Fundamentals of Information Systems, Seventh Edition Chapter 5 Electronic and Mobile Commerce and Enterprise Systems Fundamentals of Information Systems, Seventh Edition 1

Why Learn About Electronic and Mobile Commerce and Enterprise Systems? Have transformed many areas of our lives and careers One fundamental change has been: The manner in which companies interact with their suppliers, customers, government agencies, and other business partners Electronic commerce or as known e-commerce is huge growing filed. Any example of ecommerce? Online shopping, electronic payments, banking. Ecommerce changed the way that companies interact with their suppliers, customer. Fundamentals of Information Systems, Seventh Edition

An Introduction to Electronic Commerce Electronic Commerce is the use of electronic transmission mediums (telecommunications) to engage in the exchange, including buying and selling, of products and services requiring transportation, either physically or digitally, from location to location. Electronic commerce: Conducting business activities electronically over computer networks - electronic commerce is making all business activities electronically over the networks . electronic commerce can be defined as any sort of transaction made on the internet. So If you've bought something whether physical or electronic on the internet then you've engaged in e commerce. -Electronic business involves more than just selling and buying; it includes all kinds of presale and postsale efforts. Fundamentals of Information Systems, Seventh Edition

An Introduction to Electronic Commerce(continued) Business activities that are strong candidates for conversion to e-commerce: Paper-based Time-consuming Inconvenient for customers Any business activity within the organization that takes time or use papers or inconvenient for customer to use --- it can be converted to e-commerce. Fundamentals of Information Systems, Seventh Edition

Business-to-Business (B2B) E-Commerce Subset of e-commerce All the participants are organizations B2B market considerably larger and growing faster than B2C e-commerce B2B revenue about 13 times larger than B2C -There are 3 different types of Ecommerce : The first one B2B which is :ecommercme can between businesses and other businesses (e.g. one company buying hardware components from another). - The seller is business and the buyer of this type is also businesses Fundamentals of Information Systems, Seventh Edition

Business-to-Consumer (B2C) E-Commerce B2C e-commerce organizations sell their products directly to consumers Amounts to about 4.6% of total U.S. retail sales Disintermediation: The elimination of intermediate organizations between the producer and the consumer E commerce can be between a business and customers also known as B2C B2C is what you've most likely been involved in. -The seller is business and the buyer of this type is consumer Disintermediation is a process that provides a user or end consumer with direct access to a product, service or information that would otherwise require a mediator such as a wholesaler, lawyer or salesperson. Disintermediation cuts out the middleman. By using the Internet, companies and can deal directly with consumer. Example: Dell and Apple, which sell many of their systems direct to the consumer Fundamentals of Information Systems, Seventh Edition

Consumer-to-Consumer (C2C) E-Commerce Subset of e-commerce that involves consumers selling directly to other consumers Popular sites: e-Bay, Bidzcom, Companies and individuals engaging in e-commerce must be careful that their sales do not violate rules of various, county, state, or country jurisdictions And it can also be between customers (P2P) e.g. people buying and selling on an auction website. - The buyer and seller of this type is consumer Fundamentals of Information Systems, Seventh Edition

Consumer-to-Consumer (C2C) E-Commerce (continued) Fundamentals of Information Systems, Seventh Edition

e-Government -Use of information and communications technology to: e-Government is the use of information and communications technology to simplify the sharing of information, speed formerly paper-based processes, and improve the relationship between citizens and government. Use of information and communications technology to: Simplify the sharing of information Speed formerly paper-based processes Improve the relationship between citizen and government -Use of information and communications technology to: Simplify the sharing of information (sharing) Speed formerly paper-based processes (time) Improve the relationship between citizen and government (communication) Fundamentals of Information Systems, Seventh Edition

e-Government(continued) Forms of e-Government Government-to-consumer (G2C) Government-to-business (G2B) Government-to-government (G2G) Government-to-citizen (G2C),-- Citizens can use G2C applications to submit their state and federal tax returns online, renew auto licenses, apply for student loans, and make campaign contributions. مثال : ابشر government-to-business(G2B)-- G2B applications support the purchase of materials and services from private industry by government procurement offices. Example: Business.gov allows businesses to access information about laws and regulations and relevant forms needed to comply with federal requirements for their business. and government-to-government (G2G) --- G2G applications are designed to improve communications among the various levels of government. For example, the E-Vital initiative establishes common electronic processes for federal and state agencies to collect, process, analyze, verify, and share death record information. Fundamentals of Information Systems, Seventh Edition

