1. Electronic Commerce and Transaction Processing Systems
Chapter 5:
Electronic Commerce and Transaction Processing Systems
Topics:
An Introduction to Electronic Commerce
E-Commerce Applications
E-Commerce Technology Components
Strategies for Successful E-Commerce
An Overview of Transaction Processing Systems
Enterprise Resource Planning
Please turn off your cell phone.

2. An Introduction to Electronic Commerce
Chapter 5.1
An Introduction to Electronic Commerce
Key Terms
Business-to-consumer
(B2C) e-commerce
Business-to-business
(B2B) e-commerce
Consumer-to-consumer
(C2C) e-commerce
Supply chain management
Electronic data
interchange (EDI)
Mobile commerce
(m-commerce)

3. E-commerce
Business activities conducted using electronic data transmission involving computers, telecommunications networks, and streamlined work processes.

4. E-commerce History EDI Software VAN Company B EDI Software Company A
Transaction
EDI Software
Company B
Transaction
EDI Software
Company A
Electronic Data Interchange (EDI)
EDI uses private network communications networks called value-added networks (VANs) to transmit standardized transaction data between business partners and suppliers.

5. Benefits of E-Commerce?
Businesses use E-Commerce to:
Reduce transaction costs
Speed the flow of goods and info
Improve customer service
Enable close coordination of actions among manufacturers, suppliers, and customers
Gain access to worldwide markets

6. E-commerce can dramatically extend a businesses market
E-commerce can dramatically extend a businesses market. Farmyard Nurseries customer base before and after e-commerce.

7. Challenges of E-Commerce
Change distribution systems & work processes
Integrate web-based order processing with traditional systems
Companies face a series of challenges when converting to e-commerce business processes. First is to define an effective e-commerce strategy and model. A second challenge is restructuring traditional distribution systems and work processes to be able to handle direct shipment of single units to customers. Traditionally, manufacturers or vendors ship bulk quantities to resellers who sell individual items to consumers. When selling directly to consumers from a website, companies need a distribution system that can handle split-case distribution, where cases of goods are opened, individual items are warehoused, and individual items are shipped and tracked. This process is often outsourced to companies like Fedex.
As we started to see with the failure and bankruptcy of “dot-coms” at the end of the twentieth century, business to consumer e-commerce is difficult and risky even for companies that exist only on the Internet; therefore, the transition from a “bricks and mortar” business model to an e-commerce model can be expected to present many challenges.

8. The E-Commerce Supply Chain
Supply chain management is a key value chain composed of:
Demand planning
Supply planning
Demand fulfillment

9. The E-Commerce Supply Chain
Figure 5.1: Supply Chain Management

10. E-Commerce Segmentation
Consumer to Consumer (C2C)
eBay.com
Half.com
Business to Business (B2B)
Private
Business to Consumer (B2C)
Amazon.com
BestBuy.com
Although we hear more about B2C e-commerce, the B2B market is larger and expected to grow faster. B2B e-commerce allows even small startup companies to sell to a global marketplace, as well as to compare prices from global suppliers. B2C e-commerce is not as widespread and will grow more slowly. Many consumers still have concerns about the privacy and security of personal information, such as credit card numbers, provided for e-commerce. However, as we gain experience in B2C e-commerce, technology and policy should improve to overcome these fears.

11. E-Commerce Segmentation
Although we hear more about B2C e-commerce, the B2B market is larger and expected to grow faster. B2B e-commerce allows even small startup companies to sell to a global marketplace, as well as to compare prices from global suppliers. B2C e-commerce is not as widespread and will grow more slowly. Many consumers still have concerns about the privacy and security of personal information, such as credit card numbers, provided for e-commerce. However, as we gain experience in B2C e-commerce, technology and policy should improve to overcome these fears.

12. M-commerce
M-commerce: E-commerce over mobile devices like smartphones.
digital goods
proximity payment systems
distance goods

13. E-commerce Applications
Chapter 5.2
E-commerce Applications
Key Terms
Electronic retailing
Cybermall
Electronic exchange
Market segmentation
Technology-enabled
relationship management
Electronic bill presentment

14. E-Commerce Applications: Retail and Wholesale
Electronic retailing (E-tailing): the direct sale from business to consumer through electronic storefronts, typically designed around an electronic catalog and shopping cart model
Cybermalls: a single Web site that offers many products and services at one Internet location
Wholesale e-commerce: B2B
Electronic Exchanges
E-tailing, or electronic retailing, is the direct sale of goods or services from businesses to consumers through electronic storefronts. Typically, these websites include electronic catalogs and shopping carts (or baskets). This model is used for both retail and wholesale selling. A cybermall is a web site that offer many products and services. Many cybermalls consist of links to affiliated retailers.
Purchases of manufacturing, repair, and operations goods and services are an example of wholesale e-commerce. eCommerce software and processes can help streamline and improve processes for managing manufacturing, repair and operations.

