1. Electronic and Mobile Commerce and Enterprise Systems
Chapter 5
Electronic and Mobile Commerce and Enterprise Systems

2. Principles and Learning Objectives: Applications
Electronic and mobile commerce are evolving, providing new ways of conducting business that present both potential benefits and problems
Describe the current status of various forms of e-commerce, including B2B, B2C, C2C, and m-commerce
Identify several e-commerce and m-commerce applications

3. Principles and Learning Objectives: Potential Benefits and Problems
Electronic and mobile commerce are evolving, providing new ways of conducting business that present both potential benefits and problems
Identify several advantages associated with the use of e-commerce and m-commerce

4. Principles and Learning Objectives: Key Components
E-commerce and m-commerce require the careful planning and integration of a number of technology infrastructure components
Identify the key components of technology infrastructure that must be in place for e-commerce and m-commerce to work

5. Principles and Learning Objectives: E-Payment Systems
E-commerce and m-commerce require the careful planning and integration of a number of technology infrastructure components
Discuss the key features of the electronic payment systems needed to support e-commerce and m-commerce

6. Principles and Learning Objectives: Basic Activities
An organization must have information systems that support the routine, day-to-day activities that occur in the normal course of business and help a company add value to its products and services
Identify the basic activities and business objectives common to all transaction processing systems

7. Principles and Learning Objectives: Integrated Set of Systems
An organization that implements an enterprise system is creating a highly integrated set of systems, which can lead to many business benefits
Define the terms enterprise resource management, customer relationship management, and product lifecycle management systems and identify their functions and benefits

8. Why Learn About Electronic and Mobile Commerce and Enterprise Systems?
Electronic and mobile commerce have transformed many areas of our lives and careers
One fundamental change has been the manner in which companies interact with their suppliers, customers, and others
E-commerce and m-commerce present both opportunities and challenges

9. An Introduction to Electronic Commerce
Electronic commerce: conducting business activities electronically over computer networks
Business activities that are strong candidates for conversion to e-commerce are:
Paper based
Time-consuming
Inconvenient for customers

10. Business-to-Business (B2B) E-Commerce
A subset of e-commerce
All the participants are organizations
Useful tool for connecting business partners in a virtual supply chain to cut resupply times and reduce costs
Moving more customers online is key to B2B commerce success

11. Business-to-Consumer (B2C) E-Commerce
Customers deal directly with an organization and avoid intermediaries; this is called disintermediation
Reasons for steady growth
Cheaper goods and services via the Web
Online shoppers can design a personalized product
The use of social media networks to promote products and reach customers

12. Consumer-to-Consumer (C2C) E-Commerce
Electronic transactions between consumers are facilitated by a third party
Popular sites include:
eBay, Bidz.com, Craigslist, eBid, ePier, Ibidfree, Kijiji, Ubid, and Tradus
Companies and individuals involved in C2C must be careful
Sales must not violate the rules of various county, state, and country legal jurisdictions

13. Table 5.2 Differences Among B2B, B2C, and C2C
Factors
B2B
B2C
C2C
Value of sale
Thousands or millions of dollars
Tens or hundreds of dollars
Tens of dollars
Length of sales process
Days to months
Days to weeks
Hours to days
Number of decision makers involved
Several people to a dozen or more
One or two
Uniformity of offer
Typically a uniform product offering
More customized product offering
Single product offering, one of a kind
Complexity of buying process
Extremely complex; much room for negotiation on price, payment and delivery options, quantity, quality, and options and features
Relatively simple; limited discussion over price and payment and delivery options
Relatively simple; limited discussion over payment and delivery options; negotiation over price
Motivation for sale
Driven by a business decision or need
Driven by an individual consumer’s need or emotion
TABLE 5.2 Differences among B2B, B2C, and C2C

14. E-Government Use of information and communications technology to:
Simplify the sharing of information
Speed formerly paper-based processes
Improve the relationship between citizens and government

15. E-Government (cont’d.)
Forms of e-Government:
Government-to-consumer (G2C)
Government-to-business (G2B)
Government-to-government (G2G)

16. Mobile Commerce
Mobile commerce (m-commerce) relies on the use of wireless devices
The Internet Corporation for Assigned Names and Numbers (ICANN):
Created a .mobi domain to help attract mobile users to the Web
mTLD Top Level Domain Ltd of Dublin, Ireland administers the .mobi domain and

17. Mobile Commerce in Perspective
The market for m-commerce in North America
Maturing much later than in Western Europe and Japan
M-commerce sales in the United States
Projected to reach $113 billion by 2017

