Tag: Management Reporting

Information Systems (IS) are critical components of modern organizations, providing a framework for collecting, processing, storing, and disseminating information. An Information System is a set of interconnected components that work together to manage and process data, facilitating decision-making and organizational activities. Within the broader concept of Information Systems, there are various subsystems that specialize in specific functions, contributing to the overall efficiency and effectiveness of the organization.

An Information System is a coordinated set of components that collect, process, store, and distribute information to support decision-making, coordination, and control within an organization.

Components of Information Systems:

1. Hardware:

   • Physical devices like computers, servers, and networking equipment.
   • Responsible for data processing and storage.
2. Software:
   • Programs and applications that instruct the hardware on how to process data.
   • Includes operating systems, databases, and application software.
3. Data:
   • Raw facts and figures that are processed to generate meaningful information.
   • Stored in databases and other data repositories.
4. Procedures:
   • Methods and rules for using the Information System effectively.
   • Define how users interact with the system and ensure consistency.
5. People:
   • Individuals who interact with the Information System.
   • Include users, IT professionals, and system administrators.
6. Networks:
   • Communication pathways that facilitate data transfer between system components.
   • Can be local area networks (LANs), wide area networks (WANs), or the internet.

Functions of Information Systems:

1. Data Input:

Capturing and entering data into the system from various sources.

2. Data Processing:

Manipulating and organizing data to generate meaningful information.

3. Data Storage:

Saving data for future reference in databases or other storage systems.

4. Data Output:

Presenting processed information to users in a comprehensible format.

5. Feedback:

Information about system performance, used to make improvements.

Subsystems within Information Systems:

To understand the complexities of Information Systems, it’s essential to explore the various subsystems that specialize in specific functions. Each subsystem contributes to the overall functioning and efficiency of the Information System.

1. Transaction Processing System (TPS):

TPS records and processes routine transactions necessary for daily business operations.

Functions:

• Capturing and processing transactions in real-time.
• Maintaining a record of transactions for future reference.
• Ensuring data integrity and accuracy.

Importance:

• Vital for operational efficiency.
• Examples include point-of-sale systems and order processing systems.

 

• Management Information System (MIS):

MIS provides managers with summarized, organized, and filtered information to support decision-making.

Functions:

• Aggregating data to generate reports and dashboards.
• Facilitating planning and control activities.
• Supporting middle-level management decisions.

Importance:

• Enables managers to make informed decisions.
• Enhances organizational planning and control.

 

3. Decision Support System (DSS):

DSS assists in decision-making by providing interactive and ad-hoc support.

Functions:

• Analyzing data to support decision-making processes.
• Providing simulations and scenario analysis.
• Assisting in complex decision environments.

Importance:

• Helps in strategic decision-making.
• Enhances flexibility and adaptability in decision processes.

 

4. Executive Support System (ESS):

ESS provides top-level executives with information to aid strategic decision-making.

Functions:

• Offering a strategic view of organizational performance.
• Monitoring external factors affecting the organization.
• Supporting long-term planning.

Importance:

• Critical for strategic planning at the executive level.
• Provides insights into the external environment.

 

5. Office Automation System (OAS):

OAS automates routine office operations and facilitates communication.

Functions:

• Automating document creation and processing.
• Facilitating communication through email and collaboration tools.
• Supporting administrative tasks.

Importance:

• Enhances office efficiency and reduces manual workload.
• Streamlines communication within the organization.

 

6. Enterprise Resource Planning (ERP) System:

ERP integrates core business processes and functions across an organization.

Functions:

• Centralizing data and processes in a unified system.
• Supporting multiple departments with a common database.
• Enhancing coordination and collaboration.

Importance:

• Ensures consistency in data and processes.
• Streamlines cross-functional workflows.

 

7. Knowledge Management System (KMS):

KMS manages and facilitates the creation, storage, and distribution of organizational knowledge.

Functions:

• Capturing, organizing, and storing knowledge assets.
• Facilitating knowledge sharing and collaboration.
• Supporting learning and innovation.

Importance:

• Fosters a culture of continuous learning.
• Preserves and leverages organizational knowledge.

