Chapter 10 E-business and Enterprise Resource Planning Systems Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Outline Objectives Definition of e-business Benefits and costs of e-business Forms of e-business Structure of ERP systems ERP system implementations Application service providers 10-2

Objectives When you finish this chapter, you should be able to: –Explain the nature of e-business, comparing and contrasting it with traditional “brick and mortar” organizations –Discuss major forms of e-business, including business-to- business, business-to-consumer, government-to-business and government-to-consumer –Describe the basic nature, purpose and structure of enterprise resource planning systems –Give examples and analyze the causes of ERP system failures –List and discuss steps associated with successful ERP implementations –Discuss the role of application service providers in e-business. 10-3

Definition of e-business Exchange of goods and services by means of the Internet or other computer networks Same basic principles as traditional commerce Buyers and sellers transact business over networked computers Networks could be: proprietary, electronic fund transfer networks between companies, internal or others 10-4

Benefits and costs of e- business Benefits –Marketing: geographic market expansion, hard-to- reach markets, more targeted marketing –Reduced operating costs: marketing, telecommunications, transaction processing –Streamlined operations –Quicker, easier product and service delivery Costs –Financial costs associated with setting up networks –Need to develop different, better internal control systems –Potential for customer distrust –Severe consequences for technology breakdowns 10-5

Forms of e-business TypeExample Business to consumerTravelocity Business to businessDell Computers Government to consumerInternal Revenue Service Government to businessEDGAR (SEC) Consumer to consumereBay 10-6

Structure of ERP systems Based on relational database technology Modular organization –Customer relationship management –Financial management –Human resource management –Supply chain management 10-7

ERP system implementations Common causes of failure Poor leadership from top management Automating existing redundant or non- value-added processes in the new system Unrealistic expectations Poor project management Inadequate education and training Trying to maintain the status quo 10-8

ERP system implementations Common causes of failure (continued) A bad match between ERP software and organizational processes Inaccurate data in the system ERP implementation is viewed as an IT project Significant technical difficulties 10-9

ERP system implementations Necessary conditions for success –Obtain organizational commitment –Communicate strategic goals clearly –View ERP as an enterprise-wide venture –Select a compatible ERP system –Resolve multi-site issues –Ensure data accuracy 10-10

Application service providers Third party entity that deploys, hosts and manages access to a packaged application ( Types –Enterprise –Local / regional –Specialist –Vertical market –Volume business 10-11

Application service providers Examples –Human resources administration –Accounting cycle steps –Income tax returns –Personal financial planning ASP benefits –Increased flexibility –Element of a disaster recovery plan ASP risks –Service interruptions –Inability to pay ongoing fees 10-12

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