Chapter 7
Electronic Business Systems
Slide # 4
This figure gives you a good overview of the interrelatedness, interdependence, and
integration of the e-business applications that are vital components of the successful
operations and management of an e-business enterprise.
This Figure represents an e-business application architecture, which illustrates the
application components, interrelationships, and interfaces with customers, employees,
business partners, and other stakeholders of an e-business enterprise.
Notice how many e-business applications are integrated into cross-functional enterprise
application clusters like:
1.
Enterprise resource planning
2.
Customer relationship management
3.
Decision support.
4.
Supply chain management
5.
Selling chain management.
Teaching Tips
This slide corresponds to Figure 7.2 on pp. 216 relates to the material on pp. 216 - 217..
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Slide # 5
Enterprise resource planning (ERP) is a cross-functional enterprise system that serves as
a framework to integrate and automate many of the business processes that must be
accomplished within the manufacturing, logistics, distribution, accounting, finance,
human resource functions of a business.
ERP software is a family of software modules that supports the business activities
involved in these vital back office processes.
ERP is being recognized as a necessary ingredient for the efficiency, agility, and
responsiveness to customers and suppliers that an e-business enterprise needs to
succeed in the dynamic world of e-commerce.
Companies are finding major business value in installing ERP software in two major
ways:
1.
ERP creates a framework for integrating and improving their back-office systems
that results in major improvements in customer service, production, and
distribution efficiency.
2.
ERP provides vital cross-functional business processes and supplier and customer
information flows supported by ERO systems.
Teaching Tips
This slide corresponds to Figure 7.4 on pp. 218 relates to the material on pp. 217-219.
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Slide # 6
Customer relationship management (CRM): A cross-functional e-business application
that integrates and automates many customer serving processes in sales, direct
marketing, account and order management, and customer service and support.
CRM systems also create an IT framework that integrates all of these processes with the
rest of a company’s business operations. CRM systems consist of a family of software
modules that perform the business activities involved in such front office processes.
CRM software provides the tools that enable a business and its employees to provide
fast, convenient, dependable, and consistent service to its customers.
Business benefits of CRM are many. Examples include:
1.
Allows a business to identify and target their best customers; those who are the
most profitable to the business, so they can be retained as lifelong customers for
greater and more profitable services.
2.
Enables real-time customization and personalization of products and services
based on customer wants, needs, buying habits, and life cycles.
3.
Also used to keep track of when a customer contacts the company, regardless of
the contact point.
4.
Enables a company to provide a consistent customer experience and superior
service and support across all the contact points a customer chooses.
Teaching Tips
This slide corresponds to Figure 7.6 on pp. 220 relates to the material on pp. 220-221.
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Slide # 7
Enterprise application integration (EAI) software is becoming available that
interconnects several e-business application clusters.
EAI is a cross-functional e-business application that integrates front-office applications
like customer relationship management with back-office applications like enterprise
resource management.
EAI enables users to model the business processes involved in the interactions that
should occur between business applications. EAI also provides middleware that
performs data conversion and coordination, application communication and messaging
services, and access to the application interfaces involved.
EAI software can integrate a variety of enterprise application clusters by letting them
exchange data according to rules derived from the business process models developed
by users.
Teaching Tips
This slide corresponds to Figure 7.7 on pp. 221 relates to the material on pp. 221-222.
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Slide # 8
Supply Chain Management: Integrating management practices and information
technology to optimize information and product flows among the processes and
business partners within a supply chain.
SCM is a top strategic objective for many companies. It is an absolute requirement if
they want to meet their e-commerce customer value imperative: what the customer
wants, when and where it’s wanted, at the lowest possible cost.
The interrelationships with other businesses needed to build and sell a product make
up a network of business relationships that is called the supply chain.
Cross-functional e-business systems like supply chain management reengineer and
streamline traditional supply chain processes. The demands of e-commerce are
pushing manufacturers to use their intranets, extranets, and e-commerce Web portals to
help them reengineer their relationships with suppliers, distributors, and retailers. The
objective is to significantly reduce costs, increase efficiency, and improve supply chain
cycle times. SCM software can also help to improve inter-enterprise coordination
among supply chain process players. The result is much more effective distribution and
channel networks among business partners. All of the objectives of supply chain
management are aimed at achieving agility and responsiveness in meeting the demands
of a company’s customers and the needs of their business partners.
Teaching Tips
This slide corresponds to Figure 7.8 on pp. 223 relates to the material on pp. 2222-223.
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Slide # 9
Transaction Processing Systems (TPS) are information systems that process data resulting
from the occurrence of business transactions. Transactions are events that occur as a
part of doing business, including sales, purchases, deposits, withdrawals, refunds, and
payments. The key steps in the transaction processing cycle include:
Data Entry. In data entry, data is captured or collected by recording, coding, and
editing activities. As some of these methods traditionally are not ready for computer
processing, data entry has always slowed down the effectiveness of information
systems. The trend today is toward more automatic data entry that records data
initially in computer-usable form.
