7 Conversion of Manual to Computer-Based Systems

Dr. Ashish Saihjpal

1.    Learning Outcome:

After completing this module the students will be able to:

• Understand the application of a computerized information system.
• Understand the difference between manual and computer based system.
• Develop an understanding of the planning at the management level to mitigate to a computerized system.
• Outline the steps involved in the conversion process and methods of data conversion.
• Understand the concept of data banks for storage and retrieval.

2. Introduction

At the outset, a manual system does not rely on technology, it is a system where information is archived and stored in files in paper form. Manual data processing utilizes manual tools, which shall include paper, writing aids and physical cabinets for storage. Exhibit 1 shows a manual system for storing files. The process is entirely carried by humans without intervention of computer aided facilities at any step. However, a computer based system has data stored in programs and retrieved via databases and excel sheets (refer to Exhibit 2). A computer-based information system utilizes computers for collection,processing & dissemination of information for fulfilling business objectives. The main components of a Computer Based Information System (CBIS) include hardware, software, data, procedures and people.

CIMB Group, headquartered in Malaysia is a leading universal Association of South East Asian Nations (ASEAN) bank. It offers a plethora of financial services and products, ranging from consumer to corporate and investment banking, loans, insurance and securities. The groups’ retail banking network is spread over 15 countries and is serving over 12 million customers. In 2008, the organization took the initiative to galvanize its investment in Information Technology with internal resources. They procured the ARIS Business Process Management Software developed by IDS Sheer and shortlisted 25 areas that needed improvement in spheres of people, processes and technology.

It was observed that the initial account opening process was quite exhaustive. Therefore, the earlier process of filling customer details in four separate data screens was narrowed down by using the world’s first smart card named MyKad. Exhibit 4 shows a sample of MyKad. This identity card embedded in itself the profile pertaining to KYC (Know your Customer) information for complete user authentication. Scanning this smart card provided all essential user information in a single click; it also reduced the process to a single window entry and proved a great tradeoff between cost and productivity in the process of opening new accounts. Productivity increased manifold, owing to reduction in cost and time to open a new account was reduced by 56 percent.

3. Difference between Manual and Computer Based System

The digital age has changed the way the people do business. For every important company task there is a software solution to match. No doubt, there are big benefits of going digital, but the benefits come with certain risks. Certain aspects that differentiate the manual based system from an automated one can be stated as mentioned in Figure1.

  Cost – No doubt, a manual based system is more economical than an automated one but regular documentation of records and book keeping may lead to lower level of staff productivity. A computerized system on the other hand is efficient but comes with a considerable financial cost and requires IT experts for support, training and maintenance.

Speed – In contrast to manual systems the automated systems like accounting software’s can process calculations faster. Moreover, calculations are done automatically in software programs, minimizing errors and increasing efficiency.

Backup – The manual forms of record keeping are more prone to risks and environmental hazards or loss due to theft, fire etc. Whereas, automation on the other hand not only speeds up operations but also provides data storage and backup. The previous transactional records can be saved and retrieved at the touch of a button.

Accuracy and Consistency – Automated systems use calculation methods to ensure that the computation is always right. This ensures consistency in reporting through standardized file formats and established workflows. However, in manual systems there are higher chances of human error which may go unnoticed.

Alteration – In a manual system, if any changes are required to be incorporated then the documents are recreated from scratch requiring more time and effort. However, in a paperless digital document, the same document allows updating and iteration without by just creating a copy of the new version.

Ease of Distribution – In manual system, one maintains files, documents and records by hand. With digital system, one can create the same set of documents in much less time, and may print as many copies as desired. Digital documents can easily be shared via email, an external storage device, over an encrypted medium and in hard form by way of multiple printed copies. This no doubt reduces the physical hassle of the company while sharing of information.

4 Management Planning for Computerization

4.1Phases of Computerization

The need for computerization in any organization increases with the rising complexity of the processes and its structure. The process of computerization generally evolves in any organization through the four phases which are as shown in Figure 2.

• Phase 1: In the first phase, the computer is used only for transaction processing, like stock and personal data records, bills, invoices, pay slips etc.
• Phase 2: The traditional operating systems are improved upon in the second phase. These areas can be exemplified as cost accounting, budgetary control, inventory management, sales forecasting.
• Phase 3: In this stage, the systems are designed to affect decision making styles of the managers. These include project planning, cost benefit analysis, operation research.
• Phase 4: While in the final phase, advance areas are applied, such as strategic decision making, policies and simulation methods.

The introduction to computers in an organization is a major investment decision. It requires capital for maintenance of infrastructure facilities and an allocation of highly qualified people to develop software, operate and maintain the systems. It is a key tool that aids decision making in all the strategic, functional and operational areas. Computer can only deliver output at the click of a button when executed with detailed planning.

4.2  Stages of Computerization

Undertaking computerization in an organization involves the following stages shown in Figure 3.

