E- COMMERCE
services
 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
Business-to-business (B2B) E-Commerce - subset of ecommerce
where all the participants are organizations
- Considerably larger and growing more rapidly than the
business to-consumer market
Business-to-consumer (B2C) e-commerce - customers deal directly
with the organization, avoiding any intermediaries
- Elimination of intermediaries:
o Squeezes costs and inefficiencies out of supply
chain
o Can lead to higher profits for companies and
lower prices for consumers
Consumer-to-consumer (C2C) ecommerce - participants are
individuals, with one serving as the buyer and the other as the seller
- eBay: example of a C2C ecommerce site
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
o Government-to-consumer (G2C)
o Government-to-business (G2B)
o Government-to-government (G2G)
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
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
Electronic and Mobile Commerce Applications: 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
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
Marketing
- Market segmentation - the identification of specific
markets to target them with advertising messages
- Technology-enabled relationship management- use of
detailed information about a customer’s 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
Investment and Finance
- Online stock trading has brought many investors to the
Web
- Online banking
o 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
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
o Increases in fees
o Unscrupulous buyers
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 convenient— in short, anytime and
anywhere
Advantages of Electronic and Mobile Commerce
Technology Infrastructure Required to Support E-commerce and M-
commerce
- Successful implementation of e-business requires:
o Significant changes to existing business processes
o Substantial investment in IS technology
- Poor Web site performance drives consumers to abandon
some e-commerce sites
Hardware
- Storage capacity and computing power required of the
Web server depends on:
o Software that will run on the server
o Volume of e-commerce transactions
- Web site hosting
Web Server Software
- Web server software is used to perform fundamental
services, including:
o Security and identification
o Retrieving and sending Web pages
o Web site tracking
o Web site development
o Web page construction
- E-commerce software must support:
o Catalog management
o Product configuration
o Shopping cart facilities
o E-commerce transaction processing
o Web traffic data analysis
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 ecommerce
 Electronic cash - an amount of money that is
computerized, stored, and used as cash for ecommerce
transactions
o Credit card
o Charge card
o Debit card
o Smart card
An Overview of Enterprise Systems: Transaction Processing Systems
and Enterprise 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
 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
o Include order entry, inventory control, payroll,
accounts payable, accounts receivable, and the
general ledger
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
Transaction Processing Activities
 TPSs
o Capture and process data that describes
fundamental business transactions
o Update databases
o Produce a variety of reports
 Transaction processing cycle – the process of data
collection, data editing, data correction, data manipulation,
data storage, and document production
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
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
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
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 organization’s
database for further processing
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
Document Production and Reports
 Document production - the process of generating output
records and reports
– Hard-copy paper reports
– Displays on computer screens (soft copy)
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 company’s critical business
information systems that directly affect its cash flow
Transaction Processing System Audit
 Transaction processing system audit - a check of a firm’s
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?
Traditional Transaction Processing Applications
Order Processing Systems
 Traditional order processing transaction processing
systems include:
– Order entry
– Sales configuration
– Shipment planning
– Shipment execution
– Inventory control
– Accounts receivable
Purchasing Systems
 Purchasing transaction processing systems include:
– Inventory control
– Purchase order processing
– Receiving
– Accounts payable
Accounting Systems
 Accounting transaction processing systems include:
– Budget
– Accounts receivable
– Payroll
– Asset management
– General ledger
Enterprise Resource Planning, Supply Chain Management, and
Customer Relationship Management
 Enterprise resource planning (ERP) – a set of integrated
programs that manage a company’s vital business
operations for an entire multisite, global organization
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
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
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
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 International Issues Associated with Enterprise Systems
 Challenges that must be met by an enterprise system of a
Customer Relationship Management and Sales Ordering multinational company include:
 Customer relationship management (CRM) system - a – Different languages and cultures
system that helps a company manage all aspects of – Disparities in information system infrastructure
– Varying laws and customs rules
customer encounters, including marketing and advertising,
– Multiple currencies
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
 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 customer’s available credit

Financial and Managerial Accounting

 General ledger - main accounting record of a business
o Assets
o Liabilities
o Revenue
o Expenses
o Equity
 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 company’s financial state and
using these documented transactions to prepare financial
statements to external decision makers, such as
stockholders, suppliers, banks, and government agencies
 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

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