Transactional

Processing Systems
Lecture 3

Prepared by Natalie Rose

Definition of TPS

A transaction is an event that affects an

organization conducting its business.Transaction
processing describes either the manual or
computerized recording of the transactions of a
business.
A transaction processing system (TPS) is an
information system that records and processes an
organizations routine business activities.

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Reasons for Recording

Transactions
Information for Employees
Information for Management
Information for Customers,
Suppliers, and Business
Partners
Audit Trails

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Information for Employees

Recording transactions enables employees to

perform and coordinate their work.

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Information for Management

All management levels use summarized and

detailed records of business to make decisions.
Transaction data can be used to help make
decisions.

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Information for Customers,

Suppliers, and Business
Partners

Transaction processing systems provide records of

transactions for external parties. An external party can
be another company or an individual. Individuals can
use these transaction records to reconcile a chargeaccount statement, prove a purchase was made, and
establish a purchase price.

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Audit Trails

Audit trails can be used both internally and

externally. Government agencies use transaction
records to trace and verify the companys
reporting of its revenues and expenses.

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Transaction Processing
Systems
Examples

Point-Of-Sales Systems
Order-Entry Systems
Distribution and Logistics Systems
Purchasing/Receiving Systems
Reservation Systems
General Accounting Systems

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Point-of-Sale Transaction

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What is a POS?

A point-of-sale system records the sale of a product or

service and updates company records related to or
affected by the sale.
POSs often use special input hardware to improve the
speed, ease, and convenience of tracking a sale.
POS terminals may be networked to a central computer or
may operate independently. Independent terminals
usually have limited functionality.

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POS cont

Networked POS stations provide the benefit of

centralized database management, greater storage,
and increased computing power; however, failure
impacts all POS stations.

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Order Entry Transaction

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Order-Entry System

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Order-Entry Systems

Order-entry systems record and process the taking of an

order. The primary objective of an order entry system is
recording an order so that it can be filled.
Order entry systems must also support prompt and rapid
customer service. While order entry systems often
include many POS features, these systems may require a
shipping address, a billing address, and the ability to deal
with back orders.

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Distribution and Logistics

Systems

Distribution and logistics systems are systems that move,

store, and track inventory, complementing point-of-sale
and order-entry systems.
Distribution and logistics systems track products from the
time that they first arrive at the warehouse, are ordered,
and are shipped to the customer.
Distribution systems can automatically reorder a product
when an items reorder point has been reached.

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Purchasing/Receiving
Systems

Purchasing/receiving systems document

transactions between a company and its suppliers.
Transactions processed by these systems have
both internal and external implications;
A purchase order is a form sent to a supplier to
document an order.

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Purchasing/Receiving
Systems

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Reservation Systems

A computerized reservation system (CRS)

describes a special type of order entry system
used by companies that sell, rent, or allocate space
or services.
Reservation data entry systems must have access
to a common database that tracks the capacity
sold. CRSs typically use large mainframe
computers.
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Reservation Systems

More recent technologies use the Internet as their

wide area network. Access to mainframe
reservations systems can occur through direct
connections from terminals, dial-in modems, or
the Internet.
Reservation system security is a primary concern
because of the systems open accessibility.

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General Accounting Systems

Integrated Accounting Systems

payroll systems
accounts receivable systems
accounts payable systems

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A general accounting system records all financial

transactions and classifies them into specific accounts.
Integrated accounting systems generally include payroll,
accounts receivable, and accounts payable subsystems.
Payroll systems track employee hours, wages, and other
benefits.
Accounts receivable systems track monies and other
debts owed to the company as payment for goods and
services provided.
Accounts payable systems may generate purchase orders
and produce checks for paying the organizations bills.

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Transaction Processing System

Characteristics

Capturing and Transcribing Data

paper data
electronic data capture
transcribing from paper into electronic form

Batch Versus Real-Time Processing

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Capturing and Transcribing

Data

Companies have the option of capturing data in

paper or in electronic form.

Paper Data. A source document captures

transactions on paper. Source documents can be
generated internally or externally. Source
documents provide a secure, hard-copy record of
transactions.
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Capturing and Transcribing

Data

Electronic Data Capture. On-line data entry is a

data entry process in which computers capture
transactions directly, eliminating the need for
source documents.

