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Introduction to E-BusinessUAA ACCT 316Accounting Information SystemsDr. Fred Barbee3Chapter
E-Business . . .The use of information technology and electronic communication networks to exchange business information and conduct transactions in electronic, paperless form.
E-Business . . .Refers to technology-enabled interactions between individuals and organizationsB2C Popular for purchasing books, music, or airline tickets.B2B Has a far larger impact on the economy.
E-Business . . .. . .refers to all uses of advances in IT, particularly networking and communications technology, to improve the ways in which an organization performs all of its business processes.
Interactions With . . .SuppliersCustomersInvestorsCreditorsThe governmentMedia
E-Business ModelsBusiness to Consumers (B2C): Interactions between individuals and organizations.Business to Business (B2B): Interorganizational e-business.
Categories of E-Business
B2C IssuesTrust i.e., is this a legitimate business?Security i.e., will this transaction be secure?
Categories of E-Business
B2B IssuesLarger, more complex transactions typically between business partners.AccountabilityControl
Report: B2B E-Commerce Gaining StrengthStudy by Forrester Research and the Institute for Supply Management (http://www.ecommercetimes.com) January 17, 2002
B2B E-Commerce Gaining StrengthNearly half of all large U.S. corporations are now using the Internet to cut down on supply costs.45% of firms that spend US$100 million or more per year on supplies used the Internet in the 4th Quarter of 2002 (up from 28% in 3rd Quarter).
B2B E-Commerce Gaining Strength53% described the Internet as very important or critical to purchasing and cost savings plans in 2002.87% described the Internet as important.
Study: E-Commerce to Top $1 Trillion in 2003Study by IDC (http://www.idc.com) January 17, 2002
E-Commerce to Top $1 Trillion in 2003By the end of 2002, more than 600 million people worldwide will have access to the Web.They will spend more than US$1 trillion shopping online.E-commerce grew to $600 billion in 2001, a 68% increase over 2000.
E-Commerce to Top $1 Trillion in 2003Once people get over the security and privacy hiccups, as well as other problems that are not directly related to e-commerce, and have access to wider product offerings, e-commerce will become as widespread as offline commerce.Carol Glasheen, Vice President IDC Research.
E-Commerce to Top $1 Trillion in 2003B2B will account for 83% of online sales in 2002, and 88% in 2006.The majority of B2B sales consists of volume purchasing, meaning that companies are spending huge amounts of money online.
Report: Online B2B Surge May Herald Overall RecoveryStudy by Forrester Research and the Institute for Supply Management (http://www.ecommercetimes.com) September 11, 2002
Online B2B Surge . . .84% of the companies surveyed said they use the Web to purchase indirect materials.Up from 78% in the first quarter.65% said they buy materials directly from suppliers online.
The Next Wave of E-Commerce TechnologyLou Hirsch E-Commerce Times July 11, 2002 (http://www.ecommercetimes.com)
The Next Wave of E-Commerce TechnologyIn the not-too-distant future, e-commerce technology will become smarter and faster and will completely transform the way companies deal with internal information and customer service.
The Next Wave of E-Commerce TechnologyInteractive company portals that can communicate with other portals in real-time could drastically alter the sales process.
The Next Wave of E-Commerce TechnologyOne promising concept is the idea of collaborative commerce, in which companies set up smart hubs that are not only used by their own customers, but also interact with other companies sites.
The Next Wave of E-Commerce TechnologyThere will be movement in the next three years toward shared portals.Using these portals, companies that regularly do business with one another will be able to access real-time information about product availability and pricing.
The Next Wave of E-Commerce TechnologyOther possibilities . . .Supercharged KiosksInstant Messaging in both the B2B and B2C environments
E-Business Effects on Business ProcessesElectronic Data Interchange (EDI)
Electronic Data InterchangeStandard protocol, available since the 1970s, for electronically transferring information between organizations and across business processes.
