CHAPTER 14 EBUSINESS

Biggest benefit of the internet: how it enables organizations to perform business with anyone, anywhere, anytime

Ecommerce- the buying and selling of goods and services over the internet.It refers only to online transactions.

Ebsuiness- derived from the term Ecommerce. It is the conducting of business on the internet, not only buying and selling, but also serving customers and collaborating with business partners. Also refers to online exchanges if information.

Ebusiness Models

·         Ebusiness Model- is an approach to conducting electronic business on the internet

-  Takes place between two major entities- business and consumers.

   Business-to-business (B2B)

· Applies to business buying from and selling to each other over the internet.
· Electronic marketplaces represent a new wave in B2B ebusiness models.
· Electronic marketplaces or emarketplaces- are interactive business communities providing a central market space where multiple buyers and sellers can engage in business activities.
- They represent structures for conducting commercial exchange, consolidating supply chains, and creating new sales channels.

Business-to-business E market place Overview.
· Their primary goal is to increase market efficiency by tightening and automating the relationship between buyers and sellers.
· Existing marketplaces allow access to various mechanisms in which to buy and sell almost anything, from services to direct materials.

Business-to-consumer (B2C)

· Applies to any business that sells its products or services to consumers over the internet.
Eshop
· Sometimes referred to as an estore or etailer. It is a version of a retail store where customers can shop at any hour of the day without leaving their home or office.
· These online stores sell and support a variety of products and services.
· The other online businesses channeling their goods and services via the internet only, such as Amazon.com, are called pure plays.

Types of Businesses:

·         Brick-and-mortar business- a business that operates in a physical store without an internet presence.

·         Pure-play (virtual) business- a business that operates on the internet only without a physical store. Examples include Amazon.com and Expedia.com

·         Click-and-mortar business- a business that operates in a physical store and on the internet. Examples include REI and Barnes and Noble.

Consumer-to-business (C2B)

· Applies to any consumer that sells a product or service to a business over the internet.
· An example is Priceline.com where bidders (or customers) ser their prices for items such as airline tickets or hotel rooms, and a seller decides whether to supply them.

Consumer-to-consumer (C2C)

·    Applies to sites primarily offering goods and services to assist consumers interacting with each other over the internet.

 The internet’s most successful C2C online auction website, eBay, links like-minded buyers and sellers for a small commission.

 C2C online communities, or virtual communities, interact via email groups, web-based discussion forums, or chat rooms.

Online auctions:

·         Electronic auction (eauction)- sellers and buyers solicit consecutive bids from each other and prices are determined dynamically.

·         Forward auction- an auction that sellers use as a selling channel to many buyers and the highest bid wins.

·         Reverse auction- an auction that buyers use to purchase a product or service, selecting the seller with the lowest bid.

C2C Communities:

·         Communities of interest- people interact with each other on specific topics, such as golfing and stamp collecting.

·         Communities of relations- people come together to share certain life experience, such as cancer patients, senior citizens, and car enthusiasts.

·         Communities of fantasy- people participate in imaginary environments, such as fantasy football teams and playing one-to-one with Michael Jordan.

Ebusiness Benefits and Challenges.

Ebusiness Benefits:

·         Highly Accessible- businesses can operate 24 hours a day, 7 days a week, and 365 days a year.

·         Increased Customer Loyalty- additional channels to contact, respond to, and access customers helps contribute to customer loyalty.

·         Improved Information Content- in the past, customers had to order catalogs or travel to a physical facility before they could compare price and product attributes. Electronic catalogs and web pages present customers with updated information in real time about goods, services, and prices.

·         Increased Convenience- Ebusiness automates and improves many of the activities that make up a buying experience.

·         Increased Global Reach- Business, both small and large, can reach new markets.

·         Decreased Cost- the cost of conducting business on the Internet is substantially less than traditional forms of business communication.

Ebusiness Challenges:

·         Protecting Consumers- consumers must be protected against unsolicited goods and communication, illegal or harmful goods, insufficient information about goods or their suppliers, invasion of privacy, and cyberfraud.

·         Leveraging Existing Systems- most companies already use information technology to conduct business in non-Internet environments, such as marketing, order management, billing, inventory, distribution, and customer service. The internet represents an alternative and complementary way to do business, but it is imperative that ebusiness systems integrate existing sytsems in a manner that avoids duplicating functionality and maintains usability, performance, and reliability.

