Post on 11-Jan-2016
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Introduction to E-Business3
UAA – ACCT 316Accounting Information
SystemsDr. Fred Barbee
Ch
ap
ter
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E-Business Defined
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E-Business . . .
The use of information technology and electronic communication networks to exchange business information and conduct transactions in electronic, paperless form.
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E-Business . . .
Refers to technology-enabled interactions between individuals and organizations
B2C Popular for purchasing books, music, or airline tickets.
B2B Has a far larger impact on the economy.
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E-Business . . .
. . .refers to all uses of advances in IT, particularly
networking and
communications technology,
to improve the ways in which an organization performs all of its business processes.
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Interactions With . . .
Suppliers
Customers
Investors
Creditors
The government
Media
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E-Business Models
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E-Business Models
Business to Consumers (B2C): Interactions between individuals and organizations.
Business to Business (B2B): Interorganizational e-business.
Categories of E-Business
Type
Characteristics
B2C Organization-individualSmaller dollar valueOne-time or infrequent transactionsRelatively simple
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B2C Issues
Trust – i.e., is this a legitimate business?
Security – i.e., will this transaction be secure?
Categories of E-Business
Type CharacteristicsB2BB2GB2E
InterorganizationalLarger dollar valueEstablished, on-going relationshipsExtension of credit by seller to
customerMore complex
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B2B Issues
Larger, more complex transactions – typically between business partners.
Accountability
Control
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Report: B2B E-Commerce Gaining Strength
Study by Forrester Research and the Institute for Supply Management (
http://www.ecommercetimes.com) January 17, 2002
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B2B E-Commerce Gaining Strength
Nearly half of all large U.S. corporations are now using the Internet to cut down on supply costs.
45% of firms that spend US$100 million or more per year on supplies used the Internet in the 4th Quarter of 2002 (up from 28% in 3rd Quarter).
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B2B E-Commerce Gaining Strength
53% described the Internet as “very important” or “critical” to purchasing and cost savings plans in 2002.
87% described the Internet as ”important.”
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Study: E-Commerce to Top $1 Trillion in 2003
Study by IDC (http://www.idc.com) January
17, 2002
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E-Commerce to Top $1 Trillion in 2003
By the end of 2002, more than 600 million people worldwide will have access to the Web.
They will spend more than US$1 trillion shopping online.
E-commerce grew to $600 billion in 2001, a 68% increase over 2000.
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E-Commerce to Top $1 Trillion in 2003
“Once people get over the security and privacy hiccups, as well as other problems that are not directly related to e-commerce, and have access to wider product offerings, e-commerce will become as widespread as offline commerce.”
Carol Glasheen, Vice President IDC Research.
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E-Commerce to Top $1 Trillion in 2003
B2B will account for 83% of online sales in 2002, and 88% in 2006.
The majority of B2B sales consists of volume purchasing, meaning that companies are spending huge amounts of money online.
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Report: Online B2B Surge May Herald Overall Recovery
Study by Forrester Research and the Institute for Supply Management (
http://www.ecommercetimes.com) September 11, 2002
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Online B2B Surge . . .
84% of the companies surveyed said they use the Web to purchase indirect materials.
Up from 78% in the first quarter.
65% said they buy materials directly from suppliers online.
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The Next Wave of E-Commerce Technology
Lou Hirsch E-Commerce Times
July 11, 2002 (http://www.ecommercetimes.com)
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The Next Wave of E-Commerce Technology
“In the not-too-distant future, e-commerce technology will become smarter and faster and will completely transform the way companies deal with internal information and customer service.”
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The Next Wave of E-Commerce Technology
Interactive company portals that can communicate with other portals in real-time could drastically alter the sales process.
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The Next Wave of E-Commerce Technology
One promising concept is the idea of “collaborative commerce,” in which companies set up smart hubs that are not only used by their own customers, but also interact with other companies’ sites.
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The Next Wave of E-Commerce Technology
There will be movement in the next three years toward shared portals.
Using these portals, companies that regularly do business with one another will be able to access real-time information about product availability and pricing.
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The Next Wave of E-Commerce Technology
Other possibilities . . .
Supercharged Kiosks
Instant Messaging in both the B2B and B2C environments
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E-Business Effects on Business Processes
Electronic Data Interchange (EDI)
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Electronic Data Interchange
Standard protocol, available since the 1970s, for electronically transferring information between organizations and across business processes.
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E-Business Effects on Business Processes
EDI:
Reduces Inventory
Streamlines business processes,
Eliminates paper, and
Improves the flow of information
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Recent EDI Facilitators
Traditional EDI was expensive. New developments that have removed this cost barrier are:
The Internet: Eliminates the need for special proprietary third-party networks.
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Recent EDI Facilitators
XML: Extensible Markup Language – Set of standards for defining the content of data on Web pages.
XML + EDI = XML/EDI
“By combining XML and EDI we create new powerful paradigm different from XML or EDI!”
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Recent EDI Facilitators
ebXML:
Defines standards for coding common business documents.
Eliminates need for complex software to translate documents created by different companies.
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Integrated Electronic Data Interchange (EDI)
Reaping the full benefits of EDI requires that it be fully integrated with the company’s AIS.