Mobile Commerce Mobile commerce (m-commerce) relies on the use of mobile, wireless devices to place orders and conduct business The Internet Corporation for Assigned Names and Numbers (ICANN): - Created a .mobi domain to help attract mobile users to the Web. M-commerce will succeed only if it provides services that truly meet customers’ needs -mobile commerce (m-commerce) relies on the use of mobile, wireless devices, such as cell phones and smartphones, to place orders and conduct business. -As with any new technology, m-commerce will succeed only if it provides users with real benefits. Companies involved in m-commerce must think through their strategies carefully and ensure that they provide services that truly meet customers’ needs Fundamentals of Information Systems, Seventh Edition

Electronic and Mobile Commerce Applications Many B2B, B2C, C2C, and m-commerce applications are being used in: Retail and wholesale Manufacturing Marketing and advertising Bartering and retargeting Price comparison Couponing Investment and finance Banking and e-boutiques Fundamentals of Information Systems, Seventh Edition

Retail and Wholesale Electronic retailing (e-tailing): Cybermall: Direct sale from business to consumer through electronic storefronts Cybermall: Single Web site that offers many products and services at one Internet location Manufacturing, repair, and operations (MRO): Purchases often approach 40 percent of a manufacturing company’s total revenues Fundamentals of Information Systems, Seventh Edition

What is the Difference Between E Tailing and E Commerce? E Tailing vs E Commerce E tailing is the activity of selling of retail goods on the internet. E commerce is the commercial transactions conducted by electronic means on the internet. Nature E tailing is a narrow concept. E commerce is a broad concept in which e tailing is a part of. Markets The United States is the biggest market for e tailing in the world at present. At present, China is the biggest market for e commerce. The difference between e tailing and e commerce mainly depends on the range of services offered by; where customers can purchase goods and services through e tailing, e commerce involves a number of services such as electronic funds transfer, internet marketing and online transaction processing. Fundamentals of Information Systems, Seventh Edition

Manufacturing - Electronic exchange: Electronic forum where manufacturers, suppliers, and competitors buy and sell goods, trade market information, and run back-office operations Private exchanges: Owned and operated by a single company Consortium-operated exchanges Operated by a group of traditionally competing companies with common procurement needs Independent exchanges: Open to any set of buyers and sellers within a given market Fundamentals of Information Systems, Seventh Edition

Fundamentals of Information Systems, Seventh Edition

Marketing Market segmentation: Market segmentation is a term referring to the aggregating of prospective buyers into groups, or segments, that have common needs and respond similarly to a marketing action Identification of specific markets to target them with advertising message. on Facebook Nielsen, the marketing and media information company: Has developed its Business-Facts database that provides information for more than 12 million businesses Example : Nielsen https://www.youtube.com/watch?v=qH9W6ONEztE Fundamentals of Information Systems, Seventh Edition

Advertising Mobile ad impressions are generally bought at: Cost per thousand (CPM), cost per click (CPC), or cost per action (CPA) Main measures of success: number of users reached, click through rate ), and the number of actions users take Example : YouTube video if the user clicked the website the you tuber will gain certain amount of money. - In snapchat if the user bought any item because the famous person use it and talked about it they will get income. Fundamentals of Information Systems, Seventh Edition

Bartering Many people and businesses have turned to bartering as a means to gain goods and services Number of Web sites have been created to support this activity Bartering transactions have tax-reporting, accounting, and other record-keeping responsibilities associated with them Fundamentals of Information Systems, Seventh Edition

Retargeting Over 95% of Web site visitors leave a shopping site without making a purchase Retargeting used by advertisers to recapture these shoppers by using targeted and personalized ads to direct shoppers back to a retailer’s site. Done with no money either service by service or product by service or product by product ( the main difference is that the transaction is done with no money) Fundamentals of Information Systems, Seventh Edition

Price Comparison Price comparison: Mobile phone services enable shoppers to compare prices and products on the Web Fundamentals of Information Systems, Seventh Edition

Fundamentals of Information Systems, Seventh Edition Couponing Over 300 billion coupons distributed each year in North America, only1.1% of these coupons are redeemed Many manufacturers and retailers now send mobile coupons directly to consumers’ smartphones Standard red scanners used at checkout stands have difficulty reading information displayed on smartphones Consumer must print out coupon, have it scanned and present to the clerk for scanning Fundamentals of Information Systems, Seventh Edition