15. E-Commerce Applications: Manufacturing
To raise profitability and improve customer service, many manufacturers move their supply chain operations onto the Internet
Electronic exchange: an electronic forum where manufacturers, suppliers, and competitors buy and sell goods, trade market information, and run back-office operations

16. E-Commerce Applications: Manufacturing
Figure 5.3: Model of an Electronic Exchange

17. E-Commerce Applications: Marketing
Market segmentation: the identification of specific markets to target them with advertising messages
Technology-enabled relationship management: use of detailed information about a customer’s behavior, preferences, needs, and buying patterns to set prices, negotiate terms, tailor promotions, add product features, and otherwise customize the entire relationship with that customer

18. E-Commerce Applications: Marketing
Supply chain management is an important value chain that includes demand planning, supply planning, and demand fulfillment. Supply chain processes are key candidates for conversion to e-commerce. Demand planning seeks to understand buying patterns and forecast demand for a product or service. Demand fulfillment processes include taking orders, verifying customer information and credit, agreeing to fill the order, managing unfilled, backlogged orders, and filling orders. Supply planning involves planning for the infrastructure supporting procurement and demand fulfillment – such as planning for transportation, distribution and procurement. In order to get benefits from converting supply chain management processes to e-commerce, such as increased revenues, decreased costs, improved customer satisfaction, and reduced inventory, all subprocesses involving communication or exchange of goods between all stakeholders, such as manufacturers, distributors, and retailers must be integrated. With such integration, costs can be cut by reducing time-consuming and labor-intensive steps throughout the supply chain; customer satisfaction, and therefore loyalty, can be improved by the ability to give customers more detailed information about order status; and by increasing the speed and accuracy of information, allowing inventory reductions, and thus, reduced capital tied up in inventory.

19. Investment & Finance Investment and Finance Auctions
On-line Stock Trading
On-line Banking
electronic bill presentment
The Motley Fool:
Auctions
E-tailing, or electronic retailing, is the direct sale of goods or services from businesses to consumers through electronic storefronts. Typically, these websites include electronic catalogs and shopping carts (or baskets). This model is used for both retail and wholesale selling. A cybermall is a web site that offer many products and services. Many cybermalls consist of links to affiliated retailers.
Purchases of manufacturing, repair, and operations goods and services are an example of wholesale e-commerce. eCommerce software and processes can help streamline and improve processes for managing manufacturing, repair and operations.

20. E-commerce Technology, Infrastructure, and Development
Chapter 5.3
E-commerce Technology, Infrastructure, and Development
Key Terms
Web site development
tools
Web page construction
software
E-commerce software
Catalog management
Product configuration
software
Electronic shopping cart
Digital certificates
Electronic cash
Electronic wallet
Smart card

21. E-commerce Technology, Infrastructure, and Development
Cost, Availability, Reliability, Security, Redundency
Catalog, Shopping Cart, Transaction Processing, Traffic Data Analysis
Security, Encryption, Delivery, Tracking
Supply chain management is an important value chain that includes demand planning, supply planning, and demand fulfillment. Supply chain processes are key candidates for conversion to e-commerce. Demand planning seeks to understand buying patterns and forecast demand for a product or service. Demand fulfillment processes include taking orders, verifying customer information and credit, agreeing to fill the order, managing unfilled, backlogged orders, and filling orders. Supply planning involves planning for the infrastructure supporting procurement and demand fulfillment – such as planning for transportation, distribution and procurement. In order to get benefits from converting supply chain management processes to e-commerce, such as increased revenues, decreased costs, improved customer satisfaction, and reduced inventory, all subprocesses involving communication or exchange of goods between all stakeholders, such as manufacturers, distributors, and retailers must be integrated. With such integration, costs can be cut by reducing time-consuming and labor-intensive steps throughout the supply chain; customer satisfaction, and therefore loyalty, can be improved by the ability to give customers more detailed information about order status; and by increasing the speed and accuracy of information, allowing inventory reductions, and thus, reduced capital tied up in inventory.
Dedicated machine that can handle a lot of traffic.
Click Internet Services, E-commerce Hosting

