Fundamentals of Information Systems, Ninth Edition

Fundamentals of Information Systems, Ninth Edition
Chapter 5 Electronic Commerce and Enterprise Systems Chapter 5 Electronic Commerce and Enterprise Systems © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Objectives After completing this chapter, you will be able to:
Describe the current status of various forms of e-commerce, including B2B, B2C, C2C, e-government, and m-commerce Identify several advantages and challenges associated with e- commerce and m-commerce Identify and briefly describe several current e-commerce applications Identify the key components of technology infrastructure that must be in place for e-commerce and m-commerce to work Objectives After completing this chapter, you will be able to: Describe the current status of various forms of e-commerce, including B2B, B2C, C2C, e-government, and m-commerce Identify several advantages and challenges associated with e-commerce and m-commerce Identify and briefly describe several current e-commerce applications Identify the key components of technology infrastructure that must be in place for e-commerce and m-commerce to work © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Objectives After completing this chapter, you will be able to (cont’d): Discuss the key features of the electronic payment systems needed to support e-commerce and m-commerce Identify the basic activities and business objectives common to all transaction processing systems. Describe the transaction processing systems associated with the order processing, purchasing, and accounting business functions Identify the basic functions performed and the benefits derived from the implementation of an enterprise resource planning system, customer resource management, and product lifecycle management system Objectives After completing this chapter, you will be able to (cont’d): Discuss the key features of the electronic payment systems needed to support e-commerce and m-commerce Identify the basic activities and business objectives common to all transaction processing systems. Describe the transaction processing systems associated with the order processing, purchasing, and accounting business functions Identify the basic functions performed and the benefits derived from the implementation of an enterprise resource planning system, customer resource management, and product lifecycle management system © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Objectives After completing this chapter, you will be able to (cont’d): Describe the hosted software model for enterprise systems and explain why this approach is so appealing to SMEs Identify the challenges that organizations face in planning, building, and operating their enterprise systems Identify tips for avoiding many of the common causes for failed enterprise system implementations Objectives After completing this chapter, you will be able to (cont’d): Describe the hosted software model for enterprise systems and explain why this approach is so appealing to SMEs Identify the challenges that organizations face in planning, building, and operating their enterprise systems Identify tips for avoiding many of the common causes for failed enterprise system implementations © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

An Introduction to Electronic Computers
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 An Introduction to Electronic Computers 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Business-to-Business E-Commerce
B2B e-commerce is 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 Many organizations use both: Buy-side e-commerce to purchase goods and services from suppliers Sell-side e-commerce to sell products to their customers Business-to-Business E-Commerce B2B e-commerce is 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 Many organizations use both: Buy-side e-commerce to purchase goods and services from suppliers Sell-side e-commerce to sell products to their customers © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Business-to-Consumer E-Commerce
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 Business-to-Consumer E-Commerce 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Business-to-Consumer E-Commerce
© 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Consumer-to-Consumer E-Commerce
C2C e-commerce Involves electronic transactions between consumers are facilitated by a third party Popular sites include: eBay, Bidz.com, Craigslist, eBid, Etsy, Fiverr, Ibidfree, Kijiji, Ubid, and Taobao Companies and individuals involved in C2C must be careful Sales must not violate the rules of various county, state, and country legal jurisdictions Consumer-to-Consumer E-Commerce C2C e-commerce Involves electronic transactions between consumers are facilitated by a third party Popular sites include: eBay, Bidz.com, Craigslist, eBid, Etsy, Fiverr, Ibidfree, Kijiji, Ubid, and Taobao Companies and individuals involved in C2C must be careful Sales must not violate the rules of various county, state, and country legal jurisdictions © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Consumer-to-Consumer E-Commerce

