Online processing is more expensive than batch processing, so companies must weigh the cost versus the benefit. When you make an airline reservation, the information is entered into the airline’s information system, and you quickly receive confirmation, typically through an e-mail. Online processing keeps the company’s data current.Batch processing uses computer resources very efficiently and is well-suited to applications such as payroll processing that require periodic rather than continuous processing. Batch processing is where data is collected over some time period and processed together.The database management system tracks the data and allows users to query the database for the information they need. In fact, all the company’s key data is stored in a single huge database that becomes the company’s central information resource.
The TPS receives raw data from internal and external sources and prepares this data for storage in a database. Transaction Processing System adapted from Matthew Pauley CC-By-NC-SA As you can see, transaction processing system output can consist not only of documents sent to outside parties (in this case, notification of payment received), but also of information circulated internally (in the form of reports), as well as of information entered into the database for updating. The image below illustrates a transaction processing system in which the transaction is a customer’s electronic payment of a bill. The explosion in retailer cards is directly related to each firm’s desire to learn more about you and to turn you into a more loyal and satisfied customer. Use one of these cards and you’re in effect giving up information about yourself in exchange for some kind of financial incentive. Grocers and retailers can tie you to cash transactions if they can convince you to use a loyalty card. For example, if you pay a retailer in cash, you’re likely to remain a mystery to your merchant because your name isn’t attached to your money. But while TPS can generate a lot of bits of data, it’s sometimes tough to match this data with a specific customer. The cash register is the data generation workhorse of most physical retailers, and the primary source that feeds data to the TPS. Every time a consumer uses a point-of-sale system, an ATM, or a service desk, there’s a transaction (some kind of business exchange) occurring, representing an event that’s likely worth tracking. A TPS is a system that collects, modifies and retrieves business transaction data. Adapted from Five Level Pyramid Model by Compo via Wikimedia Commons CC-BY 3.0 Transaction Processing SystemsĪn integrated information system starts with a T ransaction Processing System (TPS). Information System Types Pyramid Model (click to enlarge). Let’s take a more detailed look at how companies and managers use transaction processing and management support systems. Decision support systems will be covered in the next chapter. The image below shows the relationship between transaction processing and management support systems as well as the management levels they serve.
Each type of system serves a particular level of decision-making: operational, tactical, and strategic. Companies typically have several types of information systems, starting with systems to process transactions.
Information systems are also used to process customer orders and handle billing and vendor payments. Banks use a variety of systems to process transactions such as deposits, ATM withdrawals, and loan payments. Factories use information systems to automate production processes and manage inventory. There are many different ways in which systems are utilized to automate processes and transactions. To review the systems development process, please see Chapter 7. Sometimes the new system is built to fit the internal processes or sometimes the system dictates how the business operates. It is critical that a business understands its own internal processes before purchasing or developing a new system.
#Transaction processing system companies how to#
Now that we understand business processes and how to document them, we will explore the different systems businesses use to manage their operations.
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