18. Electronic and Mobile Commerce Applications
Areas in which applications are used
Retail and wholesale – Manufacturing
Marketing and advertising – Bartering
Price comparison – Couponing
Investment and finance – Banking
E-boutiques

19. Retail and Wholesale
Electronic retailing (e-tailing): the direct sale from business to consumer through electronic storefronts
Cybermall: a single Web site that offers many products and services at one Internet location
A key sector of wholesale e-commerce
Spending on manufacturing, repair, and operations (MRO) goods and services

20. Manufacturing
Electronic exchange: an electronic forum where manufacturers, suppliers, and competitors buy and sell goods, trade market information, and run back-office operations
Private exchanges are owned and operated by a single company

21. Manufacturing (cont’d.)
Consortium-operated exchanges are run by a group of traditionally competing companies with common procurement needs
Independent exchanges are open to any set of buyers and sellers within a given market

22. Model of an Electronic Exchange
FIGURE 5.2 Model of an electronic exchange
An electronic exchange is an electronic forum where manufacturers, suppliers, and competitors buy and sell goods, trade market information, and run back-office operations.

23. Marketing
Market segmentation: the identification of specific markets to target them with advertising messages
Nielsen, the marketing and media information company:
Has developed its Business-Facts database, which provides information for more than 14 million U.S. businesses

24. Advertising Methods of buying mobile ad impressions
Cost per thousand (CPM)
Cost per click (CPC)
Cost per action (CPA)
Three main measures of success
Number of users reached
Click through rate (CTR)
Number of actions users take

25. Bartering
With economic downturn, many people and businesses have turned to bartering to gain goods and services
A number of Web sites have been created to support bartering

26. Table 5.3 Popular Bartering Web Sites
Purpose
Craiglist.org
Includes a section where users can request an item in exchange for services or exchange services for services.
Goozez.com
Allows users to exchange video games and movies.
Swapagift.com
Enables users to buy, sell, or swap merchant gift cards.
SwapHog.com
Bartering site that offers a third-party service that first receives all items and inspects them before finalizing the transaction to eliminate fraud and ensure a successful transaction.
Swapstyle.com
Users can swap, sell, or buy women’s accessories, clothes, cosmetics, and shoes.
Swaptree.com
Users trade books, CDs, DVDs, and video games on a one- for-one basis.
TradeAway.com
Enables users to exchange a wide variety of new or used items, services, or real estate.
TABLE 5.3 Popular bartering Web sites

27. Bartering: Retargeting
An average of percent of all online shopping carts are abandoned
Retargeting is used by advertisers to recapture those shoppers by using targeted and personalized ads to direct shoppers back to a retailer’s site

28. Bartering: Price Comparison
Mobile phone services enable shoppers to compare prices and products on the Web
In some cases, shopper can simply scan an item’s barcode or snap a photo of the item

29. Bartering: Couponing
In 2013, over 287 billion coupons with a value of $467 billion were distributed in North America
Less than one percent were redeemed
Mobile coupon redemption rate is expected to increase due to coupon integration in social networks

30. Growth in U.S. Mobile Coupon Users
FIGURE 5.5 Growth in U.S. mobile coupon users
The number of mobile coupon redeemers is increasing significantly.

31. 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

32. Banking Online banking customers can:
Check balances of their savings, checking, and loan accounts
Transfer money among accounts
Pay their bills
Many banks enable customers to perform online banking activities via mobile phone

33. E-Boutiques
An increasing number of Web sites offer personalized consultations for shoppers
Key to the success of Web sites such as Charm Boutique and ShopLaTiDa
A philosophy of high customer service and strong, personal client relationships

34. Technology Infrastructure Required to Support E-Commerce and M-Commerce
Factors in site performance
Response time
Customer support
Order handling
Poor Web site performance drives consumers to abandon some e-commerce sites in favor of those with better, more reliable performance

35. E-Commerce and M-Commerce Technology Infrastructure
FIGURE 5.8 Key technology infrastructure components
E-commerce systems require specific kinds of hardware and software to be successful.