22. Hardware
Storage capacity and computing power required of the Web server depends on:
Software that will run on the server
Volume of e-commerce transactions
Web site hosting

23. Software Web site development tools Retrieving and sending Web pages
Tools used to develop a web site, including HTML or visual web page editor, software development kits, and web page upload support.
Retrieving and sending Web pages
Web page construction
Software that uses web editors and extensions to produce both:
Static Web pages
Dynamic Web pages

24. Software E-commerce software must support: Catalog management
Automates the process of creating a real-time interactive catalog and delivering customized content to a user’s screen.
Product configuration
Software used by buyers to build the product they need online E.g.
Electronic shopping cart
A model used to track the items selected for purchase, allow shoppers to view what is in the cart, add new items to it, and remove items from it.

25. Software
Figure 5.5: Electronic Shopping Cart

26. Electronic Payment Systems
Digital certificate: an attachment to an message or data embedded in a Web page that verifies the identity of a sender or a Web site
Electronic cash (e-cash or digital cash)
any of several schemes that allow a person to pay for goods or services by transmitting a number from one computer to another

27. Is it safe to provide your bank information using this form?

28. Electronic Payment Systems
Electronic wallet: a computerized stored value that holds credit card information, electronic cash, owner identification, and address information
Credit card e.g. VISA, MasterCard
Charge card e.g American Express
Debit card e.g. Bank Of America
Smart card
A credit card-sized device with an embedded microchip to provide electronic memory and processing capability
FSU Card

29. An Overview of Transaction Processing Systems
Chapter 5.4
An Overview of Transaction Processing Systems
Key Terms
Batch processing system
Online transaction
processing (OLAP)
Transaction processing
cycle
Data collection
Data editing
Data correction
Data manipulation
Data storage
Document production
Order processing systems

30. An Overview of Transaction Processing Systems
Provide data for other business processes:
Management information system/decision support system (MIS/DSS)
Special-purpose information systems
Process the detailed data necessary to update records about the fundamental business operations
Include order entry, inventory control, payroll, accounts payable, accounts receivable, and the general ledger.

31. An Overview of Transaction Processing Systems
Figure 5.6: TPS, MIS/DSS, and Special Information Systems in Perspective

32. Traditional Transaction Processing Methods and Objectives
Batch processing system: method of computerized processing in which business transactions are accumulated over a period of time and prepared for processing as a single unit or batch
Online transaction processing (OLTP): computerized processing in which each transaction is processed immediately, without the delay of accumulating transactions into a batch

33. Transaction Processing Activities
Transaction processing cycle: the process of data collection, data editing, data correction, data manipulation, data storage, and document production
Data collection
Data editing
Data correction
Data manipulation
Data storage
Document production and reports

34. Transaction Processing Cycle
Supply chain management is an important value chain that includes demand planning, supply planning, and demand fulfillment. Supply chain processes are key candidates for conversion to e-commerce. Demand planning seeks to understand buying patterns and forecast demand for a product or service. Demand fulfillment processes include taking orders, verifying customer information and credit, agreeing to fill the order, managing unfilled, backlogged orders, and filling orders. Supply planning involves planning for the infrastructure supporting procurement and demand fulfillment – such as planning for transportation, distribution and procurement. In order to get benefits from converting supply chain management processes to e-commerce, such as increased revenues, decreased costs, improved customer satisfaction, and reduced inventory, all subprocesses involving communication or exchange of goods between all stakeholders, such as manufacturers, distributors, and retailers must be integrated. With such integration, costs can be cut by reducing time-consuming and labor-intensive steps throughout the supply chain; customer satisfaction, and therefore loyalty, can be improved by the ability to give customers more detailed information about order status; and by increasing the speed and accuracy of information, allowing inventory reductions, and thus, reduced capital tied up in inventory.

35. Order Processing Systems
Systems that process order entry, sales configuration, shipment planning, shipment execution, inventory control, invoicing, customer relationship management, and outing and scheduling.

