What is an online transaction processing database (OLTP)? A question as deceptively simple as it is complex. OLTP is the backbone of modern data processing, a critical component in managing large volumes of transactions quickly and efficiently.

But the true power of OLTP databases lies beyond the mere execution of transactions, and delving into their inner workings is to unravel a complex tapestry of data management, high-performance computing, and real-time responsiveness.

In this article, we will take a deep dive into the world of OLTP databases, exploring their critical role in modern business operations and the benefits they offer in streamlining business transactions. Join us as we embark on a journey of discovery, uncovering the secrets behind one of the most fundamental building blocks of the digital age.

What is OLTP?

Online transaction processing (OLTP) is a data processing technique that involves the concurrent execution of multiple transactions, such as online banking, shopping, order entry, or text messaging. These transactions, typically economic or financial in nature, are recorded and secured to provide the enterprise with anytime access to the information, which is utilized for accounting or reporting purposes. This method is crucial in modern-day business operations, allowing for real-time processing of transactions, reducing delays and enhancing the efficiency of the system.

Initially, the OLTP concept was restricted to in-person exchanges that involved the transfer of goods, money, services, or information. However, with the evolution of the internet, the definition of transaction has broadened to include all types of digital interactions and engagements between a business and its customers. These interactions can originate from anywhere in the world and through any web-connected sensor.

Additionally, OLTP now encompasses a wide range of activities such as downloading PDFs, watching specific videos, and even social media interactions, which are critical for businesses to record in order to improve their services to customers. These expanded transaction types have become increasingly important in today’s global economy, where customers demand immediate access to information and services from anywhere at any time.

The core definition of transactions in the context of OLTP systems remains primarily focused on economic or financial activities. Thus, the process of online transaction processing involves the insertion, updating, and/or deletion of small data amounts in a data store to collect, manage, and secure these transactions. A web, mobile, or enterprise application typically tracks and updates all customer, supplier, or partner interactions or transactions in the OLTP database.

The transaction data that is stored in the database is of great importance to businesses and is used for reporting or analyzed to make data-driven decisions. This approach allows businesses to efficiently manage large amounts of data and leverage it to their advantage in a highly competitive market.

What is an online transaction processing database (OLTP)?

Characteristics of OLTP systems

In general, OLTP systems are designed to accomplish the following:

Process simple transactions

OLTP systems are designed to handle a high volume of transactions that are typically simple, such as insertions, updates, and deletions to data, as well as simple data queries, such as a balance check at an ATM.

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Handle multi-user access & data integrity

OLTP systems must be able to handle multiple users accessing the same data simultaneously while ensuring data integrity. Concurrency algorithms are used to ensure that no two users can change the same data at the same time and that all transactions are carried out in the proper order. This helps prevent issues such as double-booking the same hotel room and accidental overdrafts on joint bank accounts.

Ultra-fast response times in milliseconds

The effectiveness of an OLTP system is measured by the total number of transactions that can be carried out per second. Therefore, OLTP systems must be optimized for very fast response times, with transactions processed in milliseconds.

Indexed data sets for quick access

Indexed data sets are used for rapid searching, retrieval, and querying of data in OLTP systems. Indexing is critical to ensuring that data can be accessed quickly and efficiently, which is necessary for high-performance OLTP systems.

Continuous availability

Because OLTP systems process a large volume of transactions, any downtime or data loss can have significant and costly repercussions. Therefore, OLTP systems must be designed for high availability and reliability, with 24/7/365 uptime and redundancy to ensure continuous operation.

Regular & incremental backups for data safety

Frequent backups are necessary to ensure that data is protected in the event of a system failure or other issue. OLTP systems require both regular full backups and constant incremental backups to ensure that data can be quickly restored in the event of a problem.

OLTP vs OLAP

OLTP and online analytical processing (OLAP) are two distinct online data processing systems, although they share similar acronyms. OLTP systems are optimized for executing online database transactions and are designed for use by frontline workers or for customer self-service applications.

Conversely, OLAP systems are optimized for conducting complex data analysis and are designed for use by data scientists, business analysts, and knowledge workers. OLAP systems support business intelligence, data mining, and other decision support applications.

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There are several technical differences between OLTP and OLAP systems:

• OLTP systems use a relational database that can accommodate a large number of concurrent users and frequent queries and updates, while supporting very fast response times. On the other hand, OLAP systems use a multidimensional database, which is created from multiple relational databases and enables complex queries involving multiple data facts from current and historical data. An OLAP database may also be organized as a data warehouse.
• OLTP queries are simple and typically involve just one or a few database records, while OLAP queries are complex and involve large numbers of records.
• OLTP transaction and query response times are lightning-fast, while OLAP response times are orders of magnitude slower.
• OLTP systems modify data frequently, whereas OLAP systems do not modify data at all.
• OLTP workloads involve a balance of read and write, while OLAP workloads are read-intensive.
• OLTP databases require relatively little storage space, whereas OLAP databases work with enormous data sets and typically have significant storage space requirements.
• OLTP systems require frequent or concurrent backups, while OLAP systems can be backed up less frequently.

