Electronic and Mobile Commerce and Enterprise Systems

1
Electronic and Mobile Commerce and Enterprise
Systems

• Ralph Stair and George Reynolds
• ?????????? Fundamentals of Information Systems
  4th Edition

?????????????? 477-101
2
Why Learn About Electronic and Mobile Commerce
and Enterprise Systems?

• Most organizations have an Internet presence
• Sales/marketing manager involved with e-commerce
• Customer service employees help develop Web site
• Human resource or public relations manger may
  provide Web content for employees and investors
• Must learn about e-commerce and m-commerce
• Many organizations use enterprise systems to
  perform business processes and to keep records
• Support various business activities Supply chain
  management, customer relationship management

3
An Introduction to Electronic Commerce

• Electronic commerce conducting business
  activities (e.g., distribution, buying, selling,
  marketing, and servicing of products or services)
  electronically over computer networks such as the
  Internet, extranets, and corporate networks
• Business activities that are strong candidates
  for conversion to e-commerce
• Paper-based
• Time-consuming
• Inconvenient for customers

4
Business-to-Business (B2B)
E-Commerce

• Business-to-business (B2B) e-commerce subset of
  e-commerce where all the participants are
  organizations
• Considerably larger and growing more rapidly than
  the business-to-consumer market

5
Business-to-Consumer (B2C) E-Commerce

• Business-to-consumer (B2C) e-commerce customers
  deal directly with the organization, avoiding any
  intermediaries
• Elimination of intermediaries
• Squeezes costs and inefficiencies out of supply
  chain
• Can lead to higher profits for companies and
  lower prices for consumers

6
Consumer-to-Consumer (C2C) E-Commerce

• Consumer-to-consumer (C2C) e-commerce
  participants are individuals, with one serving as
  the buyer and the other as the seller
• eBay example of a C2C e-commerce site

7
eGovernment

• eGovernment use of information and
  communications technology to simplify the sharing
  of information, speed formerly paper-based
  processes, and improve the relationship between
  citizen and government
• Forms of eGovernment
• Government-to-consumer (G2C)
• Government-to-business (G2B)
• Government-to-government (G2G)

8
Mobile Commerce

• Mobile commerce (m-commerce) relies on the use of
  wireless devices, such as personal digital
  assistants, cell phones, and smart phones, to
  place orders and conduct business

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Mobile Commerce in Perspective

• Market for m-commerce in North America is
  maturing much later than in Western Europe and
  Japan
• Western European and Japanese consumers are much
  more willing to use m-commerce
• Mobile phone gaming in the United States is
  expected to increase from about 380 million in
  2006 to more than 1 billion by 2009

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Technology Needed for Mobile Commerce

• Handheld devices used for m-commerce have
  limitations that complicate their use
• Wireless application protocol (WAP) a standard
  set of specifications for Internet applications
  that run on handheld, wireless devices

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Electronic and Mobile CommerceApplications
Retail and Wholesale

• Electronic retailing (e-tailing) the direct sale
  from business to consumer through electronic
  storefronts, typically designed around an
  electronic catalog and shopping cart model
• Cybermall a single Web site that offers many
  products and services at one Internet location
• Manufacturing, repair, and operations (MRO) goods
  and services

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Manufacturing

• To raise profitability and improve customer
  service, many manufacturers move their supply
  chain operations onto the Internet
• Electronic exchange an electronic forum where
  manufacturers, suppliers, and competitors buy and
  sell goods, trade market information, and run
  back-office operations

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Manufacturing (continued)
Figure 5.2 Model of an Electronic Exchange
14
Marketing

• Market segmentation the identification of
  specific markets to target them with advertising
  messages
• Technology-enabled relationship management use
  of detailed information about a customers
  behavior, preferences, needs, and buying patterns
  to set prices, negotiate terms, tailor
  promotions, add product features, and otherwise
  customize the entire relationship with that
  customer

15
Investment and Finance

• Online stock trading has brought many investors
  to the Web
• Online banking
• Online bill payment facility
• Electronic bill presentment a method of billing
  whereby a vendor posts an image of your statement
  on the Internet and alerts you by e-mail that
  your bill has arrived

16
Auctions

• eBay synonymous with online auctions for both
  private sellers and small companies
• Hundreds of other online auction sites cater to
  newcomers to online auctions and to unhappy eBay
  customers
• Most frequent complaints
• Increases in fees
• Unscrupulous buyers

17
Anywhere, Anytime Applications of Mobile Commerce

• M-commerce devices are ideal for accessing
  personal information and receiving targeted
  messages because of having a single user
• Companies can reach individual consumers to
  establish one-to-one marketing relationships and
  communicate whenever it is convenientin short,
  anytime and anywhere

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Advantages of Electronic and Mobile Commerce
Table 5.1 Advantages of Electronic and Mobile
Commerce
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Technology Infrastructure Required to Support
E-commerce and M-commerce

