Operations in Organisation: BIS: TPS

---

1. INTRODUCTION

The most fundamental of all Business Information Systems (BIS) is the Transaction Processing System (TPS). TPS keep track of the day-to-day activities of a business, such as sales, receipts, cash deposits, credit decisions and the flow of material in a factory. These basic business systems perform and record the routine transactions necessary in order to conduct the business.

2. What is a TRANSACTION?

A transaction is any business-related exchange or in other words a transaction is a record of an event to which the business must respond.

For example: customer paying a bill,

• The data about the money accepted that has just been recorded constitute a transaction
• The finance office responds to this transaction by adjusting the account by the amount received, and updating the ledger
• The transaction thus triggers a whole series of events that eventually update the business records produce appropriate documents.

These basic business systems that use transactions to update an organisation's records are called TPS. They handles the large volume of business transactions that occur daily within an organisation.

TPS are also known as Operational Information Systems (OIS) because they perform or support the completion of operational tasks.

OIS primarily produce routine, descriptive, expected, and objective data that describe past activities. The information they produce is usually detailed, highly structured, accurate, derived from internal sources, and produced regularly.

Many organisations, especially those in banking or financial services, could not survive for more than a day if their basic business systems ceased to function. For example: MasterCard cannot even afford a few minutes’ disruption to its system, which processes billions of credit card transaction each day from all over the world. MasterCard employs multiple backup power supply systems for its data centre in St. Louis, which is the clearing centre for all credit transactions.

2.1 Features of TPS

• Record routine business activities
• Support the functions of recording, monitoring, and evaluating the basic activities of the business
• Important suppliers of data to the operational levels and to higher levels of a business
• Much of their output is critical to the day-to-day survival of the firm

2.2 Functions of TPS

The principal purpose of a TPS is to answer routine questions and to track the flow of transactions through the organisation.

• How many parts are in inventory?
• What happened to Mrs Goldsmith’s payment?

The kind of problems solved by these systems involves very short-term issues. Information for their solution is structured and based on the firm’s routine standard operating procedures.

Although much of the information in TPS comes from inside the firm, these systems must also deal with customers, suppliers and factors external to the firm. TPS help solve problems concerning the firm’s relationship with its external environment.

Many of these systems take a high volume of input and produce a high volume of output. Input data can come from several sources:

• data entry
• punched cards
• scanning
• devices
• audio input
• computerised files

The output may consist of finished pieces of goods or documents such as pay cheques, packing slips or purchase orders.

Another form of output supplied by TPS is the data they provide for other systems used by managers. TPS are the primary suppliers of data for information systems that support mid-level managers, who use summaries of transaction data for monitoring and controlling the firm’s performance. Systems specifically serve managers are known as Management Information Systems (MIS).

2.3 Characteristics of TPS

• They provide fast and efficient processing to handle large amounts of input and output.
• They perform rigorous data editing to ensure that data records are kept accurate and up to date.
• They are audited to ensure that all input data, processing, procedures, and output are complete, accurate, and valid.
• Their use involves a high potential for security-related problems.
• They support the work processes of a large number of people, so the loss of the system can cause severe and negative impact on the organisation.

2.4 Methods of TPS

1. Batch processing Systems
2. On-line Transaction Processing (OLTP)
3. A third type of TPS, called on-line entry with delayed processing, is a compromise between batch processing and on-line processing.

Even though technology exists to run TPS applications using on-line processing, it is not done for all applications. For many applications batch processing is more cost effective.

Specific goals of the organisation define the method of TPS best suited for the various applications of the company.

2.5 Objectives of TPS

Because of the importance of the transaction processing, organisations expect their TPS to accomplish a number of specific objectives, including the following:

• Process data generated by and about transactions
• Maintain a high degree of accuracy
• Ensure data and information integrity
• Produce timely documents and reports
• Increase labour efficiency
• Help provide increased and enhanced service
• Help build and maintain customer loyalty

Depending on the specific nature and goals of the organisation, any one or more of these objectives may be more important than others.

---

Reference(s)
	Book		Laudon, K. C. & Laudon, J. P. (2007) Management Information Systems: Managing the Digital Firm. 10th Edition. Pearson Prentice Hall: United States of America (USA), New Jersey (NJ), Bergen, Upper Saddle River. [ISBN: 9780132415798]. [Available on: Amazon: https://amzn.to/3UhgqDH].
	Book		O’Brien, J. (1999) Management Information Systems: Managing Information Technology in the E-Business Enterprise. 4th Edition. McGraw-Hill: United States of America (USA), Massachusetts (MA), Suffolk, Boston. [ISBN: 9788186011799]. [Available on: Amazon: https://amzn.to/3VQvCcJ].
	Book		Stair, R. M. & Reynolds, G. W. (1999) Principles of Information Systems: A Managerial Approach. 4th Edition. Thomson Course Technology: United States of America (USA), Massachusetts (MA), Middlesex, Cambridge. [ISBN: 9780760010792]. [Available on: Amazon: https://amzn.to/3F8ncY4].

---

Reference (or cite) Article
	Kahlon, R. S. (2012) Operations in Organisation: BIS: TPS [Online]. dkode: United Kingdom, England, London. [Published on: 2012-03-15]. [Article ID: RSK666-0000039]. [Available on: dkode | Ravi - https://ravi.dkode.co/2012/03/introduction-to-bis-tps.html].

---