CHANDRA S. AMARAVADI

1. CHANDRA S. AMARAVADI TRANSACTION PROCESSING SYSTEMS BY

2. IN THIS PRESENTATION.. • TP Basics • TP Architecture • TP applications • Management & control issues

3. TP BASICS • Defn. & overview • TP cycle & T types • Objectives • Batch vs on-line systems • Comparison to MSS

4. INTRODUCING TP SYSTEMS Transaction Processing Systems (TP systems) Process business transactions. Transactions Basic operations involving exchanges (cash, credit, information) that have financial implications, such as customer placing an order or someone paying a parking ticket.

5. A TYPICAL TP SETUP Transaction processing Terminal Transaction documents Transactions ATM Database TYPES OF ARCHITECTURE CENTRALIZED: All processing done in one location DISTRIBUTED: Processing carried out in multiple locations

6. SEQUENCE OF ACTIVITIES (TP CYCLE) • INITIATE TRANSACTION • Insert card/Error • ENTER VALIDATION CODE (AUTHENTICATION) • PROCESS REQUEST/ ERROR • ACCOUNT UPDATE • DISPLAY/PRINT RECEIPT

7. BATCH PROCESSING A system in which transactions are grouped together and executed as a batch, at the end of a time period (day, week, month etc.) Batch Processing Inputs Output Accumulated Transactions Reports, Updated files Batch Processing Master Files

8. ON-LINE PROCESSING On-Line Transaction Processing (OLTP) Systems in which transactions are processed as they occur without waiting for them to be grouped. Terminal Terminal Central Computer (Processing) Immediate Processing Of Each Transaction Output Terminal Terminal Terminal

9. FAULT TOLERANCE The Fault-Tolerant Bank Fault tolerance: Continued operations in the face of System failure. Redundant Systems Databases

10. Accuracy, reliability and response time Large volumes, minimize resource usage Maintain ACID* properties (later) OLTP for critical apps. must be fault-tolerant OBJECTIVES OF TP SYSTEMS SYSTEM OBJECTIVES BUSINESS OBJECTIVES • Produce transaction documents and reports. • Increase labor efficiency & enhanced service. • Achieve competitive advantage. *ACID – Atomicity, Consistency, Isolation & Durability

11. TP SYSTEMS AND OTHER IS Less More Less More AI/KM Information Sophistication And Complexity Of Processing And Analysis DSS Decision Support Inputand Output Routine E-Commerce TP System Data More Less More Less DATABASE

12. TP ARCHITECTURE & PROCESSING

13. TYPES OF TRANSACTIONS Transaction Complex Simple Conversational Local/ Direct Remote Local/ Direct Remote Local/ Direct Remote

14. TYPES OF TRANSACTIONS Simple transactions -- single input and single output (no query) Complex transactions – those that involve lot of processing, I/O Conversational -- where there is an exchange of messages. Local -- if transactions run on the same network. Remote -- if trans. need to be run on another network.

15. TYPICAL PERFORMANCE MEASURES (FYI)

16. TP MONITOR FUNCTIONS BIRD’S EYE VIEW Transactions “TP System” Backup TP Monitor Protocols Authentication Authorization Que transactions Present interface Ensure memory Assign server Monitor transaction Co-ordinate updates transaction logs Database Server

17. TP MONITOR FUNCTIONS TP monitor is a program to integrate and manage other System components. Its function is similar to that of an operating system, but it is referred to as ‘middle ware’ Its functions are: • Communications management • Authentication, Authorization • Presentation management • Queue management • Request scheduling • Server management • Resource management • Transaction management (already discussed)

18. TP MONITOR FUNCTIONS.. Communication management – purpose of this is to carry out the protocols and authentication. Authentication – verify legitimacy of client, check terminal, time, user, program etc. Authorization – check if client can perform requested transaction. Presentation management – present the transaction interface according to type of device. Queue management – when a request arrives at a server, it is placed in a queue. Request scheduling -- route requests to approp. server. Server management – balancing loads on server, related to request scheduling, this is done by looking at wait times. Resource management -- manage terminals, databases, appln. programs and users; provides common memory resources. Transaction manager – ensures successful completion of transaciton and co-ordinates updates to database. (log manager co-ordinates backups)

19. PRESENTATION MANAGEMENT ATM TP Monitor PC Cell Phone

20. AUTHENTICATION • Passwords • Challenge-response • server picks random no. N • encrypts N  EN using key K • sends to client • client decrypts EN  N • sends response • keys distributed by authentication server • Next step is to see if client is authorized

21. TRANSACTION MANAGEMENT TRANSACTION CONCEPTS [simple, complex] Transaction start Transaction end Assign resources Update Abort/Rollback Transaction management manages a transaction from start to finish

22. RESOURCE MANAGEMENT.. TP MONITOR Transaction Compute Benefit Amount RESOURCE MANAGER Update databases and print paycheck Get Emp info Compute pay SERVER SERVER SERVER Resource Manager co-ordinates memory during processing from multiple servers/database.

