Unit 1: Introduction to Information Technology in Business

Topic: Overview of a Computer System

Introduction

In the modern business landscape, a computer system is not just a tool; it is the fundamental backbone of nearly every operation, from processing a simple sale to complex financial forecasting. Understanding the components of a computer system and how they work together is essential for any business professional. This knowledge allows you to make informed decisions about technology procurement, understand system capabilities and limitations, and appreciate how technology drives efficiency and innovation across all business functions. This section provides a foundational overview of computer systems, breaking down their core components and illustrating their critical role in business.

What is a Computer System?

A computer system is a collection of integrated devices that input, process, store, and output data and information. It is a combination of two primary components: hardware and software, which work in tandem to perform tasks. The operation of any computer system can be simplified into the Input-Process-Output-Storage (IPOS) cycle.

  • Input: Raw data is entered into the system (e.g., typing on a keyboard, scanning a barcode).
  • Process: The computer’s brain manipulates the data according to a set of instructions (e.g., calculating a total, sorting a list).
  • Output: The processed information is presented to the user (e.g., displayed on a screen, printed on a report).
  • Storage: Data and information are saved for future use (e.g., saving a file to a hard drive).
flowchart LR
    subgraph IPOS["Input-Process-Output-Storage Cycle"]
        I["📥 INPUT\n(Keyboard, Scanner,\nMouse)"]
        P["⚙️ PROCESS\n(CPU executes\ninstructions)"]
        O["📤 OUTPUT\n(Monitor, Printer,\nSpeaker)"]
        S[("💾 STORAGE\n(HDD, SSD,\nCloud)")]
    end

    I -->|"Raw Data"| P
    P -->|"Information"| O
    P <-->|"Read/Write"| S
    S -.->|"Retrieve"| P

    style I fill:#e1f5fe,stroke:#0288d1
    style P fill:#fff3e0,stroke:#ff9800
    style O fill:#e8f5e9,stroke:#4caf50
    style S fill:#f3e5f5,stroke:#9c27b0

1. Hardware Components

Hardware refers to the physical, tangible parts of a computer system that you can see and touch.

Input Devices

These devices are used to enter raw data into the computer.

  • Keyboard & Mouse: For manual data entry and navigation.
  • Scanner: Converts physical documents or images into digital format.
  • Microphone: Captures audio input.
  • Barcode Reader: Scans product codes for quick data entry.

Processing Devices

Often called the “brain” of the computer, these components perform calculations and execute instructions.

  • Central Processing Unit (CPU): The primary component that executes the instructions from software. Its speed, measured in Gigahertz (GHz), determines how many instructions it can process per second.
  • Random Access Memory (RAM): This is the computer’s short-term, volatile memory. It holds data and applications that are currently in use, allowing the CPU to access them quickly. When the computer is turned off, everything in RAM is lost. More RAM allows a computer to run more applications simultaneously without slowing down.

Output Devices

These devices present the processed information to the user.

  • Monitor/Display: Visually presents text, graphics, and video.
  • Printer: Produces a hard copy of digital documents.
  • Speakers: Outputs audio.

Storage Devices

These are used to store data and software for the long term. Unlike RAM, storage is non-volatile, meaning it retains data even when the power is off.

  • Hard Disk Drive (HDD): A traditional storage device that uses magnetic spinning platters to store data. It offers large capacity at a low cost.
  • Solid-State Drive (SSD): A modern storage device that uses flash memory chips. SSDs are significantly faster, more durable, and more energy-efficient than HDDs, but typically more expensive.
  • Cloud Storage: Data is stored on remote servers accessed via the internet (e.g., Google Drive, OneDrive). This allows for access from any device and facilitates collaboration.

2. Software Components

Software is a set of instructions, data, or programs used to operate computers and execute specific tasks. It tells the hardware what to do.

System Software

This software manages and controls the computer’s hardware, acting as a platform for application software.

  • Operating System (OS): The most crucial piece of system software. It manages all hardware resources, provides a user interface (UI), and runs applications.
    • Examples: Microsoft Windows, Apple macOS, Linux, Android, iOS.
  • Utility Software: Programs that help maintain and manage the computer system.
    • Examples: Antivirus software, file compression tools, disk cleanup utilities.

Application Software

These are programs designed to perform specific tasks for the user. This is the software that business users interact with most directly to get their work done.

  • Productivity Software: General-purpose tools for creating and managing information.
    • Examples: Microsoft Office Suite (Word, Excel, PowerPoint), Google Workspace.
  • Business-Specific Software: Tailored applications for specific business functions.
    • Examples:
      • Enterprise Resource Planning (ERP): Integrated systems like SAP or Oracle that manage core business processes.
      • Customer Relationship Management (CRM): Software like Salesforce to manage customer interactions.
      • Accounting Software: Tally, QuickBooks for financial management.