·         Increasing Liability- Ebsuiness exposes suppliers to unknown liabilities because internet commerce law is vaguely defined and differs from country to country. The internet and its use in ebusiness have raised many ethical, social, and political issues, such as identity theft and information manipulation.

·         Providing Security- The internet provides universal access, but companies must protect their assets against accidental or malicious misuse. System security, however, must not create prohibitive complexity or reduce flexibility. Customer information also needs to be protected from internal and external misuse. Privacy systems should safeguard the personal information critical to building sites that satisfy customer and business needs. A serious deficiency arises from the use of the internet as a marketing means. Sixty percent of internet users do not trust the internet as a payment channel. Making purchases via the internet is considered unsafe by many. The issue affects both the business and the consumer. However, with encryption and the development of secure websites, security is becoming less of a constraint for ebusinesses.

·         Adhering to Taxation Rules- the internet is not yet subject to the same level of taxation as traditional businesses. While taxation should not discourage consumers from using electronic purchasing channels, it should not favor internet purchases over store purchases either. Instead, a tax policy should provide a level playing field for traditional retail businesses, mail-order companies, and internet-based merchants. The internet marketplace is rapidly expanding, yet it remains mostly free from traditional forms of taxation. In one recent study, uncollected state and local sales taxes from ebusiness were projected to exceed $60 billion in 2008.

Mashups

·         Web mashup- a website or web application that uses content from more than one source to create a completely new service.

·         The web version of a mashup allows users to mix map data, photos, video, news feeds, blog entries and so on.

·         Application Programming Interface (API)- set of routines, protocols, and tools for building software applications. A good API makes it easier to develop a program by providing all the building blocks.

CHAPTER 12 INTEGRATING THE ORGANIZATION FROM END TO END-ENTERPRISE RESOURCE PLANNING

Enterprise Resource Planning (ERP)

It serves as the organization’s backbone in providing fundamental decision making support.It enables people in different business areas to communicate. ERP system helps an organization to obtain operational efficiencies, lower costs, improve supplier and customer relations, and increase revenues and market share.

ERP Integration Data Flow

 ERP Process Flow

Bringing the Organization Together

ERP enables employees across the organization to share information across a single, centralized database.With extended portal capabilities, an organization can also involve its suppliers and customers to participate in the workflow process, allowing ERP to penetrate the entire value chain, and help the organization achieve greater operational efficiency.

Organization before ERP


ERP- Bringing the Organization Together

The Evolution of ERP
· Although ERP solutions were developed to deliver automation across multiple units of an organization, to help facilitate the manufacturing process and address issues such as raw materials, inventory, order entry, and distribution, ERP was unable to extend to other functional areas of the company such as sales, marketing, and shipping. It could not tie to any CRM capabilities that would allow organizations to capture customer-specific information, nor did it work with websites or portals used for customer service or order fulfillment.

Primary Users and Business Benefits of Strategic Initiatives.

Integration Tools
· An integrated enterprise infuses support areas, such as finance and human resources, with a strong customer orientation.
· Integration are achieved using:
Middleware- several different types of software that sit in the middle of and provide connectivity between two or more software applications. It translates information between disparate systems
· Enterprise application integration (EAI) middleware- represents a new approach to middleware by packaging together commonly used functionality, suchas providing prebuilt links to popular enterprise applications, which reduces the time necessary to develop solutions that integrate applications from multiple vendors.
 Integration between SCM, CRM, and ERP Applications.

 Companies run on independent applications, such as SCM, CRM, and ERP. If one application performs poorly, the entire customer value delivery system is affected.

Enterprise Resource Planning’s Explosive Growth:
Reasons of ERP being proven to be such a powerful force:

· ERP is a logical solution to the mess of incompatible applications that had sprung up in most businesses.
· ERP addresses the need for global information sharing and reporting.
· ERP is used to avoid the pain and expense of fixing legacy systemsTo qualify as a true ERP solution, the system not only must integrate various organization processes, but also must be:

· Flexible- an ERP system should be flexible in order to respond to the changing needs of an enterprise.

· Modular and open- an ERP system has to have open system architecture, meaning that any module can be interfaced with or detached whenever required without affecting the other modules. The system should support multiple hardware platforms for organizations that have a heterogeneous collection of systems. It must also support third- party add-on components.