23. PRESEN- TATION TRANSACTION TP ARCHITECTURE AUTHENTICATION SERVER AUTHENT- ICATION REQUEST QUE DATA DICTIONARY AUTHOR- IZATION TP MONITOR SERVER1 PROGRAMS SERVER MANAGEMENT SERVER n.. RESOURCE MANAGER TRANSACTION MANAGER MEMORY DATABASE RECOVERY MANAGER BACKUP TRANSACTION RESPONSE QUE

24. TP APPLICATIONS

25. TP APPLICATIONS • Order processing • Inventory • Invoicing • Accounting • Raw material • Stock trading • POS etc.

26. POINT OF SALE SYSTEM (POS) Inventory Database Reports UPC and Quantity POS System Customer’s Receipt UPC Scanner Quantity Date Time Item, Quantity Purchases Database Date, Time, Price Price Data Analysis UPC Item Database

27. ORDER PROCESSING SYSTEM Customer Invoice Customer Order In Person or Via Mail, Phone, EDI, or Internet Order Processing Products Order Entry/ Sales Configuration Processing an order from entry to delivery, updating accounting. Inventory Status Orders Planned Shipments Finished Product Inventory Shipment Planning Routing Planned Shipments And Routes Picked List Shipment Execution Scheduling Shipped Orders Invoicing

28. Ensures that products and services ordered are sufficient to accomplish customer’s objectives and will work well together ORDER PROCESSING SUPPORT SYSTEMS - SALES CONFIGURATION ORDER ENTRY/SALES CONFIGURATION

29. A system that determines which open orders will be filled and from which location they will be shipped. ORDER PROCESSING SUPPORT SYSTEMS - SHIPMENT PLANNING Shipment Planning/Execution

30. ORDER PROCESSING SUPPORT SYSTEMS - INVOICING Invoicing Generates invoice based on products ordered/ payment method

31. ORDER PROCESSING SUPPORT SYSTEMS - INVENTORY CONTROL Inventory Control Updates inventory on current levels and generates reports.

32. Best method of shipping product/ and delivering it in a timely fashion. ORDER PROCESSING SUPPORT SYSTEMS - ROUTING AND SCHEDULING Routing/Scheduling

33. CUSTOMER RELATIONSHIP MANAGEMENT (CRM) Customer Inquiry Order Feedback Promotions Customer Interaction System Product Development Market Research Quality Control Sales Marketing

34. Accounts Receivable/Payables General Ledger Budget Payroll Asset Management ACCOUNTING SYSTEMS Accounting Systems

35. A system that manages the cash flow by keeping track of money owed for goods sold and services performed. ACCOUNTING SYSTEMS - ACCOUNTS RECEIVABLE An accounts receivable statement

36. ACCOUNTING SYSTEM Accounts Payable

37. ACCOUNTING SYSTEMS - GENERAL LEDGER General Ledger A system that produces a detailed summary of different accounts.

38. Generates payroll checks and stubs, as well as W-2 statements at the end of the year for tax purposes. ACCOUNTING SYSTEMS - PAYROLL

39. ACCOUNTING -- INTEGRATED Asset Management Notes Receivable Notes Payable Cash Cost of Assets Customer Accounts Payable Accounts Receivable Payments Amounts Owned By Company Amounts Paid By Company Amounts Owned By Customers Amounts Paid By Customers General Ledger Asset Depreciation Payroll Labor Costs Expense Transactions Timecards Paychecks Employees Budget

40. PURCHASING SYSTEM Raw Materials Packing Materials Spare Parts Inventory Control Inventory Control Status Report Employees Purchase Order Processing Purchase Order Request Purchase Order Purchase Order Receiving Supplier Material Invoice Receiving Notice Check Accounts Payable

41. Inventory Control Maintains stock of items such as raw materials, packing materials, spare parts, and supplies. Purchase Order Processing A system that helps purchasing department complete transactions quickly and efficiently. Receiving A system that creates a record of expected and actual receipts. Reconciles purchase orders with what is actually received. Accounts Payable A system that increases an organization’s control over purchasing, improves cash flow, increases profitability, and provides more effective management of current liabilities. PURCHASING SYSTEM

42. INTEGRATION OF TP Order Entry/ Configuration Customer order request Raw materials Packing materials Spare parts Inventory Inventory status Orders Finished product inventory Shipment planning Purchase order request Inventory status report Pick list Purchase order Items and quantities picked for each order Purchase order processing Shipment execution Employee Products Purchase order Materials and invoice Shipped orders Invoice Invoicing Receiving Supplier Customer Receiving notice Amounts owed by customer Check Accounts payable Accounts Receivable Payment Employee Amounts owed by company Amounts paid by company Time cards Paychecks Amounts owed by customers Amounts paid by customers General Ledger Budget Labor costs Payroll Expense transactions

43. TP Audit An examination of the TP system in an attempt to answer three basic questions Does the system meet the business need? What procedures and controls have been established? Are they being used effectively? Business Resumption Planning The process of anticipating and providing for disasters. Disaster Recovery The implementation of the business resumption plan. MANAGEMENT ISSUES

44. DISCUSSION QUESTIONS • What is TP? • Which is resource intensive, batch or OLTP? • What type of transactions are resource intensive? • What are TP monitor functions? • How can we improve performance of a TP system (i.e. TP monitor) • What happens in an organization when an order is received? • What type of accounts are summarized by the General Ledger

45. THE END