E-Business Effects on Business ProcessesEDI:Reduces InventoryStreamlines business processes,Eliminates paper, andImproves the flow of information
Recent EDI Facilitators Traditional EDI was expensive. New developments that have removed this cost barrier are:The Internet: Eliminates the need for special proprietary third-party networks.
Recent EDI Facilitators XML: Extensible Markup Language Set of standards for defining the content of data on Web pages.XML + EDI = XML/EDIBy combining XML and EDI we create new powerful paradigm different from XML or EDI!
Recent EDI FacilitatorsebXML: Defines standards for coding common business documents.Eliminates need for complex software to translate documents created by different companies.
Integrated Electronic Data Interchange (EDI)Reaping the full benefits of EDI requires that it be fully integrated with the companys AIS.
AIS CompanyEDIPurchase ordersCustomer ordersEDIIntegrated EDI System
AIS CompanyEDIEDIStand-alone EDI SystemSales Order EntryEDI SystemCustomer OrdersPurchase OrdersCustomer OrdersPhoneFax
E-Business Effects on Business ProcessesPurchasing and Inbound Logistics
Purchasing and Inbound LogisticsThe Internet improves the purchasing activity by making it easier for a business to identify potential suppliers and to compare prices.
Purchasing and Inbound LogisticsBetter information about inbound shipments enables organizations to reduce the amount of inventory buffers carried.
E-Business Effects on Business ProcessesInternal Operations, Human Resources, and Infrastructure.
Internal Operations, Human Resources, and InfrastructureAdvanced communications technology can significantly improve:The efficiency of internal operations.Planning.The efficiency and effectiveness of the human resource support activity.The efficiency and effectiveness of customer payments.
E-Business Effects on Business ProcessesElectronic Funds Transfer
EDI = Steps 1-6; EFT = Step 7; FEDI = Steps 1-7Information Flows in Electronic Commerce
Nonintegrated EDI and EFTCompany AsbankCompany BsbankCompany ACompany BPayment Instructions(ACH Format)Receipts Information(EDI Format)Remittance Data
Financial Electronic Data Interchange (FEDI)Company AsbankCompany BsbankCompany ACompany BRemittance data and payment instructionRemittance data and fundsRemittance data and receipts instruction
Other Electronic PossibilitiesFinancial Value-Added Networks (FVAN)Electronic bill paymentsElectronic cash
E-Business Effects on Business ProcessesApplication Service Providers (ASPs)
Application Service ProviderAn Application Service Provider (ASP) is a company that provides access to and use of application programs via the Internet.
Application Service ProviderThe ASP owns and hosts the software; the contracting organization accesses the software via the Internet.
E-Business Effects on Business ProcessesOutbound Logistics
Outbound LogisticsE-business can improve the efficiency and effectiveness of sellers outbound logistical activities.Timely and accurate access to detailed shipment information.Inventory optimization.For goods and services that can be digitized, the outbound logistics function can be performed entirely electronically.
E-Business Effects on Business ProcessesSales and Marketing
Sales and MarketingCompanies can create electronic catalogs to automate sales order entry.Significantly reduce staffing needs.Customization of advertisements
E-Business Effects on Business ProcessesPost-Sale Support and Service
Post-Sale Support and ServiceConsistent information to customers.Provide answers to frequently asked questions (FAQs).
E-Business Effects on Business ProcessesE-Business Success Factors
E-Business Success FactorsCritical Success Factors (CSFs)Characteristics of business transactions:ValidityIntegrityPrivacy
E-Business Effects on Business ProcessesAddressing Validity, Integrity, and Privacy Concerns
EncryptionSingle-key systems: Same key is used to encrypt and decrypt the messageSimple, fast, and efficientExample: the Data Encryption Standard (DES) algorithm
EncryptionPublic Key Infrastructure (PKI): Uses two keys:Public key is publicly available and usually used to encode messagePrivate key is kept secret and known only by the owner of that pair of keys. Usually used to decode message
Advantages & Disadvantages of PKIAdvantagesNo sharing of key necessaryMore secure than single-key systemsDisadvantagesMuch slower than single-key systems