Figure 3: Stages for Computerization

Feasibility study – Feasibility study is basically undertaken to test the financial and technical viability. It takes into consideration initial investment, recurring cost and total cost. These are measured against terms of time schedules, delivery timelines, quality of information, direct reduction of cost on optimal manpower requirement, space and furniture for the employees.

Selection of computer infrastructure – This stage involves, selection of appropriate configuration in the dynamic market, ranging from personal computers to micro-computers, mini-computers and main-frames. Choice of computer model and the configuration depends upon the need of the organization and their budgetary allocation. Help of solution architects can be availed to know about models, hardware, software licenses and the other support available.

Resource preparation – The next stage is that of resource preparation. Resources refer to infrastructural requirements, human resources and hardware and software requirements to get the system running. It is essential to recruit and train personnel for operation, maintenance etc. The other aspects are room preparation, air-conditioning, purchase of file media, stationery etc.

System design and programming – This stage should be completed prior to the installation so that the computer can be adequately utilized from the start. Computer usage increases with time as and when new applications are installed. System design is carried out by a team of cross functional system experts. The complete systems design should then be discussed with the programmers, so that system of test data and test results can be supervised by the system analyst.

Installation – When a fully programmed and tested solution gets ready for installation, it requires a pilot run and parallel run. Computer based systems are sensitive to human error and require system experts. Therefore, staff should be well trained to understand the code and file formats.

Operation, maintenance, evolution and review- Smooth operation is highly dependent on the proper documentation and detailed operational instructions in the form of a system manual. Hence, the last stage involves maintenance of a proper system manual for effective operation.

4.3  Case: Effective Fuel Management – an implementation for Indian Railways

Minister for Railways, Mr. Suresh Prabhu announced, in the Rail Budget 2016-17 to develop an online fuel management system, a first of its kind for the Indian railways which has one of the largest networks of rail links in the world.

The major concern underlying the computerization is to check pilferage and bring transparency in fuel consumption at railways. Indian railway’s spends close to 14 per cent of its earning on high speed diesel annually which approximately works out to be Rs 18,000 crore per annum. Considering this problem which is one of many others being faced by the railways, the railways decides to incorporate maximum use of Information Technology and align its processes so as to bring in higher efficiency and transparency.

At present, the monitoring of fuel and expenditure of diesel is a manual process which leaves scope for pilferage and leads to excessive expenditure. Automating the end to end process and monitoring it in real time will compile necessary details about the fuel inventory, its receipt and calibration of the fuel tank, to facilitate better management decisions and save expenditure.

This process is likely to bring annual savings close to Rs 33 crores to Indian Railways. With the amount saved on fuel, project implementation cost will be recovered within a year.

5. Conversion of Manual to Computer Based Systems

5.1 Various Steps to be followed for Conversion of Manual to Computer Based Information System

The various steps involved in digitizing of a manual system to a computerized system are shown in Figure 4 and explained as under:

1. System description

The first step refers to the system description. This process requires a clear and concise definition of the problem. The system description consists of all necessary inputs, processes and the corresponding output. The aim is to explain the logical flow of information. This can be in both, the narrative and pictorial form.

Narrative: The narrative description is a simple English language description of the problem. It outlines the inputs, operations and output for a clear understanding. This makes it easier for the engineers and technical staff to get an overview of the problem as a starting point.

Pictorial: This refers to a diagrammatic representation of the problem. Various methods to visualize the conversion process require the use of visual tools. Block diagrams and flowcharts are used to show the flow of data and interaction with hardware devices.

2. Input documents: It refers to the set of documents that can be understood by the computer. What is important to note is the required format and volume of information for input. It should be cross verified and accurate to avoid processing errors. It is essential for the data to be readable by the system in a specific format. The use of computer programs makes it possible for the system to interpret the data.

Output documents: Unlike the input documents, the output documents consist of the final result carried out by the system. These should be obtained from the system in a format that is commonly understood and easier to interpret.

File design: A file refers to a set of instructions that carries information for the computer to act upon. The flow of data inside a system relies on the way this data file is designed. A number of attributes are important to note here. These include the storage capacity, file size, and input and output media to communicate between the machine and the programmer.

Program Logic: The programming logic is the actual process that leads to the conversion of data and manual to a digital format. The logic is represented with the use of flowcharts. A computer programmer is responsible for detailing out the complete logic. Along with a flowchart a sequence of instructions is necessary that converts the raw data to a binary coded form. A binary notation is in the form of 0 & 1 and machine readable.

Computer Program – A computer program refers to the codes written using a language the system reads. Examples of coding languages include object oriented programming like C++, Visual Basic, Java etc or C language. The set of instructions are fragmented in two parts i.e., the operation code and operands. The operation code specifies the type of operation such as ADD, MULTIPLY etc. It is also important to mention, what are the values on which these operations are to be carried on. These are referred to as operands.

In context of information systems, a number of application program packages are available such as:

• Project Management
• Accounts Receivable
• Sales Forecasting
• Bill of Material processing
• Sales Forecasting
• Campaign Manager

 System Verification – A computer program needs to be checked iteratively. It should be debugged for errors and run for different set of values for validation. A computer executes the instructions for compilation till the computer program instructs it to stop. Test engineers list out various test cases or scenarios under which the program is tested. After the test cases are executed, the master file in the system is updated and finalized.