Transaction Processing. Moving beyond manual data entry, several forms of source
data automation speed up data entry:
•
Electronic Data Interchange. This involves the electronic transmission of business
transaction data over telecommunications links between computers of trading
partners. Instructor's Note: This topic is covered in greater detail on the following slide.
•
Electronic Fund Transfer. The EFT systems use source data automation
technologies to capture and process money and credit transfers between banks and
businesses and their customers.

Batch Processing. This involves accumulating transactions data over a period
of time and processing at specified intervals.

Real Time Processing. This involves processing transactions data immediately
through the system at the time it occurs.
Database Maintenance. IS specialists must keep the records and files up to date and
accurate. Day to day transactions must be entered and backed up.
Document and Report Generation. The system must be capable of producing
information products needed by managers such as action documents, information
documents, and turnaround documents.
Inquiry Processing. This is the real-time interrogation of online files and databases by
end users.
Teaching Tips
This slide corresponds to Figure 7.11 on pp. 226 and relates to the material on pp. 225226.
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Slide # 10
Enterprise collaboration systems (ECS): The use of groupware tools and the Internet,
intranets, extranets, and other computer networks to support and enhance
communication, coordination, collaboration, and resource sharing among teams and
workgroups in an internetworked enterprise.
Electronic communications tools: Software that helps you communicate and collaborate
with others by electronically sending messages, documents, and files in data, text, voice,
or multimedia over the Internet, intranets, extranets, and other computer networks.
Electronic conferencing tools: Software that helps networked computer users share
information and collaborate while working together on joint assignments, no matter
where they are located.
Collaborative Software that helps people accomplish or manage joint work activities.
Teaching Tips
This slide corresponds to Figure 7.12 on p. 227 and relates to the material on pp. 227229.
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Slide # 11
Functional Business Systems: Information systems within a business organization that
support one of the traditional functions of business such as marketing, finance, or
production. Functional business systems can be either operations or management
information systems.
Marketing:
Accounting:
- Customer relationship management
- Order processing
- Interactive marketing
- Inventory control
- Sales force automation
- Accounts receivable
- Accounts payable
Human Resource Management
- Payroll
- Compensation analysis
- General ledger
- Employee skills inventory
- Personnel requirements forecasting
Finance:
- Cash management
Productions/Operations
- Credit management
- Manufacturing resource planning
- Investment management
- Manufacturing execution systems
- Capital budgeting
- Process control
- Financial forecasting
Teaching Tips
This slide corresponds to Figure 7.12 on pp. 232 and relates to the material on pp. 232244.
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Slide # 12
Marketing is concerned with the planning, promotion, and sale of existing products in
existing markets and the development of new products and new markets to better serve
present and potential customers. Marketing information systems assist marketers in
meeting the information needs in each of the following areas:
Sales Management. Here the information system helps plan, monitor, and support the
performance of salespeople and sales of products and services.
Sales Force Automation. Here the information system automates the recording and
reporting of sales activity by salespeople and the communications and sales support
from sales management.
Product Management. Here the IS helps plan, monitor, and support the performance of
products, product lines, and brands.
Advertising and Promotion. Here information systems help select media and
promotional methods and control and evaluate advertising and promotion results.
Sales Forecasting. An information system can rapidly produce short- and long-term
sales forecasts.
Market Research. The tools of an information system can assist researchers in collecting
and analyzing internal and external data on market variables, development, and trends.
Marketing Management. Information systems can help marketing managers develop
marketing strategies and plans based on corporate goals and market research and sales
activity data, and monitor and support overall marketing activities.
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Slide # 13
Targeted Marketing: has become an important tool in developing advertising and
promotion strategies for a company’s electronic commerce websites. Targeted
marketing is an advertising and promotion management concept that includes five
targeting components.
1.
Community: Companies can customize their Web advertising messages and
promotion methods to appeal to people in specific communities.
2.
Content. Advertising such as electronic billboards or banners can be placed on
various website pages, in addition to a company’s home page.
3.
Context. Advertising appears only in Web pages that are relevant to the content of
a product or service.
4.
Demographic/Psychographic. Marketing efforts can be aimed only at specific
types or classes of people.
5.
Online Behavior. Advertising and promotion efforts can be tailored to each visit
to a site by an individual.
Teaching Tips
This slide corresponds to Figure 7.17 on pp. 234 and relates to the material on pp. 233234.
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Slide # 14
Manufacturing Information Systems support the production/operations function, which
includes all activities concerned with the planning and control of the processes that
produce goods and services. These operational systems can be divided into the
following categories:
Computer-Integrated Manufacturing. CIM stresses that the computer use in factory
automation must be to:
•
Simplify (reengineer) production processes, product designs, and factory
organization as a vital foundation to automation and integration.
•
Automate production processes and the business functions that support them with
computers and robots.