E-Government E-government is the use of information and communications technology to: Simplify the sharing of information Speed formerly paper-based processes Improve the relationship between citizens and government Forms of e-Government: Government-to-consumer (G2C) Government-to-business (G2B) Government-to-government (G2G) E-Government E-government is the use of information and communications technology to: Simplify the sharing of information Speed formerly paper-based processes Improve the relationship between citizens and government Forms of e-Government: Government-to-consumer (G2C) Government-to-business (G2B) Government-to-government (G2G) © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 The market for m-commerce in North America Maturing much later than in Western Europe and Japan Worldwide, m-commerce accounted for 35 percent of all retail e-commerce sales in the fourth quarter of 2015 The number of mobile Web sites worldwide is growing rapidly Because of advances in wireless broadband technologies 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 The market for m-commerce in North America Maturing much later than in Western Europe and Japan Worldwide, m-commerce accounted for 35 percent of all retail e-commerce sales in the fourth quarter of 2015 The number of mobile Web sites worldwide is growing rapidly Because of advances in wireless broadband technologies © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Advantages of Electronic and Mobile Commerce
Reach new customers Reduce the cost of doing business Speed the flow of goods and information Increase the accuracy of order-processing Improve the level of customer service Advantages of Electronic and Mobile Commerce Reach new customers Reduce the cost of doing business Speed the flow of goods and information Increase the accuracy of order-processing Improve the level of customer service © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

E-Commerce Challenges
Dealing with Consumer Privacy Concerns About one-third of all adult Internet users will not buy online due to privacy concerns Overcoming Consumers’ Lack of Trust In online sellers Overcoming Global Issues Cultural, language, time and distance, infrastructure, currency, and legal challenges E-Commerce Challenges Dealing with Consumer Privacy Concerns About one-third of all adult Internet users will not buy online due to privacy concerns Overcoming Consumers’ Lack of Trust In online sellers Overcoming Global Issues Cultural, language, time and distance, infrastructure, currency, and legal challenges © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Electronic and Mobile Commerce Applications
Areas in which applications are used Retail and wholesale – Manufacturing Marketing – Advertising Bartering – Retargeting Price comparison – Couponing Investment and finance – Banking Electronic and Mobile Commerce Applications Areas in which applications are used Retail and wholesale – Manufacturing Marketing – Advertising Bartering – Retargeting Price comparison – Couponing Investment and finance – Banking © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 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 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 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Manufacturing Manufacturing

