Handling the activities: Transaction Processing Systems

Information Systems in Organizations

Various Types of Information Systems TypePurposeRole 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 Fundamentals Handles 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 ProcessPurposeTransactions & Activities Revenue ProcessGenerates 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 ProcessKeeps 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.