Overview of Transaction Processing & ERP System 1

Overview of Transaction Processing & ERP System

Transaction Processing System - (TPS)

TPS is a type of information system that collects, processes, stores, and retrieves transaction data
in real-time. It is primarily used to manage business transactions efficiently, ensuring accuracy,
speed, and reliability.

Key Features of TPS:

1. Real-time Processing – Transactions are processed instantly (e.g., ATM withdrawals,

online purchases).
2. Batch Processing – Some systems process multiple transactions at once (e.g., payroll
systems).
3. High Reliability – Ensures data integrity and prevents transaction failures.
4. Concurrency – Multiple users can perform transactions simultaneously.
5. Security – Protects sensitive transaction data.
6. Automation – Reduces manual work by automating repetitive tasks.

Examples of TPS:

• Banking Systems – ATM transactions, online banking.

• Point of Sale (POS) Systems – Retail store purchases.
• Airline Reservation Systems – Ticket booking and cancellations.
• Inventory Management Systems – Tracking stock in warehouses.

What is Enterprise Resource Planning – ERP

ERP is a type of software system that helps organizations manage and integrate their core business
processes in a centralized platform. It enables companies to streamline operations, improve
efficiency, and enhance decision-making by providing a unified view of data across departments.

Key Features of ERP:

1. Centralized Database – Stores all business data in one place for easy access.
2. Automation – Reduces manual work by automating tasks like invoicing, payroll, and
inventory management.
3. Integration – Connects different business functions (finance, HR, supply chain, sales, etc.)
into a single system.
4. Real-time Data Processing – Provides up-to-date information for better decision-making.
5. Customization & Scalability – Can be tailored to meet specific business needs and grow
with the organization.

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Modules in ERP:

• Finance & Accounting – Tracks revenue, expenses, and budgeting.

• Human Resources (HR) – Manages employee records, payroll, and recruitment.
• Supply Chain Management (SCM) – Controls inventory, procurement, and logistics.
• Customer Relationship Management (CRM) – Handles customer interactions and sales.
• Manufacturing & Production – Oversees production planning and quality control.

Popular ERP Software:

• SAP ERP
• Oracle ERP Cloud
• Microsoft Dynamics 365
• NetSuite ERP
• Odoo ERP

Data Processing Cycle

The data processing cycle refers to the sequence of steps involved in converting raw data into
meaningful information. It consists of four main parts, each with specific activities:

1. Input

This is the first stage, where raw data is collected and entered into the system for processing.

Major Activities:

• Data Collection: Gathering relevant data from various sources (e.g., surveys, sensors,
transactions).
• Data Entry: Converting collected data into a form suitable for processing (manual entry,
scanning, importing).
• Data Validation: Checking for errors or inconsistencies to ensure data quality.

2. Processing

In this stage, the input data is transformed into meaningful information through various techniques.

Major Activities:

• Data Organization: Sorting and classifying data for easy processing.

• Calculations and Computations: Performing arithmetic or logical operations (e.g.,
summations, comparisons).
• Data Transformation: Converting data formats, applying formulas, or aggregating data.
• Data Analysis: Identifying patterns or trends to support decision-making.

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3. Storage

Processed data and information are stored for future use.

Major Activities:

• Data Saving: Storing data in digital formats (databases, data warehouses, cloud storage).
• Data Updating: Regularly updating stored data to maintain accuracy.
• Data Retrieval: Accessing stored data when needed for reporting or further analysis.
• Data Security: Ensuring stored data is protected from unauthorized access or corruption.

4. Output

The final stage where processed information is presented in a user-friendly format for decision-
making.

Major Activities:

• Information Presentation: Displaying data through reports, graphs, charts, or dashboards.

• Information Distribution: Sharing information with relevant stakeholders via print,
email, or online platforms.
• Decision Support: Using the information to support business strategies, planning, and
decision-making.

Data Storage Methods in Computer-Based System

Data Storage Methods in Computer-Based Information Systems (CBIS)

Data storage in computer-based information systems (CBIS) refers to the methods and
technologies used to save digital data for processing, retrieval, and future use. Effective data
storage ensures that data remains secure, accessible, and manageable.

Storage Hierarchy in CBIS

Data storage is typically structured in a hierarchy based on speed, cost, and capacity:

a) Primary Storage (Main Memory)

• Description: Temporary, fast storage directly accessible by the computer's CPU.

