Transaction Processing

Systems (TPS)
6.1 Batch, Real Time/Online Systems
 What is a TPS?
• A Transaction Processing System (TPS) is a type of
information system that collects, stores, modifies and
retrieves the data transactions of an enterprise
• Examples of TPS includes ATMs, Point Of Sale
systems (POS) in a retail shop, electronic transfer of
funds, airline reservation systems, Motel/Hotel
reservations, Library Booking systems etc.
 TPS Overview
• TPS are aimed at improving the daily/routine
business activities of an enterprise
• The types of transactions that occur vary from
organization to organization.
• Transaction processing is mainly interested with
maintaining data integrity
 Transactions ..
• Common transactions include:
– Customer orders, Purchase orders, Receipts, invoices
etc.
– Billing customers, placing orders, depositing cheques
– Purchases & Orders (phone, Internet, direct)
– from Airline reservations to Toll Booth Operations
– payroll checks in an organization
 TPS motivated by the following reasons

i. The need to handle hundreds or even thousands of

simultaneous Users

ii. The need to allow many Users to work on the same set
of data, with immediate updating

iii. The need to handle errors in a safe and consistent

manner
 Objectives of TPS
• Process data generated by and about transactions
• Maintain a high degree of accuracy
• Ensure data & information integrity
• Produce timely documents and reports
• Increase labor efficiency
• Help provide increased and enhanced service
• Help build and maintain customer loyalty
• Achieve competitive advantage
 Examples of TPS
If an electronic payment is made, the amount must be either
both withdrawn from one account and added to the other, or
none at all. In case of a failure preventing transaction
completion, the partially executed transaction must be 'rolled
back' by the TPS.
An airline seat reservation system is accessed by multiple
operators, after an empty seat inquiry, the seat reservation
data must be locked until the reservation is made, otherwise
another user may get the impression a seat is still free while it
is actually being booked at the time. Without proper
transaction monitoring, double bookings may occur
Characteristics/ Features of TPS (1)
The following features are considered important in evaluating
transaction processing systems.
1. RAPID RESPONSE- Fast performance with a rapid
response is critical. Input must become output in seconds so
customers don’t wait.

2. RELIABILITY- Organisations rely heavily on their TPS

with failure possibly stopping business. Back-up and
recovery procedures must be quick and accurate. The system
must be available during the time period when the users are
entering transactions.
Characteristics/ Features of TPS (2)
3. INFLEXIBILITY- A TPS wants every transaction
processed in the same way regardless of user or time. If
it were flexible there would be too many opportunities
for non-standard operations.

4. CONTROLLED PROCESSING- The processing must

support an organisation's operations.
Characteristics/ Features of TPS (3)
5. DATA INTEGRITY - The system must be able to
handle hardware or software problems without corrupting
data. Multiple users must be protected from attempting to
change the same piece of data at the same time, for example
two operators cannot sell the same seat on an airplane.

6. EASE OF USE Often users of transaction processing

systems are casual users. The system should be simple for
them to understand, protect them from data-entry errors as
much as possible, and allow them to easily correct their
errors.
 Properties of a TPS
• In order to qualify as a TPS, transactions made by the
system must pass the ACID test.
• The ACID tests refers to the following four pre-requisites
as defined by Jim Gray in the late 1970s —
1. atomicity,
2. consistency,
3. isolation,
4. and durability.
 1. Atomicity
• Atomicity-the transaction starts and each step must be
completed or it will be undone. This means that all
transactions/operations must succeed or fail as a group.
• Transactions are known as atomic, meaning that the
transaction will either happen or not.
• For example, if funds are transferred from one account
to another, this only counts as a bone fide transaction if
both the withdrawal and deposit take place. If one
account is debited and the other is not credited, it does not
qualify as a transaction.
 2. Consistency
• Consistency means that data is agreed upon, remains in
a consistent state and is accounted for. This means all
parties must agree on the facts of the exchange
• TPS systems exist within a set of operating rules (or
integrity constraints).
• If an integrity constraint states that all transactions in a
database must have a positive value, any transaction with
a negative value would be refused.
 3. Isolation
• Isolation-treats each transaction separately and |keeps
data from each transaction separate from the next
transaction.
• Transactions must appear to take place in isolation. For
example, when a fund transfer is made between two
accounts the debiting of one and the crediting of another
must appear to take place simultaneously.
• The funds cannot be credited to an account before they are
debited from another.
 4. Durability