Investment and Finance The Internet: Has revolutionized the world of investment and finance The brokerage business: Adapted to the Internet faster than any other arm of finance 1- a person can buy stocks directly 2- a person can use a broker to buy the stock from specific company Fundamentals of Information Systems, Seventh Edition

Fundamentals of Information Systems, Seventh Edition E-Boutiques Offer personalized shopping consultations for shoppers Operate on a philosophy of high customer service and strong, personal client relationships Fundamentals of Information Systems, Seventh Edition

Banking Online banking customers: Can check balances of their savings, checking, and loan accounts Transfer money among accounts Pay their bills Many banks support bill payment via cell phone Fundamentals of Information Systems, Seventh Edition

Advantages of Electronic and Mobile Commerce Fundamentals of Information Systems, Seventh Edition

Hardware Key e-commerce infrastructure ingredient: Web server hardware platform complete with the appropriate software Key decision facing new e-commerce companies: Whether to host their own Web site or to let someone else do it Important to have adequate hardware backup to avoid a major disruption in case of a hardware failure of the primary Web server. A Web server hardware platform complete with the appropriate software is a key e-commerce infrastructure ingredient. The amount of storage capacity and computing power required of the Web server depends primarily on two things: the software that must run on the server and the volume of e-commerce transactions that must be processed. Although IS staff can sometimes define the software to be used, they can only estimate how much traffic the site will generate. As a result, the most successful e-commerce solutions are designed to be highly scalable so that they can be upgraded to meet unexpected growth in user traffic. A key decision facing new e-commerce companies is whether to host their own Web site or to let someone else do it. Many companies decide that using a third-party Web service provider is the best way to meet initial e-commerce needs. The third-party company rents space on its computer system and provides a high-speed connection to the Internet, which minimizes the initial out-of-pocket costs for e-commerce start-up. The third party can also provide personnel trained to operate, troubleshoot, and manage the Web server. Of course, many companies decide to take full responsibility for acquiring, operating, and supporting the Web server hardware and software themselves, but this approach requires considerable up-front capital and a set of skilled and trained workers. No matter which approach a company takes, it must have adequate hardware backup to avoid a major business disruption in case of a failure of the primary Web server. Fundamentals of Information Systems, Seventh Edition

E-Commerce and M-Commerce Technology Infrastructure Fundamentals of Information Systems, Seventh Edition

Web Server Software Each e-commerce Web site must have Web server software to perform fundamental services: Security and identification Retrieval and sending of Web pages Web site tracking Web site development Web page development Web Server Software In addition to the Web server operating system, each e-commerce Web site must have Web server software to perform fundamental services, including security and identification, retrieval and sending of Web pages, Web site tracking, Web site development, and Web page development. The two most widely used Web server software packages are Apache HTTP Server (51 percent market share) and Microsoft Internet Information Services (35 percent market share).2 Fundamentals of Information Systems, Seventh Edition

E-Commerce Software Investigate and install e-commerce software to support five core tasks: Catalog management to create and update the product catalog Product configuration to help customers select the necessary components and options Shopping cart facilities to track the items selected for purchase E-commerce transaction processing Web traffic data analysis to provide details to adjust the operations of the Web site Fundamentals of Information Systems, Seventh Edition

Mobile Commerce Hardware and Software For m-commerce to work effectively: The interface between the wireless, handheld device and its user must improve Encryption can provide secure transmission Wireless Application Protocol (WAP): Standard set of specifications for Internet applications that run on handheld, wireless devices Mobile Commerce Hardware and Software For m-commerce to work effectively, the interface between the wireless, handheld device and its user must improve to the point that it is nearly as easy to purchase an item on a wireless device as it is to purchase it on a PC. In addition, network speed must improve so that users do not become frustrated. Security is also a major concern, particularly in two areas: the security of the transmission itself and the trust that the transaction is being made with the intended party. Encryption can provide secure transmission. Digital certificates, discussed later in this chapter, can ensure that transactions are made between the intended parties. The handheld devices used for m-commerce have several limitations that complicate their use. Their screens are small, perhaps no more than a few square inches, and might be able to display only a few lines of text. Their input capabilities are limited to a few buttons, so entering data can be tedious and error prone. They also have less processing power and less bandwidth than desktop computers, which are usually hardwired to a high-speed LAN. They also operate on limited-life batteries. For these reasons, it is currently impossible to directly access many Web sites with a handheld device. Web developers must rewrite Web applications so that users with handheld devices can access them. To address the limitations of wireless devices, the industry has undertaken a standardization effort for their Internet communications. The Wireless Application Protocol (WAP) is a standard set of specifications for Internet applications that run on handheld, wireless devices. It effectively serves as a Web browser for such devices. Fundamentals of Information Systems, Seventh Edition

