1. TRANSACTION PROCESSING
SYSTEMS BY
CHANDRA S. AMARAVADI

2. IN THIS PRESENTATION.. TP Basics TP Architecture TP applications
Management & control issues

3. TP BASICS Defn. & overview TP cycle & T types Objectives
Batch vs on-line systems
Comparison to MSS

4. INTRODUCING TP SYSTEMS
Transaction Processing Systems (TP systems)
Process business transactions.
Transactions
Basic operations involving exchanges (cash, credit, information) that have financial implications, such as customer placing an order or someone paying a parking ticket.

5. Transaction processing
A TYPICAL TP SETUP
Transaction processing
Terminal
Transaction
documents
Transactions
ATM
Database
TYPES OF ARCHITECTURE
CENTRALIZED: All processing done in one location
DISTRIBUTED: Processing carried out in multiple locations

6. SEQUENCE OF ACTIVITIES (TP CYCLE)
INITIATE TRANSACTION
Insert card/Error
ENTER VALIDATION CODE (AUTHENTICATION)
PROCESS REQUEST/ ERROR
ACCOUNT UPDATE
DISPLAY/PRINT RECEIPT

7. BATCH PROCESSING Inputs Output
A system in which transactions are grouped together
and executed as a batch, at the end of a time period (day, week, month etc.)
Batch Processing
Inputs
Output
Accumulated
Transactions
Reports,
Updated files
Batch Processing
Master Files

8. ON-LINE PROCESSING Output On-Line Transaction Processing (OLTP)
Systems in which transactions are processed as they occur
without waiting for them to be grouped.
Terminal
Terminal
Central Computer
(Processing)
Immediate Processing
Of Each Transaction
Output
Terminal
Terminal
Terminal

9. FAULT TOLERANCE The Fault-Tolerant Bank Fault tolerance:
Continued operations
in the face of
System failure.
Redundant Systems
Databases

10. OBJECTIVES OF TP SYSTEMS
SYSTEM OBJECTIVES
Accuracy, reliability and response time
Large volumes, minimize resource usage
Maintain ACID* properties (later)
OLTP for critical apps. must be fault-tolerant
BUSINESS OBJECTIVES
Produce transaction documents and reports.
Increase labor efficiency & enhanced service.
Achieve competitive advantage.
*ACID – Atomicity, Consistency, Isolation & Durability

11. TP SYSTEMS AND OTHER IS Information AI/KM DSS E-Commerce TP System
Less
More
Less
More
Information
DSS
Sophistication
And Complexity
Of Processing
And Analysis
Decision
Support
Input and
Output
Routine
E-Commerce
TP System
Data
More
Less
More
Less
DATABASE

12. TP ARCHITECTURE &
PROCESSING

13. TYPES OF TRANSACTIONS Transaction Complex Simple Conversational Local/
Direct
Remote
Local/
Direct
Remote
Local/
Direct
Remote

14. TYPES OF TRANSACTIONS
Simple transactions -- single input and single output (no query)
Complex transactions – those that involve lot of processing, I/O
Conversational where there is an exchange of messages.
Local if transactions run on the same network.
Remote if trans. need to be run on another network.

15. TYPICAL PERFORMANCE MEASURES (FYI)
Performance/Transaction
Interactive Transactions Only
Small/Simple
Medium
Large/Complex
Instructions/Transactions
100K 1M
100M
Disk I/O/transaction 1 10
1000
Local Messages (bytes)
10 (5KB)
100 (50KB)
1,000 (1MB)
Remote Messages (bytes)
2 (300B)
2 (4KB)
100 (1MB)
Cost/transaction/second
10K$/tps
100k$/tps
1M$/tps
Peak T/sec/site
1,000
100

16. TP MONITOR FUNCTIONS Transactions “TP System” Backup BIRD’S EYE VIEW
Protocols
Authentication
Authorization
Que transactions
Present interface
Ensure memory
Assign server
Monitor transaction
Co-ordinate updates
transaction
logs
Database
Server