Marketing Market segmentation: the identification of specific markets to target them with advertising messages Divides the pool of potential customers into subgroups usually defined in terms of demographic characteristics eXelate (a subsidiary of Nielson) Provides data as a service solution that customers can use to access a database of more than 250 million business records Marketing Market segmentation: the identification of specific markets to target them with advertising messages Divides the pool of potential customers into subgroups usually defined in terms of demographic characteristics eXelate (a subsidiary of Nielson) Provides data as a service solution that customers can use to access a database of more than 250 million business records © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Retargeting An average of 74 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 Retargeting An average of 74 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Price Comparison Mobile phone apps enable shoppers to compare prices and products online In some cases, shopper can simply scan an item’s barcode or snap a photo of the item Price Comparison Mobile phone apps enable shoppers to compare prices and products online In some cases, shopper can simply scan an item’s barcode or snap a photo of the item © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Couponing In 2015, over $515 billion in consumer incentives were distributed in North America Less than one percent were redeemed Shoppers can subscribe to mobile coupon aggregators Mobile coupon redemption rate is expected to increase due to coupon integration in social networks Couponing In 2015, over $515 billion in consumer incentives were distributed in North America Less than one percent were redeemed Shoppers can subscribe to mobile coupon aggregators Mobile coupon redemption rate is expected to increase due to coupon integration in social networks © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Technology Infrastructure Required to Support E-Commerce and M-Commerce
Poor Web site performance drives consumers to abandon some e-commerce sites in favor of those with better, more reliable performance Technology Infrastructure Required to Support E-Commerce and M-Commerce Poor Web site performance drives consumers to abandon some e-commerce sites in favor of those with better, more reliable performance © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Hardware 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 Hardware 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Hardware Hardware © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 than desktop or laptop computers Operate on limited-life batteries For these reasons Web developers must often rewrite Web applications so users with mobile devices can access them 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 than desktop or laptop computers Operate on limited-life batteries For these reasons Web developers must often rewrite Web applications so users with mobile devices can access them © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Electric Payment Systems
Authentication technologies are used by many organizations to confirm the identity of a user requesting access to information or assets 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 Electric Payment Systems Authentication technologies are used by many organizations to confirm the identity of a user requesting access to information or assets 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Various measures are being implemented to increase the security associated with the use of credit cards Address Verification System is a check built into the payment authorization request Compares the address on file with the address provided by the cardholder Card Verification Number A check of the additional digits typically printed on the back of the card Electric Payment Systems Various measures are being implemented to increase the security associated with the use of credit cards Address Verification System is a check built into the payment authorization request Compares the address on file with the address provided by the cardholder Card Verification Number A check of the additional digits typically printed on the back of the card © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Transport Layer Security (TLS) is 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 Credit, charge, debit, and smart cards are payment systems used for e- commerce Electric Payment Systems Transport Layer Security (TLS) is 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 Credit, charge, debit, and smart cards are payment systems used for e-commerce © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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. A TPS provides valuable input to: Management information systems Decision support systems Knowledge management systems 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. A TPS provides valuable input to: Management information systems Decision support systems Knowledge management systems © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 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 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 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Organizations expect their TPSs to: Capture, process, and update databases Ensure that the data is processed accurately and completely Avoid processing fraudulent transactions Produce timely user responses and reports Reduce clerical and other labor requirements Help improve customer service Achieve competitive advantage Traditional Transaction Processing Methods and Objectives Organizations expect their TPSs to: Capture, process, and update databases Ensure that the data is processed accurately and completely Avoid processing fraudulent transactions Produce timely user responses and reports Reduce clerical and other labor requirements Help improve customer service Achieve competitive advantage © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A TPS includes: Order processing systems Processing flow begins with receipt of customer order, then finished product inventory is checked to see if sufficient inventory is on hand to fill the order Product pick list is printed at the warehouse and inventory is adjusted Customer invoice is created and copy included in the customer shipment Accounting systems Must track the flow of data related to all the cash follows that affect the organization Purchasing systems Systems that support the purchasing business function Inventory control, purchase order processing, receiving, and accounts payable Traditional Transaction Processing Methods and Objectives A TPS includes: Order processing systems Processing flow begins with receipt of customer order, then finished product inventory is checked to see if sufficient inventory is on hand to fill the order Product pick list is printed at the warehouse and inventory is adjusted Customer invoice is created and copy included in the customer shipment Accounting systems Must track the flow of data related to all the cash follows that affect the organization Purchasing systems Systems that support the purchasing business function Inventory control, purchase order processing, receiving, and accounts payable © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Transaction Processing Systems for Entrepreneurs and Small and Medium-Sized Enterprises
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 Transaction Processing Systems for Entrepreneurs and Small and Medium-Sized Enterprises 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Transaction Processing Activities
The transaction processing cycle Data collection Data editing Data correction Data manipulation Data storage Document production Transaction Processing Activities The transaction processing cycle Data collection Data editing Data correction Data manipulation Data storage Document production © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Data Collection Capturing and gathering all data necessary to complete the processing of transactions Data collection can be: Manual Automated via special input devices 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 Cloud-based POS systems provide a range of capabilities Including advanced integration with digital loyalty programs, various accounting tools, and the ability to generate gift cards and coupons Data Collection Capturing and gathering all data necessary to complete the processing of transactions Data collection can be: Manual Automated via special input devices 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 Cloud-based POS systems provide a range of capabilities Including advanced integration with digital loyalty programs, various accounting tools, and the ability to generate gift cards and coupons © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Data Collection Data Collection