•
Integrate all production and
telecommunications networks.
support
processes
using
computers
and
Process Control. Process control is the use of computers to control an ongoing physical
process. Process control software uses mathematical models to analyze the ongoing
process and compare it to standards or forecasts of required results.
Machine Control. Also called numerical control, it uses computer programs for machine
tools to convert geometric data from engineering drawings and machining instructions
from process planning into commands that control the machines.
Robotics. Robotics is the technology of building and using machines (robots) with
computer intelligence and computer-controlled human like physical capabilities.
Computer-Aided Engineering. Manufacturing engineers use powerful workstations
with enhanced graphics and computational capabilities to simulate, analyze, and
evaluate models of product design in less time and at lower cost than constructing
physical prototypes.
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Slide # 15
The human resource management (HRM) function involves the recruitment, placement,
evaluation, compensation, and development of employees
Goal of HRM is the effective and efficient use of the human resources of a company.
Human resource information systems are designed to support:
1.
Planning to meet the personnel needs of the business
2.
Development of employees to their full potential
3.
Control of all personnel policies and programs.
Originally, businesses used computer-based information systems to: (1) Produce
paychecks and reports, (2) maintain personnel records, and (3) analyze the use of
personnel in business operations. Many firms have developed HRIS that support:
1.
Recruitment, selection, and hiring.
2.
Job placement
3.
Performance appraisals
4.
Employee benefits analysis
5.
Training and development
6.
Health, safety, and security.
Teaching Tips
This slide corresponds to Figure 7.21 on pp. 239 and relates to the material on pp. 238240.
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Slide # 16
Accounting Information Systems are the oldest and most widely used information systems
in business. They record and report business transactions and other economic events.
Operational accounting systems emphasize legal and historical record-keeping and the
production of financial statements. Management accounting systems focus on the
planning and control of business operations. Six common purposes of accounting
systems include:
Order Processing. Or, sales order processing is an important transaction processing
system which captures and processes customer orders and produces invoices for
customers and data needed for sales analysis and inventory control.
Inventory Control. These systems track and monitor levels of and changes in inventory.
They may be programmed to notify managers if some threshold level of inventory is
reached that requires a decision. They may also be equipped to handle routine re-order
information.
Accounts Receivable. Accounts receivable systems keep records of amounts owed by
customers from data generated by customer purchases and payments.
Accounts Payable. Accounts payable systems keep track of data concerning purchases
from and payments to suppliers.
Payroll. Payroll systems receive and maintain data from employee time cards and other
work records to produce paychecks and other documents such as earning statements,
payroll reports, and labor analysis reports.
General Ledger. General ledger systems consolidate data received from accounts
receivable, accounts payable, payroll, and other accounting information systems.
Teaching Tips
This slide corresponds to Figure 7.23 on pp. 241 and relates to the material on pp. 241243.
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Slide # 17
Financial Information Systems support financial managers in decisions concerning the
financing of the business and the allocation and control of financial resources. Key
areas for financial information systems include:
Cash and Securities Management. Information systems collect information on all cash
receipts and disbursements within a company on a real-time or periodic basis. Further,
many businesses invest their excess cash in short-term marketable securities and these
portfolios can be managed by systems software.
Capital Budgeting. The IS assists the capital budgeting process by helping to evaluate
the profitability and financial impact of proposed capital expenditures.
Financial Forecasting. The financial information system package of the organization
will have a variety of statistical forecasting packages to provide analytical techniques
that result in economic or financial forecasts of national and local economic conditions,
wage levels, price levels, and interest rates.
Financial Planning. Financial planning systems use financial planning models to
evaluate the present and projected performance of a business or of one of its divisions
or subsidiaries. They also help determine the financing needs of a business and analyze
alternative methods of financing.
Teaching Tips
This slide corresponds to Figure 7.26 on pp. 243 and relates to the material on pp. 243244.
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Chapter Summary
1.
The e-Business Application Architecture reflects the key e-business applications
and their interrelationships.
2.
Cross-functional enterprise applications cross the boundaries of traditional
business functions. These systems focus on supporting integrated clusters of
business processes.
3.
Supply Chain Management relies on information technology and management
practices to optimize information and product flows among the processes and
business partners within the supply chain.
4.
A transaction processing system is an information system that processes data
resulting from the occurrence of business transactions.
5.
Traditional functional business systems support specific business functions
including marketing, accounting, finance, production/operations, and human
resource management.
6.
Marketing information systems support traditional and e-commerce processes and
management of the marketing function.
7.
Computer-based manufacturing systems help a company simplify, automate, and
integrate many of the activities needed to quickly produce high-quality products
to meet changing customer demands.
8.
Human resource information systems support human resource management in
organizations.
9.
Several different types of electronic payment systems are used to support ecommerce transactions.
10.
Because the Internet is not a secure network special security measures must be
undertaken to protect sensitive customer information.
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