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.

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.