Data Editing Data editing Examples
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 Data Editing 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Data Correction Systems should provide error messages that alert those responsible for editing the data Error messages should specify the problem so proper corrections can be made Data correction involves reentering data that was not typed or scanned properly Data Correction Systems should provide error messages that alert those responsible for editing the data Error messages should specify the problem so proper corrections can be made Data correction involves reentering data that was not typed or scanned properly © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Data Storage Data Storage
Involves updating one or more databases with new transactions After being updated, this data can be further processed and manipulated by other systems Data Storage Involves updating one or more databases with new transactions After being updated, this data can be further processed and manipulated by other systems © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Document Production Document Production involves generating output records, documents, and reports Hard-copy paper reports Displays on computer screens (soft copy) Results from one TPS can be input to another system Most TPSs provide other useful management information, such as: Printed or on-screen reports that help managers and employees perform various activities Reports showing current inventory Reports required by local, state, and federal agencies Document Production Document Production involves generating output records, documents, and reports Hard-copy paper reports Displays on computer screens (soft copy) Results from one TPS can be input to another system Most TPSs provide other useful management information, such as: Printed or on-screen reports that help managers and employees perform various activities Reports showing current inventory Reports required by local, state, and federal agencies © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Enterprise Systems An enterprise system is central to individuals and organizations of all sizes Ensures that 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 significant benefits by reducing costs and improving service Businesses rely on enterprise systems to perform daily activities in areas such as: Product supply and distribution Sales and marketing Human resources Manufacturing Accounting and taxes Enterprise Systems An enterprise system is central to individuals and organizations of all sizes Ensures that 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 significant benefits by reducing costs and improving service Businesses rely on enterprise systems to perform daily activities in areas such as: Product supply and distribution Sales and marketing Human resources Manufacturing Accounting and taxes © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Enterprise Resource Planning
Enterprise resource planning (ERP) A set of integrated programs that manage a company’s vital business operations for an entire organization Business process A set of coordinated and related activities that takes one or more kinds of input and creates an output of value to the customer of that process Enterprise Resource Planning Enterprise resource planning (ERP) A set of integrated programs that manage a company’s vital business operations for an entire organization Business process A set of coordinated and related activities that takes one or more kinds of input and creates an output of value to the customer of that process © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Enterprise Resource Planning
ERP systems evolved from materials requirement planning systems (MRP) developed in the 1970s Large organizations were the first to take on the challenge of implementing ERP Enterprise Resource Planning ERP systems evolved from materials requirement planning systems (MRP) developed in the 1970s Large organizations were the first to take on the challenge of implementing ERP © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Advantages of ERP Improved access to quality data for operational decision making Elimination of costly, inflexible legacy systems Improvement of work processes Opportunity to upgrade and standardize technology infrastructure Advantages of ERP Improved access to quality data for operational decision making Elimination of costly, inflexible legacy systems Improvement of work processes Opportunity to upgrade and standardize technology infrastructure © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Leading ERP Systems ERP vendors are classified as:
Tier I vendors – target large multinational firms with multiple geographic locations and annual revenues in excess of $1 billion Tier II vendors – target medium-sized firms with annual revenues in the $50 million to $1 billion range operating out of one or more locations Tier III vendors – target smaller firms with annual revenues in the $10 million to $50 million range that typically operate out of a single location Leading ERP Systems ERP vendors are classified as: Tier I vendors – target large multinational firms with multiple geographic locations and annual revenues in excess of $1 billion Tier II vendors – target medium-sized firms with annual revenues in the $50 million to $1 billion range operating out of one or more locations Tier III vendors – target smaller firms with annual revenues in the $10 million to $50 million range that typically operate out of a single location © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Leading ERP Systems Leading ERP Systems

