TRANSACTION PROCESSING SYSTEMAn Overview of the Transactional Processing System

1

Transaction Processing System (TPS)• A transaction processing system (TPS) provides data for other

business processes

– Management information system/decision support system (MIS/DSS)

– Special-purpose information systems

2

Figure 9.1: TPS, MIS/DSS, and Special Information Systems in Perspective

3

Transaction Processing System (Continued)• TPSs

– Process the detailed data necessary to update records about the fundamental business operations

– Include order entry, inventory control, payroll, accounts payable, accounts receivable, the general ledger, and more

4

Traditional Transaction Processing Methods and Objectives

• Batch processing system: method of computerized processing in which business transactions are accumulated over a period of time and prepared for processing as a single unit or batch

• Online transaction processing (OLTP): computerized processing in which each transaction is processed immediately, without the delay of accumulating transactions into a batch

5

Traditional Transaction Processing Methods and Objectives Performance Reviews (Continued)• Online entry with delayed processing: transactions are

entered into the computer system when they occur, but they are not processed immediately

• Organizations expect their TPSs to:

– Process data generated for and about transactions

– Maintain a high degree of accuracy and integrity

– Produce timely documents and reports6

Traditional Transaction Processing Methods and Objectives Performance Reviews (Continued)• Organizations expect their TPSs to (continued):

– Increase labor efficiency

– Help provide increased service

– Help build and maintain customer loyalty

– Achieve competitive advantage7

Figure 9.2: Batch Versus Online Transaction Processing

8

Transaction Processing Activities• TPSs

– Capture and process data that describes fundamental business transactions

– Update databases

– Produce a variety of reports

• Transaction processing cycle: the process of data collection, data editing, data correction, data manipulation, data storage, and document production

9

Figure 9.5: Data Processing Activities Common to TPSs

10

Figure 9.4: A Simplified Overview of a Transaction Processing System

11

Transaction Processing Activities (Continued)• Data collection

– The process of capturing and gathering all data necessary to complete transactions

• Data editing

– The process of checking data for validity and completeness.

• Data correction

– The process of reentering miskeyed or misscanned data that was found during data editing.

12

Transaction Processing Activities (Continued)• Data manipulation

– The process of performing calculations and other data transformation related to business transaction.

• Data storage

– The process of updating one or more databases with new transactions.

• Document Production

– The process of generating output records and reports.13

Table 9.2: The Systems That Support Order Processing, Purchasing, and Accounting Functions

14

Order Processing Systems• Order entry system: captures the basic data needed to process a

customer order

• Sales configuration system: ensures that the products and services ordered are sufficient to accomplish the customer’s objectives and will work well together

• Shipment planning system: determines which open orders will be filled and from which location they will be shipped

15

Figure 9.7: Order Processing Systems

16

Figure 9.8: Data Flow Diagram of an Order Entry System

17

Order Processing Systems (Continued)• Shipment execution system: coordinates the outflow of all

products from the organization, with the objective of delivering quality products on time to customers

• Inventory-control system: updates the computerized inventory records to reflect the exact quantity on hand of each stock-keeping unit

18

Order Processing Systems (Continued)• An invoicing application looks up the full name and address of the

customer, determines whether the customer has an adequate credit rating, automatically computes discounts, adds taxes and other charges, and prepares invoices and envelopes

• Customer relationship management (CRM) system: helps a company manage all aspects of customer encounters, including marketing and advertising, sales, customer service after the sale, and programs to retain loyal customers

19

Figure 9.12: Customer Relationship Management System

20

Order Processing Systems (Continued)• Routing system: determines the best way to get products from

one location to another

• Scheduling system: determines the best time to pick up or deliver goods and services

21

Figure 9.13: Purchasing Transaction Processing System

22

Purchasing Systems• Inventory control

• Purchase order processing system: helps purchasing departments complete their transactions quickly and efficiently

23

Figure 9.16: Financial Systems

24

Purchasing Systems (Continued)• Receiving system: creates a record of expected receipts

• Accounts payable system: increases an organization’s control over purchasing, improves cash flow, increases profitability, and provides more effective management of current liabilities

25

Accounting Systems• Budget transaction processing system: automates many of

the tasks required to amass budget data, distribute it to users, and consolidate the prepared budgets

• Accounts receivable system: manages the cash flow of the company by keeping track of the money owed the company on charges for goods sold and services performed

26

Figure 9.17: An Accounts Receivable Statement

27

Accounting Systems (Continued)• Payroll system prepares:

– Payroll check and stub

– Payroll register

– W-2 statements

• Asset management transaction processing system: controls investments in capital equipment and manages depreciation for maximum tax benefits 28

Accounting Systems (Continued)• General ledger system: designed to automate financial reporting

and data entry

29

Control and Management Issues• Business continuity planning: identification of the business

processes that must be restored first in the event of a disaster and specification of what actions should be taken and who should take them to restore operations

• Disaster recovery: actions that must be taken to restore computer operations and services in event of disaster

30

Transaction Processing System Audit• Does the system meet the business need for which it was

implemented?

• What procedures and controls have been established?

• Are these procedures and controls being used properly?

• Are the information systems and procedures producing accurate and honest reports?

31

Figure 9.3: Integration of a Firm’s TPSs

32

Transaction Processing System Audit• Does the system meet the business need for which it was

implemented?

• What procedures and controls have been established?

• Are these procedures and controls being used properly?

• Are the information systems and procedures producing accurate and honest reports?

33

International Issues• Issues that multinational corporations face in planning, building,

and operating their TPSs

– Different languages and cultures

– Disparities in information system infrastructure

– Varying laws and customs rules

– Multiple currencies34

JAYSON C. JUECOBS Electrical Engineering

Reporter

35

“Life is full of uncertainty, just go and deal with it.”