Home > Encyclopedia of Business and Finance > Information Processing: An Historical Perspective

Throughout history humanity has tried to invent new ways to simplify the problem-solving process. With each generation, people have used various tools and methods to help them process information. Information is defined as letters, symbols, or numbers that are used to express an idea.

The history of information processing goes back five thousand years to the abacus, one of the earliest known counting devices. This first reported calculator or processor was developed in ancient Egypt and in the Far East during the thirteenth century. The abacus consisted of wires strung across a rectangular frame. The frame divides each wire into two sections: The one on the top contains two beads, and the one on the bottom contains five beads. Each top bead represents the quantity 5; each bottom bead represents the quantity 1. Each wire represents a place: units, tens, hundreds, and so on. Computations were done by moving the correct number of beads up to the top of the frame.

The invention of logarithms by John Napier was a landmark in the history of mathematics, enabling people to multiply or divide large numbers quickly and accurately. As a product of logarithms, Napier invented a tool, nicknamed "Napier's Bones," that was used to multiply, divide, and extract square and cube roots.

In 1642 a French philosopher and mathematician, Blaise Pascal, invented the first adding machine, called the Pascaline. It consisted of a series of ten-toothed wheels connected to numbers that could be added together by advancing the wheels by a correct number of teeth. The Pascaline was used until it was replaced by the electronic calculator in the 1960s.

In the 1820s, Sir Charles Babbage, an inventor and genius, developed a mechanical device that could be programmed to perform simple mathematical calculations. He called his invention the Difference Engine. In 1834, he designed the Analytical Engine, which could do more complicated calculations. It could multiply, divide, add, subtract, and even print out an answer. It included an input device, a storage facility to hold numbers for processing, a processor or number calculator, a control unit to direct tasks to be performed, and an output device. The concept used in the Analytical Engine is the concept used in today's general-purpose computer, which is why Babbage is considered to be the father of the modern computer and the field of study known today as operational research.

In 1884, an American inventor at MIT, Her man Hollerith, filed his first patent for a system of encoding data on cards through a series of punched holes. His hand-fed press sensed the holes in punched cards as a wire passed through the holes into a cup of mercury beneath the card, closing the electrical circuit. This process triggered mechanical counters and sorter bins that tabulated the appropriate data. The U.S. government used Hollerith's machine to help with the 1890 census tabulation. His later machines mechanized the card-feeding process, added numbers, and sorted cards, in addition to merely counting data. In 1896, Hollerith started the Tabulating

Machine Company, which was the predecessor of the IBM (International Business Machines) Corporation.

Two major types of information-processing equipment were developed at the end of the nineteenth century. Christopher Sholes developed the first typewriter; it operated at a speed faster than a person could write, and its letters were always legible. Alexander Graham Bell, Charles Painter, and Chickester Bell invented the first telephone, which enhanced the processing of oral information.

Dr. John V. Atanasoff and Clifford Berry are believed to have invented the first electronic digital computer during the period 1937-1942. Their invention was called ABC, which stood for Atanasoff-Berry Computer.

In 1945, Howard Aiken, a mathematician, created the first digital computer, constructed from mechanical adding machine parts. An instruction sequence was fed into the machine on a roll of punched paper tape, rather than being stored in the computer, to solve a problem.

A research team at the University of Pennsylvania under the leadership of Dr. John W. Mauchly and J. Presper Eckert, Jr., was working with the U.S. Army in 1945 on the ENIAC (Electrical Numerical Integrator and Calculator) project. Their goal was to develop a calculating device with memory that could set firing tables for different weapons under varied conditions with target accuracy. They refined the ABC by developing five functional units—called central control, central arithmetic, input, output, and memory—to enhance these first electronic computers.

In 1946, John Presper Eckert and John Mauchly introduced the first "true computer" by unveiling the ENIAC I. It was an enormous machine covering 1800 square feet, weighing 60,000 pounds, and consuming 160 kilowatts of electrical power. This early machine had the calculating power of today's pocket calculator. With so many vacuum tubes, one of them would burn out every few minutes, which severely limited the running time of a program. They started the Eckert-Mauchly Computer Corporation, which was later bought out by Remington Rand Corporation, which changed the name to the UNIVAC division of Remington Rand.

The transistor, which was invented in the late 1940s, offered a huge advantage over vacuum tubes for building computers. Improvements in transistors led to the first integrated circuit, in which a number of transistors and other electronic devices, together with the wiring that connects them, are manufactured in one piece. Development of this technology changed the future of computers forever.

The next computer was UNIVAC I, built by Remington Rand. It introduced the use of magnetic tape as a means of input into a computer. The UNIVAC I was the first commercially available computer; the first one was installed at the Census Bureau in 1951 and the second one was installed at General Electric Appliance Park.

In the 1950s, when a computer was first used for business and engineering applications, the term data processing was first used, defined as the process of changing letters, numbers, and symbols into usable written information. The next attempt at data processing was the development of word-processing equipment to automate the production stage of typing documents. These machines produced high-quality documents efficiently but, unlike data-processing equipment, did not have calculating capabilities.

Until 1956, the only commercial computer was the UNIVAC I. IBM, recognizing the large potential for commercial applications, developed the IBM 650 computer system. Smaller than the UNIVAC I, it became the most successful computer system in use during the 1950s.

The 1960s saw the introduction of second-generation computers that used transistor technology. The transistor performed the same duties as the vacuum tube but was less expensive, required little power, and generated little heat. Computers became smaller in size, lower in cost, and quicker in operation when transistors replaced the vacuum tubes. Second-generation computers replaced machine language with assembly language, allowing abbreviated programming codes to replace long, difficult binary codes. Second-generation computers, however, had limited compatibility and used low-level programming languages. More than five thousand second-generation computers were installed in the United States, with the most successful machine being the IBM 1401.

Integrated circuits replaced transistors in third-generation computers. Integrated circuitry utilized extremely small chips of silicon mounted on a ceramic or glass substrate, segments of which had been metalized to form an electronic circuit similar to the transistor found on the printed circuit board. Third-generation computers had increased internal processing speed, disk-oriented systems, compatibility and multiprogramming capability, and data communications with on-line systems.

Fourth-generation computers are characterized by a microprocessor contained on a single silicon chip, called a semiconductor. These machines were smaller and more energy-efficient. IBM's System/360 computers gave customers a choice of processors, power, speed, and memory. Intel, the leading manufacturer of microprocessor chips, introduced the Pentium processor. The microcomputer moved the computer into small businesses and homes.

The history of information processing is vast and filled with inventions. We have gone from an abacus to a graphing calculator, from Babbage's Analytical Engine to powerful computers in the home. We now have cell phones, faxes, and answering machines.

IBM, which entered the computer field in 1951, created the personal computer for business and home use and rapidly advanced the field of data processing. Its relatively low-cost desktop microcomputer, with its enhanced graphics and communications capabilities, gave birth to the huge software industry that automated the processing of information.

By the 1980s, attention had focused on other stages of the document cycle in which manual tasks other than typing might be automated. The term word/information processing was introduced to describe automation as it is applied to all stages of the document cycle.

In today's fast-paced business world, information must be gathered, processed, and made available at an ever-increasing speed. The computer has proven to be a fast, reliable, and economical means of processing information critical to all organizations. Effectively managed information helps an organization serve its customers better and operate more efficiently. Information processing has given us the tools that can help us to become more creative and productive in our work while eliminating many of the boring, repetitive tasks of the workplace.