Electronic
Business
(E-Business)
Systems
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Learning Objectives
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Appreciate the possible changes to
organizational processes that occur when ebusiness introduced
Understand major approaches to transfer of
electronic data during business events
processing
Recognize the complexities that are
introduced as electronic document
management moves us steadily toward the
paperless office
Understand the complexities surrounding EDI
that are introduced when linking two different
organizations’ computer systems for joint
business event data processing
Appreciate the challenges faced by
organizations when they pursue direct
business links with customers via the Internet
or other networks
Appreciate the business advantages gained
through effective use of electronic business
Electronic
Business
(E-Business)
Systems
Electronic Business
• Electronically exchanging information and
linking business processes, individuals and
organizations
• Transactions completed more quickly, more
efficiently, and more effectively
• Eliminates paper trail (eventually)
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E-business
• Record electronic business events
– Interconnects back-office processes and/or front
office processes of two or more organizations
– elimination of sales staff, normally intermediary
between two parties to transactions
• Is this a good idea?
– Save costs, but...
– Efficiency gains
• Including price efficiencies
– Ease at which purchasing agents get access prices
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Recording Business Events
(Accounting for Events)
• Technology (E-business)
– New processes
– New business events
• Reengineering
– Hugely Increased Efficiency
– Hugely Increased Effectiveness
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Modes of Accounting for Events
• Periodic
– Delay between event and recording that event
– Batch processing
• Aggregation of multiple business events over a period of
time for later processing
– the only time the master data are up to date is
right after the processing has been completed.
– As soon as the next business event occurs, the
master data are no longer up to date.
• Immediate
– Little or no delay occurs business event and
recording that event
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Methods of Accounting
• Automated Manual System
• Online Transaction Entry (OLTE)
• Online Real-Time (OLRT)
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Automated Manual System
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Four Sub-processes
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Business Event Occurs
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Recorded on Source Document
Record Business Event
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Batch Processed and Input by data-entry clerk
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Event Data Store (Sales, Purchases, etc.)
• Data Store = Table
Update Master Data
Generate Output
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Automated Equivalent to a Manual System
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Online Transaction Entry (OLTE)
• Entering business events at time and place
the business event occurs
– Computer input device used to enter data at
source at time of business event
• Merging Step 1 & 2 of Automated Manual System
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Input/Source document is eliminated
Price data is retrieved from the system
Source documents are printed by the system
Event information in accumulated on tape or disk
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Online Transaction Entry (Batch)
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Online Real-time (OLRT)
• Three Sub-processes
– Business event occurs and is recorded
• Transactions saved
– Update Master data
• Immediate mode
– Generate Reports and Support Queries
• Reports periodically or on an as needed basis
• Support queries to generate unique reports for
key decisions on demand
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Online real-time processing
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Methods of Conducting E-Business
• E-Mail
– Electronic communication of non-Standardized
messages via communication network
• Requires human interpretation
• Electronic Document Management
– capture and storage of document images instead of
paper
• Electronic Data Interchange
– computer-to-computer exchange of business data in
structured formats that allow direct processing of
those electronic documents by the receiving computer
system.
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Electronic Document
Management
• Document Storage and Retrieval
• Business Event Data Processing
– Workflow Management
• Route documents to appropriate people and
appropriate time AND
• Manage the flow of documents
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#9 AICPA Technology 2006
• Paperless Digital Technologies
– process of capturing, indexing, storing, retrieving,
searching, and managing documents
electronically including database management
– Knowledge management then brings structure and
control to this information, allowing organizations
to harness the intellectual capital contained in the
underlying data.
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Document Mgmt Demo
Lotus Notes Demo
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Electronic Data Interchange
(EDI)
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Computer-Computer
Business Data
Direct processing
Standardized
– ANSI X12
• US and Canada
– EDIFACT
• International
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EDI
Components
1. An originating
application prepares
an electronic business
document, such as a
purchase
order (PO).
7. At the destination
organization, an
application processes
the business data.
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EDI
Components
2 and 6. An
application’s
electronic business
document must be
translated from
standard message
format to the
structured EDI
format that will be
recognized by the
receiving computer.
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Electronic Data Interchange Set
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ANSI X12 Document Types
• EDI Service Bureau
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EDI
Components
3 and 5. Establish a
method to
communicate
electronic message.
EDI service bureaus
or the Internet are may
be used, saving time
and money over other
methods.
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EDI
Components
4. Rather than
connecting each
trading partner, an
organization can use a
VAN. An organization
can connect to the
VAN when it wants,
leave its outgoing
messages and, at the
same time, pick up
incoming messages
from its “mailbox.”
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EDI Process Changes
• Significant reduction in human
interaction (Purchaser & Salespeople)
• Elimination of erroneous data
• Online Real Time Processing
• Forces organization to change
processes as a result of instantaneous
information flows
– Business Process Reengineering
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Control Considerations
• Proper Authorization
– Authenticate EDI transmission
• Prevent rather then Detect errors in
data
• Program changes & Security over IS
• VAN vs. direct communication
– Prevent compromise of data
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Controls Needed
• All transactions are sent/received
• All transactions are recorded only once
• Accuracy of data
(sent/received/translated)
• Authenticate Senders
• Messages are not intercepted/altered
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Control Plans
• EDI has built in controls
– Batch, Counts, Control #’s, Headers/Footers
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Reasonableness checks
Access
Data Encryption
Digital Signatures
Continuous Audition
– Integrated Tests
• Dummy Data is tested
– Imbedded Audit Modules
• Alerts auditor to suspect data
– Hmmm, sounds like a use of Complex Event Processing
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Internet Commerce
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Computer-Computer
Exchange of Business Data
Structured and semi-structured
Via Internet
Forms
XML possible replacement of EDI
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XML
• eXtensible Markup Language
– Describes Data
– Use of Tags
– Facilitates sharing of data across systems
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XML Example
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<?xml version="1.0" encoding="UTF-8"?>
<recipe name="bread" prep_time="5 mins" cook_time="3 hours">
<title>Basic bread</title>
<ingredient amount="3" unit="cups">Flour</ingredient>
<ingredient amount="0.25" unit="ounce">Yeast</ingredient>
<ingredient amount="1.5" unit="cups“
state="warm">Water</ingredient>
<ingredient amount="1" unit="teaspoon">Salt</ingredient>
<instructions>
<step>Mix all ingredients together, and knead thoroughly.</step>
<step>Cover with a cloth, and leave for one hour in warm
room.</step>
<step>Knead again, place in a tin, and then bake in the
oven.</step>
</instructions>
</recipe>
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Typical Internet Connection
Client/Server
1 and 7. Customer
connects to vendor
in client-server
configuration.
Customer is Client
(secure), Vendor is
Server (receive
and translate data)
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Typical Internet Connection
Network
Providers
2 and 5. Connection
to Internet through
direct connection
or service provider
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Typical Internet Connection
Assurance
Providers
4 and 6. Assurance
services provide
limited assurance
that web site
reliable and
secure:
WebTrust;
Verisign
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Typical Internet Connection
Internet
Connection
3. The Internet
(public network)
E-business is open
to all
Revolutionizes
Business
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