36. Technology Infrastructure: Hardware
The Web server’s required storage capacity and computing power depend on:
The software that must run on the server
Volume of e-commerce transactions that must be processed
Successful e-commerce solutions are designed to be highly scalable
Can be upgraded to meet unexpected user traffic

37. Technology Infrastructure: Hardware (cont’d.)
Key Web site performance measures
Response time
Transaction success rate
System availability
Key decision for a new e-commerce company
Choosing whether to host its own Web site or to enlist a third-party Web service provider

38. Table 5.5 Key Performance Measures for Popular Retail Web Sites
Retail Apparel Firm
Response Time (seconds)
Success Rate
Outage Time During One Week
Abercrombie
4.64
98.6%
1 hour
Macy’s
6.81
99.5%
0 hours
Sears
12.90
99.1%
J Crew
7.89
97.7%
Saks Fifth Avenue
10.59
95.7%
2 hours
TABLE 5.5 Key performance measures for popular retail Web sites

39. Technology Infrastructure: Web Server Software
Fundamental services needed in Web server software
Security and identification
Retrieving and sending Web pages
Web site tracking
Web site development
Web page development

40. Technology Infrastructure: E-Commerce Software
Five core tasks that must be supported by e-commerce software
Catalog management
Product configuration
Shopping cart facilities
E-commerce transaction processing
Web traffic data analysis

41. Technology Infrastructure: Mobile Commerce Hardware and Software
Limitations of handheld devices that complicate their use
Screens are small
Input capabilities are limited to a few buttons
Less processing power and less bandwidth
The Wireless Application Protocol (WAP)
A standard set of specifications for Internet applications that run on handheld, wireless devices

42. Technology Infrastructure: Electronic Payment Systems
Digital certificate: an attachment to an message or data embedded in a Web site that verifies the identity of a sender or Web site
Certificate authority (CA): a trusted third-party organization or company that issues digital certificates

43. Electronic Payment Systems (cont’d.)
Secure Sockets Layer (SSL) is 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
Credit, charge, debit, and smart cards are payment systems used for e-commerce

44. Table 5.6 Comparison of Payment Systems
Description
Advantages
Disadvantages
Credit card
Carries preset spending limit based on the user’s credit history
Each month the user can pay all or part of the amount owed
Unpaid balance accumulates interest charges—often at a high rate of interest
Charge card
Looks like a credit card but carries no preset spending limit
Does not involve lines of credit and does not accumulate interest charges
The entire amount charged to the card is due at the end of the billing period
Debit card
Looks like a credit card or automated teller machine (ATM) card
Operates like cash or a personal check
Money is immediately de- ducted from user’s account balance
Smart card
Is a credit card device with embedded microchip capable of storing facts about cardholder
Better protected from misuse than conventional credit, charge, and debit cards because the smart card information is encrypted
Not widely used in the United States
TABLE 5.6 Comparison of payment systems

45. Electronic Payment Systems: P-Card and Cell Phone Payments
A p-card (procurement card or purchasing card) is a credit card used to streamline the traditional purchase order and invoice payment processes
Two options form making payments using cell phones
Payments linked to your bank account
Payments added to your phone bill

46. An Overview of Transaction Processing Systems
Transaction processing systems (TPSs):
Capture and process detailed data necessary to update the organization’s records about fundamental business operations
Include order entry, inventory control, payroll, accounts payable, accounts receivable, general ledger, etc.
Provide valuable input to MIS, DSS, and special-purpose information systems

47. TPS, MIS/DSS, and Special Information Systems in Perspective
FIGURE 5.10 TPS, MIS/DSS, and special information systems in perspective
A TPS provides valuable input to MIS, DSS, and KM systems.

48. Traditional Transaction Processing Methods and Objectives
Batch processing system
Business transactions are accumulated over a period of time and prepared for processing as a single unit or batch
Essential characteristic: the delay between an event and the processing of the related transaction to update the organization’s records

49. Traditional Transaction Processing Methods and Objectives (cont’d.)
Online transaction processing (OLTP)
Data processing in which each transaction is processed immediately
At any time, the data in an online system reflects the current status
Many organizations find that OLTP enables them to provide faster, more efficient service

50. Batch Versus Online Transaction Processing
FIGURE 5.11 Batch versus online transaction processing
(a) Batch processing inputs and processes data in groups. (b) In online processing, transactions are completed as they occur.

51. Integration of a Firm’s TPS
FIGURE 5.12 Integration of a firm’s TPS
When transactions entered into one system are processed, they create new transactions that flow into another system.

