This is a type of information system that is used to collect, process, store, and retrieve transactions. The automated TPS manipulates and stores data to meet daily business transactions. A TPS is made up of different components that make up any other information system such as hardware, software, people, and networking.
Types of the transaction processing system
TPS systems can be categorized into 2 main types depending on how and when they are carried out.
These are types of transaction systems where the related data is collected over some time and processed together. These transactions allow for a time delay from the time data is collected to the time of output. These systems are mostly used in the payroll system.
This is the most common type of TPS where the time of data input and the output of result is reduced. The data should be done in real-time without delay on time. If for example, you are doing a bank transaction it should be reflected across all your account in real time otherwise it will cause data inconsistency.
The most common real-time TPS is Online Transaction Processing System (OTPS). This includes an e-commerce system where users can shop, select, buy, pay, and get receipts online. OPTS system should be real-time with a high response time to ensure transactions are carried out.
Features of Transaction Processing System
A transaction processing system must meet the following characteristics to work as expected.
Reliability and accuracy
The TPS system should provide accurate data that will be used in the transactions. The data from input, processing, and output should be reliable and dependable to be used in business operations. Any error from the TPS system can be carried over to other systems since it tends to be the source of data for other systems.
TPSes are the main information systems that are used more and on daily bases within the organization. This means they should be built to be very fast to increase the response time. The faster the system the more transaction the system can carry out within a given period.
Inflexibility or consistency
Most business processes must be done the same way all the time. A TPS should be able to provide consistency in the processes through its operation. So it should be inflexible in such a way that similar transactions are carried out the same way all the time.
Since business transactions are expected to grow over time the system should have room to handle more transaction as the business grow. The database and other information system infrastructure should be able to handle the growth of the organization.
Can handle huge data
TPS systems are regarded as the day-to-day transaction system. This means they should be able to handle all the data entry and transactions that can be carried out within that organization.
Multiuser and multi transactions
Transaction processing systems should be able to handle multiuser who are doing a different variety of operations at the same time. Also, the system should be able to handle multiple transactions at any given time. Take the example of a bank system, many cashiers are doing multiple transactions at any given moment.
The TPS system should be able to offer data security for all transactions made within the system. It should ensure confidentiality, integrity, and availability of data to authorized users.
The TPS systems are used to carry out the day-to-day operations of the organization, hence they should be available at all times. The system should be dependable since the output data of the system is used as input to other systems.
Advantages of the transaction processing system
- Business process automation. The TPS system comes to automate most of the business operations which makes it fast and reduces the workload and workforce required.
- Faster and more efficient services. When the systems are automated the operations become fast hence services are offered more efficiently to clients.
- Improve customer experience. System help takes the services near to the customer for a better user experience. Online real-time systems enable the customer to make transactions 24/7 from their comfort.
- Real-time transaction processing. TPS makes transactions to be done in real-time. This means business processes that used to take a week can now be done from start to end within minutes.
- Reduced paperwork. When businesses start using systems for business operations they reduce the use of paper since most data will be stored on a system database. All reports can be generated and used as softcopy without the need for hardcopy.
Disadvantages of TPS
- Dependence on technology. TPS systems automate business processes that are computerized. This means it depends on the operations of computers and other IT infrastructure within the organization. If the IT system goes down then the system will not work.
- Cost of implementation. The cost of acquisition and maintenance of the system is high compared to the manual systems operation. The cost includes initial setup cost, maintenance, user training, system upgrade, and system administrators cost among other related costs.
- Skilled personnel is required for operations. To use the TPS system user need to have computer skills and all new employees should be trained on the organization system. It will also require the recruitment of skilled system administrators, technicians, and other technical experts to manage the system
- Data security issues. Any processes that are moved from manual to computerized are prone to the security breach. Transaction processing systems are not exceptions to security issues and can be attacked either from within or without.