Supporting the
User Interaction
with BusinessE
Basic Concepts
• Electronic Commerce 
• Infrastructure for E-commerce – supporting the
electronic business environment 
• Transaction Processing Systems – supporting the
user interface with business 
• Enterprise Computing – information across the
organization 

MIS 300, Chapter 5
2
Principles and Learning Objectives -1
• E-commerce is a new way of conducting business,
and as with any other new application of technology,
it presents both opportunities for improvement and
potential problems. 
– Identify several advantages of e-commerce.
– Identify some of the major challenges that companies
must overcome to succeed in e-commerce and mcommerce.
– Describe some of the current uses and potential
benefits of m-commerce.
– Identify several e-commerce applications.
MIS 300, Chapter 5
3
Principles and Learning Objectives -2
• E-commerce requires the careful planning and
integration of a number of technology infrastructure
components. 
– Outline the key components of technology
infrastructure that must be in place for e-commerce to
succeed.
– Discuss the key features of the electronic payment
systems needed to support e-commerce.
MIS 300, Chapter 5
4
Principles and Learning Objectives -3
• An organization’s transaction processing system
(TPS) must support the routine, day-to-day activities
that occur in the normal course of business and help
a company add value to its products and services.

– Identify the basic activities and business objectives
common to all TPSs.
– Explain some key control and management issues
associated with TPSs.
– Identify the challenges multinational corporations
must face in planning, building, and operating their
TPSs.
MIS 300, Chapter 5
5
Principles and Learning Objectives -4
• Implementation of an enterprise resource planning
(ERP) system enables a company to achieve many
benefits by creating a highly integrated set of
systems. 
– Discuss the advantages and disadvantages
associated with the implementation of an ERP
system.
MIS 300, Chapter 5
6
An Introduction to Electronic
Commerce
• Business-to-consumer (B2C) e-commerce:
customers deal directly with the organization,
avoiding any intermediaries Amazon.com
• Business-to-business (B2B) e-commerce:
participants are organizations
• Consumer-to-consumer (C2C) e-commerce:
participants are individuals, with one serving as the
buyer and the other, the seller E-bay.com
B
C
C
MIS 300, Chapter 5
7
The Supply Chain
Suppliers
Focal Firm
(Producer or
Service
Provider)
Buyers
Procurement, inbound logistics, production, outbound
logistics, sales, servicing
The Value Chain coexists with the supply chain,
adding “value” at every link in the chain
MIS 300, Chapter 5
8
The E-Commerce Supply Chain
Suppliers
These links are
all electronic.
Info is
maintained in
data bases
MIS 300, Chapter 5
Focal Firm
(Producer or
Service
Provider)
Buyers
These links are
all electronic.
Info is
maintained in
data bases
9
E-Commerce Supply Chain Management
• Supply chain management is a key value chain
composed of:
– Demand planning
– Supply planning
– Demand fulfillment
• It’s actually a supply network.
• The supply chain is the upstream aspect of the
value chain.
• The value chain is actually a value network.
MIS 300, Chapter 5
10
The E-Commerce Supply Chain
(continued)
Figure 5.1: Supply Chain Management
MIS 300, Chapter 5
11
The E-Commerce Supply Chain
(continued)
• E-commerce supply chain management allows
businesses an opportunity to achieve:
– Increased revenues and decreased costs
– Improved customer satisfaction
– Inventory reduction across the supply chain
MIS 300, Chapter 5
12
Mobile Commerce
• Mobile commerce (m-commerce) relies on the use
of wireless devices, such as personal digital
assistants, cell phones, and smart phones, to place
orders and conduct business
• What does it mean to “be mobile”?
• Issues confronting m-commerce
– User-friendliness of the wireless device
– Network speed
– Security
MIS 300, Chapter 5
13
Mobile Commerce (continued)
• Handheld devices used for m-commerce have
limitations that complicate their use
• Wireless application protocol (WAP): a standard
set of specifications for Internet applications that run
on handheld, wireless devices
MIS 300, Chapter 5
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
• Cybermall: a single Web site that offers many
products and services at one Internet location
• Manufacturing, repair, and operations (MRO) goods
and services
MIS 300, Chapter 5
15
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 backoffice operations
MIS 300, Chapter 5
16
Manufacturing (continued)
Figure 5.3: Model of an Electronic Exchange
MIS 300, Chapter 5
17
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
MIS 300, Chapter 5
18
Investment and Finance
• Online stock trading
– Portfolio tracker
• Online banking
– Electronic bill presentment

