How Does Data Mining Work?

Large-scale information technology (IT) has been evolving for years. In fact, the term information technology is so common that it is used in every large organization. Yet, when we typically use the term, we usually are referring to the IT department of a business or university. We say, “I should call IT to come and fix my computer” or “See if IT can install the new software we ordered.” But we generally no longer question exactly what the term information technology means.

For our purposes, IT is the use of any computers, storage, networking, and other physical devices, infrastructure, and processes to create, process, store, secure, and exchange all forms of electronic data. The term information technology was coined by the Harvard Business Review in order to make a distinction between purpose- built machines designed to perform a limited scope of functions and general-purpose computing machines that could be programmed for various tasks (Applegate et al., 1988). As the IT industry evolved from the mid-twentieth century, it encompassed transistors and integrated circuits, while our computing capabilities make giant leaps forward.

IT usually includes several layers of physical equipment (hardware), virtualization and management or automation tools, operating systems, and applications (software) used to perform essential functions. User devices, peripherals, and software, such as laptops, smartphones, or even recording equipment, can be included in the IT domain. IT can also refer to the architectures, methodologies, and regulations governing the use and storage of data. But it is important for you to be aware that IT has over the past two decades been evolving into separate transaction and analytical systems.

A transaction processing system (TPS) supports the processing of a company’s or organization’s business transactions. For instance, the TPS of a university helps perform such tasks as enrolling students in courses, billing students for tuition, and issuing paychecks to faculty. In addition, the TPS associated with a university’s large employee and faculty pension fund may assist stockbrokers in executing buy and sell orders while also helping with accounting for the transaction (Mahar, 2003).

TPSs keep an organization running smoothly by automating the processing of the voluminous amounts of paperwork that must be handled daily. These systems, if we again use the example of a large university, include the accurate recording of transactions, as well as control procedures usually used in paychecks, invoices, customer statements, payment reminders, tuition bills, and student schedules (Mahar, 2003).

The TPS of an organization may be far reaching, extending completely throughout the organization, linking together the entire financial system.

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