TRANSACTION PROCESSING SYSTEM

TPS
A transaction processing system is a type of information system that collects, stores, modifies and
retrieves the data transactions of an enterprise.

Transaction processing system is a way of computing that divides work into individual, indivisible
operations called transactions.

A transaction processing system is a software system, or software/hardware combination, that

supports transaction processing.
Ex. Payroll processing system, transport ticket reservation system, purchase order entry system, and
market tabulation system.

TRANSACTIONS
A business activity between seller and buyer to exchange an asset for payment.

Types of Transaction

INTERNAL TRANSACTIONS
Those transactions which are internal to the company and are related with the internal working of any
organization. Ex. Recruitment policy, Promotion policy, Production policy.

EXTERNAL TRANSACTIONS
Those transactions, which are external to the organization and are related with the external sources, are
regarded as external transaction. Ex, purchases, sales.

HISTORY
The first transaction processing system was SABRE, made by IBM for American airlines, which became
operational in 1970. Designed to process up to 83,000 transactions a day. The system ran on two IBM
7090 computers. SABRE was migrated to IBM system/360 computers in 1972, and became an IBM
product first as Airline control program and later as Transaction processing facility.

The historical significance of transaction processing as the type of information systems, was driven by
business. Business computerized manual processes used such as collecting, recording and reporting.

FUNCTIONS
Transaction processing system provide the ff. functions:

System Runtime function

Transaction processing system provide an execution environment that ensures the integrity, availability,
and security of data.

System Administration functions

TPS provide administrative support that lets users configure, monitor, and manage their transaction
systems.
Application development functions
TPS provide functions for use in custom business applications, including functions to access data, to
perform intercomputers communications, and to design and manage the user interface.

BENEFITS
Transaction processing has these Benefits:
 It allows sharing of computer resources among many users.
 It shifts the time of job processing to when the computing resources are less busy.
 It avoids idling the computing resources without minute by minute human interaction and
supervision.
 It is used on expensive classes of computers to help amortize the cost by keeping high rates of
utilization of those expensive resources.

ADVANTAGES and DISADVANTAGES

Advantages:
 Control over time of processing
 Standardization
 Reduced setup and processing costs
 Transaction response time is quick if not immediate
 Date is processed as demanded
 Error correction can be immediate.
 Batch or real time processing available
 Reduction in processing time, lead time and order cycle time.
 Reduction in inventory, personnel and ordering costs
 Increase in productivity and customer satisfaction

Disadvantages:
 Errors corrected after the processing the data
 Time delay in gathering data, storing and bulk processing
 Operational costs may increase
 Only identical data is processed in one batch
 Standardization may not exist or may be more difficult
 Processing needs make control difficult
 System hardware and software is expensive
 Backup is critical in case of system crashing
 Security is critical in case of crashing or data security
 The possibility of data corruption requires backup
 High setup costs
 Lack of standard formats
 Hardware and software incompatibility