• Successful implementation of e-business requires
• Significant changes to existing business
  processes
• Substantial investment in IS technology
• Poor Web site performance drives consumers to
  abandon some e-commerce sites

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Technology Infrastructure Required to Support
E-commerce and M-commerce (continued)
Figure 5.3 Key Technology Infrastructure
Components
21
Hardware

• Storage capacity and computing power required of
  the Web server depends on
• Software that will run on the server
• Volume of e-commerce transactions
• Web site hosting

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Web Server Software

• Web server software is used to perform
  fundamental services, including
• Security and identification
• Retrieving and sending Web pages
• Web site tracking
• Web site development
• Web page construction

23
Web Server Software (continued)

• E-commerce software must support
• Catalog management
• Product configuration
• Shopping cart facilities
• E-commerce transaction processing
• Web traffic data analysis

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Web Server Software (continued)
Figure 5.4 Electronic Shopping Cart
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Electronic Payment Systems

• Digital certificate an attachment to an e-mail
  message or data embedded in a Web page that
  verifies the identity of a sender or a Web site
• Secure Sockets Layer (SSL) a communications
  protocol used to secure sensitive data during
  e-commerce
• Electronic cash an amount of money that is
  computerized, stored, and used as cash for
  e-commerce transactions

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Electronic Payment Systems (continued)

• Credit card
• Charge card
• Debit card
• Smart card

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An Overview of Enterprise SystemsTransaction
Processing Systems andEnterprise Resource
Planning

• Enterprise system a system central to the
  organization that ensures information can be
  shared across all business functions and all
  levels of management to support the running and
  managing of a business
• Eliminates the problems of lack of information
  and inconsistent information caused by multiple
  transaction processing systems

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Transaction Processing Systems andEnterprise
Resource Planning (continued)

• Enterprise resource planning systems support
  supply-chain processes
• Transaction processing systems capture and
  process detailed data necessary to update records
  about the fundamental business operations of the
  organization
• Include order entry, inventory control, payroll,
  accounts payable, accounts receivable, and the
  general ledger

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Transaction Processing Systems andEnterprise
Resource Planning (continued)
Figure 5.5 TPS, MIS/DSS, and Special Information
Systems in Perspective
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Traditional Transaction Processing Methods and
Objectives

• Batch processing system method of computerized
  processing in which business transactions are
  accumulated over a period of time and prepared
  for processing as a single unit or batch
• Online transaction processing (OLTP)
  computerized processing in which each transaction
  is processed immediately, without the delay of
  accumulating transactions into a batch

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Traditional Transaction Processing Methods and
Objectives (continued)
Figure 5.6 Batch Versus Online Transaction
Processing
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Transaction Processing Activities

• TPSs
• Capture and process data that describes
  fundamental business transactions
• Update databases
• Produce a variety of reports
• Transaction processing cycle the process of data
  collection, data editing, data correction, data
  manipulation, data storage, and document
  production

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Transaction Processing Activities (continued)
Figure 5.8 Data-Processing Activities Common to
Transaction Processing Systems
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Data Collection

• Data collection capturing and gathering all data
  necessary to complete the processing of
  transactions
• Data should be
• Collected at source
• Recorded accurately and in a timely fashion

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Data Editing

• Data editing the process of checking data for
  validity and completeness
• Example quantity and cost data must be numeric
  and names must be alphabetic otherwise, the data
  is not valid

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Data Correction

• Data correction the process of reentering data
  that was not typed or scanned properly
• Example a scanned UPC code must match a code in
  a master table of valid UPCs

37
Data Manipulation

• Data manipulation the process of performing
  calculations and other data transformations
  related to business transactions
• Includes classifying data, sorting data into
  categories, performing calculations, summarizing
  results, and storing data in the organizations
  database for further processing

38
Data Storage

• Data storage the process of updating one or more
  databases with new transactions
• After being updated, this data can be further
  processed and manipulated by other systems and
  made available for management reporting and
  decision making

39
Document Production and Reports

• Document production the process of generating
  output records and reports
• Hard-copy paper reports
• Displays on computer screens (soft copy)

40
Control and Management Issues Disaster Recovery
Plan

• Disaster recovery plan (DRP) formal plan
  describing the actions that must be taken to
  restore computer operations and services in the
  event of a disaster
• Necessary for preventing a lengthy disruption in
  the operation of any of a companys critical
  business information systems that directly affect
  its cash flow

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Transaction Processing System Audit

• Transaction processing system audit a check of a
  firms TPS systems to prevent accounting
  irregularities and/or loss of data privacy
• Attempts to answer four basic questions
• Does the system meet the business need for which
  it was implemented?
• What procedures and controls have been
  established?
• Are these procedures and controls being used
  properly?
• Are the information systems and procedures
  producing accurate and honest reports?

