In the context of Transaction Processing Systems (TPS), transactions can be categorized into two

main types: internal transactions and external transactions.

1. *Internal Transaction:*
Internal transactions are transactions that occur within the boundaries of an organization or
system. These transactions are typically initiated and processed entirely within the organization's
internal systems.
- They involve interactions between different components or subsystems within the
organization.
- These transactions are not visible to external parties or customers.
- Examples include inventory management, financial journal entries, and interdepartmental
data transfers.

By.Aditya Valand
2. *External Transaction:*
External transactions are transactions that involve interactions with entities or
individuals outside of the organization. These transactions typically include exchanges
of information, goods, or services with external parties.
- They involve interactions with customers, suppliers, partners, or other external
stakeholders.
- External transactions are often customer-facing and may include online orders,
payments, customer inquiries, and sales transactions.
- They can have a direct impact on the organization's relationship with external
parties.

A Transaction Processing System (TPS) model is a framework that illustrates the key components and processes involved in a TPS.
Here's a simplified model of a TPS:

1.Data Entry:

- The TPS begins with the data entry phase, where transactions are initiated. Users or automated systems input transaction data
into the TPS. This data can include customer orders, sales transactions, inventory updates, and more.

2. Data Validation:

- Once data is entered, the TPS validates it to ensure accuracy and consistency. Validation checks include verifying data formats,
performing calculations, and checking for data integrity.

confirmation in real time.

By.Aditya Valand
3. *Data Processing:*

- Validated data is processed by the TPS. This processing can take two primary forms:

- *Real-Time Processing:* In real-time processing, transactions are immediately processed as they are entered,
providing instant updates and responses. This is common in systems like online shopping carts and ATMs.

- *Batch Processing:* In batch processing, transactions are accumulated over a period and then processed
together as a batch. This is often used for tasks like payroll processing and end-of-day financial reporting.

4. *Database Update:*

- The TPS updates the organization's databases with the processed transaction data. This ensures that the data is
stored and can be accessed for future reference.

5. *Response Generation:*

- In real-time processing, the TPS generates immediate responses or confirmations. For example, in an online
booking system, the system might provide a booking

6. *Reporting:*

- The TPS can generate transaction reports, which may be used for tracking, auditing, and decision-making. These
reports provide insights into transaction volumes, trends, and operational metrics.

7. *Data Backup and Recovery:*

- TPS often include mechanisms for data backup and recovery. This ensures that transaction data is safeguarded in
case of system failures or data loss.

8. *User Access Control:*

- Access to the TPS is controlled to ensure that only authorized users or systems can initiate and process
transactions. User authentication and authorization mechanisms are implemented.

By.Aditya Valand
Transaction Processing Systems (TPS) are designed to efficiently process a large
volume of routine transactions, such as data entry, order processing, and
information retrieval. Here are some key features of TPS:
1. *Rapid Processing:* TPS are optimized for fast and efficient transaction
processing. They handle a high volume of transactions in a short time, often in
real-time or near-real-time.
2.Reliability:* TPS are built to be highly reliable. They use redundancy, backup
systems, and failover mechanisms to ensure system availability and minimize
downtime.
3.Scalability:* TPS can be scaled to accommodate growing transaction volumes.
This makes them adaptable to the changing needs of an organization.
4.Centralized Control:* They are usually centrally controlled to ensure
uniformity and data consistency.

By.Aditya Valand
The future of Transaction Processing Systems (TPS) is continually evolving to meet the changing
needs of organizations and take advantage of technological advancements. Let's discuss the future of
various components of TPS:

1. *Data Entry:*

- Future Trends: Data entry is likely to become more automated and efficient. Technologies such as
Optical Character Recognition (OCR), voice recognition, and Natural Language Processing (NLP) will
reduce the need for manual data entry.

- Benefits: Increased accuracy, faster data input, and reduced human errors.

2. *Transaction Processing:*

- i) Batch Processing:

- Future Trends: Batch processing will continue to be relevant for tasks like payroll, but with
improved scheduling and automation. There will be a shift towards more efficient job scheduling and
parallel processing to speed up batch tasks.

- Benefits: Faster batch processing and reduced processing windows.

