Tps - A Transaction Processing System

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Transactions are the routine day-to-day activities performed by most organisations.
· some are commercial transactions (buying, selling products and services, paying bills etc)
· others involve recording or retrieving data (making a booking, enrolling a student at university looking up results etc)
Most individual transactions are relatively simple, but in most organisations, there are very large numbers of them - so speed and efficiency are important considerations.
What is a TPS?
A transaction is any business-related exchange such as a payment to an employee, a sale to a customer, and a payment to a supplier.

- A Transaction Processing System (TPS) is an organized collection of people, procedures, databases, hardware and software to record completed business transactions.
- Most TPSs consist of all the components of a CBIS including databases, telecommunications, people, procedures, software and hardware.
- For most organizations, the TPS is the basis of the day-to-day activities that occur in the normal course of business, adding value to its products or services.

Transaction processing is often the core of most major activities in organisations and the systems that collect this data often support other systems that might be decision support, management information or executive information.
A transaction is a fundamental unit of activity in organisations and are generally indivisible. They often involve multiple steps, but if any of the steps fail then the whole transaction cannot proceed
Analysing transaction patterns and volumes of transaction data is an important middle management activity in any business process.

Objectives of a TPS

¨Increase labor efficiency
¨Capture, process and store transactions and produce output
¨Maintain error-free data input and processing
¨Ensure data and information integrity
¨Produce timely documents and reports
¨Provide increased and enhanced service
¨Increase customer loyalty
¨Achieve competitive advantage

Early systems
Typically, transaction processing business processes were among the first to be automated/computerised in most organisations, thus a lot of this early work with this type of system provides the foundation for current thinking about information systems.
The reason behind this is that:
· computer equipment was relatively expensive in these early days
· these systems were among the easier to create
· small savings in the costs to process large numbers of transactions added up to significant amounts that would cover the costs of the expensive equipment
· few other business processes within typical organisations could provide these benefits
At this point, it is also worth noting that centralised systems were initially easier to control and could achieve economies of scale. Grosch's Law claimed that computing power was proportional to the square of the cost of the processor – this favoured ever larger centralised mainframes over smaller distributed systems.

How to Cite this Page

MLA Citation:
"Tps - A Transaction Processing System." 16 Jan 2017

This generally meant that these early transaction processing systems were co-located on one large central mainframe.
Other TPS features
A key feature of most of these systems are the methods used to streamline the processing:
· one example is the use of bar codes - these speed up data capture and make it much more reliable. Without these, it can often be uneconomic to capture this data
· another example is the transferring of data entry to the customers of the organisation - bank customers using automatic teller machines are effectively doing the data entry for the bank; many Internet/e-commerce based applications are using the customers for data entry
Other key features of transaction processing systems include controls and reports:
· controls ensure the systems objectives are properly met, for example, that the data integrity meets minimum standards
· reports are designed to give management an overview of the transactions performed, and are often used for decision making purposes
Basic structure of transaction processing systems
The following is a simple activity diagram illustrating the basic structure of typical transaction processing systems.

Transaction Processing Activities

¨Data Collection is the process of capturing and gathering all data needed to complete one or more transactions. Can be done manually, or using devices like scanners and point-of-sale equipment.

¨Data Editing is the process of checking data for validity and completeness.

¨Data Correction is the process of reentering mis-keyed or mis-scanned data that was found during the data editing.

¨Data Manipulation is the process of performing calculations and other data transformations like classifying data and sorting files.

¨Data Storage is the process of placing transaction data into one or more databases.

¨Document Production is the process of creating reports and outputting records. Output can be printed on paper (hard copy) or displayed on the screen (soft copy).

Typical transaction processing systems
Many commercial organisations have as their core business the selling of products or services. These businesses are founded around four key information systems that have transaction processing as their major component:
· sales order processing
· purchase order processing
· accounting
· payroll
We will mainly illustrate businesses that sell products, but those in the service sector are generally much the same, although there may be some differences. The following is a systems diagram highlighting the major components of these business systems and how they interact with each other and various entities.
As an aside, we may note that a customer for one business such as this could well be a supplier for others. When there are a number of these linkages, we might refer to them as being part of a supply chain. In some parts of the world, businesses in supply chains form close alliances and are often seen as being part of a family of businesses. This has become more important with the increasing use of "just-in-time" (JIT) manufacturing techniques, where there is significant dependence on the reliability of other businesses in the supply chain.

Methods of Transaction Processing

¨Batch Processing is the method that collects transactions in groups, called batches, and process them together (i.e., old CSUS registration).
¨On-line Transaction Processing is the method that completes business transactions as they occur (i.e., airline reservation or bank withdrawal).
¨On-line Delayed Processing is a compromise of the batch and on-line transaction processing when transactions are entered in the computer as they occur, but are not processed immediately (i.e., ordering over the phone).

Other transaction processing systems and issues
While these four systems are typical to most businesses, there are many other transaction processing systems in most organisations. We won't list all of these here, but will note a few:
· production and stock (or inventory) control systems are important systems in organisations that produce products. Production systems have become much more sophisticated since the advent of JIT approaches to manufacturing
· booking systems, such as airline booking systems are often high volume transaction systems and are one of the equivalents of sales systems for the service sector.
· point of sale systems
· there are many large transaction processing systems in government organisations and sometimes they may not have one or more of the core systems noted above. Examples include tax processing; benefit payments (unemployment, pensions etc), and statistics collection and processing such as census data
Batch systems versus real-time systems:
· with batch processing, individual transactions are collected together and processed in a group at a later time - this was the only feasible way for many early systems to operate
· issues with immediate access to data captured in batch processes (time delays)
· can implement various batch controls that help with the reliability of the data capture
· extra processing and care needs to be taken for transactions rejected during batch processing (suspense files etc)
· many batch systems still in use today, particularly where transactions arrive on documents (eg cheque processing, ATM deposit processing in the banking sector)
· real-time transactions are processed individually, immediately they arrive
· real-time systems give immediate feedback to the user which is a useful alternative for reliability of data capture
· real-time systems require more stringent requirements with respect to system response times and system availability
It is important to note that most of these systems will either provide internally, or interface to other systems to provide, management information and other facilities to support decision making. We will cover aspects of decision support systems, management information systems, and executive information systems in the next lecture.

Some TPS Applications
¨Order processing applications collect and process orders from clients (mail, telephone, staff sales is usually used). Once orders are taken, invoicing, accounts receivable and inventory control processing applications are also initiated.
¨Payroll applications used to run on a computer system with punched cards using batch processing. Today, payroll programs are being run through the use of terminals and interactive on-line processing.
¨Automatic Teller Machines use a number of specialized computer programs to handle bank transactions.

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