36. Order Processing Systems
The lifeblood of the organization!
Supply chain management is an important value chain that includes demand planning, supply planning, and demand fulfillment. Supply chain processes are key candidates for conversion to e-commerce. Demand planning seeks to understand buying patterns and forecast demand for a product or service. Demand fulfillment processes include taking orders, verifying customer information and credit, agreeing to fill the order, managing unfilled, backlogged orders, and filling orders. Supply planning involves planning for the infrastructure supporting procurement and demand fulfillment – such as planning for transportation, distribution and procurement. In order to get benefits from converting supply chain management processes to e-commerce, such as increased revenues, decreased costs, improved customer satisfaction, and reduced inventory, all subprocesses involving communication or exchange of goods between all stakeholders, such as manufacturers, distributors, and retailers must be integrated. With such integration, costs can be cut by reducing time-consuming and labor-intensive steps throughout the supply chain; customer satisfaction, and therefore loyalty, can be improved by the ability to give customers more detailed information about order status; and by increasing the speed and accuracy of information, allowing inventory reductions, and thus, reduced capital tied up in inventory.
Business Resumption Planning: Anticipating and minimizing the effects of disasters.

37. Order Process I ng Purchasing
Order Entry System
Order Process I ng
Purchasing
Accounts Payable System
Customer
Supplier
Shipment Planning System
Receiving System
Shipment Execution System
Purchase Order Processing System
Invoicing System
Inventory Control System
Warehouse

38. TPS Control and Management Issues
Chapter 5.5
TPS Control and Management Issues
Key Terms
Business continuity
planning
Transaction processing
system audit
Audit trail

39. TPS Control and Management Issues
Business continuity planning: identification of the business processes that must be restored first in the event of a disaster and specification of what actions should be taken and who should take them to restore operations
Audit trail: documentation that allows the auditor to trace any output from the computer system back to the source documents

40. Transaction Processing System Audit
Does the system meet the business need for which it was implemented?
What procedures and controls have been established?
Are these procedures and controls being used properly?
Are the information systems and procedures producing accurate and honest reports?

41. Enterprise Resource Planning
Chapter 5.6
Enterprise Resource Planning
Key Terms
Best practices

42. Enterprise Resource Planning (ERP)
From Webopedia.com: a business management system that integrates all facets of the business, including planning, manufacturing, sales, and marketing.
Key: Real-time monitoring of business functions
Current business conditions make enterprise-wide accessibility of information a key to success. ERP software offers that possibility. Deploying an ERP system allows a firm to replace numerous separate, sometimes isolated, inefficient legacy applications with a single set of integrated products. This improves the efficiency of systems and decreases the cost of maintaining old systems. This improves an organization’s ability to adapt to changing conditions. Implementing an ERP system also gives an enterprise the chance to upgrade and standardize hardware, software and databases, reducing support and operations costs.
ERP systems are designed around the most effective and customer-oriented business practices found. Thus, deploying an ERP system will help an organization follow the industry’s best practices. Although the adoption of improved work processes can be beneficial, as noted on the next slide, this can also be a disadvantage. Often established processes must be re-engineered, possibly causing dissatisfaction or turnover among experienced employees.
Since ERP systems maintain an integrated database, decisions can be made based on enterprise-wide data. This is far more efficient than trying to coordinate decisions across units.

43. ERP Benefits Eliminates costly, inflexible legacy systems
Improved technology infrastructure
Improved work processes
Increased data access for decision making
Disadvantages
Expense & time
Radical change
Integrating with other systems
One vendor risks
Current business conditions make enterprise-wide accessibility of information a key to success. ERP software offers that possibility. Deploying an ERP system allows a firm to replace numerous separate, sometimes isolated, inefficient legacy applications with a single set of integrated products. This improves the efficiency of systems and decreases the cost of maintaining old systems. This improves an organization’s ability to adapt to changing conditions. Implementing an ERP system also gives an enterprise the chance to upgrade and standardize hardware, software and databases, reducing support and operations costs.
ERP systems are designed around the most effective and customer-oriented business practices found. Thus, deploying an ERP system will help an organization follow the industry’s best practices. Although the adoption of improved work processes can be beneficial, as noted on the next slide, this can also be a disadvantage. Often established processes must be re-engineered, possibly causing dissatisfaction or turnover among experienced employees.
Since ERP systems maintain an integrated database, decisions can be made based on enterprise-wide data. This is far more efficient than trying to coordinate decisions across units.

44. ERP
Best practices
the most efficient and effective ways to complete a business process

45. Review E-commerce supports electronic business transactions.
Electronic Data Interchange (EDI) uses private VANs for e-commerce.
B2B is huge compared to B2C and C2C.
E-commerce benefits include streamlined business process and opportunities for small businesses.
M-commerce is e-commerce over mobile devices.

46. Review
Encryption and Digital Signatures provide security for e-commerce transactions.
TPS facilitates and records business transactions.
There are lots of different kinds of TPSs. Among the most important is the Order Processing System.
ERP provides real time access to business processes.

47. ?
Questions? ? ? ? ?