- ii) Real-Time Processing:

- Future Trends: Real-time processing will become even more real-time with reduced latency.
Technologies like 5G and edge computing will enable quicker data processing and response times.

- Benefits: Near-instant processing for mission-critical applications like financial transactions.

3. *Database Maintenance:*

- Future Trends: Database maintenance will see increased automation, self-healing databases, and
predictive maintenance. Machine learning and AI will be used to detect and resolve issues before
they impact the system.

- Benefits: Improved database reliability, reduced downtime, and efficient data management.

4. *Document and Report Generation:*

- Future Trends: Automated document and report generation will become more personalized and
dynamic. AI and templates will create customized reports and documents based on user preferences
and real-time data.

- Benefits: Tailored and real-time reporting, reduced manual effort, and improved data
visualization.

By.Aditya Valand
5. *Inquiry Processing:*

- Future Trends: Inquiry processing will incorporate AI-powered chatbots and natural language
interfaces for more intuitive and interactive user experiences. Virtual assistants will handle inquiries
in a conversational manner.

- Benefits: Improved user engagement, faster responses, and 24/7 support.

The future of TPS is intertwined with technological advancements, such as AI, machine learning,
edge computing, and improved connectivity. These innovations will make TPS more efficient,
accurate, and responsive to the dynamic needs of organizations, enhancing data entry, transaction
processing, database maintenance, document/report generation, and inquiry processing.

By.Aditya Valand
Certainly, let's explain the advantages of Transaction Processing Systems (TPS) in more detail:

1. *Handling Operations:*

- Advantage: TPS excel at handling routine and repetitive operations efficiently. They automate
tasks like data entry, order processing, and inventory management, reducing manual effort and
minimizing errors.

- Benefit: Increased operational efficiency, reduced labor costs, and improved accuracy.

2. *Good Data Placement:*

- Advantage: TPS ensure data is correctly placed in the organization's databases, following
predefined structures and data models. This ensures data consistency and integrity.

- Benefit: Data reliability, consistency, and ease of retrieval.

3. *Quick Processing:*

- Advantage: TPS are optimized for rapid transaction processing, whether in batch or real-time
mode. This quick processing is crucial for tasks like financial transactions and online orders.

- Benefit: Fast response times, improved customer satisfaction, and timely decision-making.

4. *Real-Time Backup:*

- Advantage: TPS often incorporate real-time backup mechanisms, ensuring that transaction data is
continuously backed up. This minimizes the risk of data loss in case of system failures.

- Benefit: Data resilience, reduced downtime, and data recovery capabilities.

5. *High Normalization:*

- Advantage: TPS typically use a high degree of data normalization, which means data is organized
efficiently to minimize redundancy. This reduces storage requirements and improves data
consistency.

- Benefit: Reduced storage costs, improved data integrity, and easier data maintenance.

6. *Archiving Historical Data:*

- Advantage: TPS systems often include features for archiving historical data. This preserves
historical transaction records for compliance, auditing, and analysis purposes without cluttering the
live database.

- Benefit: Compliance with regulations, historical trend analysis, and efficient data management.

By.Aditya Valand
Let's explain the disadvantages of Transaction Processing Systems (TPS) in more detail:

1. *Too Much Consolidation:*

- Disadvantage: Over-consolidation can be a drawback of TPS, where all transaction-related

activities and data are tightly integrated into a single system. While consolidation offers advantages
like streamlined processes, it can lead to a lack of flexibility. Changes or updates to the system may
become complex and time-consuming.

- Impact: Reduced adaptability to changes in business processes, technology advancements, and

scalability requirements.

2. *Security Problems:*

- Disadvantage: TPS, especially those handling sensitive data like financial transactions, are prime
targets for security breaches. Security issues can arise due to vulnerabilities in the system,
unauthorized access, data theft, or cyberattacks.

- Impact: Potential data breaches, financial losses, loss of trust from customers, and regulatory
compliance issues.

Addressing these disadvantages requires a balanced approach in system design, implementing

security measures, and considering the long-term adaptability of the TPS. It's important to strike a
balance between consolidation and flexibility and to prioritize robust security measures to mitigate
potential risks.

By.Aditya Valand
By.Aditya Valand