Electronic Payment Systems Digital certificate: Attachment to an e-mail message or data embedded in a Web site that verifies the identity of a sender or Web Site Certificate authority (CA): Trusted third-party organization or company that issues digital certificates Responsible for guaranteeing that the people or organizations granted these unique certificates are, in fact, who they claim to be Fundamentals of Information Systems, Seventh Edition

Electronic Payment Systems (continued) Secure Sockets Layer (SSL): Used to secure sensitive data Electronic cash: An amount of money that is computerized, stored, and used as cash for e-commerce transactions Credit, charge, debit, p-cards, and smart cards: Smart card: Credit card-sized device with an embedded microchip to provide electronic memory and processing capability SSL: ensures all data passed between the web server and browser remain private and integral. E-cash: without usage of credit cards Fundamentals of Information Systems, Seventh Edition

Electronic Payment Systems (continued) Fundamentals of Information Systems, Seventh Edition

Electronic Payment Systems (continued) P-Card: Credit card used to streamline the traditional purchase order and invoice payment processes Issued to selected employees who must follow company rules and guidelines for its use Payments using cell phones: Available options: Payments linked to your bank account Payments added to your phone bill Purchasing Cards (P-Cards): are issued to employees (i.e., cardholders) responsible for making purchases or payments on behalf of their employer; for example, cardholders can order and pay for office supplies via a supplier’s website. This type of commercial card  allows organizations to take advantage of the existing credit card infrastructure to make electronic payments for a variety of business expenses (e.g., goods and services). Fundamentals of Information Systems, Seventh Edition

Enterprise Resource Planning An enterprise system: Central to the organization Ensures information can be shared across all business functions and all levels of management Employs a database of key operational and planning data that can be shared by all ERP System: is an enterprise system central to an organization and ensures information can be shared across all business functions and all levels of management to support the running and managing of a business. Enterprise systems employ a database of key operational and planning data that can be shared by all (Figure 5.9). This eliminates the problems of lack of information and inconsistent information caused by multiple transaction processing systems that support only one business function or one department in an organization. Such systems provide a competitive advantage to businesses by reducing costs and improving service. Fundamentals of Information Systems, Seventh Edition

Enterprise Resource Planning (continued) Fundamentals of Information Systems, Seventh Edition

An Overview of Enterprise Resource Planning ERP systems: Evolved from materials requirement planning systems (MRP) Large organizations: The first to take on the challenge of implementing ERP An Overview of Enterprise Resource Planning ERP systems evolved from materials requirement planning systems (MRP) that tied together the production planning, inventory control, and purchasing business functions for manufacturing organizations. Many organizations recognized that their legacy transaction processing systems lacked the integration needed to coordinate activities and share valuable information across all the business functions of the firm. As a result, costs were higher and customer service poorer than desired. As a result, firms are scrapping large parts of their existing information systems and converting to new ERP systems. Large organizations, specifically members of the Fortune 1000, were the first to take on the challenge of implementing ERP. As they did, they uncovered many advantages as well as some disadvantages summarized in the following sections Fundamentals of Information Systems, Seventh Edition

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 Increased global competition  While some manufacturers choose to stick to the tried and true methods of the past, others seek technology solutions. Manufacturers cannot afford to put off an ERP implementation while their competition invests in ERP. Improved Access to Data for Operational Decision Making ERP systems operate via an integrated database, using one set of data to support all business functions. The systems can support decisions on optimal sourcing or cost accounting, for instance, for the entire enterprise or business units from the start, rather than gathering data from multiple business functions and then trying to coordinate that information manually or reconciling data with another application. The result is an organization that looks seamless, not only to the outside world but also to the decision makers who are deploying resources within the organization. The data is integrated to facilitate operational decision making and allows companies to provide greater customer service and support, strengthen customer and supplier relationships, and generate new business opportunities. Elimination of costly, inflexible legacy systems  Adoption of an ERP system enables an organization to eliminate dozens or even hundreds of separate systems and replace them with a single, integrated set of applications for the entire enterprise. Fundamentals of Information Systems, Seventh Edition

Challenges to Successful ERP Fundamentals of Information Systems, Seventh Edition

Leading ERP Systems ERP systems used in wide variety of organizations Business needs of these various organizations varies widely, thus no one ERP solution from a single vendor is “best” for all organizations Fundamentals of Information Systems, Seventh Edition

