Page 12 - Management Information System_Neat

FEATURES OF TRANSACTION PROCESSING SYSTEMS

There are certain features of TPS which distinguish these from other information systems
of an organisation:

1. In many cases organizations are required to process transactions in a way that is required by its
external stakeholders.ie. a large business organization is required to maintain its financial
transactions as prescribed by Income Tax Act.
2. TPS are major procedure of information for other types of systems.e.g. purchase processing
systems supply data to the organization‘s general ledger systems which are responsible for
maintaining records of the organization for producing reports,such as trail balance,profit and loss
account,and balance sheet.
3. TPS handle detail of data and these data shows the result of various activities usually on
historical basis.TPS reflect what has already happened rather than projecting what is likely to
happen in future.
4. TPS span the boundary of the organization and connect the elements of its environment.TPS
connects the organization with its customers and suppliers.This connectivity ensures faster
transaction processing which results into increased operational efficiency.
5. TPS serve the basic need of operational level of the organization.At the operational level,
objectives. tasks. and resources are pre-defined and are highly structured. Therefore the decisions
are made on the basis of predefined criteria. For example. a decision' regarding granting credit to
a customer can be made by the superior concerned as the criteria for allowing credit are pre-
defined by higher-level managers.
6. TPS are relevant to all the four functional areas of a business organization
production,marketing,finance,and human resource-because each functional area needs some kind
of transaction processing.
7. A TPS supports different tasks by imposing a set of rules and guidelines that specify how to
record, process, and store a given transaction. There are many uses of transaction processing
systems in our everyday lives, such as when we make a purchase at retail store, deposit or
withdraw money at a bank, or register for classes at a university. Almost all organizations,
regardless of the industry in which they operate, have a manual or automated TPS
8. A TPS is the data life-line for a company because it is the source of data for other information
systems, such as MIS and DSS (Decision Support Systems). Hence, if the TPS shuts down, the
consequences can be serious for the organization

9. A TPS is also the main link between the organization and external entities, such as customers
suppliers, distributors, and regulatory agencies
10. TPS exist for the various functional areas in an organization, such as finance, accounting,
manufacturing, production, human resources, marketing quality control, engineering, and
research and development. Until a few years ago, many companies viewed the TPS for each
business function as separate entity with little or no connection to other systems in the company.
Today, however, many companies are trying to build cross-functional TPS to promote the free
exchange of information among different business units. This is a desirable goal, but is still very
difficult to achieve.