Documentation – System documentation is of paramount importance for future reference. This helps to preserve the system logic that was used for processing. Documentation comprises of – Input details which comprise the complete set of guidelines in which the input is expected.

System maintenance consists of technical details for timely updates, upgrades or migration of the system in case of any failover. It also carries details about how to run and execute a program.

System output carries details of the program which are obtained and the list of constraints that surround the result.

5.2 Methods of Conversion from Manual to Computerized system

There are four ways to convert from manual to computerized system. These are:

1. Parallel Conversion – This method of conversion includes running of both old & new computerized systems simultaneously (refer Figure 5). The new system is used in concurrence with the old till the latter is checked out completely and discontinued. However, it is required in certain essential systems, such as payroll or customer billing. The system becomes well dependable and error free, once it gets well integrated with the Organizational Information System.

2. Phased conversion – Under this type of conversion, different parts of an Information System are integrated in specific time frames. One step is taken at a time. Each phase requires expert assistance and training. This enables users to be more adaptable and acceptable to changes. These systems are generally implemented department wise so that functions and processes become fine tuned and implementation gets easier eventually. Figure 6 shows a broad understanding of Phased Conversion.

3. Pilot conversion – It is implemented only in one department then executed in whole organization (i.e. in a pilot/test site, as shown in Figure 7). The old system continues to operate in the other parts of the organisation. Any problems with the new system are identified and corrected at the pilot/test stage. Once this has occurred, the new system can be implemented across the whole organisation, probably, using a direct cut-over approach. Pilot operation becomes an option when a new system is to be implemented in a series of sites or departments.

4. Direct conversion – This process requires the old system to be redundant and completely be replaced by the new one as shown in Figure 8. The former is no longer a failover backup for the new one. This process is easier to be incorporated in smaller organizations, where a time lag between the two systems does not impact the functions.

5.Data Bank for Information Storage and Retrieval

Procuring data and processing it yields information for mission critical cases that are imperative to any organization. The modern age organizations are becoming knowledge driven and are highly focused on capturing the implicit knowledge which is both intangible and personal in nature, making it more difficult for the organizations to store it. Hence, there arises a need for Data Banks where information can be stored and retrieved in an automated way.

Modern day managers have a daunting task of searching and handling multiple types of information which at times is scattered and becomes huge and thus, difficult to handle. Such problems can be catered by the Data Banks that provide unrestricted and a huge data storage capacity. Moreover, Data Banks can maintain data history for longer periods of time.

In case of a manual system, archiving large volume of information and retrieving it for later use is a cumbersome process. The information may tend to get duplicated across different functional departments. This may further occupy unnecessary space for storage with no control over the number of versions. Hence, an automated information system integrated with a central database is helpful. This central database is integrated across the enterprise and different departments can fetch data as per business needs.

Users can also work on the same version of the document at the same time. Thus, only ‘one set of record’ is maintained for each file leading to effective space management. Modern information processing technology allows a high speed, random access and mass storage device to store large volumes of data concerning various aspects of the firm. Corporate information when procured from different sources such as text documents, audio, video, images etc are unstructured. Incorporating data banks enable information to be segregated in pre-defined templates or schema. This is helpful in organizing the information in a structured manner.

7. Summary

Nowadays, the intergration of information system and information technology has become an inevitable part of any successful business. It is regarded as a major functional area like any other functional areas such as marketing, finance, production and human resources, etc. Therefore, it is important to understand the functions of an information system just like any other functional area in a business. A well-maintained management information system supports the organization at different levels.

Many information systems are designed to cross traditional business boundaries in order to re-engineer and improve business processes all across the enterprise. One have to decide what business they are in, the competency and how can it be aligned to fulfill organizational goals. Those decisions drive the technology, instead of the technology driving the company.

Computer Based Information System provides an opportunity for businesses to improve their efficiency and effectiveness and even to gain a competitive advantage. Information Technology is a catalyst of fundamental changes in the structure, operations and management of organizations. From the stage of raw material procurement to the end product and service delivery to the customers, CBIS facilitate faster decision making and support information sharing at each level. Hence, in the long run the benefits derived from CBIS when weighed against the investment incurred in digitizing the platform from a manual one are much higher.

• C. W. Frenzel and J. C. Frenzel, 2004. “Management of Information Technology”, 4th edition Thomson course technology, Cengage Learning.
• Laudon Kenneth C, Laudon Jane P, Management Information Systems, Managing the Digital Firm, Pearson Education South Asia, 2013.
• Mahapatra Ashish Kumar; Sarangi Suresh Chandra, Computerization and Performance Evaluation, Orissa Review, 2005
• McLeod, R. and George P Schell (2008), “Management information systems (10th ed.)”, Pearson education India

Web Resources

1. http://economictimes.indiatimes.com/industry/transportation/railways/railway-opts-for-online-fuel-management-system/articleshow/50981973.cms