• Examples: RAM (Random Access Memory), Cache memory.
• Purpose: Holds data and instructions that are currently being processed.
• Characteristics:
o Volatile (data is lost when power is off).
o Fastest form of storage.
o Limited capacity and expensive per unit of storage

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b) Secondary Storage

• Description: Permanent storage used for data and programs not actively in use.
• Examples: Hard Disk Drives (HDD), Solid-State Drives (SSD).
• Purpose: Stores operating systems, applications, and user data.
• Characteristics:
o Non-volatile (data is retained even when power is off).
o Slower than primary storage but offers higher capacity.
o SSDs are faster but more expensive than HDDs

c) Tertiary Storage

• Description: Used for backup, archival, and infrequently accessed data.

• Examples: Optical disks (CDs, DVDs), magnetic tapes.
• Purpose: Long-term storage, data backup, and disaster recovery.
• Characteristics:
o Non-volatile and removable.
o Slower access time.
o Cost-effective for large amounts of data.

d) Cloud Storage

• Description: Data stored on remote servers accessed via the internet.

• Examples: Google Drive, Amazon S3, Microsoft Azure.
• Purpose: Scalable storage, accessible from anywhere with internet connectivity.
• Characteristics:
o On-demand scalability.
o Pay-as-you-go pricing models.
o Redundancy and backup handled by cloud providers.
o Requires reliable internet access and security measures.

Data Storage Methods in CBIS

a) File Storage (Flat File Storage)

• Description: Data is stored in files (text, binary) without relationships between them.
• Use Cases: Storing logs, configuration files, simple data storage needs.
• Pros: Simple, easy to implement.
• Cons: Poor for managing complex relationships and large datasets.

b) Database Storage

• Description: Structured storage using Database Management Systems (DBMS).

• Types:
o Relational Databases (RDBMS): Store data in tables with rows and columns (e.g.,
MySQL, Oracle, SQL Server).

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o NoSQL Databases: For unstructured or semi-structured data (e.g., MongoDB,

Cassandra).
• Pros:
o Efficient querying and data management.
o Supports relationships between datasets.
o Enforces data integrity and consistency.
• Cons: Requires specialized knowledge to manage and optimize.

c) Object Storage

• Description: Data stored as objects, each with data, metadata, and a unique identifier.
• Examples: Amazon S3, Azure Blob Storage.
• Use Cases: Storing multimedia files, backups, big data applications.
• Pros: Highly scalable and flexible.
• Cons: Slower for transactional data compared to relational storage.

d) Block Storage

• Description: Data is stored in fixed-size blocks, each with a unique identifier.

• Examples: SAN (Storage Area Network), iSCSI storage.
• Use Cases: Databases, virtual machines, enterprise applications.
• Pros: High performance and suitable for applications requiring low latency.
• Cons: More complex to manage than file storage.

e) Distributed Storage

• Description: Data distributed across multiple physical locations for redundancy and
performance.
• Examples: Hadoop Distributed File System (HDFS), Google File System.
• Use Cases: Big data processing, cloud-native applications.
• Pros: High availability, fault tolerance, and scalability.
• Cons: Complex management and higher network overhead.

Key Considerations in Data Storage for CBIS

• Data Security: Encryption, access control, and compliance with regulations (e.g., GDPR).
• Data Integrity: Ensuring data accuracy and consistency across storage systems.
• Data Availability: Redundancy and failover mechanisms for continuous access.
• Backup and Recovery: Regular backups and disaster recovery plans to prevent data loss.
• Performance: Optimizing storage methods for fast data retrieval and processing.
• Scalability: Storage solutions should handle growing data volumes without major
reconfigurations.

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Emerging Trends in Data Storage

• Hybrid Cloud Storage: Combining on-premises and cloud storage for flexibility and cost-
effectiveness.
• Software-Defined Storage (SDS): Abstracting storage resources from hardware,
improving scalability.
• Edge Storage: Storing data closer to the source like; IoT devices (Internet of Things) for
real-time processing. Example; Smart home gadgets like speakers, thermostats, and
security cameras; wearables such as fitness trackers and smartwatches; industrial sensors
and automated systems in factories and agriculture; and complex technologies like self-
driving cars and medical devices that monitor health
• Hyper-converged Infrastructure (HCI): Integrating storage, compute, and networking
in a single system for simplified management.