• Durability-the data should continue to exist. Thus the

effects of a completed transaction should be lasting
• Once transactions are completed they cannot be undone.
(Ecocash Transfer e.g.).
• To ensure that this is the case even if the TPS suffers
failure, a log will be created to document all completed
transactions.
 Summary of TPS Properties
• These four conditions ensure that TPS systems carry out their
transactions in a methodical, standardized and reliable
manner.
• These four properties ensure that:
 Transactions are never incomplete (atomicity),

 Data is never inconsistent. (consistency)

 Transactions do not intrude or affect each other (isolation)

 The results of a completed transaction are permanent

(durability).
 All these properties combine to ensure the integrity of all data

is maintained before, during and after each transaction.

 Sunday, 3 September  Characteristics of TPS  16
2017
 Components of a TPS
• The components of a TPS include
i. Hardware,
ii. Software
iii. and People.
• The most important component of a TPS are people.
Without people the system does not have customers and
without customers it does not have a function to perform.
• People in a TPS can be divided into 3 categories: users,
participants and people from the environment.
 3 Categories of People in a TPS
1. Users: The users are people employees of the company who own the
TPS. They will use it to provide information about the system but will
not enter data themselves. The information they provide from the TPS
may be used to provide inputs for other information systems such as
stock control, marketing etc...
2. Participants: Participants are direct users of the system. These are the
people who will enter the data. They include data entry operators,
customer service operators, people working at checkouts and anyone
carrying out the tasks required to process the data.
3. People From The Environment: These are people who do not directly
work for the company but people off the street who sometimes require
the services of a TPS as they enter transactions and validate data such
as a customer withdrawing money from an ATM.
 Transaction Processing Modes
• Transaction processing may be accomplished in one of
two modes:
1. Batch Mode
2. Real Time/ On-line Mode
 1. Batch Transaction Processing (BTP)
• Batch processing is where the information is collected and
stored as a batch but not processed immediately.
• BTP collects the transaction data as a group/ batch and
processes it later after time delay as batches of identical data.
• Batch processing is useful for enterprises that need to process
large amounts of data using limited resources.
• Batch Processing is done when convenient or economical to do
e.g. at night or during weekends when PCs are idle and
networks are not busy NB: Large volumes have lower
processing costs.
 Batch Processing Cont..
• Originally, batch was the only available option
– Transactions accumulated(collect) over period of time
– Time period – day, week, month
– Transaction records accumulated in files
– When batches are processed, what happens?
• Update databases
• Generate reports
• Generate transactions for other systems
• Processing occurs without human interaction
• Processing cost are lower per transaction
• Collected and stored offline using magnetic tape or paper.
• Batch processing carried out in large organisations using
mainframe or midrange computers.
 Batch Processing Cont..
• Batch Processing transactions is the processing as the
collection/storage of data at the time of the event with
actual updating of the database later when it is scheduled
or there is enough data.
• An example may be the accounts which are not able to be
easily stored and updated due to the amount and type of
data used. Examples of this may be a telephone account,
which accumulates over a period of time.
 Batch Schematic

Data entry
Input
of accumulated Output
(batched)
transactions
 Examples of BTP systems include:
1. CHEQUE CLEARANCE- A cheque is a written order asking the bank
to pay an amount of money to a particular person. When one is issued to a
person they deposit it into a bank account yet the money cannot be withdrawn
until the cheque is cleared. This involves checking the that the cheque writer has
enough money in their account to cover it usually taking 3 working days in which
cheques are cleared in a group during a quiet period of the day.
2. BILL GENERATION- Organisations develop a bill or invoice of services
or products supplied to a customer. Usually generate a group of bills at a
scheduled time as this enables the user to effectively mange time and results in less
disruption to main database.
3. CREDIT CARD TRANSACTIONS- Credit cards have become a
method of paying for goods and services. In a credit slip system the retailer sends
credit slips to the bank as a group. In POS terminal sales the transactions are
stored for processing later. The customers may view their credit card transactions
as real-time but the actual updating is batch.
 Characteristics of
Batch Transaction Processing:
1. Relies on accumulating transaction data over a period of time
and then processing the entire batch at once.
2. Batch processing is usually cyclic: daily, weekly, or monthly run
cycle is established depending on the nature of the transactions
3. Cheaper than on-line processing
4. Easier to control than on-line processing
5. Database is constantly out of date
6. Batch processing is now being captured using disk files
 Advantages of Batch Processing