· Comprehensive- an ERP system should be able to support a variety of organizational functions and must be suitable for a wide range of business organizations.

· Beyond the company- an ERP system must not be confined to organizational boundaries but rather support online connectivity to business partners or customers.
Everyone involved in sourcing, producing, delivering the company’s product works with the same information, which eliminates redundancies, cuts wasted time, and removes misinformation

CHAPTER11 BUILDING A CUSTOMER-CENTRIC ORGANIZATION-CUSTOMER RELATIONSHIP MANAGEMENT

CHAPTER11

BUILDING A CUSTOMER-CENTRIC ORGANIZATION-CUSTOMER RELATIONSHIP MANAGEMENT

Customer Relationship Management (CRM)

CRM is a business philosophy based on the premise that those organizations that understand the needs of individual customers are best positioned to achieve sustainable competitive advantage in the future.

- A customer strategy starts with understanding who the company's customers are and how the company can meet strategic goals.

- As the business world increasingly shifts from product focus to customer focus, most organizations recognize the treating existing customers well is the best source of profitable and sustainable revenue growth in the age of e-business, however, an organization is challenged more than ever before to truly satisfy its customers.

Recently, Frequency, and Monetary Value

An organization can find its most valuable customers by using a formula that industry insiders call RFM-recency, frequency, and monetary value. In other words, an organization must track:

- How recently a customer purchased items (recently)

- How frequently a customer purchases an item (frequently

- How much a customer spends on each purchase (monetary value)

The evolution of CRM

Knowing the customer, especially knowing the profitability of individual customers, is highly lucrative in the financial service industry.

There are three phases in the evolution of CRM:

1.                 CRM Reporting technology help organizations identify their customers across other applicants

2.         CRM analysis technology helps organizations segment their customers into categories such as best and worst customers.

3.               CRM predicts technological help organizations make predictions regarding customer behavior such as which customers are at risk of leaving.

The Ugly Side of CRM: Why CRM Matters More Now than Ever Before

Now companies have no choice as the power of the customer grows exponentially as the internet grows. In every case, customers have become an integral part of the action as a member of the aggregated, interactive, self-organizing, auto-entertaining audience on businesses. However, this should no be a surprise, since it was the customers crazy passion and hobbies and obsessions-that build up the web in the first place.

Customer Relationship Management's Explosive Growth

When customers buy on Internet, they see, and they steer, entire value chains.

- Customer web interaction become conversations, interactive dialogs with shared knowledge, not just business transaction. Web- based customer care can actually become the focal point of customer relationship management and provide breakthrough benefits for both the enterprise and its customers, substantially reducing costs while improving service.

- Current users allow allocating 20 percent of their IT budget to CRM solutions.

Using Analytical CRM to Enhance Decisions

The two components of a CRM strategy are:

- Operational CRM supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers.

- Analytical CRM supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers.

The primary difference between operational CRM and analytical CRM in the direct interaction between the organization and its customers.

-Personalization occurs when a website can know enough about a person's likes and dislikes that it can fashion offers that are more likely to appeal to that person. Many organizations are now utilizing CRM to create customer rules and templates that marketers can use to personalize customer messages.

Customer Relationship Management Success Factor

CRM solutions make organizational business processes more intelligent. This is achieved by understanding customer behavior and preferences, then realigning product and service offering and related communications to make sure they are synchronized with customer needs and preferences. 

Chapter 10 Extending The Organization - Supply Chain Management

Supply Chain Management

- Companies that excel in supply chain operations perform better in almost every financial measure of success, according to a report from Boston-based MR Research Inc.

- These companies understand that value chain performance translates to productivity and market-share leadership.

Basics of Supply Chain

 A supply chain consists of all parties involved, directly or indirectly, in the procedurement of a product or raw material.

- Organization must embrace technologies that can effectively manage and oversee their supply chain.

supply chain management involves the management of information flow between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.

Information Technology's Role in the Supply Chain

• The notion of virtually seamless information links within and between organizations is an essential element of integrated supply chain.
• Information technology's primary role in SCM is creating the integration or tight process and information linkages between functions within a firm.
• Considerable evidence shows that this type of supply chain integration results in superior supply chain capabilities and profits.

VISIBILITY

Supply chain visibility is the ability to view all areas up and down the supply chain.

Bullwhip effect occurs when distorted products demand information passes from one entity to the next through the supply chain.

