Transaction Processing system

 objective:

 Transaction processing system

 Transaction processing modes
 Subsystems of Transactions.
 Types of reports.

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 Transaction Processing Systems
 A transaction :is an elementary activity
conducted during business operations.

 Transaction: Is an executing program

(process) that includes one or more
database access operations :Example
from banking database:

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 Transaction processing
systems (TPS) process the company's
business transactions and thus support
the operations of an enterprise.

 A TPS records a non-inquiry transaction

itself, as well as all of its effects, in the
database and produces documents
relating to the transaction

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Importance of Transaction Processing Systems

 TPS collects data and stores both incoming

and outgoing transactions within a business.
 Transaction processing systems prove
themselves through business performance,
availability, data integrity, and growth.
 Transaction processing systems can collect
data,and store it for present and future use.

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 TPS systems mainly control the decisions
made as part of a transaction to ensure
the best choice is available.
 TPS calculates and processes is
relatively quick and viewable to owners
and managers
 Transaction processing systems can
transform the way certain businesses
and organizations operate.
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 TPS are necessary to conduct business in
almost any organization today.
System Charts
 Systems charts: are well-established tools
which are used to describe TPSs.
 These charts show the sources of input
into the system, major processing
steps, data storage, and systems
outputs.
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Objective of TPS

 Process data generated about

transaction.
 Increases labor efficiency.
 Ensure data and information integrity
and accuracy
 Help and maintain customer loyalty.
 Competitive advantage.
 produce timely documents and reports
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TPS

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 Transaction Processing Modes

 Transaction processing may be accomplished in one of two modes:

 1. On-line mode
 2. Batch mode

 Characteristics of on-line transaction processing:

 1. Each transaction is completely processed immediately upon
entry.
 2. OLAP 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

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 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
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 Transaction Processing Subsystems in a
Firm
 Overall transaction processing, also known as
data processing, reflects the principal
business activities of a firm. The principal
transaction processing subsystems in a firm are
those supporting:
 Sales
 Production
 Inventory
 Purchasing
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 Transaction Processing Activities
 The processing of individual
transactions, of course, depends to a
degree on their nature.
 The general elements of transaction
processing include:
 1. Data capture and validation
 2. Transaction processing steps
 3. Database maintenance
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 Data Capture
 Direct data entry is commonly employed
through source data automation.
 Increasingly, transaction processing systems
rely on electronic data interchange (EDI).
 By replacing paper documents with formatted
transaction data sent over telecommunications
networks.
 TPS systems provide for computer-to-computer
communication without repeated data entry.

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 Data Validation
 Typical validation tests include checking
for missing data items, valid codes,
and valid values.
 More extensive validation may entail
authorization of the transaction based on
the customers record.

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Processing Steps Dependent on the Transaction and
on Processing Mode

 Depending on the nature of the transaction

and on whether the system operates in on-
line or batch mode, the following processing
steps may be performed:
 1. Classification :The system classifies
incoming transactions to select further
processing steps.
 2. Sorting Transaction records are arranged
in order of the value of the data item(s) that
uniquely identifies each of them.
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 3. Data Retrieval: The purpose of an
inquiry transaction is retrieval of data
from the database. Other transactions
may involve data retrieval as well.
 4. Calculation: The calculations
required depend on the nature of the
transaction.
 5. Summarization: Usually performed
to obtain simple reports offered by TPS,
this step computes summaries across all
or some of the transactions.
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Outputs of Transaction Processing Systems

 The outputs provided by TPSs may be

classified as:
 1. Transaction documents
 2. Query responses
 3. Reports

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 Transaction Documents
 Many TPSs produce transaction documents, such as
invoices, purchase orders, or payroll checks.
 These transaction documents produced by TPS may
be divided into two classes:
 action documents and information documents.
 1. Action documents: direct that an action take
place. Turnaround documents initiate action and are
returned after its completion to the requesting
agency.
 They therefore also serve as input documents for
another transaction.
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 2. Information documents confirm
that a transaction has taken place or
inform about one or several transactions.
 Transaction documents require manual
handling and, in some cases,
distribution of multiple copies.
 The process is costly and may lead to
inconsistencies if one of the copies
fails to reach its destination.

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 Query Responses and Reports
 TPS offer certain querying ad simple reporting
capabilities, much less elaborate than those
of management reporting systems.
 Most queries produce a screenful of
information. However, reports are also often
produced as a result of inquiries.
 Unlike management reporting systems,
TPSs typically provide a limited range of
preplanned reports.

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 The following report types are produced by TPS:
 1. Transaction Logs - are listings of all transactions
processed during a system run and include purchase
order manifests or sales registers.
 2. Error (Edit) Reports - error reports list
transactions found to be in error during the processing.
They identify the error and sometimes also list the
corresponding master file or database records.
 3. Detail Reports - detail reports are extracts from
the database that lists records satisfying particular
criteria.
 4. Summary Reports - typical summary reports
produced by TPSs include financial statements.
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 From Electronic Data Interchange (EDI) to
Electronic Commerce
 A prominent means of source data automation is
electronic data interchange.
 Electronic data interchange (EDI) is the computer to
computer interchange of electronic transaction
documents, involving at least two trading
partners.
 With EDI, paper transaction documents, such as
purchase orders or invoices are eliminated and
replaced with standardized electronic
communications.
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EDI components include the following:

 1. Transaction standards
 The messages are exchanged in a standard form,
agreed on by the participating partners.
 2. Industry standard for product identification
 partners have to agree on the standard way to
identify their products.
 3. Translation software
 Translation software converts the incoming EDI
messages into a format that can be used by the
owner firm's applications.
 4. Telecommunications systems
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  Review question:
 With examples explain the differences between Decision
support system and Data processing system
 Transaction processing system is used to help plan the
objectives of the business as a whole and to measure how
well the objective of an organization are being achieved. In
your own opinion explain how transaction processing
system can assist to achieve such objectives with example.
 Discuss the components of transaction processing system
 Describe the sub systems of transaction processing system
with examples