 

8. Customer Relationship Management (CRM) System:

CRM manages interactions and relationships with customers.

Functions:

• Storing customer information and interactions.
• Facilitating personalized communication.
• Supporting sales and customer service.

Importance:

• Improves customer satisfaction and loyalty.
• Enhances customer interactions and engagement.

 

9. Supply Chain Management (SCM) System:

SCM manages the flow of goods, services, and information across the supply chain.

Functions:

• Optimizing inventory levels and order fulfillment.
• Coordinating logistics and transportation.
• Enhancing collaboration with suppliers and distributors.

Importance:

• Improves efficiency in the supply chain.
• Reduces costs and enhances responsiveness.

 

10. Business Intelligence (BI) System:

BI systems analyze and present business data to support decision-making.

Functions:

• Extracting, transforming, and loading data for analysis.
• Creating reports, dashboards, and data visualizations.
• Facilitating data-driven decision-making.

Importance:

• Provides insights into business performance.
• Supports strategic and tactical decision-making.

Roles of Subsystems in Organizational Success:

1. Operational Efficiency:

TPS ensures smooth and efficient day-to-day operations, reducing manual effort and errors.

2. Strategic Decision-Making:

DSS, ESS, and BI systems provide critical information for strategic decision-making, enabling organizations to stay competitive.

3. Knowledge Sharing and Innovation:

KMS fosters a culture of knowledge sharing, supporting innovation and continuous improvement.

4. Customer Satisfaction:

CRM systems contribute to improved customer satisfaction by providing personalized and efficient services.

5. Supply Chain Optimization:

SCM systems enhance the efficiency and responsiveness of the supply chain, reducing costs and improving overall performance.

6. Cross–Functional Collaboration:

ERP systems promote collaboration and coordination across different departments, ensuring consistency in processes.

7. Data-Driven Operations:

BI systems empower organizations to make data-driven decisions, leading to improved efficiency and effectiveness.

8. Communication and Collaboration:

OAS facilitates streamlined communication and collaboration, improving overall organizational efficiency.

9. Strategic Planning:

MIS provides critical information for middle-level managers to plan and control organizational activities effectively.

10. Executive Decision Support:

ESS systems provide top-level executives with insights into the external environment, supporting long-term strategic planning.

In the realm of Information Systems (IS), managers are instrumental in overseeing various activities that contribute to the effective planning, development, implementation, and maintenance of information technology within an organization. The roles and responsibilities of IS managers encompass strategic planning, leadership, resource allocation, risk management, vendor management, and policy development. Simultaneously, specific IS activities involve planning and strategy, development and implementation, infrastructure management, user support, data management, technology evaluation, compliance and security, business intelligence and analytics, project portfolio management, innovation management, collaboration and communication, and continuous improvement.

Information Systems managers, particularly Chief Information Officers, play a pivotal role in steering the strategic direction of IT within an organization. Their responsibilities encompass a wide range of activities that collectively ensure Information Systems align with business goals, contribute to organizational success, and adapt to the evolving technology landscape. Effective management of these activities is crucial for leveraging technology as a strategic asset for the organization.

Roles of Information Systems Managers:

• Strategic Planning:

The CIO is responsible for developing and aligning IT strategies with the overall business objectives. This involves creating IT roadmaps, identifying technology trends, and ensuring that IS aligns with the organization’s long-term goals.

• Leadership:

As a top-level executive, the CIO provides vision and leadership for the IS department, guiding the organization in leveraging technology for competitive advantage.

• Resource Allocation:

The CIO manages budgets, allocates resources, and makes strategic technology investments to ensure that the organization has the necessary IT capabilities.

• Risk Management:

Assessing and managing IT-related risks, the CIO plays a key role in safeguarding the organization’s digital assets and ensuring business continuity.

• Vendor Management:

Overseeing relationships with IT vendors and service providers, the CIO ensures that external partnerships contribute to the organization’s success.

• Policy Development:

The CIO establishes and enforces IT policies and procedures, ensuring that the organization operates in compliance with relevant standards and regulations.