*Information technology allows additional visibility in the supply chain.

CONSUMER BEHAVIOR

Demand planning software generates demand forecasts using statistical tools and forecasting techniques.

Ones an organization understand customer demand and its effect on the supply chain it can begging to estimate the impact that its supply chain will have on its customers and ultimately the organization's performance.

COMPETITION

Supply chain management can be broken down in"

Supply chain planning software: uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. SCP depends entirely on information for its accuracy.

Supply chain executive (SCE) software automates the different stems and stages of the supply chain.

SPEED

During the past decade, competition has focused on speed. New forms of severs, telecommunications enabling companies to perform activities that were once never thought possible.

Another aspect of speed is the company's ability to satisfy continually changing customer requirements efficiently, accurately, and quickly.

Supply Chain Management Success Factors

To succeed in today's competitive markets, companies must align their supply chains with the demands of the markets key serve.

To achieve success such as reducing operation costs, improving asset productivity, and compressing order cycle time, and organization should follow the seven principles of SCM outlines.

One of the benefits is to know immediately what is being transacted at the customer and of the supply chain instead of waiting days or weeks for the information to flow.

Organizations should study industry best practices to improve their chances of successful implementation of SCM systems. The following are keys to SCM success.

MAKE THE SALE TO SUPPLIERS

The hardest part of any SCM system is its complexity because a large part of the system extends beyond the company's walls.

WEAN EMPLOYEES OF TRADITIONAL BUSINESS PRACTICES

Operations people typically deal with phone calls, faxes, and orders scrawled on paper and will most likely want to keep it that way.

ENSURE THE SCM SYSTEM SUPPORTS THE ORGANIZATIONAL GOALS

It is important to select SCM software that give organizations and advantage in the areas most crucial to their business success.

DEPLOY IN INCREMENTAL PHASES AND MEASURE AND COMMUNICATE SUCCESS

Design the deployment of the SCM system in incremental phases.

BE FUTURE ORIENTED

The supply chain design must anticipate the future state of the business.

CHAPTER 9 - Enabling the Organization - Decision Making

CHAPTER 9 - Enabling the Organization - Decision Making

The Decision Making Process

1. Problem Identification

2. Data collection

3. Solution Generation

4. Solution Test

5. Solution Selection

6. Solution Implimention

There are reason for growth of decision making information system :

• people need to analyze large amount of information
• people must make decision quickly
• people must apply sophisticated analysis technique
• people must protect corporate asset of organizational  information
  
  
  
  
  
  
  

Transaction Processing System
moving up thru organizational pyramid users move from requiring transactional information to analytical information.

Decision Support System 
model information to support managers & business professionals during the decision-making process.
DSS used three quantitative models that are :- sensitivity analysis, what-if analysis and goal seeking analysis.

Interaction between DSS and TPS 

          

Executive Information System (EIS) - a specialized DSS that supports senior level executives within the organization.

EIS offering capabilities :
1. consolidation
2. drill down
3. slice-and-dice

            

Interaction between TPS and EIS

Digital dashboard

Integrates info from multiple components and presents it in unified display

 example of dashboard

Artificial Intelligence (AI)

Ultimate goal is ability to build a system that can mimic human intelligence
Intelligent system - various commercial applications of artificial intelligence
Artificial intelligence - simulates human intelligence such as ability to reason and learn

Chapter 7 : Storing Organizational Information

Information is stored in databases


Database – maintains information about various types of objects (inventory), events (transactions), people (employees), and places (warehouses)


Database models include:

Hierarchical database model – information is organized into a tree-like structure (using parent/child relationships) in such a way that it cannot have too many relationships

Network database model – a flexible way of representing objects and their relationships Relational database model – stores information in the form of logically related two-dimensional tables



Entity – a person, place, thing, transaction, or event about which information is stored
The rows in each table contain the entities
In Figure 7.1 CUSTOMER includes Dave’s Sub Shop and Pizza Palace entities

Attributes (fields, columns) – characteristics or properties of an entity class
The columns in each table contain the attributes
In Figure 7.1 attributes for CUSTOMER include Customer ID, Customer Name, Contact Name
Primary keys and foreign keys identify the various entity classes (tables) in the database.

