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Chapter 5:Electronic Commerce
and Transaction Processing Systems
• 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
Topics:
Please turn off your cell phone.
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An Introduction to Electronic Commerce
Chapter 5.1
• Business-to-consumer(B2C) e-commerce
• Business-to-business(B2B) e-commerce
• Consumer-to-consumer(C2C) e-commerce
• Supply chain management
Key Terms• Electronic data
interchange (EDI)• Mobile commerce
(m-commerce)
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E-commerce
Business activities conducted using electronic data transmission involving computers, telecommunications networks, and streamlined work processes.
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VANCompany B
Company A
EDISoftware
EDISoftware
Transaction
Transaction
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.
E-commerce History
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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
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Pre-E-Commerce Sales
Local90%
Rest of Wales9%
UK1%
Post E-Commerce Sales
Local25%
Rest of Wales36%
UK37%
World2%
E-commerce can dramatically extend a businesses market. Farmyard Nurseries customer base before and after e-commerce. http://www.farmyardnurseries.co.uk/mail.htm.
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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 Business (B2B) Private
Business to Consumer (B2C) Amazon.com BestBuy.com
B2CC2C
B2B
Consumer to Consumer (C2C) eBay.com Half.com
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E-Commerce Segmentation
E-commerce Revenues
B2C
B2B
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
1999 2003
Sal
es (
Bill
ion
s)
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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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E-commerce Applications
Chapter 5.2
• Electronic retailing• Cybermall• Electronic exchange• Market segmentation• Technology-enabled
relationship management• Electronic bill presentment
Key Terms
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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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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
E-Commerce Applications: Manufacturing
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Figure 5.3: Model of an Electronic Exchange
E-Commerce Applications: Manufacturing
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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
www.sharebuilder.com On-line Banking
electronic bill presentment The Motley Fool: http://www.fool.com
Auctions http://www.ebay.com http://www.whattheheck.com/ebay/
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E-commerce Technology, Infrastructure, and Development
Chapter 5.3
• Web site development tools
• Web page construction software
• E-commerce software• Catalog management
software
Key Terms• Product configuration
software• Electronic shopping cart• Digital certificates• Electronic cash• Electronic wallet• Smart card
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Dedicated machine that can handle a lot of
traffic.
Security, Encryption, Delivery, Tracking
Catalog, Shopping Cart, Transaction Processing, Traffic Data Analysis
Cost, Availability, Reliability, Security, Redundency
www.cnet.com
Click Internet Services, E-commerce Hosting
E-commerce Technology, Infrastructure, and Development
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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
Automates the process of creating a real-time interactive catalog and delivering customized content to a user’s screen.
Product configuration 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, add new items to it, and remove items from it.
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25Figure 5.5: Electronic Shopping Cart
Software
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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 capabilityFSU Card
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An Overview of Transaction Processing Systems
Chapter 5.4
• Batch processing system• Online transaction
processing (OLAP)• Transaction processing
cycle• Data collection• Data editing
Key Terms• 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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Systems that process order entry, sales configuration, shipment planning, shipment execution, inventory control, invoicing, customer relationship management, and outing and scheduling.
Order Processing Systems
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Order Processing SystemsThe lifeblood of the organization!
Business Resumption Planning: Anticipating and minimizing the effects of disasters.
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Customer
OrderEntry
System
OrderEntry
System
ShipmentPlanning System
ShipmentPlanning System
InventoryControl System
InventoryControl System
ShipmentExecutionSystem
ShipmentExecutionSystem
Invoicing System
Invoicing System
Order
ProcessIng
Supplier
Purchasing
PurchaseOrder
Processing System
PurchaseOrder
Processing System
ReceivingSystem
ReceivingSystem
AccountsPayableSystem
AccountsPayableSystem
Warehouse
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TPS Control and Management Issues
Chapter 5.5
• Business continuity planning
• Transaction processingsystem audit
• Audit trail
Key Terms
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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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Enterprise Resource Planning
Chapter 5.6
• Best practices
Key Terms
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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/
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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?
?? ????