Business Applications of Computer Systems

Computer systems are not just for IT departments; they are integral to every function of a modern business.

  • Finance & Accounting:
    • Hardware: High-performance workstations for running complex financial models in Excel; secure servers for storing sensitive financial data.
    • Software: Accounting software (e.g., Tally) for bookkeeping, ERP systems for integrated financial management, and spreadsheet software for budgeting and forecasting.
  • Marketing:
    • Hardware: Powerful computers with high-quality displays for graphic design and video editing; servers to host company websites and marketing campaigns.
    • Software: CRM software to track customer data and manage relationships; Data Analytics tools (e.g., Google Analytics) to measure campaign effectiveness; Social Media Management platforms.
  • Human Resources (HR):
    • Hardware: Servers to host employee databases; scanners to digitize employee records and résumés.
    • Software: Human Resource Information Systems (HRIS) for managing employee data, payroll software for processing salaries, and Applicant Tracking Systems (ATS) for streamlining recruitment.
  • Operations & Supply Chain:
    • Hardware: Barcode scanners and RFID readers for inventory tracking; rugged tablets for warehouse management; GPS devices for tracking shipments.
    • Software: Inventory Management Systems to monitor stock levels; Supply Chain Management (SCM) software to coordinate logistics; ERP systems to manage production planning and procurement.

Real-World Examples from Nepal

1. Digital Wallets: eSewa and Khalti

  • Overview: eSewa and Khalti are leading digital payment platforms in Nepal, transforming how individuals and businesses conduct transactions.
  • System Components:
    • Hardware: Their operations rely on powerful, secure server farms (data centers) to process millions of transactions daily. The user’s smartphone acts as the primary input/output device.
    • Software: The core of their service is sophisticated application software—the mobile app for users and a complex server-side application that handles transactions, security, and integration with banks and merchants. This runs on a stable server OS (like Linux) and uses database management systems to store user and transaction data.
  • Business Impact: They have revolutionized business operations by enabling instant, cashless payments. This impacts Finance (easier reconciliation), Operations (faster checkout for e-commerce like Daraz), and Marketing (in-app promotions and merchant partnerships).

2. E-commerce: Daraz Nepal

  • Overview: Daraz is Nepal’s largest online marketplace, connecting thousands of sellers with millions of customers.
  • System Components:
    • Hardware: Daraz operates on extensive cloud-based server infrastructure to handle massive website traffic, product listings, and user data. In their warehouses, they use barcode scanners, computers, and printers for logistics.
    • Software: The platform is a complex web application supported by a robust database. They use sophisticated inventory management software, logistics software to track packages, and a CRM system to manage customer service inquiries.
  • Business Impact: Daraz’s entire business model is built on an integrated computer system. It automates Marketing (online storefront), Operations (order processing and fulfillment), and Finance (payment processing and seller payouts).

3. Core Banking Systems (CBS) in Nepalese Banks

  • Overview: Commercial banks in Nepal like Nabil Bank, Global IME Bank, and NIC Asia Bank rely on a Core Banking System (CBS) to run their daily operations.
  • System Components:
    • Hardware: Banks use a network of powerful central servers to run the CBS, workstations for employees, and specialized hardware like ATMs and cheque deposit machines.
    • Software: The CBS (e.g., Finacle, Temenos T24) is a massive, integrated application software that handles all banking functions: account management, loans, deposits, and transactions. It is the single source of truth for all customer data. Mobile banking apps are another layer of application software that connects to the CBS.
  • Business Impact: The CBS is the digital heart of the bank. It ensures that a transaction made at an ATM in Pokhara is instantly reflected in the customer’s account, which can be viewed via a mobile app in Kathmandu. It enables all functions, from Operations (transaction processing) to Finance (end-of-day reporting).

Key Takeaways

  • A computer system is a combination of hardware (physical parts) and software (instructions).
  • The fundamental operation follows the Input-Process-Output-Storage (IPOS) cycle.
  • Key hardware includes the CPU, RAM, storage (HDD/SSD), and input/output devices.
  • Software is divided into System Software (like the OS) which manages the computer, and Application Software (like Excel or Tally) which performs user tasks.
  • Every modern business function—Finance, HR, Marketing, and Operations—is deeply reliant on computer systems to improve efficiency, manage data, and drive strategy.

Review Questions

  1. Explain the difference between hardware and software, providing one business-related example of each.
  2. What are the four main components of a computer system based on the IPOS model? Describe the role of each.
  3. Why is RAM considered “volatile memory”? How does having more RAM benefit a business professional who multitasks with many applications?
  4. Provide one example of how application software is used in the HR department and one example for the Finance department.
  5. Using Daraz Nepal as an example, explain how both hardware (e.g., scanners) and software (e.g., inventory system) are critical for its operational success.