• Batch processing : (compared to real time)

i. Control over time of processing i.e. batches can be processed
during low-activity periods
ii. Standardization
iii. Reduced setup and processing costs
iv. Relatively easy to program, install and maintain
i. Batches can be processed during low-activity periods
• Look for more Advantages and disadvantages
 Disadvantages of Batch Processing
i. Time delay in gathering data, storing and bulk processing
ii. The transactions must wait for processing as schedule is
predetermined
iii. Errors cannot be corrected during processing
iv. Sorting transaction data is expensive and time consuming.
v. Only identical data is processed in one batch.
vi. Operational costs may increase;
 2. Real-Time/ Online Transaction Processing

• RTTP This is the immediate processing of data.

• It provides instant confirmation of a transaction. It may
involve a large number of users who are simultaneously
performing transactions which change data.
• Because of advances in technology (such as the increase
in the speed of data transmission and larger bandwidth),
real-time updating is possible.
• Each transaction in real-time processing is unique; it is
not part of a group of transactions.
 RTTP Cont ..
• Real time systems attempt to guarantee an immediate response to
a stimulus or request quickly enough to affect the conditions that
caused the request.
• Real time transaction processing is the immediate processing of
data with the database updated as the transaction is being carried
out.
• Here System failure is critical, this means that once encountered
processing cannot take place.
• An example may be the Bank ATM and POS terminal, both
of which have user input which requires immediate feedback.
On-line/Real Time Schematic

Terminal
Terminal Terminal

Output
Immediate
Terminal processing
of each
transaction

Terminal
Terminal
 Examples of RTTP systems include:
1. RESERVATION SYSTEMS- involve setting aside a service or product for the customer to use
at a future time. Commonly used for travelling such as in flight or train bookings and motel
reservations. Require an acceptable response time because transactions are made in
presence of customers.
2. POS TERMINALS- are used by retail stores to sell goods and services. Send inventory data to a
central computer (mainframe or midrange) when sale is made which does the processing for entire chain.
To accomplish this the data is converted to a form that is easily transmitted through a communication
system. If the POS terminal immediately processes the transaction it minimises the cost of batch
handling. Advantage is that the correct price of the product is received once the product is entered
usually through barcodes when barcode readers are used to identify the product. The POS terminal can
provide price and any other relevant information about the product.
3. LIBRARY LOAN SYSTEM- is used to keep track of items borrowed from the library. When
a book is borrowed the librarian scans the barcode on the person’s membership card and the book.
This information and the date are immediately recorded on the library database. All in real-time.
Similar to reservation system as operational activities involve keeping information on products,
availability, usage and maintenance. Also has ‘front office’ and ‘back office’. Only difference is that
loan system has more items, which are stored in a data warehouse.
 Characteristics of On-Line
Transaction Processing:
1. Each transaction is completely processed immediately
upon entry.
2. RTTP is the most common mode of used today.
3. More costly than batch processing.
4. Database is always up to date.
5. Require the use of fast secondary storage such as
magnetic disks.
 Advantages of RTTP
Real time transaction processing: (compared to batch)

i. Transaction response time is quick if not immediate

ii. Data is processed as demanded
iii. Error correction can be immediate.
iv. Immediate update of database and immediate response to user
inquiries
v. simplicity and efficiency.
vi. Reduced paper trails and the faster,
vii. More accurate forecasts for revenues andexpenses
 Disadvantages of RTTP
i. System hardware and software is expensive
ii. Backup is critical incase of system crashing
iii. Security is critical incase of crashing or data security
iv. The possibility of data corruption requires backup
v. Standardization may not exist or may be more difficult
vi. Processing needs make control difficult
vii. Difficult to maintain than batch processing
 RTTP Concerns
• CONCURRENCY- • ATOMICITY- ensures all
ensures two users cannot the steps involved in a
change the same data at the transaction are completed
same time. One must wait successfully as a group. If one
until the other is finished. step fails no other step should
be completed.
 Management of TPS
 Uptime
 How long can the TPS be “down” before significant costs are
incurred?
 Processing Delays / Response Times
 How quickly must a transaction be processed?
 What is the worst online response time that is acceptable

 36
 Management of TPS cont..
 Disaster Recovery
 What plans are in place to recover lost business data?
 What plans are in place to resume business processing in case
of disaster?
 Audit
 Can you verify the integrity of the system?
 How will you know if transactions are not processed or are
processed incorrectly?

 37