52. Traditional Transaction Processing Methods and Objectives (cont’d.)
Organizations expect their TPSs to:
Process data generated by and about transactions
Maintain a high degree of accuracy and integrity
Avoid processing fraudulent transactions
Produce timely user responses and reports
Increase labor efficiency
Help improve customer service and/or loyalty

53. Expectations of TPSs A TPS includes: Order processing systems
Accounting systems
Purchasing systems

54. Transaction Processing Systems for Small and Medium-Size Enterprises (SMEs)
Many software packages:
Provide integrated transaction processing system solutions for small and medium-size enterprises (SMEs)
Are easy to install and operate with a low total cost of ownership
Have an initial cost of a few hundred to a few thousand dollars

55. Table 5.7 Sample of Integrated TPS Solutions for SMEs
Vendor
Software
Type of TPS Offered
Target Customers
AccuFund
Financial reporting and accounting
Nonprofit, municipal, and government organizations
OpenPro
Complete ERP solution, including financials, supply chain management, e-commerce, customer relationship management, and retail POS system
Manufacturers, distributors, and retailers
Intuit
QuickBooks
Manufacturers, professional services, contractors, nonprofits, and retailers
Sage
Timberline
Financial reporting, accounting, and operations
Contractors, real estate developers, and residential builders
Redwing
TurningPoint
Professional services, banks, and retailers
TABLE 5.7 Sample of integrated TPS solutions for SMEs

56. Transaction Processing Activities
The transaction processing cycle
Data collection
Data editing
Data correction
Data manipulation
Data storage
Document production

57. Transaction Processing Activities (cont’d.)
FIGURE 5.13 Transaction processing activities
A transaction processing cycle includes data collection, data editing, data correction, data processing, data storage, and document production.

58. Data Collection
Capturing and gathering all data necessary to complete the processing of transactions
Data collection can be:
Manual
Automated via special input devices

59. Data Collection (cont’d.)
Source data automation
Involves capturing data at its source and recording it accurately in a timely fashion with minimal manual effort and in an electronic or digital form so that it can be directly entered into the computer
Example: a scanner reading a UPC code

60. Point-of-Sale Transaction Processing System
FIGURE 5.14 Point-of-sale transaction processing system
The purchase of items at the checkout stand updates a store’s inventory database and its database of purchases.

61. Data Editing
Checking data for validity and completeness to detect any problems
Examples
Quantity and cost data must be numeric
Names must be alphabetic
Codes associated with an individual transaction are edited against a database containing valid codes

62. Data Correction
Error messages must specify the problem so proper corrections can be made
Correction involves reentering data that was not typed or scanned properly

63. Data Processing
Performing calculations and other data transformations related to business transactions including:
Classifying data
Sorting data into categories
Performing calculations
Summarizing results
Storing data in the organization’s database for further processing

64. Data Storage Updating one or more databases with new transactions
After being updated, this data can be further processed and manipulated by other systems

65. Document Production Generating output records, documents, and reports
Hard-copy paper reports
Displays on computer screens (soft copy)
Results from one TPS can be inputs to another system

66. Enterprise Resource Planning
An enterprise system is central to an organization
Ensures information can be shared across all business functions and all levels of management to support the running and managing of a business
The ultimate goal is to satisfy customers and provide a competitive advantage by reducing costs and improving service

67. Enterprise Resource Planning System
FIGURE 5.15 Enterprise resource planning system
An ERP integrates business processes and the ERP database.

68. An Overview of Enterprise Resource Planning
ERP systems evolved from materials requirement planning systems (MRP)
Large organizations were the first to take on the challenge of implementing ERP

69. Advantages of ERP
Improved access to quality data for operational decision making
Elimination of inefficient or outdated systems
Improvement of work processes
Technology standardization

70. Leading ERP Systems ERP vendors classified by customer type Category
Type of Customer
Annual Revenues
Tier I
Large multinational firms with multiple geographic locations
> $1 billion
Tier II
Medium-sized firms operating out of one or more locations
$50 million to $1 billion
Tier III
Smaller firms that operate out of a single location
$10 to $50 million

71. Leading ERP Systems (cont’d.)
Large companies were leaders in adopting ERP systems
ERP software vendors created new solutions for smaller companies
Cloud-based solutions are available
Examples: Plex and NetSuite
Compiere offers an open-source ERP system

72. ERP Systems: Customization
Vendor’s ERP software may require customization to:
Integrate other business systems
Add data fields or change field sizes from those in the standard system
To meet regulatory requirements

73. Supply Chain Management (SCM)
A system that includes planning, executing, and controlling all activities involved in:
Sourcing and procurement of raw materials
Converting raw materials to finished products
Warehousing and delivering finished product to customers

74. Supply Chain Management (cont’d.)
Process for developing a production plan
Sales forecasting
Sales and operations plan (S&OP)
Demand management
Detailed scheduling
Materials requirement planning (MRP)
Purchasing
Production
Sales ordering

75. Customer Relationship Management
Customer relationship management (CRM) software
Automates and integrates the functions of sales, marketing, and service in an organization
The objective is to capture data about every contact a company has with a customer through every channel and store it in the CRM system

76. Customer Relationship Management System
FIGURE 5.16 Customer relationship management system
A CRM system provides a central repository of customer data used by the organization.