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Traditional Transaction ProcessingApplications
Table 5.2 Systems That Support Order Processing,
Purchasing, and Accounting Functions
43
Order Processing Systems

• Traditional order processing transaction
  processing systems include
• Order entry
• Sales configuration
• Shipment planning
• Shipment execution
• Inventory control
• Accounts receivable

44
Order Processing Systems (continued)
Figure 5.10 Traditional TPS Systems That Support
the Order Processing Business Function
45
Purchasing Systems

• Purchasing transaction processing systems
  include
• Inventory control
• Purchase order processing
• Receiving
• Accounts payable

46
Accounting Systems

• Accounting transaction processing systems
  include
• Budget
• Accounts receivable
• Payroll
• Asset management
• General ledger

47
Enterprise Resource Planning, SupplyChain
Management, and CustomerRelationship Management

• Enterprise resource planning (ERP) a set of
  integrated programs that manage a companys vital
  business operations for an entire multisite,
  global organization

Figure 5.11 Enterprise Resource Planning System
48
An Overview of Enterprise Resource Planning

• ERP systems evolved from materials requirement
  planning systems (MRP) developed in the 1970s
• 1980s - early 1990s organizations recognized
  that their legacy transaction processing systems
  lacked integration
• Result higher costs and poorer customer service
• Realization of a need for a system to coordinate
  activities and share valuable information across
  all the business functions of the firm, i.e., an
  ERP system

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Advantages of ERP

• Improved access to data for operational decision
  making
• Elimination of costly, inflexible legacy systems
• Improvement of work processes
• Upgrade of technology infrastructure

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Disadvantages of ERP Systems

• Expense and time in implementation
• Difficulty implementing change
• Difficulty integrating with other systems
• Risks in using one vendor
• Risk of implementation failure

51
Production and Supply Chain Management

• ERP systems follow a systematic process for
  developing a production plan
• Sales forecasting
• Sales and operations plan
• Demand management
• Detailed scheduling
• Materials requirement planning
• Purchasing
• Production

52
Customer Relationship Management and Sales
Ordering

• Customer relationship management (CRM) system a
  system that helps a company manage all aspects of
  customer encounters, including marketing and
  advertising, sales, customer service after the
  sale, and programs to retain loyal customers
• Goals of CRM
• Understand and anticipate the needs of current
  and potential customers to increase customer
  retention and loyalty
• Optimize the way products and services are sold

53
Customer Relationship Management and Sales
Ordering (continued)

• Sales ordering set of activities that must be
  performed to capture a customer sales order
• Essential steps include
• Recording the items to be purchased
• Setting the sales price
• Recording the order quantity
• Determining the total cost of the order including
  delivery costs
• Confirming the customers available credit

54
Financial and Managerial Accounting

• General ledger main accounting record of a
  business
• Assets
• Liabilities
• Revenue
• Expenses
• Equity

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Financial and Managerial Accounting (continued)

• In an ERP system, input to the general ledger
  occurs simultaneously with the input of a
  business transaction
• Financial accounting capturing and recording all
  transactions that affect a companys financial
  state and using these documented transactions to
  prepare financial statements to external decision
  makers, such as stockholders, suppliers, banks,
  and government agencies

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Financial and Managerial Accounting (continued)

• Managerial accounting use of historical and
  estimated data to provide information that
  management uses in conducting daily operations,
  in planning future operations, and in developing
  overall business strategies

57
Hosted Software Model for Enterprise Software

• Target market small-to-medium businesses
• Offered by vendors such as NetSuite,
  Salesforce.Com Inc., Everest Software, and SAP
• Appealing to small businesses because they
• Can experiment with powerful software
  capabilities without major financial investment
• Do not need to employ a full-time IT person to
  maintain key business applications
• Can expect additional savings from reduced
  hardware costs

58
International Issues Associated withEnterprise
Systems

• Challenges that must be met by an enterprise
  system of a multinational company include
• Different languages and cultures
• Disparities in information system infrastructure
• Varying laws and customs rules
• Multiple currencies

59
Summary

• In business-to-business (B2B) e-commerce, the
  participants are organizations
• In business-to-consumer (B2C) e-commerce,
  customers deal directly with the organization
• In consumer-to-consumer (C2C) e-commerce,
  participants are individuals, with one serving as
  the buyer and the other as the seller
• Mobile commerce (m-commerce) uses wireless
  devices to place orders and conduct business

60
Summary (continued)

• Transaction processing systems (TPSs) process
  the detailed data necessary to update records
  about the fundamental business operations
• Transaction processing cycle data collection,
  data editing, data correction, data manipulation,
  data storage, and document production
• Order processing TPSs order entry, sales
  configuration, shipment planning, shipment
  execution, inventory control, and accounts
  receivable

61
Summary (continued)

• Purchasing TPSs inventory control, purchase
  order processing, receiving, and accounts payable
• Accounting TPSs budget, accounts receivable,
  payroll, asset management, and general ledger
• Primary benefits of implementing ERP improved
  access to data for operational decision making,
  elimination of inefficient or outdated systems,
  improvement of work processes, and technology
  standardization

62
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