Business Systems:
Electronic Commerce, Transaction Processing
Systems (TPS), Management Information
Systems (MIS), Enterprise Resource Planning
(ERP), Decision Support System (DSS), Group
Decision Support System (GDSS), Executive
Support System (ESS/EIS)
Chapter 5 and 6
Electronic Commerce History
Began in the early 1970s
innovations such as electronic transfer of funds (EFT)
were limited to large corporations and a few daring
small businesses
Electronic Data Interchange (EDI)
added other kinds of transaction processing and
extended the types of participating companies
ANSI X.12 standardized in 1983
EDIFACT standardized in 1986-87
Over the last five years
innovative applications, from advertisement to auctions
and procurement
fueled by the internet
Types of Electronic Commerce
Business-to-consumer EC (B2C)
companies sell directly to consumers over the Internet
Business-to-business EC (B2B)
two (or more) businesses make transactions electronically
More than $7.3 trillion volume by 2004
15x volume of B2C
Mostly done by EDI – 95% of EC is EDI!
Consumer-to-consumer (C2C)
E.g. E-bay, Classifieds
Government-to-citizens (G2C) and to others
Doing taxes online etc.
Mobile commerce (m-commerce)
Wireless commerce. E.g. Using cell phone to pay for gas
Supply Chain Management
Value Chains in E-Commerce
Conversion to e-commerce supply chain
management provides businesses with an
opportunity to:
increase revenues or decrease costs by eliminating
time-consuming and labor-intensive steps throughout
the order and delivery process
improve customer satisfaction by enabling customers
to view detailed information about delivery dates and
order status
reduce inventory including raw materials, safety stocks,
and finished goods
Product and Information Flow for
HP Printers Ordered Over the Web
E-Commerce Applications
Retail and Wholesale
Cybermall
Electronic exchange
Manufacturing
Marketing
Investment and Finance
On-line Stock Trading
On-line Banking
Electronic Retailing
Solo storefronts
Examples: walmart.com, buy.com
Can use services like http://store.yahoo.com
Cybermalls
Stores give up some freedom to be part of the mall
Some solo stores expand to become malls
Amazon.com, Buy.com
Some malls are more like intelligent agents for
comparing prices (pricegrabber.com)
Companies can both be in a mall and a solo
storefront
Issues in E-tailing
Channel conflict
Lego.com: Keeping consumers and retailers happy (very
small percent of revenue from online sales)
Order fulfillment
Shipping small quantities to many customers. How to handle
returns?
B2B E-commerce
Sell-side marketspaces
One company trying to sell its goods to many
companies
Customized catalogs, auctions
Buy-Side marketspaces / E-procurement
One large buyer, many smaller suppliers
Examples: Supermarket chains, Ford, Boeing
Alternative: Group procurement (e.g.
shop2gether.com)
Electronic Exchanges
Many sellers and many buyers
An Electronic Exchange
Key Technical Components
•Catalog Management
•Product Configuration
•Shopping Cart
•E-commerce Transaction
Processing
•Web Site Data Analysis
•Linux
•Unix
•Windows
Electronic Payment Systems
•Credit cards, smart cards
•Digital certificate
•Electronic cash
•Electronic wallet
•P2P payment (PayPal)
Decision: Develop or outsource?
•Apache Web server
•Oracle
•Web construction
•PC
•Mainframe
•Mid-range
Transaction Processing Information
Systems
What is a transaction?
Grocerystore purchase, airline ticket reservation,
deposit money to an account.
Something is exchanged (money, goods, ...)
What data is collected?
What transactions did you take part in yesterday?
Transaction Processing
major business processes
provide the mission-critical activities
transaction may generate additional transaction
Transaction Processing System (TPS)
computerized information system
supports the transaction processes
Critical to the well-being of the organization!!
Characteristics of TPS
Large amounts of data are processed
The TPS processes information on a regular basis
High level of detail in data
Low complexity of calculations
Systems must be very reliable
Large storage (database) capacity is required
Need lots of processing speed due to the high volume
Input and output data are structured
Need high level of accuracy, data integrity, and security
Must allow for queries of data
Transaction Processing Overview
Transaction Processing Systems
Batch Processing System
Transactions are accumulated over time and
processed in a single group
On-line Transaction Processing (OLTP)
Each transaction is processed immediately
Examples?
Does anyone use a
batch processing system?
Know of one?
Heard of one?
TPS, MIS/DSS, and AI/ES
Transaction Processing Activities
Data Collection
Source data automation makes it
easier
Data Editing
Check for validity and
completeness
Data Correction
Re-enter invalid data
Data Manipulation
Simple calculations
Data Storage
Update databases
Document Production
Business documents and Reports
Example: Point-of-Sale System
Order Processing Systems
Systems that process order
entry, sales configuration,
shipment planning, shipment
execution, inventory control,
invoicing, customer
interaction, and routing and
scheduling
Integration of
TPSs
Management Information Systems
Provide routine information to managers in the
functional areas
Provide information in exception reports and ad
hoc (demand) reports
Terminology
Originally: ’MIS’ used for everything having to do with
IT and IS
Today: ’MIS’ used for this type of system (except in a
few universities!)
MIS gets input from TPS
Management Information System
Sources of Managerial Information
Enterprise Resource Planning (ERP)
Provide real-time monitoring of business functions
Permits timely analysis of issues such as quality, availability,
customer satisfaction, performance, and profitability.
Combines TPS and MIS (among other things)
Advantages
Elimination of costly, inflexible legacy systems
Improvement of work processes
Increase in access to data for operational decision making
Upgrade of technology infrastructure
Disadvantages
Expense and Time in Implementation
Difficulty Implementing Change
Difficulty Integrating with Other Systems
Risks in Using One Vendor
Decision Support Systems
Support for Problem-Solving
Phases
Different Decision
Frequencies
One-time: ad hoc DSS
Repetitive: Institutional DSS
Different Problem Structures
Highly structued vs. Semi or
unstructured
Support for Various
Decision-Making Levels
Operational, tactical, strategic
Decision Making Level
Book, p. 238
Model of a DSS
•Financial Models
•Statistical Analysis Models
•Graphical Models
•Project Management Models
Group Decision Support System
Software application that consists of most
elements in a DSS, plus software needed to
provide effective support in a group decision
making
Special design
Ease of use
Flexibility
Decision-making support
Anonymous input
Reduction of negative
group behavior
Parallel communication
Automated record
keeping
GDSS Configuration
GDSS Alternatives
Executive Support System
Tailored to individual executives
Easy to use
Drill down capabilities
Support need for external data
Can help when uncertainty is high
Future-oriented
Linked to value-added processes
Support for
defining an overall vision
strategic planning
strategic organizing and staffing
strategic control
crisis management
Next Week
Thanksgiving
December 4
Lecture
Chapter 8
Group Presentations
Team 4, 5 and 6