Key Information Systems Activities:

1. Planning and Strategy:

   • Strategic Planning: IS managers engage in defining strategic plans for Information Systems, aligning technology initiatives with the overarching business strategy. This involves setting IT goals, objectives, and roadmaps.
   • Key Activities: Developing IT roadmaps, identifying technology trends, aligning IS with organizational goals.

2. Development and Implementation:

   • Managerial Activity: IS managers oversee the development and implementation of IS projects, ensuring that they align with organizational objectives and are executed efficiently.
   • Key Activities: Project management, system development life cycle, quality assurance, and testing.

3. Infrastructure Management:

   • Managerial Activity: IS managers are responsible for ensuring a robust and secure IT infrastructure that supports the organization’s operations.
   • Key Activities: Network management, server administration, cybersecurity.

4. User Support:

   • Managerial Activity: Providing effective user support and helpdesk services is crucial for IS managers to ensure that end-users can utilize technology efficiently.
   • Key Activities: Helpdesk management, end-user training, issue resolution.

5. Data Management:

   • Managerial Activity: IS managers oversee data governance and management to ensure the integrity, security, and accessibility of organizational data.
   • Key Activities: Database management, data quality assurance, data security.

6. Technology Evaluation:

   • Managerial Activity: IS managers assess and adopt new technologies strategically, ensuring that the organization leverages advancements to stay competitive.
   • Key Activities: Technology assessment, vendor evaluation, technology adoption planning.

7. Compliance and Security:

   • Managerial Activity: Ensuring IS compliance and security is a critical responsibility to protect the organization’s information assets.
   • Key Activities: Regulatory compliance, information security policies, security audits, and assessments.

8. Business Intelligence and Analytics:

   • Managerial Activity: IS managers play a key role in driving the use of data for informed decision-making, utilizing business intelligence and analytics.
   • Key Activities: Business intelligence implementation, data analytics, and reporting, data-driven decision support.

9. Project Portfolio Management:

   • Managerial Activity: IS managers prioritize and manage the organization’s portfolio of IT projects, ensuring alignment with strategic goals.
   • Key Activities: Project selection and prioritization, resource allocation, project portfolio reviews.

10. Innovation Management:

    • Managerial Activity: IS managers foster a culture of innovation within the department, encouraging research and development initiatives.
    • Key Activities: Research and development, technology scouting, innovation initiatives.

11. Collaboration and Communication:

    • Managerial Activity: Facilitating effective communication and collaboration is crucial for IS managers to ensure that teams work cohesively.
    • Key Activities: Team coordination, stakeholder communication, cross-functional collaboration.

12. Continuous Improvement:

    • Managerial Activity: IS managers promote continuous improvement in IS processes and services to enhance efficiency and effectiveness.
    • Key Activities: Process optimization, performance monitoring, feedback collection, and lessons learned.

Information systems play a critical strategic role in organizations by providing support for the management of business operations and decision-making.

• Improving Operational Efficiency

Information systems are used to automate business processes, reducing the time and effort required to complete routine tasks. For example, an enterprise resource planning (ERP) system can integrate business functions such as accounting, inventory management, and human resources management, resulting in improved efficiency and productivity.

• Enhancing Decision Making

Information systems provide decision-makers with real-time access to critical information, enabling them to make informed decisions. Decision support systems (DSS) provide data analysis and modeling tools, enabling managers to analyze complex data and make informed decisions.

• Creating Competitive Advantage

Information systems can provide organizations with a competitive advantage by enabling them to differentiate their products or services from those of their competitors. For example, an organization can use customer relationship management (CRM) systems to provide personalized customer experiences that differentiate their products or services.

• Facilitating Collaboration

Information systems can facilitate collaboration among employees, suppliers, and customers, enabling them to share information and work together on projects. For example, project management systems can enable teams to work on projects from different locations, resulting in improved productivity and reduced costs.

• Enabling Innovation

Information systems can enable innovation by providing organizations with the tools and resources necessary to develop new products or services. For example, computer-aided design (CAD) systems can enable organizations to design and develop new products, while simulation and modelling tools can help them test and refine their designs.

Steps to achieve Strategic roles of Information Systems

Achieving the strategic role of information systems requires careful planning, implementation, and management. Here are some steps to follow:

• Define the organization’s business strategy:

The first step in achieving the strategic role of information systems is to define the organization’s business strategy. This involves identifying the organization’s goals, objectives, and competitive advantages. The information systems strategy should be aligned with the business strategy.