MIS 300, Chapter 5
19
E-commerce Technology,
Infrastructure, and Development
Figure 5.4: Key E-Commerce Technical Components
MIS 300, Chapter 5
20
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
MIS 300, Chapter 5
21
Software
• Security and identification
• Retrieving and sending Web pages
• Web page construction
– Static Web page
– Dynamic Web page
MIS 300, Chapter 5
22
Software (continued)
• E-commerce software must support:
– Catalog management
– Product configuration
– Shopping-cart facilities
MIS 300, Chapter 5
23
Software (continued)
Figure 5.5: Electronic Shopping Cart
MIS 300, Chapter 5
24
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: an amount of money that is
computerized, stored, and used as cash for
e-commerce transactions
MIS 300, Chapter 5
25
Electronic Payment Systems
(continued)
• Electronic wallet: a computerized stored value that
holds credit card information, electronic cash, owner
identification, and address information
• Credit card
• Charge card
• Debit card
• Smart card

MIS 300, Chapter 5
26
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.
MIS 300, Chapter 5
27
An Overview of Transaction Processing
Systems (continued)
Figure 5.6: TPS, MIS/DSS, and Special Information Systems in
Perspective
MIS 300, Chapter 5
28
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
MIS 300, Chapter 5
29
Traditional Transaction Processing
Methods and Objectives (continued)
Figure 5.7: Batch Versus Online Transaction Processing
MIS 300, Chapter 5
30
Transaction Processing Activities
• TPSs
– Capture and process data that describes fundamental
business transactions
– Update databases
– Produce a variety of reports
• Transaction processing cycle: the process of data
collection, data editing, data correction, data
manipulation, data storage, and document
production
MIS 300, Chapter 5
31
Transaction Processing Activities
(continued)
Figure 5.8: Data Processing Activities Common to TPSs
MIS 300, Chapter 5
32
Transaction Processing Activities
(continued)
• Data collection
– Should be collected at source
– Should be recorded accurately, in a timely fashion
• Data editing
• Data correction
MIS 300, Chapter 5
33
Transaction Processing Activities
(continued)
• Data manipulation
• Data storage
• Document production and reports
MIS 300, Chapter 5
34
Basic TPS Applications
Table 5.4: Systems That Support Order Processing
MIS 300, Chapter 5
35
Order Processing Systems
•
•
•
•
Order entry
Sales configuration
Shipment planning
Shipment execution
MIS 300, Chapter 5
36
Order Processing Systems (continued)
•
•
•
•
Inventory control
Invoicing
Customer relationship management
Routing and scheduling
MIS 300, Chapter 5
37
Order Processing Systems (continued)
Figure 5.10: Order Processing Systems
MIS 300, Chapter 5
38
Purchasing and Accounting Systems
• Purchasing transaction processing systems include:
–
–
–
–
Inventory control
Purchase-order processing
Receiving
Accounts payable
MIS 300, Chapter 5
39
Purchasing and Accounting Systems
(continued)
• Accounting transaction processing systems include:
–
–
–
–
–
Budget
Accounts receivable
Payroll
Asset management
General ledger
MIS 300, Chapter 5
40
Purchasing and Accounting Systems
(continued)
Figure 5.11: Integration of a Firm’s TPSs
MIS 300, Chapter 5
41
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
MIS 300, Chapter 5
42
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?
MIS 300, Chapter 5
43
International Issues
• Issues that multinational corporations face in
planning, building, and operating their TPSs
–
–
–
–
Different languages and cultures
Disparities in IS infrastructure
Varying laws and customs rules
Multiple currencies