Online transaction processing examples

Since the advent of the internet and the e-commerce era, OLTP systems have become ubiquitous and are now present in nearly every industry or vertical market, including many consumer-facing systems. Some common everyday examples of OLTP systems include:

• ATM machines and online banking applications
• Credit card payment processing, both online and in-store
• Order entry systems for both retail and back-office operations
• Online booking systems for ticketing, reservations, and other purposes
• Record keeping systems such as health records, inventory control, production scheduling, claims processing, and customer service ticketing, among others. These applications rely on OLTP systems to efficiently process large numbers of transactions, ensure data accuracy and integrity, and provide fast response times to customers.

How do transaction processing databases evolved?

As transactions became more complex, arising from diverse sources and devices from around the world, traditional relational databases proved insufficient to meet the needs of modern-day transactional workflows. In response, these databases underwent significant evolution to enable them to process modern-day transactions, heterogeneous data, and operate at global scale, while running mixed workloads. This evolution led to the emergence of multimodal databases that can store and process not only relational data but also all other types of data in their native form, including XML, HTML, JSON, Apache Avro and Parquet, and documents, with minimal transformation required.

To meet the demands of modern-day transactions, relational databases also had to incorporate additional functionality such as clustering and sharding to enable global distribution and infinite scaling, utilizing the more cost-effective cloud storage available.

In addition, these databases have been enhanced with capabilities such as in-memory processing, advanced analytics, visualization, and transaction event queues, enabling them to handle multiple workloads, such as running analytics on transaction data, processing streaming data (such as Internet of Things (IoT) data), spatial analytics, and graph analytics. This new breed of databases can handle complex modern-day transactional workflows, with the ability to support a wide variety of data types, scale up or out as needed, and run multiple workloads concurrently.

Modern relational databases built in the cloud incorporate automation to streamline database management and operational processes, making them easier for users to provision and use. These databases offer automated provisioning, security, recovery, backup, and scaling features, reducing the time that DBAs and IT teams need to spend on maintenance. Moreover, they are equipped with intelligent features that automatically tune and index data, ensuring consistent database query performance, regardless of the amount of data, number of concurrent users, or query complexity.

Cloud databases also come with self-service capabilities and REST APIs, providing developers and analysts with easy access to data. This simplifies application development, giving developers flexibility and making it easier for them to incorporate new functionality and customizations into their applications. Additionally, it streamlines analytics, making it easier for analysts and data scientists to extract insights from the data. Modern cloud-based relational databases automate management and operational tasks, reduce the workload of IT staff, and simplify data access for developers and analysts.

Choosing the right database for your OLTP workload

As businesses strive to maintain their competitive edge, it is crucial to carefully consider both immediate and long-term data needs when selecting an operational database. For storing transactions, maintaining systems of record, or content management, you will need a database with high concurrency, high throughput, low latency, and mission-critical characteristics such as high availability, data protection, and disaster recovery. Given that workload demands can fluctuate throughout the day, week, or year, it is essential to select a database that can autoscale, thus saving costs.

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Another important consideration when selecting a database is whether to use a purpose-built database or a general-purpose database. If your data needs are specific, a purpose-built database may be appropriate, but ensure that you do not compromise on any other necessary characteristics. Building in these characteristics at a later stage can be costly and resource-intensive. Additionally, adding more single-purpose or fit-for-purpose databases to expand functionality can create data silos and amplify data management problems.

It is also important to consider other functionalities that may be necessary for your specific workload, such as ingestion requirements, push-down compute requirements, and size limit. By thoughtfully considering both immediate and long-term needs, businesses can select an operational database that will meet their specific requirements and help them maintain a competitive edge.

Selecting a future-proof cloud database service with self-service capabilities is essential to automating data management and enabling data consumers, including developers, analysts, data engineers, data scientists, and DBAs, to extract maximum value from the data and accelerate application development.

Final words

Back to our original question: What is an online transaction processing database? It is a powerful tool that enables businesses to process high volumes of transactions quickly and efficiently, ensuring data integrity and reliability. OLTP databases have come a long way since their inception, evolving to meet the demands of modern-day transactional workflows and heterogeneous data. From their humble beginnings as simple relational databases to the advanced multimodal databases of today, OLTP databases have revolutionized the way businesses manage their transactions.

By providing high concurrency, rapid processing, and availability, OLTP databases have become an indispensable component of modern business operations. Whether you are a developer, analyst, data scientist, or DBA, OLTP databases offer unparalleled benefits in data management and performance. So, if you are looking for a database that can keep pace with the speed of business and help you stay ahead of the curve, OLTP is the answer.

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• Source: https://dataconomy.com/2023/04/27/what-is-an-online-transaction-processing-database/