Fundamentals of Information Systems, Seventh Edition

Other examples of enterprise systems Supply Chain Management (SCM): A system that includes: Planning, executing, and controlling all activities involved in raw material sourcing and procurement Converting raw materials to finished products and warehousing and delivering finished product to customers the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. Supply Chain Management (SCM): is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities Fundamentals of Information Systems, Seventh Edition

Supply Chain Management (SCM) (continued) Process for developing a production plan: Sales forecasting Sales and operations plan (S&OP) Demand management Detailed scheduling Materials requirement planning (MRP) Purchasing Production Fundamentals of Information Systems, Seventh Edition

Examples of enterprise systems customer relationship management (CRM): manages and analyzes customer interactions and data throughout the customer lifecycle. encompasses direct interactions with customers, such as sales and service-related processes, and analysis of trends and behaviors. Investopedia on Facebook Is the system that manages and analyzes customer interactions and data throughout the customer lifecycle, with the goal of improving business relationships with customers, assisting in customer retention and driving sales growth. CRM systems are designed to compile information on customers across different channels -- or points of contact between the customer and the company which could include the company's website, telephone, direct mail, marketing materials and social media.  Ultimately, CRM serves to enhance the customer's overall experience. Fundamentals of Information Systems, Seventh Edition

Customer Relationship Management Key features of a CRM system: Contact management Sales management Customer support Marketing automation Analysis Social networking Access by smartphones Import contact data Fundamentals of Information Systems, Seventh Edition

Financial and Managerial Accounting Financial Accounting:  used to present the financial health of an organization to its external stakeholders. Board of directors, stockholders, financial institutions and other investors are the audience for financial accounting reports. managerial Accounting: - used by managers to make decisions concerning the day-to-day operations of a business. Financial accounting presents a specific period of time in the past and enables the audience to see how the company has performed. Financial accounting reports must be filed on an annual basis, and for traded companies, the annual report must be made part of the public record. Management or managerial accounting is used by managers to make decisions concerning the day-to-day operations of a business. It is based not on past performance, but on current and future trends. Because managers often have to make operation decisions in a short period of time in a fluctuating environment, management accounting relies heavily on forecasting of markets and trends. Fundamentals of Information Systems, Seventh Edition

Financial and Managerial Accounting (continued) Financial accounting Captures and records all transactions that affect a company’s financial state and reports Must be prepared in strict accordance to SEC, IRS, and FASB Managerial accounting Uses both actual and forecasted data to provide information to conduct daily operations, plan future operations, and develop overall business strategies SEC,IFRS, and FASB are Financial Reporting Standards. Fundamentals of Information Systems, Seventh Edition

Product Lifecycle Management (PLM) PLM software provides means for managing all data associated with product development, engineering design, production, support, and disposal of manufactured goods Data gathered and distributed to various groups as product advances through above stages Data includes design and process documents, bill of materials definitions, product attributes, and documents needed for FDA and environmental compliance Product Lifecycle Management (PLM) is the business strategy of managing the entire lifecycle of a product from its conception, through design and manufacture, to service and disposal. Fundamentals of Information Systems, Seventh Edition

Product Lifecycle Management (PLM)

Hosted Software Model for Enterprise Software Many business application software vendors: Are pushing the use of the hosted software model for SMEs Using the hosted software model: Means the small business firm does not need to employ a full-time IT person to maintain key business applications Hosted software refers to software that is installed, hosted and accessed entirely from a remote server or location. Hosted software is hosted and managed by the software manufacturer or a third-party vendor. Fundamentals of Information Systems, Seventh Edition

Hosted Software Model for Enterprise Software (continued) Fundamentals of Information Systems, Seventh Edition

Summary Electronic commerce: Mobile commerce: Conducting business activities electronically over computer networks Mobile commerce: The use of wireless devices such as cell phones and smartphones to facilitate the sale of goods or services—anytime, anywhere Electronic payment systems: Key component of the e-commerce infrastructure Fundamentals of Information Systems, Seventh Edition

Summary (continued) Transaction processing system: An organized collection of people, procedures, software, databases, and devices Enterprise resource planning (ERP) software Supports the efficient operation of business processes Production and supply chain management process starts with sales forecasting Fundamentals of Information Systems, Seventh Edition

Summary (continued) A CRM: A PLM: Helps an organization build a database about its customers A PLM: Provides means for managing all data associated with product development, engineering design, production, support, and disposal of manufactured goods Fundamentals of Information Systems, Seventh Edition