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Management Reporting Systems

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continue

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Management Reporting Systems

 OBJECTIVES
 Features Of Management Reporting
System
 Why we need an effective MRS
 Essentials Of An Effective Management
Reporting System.
 Types Of Reports in MRS.
 Functions Or Importance Of A Report

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Management Reporting
Systems
 The main objective of management
reporting systems (MRS) is :
 To provide lower and middle
management with printed or electronic
reports and with inquiry capabilities
 To help maintain operational and
management control of the enterprise

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 A management reporting system is a
part of a management control system
that provides business information.
 This information can be in the form of
reports or statements.
 The system is designed to assist
members of the management by
providing timely information.

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 Characteristics of MRS include:
 1. They are usually developed by
information systems professionals, rather
than by end users.
 2. These systems are built for situations in
which information requirements are
reasonably well known and expected to
remain relatively stable.
 3. MRSs do not directly support the
decision-making process.
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 4. MRSs are oriented toward reporting
on the past and the present, rather
than projecting the future.
 5. MRSs generally have limited
analytical capabilities.
 6. MRSs largely report on internal
company operations rather than
spanning the company boundaries by
reporting external information.

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 WHY DO WE NEED AN EFFECTIVE
MANAGEMENT REPORTING SYSTEM:
 To help in capturing data that is
needed by managers to run an effective
business. E.g Data could range from
financial data, employee headcount,
client, accounts, products, client
assets in custody, investment
performance, etc.

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Reasons Why An Enterprise Needs An
Effective Management Reporting System:

 For Constant need of reports for

decision making and analysis of
trends.
 Reports being unavailable with the right
stakeholders at the right time.
 Lack of visibility and a single holistic
view of the Enterprise performance.

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 Data redundancy, duplication of data
leading to data management and
quality issues leading to error prone
reports.
 High value resources.
 Changing a global report to fit local
needs.

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 An effective management reporting
system helps:
 Improve decision making process.
 Improves management effectiveness in
an organization.
 Improves responsiveness to issues of an
enterprise.
 Improve efficiency of resources in the
delivery of organizational services.
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 Identifying the problem in an
organization.
 Evaluate alternate solutions.
 Implement the best solution.
 Review implementation.

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 FIVE ESSENTIALS OF AN EFFECTIVE
MANAGEMENT REPORTING SYSTEM
 Should be able to generate good reports:
 Good reports should be generated in a
timely manner.
 Good reports Should have the proper
flow of information.
 Good reports Should be in the correct
format.

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 The system should be flexible enough to adjust to
all the requirements that are made by the user.
 A MR system is expected to be accurate.
 Management reporting system is for it to be cost
effective.
 Reports should be detailed enough to let
management know where the next change should be.
 An automated delivery of reports based on the
organizational hierarchy levels is the success of a MR
system
 Management reporting system should maintain
a high-level of consistency.
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 MRSs provide the following types of
reports:
 1. Scheduled (Periodic) Reports
 Are furnished on a daily, weekly, annually, or
other regular basis depending on the
decision-making need.
 However, it is crucial to identify the essential
informational needs of various managers to
facilitate each manager's decision making
and to prevent information overload.
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 The concept of responsibility reporting
is generally applied - managers receive
reports within their specific areas of
responsibility.
 A hierarchy of performance reports
arises, with each report including only
the items that the manager can control.

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 2. Exception Reports
 produced only when out of
bound conditions occur and containing
only the information regarding the
conditions.
 Exception reporting helps managers
avoid perusal of incident figures and
concentrate on deviations from the norm
and on unusual events

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 3. Demand (Ad Hoc) Reports
 The ability of a manager to request a
demand report or screen output as
needed enhances the flexibility of MRS
that best suit his or her needs.
 Query languages provided by DBMSs
make data accessible for demand
reporting.

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 Strategic Potential of Transaction
Processing & Management Reporting
Systems
 TPS can be enablers of major process innovations
and can ensure rapid and high-quality customer
service.
 Strategic TPSs may become a source of
competitive advantage by focusing on the internal
or customer-oriented processes.
 The customer driven nature of many TPSs affords
some firms the opportunity to gain a competitive
advantage by providing unique systems
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 Some of the types of information systems
based on these capabilities which can be
exploited for competitive effect include:
 1. Tracking systems - management reporting
systems that continuously track the status of a
project or a product under development.
 2. Location systems - TPS that monitor the
geographic location of materials or vehicles.
 3. Asset management systems - TPS and MRS
that maintain and report on-line the status of
financial inventory, and human resources assets.
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Functions or importance of a report

 Provides Information: The very purpose

of preparing a report is providing
information to various levels of
management.

 Helps in Selection: A report brings

many alternatives out of which a
management has to choose one profitable
alternative.
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 Role in Control System: The reports
are prepared in such a way as to
measure the actual performance with
the budgeted targets.

 Helpful in Profitable Operations: A

report highlights the direction of
moving the business and the level of
operation.

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 Follow the Principle of Management by
Exception: A management has only a
minimum time to exercise control. Hence, the
activities, which are not carried out according
to planning and budget, are highlighted
before the management.
 Helpful in Achieving Overall Objectives:
Report motivates the executives and
employees to take necessary steps towards
increasing the earnings of the organization
significantly.
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Review Questions
 Explain the objectives of management

reporting system citing examples in each

of them.
 Discuss six reasons why information

system professional should concentrate

on the end users when implementing
systems.

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