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Understanding Transaction Processing Systems in Business

Learn about manual and automatic transaction processing systems, including batch and online processing, their pros and cons, requirements, activity model, and management issues in this comprehensive guide.

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Understanding Transaction Processing Systems in Business

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  1. Transaction Processing Systems • Manual or automatic – all businesses systematically process transactions • Function: process routine, day-to-day business activities • Computerized TPS: • Batch • Online (real-time, OLTP) • The foundation of business systems MIS 175 Spring 2002 Chapter 9MIS 221

  2. Batch TPS • Originally, the only available option • Transactions accumulated over period of time • Time period – day, week, month • Transaction records accumulated in files • When batches are processed, what happens? • Update databases • Generate reports • Generate transactions for other systems MIS 175 Spring 2002 Chapter 9MIS 221

  3. Batch Processing Pros and Cons • Pros • Relatively easy to program, install and maintain • Batches can be processed during low-activity periods • Cons • Information is delayed MIS 175 Spring 2002 Chapter 9MIS 221

  4. Online TPS (OLTP) • Transactions are processed in real time • Required for any “modern” application where time is critical • Well supported by client/server computing model MIS 175 Spring 2002 Chapter 9MIS 221

  5. Hybrid TPS • OLTP applications can feed transactions to batch systems • Examine: GL only updated once per day • Real time order capture with delayed processing MIS 175 Spring 2002 Chapter 9MIS 221

  6. TPS Requirements • Capture, process and store transactions • Produce reports and information about transactions • Produce transactions for other TPS • Be accurate and timely • Be efficient – require less labor • Increase customer service • Increase competitive advantage MIS 175 Spring 2002 Chapter 9MIS 221

  7. TPS Activity Model • Data capture • From online entry or “external” system • Data validation • Should be done as close to source as possible • Processing • Data manipulation • Database updating • Generation of transactions for other systems • Archive Transaction • Create documents and reports MIS 175 Spring 2002 Chapter 9MIS 221

  8. Management Issues • Uptime • How long can the system be “down” before significant costs are incurred? • Processing Delays / Response Times • How quickly must a transaction be processed? • What is the worst online response time that is acceptable MIS 175 Spring 2002 Chapter 9MIS 221

  9. Management Issues (2) • Disaster Recovery • What plans are in place to recover lost business data? • What plans are in place to resume business processing in case of disaster? • Audit • Can you verify the integrity of the system? • How will you know if transactions are not processed or are processed incorrectly? MIS 175 Spring 2002 Chapter 9MIS 221

  10. TPS By Function • Order Processing • Procurement & Inventory Control • Accounting MIS 175 Spring 2002 Chapter 9MIS 221

  11. Order Processing TPS • Order capture • Variety of means • Configuration • Shipment planning and inventory allocation • Prioritize orders, select shipment locations, allocate inventory to orders • Shipping and warehousing • Picking, packing, invoicing, reporting MIS 175 Spring 2002 Chapter 9MIS 221

  12. Procurement • Inventory Control • Raw materials, WIP, FGI, etc • Purchase Order Processing • Generating, transmitting, maintaining purchase orders • Receiving • Accounts Payable • Boundary between procurement and accounting MIS 175 Spring 2002 Chapter 9MIS 221

  13. Accounting • Accounts Payable • Accounts Receivable • Budget • Payroll • General Ledger • Asset Management MIS 175 Spring 2002 Chapter 9MIS 221

  14. Disadvantages of Functionally Organized TPS • Processing inefficiency • Data redundancy • Causes integrity problems • Inefficient • Temporal integrity problems • Caused by different times at which processing occurs • Lack of information coherence MIS 175 Spring 2002 Chapter 9MIS 221

  15. Enterprise Resource Planning Systems • Key word is Enterprise: solution designed for entire enterprise • All processes organized around one enterprise-wide data model MIS 175 Spring 2002 Chapter 9MIS 221

  16. Advantages of ERP • Elimination of costly legacy systems • Old systems are expensive to maintain and reduce business agility • Improvement of processes • ERP may have implemented best-in-class processes • Improve data access and data integrity • Provide complete, consistent view of enterprise data MIS 175 Spring 2002 Chapter 9MIS 221

  17. Disadvantages of ERP • Implementation cost • Software and hardware • Expertise • Opportunity costs • Time to implementation • Lengthy and difficult process • MOC (management of change) challenges • System integration difficulties • Vendor dependence MIS 175 Spring 2002 Chapter 9MIS 221

  18. Current ERP Vendors • SAP • Baan • PeopleSoft • Oracle • J. D. Edwards • Manugistics MIS 175 Spring 2002 Chapter 9MIS 221

  19. R/3 Architecture • Functionally rich • More functional options than a business will ever need • Logical • Built around information model • 10,000 tables • Control tables • Application data tables • Heavily parameterized MIS 175 Spring 2002 Chapter 9MIS 221

  20. R/3 Architecture (con’t) • Hardware • PC Clients • Application server • Database server • Public interfaces • BAPI • Customization • ABAP Development System MIS 175 Spring 2002 Chapter 9MIS 221

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