17. TP MONITOR FUNCTIONS
TP monitor is a program to integrate and manage other
System components. Its function is similar to that of an
operating system, but it is referred to as ‘middle ware’
Its functions are:
Communications management
Authentication, Authorization
Presentation management
Queue management
Request scheduling
Server management
Resource management
Transaction management (already discussed)

18. TP MONITOR FUNCTIONS..
Communication management – purpose of this is to carry out the protocols and authentication.
Authentication – verify legitimacy of client, check terminal,
time, user, program etc.
Authorization – check if client can perform requested transaction.
Presentation management – present the transaction interface according to type of device.
Queue management – when a request arrives at a server,
it is placed in a queue.
Request scheduling -- route requests to approp. server.
Server management – balancing loads on server, related to request scheduling, this is done by looking at wait times.
Resource management -- manage terminals, databases, appln. programs and users; provides common memory resources.
Transaction manager – ensures successful completion of transaciton and co-ordinates updates to database. (log manager co-ordinates backups)

19. PRESENTATION MANAGEMENT
Bank of Brisbane
Enter Acct # *******
Enter Password ****
ATM TP
Monitor PC
Cell
Phone

20. AUTHENTICATION Passwords Challenge-response server picks random no. N
encrypts N  EN using key K
sends to client
client decrypts EN  N
sends response
keys distributed by authentication server
Next step is to see if client is authorized

21. TRANSACTION MANAGEMENT
TRANSACTION CONCEPTS
[simple, complex]
Transaction start
Transaction end
Assign resources
Update
Abort/Rollback
Transaction management manages a transaction from start
to finish

22. Compute Benefit Amount
RESOURCE MANAGEMENT.. TP
MONITOR
Transaction
Compute Benefit Amount
RESOURCE
MANAGER
Update databases
and print paycheck
Get Emp info
Compute pay
SERVER
SERVER
SERVER
Resource Manager co-ordinates memory during processing
from multiple servers/database.

23. TP ARCHITECTURE TP MONITOR PRESEN- TATION MEMORY TRANSACTION
AUTHENTICATION
SERVER
AUTHENT-
ICATION
REQUEST QUE
DATA
DICTIONARY
AUTHOR-
IZATION
TP MONITOR
SERVER1
PROGRAMS
SERVER
MANAGEMENT
SERVER n..
RESOURCE
MANAGER
TRANSACTION
MANAGER
MEMORY
DATABASE
RECOVERY
MANAGER
BACKUP
TRANSACTION
RESPONSE QUE

24. TP APPLICATIONS

25. TP APPLICATIONS Order processing Inventory Invoicing Accounting
Raw material
Stock trading
POS etc.

26. POINT OF SALE SYSTEM (POS)
Inventory
Database
Reports
UPC and Quantity
POS
System
UPC
Customer’s
Receipt
Scanner
Quantity
Date
Time
Item, Quantity
Purchases
Database
Date, Time, Price
UPC
Price
Data
Analysis
Item
Database

27. ORDER PROCESSING SYSTEM
Customer
Invoice
Customer Order In Person or Via
Mail, Phone, EDI, or Internet
Order Processing
Products
Order Entry/
Sales Configuration
Processing an
order from entry
to delivery,
updating
accounting.
Inventory Status
Orders
Planned
Shipments
Finished
Product
Inventory
Shipment
Planning
Routing
Planned Shipments
And Routes
Picked List
Shipment
Execution
Scheduling
Shipped Orders
Invoicing

28. ORDER PROCESSING SUPPORT SYSTEMS - SALES CONFIGURATION
ORDER ENTRY/SALES CONFIGURATION
Ensures that products and services ordered are sufficient to accomplish customer’s objectives and will work well together

29. ORDER PROCESSING SUPPORT SYSTEMS - SHIPMENT PLANNING
Shipment Planning/Execution
A system that determines which open orders will be filled and from which location they will be shipped.

