11 INTRO TO TP SYSTEMS IS 340 BY CHANDRA S. AMARAVADI

IN THIS PRESENTATION..  Definitions  Characteristics of TP systems  TP concept  TP cycle  Case studies of SABRE, VISA  Case study of Payroll system  TP and competitive advantage

Transaction processing systems (TP systems) Systems which process business transactions Transaction:events to which a business must respond. DEFINITIONS

 Concerned with business operations  Deal with customers, suppliers, vendors, gov.  Transactions/exchange with these entities  High volume (millions of records)  Also involve inquiries (was check #23 cashed?)  Could be batch or online (OLTP)

BATCH VS ON-LINE PROCESSING BATCH PROCESSING: Transactions are grouped and processed at the end of a specified time period. ONLINE TRANSACTION PROCESSING: Transactions are processed as and when they occur.

CHARACTERISTICS OF TP SYSTEMS.. n Traditionally mainframe + COBOL n Shift towards object-oriented, client-server n Towards PC-based and Web-based systems What type of organizations use TP systems? Who are the primary users of TP systems?

Online Data Entry Scanners Summary Reports Transaction Reports Application. Files Transaction Processing E.g. receipt for a deposit Database Update E.g. monthly statement

u Data entry - keyboards, scanners, (e.g. credit cards, price tags) u Processing itself (Batch, OLTP) u Database updates u Reports/documents u Inquiries Maintain account... If dep. then acct-bal=bal. + amt If withdrawal then... Q Classify Q Sort Q Merge Q Group Q Update

ORDER PROCESSING Receive order Customer Inventory Back order WarehouseReceipt of goods, invoice

FOR DISCUSSION Discuss a payroll system from the point of view of inputs, processing and outputs. PROCESSES INPUTSOUTPUTS

TP EXAMPLES & CASE STUDIES

SABRE HISTORY  A fledgling airline  Informal booking prior to the war  Demand for travel after WWII  Manual booking

SABRE HISTORY.. AIRLINE RESERVATIONS AFTER THE WAR “A large cross-hatched board dominates one wall, its spaces filled with cryptic notes. At rows of desks sit busy men and women who continually glance from thick reference books to the wall display while continuously talking on the telephone and filling out cards. One man sitting in the back of the room is using field glasses to examine a change that has just been made high on the display board. Clerks and messengers carrying cards and sheets of paper hurry from files to automatic machines. The chatter of teletype and the sound of card sorting equipment fills the air” [-- From “The Virtual Corporation by Davidow and Malone P43]

SABRE HISTORY.. u Charles Amman (R&D) takes charge u Tubes and marbles prototype u Next improvement: “Reservisor” system u Still 8% transactions in error u Takes 12 people, 15 steps and 3 hrs! u IBM jumps in u After many false starts, SABRE in 1962 u Installation $2.1 million, HW 37 million u $16,000 per agent u Revenues of $500 million

Is a classic example of a TP system ◦ reservation system used by AA  PARS - TWA  Apollo - United ◦ 45 million records ◦ 200,000 new records added daily ◦ 60,000 terminals ◦ 6 mainframes

DISCUSSION What characteristics of TP systems are exhibited by SABRE?

¶ · ¸ ¹ º» ¼ ½ ¾ Merchant/Store Merchant’s bank Card- issuing bank Cardholder

+ 10 million merchants world-wide accept VISA + MC + VISA + MC largest TP system + 20 million transactions per day

VISA’S CREDIT CARD PAYMENT  Customer makes purchase  Merchant’s bank linked via VISA network to the bank that issued the card  Card issuing bank approves the charge  Bank subtracts fee and pays rest to merchant  Merchant’s bank submits charge to VISA  VISA charges credit card company  Card holder’s acct # checked against black list

 Payroll  Order entry  Billing  Credit card  Reservations  Inventory  Stock trades

 Competitive advantage of TP ◦ operational  ◦ better service  For Discussion: ◦ What would TP systems do in a company like State Farm? What are the operational benefits?

THE END!