Primary key – a field (or group of fields) that uniquely identifies a given entity in a table
Foreign key – a primary key of one table that appears an attribute in another table and acts to provide a logical relationship among the two tables

















Database advantages from a business perspective include

• Increased flexibility
• Increased scalability and performance
• Reduced information redundancy
• Increased information integrity (quality)
• Increased information security

Increased flexibility

• A well-designed database should:
• Handle changes quickly and easily
• Provide users with different views
• Have only one physical view
• Physical view – deals with the physical storage of information on a storage device
• Have multiple logical views
• Logical view – focuses on how users logically access information

Increased scalability and performance


A database must scale to meet increased demand, while maintaining acceptable performance levels
Scalability – refers to how well a system can adapt to increased demands
Performance – measures how quickly a system performs a certain process or transaction


Reduced information redundancy
Databases reduce information redundancy
Redundancy – the duplication of information or storing the same information in multiple places

Inconsistency is one of the primary problems with redundant information


Increase Information Integrity (Quality)


Information integrity – measures the quality of information

Integrity constraint – rules that help ensure the quality of information
Relational integrity constraint
Business-critical integrity constraint




Increased information security
Information is an organizational asset and must be protected

Databases offer several security features including:
Password – provides authentication of the user
Access level – determines who has access to the different types of information
Access control – determines types of user access, such as read-only access



Database Management Systems

Direct interaction –

The user interacts directly with the DBMS

The DBMS obtains the information from the database

Indirect interaction

User interacts with an application (i.e., payroll application, manufacturing application, sales application)

The application interacts with the DBMS

The DBMS obtains the information from the database

A data-driven Web site is an interactive Web site kept constantly updated and relevant to the needs of its customers through the use of a database. Data-driven Web sites are especially useful when the site offers a great deal of information, products, or services. Web site visitors are frequently angered if they are buried under an avalanche of information when searching a Web site. A data-driven Web site invites visitors to select and view what they are interested in by inserting a query, which the Web site then analyzes and custom builds a Web page in real-time that satisfies the query. The figure displays a Wikipedia user querying business intelligence and the database sending back the appropriate Web page that satisfies the user’s request.

Data Driven Web Site Advantages

Development: Allows the Web site owner to make changes any time—all without having to rely on a developer or knowing HTML programming. A well-structured, data-driven Web site enables updating with little or no training.

Content management: A static Web site requires a programmer to make updates. This adds an unnecessary layer between the business and its Web content, which can lead to misunderstandings and slow turnarounds for desired changes.

Future expandability: Having a data-driven Web site enables the site to grow faster than would be possible with a static site.  Changing the layout, displays, and functionality of the site (adding more features and sections) is easier with a data-driven solution.

Minimizing human error: Even the most competent programmer charged with the task of maintaining many pages will overlook things and make mistakes. This will lead to bugs and inconsistencies that can be time consuming and expensive to track down and fix. Unfortunately, users who come across these bugs will likely become irritated and may leave the site. A well-designed, data-driven Web site will have ”error trapping” mechanisms to ensure that required information is filled out correctly and that content is entered and displayed in its correct format.

Cutting production and update costs: A data-driven Web site can be updated and ”published” by any competent data entry or administrative person. In addition to being convenient and more affordable, changes and updates will take a fraction of the time that they would with a static site. While training a competent programmer can take months or even years, training a data entry person can be done in 30 to 60 minutes.

More efficient: By their very nature, computers are excellent at keeping volumes of information intact. With a data-driven solution, the system keeps track of the templates, so users do not have to. Global changes to layout, navigation, or site structure would need to be programmed only once, in one place, and the site itself will take care of propagating those changes to the appropriate pages and areas. A data-driven infrastructure will improve the reliability and stability of a Web site, while greatly reducing the chance of ”breaking” some part of the site when adding new areas.

Improved Stability: Any programmer who has to update a Web site from ”static” templates must be very organized to keep track of all the source files. If a programmer leaves unexpectedly, it could involve re-creating existing work if those source files cannot be found. Plus, if there were any changes to the templates, the new programmer must be careful to use only the latest version. With a data-driven Web site, there is peace of mind, knowing the content is never lost—even if your programmer is.

Integrating Information
among Multiple Databases

Integration – allows separate systems to communicate directly with each other

Forward integration – takes information entered into a given system and sends it automatically to all downstream systems and processes


Backward integration – takes information entered into a given system and sends it automatically to all upstream systems and processes