• Identify the information needs:

Once the business strategy has been defined, the next step is to identify the information needs of the organization. This involves identifying the types of information required, the sources of information, and the frequency of information needed.

• Determine the information systems requirements:

Based on the information needs, the organization should determine the information systems requirements. This involves identifying the hardware, software, and network infrastructure required to support the information systems.

• Develop an information systems plan:

The next step is to develop an information systems plan. This plan should outline the objectives, scope, and budget of the information systems project. It should also include a timeline and a risk management plan.

• Implement the information systems:

After the information systems plan has been developed, the organization should implement the information systems. This involves installing the hardware and software, configuring the network, and training the users.

• Monitor and evaluate the information systems:

Once the information systems have been implemented, the organization should monitor and evaluate their performance. This involves measuring the effectiveness of the information systems in meeting the information needs of the organization. It also involves identifying areas for improvement.

• Align the information systems with the business strategy:

Finally, the information systems should be aligned with the business strategy. This involves ensuring that the information systems are meeting the goals and objectives of the organization. It also involves making adjustments to the information systems as needed to ensure that they continue to support the business strategy.

Information Systems have transformed the way businesses operate and compete in the modern era. The integration of technology into various business functions has allowed companies to streamline their operations, improve their decision-making processes, and enhance their overall efficiency.

Information Systems have transformed businesses by improving decision-making processes, increasing efficiency, enhancing the customer experience, improving supply chain management, and increasing access to new markets. As technology continues to evolve, businesses must continue to invest in information systems to remain competitive in the modern business landscape.

• Improved Decision Making

One of the most significant impacts of information systems on businesses is the ability to provide managers with real-time data that can be used to make informed decisions. For example, with the help of a data analytics system, a retailer can track sales, customer behavior, and inventory levels in real-time. This information can be used to make decisions regarding pricing, inventory management, and marketing strategies. This helps businesses to respond to changes in the market quickly and make informed decisions.

• Increased Efficiency

Information systems can automate routine tasks and improve business processes, which reduces the time and resources required to complete them. For example, an online booking system can streamline the booking process for a hotel, eliminating the need for manual booking processes. Similarly, inventory management systems can automate the ordering process, reducing the time and resources required to manage inventory.

• Enhanced Customer Experience

Information systems can be used to collect and analyze customer data, allowing businesses to create personalized experiences that cater to the individual needs of their customers. For example, an online retailer can use customer data to provide personalized product recommendations, customized promotions, and more. This improves the customer experience and enhances customer loyalty.

• Improved Supply Chain Management

Information systems can be used to manage the supply chain more efficiently. This includes managing inventory, tracking shipments, and ensuring timely delivery of goods. This leads to better coordination between suppliers, manufacturers, and retailers, resulting in a more efficient supply chain that reduces costs and increases productivity.

• Increased Access to Markets

Information systems can help businesses expand their reach and access new markets. For example, a business can use e-commerce platforms to sell products and services to customers around the world, regardless of physical location. This provides businesses with access to new markets, customers, and revenue streams.

Global e-businesses and collaborations refer to the integration of electronic technologies into the business processes of companies operating on a global scale. This integration enables companies to expand their operations beyond their physical boundaries, connect with customers and partners from different parts of the world, and collaborate with other businesses to create value.

Global e-businesses and collaborations have revolutionized the way businesses operate. With the help of technology, businesses can expand their reach, access new markets, optimize their supply chain management systems, collaborate with other businesses, and reduce costs. As technology continues to evolve, businesses must continue to adapt to remain competitive in the global marketplace.

• E-commerce

E-commerce refers to the buying and selling of goods and services over the internet. This has enabled businesses to expand their reach and sell their products and services to customers from all over the world. E-commerce has also enabled businesses to operate 24/7, allowing customers to purchase products at any time. With the help of digital marketing, businesses can target specific audiences, resulting in more efficient and effective marketing campaigns.