30. ORDER PROCESSING SUPPORT SYSTEMS - INVOICING
Generates invoice based on products ordered/
payment method

31. ORDER PROCESSING SUPPORT SYSTEMS - INVENTORY CONTROL
Updates inventory
on current levels
and generates
reports.

32. ORDER PROCESSING SUPPORT SYSTEMS - ROUTING AND SCHEDULING
Routing/Scheduling
Best method of shipping product/
and delivering it in a timely fashion.

33. CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
Inquiry
Order
Feedback
Promotions
Customer
Interaction
System
Product
Development
Market Research
Quality
Control
Sales
Marketing

34. ACCOUNTING SYSTEMS Accounting Systems Accounts Receivable/Payables
General Ledger
Budget
Payroll
Asset Management

35. ACCOUNTING SYSTEMS - ACCOUNTS RECEIVABLE
A system that manages the cash flow by keeping track of money owed for goods sold and services performed.
An accounts receivable statement

36. ACCOUNTING SYSTEM
Accounts Payable

37. ACCOUNTING SYSTEMS - GENERAL LEDGER
A system that produces a detailed
summary of
different accounts.

38. ACCOUNTING SYSTEMS - PAYROLL
Generates payroll checks and stubs, as well as W-2 statements at the end of the year for tax purposes.

39. ACCOUNTING -- INTEGRATED
Asset
Management
Notes
Receivable
Notes
Payable
Cash
Cost of Assets
Customer
Accounts
Payable
Accounts
Receivable
Payments
Amounts Owned By Company
Amounts Paid By Company
Amounts Owned By Customers
Amounts Paid By Customers
General
Ledger
Asset Depreciation
Payroll
Labor Costs
Expense
Transactions
Timecards
Paychecks
Employees
Budget

40. PURCHASING SYSTEM Inventory Control Status Report Purchase Order
Raw Materials
Packing Materials
Spare Parts
Inventory Control
Inventory Control Status Report
Employees
Purchase
Order
Processing
Purchase
Order Request
Purchase Order
Purchase Order
Receiving
Supplier
Material
Invoice
Receiving Notice
Accounts
Payable
Check

41. PURCHASING SYSTEM Inventory Control Purchase Order Processing
Maintains stock of items such as raw materials, packing materials, spare parts, and supplies.
Purchase Order Processing
A system that helps purchasing department complete transactions quickly and efficiently.
Receiving
A system that creates a record of expected and actual receipts. Reconciles purchase orders with what is actually received.
Accounts Payable
A system that increases an organization’s control over purchasing, improves cash flow, increases profitability, and provides more effective management of current liabilities.

42. INTEGRATION OF TP Order Entry/ Configuration
Customer order request
Raw materials Packing materials Spare parts Inventory
Inventory status
Orders
Finished product inventory
Shipment planning
Purchase order request
Inventory status report
Pick list
Purchase order
Items and quantities picked for each order
Purchase order processing
Shipment execution
Employee
Products
Purchase order
Materials and invoice
Shipped orders
Invoice
Invoicing
Receiving
Supplier
Customer
Receiving notice
Amounts owed by customer
Check
Accounts payable
Accounts Receivable
Payment
Employee
Amounts owed by company Amounts paid by company
Time cards
Paychecks
Amounts owed by customers Amounts paid by customers
General Ledger
Budget
Labor costs
Payroll
Expense transactions

43. MANAGEMENT ISSUES TP Audit
An examination of the TP system in an attempt to answer three basic questions
Does the system meet the business need?
What procedures and controls have been established?
Are they being used effectively?
Business Resumption Planning
The process of anticipating and providing for disasters.
Disaster Recovery
The implementation of the business resumption plan.

44. DISCUSSION QUESTIONS What is TP?
Which is resource intensive, batch or OLTP?
What type of transactions are resource intensive?
What are TP monitor functions?
How can we improve performance of a TP system (i.e. TP monitor)
What happens in an organization when an order is received?
What type of accounts are summarized by the General Ledger

45. THE END