Chapter 5:
Electronic Commerce
and Transaction
Processing Systems
Topics:
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•
•
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Please turn off your
cell phone.
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
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Chapter 5.1
An Introduction to
Electronic Commerce
Key Terms
• Business-to-consumer
• Electronic data
(B2C) e-commerce
interchange (EDI)
• Business-to-business
• Mobile commerce
(B2B) e-commerce
(m-commerce)
• Consumer-to-consumer
(C2C) e-commerce
• Supply chain management
2
E-commerce
 Business activities conducted
using electronic data
transmission involving
computers,
telecommunications networks,
and streamlined work
processes.
3
E-commerce History
Transaction
EDI
Software
VAN
Transaction
Company B
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.
4
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
5
Pre-E-Commerce Sales
Rest of Wales
9%
UK
1%
Local
90%
Post E-Commerce Sales
E-commerce can dramatically
extend a businesses market.
Farmyard Nurseries customer
base before and after ecommerce.
http://www.farmyardnurseries.co.
uk/mail.htm.
World
2%
UK
37%
Local
25%
Rest of Wales
36%
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Challenges of E-Commerce
 Change distribution systems & work
processes
 Integrate web-based order processing with
traditional systems
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The E-Commerce Supply Chain
 Supply chain management is a key value
chain composed of:



Demand planning
Supply planning
Demand fulfillment
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The E-Commerce Supply Chain
Figure 5.1: Supply Chain Management
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E-Commerce Segmentation
 Business to
 Consumer to
Consumer (B2C)


Consumer (C2C)

Amazon.com
BestBuy.com
 Business to

eBay.com
Half.com
Business
(B2B)

Private
B2C
C2C
B2B
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E-Commerce Segmentation
Sales (Billions)
E-com m erce Revenues
$1,400
$1,200
$1,000
$800
$600
$400
B2B
$200
$0
1999
B2C
2003
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M-commerce
 M-commerce: E-commerce over mobile
devices like smartphones.



digital goods
proximity payment systems
distance goods
http://www.dylanscandybar.com
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Chapter 5.2
E-commerce Applications
•
•
•
•
•
Key Terms
Electronic retailing
Cybermall
Electronic exchange
Market segmentation
Technology-enabled
relationship management
• Electronic bill presentment
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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

www.sharperimage.com
 Cybermalls: a single Web site that offers many
products and services at one Internet location

http://eshop.msn.com
 Wholesale e-commerce: B2B
 Electronic Exchanges
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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
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E-Commerce Applications:
Manufacturing
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Figure 5.3: Model of an Electronic Exchange
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
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E-Commerce Applications:
Marketing
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Investment & Finance
 Investment and Finance

On-line Stock Trading


On-line Banking


www.sharebuilder.com
electronic bill presentment
The Motley Fool: http://www.fool.com
 Auctions


http://www.ebay.com
http://www.whattheheck.com/ebay/
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Chapter 5.3
E-commerce Technology,
Infrastructure, and
Development
Key Terms
• Web site development
tools
• Web page construction
software
• E-commerce software
• Catalog management
software
• Product configuration
software
• Electronic shopping cart
• Digital certificates
• Electronic cash
• Electronic wallet
• Smart card
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E-commerce Technology,
Infrastructure, and Development
Cost, Availability, Reliability, Security,
Redundency
Catalog, Shopping Cart, Transaction
Processing, Traffic Data Analysis
Security, Encryption, Delivery, Tracking
Dedicated machine that
can handle a lot of
traffic.
www.cnet.com
Click Internet Services, E-commerce Hosting
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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
 www.dreamhost.com
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Software
 Web site development tools
 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
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Software
 E-commerce software must support:

Catalog management


Product configuration


Automates the process of creating a real-time
interactive catalog and delivering customized content
to a user’s screen.
Software used by buyers to build the product they
need online E.g. www.dell.com
Electronic shopping cart

A model used to track the items selected for
purchase, allow shoppers to view what is in the cart,
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add new items to it, and remove items from it.
Software
Figure 5.5: Electronic Shopping Cart
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Electronic Payment Systems
 Digital certificate: an attachment to an e-mail
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
http://www.paypal.com
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Is it safe to provide
your bank
information using
this form?
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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
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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
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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.
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An Overview of Transaction
Processing Systems
Figure 5.6: TPS, MIS/DSS, and Special Information
Systems in Perspective
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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
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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
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Transaction Processing Cycle
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Order Processing Systems
 Systems that process order entry, sales
configuration, shipment planning, shipment
execution, inventory control, invoicing,
customer relationship management, and
outing and scheduling.
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Order Processing Systems
The lifeblood of the organization!
Business Resumption
Planning: Anticipating
and minimizing the
36
effects of disasters.
Order
Entry
System
Customer
Shipment
Planning
System
Shipment
Execution
System
Invoicing
System
O
r
d
e
r
P
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r
c
h
a
s
i
n
g
P
r
o
c
e
s
s
I
n
g
Accounts
Payable
System
Supplier
Receiving
System
Purchase
Order
Processing
System
Inventory
Control
System
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Warehouse
Chapter 5.5
TPS Control and
Management Issues
Key Terms
• Business continuity
planning
• Transaction processing
system audit
• Audit trail
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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
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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?
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Chapter 5.6
Enterprise Resource
Planning
Key Terms
• Best practices
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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
http://www.aim.fsu.edu/
42
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
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ERP
 Best practices

the most efficient and effective ways to
complete a business process
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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.
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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.
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Questions?
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?
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