• Digital Payments

Digital payments have revolutionized the way businesses operate. With the help of digital payment platforms, businesses can securely and quickly send and receive payments from customers and partners from all over the world. This has made international transactions more accessible and efficient, reducing the time and cost required to complete them.

• Supply Chain Management

Global e-businesses have enabled businesses to optimize their supply chain management systems by automating the processes involved in sourcing, production, and distribution. With the help of technology, businesses can track inventory levels, monitor production processes, and manage logistics in real-time, resulting in a more efficient supply chain.

• Collaborations

Collaborations between businesses have become easier with the help of digital technologies. Companies can collaborate with other businesses from different parts of the world, allowing them to access new markets and expand their operations. For example, a business can collaborate with a supplier from a different country to reduce costs or work with a partner to create new products or services.

• Cloud Computing

Cloud computing has enabled businesses to store and process large amounts of data without the need for physical servers. This has reduced the cost of data storage and processing, making it more accessible to businesses of all sizes. Cloud computing has also enabled businesses to access data from anywhere in the world, making collaboration and remote work easier.

Global E-Businesses and Collaborations importance

Global e-businesses and collaborations are of great importance to businesses operating in the modern era. The integration of electronic technologies into business processes has enabled businesses to expand their operations beyond their physical boundaries, connect with customers and partners from different parts of the world, and collaborate with other businesses to create value. In this response.

• Expanded Reach

Global e-businesses have enabled businesses to expand their reach beyond their local markets. With the help of e-commerce platforms, businesses can sell their products and services to customers from all over the world, regardless of physical location. This has enabled businesses to access new markets and increase their customer base, resulting in increased revenue and profitability.

• Reduced Costs

Global e-businesses and collaborations have enabled businesses to reduce costs associated with traditional business processes. For example, businesses can reduce the cost of storage and processing data by using cloud computing. Similarly, businesses can reduce the cost of manufacturing by collaborating with suppliers from different parts of the world.

• Improved Efficiency

Global e-businesses and collaborations have enabled businesses to improve their efficiency by automating routine tasks and optimizing business processes. With the help of technology, businesses can track inventory levels, monitor production processes, and manage logistics in real-time, resulting in a more efficient supply chain. This has reduced the time and resources required to complete business processes, resulting in increased productivity.

• Enhanced Customer Experience

Global e-businesses have enabled businesses to provide customers with a personalized experience that caters to their individual needs. With the help of digital marketing, businesses can target specific audiences and provide them with customized offers and promotions. This has enhanced the customer experience, resulting in increased customer loyalty and repeat business.

• Access to New Markets

Global e-businesses and collaborations have enabled businesses to access new markets and expand their operations. By collaborating with other businesses from different parts of the world, businesses can access new markets and expand their product or service offerings. This has enabled businesses to create new revenue streams and increase their profitability.

Enhancing business processes through information systems (IS) involves leveraging technology to improve the efficiency, effectiveness, and quality of organizational processes.

Enhancing business processes through IS can provide organizations with a competitive advantage by improving efficiency, reducing costs, and enhancing customer satisfaction. However, it is important to ensure that IS implementation is aligned with the organization’s strategy, culture, and goals, and that employees are trained and engaged in the process.

• Automating Routine Tasks:

Information Systems can be used to automate routine, repetitive tasks that are prone to errors and require significant time and effort. For example, an online booking system can automate the process of making reservations, reducing the need for manual entry and improving accuracy.

• Improving Communication and Collaboration:

Information Systems can facilitate communication and collaboration among employees, customers, and partners. For instance, an organization can use a project management system that enables team members to share information, collaborate on documents, and track project progress in real-time.

• Enhancing Decision-making:

Information Systems can be used to provide real-time information to decision-makers, enabling them to make better decisions quickly. For example, an organization can use a business intelligence system that provides real-time data visualization and analysis tools, enabling managers to make data-driven decisions.

• Streamlining Operations:

Information Systems can be used to streamline operations and improve the flow of work processes. For instance, an organization can use an enterprise resource planning (ERP) system that integrates all of its business processes into a single system, reducing duplication of effort and improving data accuracy.

• Enhancing Customer Service:

Information Systems can be used to improve customer service by providing customers with easy access to information and support. For example, an organization can use a customer relationship management (CRM) system that tracks customer interactions and provides personalized support and recommendations.

