Strategic Management: Formulation and Implementation

Transaction Processing Systems

A transactionprocessing systems (TPS) is a computerbased information system that executes and records the daytoday routine transactions necessary to the conduct of the business (e.g., sales order entry, hotel reservation systems, payroll and shipping).

Two aspects of TPS are particularly important. First, TPS span the boundary between the organization and its environment. They connect customers to the firm's warehouse, factory, and management. If TPS does not work well, the organization fails either to receive inputs from the environment (orders) or to deliver outputs (assembled goods). Second, a TPS is a main source of data used by other types of computerbased information systems within an organization.

All organizations have five kinds of TPS: marketing, production, financial, personnel, and industry specific. Figure 87 describes the typical TPS systems in terms of their major functions and application systems.