MIS 300, Chapter 5
44
Enterprise Resource Planning: An
Overview of Enterprise Resource
Planning
• Enterprise resource planning (ERP) systems are
used in large, midsized, and small companies
• Real-time monitoring of business functions
• Timely analysis of key issues, such as quality,
availability, customer satisfaction, performance, and
profitability
MIS 300, Chapter 5
45
An Overview of Enterprise Resource
Planning (continued)
• Steps in running a manufacturing organization using
an ERP system:
–
–
–
–
Develop demand forecast
Deduct demand forecast from inventory
Determine what is needed for production
Check inventory for needed raw materials
MIS 300, Chapter 5
46
An Overview of Enterprise Resource
Planning (continued)
• Steps in running a manufacturing organization using
an ERP system (continued):
– Schedule production
– Assess need for additional production resources
– Financial forecasting
MIS 300, Chapter 5
47
Definition
• The adoption of an integrated, comprehensive set of
applications that communicate easily with one
another to handle all of a firm’s business
MIS 300, Chapter 5
48
Basic Philosophy
• Division of labor, basis of bureaucracy isn’t whole
story
• Business is an integrated, tightly cohesive system
• Structure follows form follows function follows
information!
• Redundancy, duplication are bad
• Variety is the enemy
MIS 300, Chapter 5
49
Management Level
Typically, corporate IT use is …
Sales EIS
Production
DSS
Corporate
Accountability
Finance
ESS
Sales Mgmt
Software
Production
Mgmt
Application
Accounting
System
Debt
Management
Application
Sales
POS
System
Production
System
Accounts
Receivable
Finance
Spreadsheet
Division, Function, Responsibility
MIS 300, Chapter 5
50
No aggregation or dissemination across levels
of responsibility
Management Level
Fragmented, Fractured…
Sales EIS
Production
DSS
Corporate
Accountability
Finance
ESS
Sales Mgmt
Software
Production
Mgmt
Application
Accounting
System
Debt
Management
Application
Sales
POS
System
Production
Accounts
Finance
No communication
across
functionsSpreadsheet
System
Receivable
Division, Function, Responsibility
MIS 300, Chapter 5
51
Integration Proceeds in Two Dimensions
1. CrossFunctional
Production
Corporate
Finance
Sales EIS
DSS real-timeAccountability
ESS
Common data formats,
data processing, clientserver platforms, and Internet-based extranets enable data
to move “seamlessly” across divisional boundaries,
Production
Debt
lubricating
Sales
Mgmt the movement of semi-finished
Accountinginventory,
Management
product, etc. One Mgmt
barrier to integration
is removed.
Software
System
Application
Application
Common user interfaces enable better communication and
movement of human resources among divisions
Sales
POS
System
Production
System
Accounts
Receivable
Finance
Spreadsheet
Division, Function, Responsibility
MIS 300, Chapter 5
52
Typically, corporate IT use is …
Management Level
Sales EIS
Sales Mgmt
Software
Sales
POS
System
MIS 300, Chapter 5
2. Vertically Integrated
Production
Corporate
Finance
DSS
Accountability
ESS
Central repositories,
common formats, real-time
processing, updated
Production
Debt
security, mobile
Accounting
Mgmt
Management
technologies enable
System
Application
Application
executives, managers,
supervisors and workers
at all levels to create,
access, use, and update
information according
Production
Accountsto
Finance
their needs. Receivable
System
Spreadsheet
53
Result?
And to CFO to update
information for loan
repayment, renegotiation
Available to Sales
Managers to forecast
demand
Sales data
generated
from POS
MIS 300, Chapter 5
And to production
management to monitor
productivity, anticipate
problems
And to production
stations for
schedule
generation
And to all employees to keep
them informed
about working
conditions
And to customers to
estimate delivery
time, options, etc.
54
Why Is Enterprise Computing Important?
• Integrates the supply chain
• Provides for organizational learning
• Introduces strong IT efficiencies through common
approaches
• Solves management problems of burgeoning IT
costs (consolidation)
• Recognizes IT’s central role in integration,
lubrication of business processes
MIS 300, Chapter 5
55
What Makes ERP/EC Difficult?
•
•
•
•
•
•
•
•
Sheer volume of data
Divisional lore
Actual divisions of labor
Human nature (undesirability of change)
Poorly thought-through problem statement
High initial cost
Legacy systems, sunk costs
Near-monopoly supplier situation (SAP, Bahn, Peoplesoft,
Oracle are really only suppliers)
MIS 300, Chapter 5
56
Advantages and Disadvantages of ERP
• Elimination of costly, inflexible legacy systems
• Improvement of work processes
• Increase in access to data for operational decision
making
• Upgrade of technology infrastructure
• Expense and time in implementation
MIS 300, Chapter 5
57
Advantages and Disadvantages of ERP
(continued)
•
•
•
•
Difficulty implementing change
Difficulty integrating with other systems
Risks in using one vendor
Risk of implementation failure

MIS 300, Chapter 5
58
Summary
• In business-to-consumer (B2C) e-commerce,
customers deal directly with the organization
• In business-to-business (B2B) e-commerce, the
participants are organizations
• In consumer-to-consumer (C2C) e-commerce, the
participants are individuals
• Supply chain management is composed of demand
planning, supply planning, and demand fulfillment
• Mobile commerce (m-commerce) uses wireless
devices to place orders and conduct business
MIS 300, Chapter 5
59
Summary (continued)
• Transaction processing systems (TPSs) process the
detailed data necessary to update records about the
fundamental business operations
• Transaction processing cycle: data collection, data
editing, data correction, data manipulation, data
storage, and document production
• Order processing TPSs: order entry, sales
configuration, shipment planning, shipment
execution, inventory control, invoicing, customer
relationship management, and routing and
scheduling
MIS 300, Chapter 5
60
Summary (continued)
• Purchasing TPSs: inventory control, purchase-order
processing, receiving, and accounts payable
• Accounting TPSs: budget, accounts receivable,
payroll, asset management, and general ledger
• Enterprise resource planning (ERP) systems permit
timely analysis of key issues, such as quality,
availability, customer satisfaction, performance, and
profitability
MIS 300, Chapter 5
61