There are several approaches to enhancing business processes through information systems (IS). Here are three common approaches:

• Business Process Reengineering (BPR):

BPR involves the radical redesign of business processes to achieve significant improvements in performance, efficiency, and quality. This approach involves questioning existing assumptions and rethinking the way work is done, often resulting in the elimination of non-value-adding activities. IS can be used to automate and streamline redesigned processes, resulting in significant improvements in performance.

• Continuous Process Improvement (CPI):

CPI involves the ongoing effort to improve business processes through incremental changes. This approach involves identifying areas for improvement and implementing small changes that can be quickly tested and refined. IS can be used to support CPI initiatives by providing real-time data and analysis tools that enable teams to identify opportunities for improvement and monitor progress.

• Lean Six Sigma:

Lean Six Sigma is a methodology that combines the principles of lean manufacturing and Six Sigma to improve quality and reduce waste. This approach involves identifying and eliminating non-value-adding activities and reducing process variability. IS can be used to support Lean Six Sigma initiatives by providing real-time data on process performance, enabling teams to identify opportunities for improvement and monitor progress.

Behavioural, technical, and socio-technical approaches are three different perspectives for understanding and designing information systems. Each approach focuses on different aspects of information systems and has different strengths and weaknesses.

The behavioural, technical, and socio-technical approaches each have their own strengths and weaknesses, and may be more or less appropriate depending on the specific context and goals of the information system being designed. A comprehensive approach that takes into account all three perspectives can lead to more effective and sustainable information systems.

Behavioural approach:

The behavioural approach focuses on understanding the behaviour of users and how they interact with information systems. This approach emphasizes the human element of information systems, including user attitudes, behaviours, and motivations. The behavioural approach uses techniques such as interviews, surveys, and observations to gather data about users and their interactions with information systems. The strengths of this approach are that it considers the user experience and can lead to more user-friendly and effective systems. The weakness is that it may not consider technical limitations or cost considerations.

• Using positive reinforcement to encourage desired behaviours, such as giving employees bonuses for meeting sales targets.
• Using punishment to discourage unwanted behaviours, such as disciplining employees who consistently show up late for work.

Technical approach:

The technical approach focuses on the technical aspects of information systems, including the hardware, software, and network infrastructure. This approach emphasizes the efficiency, reliability, and performance of the system. The technical approach uses techniques such as system analysis and design, programming, and testing to create and implement information systems. The strengths of this approach are that it produces technically sound and efficient systems. The weakness is that it may not consider the user experience or socio-technical factors.

• Implementing a new software system to automate repetitive tasks and reduce errors.
• Introducing new machinery or equipment to improve production processes.

Socio-Technical approach:

Socio-technical approach focuses on the interaction between people, technology, and the organizational context in which they operate. This approach emphasizes the importance of understanding the social and organizational context in which information systems are used. The socio-technical approach uses techniques such as participatory design, ethnographic research, and change management to design and implement information systems that are effective and sustainable. The strengths of this approach are that it considers both technical and social factors, leading to systems that are more effective and accepted by users. The weakness is that it may be more complex and time-consuming than other approaches.

• Redesigning work processes to better align with the skills and abilities of employees, while also utilizing technology to enhance productivity.
• Encouraging collaboration and communication among team members to foster a positive work environment and improve outcomes.

Transaction Process System (TPS) is an information processing system for business transactions involving the collection, modification and retrieval of all transaction data. Characteristics of a TPS include performance, reliability and consistency.

TPS is also known as transaction processing or real-time processing.

A transaction process system and transaction processing are often contrasted with a batch process system and batch processing, where many requests are all executed at one time. The former requires the interaction of a user, whereas batch processing does not require user involvement. In batch processing the results of each transaction are not immediately available. Additionally, there is a delay while the many requests are being organized, stored and eventually executed. In transaction processing there is no delay and the results of each transaction are immediately available. During the delay time for batch processing, errors can occur. Although errors can occur in transaction processing, they are infrequent and tolerated, but do not warrant shutting down the entire system.

