Batch Processing

Batch Processing is a collection of batch of input transaction and

processing the batch in a serial order.

Ex- The batch processing procedure process all invoices one go, in
case where invoice need not be raised immediately on placement
of order. There is no waiting time between jobs.

A Batch Operating system normally reads a stream of different

jobs from an I/O device with its own control cards that predefine
what a job does.

In a Batch mode, each user prepares his program off-line and

submits it to the computer centre. A computer operator collects the
programs, which have been punched, on card and stacks one
program or job on top of another. When a batch of programs has
been collected, the operator loads this batch of programs into the
computer at one time where they are executed one after another.
Finally the operator retrieves the printed output of all these jobs
and returns them to the concerned user.

In Batch systems, transactions are accumulated in a ‘transaction

file’, which contains the transactions for a particular time period.
Periodically this file is used to update a ‘master file’, which
contains permanent information on entities. Adding the transaction
data to the existing master file creates a new master file.
Example – A payroll master file with employee earning and
deduction data. It is updated with weekly time card transactions.

Batch processing is economical where:

1. Transaction value is very large (i.e. each time a processing is

done, a huge cost has to be incurred).
2. Immediate query of replies are not required.
3. Instant update is not essential.
 4. Resources are shared.
5. Restoring previous status of transaction file is required.

The limitations of batch processing are:

1. Output is available in batches only.

2. File updating is done at the end of the processing cycle.
3. Large storage space is required.
4. Sorted sequential file is used.
Keyboard
input

Transaction
grouped in
Batches
Sorted Old
transac master
tion file
file

Validate and
Update

New
Error Reports Reports
Master
file

BATCH PROCESSING
 Real Time Processing

There are many applications that require an immediate response

from the computer. Getting a stock market quotation, finding the
current level of product inventory, and searching a criminal data
file for a possible suspect may all be actions that need to be done
without delay. In these cases a real time processing system is
needed. Real time means immediate response from the computer. A
system in which a transaction accesses and updates a file quickly
enough to affect the original decision-making is called a real time
system. The essential feature is that the input data must be
processed quickly enough so that further action can then be
promptly taken on the results.

In other words, a real time processing system may be described as

an on line processing system with severe time limitations. It may
be noted here that a real time system uses on line processing, but
an on line system need not necessarily operates in real time mode.

Real time processing requires immediate (not periodic) transaction

input from all input originating terminals. Many remote stations
are tied directly by high-speed communication equipment into one
or more CPUs. Several stations may be operating simultaneously.
Files are updated each minute, and enquiries are answered by split
second access to up to the minute records. The system processes
input data and presents the result in such a form that human
judgment can immediately be brought into decisive action.

Few examples of business real time processing are:

 Air traffic control.

 Process control system as in nuclear reactor plants and steel
mills.
Similarly, there are many applications that require real time
processing. It would be a mistake, however, to assume that real
time processing should be universally applied to all data
processing applications. A quick response system can be designed
to fit the needs of the business. Some application can be processed
on a lower priority or background basis using batch methods (e.g.
payroll); some can be on line with periodic (not immediate)
updating real time methods.

Real time systems are required to be highly reliable because even

minimal downtime in many critical applications may be hazardous
causing danger to several lives and substantial financial loss. For
example, in case of a computerized air traffic control system, the
radar and computers that keep track of air traffic in each region
must operate constantly with minimum maintenance. An
unscheduled downtime in this real time system may cost lives of
several human beings. Similarly, in case of a chemical process
control system high degree of reliability is essential, since even
minimal downtime can lead to a ruined batch of product or damage
to expensive equipment with substantial financial loss. In order to
achieve the desired degree of reliability, real time systems are
normally duplicated so that, in the event of a break down, back up
facilities are immediately available for continuous operation of the
system. This makes some systems very expensive but, in the
environment to which real time systems are applied, a fail proof
system is essential
Types Of Real Time Processing

Hard realtime Processing: Processing needs to be completed in

time bound manner. If deadline is not met, system said to be failed.
( Computer processing in Nuclear reactor system)

Firm real time Processing : Application where if response misses

the deadline, the utility of the response becomes zero. In
networking if a packet of data is not received in predefined time, it
is taken to lost and receiver request for resend of same packet.

Soft Real time Processing : Process has deadline, however if it

fails the utility of the result decreases. On line transaction like Air/
railway etc are treated in this type of processing.

On Line Transaction Processing

Online transaction processing involves direct access to records. It
allows immediate computation and updating the transaction. The
concept of online applies OLTP.

OLTP (online transaction processing) is a class of program that

facilitates and manages transaction-oriented applications, typically
for data entry and retrieval transactions in a number of industries,
including banking, airlines, mail-order, supermarkets, and
manufacturers. Probably the most widely installed OLTP product is
IBM's CICS (Customer Information Control System).

Today's online transaction processing increasingly requires support

for transactions that span a network and may include more than
one company. For this reason, new OLTP software uses
client/server processing and brokering software that allows
transactions to run on different computer platforms in a network.

