What is Online Processing?

Online processing is the ongoing entry of transactions into a computer system in real time. This approach to data entry is needed in environments where it is essential to have immediate updates to the data being provided to users. Online processing is a major factor in improving the usability of computer reports, since the information on them is more current.

Characteristics of Online Processing

The key characteristics of online processing are as follows:

Real-time data processing. Data is processed instantly or with minimal delay after input, which ensures timely responses to user actions or system events.
Interactive system. Online processing supports continuous user interaction, so that users can provide input and receive immediate feedback (e.g., ATMs, online booking systems).
High availability. Online processing systems must be operational most of the time to handle user requests without interruptions. Downtime can significantly affect user experience and system performance.
Error handling. Online processing systems are designed to detect and manage errors in real-time. These systems often include mechanisms for validation, error logging, and immediate corrective actions.
Resource intensive. Online processing systems require robust hardware and network infrastructure to handle real-time data processing efficiently.
Time-sensitive transactions. Processes must be completed within a specific time frame to meet user expectations and operational needs.

Online Processing vs. Batch Processing

The opposite of online processing is batch processing, where transactions are allowed to pile up in a stack of documents, and are entered into the computer system in a batch. From a labor utilization perspective, batch processing can be more efficient than online processing, since employees can plow through a large number of transactions within a short period of time. However, the attendant reduction in the real time accuracy of information in this environment still makes batch processing a lesser alternative to online processing.

Example of Online Processing

A warehouse staff can use online processing to scan the bar codes attached to items in the warehouse, thereby documenting the movement of these items from place to place in the warehouse. Someone looking for inventory can then rely upon this information to determine the current location of the inventory. Under an older batch processing system, these inventory transfer transactions might not be loaded into the computer system until the following day - until then, the inventory location information stored by the system is inaccurate. Thus, the use of online processing ensures that inventory records exactly match actual unit counts in the warehouse at all times.