To achieve performance, reliability and consistency, data must be readily accessible in a data warehouse, backup procedures must be in place and the recovery process must be in place to deal with system failure, human failure, computer viruses, software applications or natural disasters.

Features of Transaction Processing System

There are several features involved in a good transaction processing system. A few of these critical features are described below.

1. Performance

The concept behind the use of TPS is to efficiently generate timely results for transactions. Effectiveness is based on the number of transactions they can process at a particular time.

2. Continuous availability

The transaction processing system should be a very stable and reliable system that must not crash easily. Disruption of TPS in an organization can lead to work disturbance and financial loss.

3. Data integrity

The TPS must maintain the same method for all transactions processed, the system must be designed to effectively protect data and overcome any hardware/ software issues.

4. Ease of use

The TPS should be user-friendly in order to encourage the use and also decrease errors from inputting data. It should be structured in such a way that it makes it easy to understand as well as guarding users against making errors during data-entry.

5. Modular growth

The TPS hardware and software components should be able to be upgraded individually without requiring a complete overhaul.

6. Controlled processing

Only authorized personnel, staff members, or employees should be able to access the system at a time.

Types of Transaction Processing Systems

1. Batch processing

Batch processing is when clusters of transactions are refined simultaneously using a computer system.

This method, although designed to be efficient for breaking down bulky series of programs, has a drawback as there is a delay in the transaction result.

2. Real-time Processing

Real-time processing carries out its transactions exclusively; this method ensures a swift reply on the condition of the transaction result. It is an ideal technique for dealing with singular transactions.

How does a Transaction Processing System Work?

1. Processing in a batch

Processing batch transactions requires data collection and batch grouping. Data collected are stored in the form of batches and may be processed anytime.  This long-established technique was used widely in the absence of infotech.

2. Processing in real-time

Recent technology innovations gave rise to real-time processing. RTP ensures instant data processing with the aim of providing a quick verification of the transaction. It is highly versatile as it can work effectively as a multi-user interface and can also be accessed anywhere there is an online network.

Components of Transaction Processing System

Below are some of the components involved in a TPS:

• Inputs: These are source documents gotten from transactions which serve as inputs into the computer’s accounting system examples are invoices, and customer orders.
• Processing: This requires the breaking down of information provided by the inputs.
• Storage: This is saved information in TPS memory, it may be in the form of ledgers.
• Output: Any generated record may serve as the output

Examples of Transaction Processing System

• TPS accumulates data about transactions and also initiates processing that transforms stored data. Examples include order processing, employee records, and hotel reservation systems.
• Batch transaction process examples include bill generation and check clearances.
• Examples of real-time transaction processes are the point of sale terminals (P.O.S) and microfinance loan systems.

Limitations of Transaction Processing Systems

• Managing operations with the TPS can be complicated if the company is not big enough to efficiently use the transaction processing system.
• TPS needs both hardware and software components to efficiently manage high data volume. This capacity makes TPSs susceptible to software security breaches in the form of the virus and faulty hardware issues such as power outage can disrupt the whole system.
• Effective integration of a TPS in a company operation requires skilled personnel, it also requires a link with associate company branches to maintain a secure flow of information. This high requirement can create instability and flux in the company’s daily operations.

Functions of Transaction Processing System

Transaction Processing Systems can execute input, output, storage, and processing functions.

(i) Input functions

This includes the securing of data on the source document, entering of input data in the system and also validate data.

(ii) Output functions

This includes the production of the report of the transaction via monitor or paper, examples are exception reports, detail reports, and summary reports.

(iii) Storage functions

This is the process by which data is stored. It entails the storage of information, accessing, sorting, and updating stored data.

(iv) Processing functions

This entails the transformation of data, it includes calculation, computation, and apt result.

Types of Recovery

• Backup Recovery: this can be used to reverse required changes to a record.
• Forward Recovery: this can be used to save transactions made between the last backup and the up to date time.it works by backing up a copy of the database and it is more proficient because it does not need to save each transaction.

A Transaction Processing System (TPS) is an infotech used to accumulate, store, modify and retrieve data transactions. Transaction processing systems present a unique response to user requirements, although planning to choose the most appropriate method relies heavily on the quantity of data and the type of business.