77. Key Features of a CRM System
Contact management
Sales management
Customer support
Marketing automation
Analysis
Social networking
Access by smartphones
Import contact data

78. Table 5.8 Highest-Rated CRM Systems, 2014
Rank
Vendor
Select Customers
Pricing Starts at 1
Salesforce Sales Cloud
Dell
Dr. Pepper Snapple
$5 per user/month 2
OnContact CRM 7
Prudential Carfax
$50 per user/month 3
Sage Software CRM
Panasonic Lockheed Martin
$39 per user/month 4
Prophet CRM
AT&T
Century 21
$24 per user/month
TABLE 5.8 Highest-rated CRM systems, 2014

79. Product Lifecycle Management (PLM)
An enterprise business strategy that creates a common repository of product information and processes
Supports the collaborative creation, management, dissemination, and use of product and packaging definition information

80. PLM Software
Provides a means for managing the data and processes associated with the various phases of the lifecycle of a product
Provides support for key functions
Configuration management, document management, engineering change management, release management, and collaboration with suppliers and original equipment manufacturers (OEMs)

81. Scope of PLM Software FIGURE 5.17 Scope of PLM software
Using PLM software, you can manage the data and processes associated with the various phases of the lifecycle of a product.

82. Table 5.9 Benefits of a PLM System
How Achieved
Reduce time to market
By connecting design, research and development, procurement, manufacturing, and customer service seamlessly through a flexible collaboration environment
By improving collaboration among the organization and its suppliers, contract manufacturers, and OEMs
Reduce costs
By reducing prototyping costs through the use of software simulation
By reducing scrap and rework through improved processes
By reducing the number of product components through standardization
Ensure regulatory compliance
By providing a secure repository, tracking and audit trails, change and document management controls, workflow and communications, and improved security
TABLE 5.9 Benefits of a PLM system

83. Overcoming Challenges in Implementing ERP Systems
Cost and disruption of upgrades for systems that must integrate with the ERP system
Cost and long implementation time
Difficulty in managing change
Management of software customization
User frustration with the new system

84. Overcoming Challenges in Implementing ERP Systems (cont’d.)
Tips for avoiding a failed implementation
Assign a full-time executive to manage the project
Appoint an experienced, independent resource to provide project over- sight and to verify and validate system performance
Plan to spend considerable time and money training people

85. Tips for Avoiding a Failed Implementation (cont’d.)
Define metrics to assess project progress and to identify project-related risks
Keep the scope of the project well defined and contained to essential business processes
Be wary of modifying the enterprise system software to conform to your firm’s business practices

86. 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 enables SMEs to:
Experiment with powerful software capabilities without making a major financial investment
Avoid employing a full-time IT person to maintain key business applications

87. Table 5.12 Advantages and Disadvantages of Hosted Software Model
Decreased total cost of ownership
Potential availability and reliability issues
Faster system start-up
Potential data security issues
Lower implementation risk
Potential problems integrating the hosted products of different vendors
Management of systems outsourced to experts
Savings anticipated from outsourcing may be offset by increased effort to manage vendor
TABLE 5.12 Advantages and disadvantages of hosted software model

88. Summary – Principle 1
Electronic commerce is the conducting of business activities electronically over computer networks
Types of e-commerce
Business-to-consumer (B2C)
Business-to-business (B2B)
Consumer-to-consumer (C2C)

89. Summary – Principle 1 (cont’d.)
Mobile commerce:
Is the use of wireless devices to facilitate the sale of goods or services
Provides a unique opportunity to establish one-on-one marketing relationships and support communications
Businesses use e-commerce to reduce costs, speed the flow of information, and to improve customer service

90. Summary – Principle 2
A number of infrastructure components must be integrated to support a large volume of transactions with customers, suppliers, and other business partners worldwide
Electronic payment systems are a key component of the e-commerce infrastructure

91. Summary – Principle 3
Transaction processing systems (TPSs) are at the heart of most information systems in businesses today
The methods of transaction processing systems include batch and online
Traditional TPSs include the following types of systems: order processing, accounting, and purchasing systems

92. Summary – Principle 4
Enterprise resource planning (ERP) software supports the efficient operation of business processes
Implementation of an enterprise system can provide many advantages
The business processes required to capture and report accounting details are often included within the scope of an organization’s ERP system

93. Summary – Principles 5 and 6
PLM software is used by users both internal and external to the organization
There are several challenges in implementing enterprise systems, e.g., changes in organizational operations and users becoming frustrated
Business application software vendors are experimenting with the hosted software model