Definition:

 

Online transaction processing (OLTP) – the capturing of transaction and event information using technology to (1) process the information according to defined business rules, (2) store the information, (3) update existing information to reflect the new information.

Online transaction processing, or OLTP, refers to a class of systems that facilitate and manage transaction-oriented applications, typically for data entry and retrieval transaction processing. The "transaction" is not only in the context of computer or database transactions, but also is defined in terms of business or commercial transactions. OLTP has also been used to refer to processing in which the system responds immediately to user requests. An automatic teller machine (ATM) for a bank is an example of a commercial transaction processing application.

 

Broad applications:

 

The technology has been used in a variety of industries, ranging from banking, airlines, mail order, supermarkets to manufacturing. Applications include electronic banking, order processing, employee time clock systems, e-commerce, and e-Trading. The most widely used OLTP system is probably IBM's CICS. Let’s take online banking for example: online transaction processing allows a bank’s customers to get online with the bank via telephone lines to view the status of their account(s) and transaction history. It usually also allows them to transfer funds, pay bills, request check books, etc. Online transaction processing makes banking a system where time-sensitive, transaction-related data is processed immediately and is always kept current.

 

Requirements:

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. In large applications, efficient OLTP may depend on sophisticated transaction management software (such as CICS) and/or database optimization tactics to facilitate the processing of large numbers of concurrent updates to an OLTP-oriented database.
For even more demanding decentralized database systems, OLTP brokering programs can distribute transaction processing among multiple computers on a network. OLTP is often integrated into SOA service-oriented architecture and Web services, because there is a need for transactions you will need online processing.

Benefits: 

Online Transaction Processing has two key benefits: simplicity and efficiency. Reduced paper trails and the faster, more accurate forecasts for revenues and expenses are both examples of how OLTP makes things simpler for businesses.
As e-commerce and real-time transactions become an increasingly important part of the modern business model, businesses are becoming more dependent on online transaction processing (OLTP) systems. For example, financial investment industry relies on online transaction processing systems to manage millions of transactions and update database records instantly and accurately. The demand for this activity is 24x7x365 and there is no margin for error. Furthermore, OLTP systems must be able to scale quickly and smoothly to handle larger data and user volumes, more complex calculations, and higher peak loads. Online Transaction Processing has two key benefits: simplicity and efficiency. Reduced paper trails and the faster, more accurate forecasts for revenues and expenses are both examples of how OLTP makes things simpler for businesses.

Disadvantages:

 

As with any information processing system, security and reliability are considerations. Online transaction systems are generally more susceptible to direct attack and abuse than their offline counterparts. When organizations choose to rely on OLTP, like any other technology, operations can be severely impacted by reliability problems. Also, some systems require offline maintenance which further affects the cost-benefit analysis.
 

Example of OLTP Software:

 

SQL Server 2008 provides a flexible, high-performance database foundation for businesses that require the highest levels of availability, reliability, and security for their OLTP applications. Its mission-critical features help boost application responsiveness while helping ensure that transactions complete accurately and without interruption.

 

Microsoft® SQL Server® 2008 running on Intel® processor-based servers provides leading performance, massive data-handling capacity, industry leading security and continuous availability for the most demanding enterprise applications. The new mission-critical features and scalability of SQL Server 2008 coupled with the mainframe-class RAS features and scalable performance of Intel processors reduce the cost and complexity of high availability OLTP applications.

 

http://en.wikipedia.org/wiki/OLTP