Handling the activities: Transaction Processing Systems

Information Systems in Organizations

Various Types of Information Systems

Type Purpose Role

Transaction Processing System (TPS)

Handles transactions and generates transaction data that forms the basis for knowledge about its operations

Handles the present

Report Generating

Systems

Stores: data from TPS; information generated by operations; and knowledge necessary to run the organization

Remembers the past

Business Intelligence & Decision Support Systems (DSS)

Answers questions from management using data, information, and models to facilitate decision making

Prepares for the future

Transaction Processing FundamentalsHandles the present by compiling an accurate and current record of the organization’s activities and generating the data that forms the basis for part of organizational memory.

Characteristics of a Transaction Processing System:– Handles a large number of transactions quickly and efficiently– Validates correctness of transactions while highlighting or

correcting invalid data– Provides critical operations, so that an organization can quickly

cease to operate if the TPS fails– May have potential for security problems because of the nature

of the transactions

Business Processes and Transactions

Business Process Purpose Transactions & Activities

Revenue Process Generates revenue for the organization

Transacting a sale or accepting an order, shipping goods or providing services

Expenditure Process

Handles transactions associated with expenses

Purchasing raw materials and parts, receiving them, and paying for them

Conversion Process

Handles transactions associated with the production of goods or services

Work order preparation, material requisition, manufacturing and cost allocation

Financial Process Keeps track of all transactions

Post to general ledger and journals

Transaction Processing Functions

• Data collection– Should be collected at source– Should be recorded accurately, in a timely fashion

• Data editing• Data correction

Transaction Processing Activities

• Gathering and entering the data that describe the activities of the organization

• Processing (arranging and manipulating) the data for use by a large variety of potential users

• Storing data and reports for easy retrieval when necessary

• Reporting information to users

Transaction Processing System

Transaction Processing Methods

• Batch Processing System - A system that combines data from multiple users or time periods and submits to the computer for processing together.

• Online Transaction Processing (OLTP) - A process in which each transaction is processed at the time of its entry rather than being held for later processing.

• Point-of-Sale (POS) Transaction Processing - An input system used to store and process important information that is obtained at the time a sale is made.

POS Transaction Processing System

Processing and Manipulating Transaction Data

Transaction Processing Audit

• Does the system meet its business requirements? • Are there procedures and controls? • Are the procedures & controls properly used?

Order Processing Systems(a typical TPS)

• Order entry• Sales configuration• Shipment planning• Shipment execution• Invoicing• Customer relationship management (CRM)• Routing and scheduling• Scheduling systems

The Impact of the Internet on the TPS

The Internet and Web have affected the way transactions are carried out and the types of interactions possible are changing.

It is possible for a much wider variety of transactions to go on between virtually all possible combinations of these stakeholders: – business-to-consumer (B2C)– business-to-business (B2B)– business-to-government (B2G)

Business-to-Business (B2B) Transactions

The biggest market affected by the Internet is undoubtedly in the business-to-business area.Businesses can reduce all three types of risks – demand, innovation, and inefficiency- through the use of the Internet.

Interorganizational System (IOS) - A networked information system used by two or more separate organizations to perform a joint business function.