Online Transaction processing database applications are optimal

for managing changing data, and usually have a large number of
users who will be simultaneously performing transactions that
change real-time data. Although individual requests by users for
data tend to reference few records, many of these requests are
being made at the same time. Common examples of these types of
databases are airline ticketing systems and banking transaction
systems. The primary concerns in this type of application are
concurrency and atomicity.

Concurrency controls in a database system ensure that two users

cannot change the same data, or that one user cannot change a
piece of data before another user is done with it. For example, if
you are talking to an airline ticket agent to reserve the last
available seat on a flight and the agent begins the process of
reserving the seat in your name, another agent should not be able
to tell another passenger that the seat is available.

Atomicity ensures that all of the steps involved in a transaction

complete successfully as a group. If any step fails, no other steps
should be completed.
For example, a banking transaction may involve two steps: taking
funds out of your checking account and placing them into your
savings account. If the step that removes the funds from your
checking account succeeds, you want to make sure that the funds
are placed into your savings account or put back into your
checking account.

Situations where concurrency and atomicity are NOT of much

concern
Decision-support database applications are optimal for data queries
that do not change data. For example, a company can periodically
summarize its sales data by date, sales region, or product and store
this information in a separate database to be used for analysis by
senior management. To make business decisions, users need to be
able to determine trends in sales quickly by querying the data
based on various criteria. However, they do not need to change this
data. The tables in a decision-support database are heavily indexed,
and the raw data is often preprocessed and organized to support the
various types of queries to be used. Because the users are not
changing data, concurrency and atomicity issues are not a concern;
the data is changed only by periodic, bulk updates made during
off-hour, low-traffic times in the database.

Transactions

Process / Update Master file

master file
Enter directly

Immediate file
Immediate Immediate update
input processing

ON-LINE TRANSACTION PROCESSING

Online/ Real Time processing applications

 Railway / Airway / Hotel Reservation Systems

 Automated Teller Machines

(ATM), device used by bank customers to process account

transactions. Typically, a user inserts into the ATM a special plastic
card that is encoded with information on a magnetic strip. The strip
contains an identification code that is transmitted to the bank's
central computer by modem. To prevent unauthorized transactions,
a personal identification number (PIN) must also be entered by the
user using a keypad. The computer then permits the ATM to
complete the transaction; most machines can dispense cash, accept
deposits, transfer funds, and provide information on account
balances. Banks have formed cooperative, nationwide networks so
that a customer of one bank can use an ATM of another for cash
access; by 1997 there were more than 160,000 ATMs across the
United States. Some ATMs will also accept credit cards for cash
advances. The first ATM was installed in 1969 by Chemical Bank
at its branch in Rockville Centre, N.Y. A customer using a coded
card was dispensed a package containing a set sum of money.

Refer diagram

 Electronic Fund Transfer

Electronic Fund Transfer (EFT)

Any transfer of funds initiated through an electronic terminal,

telephone, computer or magnetic tape. The term includes, but is
not limited to, credit card payments, automated clearing house
transfers and transfers made at automated teller machines and
point-of-sale terminals or payments of bills/ transfer of fund
using internet banking on real time basis.

Online Payment Systems

Three categories of online payment (EFT)

–digital cash , digital cheques, real time transfer of fund based on

internet/intranet and credit cards.

Digital cash represents, in a sequence of binary numbers, an

intrinsic value in a chosen currency.
Digital cash is the electronic equivalent of physical cash, with all
the inherent properties of physical cash embedded in it.

These properties include broad acceptability of the digital currency across

the commercial world, anonymity, untraceability, reliability, scalability,
convertibility, and efficiency. The important basic requirements are
discussed as follows:

 Anonymity implies that buyers are able to hide their identity while
making certain purchases.
 Untraceability implies that no one can link different payments made
by a single buyer.
 Acceptability:. The value stored in the digital cash should be
honoured and accepted by other banks and financial institutions for
reconciliation.
 Convertibility: The electronic currency should be interoperable and
exchangeable with the other forms of electronic cash, paper
currencies, deposits in bank accounts, bank notes, or any other
financial instrument.
 Reliability: The payment system should ensure and infuse confidence
in users. The users should be completely shielded from systemic or a
single point failure.
 Efficiency: Efficiency here refers mainly to the cost overheads
involved in the operation of digital payments.
 Security: Digital currency should be stored in a form that is resistant
to replication, double-spending, and tampering.