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Capturing and Transcribing

Data
Electronic data capture provides several advantages:

(1) input hardware can be used;

(2) tasks can be automated;
(3) paper storage is reduced;
(4) information loss can be minimized;
(5) data can easily be shared;
(6) data can be summarized;
(7) errors can be caught at their source; and
(8) computers handle information more effectively.
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Capturing and Transcribing

Data

Electronic data capture disadvantages include:

(1) computers or computer terminals are required

at each location at which a transaction might
occur;
(2) terminals, support hardware, and support
software can be expensive; and
(3) computer failures can cause serious problems.
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Capturing and Transcribing

Data
Transcribing from Paper into Electronic Form.
While this approach is becoming less common, companies may
elect to capture data initially on paper then convert the data
into electronic form. Data entry clerks can either key or scan
in data.

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Batch versus Real-Time

Processing
Two different methods are used to process data.
Batch processing stores electronic records or
transcribed paper records in a stand-alone
computer file that other parts of the companys
information system cannot use or access.
Periodically, the computer processes the entire
batch of records, updating the organizations
information system.

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Batch versus Real-Time

Processing
Real-time processing attends to data upon their entry,
immediately updating the information system and making
the data available to all users. Compared to real-time
processing, batch processing uses fewer and less costly
computer resources, allows a company to evenly spread
the load on its computers over the entire day, and allows
the use of microcomputers and other low-cost devices to
create the electronic batch.

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Batch versus Real-Time Processing

(b) Real-time processing

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Ensuring Effective Transaction

Processing Systems

Developing Fast Systems

Ensuring System Reliability

fault-tolerant systems
recoverability
transaction processing monitors

Having an Accessible System

Providing Security

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Developing Fast Systems

As a rule-of-thumb, users should not have to wait longer

than three seconds for a TPS response. The inability to
process transactions quickly can delay business activity,
increase costs, result in lost revenue, impact customer
behavior, impact employee performance, and impact the
organizations bottom line. The transaction data may be
downloaded into a data warehouse that supports
management reporting, analysis, and querying

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Ensuring System Reliability

Transaction processing systems, especially realtime, must ensure reliability. TPS failures can be
classified as incorrect recording of a transaction or
failure to operate. Incorrect or missing
transactions leave no record of failure; systems
that fail to operate generally cause a slowdown or
stoppage of work. Fault-tolerant systems,
recoverability, and transaction processing
monitors are used to improve reliability.
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Fault-Tolerant

Fault-Tolerant Systems. Fault-tolerant systems

(nonstop systems) are systems that achieve high
reliability by using hardware incorporating redundancy
and software designed to take advantage of this
redundancy. The amount of redundancy depends on the
extent of reliability desired. An uninterruptible power
supply provides secondary sources of power. Systems
with a higher tolerance for failure may limit redundancy
to disk storage.

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TP Monitors and Recoverability

Transaction Processing Monitors. Transaction processing

monitors can help ensure acceptable and consistent
performance in processing transactions, manage the
interaction among layers of client/server systems, support
multiple databases, monitor the interactions between the
layers or the databases to make them operate seamlessly
and reliably, and integrate tools and eliminate bottlenecks
in transaction processing.
Recoverability. The TPS should be able to reconstruct
incorrectly logged or unlogged transactions.
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Having an Accessible System

Accessibility enables employees to record

transactions whenever and wherever they occur.
Operating in a global environment requires
operating the TPS 24 hours a day. Backing up a
TPS that operates 24 hours a day can be
accomplished in either of two ways. First, the
transaction data can be partitioned by area of the
world. Second, multiple transaction logs can be
kept.
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Providing Security

Employees, competitors, or natural occurrences

can harm a TPS. Transaction processing systems
are particularly vulnerable because they collect
transaction information from all locations where a
company does business.

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Developing and Updating

Transaction Processing
Systems

The Development, Testing, and Production

Environments
Database Management Systems (Heart of the
TPS)

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The Development, Testing,

and Production Environments

Unanticipated errors can occur when small changes are

made to a TPS program. TPSs are often called legacy
systems. To ensure TPS reliability as the TPS software is
changed, three parallel environments are created.
The development environment contains in-process
copies of the TPS software and data for software
developers to use in checking and improving their new
programs.

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Database Management
Systems as the Heart of TPS

Database management systems provide a variety of

services needed by a TPS, including simplifying the
storage and retrieval of data, controlling the simultaneous
access and update to data by two or more users and
allowing data sharing, and reducing the dependency of
the TPS on a particular hardware environment.
These services are reasons why the TPS transactions are
usually recorded by a DBMS

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