

Data is collected and processed in batches. Used for large amounts of data.

Eg: payroll system

Real-time Processing

Data is processed within seconds when the input is given. Used for small amounts of data.

Eg: withdrawing money from ATM

Online Processing

Data is automatically fed into the CPU as soon as it becomes available. Used for continuous processing of data.

Eg: barcode scanning


Data is broken down into frames and processed using two or more CPUs within a single computer system. Also known as parallel processing.

Eg: weather forecasting


Allocates computer resources and data in time slots to several users simultaneously. 

What is Data Processing: Data Processing Methods

There are three main data processing methods - manual, mechanical and electronic. 

Manual Data Processing

This data processing method is handled manually. The entire process of data collection, filtering, sorting, calculation, and other logical operations are all done with human intervention and without the use of any other electronic device or automation software. It is a low-cost method and requires little to no tools, but produces high errors, high labor costs, and lots of time and tedium.

Mechanical Data Processing

Data is processed mechanically through the use of devices and machines. These can include simple devices such as calculators, typewriters, printing press, etc. Simple data processing operations can be achieved with this method. It has much lesser errors than manual data processing, but the increase of data has made this method more complex and difficult.

Electronic Data Processing

Data is processed with modern technologies using data processing software and programs. A set of instructions is given to the software to process the data and yield output. This method is the most expensive but provides the fastest processing speeds with the highest reliability and accuracy of output.

Examples of Data Processing

Data processing occurs in our daily lives whether we may be aware of it or not. Here are some real-life examples of data processing:

  • A stock trading software that converts millions of stock data into a simple graph
  • An e-commerce company uses the search history of customers to recommend similar products
  • A digital marketing company uses demographic data of people to strategize location-specific campaigns
  • A self-driving car uses real-time data from sensors to detect if there are pedestrians and other cars on the road

Moving From Data Processing to Analytics

If we had to pick one thing that stands out at the most significant game-changer in today’s business world, it’s big data. Although it involves handling a staggering amount of information, the rewards are undeniable. That’s why companies that want to stay competitive in the 21st-century marketplace need an effective data processing strategy.

Analytics, the process of finding, interpreting, and communicating meaningful patterns in data, is the next logical step after data processing. Whereas data processing changes data from one form to another, analytics takes those newly processed forms and makes sense of them.

But no matter which of these processes data scientists are using, the sheer volume of data and the analysis of its processed forms require greater storage and access capabilities, which leads us to the next section!

The Future of Data Processing

The future of data processing can best be summed up in one short phrase: cloud computing.

While the six steps of data processing remain immutable, cloud technology has provided spectacular advances in data processing technology that has given data analysts and scientists the fastest, most advanced, cost-effective, and most efficient data processing methods today.

The cloud lets companies blend their platforms into one centralized system that’s easy to work with and adapt. Cloud technology allows seamless integration of new upgrades and updates to legacy systems while offering organizations immense scalability.

Cloud platforms are also affordable and serve as a great equalizer between large organizations and smaller companies.

So, the same IT innovations that created big data and its associated challenges have also provided the solution. The cloud can handle the huge workloads that are characteristic of big data operations.

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We hope you enjoyed the article “What is Data Processing?” and found it useful. If you have any questions, please ask them in the comment section, and we’ll get you an answer as soon as we can.


1. What is Manual Data Processing?

Manual Data Processing is when the entire process is done by humans without using any automation service or electronic devices. It’s a low cost method of data processing but it is definitely time and labor intensive.

2. What is Mechanical Data Processing?

In Mechanical Data Processing, data is processed without human intervention using machines and computers to automate the process. This includes using simple devices such as calculators, typewriters, etc. With the mechanical data process, there are less errors and the processing is faster and less intensive.

3. What is Electronic Data Processing?

Electronic Data Processing or EDP is the use of automated methods to process commercial data. This process uses computers to process simple data in large volumes. Examples of this include stock inventory, banking transactions, etc. This process does not include human intervention and is prone to fewer errors.

4. What is Batch Data Processing?

Batch Data Processing is when processing and analysis happens on data that has been stored for a longer period of time. This process is often applied to large datasets such as payroll, credit card or banking transactions, etc.

5. What is Real-time Data Processing?

Real-time Data Processing is when data is processed quickly and in a short-period of time. This system is used when results are required in a short amount of time, for example stock selling.

6. What is Automatic Data Processing

Automatic Data Processing is when a tool or software is used to store, organize, filter and analyze the data. It is also known as Automated Data Processing.

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