Leading ERP Systems Many large companies employed ERP on large mainframe computers in the 2000s 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 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 Leading ERP Systems Many large companies employed ERP on large mainframe computers in the 2000s 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 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Customer Relationship Management
Customer relationship management (CRM) system Helps a company manage all aspects of customer encounters, including marketing, sales, distribution, accounting, and customer service The goal of CRM is to understand and anticipate the needs of current and potential customers CRM is used primarily in sales, marketing, and service organizations: To capture and view data about customers and to improve communications CRM software: Automates and integrates the functions of sales, marketing, and service in an organization Customer Relationship Management Customer relationship management (CRM) system Helps a company manage all aspects of customer encounters, including marketing, sales, distribution, accounting, and customer service The goal of CRM is to understand and anticipate the needs of current and potential customers CRM is used primarily in sales, marketing, and service organizations: To capture and view data about customers and to improve communications CRM software: Automates and integrates the functions of sales, marketing, and service in an organization © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Key features of a CRM system include: Contact management Sales management Customer support Marketing automation Analysis Social networking Access by smartphones Import contact data Customer Relationship Management Key features of a CRM system include: Contact management Sales management Customer support Marketing automation Analysis Social networking Access by smartphones Import contact data © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Due to the popularity of mobile devices Shoppers can easily compare products and prices on their mobile phones Shopper can also tweet their experiences with a brand to dozens of friends Savvy retailers use their CRM systems to stay on top of what these customers are saying on social networks Most CRM systems can now be accessed via smartphones Customer Relationship Management Due to the popularity of mobile devices Shoppers can easily compare products and prices on their mobile phones Shopper can also tweet their experiences with a brand to dozens of friends Savvy retailers use their CRM systems to stay on top of what these customers are saying on social networks Most CRM systems can now be accessed via smartphones © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Product Lifecycle Management
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 Product lifecycle management (PLM) software Provides a means for managing the data and processes associated with the various phases of the lifecycle of a product The scope of PLM software may include computer-aided design, computer-aided engineering, and computer-aided manufacturing Product Lifecycle Management 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 Product lifecycle management (PLM) software Provides a means for managing the data and processes associated with the various phases of the lifecycle of a product The scope of PLM software may include computer-aided design, computer-aided engineering, and computer-aided manufacturing © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Computer-aided design (CAD): The use of software to assist in the creation, analysis, and modification of the design of a component or product Computer-aided engineering (CAE): The use of software to analyze the robustness and performance of components and assemblies Computer-aided manufacturing (CAM) The use of software to control machine tools and related machinery in the manufacture of components and products Product Lifecycle Management Computer-aided design (CAD): The use of software to assist in the creation, analysis, and modification of the design of a component or product Computer-aided engineering (CAE): The use of software to analyze the robustness and performance of components and assemblies Computer-aided manufacturing (CAM) The use of software to control machine tools and related machinery in the manufacture of components and products © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Discrete manufacturing The production of distinct items e.g., autos, airplanes, furniture, or toys that can be decomposed into their basic components Process manufacturing The production of products that are the result of a chemical process, e.g., gasoline and pharmaceutical drugs that cannot be easily decomposed into its basic components Product Lifecycle Management Discrete manufacturing The production of distinct items e.g., autos, airplanes, furniture, or toys that can be decomposed into their basic components Process manufacturing The production of products that are the result of a chemical process, e.g., gasoline and pharmaceutical drugs that cannot be easily decomposed into its basic components © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Overcoming Challenges in Implementing Enterprise Systems

Overcoming Challenges in Implementing Enterprise Systems
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 Allow sufficient time to transition from the old way of doing things to the new system and new processes Allocate sufficient time and money training people 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 Overcoming Challenges in Implementing Enterprise Systems 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 Allow sufficient time to transition from the old way of doing things to the new system and new processes Allocate sufficient time and money training people 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 © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Hosted Software Model for Enterprise Software
Many business application software vendors are pushing the use of the hosted software model for businesses The goal is to help customers acquire, use, and benefit from the new technology while avoiding much of the associated complexity and high start-up costs Using the hosted software model enables businesses to: Experiment with powerful software capabilities without making a major financial investment Avoid employing a full-time IT person to maintain key business applications Hosted Software Model for Enterprise Software Many business application software vendors are pushing the use of the hosted software model for businesses The goal is to help customers acquire, use, and benefit from the new technology while avoiding much of the associated complexity and high start-up costs Using the hosted software model enables businesses to: Experiment with powerful software capabilities without making a major financial investment Avoid employing a full-time IT person to maintain key business applications © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Hosted Software Model for Enterprise Software

Summary Electronic and mobile commerce are evolving, providing new ways of conducting business that present both potential benefits and problems E-commerce and m-commerce require the careful planning and integration of a number of technology infrastructure components An organization must have information systems that support routine, day-to- day activities and that help a company add value to its products and services An organization that implements an enterprise system is creating a highly integrated set of systems, which can lead to many business benefits Summary Electronic and mobile commerce are evolving, providing new ways of conducting business that present both potential benefits and problems E-commerce and m-commerce require the careful planning and integration of a number of technology infrastructure components An organization must have information systems that support routine, day-to-day activities and that help a company add value to its products and services An organization that implements an enterprise system is creating a highly integrated set of systems, which can lead to many business benefits © 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Fundamentals of Information Systems, Ninth Edition

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