TSO stands for Time Sharing Option. TSO is the part of MVS that lets you use the MVS System interactively. Just as from the DOS-Prompt, you type in commands to create a directory, remove a directory, create a new file in editor, type in data, copy files, rename files delete files, the same way, one can type commands on the TSO. When IBM first introduced TSO in 1969, interactive computing was a hot new feature, which required a large portion of the memory. This is where the O comes from : O meaning option, TSO was optional : when all jobs were run as batch jobs.
Since, it allows multiple users to share time on the system concurrently, it is Time Sharing.
You said, All JOBs are run as Batch JOBs. Then, what about TSO? Well, under the hood, each TSO user session is run as a Batch Job. It can specify the procedure to be executed or the command when the user LOGON occurs. It also specifies the Terminal Monitoring Program to monitor TSO User Session. It specifies the data-sets to be allocated, when the user logs on. When you write a Batch Job means, you write its JCL(What Input Data Set, What Output DataSet, Which Program to run). Who writes the JCL for TSO? The System Programmer guys who maintain TSO.
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