INTRO TO TP SYSTEMS
IS 340
BY
CHANDRA S. AMARAVADI
IN THIS PRESENTATION..
Definitions
Characteristics of TP systems
TP concept
TP cycle
Case studies of SABRE, VISA
Case study of Payroll system
TP and competitive advantage
DEFINITIONS
Transaction processing systems (TP systems)
Systems which process business transactions
Transaction:events to which a business must
Respond; exchange that has financial
implications
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Concerned with business operations
Deal with customers, suppliers, vendors, gov.
Transactions/exchange with these entities
High volume (millions of records)
Also involve inquiries (was check #23 cashed?)
Could be batch or online (OLTP)
BATCH VS ON-LINE
PROCESSING
BATCH PROCESSING: Transactions are grouped and
processed at the end of a specified time period.
ONLINE TRANSACTION PROCESSING: Transactions
are processed as and when they occur.
CHARACTERISTICS
OF TP SYSTEMS..
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Traditionally mainframe + COBOL
Shift towards object-oriented, client-server
Towards PC-based and Web-based systems
What type of organizations use TP systems?
Who are the primary users of TP systems?
TP CONCEPT
Online Data
Entry
Scanners
Application.
Files
Transaction
Processing
Database
Update
Transaction
Reports
Summary
Reports
E.g. receipt for a deposit
E.g. monthly statement
TP CYCLE
Data entry - keyboards, scanners, (e.g. credit cards,
price tags)
Processing itself (Batch, OLTP)
Maintain account...
If dep. then acct-bal=bal. + amt
If withdrawal then...
Database updates
 Reports/documents
Inquiries
 Classify
 Sort
 Merge
 Group
 Update
ORDER PROCESSING
Customer
Receive order
Inventory
Back order
Receipt of goods, invoice
Warehouse
FOR DISCUSSION
Discuss a payroll system from the point of view
of inputs, processing and outputs.
INPUTS
PROCESSES
OUTPUTS
TP EXAMPLES &
CASE STUDIES
SABRE HISTORY
A fledgling airline
Informal booking prior to the war
Demand for travel after WWII
Manual booking
SABRE HISTORY..
AIRLINE RESERVATIONS AFTER THE WAR
“A large cross-hatched board dominates one wall, its spaces
filled with cryptic notes. At rows of desks sit busy men
and women who continually glance from thick reference
books to the wall display while continuously talking on
the telephone and filling out cards. One man sitting in the
back of the room is using field glasses to examine a change
that has just been made high on the display board. Clerks
and messengers carrying cards and sheets of paper hurry
from files to automatic machines. The chatter of teletype
and the sound of card sorting equipment fills the air”
[-- From “The Virtual Corporation by Davidow and Malone
P43]
SABRE HISTORY..
Charles Amman (R&D) takes charge
Tubes and marbles prototype
 Next improvement: “Reservisor” system
 Still 8% transactions in error
 Takes 12 people, 15 steps and 3 hrs!
 IBM jumps in
After many false starts, SABRE in 1962
Installation $2.1 million, HW 37
$16,000 per agent
Revenues of $500 million
million
SABRE
Is a classic example of a TP system
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reservation system used by AA
Worldspan, Galileo, Patheo, and Abacus
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45 million records
200,000 new records added daily
60,000 terminals
6 mainframes
DISCUSSION
What characteristics of TP systems are
exhibited by SABRE?
VISA’S CREDIT CARD PROCESSING
Merchant’s bank
Merchant/Store
Cardissuing
bank
Cardholder
VISA’S CREDIT CARD PAYMENT
 Customer
makes purchase
 Merchant’s bank linked via VISA network to the bank
that issued the card
 Card issuing bank approves the charge
 Bank subtracts fee and pays rest to merchant
 Merchant’s bank submits charge to VISA
 VISA charges credit card company
 Card holder’s acct # checked against black list
VISA’S CREDIT CARD PROCESSING
10
million merchants world-wide accept VISA + MC
VISA + MC largest TP system
45 billion transactions a year
OTHER APPLICATIONS OF TP
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Payroll
Order entry
Billing
Credit card
Reservations
Inventory
Stock trades
TP AND COMPETITIVE ADVANTAGE
Competitive advantage of TP
◦ operational η
◦ better service
For Discussion:
◦ What would TP systems do in a company like
State Farm? What are the operational benefits?
THE END!