Advantages :
 can be used 24/7/365.
 no need to handle cash, all transactions by using
cards.
 the transactions are automatic, saving staff costs.
 the process is almost paperless.
 the customer can print an on screen receipt.
 the delivery process can often be tracked online.
 goods are often discounted because of lower retail
costs.
Electronic fund transfer processes

(1) Merchant: Someone who owns a company that sells products

and services.
(2) Customer: The holder of the payment instrument – such as
credit card, debit card, or electronic check.
(3) Customer issuing bank: A financial institution that provides a
customer with a credit card or other payment instrument.
Examples include Citibank, Standard Chartered bank, ICICI
bank, SBI, PNB, HDFC, HSBC, BOB, etc. During a purchase,
the customer issuing bank verifies that the payment information
submitted to the merchant is valid and that the customer has the
funds or credit limit to make the proposed purchase.
(4) Acquiring bank: In the online payment processing world, an
acquiring bank provides Internet merchant accounts. A merchant
must open an Internet merchant account with an acquiring bank
to enable online credit card authorization and payment
processing.
(5) Internet merchant account: A special account with an
acquiring bank that allows the merchant to accept credit cards
over the Internet. The merchant typically pays a processing fee
for each transaction processed, also known as the discount rate.
The fees charged by the acquiring bank will vary.
(6) Authorization: The process by which a customer’s credit card is
verified as active and that they have the credit available to make
a transaction. In the online payment processing world, an
authorization also verifies that the billing information the
customer has provided matches up with the information on
record with their credit card company.
(7) Credit card association: A financial institution that provides
credit card services that are branded and distributed by customer
issuing banks. Examples include Visa and Mastercard.
 (8) Payment gateway: A service that provides connectivity among
merchants, customers, and financial networks to process
authorizations and payments. The service is usually operated by
a third party provider such as VeriSign.
(9) Processor: A large data center that processes credit card
transactions and settles funds to merchants. The processor is
connected to a merchant’s site on behalf of an acquiring bank via
a payment gateway. bank for deposit.

EDI

What is Electronic Data Interchange (EDI)?

Electronic Data Interchange (EDI) is the exchange of documents in

a standardized electronic form, between organizations, in an
automated manner, directly from a computer application in one
organization to an application in another.

It includes electronic order placement, electronic shipping

notification, electronic invoicing, and many other business
transactions that computers can actually perform better than
people.

EDI may be most easily understood as the replacement of paper-

based purchase orders with electronic equivalents. It is actually
much broader in its application than the procurement process, and
its impacts are far greater than mere automation. EDI offers the
prospect of easy and cheap communication of structured
information throughout the corporate community, and is capable of
facilitating much closer integration among hitherto remote
organizations.

Benefits of EDI
1. The major benefit is cost reduction by eliminating paper
document handling and with faster electronic document
transmission.

2. Improvements in overall quality by better record keeping, fewer

errors in data, reduction in processing time etc.

3. Inventory reduction – It permits faster and more accurate filing

of orders, helps reduce inventory, assists in JIT inventory
management.

4. Saves time and manpower by avoiding the need to re-key data.

5. Data arrives much faster than it could be by mail, and there is

immediate acknowledgement.

Limitations of EDI

1. High costs – Applications are costly to develop and operate.

Especially new entrants find this more difficult to have EDI.

2. Limited accessibility – It does not allow consumers to

communicate or transact with vendors in an easy way. A subscriber
must subscribe to an online VAN (Value Added Network).

3. Rigid requirements – Needs highly structured protocols,

previously established arrangement, and unique proprietary
bilateral information exchange.

4. Applications are narrow in scope.

Application of EDI

EDI is used in manufacturing, shipping, warehousing, utilities,

pharmaceuticals, construction, petroleum, metals, banking,
insurance, retailing, government, healthcare and textiles among
others.
EDI Model

This involves trading partners who wants to exchange data from

the organizations (may be customer and supplier). Trading partners
will have the flow of data between them through exchanges. The
simplest and most common form of exchange is where one partner
wants to send a single message to the other and to know whether
the message has been received by the other. Any message has an
originator who is the creator of the message and a destination
which is the other trading partner.

Seller EDI Service Buyer 1

Buyer 2

Transport
Company Message store

Buyer 3

The EDI Model

EDI Protocol

The protocol, which is a part of the EDI standard, is the set of

rules, which lays down

1. How messages are structured

2. What data is present.

3. The order in which it is transmitted and what additional

information is to be provided if required.

Further, it specifies limits (character sets and encryption methods

are allowed). The electrical interface design such as number of
wires, type of signals, the type of plug used and the identification
numbers and passwords for originators and destinations are
allocated. Most known EDI standards for commercial use are
GTDI/ EDI FACT set and in USA the equivalent set is ANSI X.12.

Value Added Networks (VANs)

Value Added Networks are an alternative to firms designing and

managing their own networks. Value Added Networks (VANs)
are private, third-party-managed networks that offer data
transmission and network services to subscribing firms.
Subscribers pay only for the amount of data they transmit plus a
subscription fee. Customers do not have to invest in net-work
equipment and software and may achieve savings in line charges
and transmission costs because the costs of using the network are
shared among many users.

Many companies are now using the internet to transmit their data
because it is less expensive than using VANs. In response, today’s
value-added networks are providing extra services for secure e-
mail management and data transmission, management reporting,
and electronic document interchange translation.