What Is Data Processing? A Comprehensive Guide Along with Types & Methods
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What Is Data Processing? A Comprehensive Guide Along with Types & Methods

Ryan Thompson
Ryan Thompson
October 27, 2023
Last updated on:

October 27, 2023


Read time: 7 mins

Data processing is the transformative bridge that converts raw data into actionable insights. This process involves several crucial steps: collection, cleaning, storage, analysis, and interpretation. Each step in data processing demands careful attention to detail, accuracy, and adherence to specific methodologies. The primary objectives of data processing include data storage, retrieval, and analysis. This processed data is used for decision-making, research, and analysis. Therefore, managing data efficiently is critical in today's data-driven world.

In this blog, we will unravel the realm of data processing, understanding its intricacies, types, and methodologies.

According to PCMAG, approximately 90% of the immense volume of data we produce is in an unstructured state.

What is Data Processing - Understanding with an Example

To gain a deep understanding of data processing, let's delve into an example of how an ecommerce business leverages data conversion to its advantage. All ecommerce businesses need to analyze customer purchase data. This is done primarily by collecting raw data on customer transactions, including items purchased, prices, and dates. The data collected has to be cleaned. In the cleaning stage, duplicates, errors, or incomplete entries are corrected to ensure data accuracy. Next, the cleaned data is organized into a structured format for easy analysis. The  analysis takes into consideration key metrics like average purchase value, popular products or customer retention rates. The analysis throws light on matters that usually remain below the surface and go undetected like trends, customer preferences, buying patterns etc. The knowledge of this empowers businesses to make informed decisions on optimizing product offering, enhancing marketing strategies and driving business growth and profitability.  

Why is Data Quality Important for Processing?

Data quality is necessary for accurate and reliable processing. It ensures that the information used is accurate, consistent, complete, and timely, leading to better decision-making, efficiency, and effectiveness in operations.
To know the best practices for improving data quality, read our blog, '5 Best Practices for Effective Data Quality Management.'

Types of Data Processing

Here is the list of data processing types: 

1. Batch Processing

Batch processing is a type of data process where data is collected, processed, and stored in groups or batches. It is typically used for non-time-sensitive tasks that involve large volumes of data. Batch processing allows for efficient utilization of resources and can be automated. However, it may introduce latency in data processing. For instance, it is commonly employed in financial institutions for end-of-day transaction reconciliation and report generation.

Batch processing is crucial in processing thousands of daily transactions in the banking sector. Simultaneously, this process allows banks to reconcile accounts, generate customer statements overnight, and ensure accuracy and efficiency in their operations.

2. Real-Time Processing

Real-time processing is another type of data processing where data is processed and analyzed instantly as it is generated or received without any delay. It is vital for time-sensitive applications where immediate insights or actions are crucial. Real-time processing is utilized in various domains like finance, healthcare, and monitoring systems as it offers instant responses and enables real-time decision-making based on the most current data.

In online payment systems, real-time processing ensures immediate verification and authorization of transactions, confirming funds availability and preventing fraud. The systems instantly approve or decline payments and provide seamless and secure experiences for both customers and merchants.

3. Online Transaction Processing (OLTP)

This type of data processing focuses on managing and executing high volumes of transactional tasks in real time. OLTP systems support day-to-day business operations and interactions, such as order processing and inventory management. It emphasizes data accuracy, consistency, and rapid response times to efficiently handle numerous concurrent transactions.

In eCommerce, OLTP systems handle real-time online order placements, inventory updates, and payment processing. When a customer places an order, the OLTP system updates inventory, verifies payment, and generates order confirmations swiftly, ensuring a seamless buying experience.

4. Online Analytical Processing (OLAP)

Online Analytical Processing (OLAP) is another type of data processing designed to extract meaningful insights and swiftly perform complex multidimensional analysis on large volumes of data. OLAP systems organize data in a multidimensional model, enabling users to query and analyze data from different perspectives. It's widely used in business intelligence and decision-making processes, allowing users to explore data, identify trends, and make informed strategic choices.

In retail, OLAP enables analysis of sales data by product, region, and time, helping businesses identify sales trends and optimize inventory. It allows managers to swiftly access reports and make data-driven decisions on stock levels and promotional strategies for various product categories.

Online Transaction Processing vs Online Analytical Processing
Image 1 - Online Transaction Processing vs Online Analytical Processing

Methods of Data Processing

Here are the three important data processing methods: 

1. Manual Data Processing

Manual data processing involves the handling and manipulation of data without the aid of automated tools or technology. It typically entails tasks like sorting, organizing, and entering data into systems by human operators. This method often involves using physical documents, forms, or records, and it relies on human attention to detail and accuracy. 

Manual data processing can be time-consuming, susceptible to errors, and limited in efficiently handling large volumes of data. Despite its drawbacks, it is the fundamental approach in smaller-scale operations or when automation is not feasible or cost-effective.

2. Automatic Data Processing

Automatic data processing involves the use of computer-based algorithms, software, and machines to process and manipulate data without direct human intervention. This method is swift and efficient and capable of handling vast amounts of data in real time. 

Automated data processing includes data collection, storage, analysis, and reporting tasks, often enhancing accuracy and reducing human errors. Algorithms and software are programmed to follow predefined rules and processes, streamlining data processing workflows. Automatic data processing is fundamental in modern information systems as it enables faster decision-making, advanced analytics, and seamless integration with various applications and databases.

3. Semi-automatic Data Processing

Semi-automatic data processing is a hybrid approach combining manual and automatic processing elements. It involves a blend of human intervention and automated technology to process and manipulate data. In this method, humans oversee and guide the process, utilizing automated tools to expedite tasks. 

Semi-automatic data processing involves data validation, correction, or data entry assisted by computer software, improving accuracy and efficiency. It strikes a balance between the precision of manual processing and the speed and scalability of automatic processing. This makes the semti-automatic data processing method suitable for tasks where human expertise and oversight is necessary and beneficial.

Types of Data Processing Algorithm
Image 2 - Types of Data Processing Algorithm


The future of Data Processing holds immense promise and challenges. As technology evolves, data volumes explode, and privacy concerns intensify, efficient and ethical data handling becomes essential. Automation, AI, and quantum computing are poised to revolutionize data processing, enhancing speed and accuracy. However, these advancements also introduce challenges like data security, regulatory compliance, and algorithmic bias. To navigate this complex landscape, partnering with industry experts is essential. Collaborating with specialists in cybersecurity, AI ethics, and legal compliance can help organizations develop robust data processing strategies that ensure data integrity, protect privacy, and maintain regulatory compliance.

Invensis stands as a resilient and forward-thinking data processing service with a firm commitment to address the complexities of data processing. We help businesses in navigating the challenges through technological advancements. We also ensure that our data processing strategies are technologically advanced, ethically sound, and legally compliant. Contact us if you are looking for a trusted partner to harness the potential of data while mitigating risks and staying ahead of the curve.

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