Conclusion:

In computer-based information systems, data storage methods must balance performance, cost,
scalability, and security. The choice of storage depends on the nature of the data, the speed of
access required, and the criticality of the information being stored.

How Organizations Use Enterprise Resource Planning (ERP) Systems

Enterprise Resource Planning (ERP) systems are integrated software platforms that
organizations use to manage and streamline core business processes across various departments.
ERP systems help in processing transactions and providing real-time information, enabling
efficient decision-making and operational excellence.

Transaction Processing in ERP Systems

a) Integration of Business Processes

ERP systems integrate key business functions such as:

• Finance and Accounting

• Human Resources (HR)
• Sales and Marketing
• Manufacturing and Production
• Supply Chain Management (SCM)
• Inventory and Procurement

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b) Real-Time Transaction Processing

• Order-to-Cash Process: When a sales order is processed, the ERP system updates
inventory levels, generates an invoice, records revenue, and adjusts accounts receivable—
all in real time.
• Procure-to-Pay Process: When purchasing raw materials, the ERP system manages
purchase orders, tracks delivery, updates inventory, and processes vendor payments.
• Hire-to-Retire Process: In HR, ERP systems manage employee records, payroll
transactions, and benefits administration seamlessly.

c) Automation of Routine Transactions

ERP systems automate routine tasks such as:

• Generating purchase orders when stock levels drop below a threshold.

• Automatically scheduling production runs based on sales forecasts.
• Processing payroll based on attendance data and compensation structures.

Automation reduces human error, speeds up operations, and ensures compliance with regulations.

d) Workflow Management

ERP systems manage approval workflows for various transactions, such as:

• Purchase requisition approvals.

• Expense report validations.
• Sales order confirmations.

This ensures accountability, reduces bottlenecks, and improves transaction processing speed.

a) Centralized Data Repository

ERP systems store all organizational data in a centralized database. This:

• Ensures consistency and accuracy across departments.

• Eliminates duplicate data entries.
• Provides a single source of truth for decision-making.

b) Real-Time Reporting and Analytics

• Customizable Dashboards: Providing key performance indicators (KPIs) in real time.

• Standard Reports: Such as financial statements, sales performance, and inventory status.
• Ad-Hoc Reporting: Allowing managers to generate reports based on specific business
questions.
• Predictive Analytics: Using historical data to forecast trends and guide strategic planning.

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c) Decision Support

• Strategic Planning: ERP systems provide insights into market trends, customer
preferences, and operational efficiencies, aiding long-term planning.
• Operational Decisions: Real-time data helps managers adjust production schedules,
allocate resources, and respond to market demands quickly.
• Tactical Adjustments: ERP systems highlight areas where operational improvements can
be made, such as optimizing supply chains or reducing production costs.

d) Role-Based Access to Information

ERP systems ensure that information is available to the right people at the right time by:

• Assigning role-based access controls.

• Protecting sensitive information while enabling authorized personnel to access relevant
data.
• Supporting data privacy and compliance requirements.

Key Benefits of ERP in Processing Transactions and Information

• Improved Efficiency: Automated workflows and integrated processes reduce manual

tasks and errors.
• Enhanced Collaboration: Departments work together more effectively due to shared data.
• Real-Time Insights: Managers can access up-to-date information for faster decision-
making.
• Scalability: ERP systems can grow with the business, accommodating more users and
higher transaction volumes.
• Regulatory Compliance: Built-in controls help organizations comply with industry
standards and regulations.

Real-World Example of ERP Usage

Manufacturing Company Example:

• Transaction Processing: When a customer places an order, the ERP system automatically
checks inventory levels, schedules production if needed, updates financial records, and
arranges for shipping.
• Information Provision: Management can view real-time reports on production progress,
sales performance, and financial health, allowing them to adjust operations or marketing
strategies as needed.

ERP Modules Supporting Transactions and Information Management

• Financial Management: Tracks transactions like payments, expenses, and revenue.

• Supply Chain Management: Manages procurement, production, and distribution
activities.

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• Customer Relationship Management (CRM): Handles sales, marketing & customer

service data.
• Human Resource Management: Manages employee data, payroll, and recruitment.
• Inventory Management: Tracks inventory levels, orders, and deliveries.
• Business Intelligence (BI): Provides analytical tools for data-driven decisions.

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