Suppliers
Customers
AIS
Company
EDIPurchase orders
Customer orders
EDI
Integrated EDI System
Suppliers
Customers
AIS
Company
EDI
EDI
Stand-alone EDI System
Sales Order Entry
EDI System
Customer Orders
Purchase Orders
Customer Orders
Phone
Fax
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E-Business Effects on Business Processes
Purchasing and Inbound Logistics
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Purchasing and Inbound Logistics
The Internet improves the purchasing activity by making it easier for a business to identify potential suppliers and to compare prices.
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Purchasing and Inbound Logistics
Better information about inbound shipments enables organizations to reduce the amount of inventory buffers carried.
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E-Business Effects on Business Processes
Internal Operations, Human Resources, and Infrastructure.
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Internal Operations, Human Resources, and Infrastructure
Advanced communications technology can significantly improve:
The efficiency of internal operations.
Planning.
The efficiency and effectiveness of the human resource support activity.
The efficiency and effectiveness of customer payments.
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E-Business Effects on Business Processes
Electronic Funds Transfer
1. Inquiries
2. Responses
3. Orders
4. Acknowledgment5. Billing
6. Remittance Data7. Payments
EDI = Steps 1-6; EFT = Step 7; FEDI = Steps 1-7
Information Flows in Electronic Commerce
Nonintegrated EDI and EFT
Company A’sbank
Company B’sbank
Company A Company B
Payment Instructions
(ACH Format)
Receipts Information
(EDI Format)Remittance Data
Financial Electronic Data Interchange (FEDI)
Company A’sbank
Company B’sbank
Company A Company B
Remittance data and payment instruction
Remittance data and funds
Remittance data and receipts instruction
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Other Electronic Possibilities
Financial Value-Added Networks (FVAN)
Electronic bill payments
Electronic cash
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E-Business Effects on Business Processes
Application Service Providers (ASPs)
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Application Service Provider
An Application Service Provider (ASP) is a company that provides access to and use of application programs via the Internet.
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Application Service Provider
The ASP owns and hosts the software; the contracting organization accesses the software via the Internet.
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E-Business Effects on Business Processes
Outbound Logistics
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Outbound Logistics
E-business can improve the efficiency and effectiveness of sellers’ outbound logistical activities.
Timely and accurate access to detailed shipment information.Inventory optimization.For goods and services that can be digitized, the outbound logistics function can be performed entirely electronically.
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E-Business Effects on Business Processes
Sales and Marketing
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Sales and Marketing
Companies can create electronic catalogs to automate sales order entry.Significantly reduce staffing needs.Customization of advertisements
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E-Business Effects on Business Processes
Post-Sale Support and Service
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Post-Sale Support and Service
Consistent information to customers.Provide answers to frequently asked questions (FAQs).
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E-Business Effects on Business Processes
E-Business Success Factors
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E-Business Success Factors
Critical Success Factors (CSFs)
Characteristics of business transactions:
Validity
Integrity
Privacy
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E-Business Effects on Business Processes
Addressing Validity, Integrity, and Privacy
Concerns
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Encryption
Single-key systems: Same key is used to encrypt and decrypt the message
Simple, fast, and efficient
Example: the Data Encryption Standard (DES) algorithm
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Encryption
Public Key Infrastructure (PKI): Uses two keys:
Public key is publicly available and usually used to encode message
Private key is kept secret and known only by the owner of that pair of keys. Usually used to decode message
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Advantages & Disadvantages of PKI
AdvantagesNo sharing of key necessaryMore secure than single-key systems
DisadvantagesMuch slower than single-key systems
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Digital Signatures and Digests
Digital signature: An electronic message that uniquely identifies the sender of that message.
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Digital Signatures and Digests
Digest: The message that is used to create a digital signature or digital summary.
If any individual character in the original document changes, the value of the digest also changes. This ensures that the contents of a business document have not been altered or garbled during transmission
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Digital Certificates & Certificate Authorities
Digital Certificate: Used to verify the identity of the public key’s owner.
A digital certificate identifies the owner of a particular private key and the corresponding public key, and the time period during which the certificate is valid.
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Digital Certificates & Certificate Authorities
Digital certificates are issued by a reliable third party, called a Certificate Authority, such as:
Verisign
Entrust
Digital Signature Trust
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Digital Certificates & Certificate Authorities
The certificate authority’s digital signature is also included on the digital certificate so that the validity of the certificate can also be verified.
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Infrastructure for E-Business
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Types of Networks
Private portion owned or leased by the company
Local-Area Networks (LANs)
Wide-Area Networks (WANs)
The Internet
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Types of Networks
Intranet
Extranet
Virtual Private Network (VPN)
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Infrastructure for E-Business
Network Configuration
Options
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Local Area Networks
Star configuration
Ring configuration
Bus configuration
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Star Configuration
Each device is directly connected to the central server.
All communications between devices are controlled by and routed through the central server.
Typically, the server polls each device to see if it wants to send a message.
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Host computeror server
A B C
G F E
DH
Star Configuration
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Ring Configuration
A
H
B
D
C
EGF
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A B C
GFE
D
H
Host computeror server
Bus channel
Bus Configuration
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Wide Area Networks
Centralized System
Decentralized System
Distributed Data Processing
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Centralized WAN
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Decentralized WAN
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Distributed Data Processing
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Network Configuration Options
Many WANs, and most LANs, are set up as client/server systems.
Each desktop computer is referred to as a client.
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Network Configuration Options
The client sends requests for data to the servers.
The servers perform preprocessing on the database and send only the relevant subset of data to the client for local processing.