E-BUSINESS SYSTEM

Written By:
Laura Deswita Fonna
1201103040016
Laura.deswitafonna@gmail.com

Muhammad Khaidir
1201103040003

Khaidir.iap@gmail.com

Raihan Iskandar
1201103040016
icaaiskandar@gmail.com

INTERNATIONAL ACCOUNTING
PROGRAM
FACULTY OF ECONOMY

SYIAH KUALA UNIVERSITY

2015
INTRODUCTION
The explosion in the use of the Internet has paved the way for several
path-breaking innovations. One of the most interesting and exciting aspects of this
evolution is the emergence of electronic business (e-business) as a mainstream
and viable alternative to more traditional methods of businesses being conducted
today. E-business is defined as the process of using electronic technology to do
business. It is the day and age of electronic business. Also the structure of the Web
is rapidly evolving from a loose collection of Web sites into organized market
places. The phenomena of aggregation, portals, large enterprise sites, and
business-to-business applications are resulting in centralized, virtual places,
through which millions of visitors pass daily.
E-business has become standard operating procedure for the vast majority of
companies. Setting up and running an e-business, especially one that processes a
large number of transactions, requires technical, marketing and advertising
expertise. Consumers like to access to products and services on a 24-by-7 basis,
and the easiest way to provide that is to move operations online. The businesses
that provide the most reliable, most functional, most user-friendly and fastest
services will be the ones that succeed.

BUSINESS AND E-BUSINESS

Business
Business is an organization or enterprising entity engaged in commercial,
industrial or professional activities. A business can be a for-profit entity, such as a
publicly-traded corporation, or a non-profit organization engaged in business
activities. Businesses include everything from a small owner-operated company
such as a family restaurant, to a multinational conglomerate such as General
Electric. To "do business" with another company, a business must engage in some
kind of transaction or exchange of value with that company. In this sense, the

word "business" can be used to refer to a specific industry or activity, such as the
"real estate business" or the "advertising business".

History Of Business
1

Feudalism
Feudalism is the business or economic systems in which in one class of

people (aristocrats) control the property rights to all valuable resources, including
people. This system is the oldest of business scheme. It happened in Middle Ages
around 500 1500 A.D. In this era, the writings of business had founded and the
king had the complete control of this system.
The evolution of tenant farming began in this era. To make their estates
more profitable landowners assigned the most able workers to take control of
specific farms on their estates. The king would award his knights with manor and
Land. The peasant (labor) work to pay for the land owned by the Knights. Then,
the knights would provide food, shelter, and safety to the peasant.
2

Mercantilism
Mercantilism is the business system in which products are traded across

markets and countries until they are put to their most highly valued used. This
system was created in the early 1500s by Greeks. From the time of the Phoenician
traders onwards, there was a great deal of mercantilism between countries in the
Middle East and Europe. They recognize an opportunity to profit from the
difference in prices by trading commodities between one market and the next.
Merchants and bankers are traders who notice a difference between the
value and the price of commodities. This brought wealth to the countries that had
the most natural resources to exchange. Few countries that use this system were
United States, England and Europe. During the time, the Queen Elisabeth reigns
the exchange of gold for resources was successful.
3

Capitalism
Capitalism is the economic or business system in which the private

ownership of resources becomes the bases for the production and distribution of

good and services. In basic, capitalism can be explained by simply saying smallbusiness owners could own merchant sale and produce it at a cheaper rate than
their companies. Small companies could capitalize on the basic labor of workers
by paying less money for more hours. The capitalist would make more money by
forcing workers to work hard so that they can make more money.
Capitalism gave rise to increasing conflicts between capitalist and
workers. Capitalist are people who personally own or control the physical capital
of industrial production such as machinery, factories and distribution networks,
raw materials and technology. Capitalism started the social hierarchy. Capitalist
has many negative overtones because of industrialists like Rockefeller and
Carnegie.
4

E-Business

E-Business is the powerful business environment that is created when we

connect critical business systems directly to customers, employees, vendors, and
business partners using intranets, E-Commerce technologies, collaborative
applications and the Web. This systems is as an interchange of goods or
commodities, especially on a large scale between different countries (foreign
commerce) or between different parts of the same country (domestic commerce)
trade; business. Business as commerce, occupation, and organization evolved to
allow land, labor, capital, and enterprise to be used most productively and
profitably.

E-business
Electronic Business, also known as "e-Business" or "e-Business", is
defined as the utilisation of information and communication technologies (ICT)
in support of all the activities of business. Commerce constitutes the exchange of
products and services between businesses, groups and individuals and hence can
be seen as one of the essential activities of any business. Hence, electronic
commerce or e-Commerce focuses on the use of ICT to enable the external
activities and relationships of the business with individuals, groups and other
businesses.

Electronic business methods enable companies to link their internal and

external data processing systems more efficiently and flexibly, to work more
closely with suppliers and partners, and to better satisfy the needs and
expectations of their customers.
In practice, e-business is more than just e-commerce. While e-business refers to
more strategic focus with an emphasis on the functions that occur using electronic
capabilities, e-commerce is a subset of an overall e-business strategy. E-commerce
seeks to add revenue streams using the World Wide Web or the internet to build
and enhance relationships with clients and partners and to improve efficiency
using the empty vessel strategy. Often, e-commerce involves the application of
knowledge management systems.
E-business involves business processes spanning the entire value chain:
electronic purchasing and supply chain management, processing orders
electronically, handling customer service, and cooperating with business partners.
Special technical standards for e-business facilitate the exchange of data between
companies. E-business software solutions allow the integration of intra and inter
firm business processes. E-business can be conducted using the web, the internet,
intranets, extranets, or some combination of these.
Activities using e-Business tools include:

Trading of goods or services online, such as e-Procurement, primarily

through the web-sites;

Electronic retailing (e-Tailing);

Use of the internet, intranets or extranets to conduct research and manage

business activities;

Web-site marketing;

Online communications, such as e-mail; and

Online training for staff (e-Learning).

E-Business tools include:

Mobile phones;

Personal digital assistants (PDA);

Electronic Data Interchange;

File transfer;

Facsimile;

Video conferencing, internet, intranets and extranets.

Enterprise Business System

Enterprise systems (ES) are large-scale application software packages that
support business processes, information flows, reporting, and data analytics in
complex organizations. While ES are generally packaged enterprise application
software (PEAS) systems they can also be bespoke, custom developed systems
created to support a specific organization's needs.
Types of enterprise systems include:

enterprise resources planning (ERP) systems,

enterprise planning systems, and

Customer relationship management software.

Although data warehousing or business intelligence systems are enterprise-wide

packaged application software often sold by ES vendors, since they do not
directly support execution of business processes, they are often excluded from the
term.
Enterprise systems are built on software platforms, such as SAPs Net Weaver and
Oracle's Fusion, and databases.
From a hardware perspective, enterprise systems are the servers, storage and
associated software that large businesses use as the foundation for their IT
infrastructure. These systems are designed to manage large volumes of critical
data. These systems are typically designed to provide high levels of transaction
performance and data security.

Cross Functional Enterprise System

Cross functional is a term that refers to efforts that span various

departments or tasks in an organization, with an eye toward accomplishing a
common goal. In project management, cross functional (cross-functional) is an
approach to work in which team members come from different areas of an
organization and have different skill sets.
A cross functional team places less emphasis on the members' specific
roles within the organization and more emphasis on communication and working
together to accomplish organizational. For example, adata science team might
include a business analyst, a quality engineer and the product managers from
different divisions within the organization who will be using the data. Or a
software development team for a new vendor offering may include the executive
sponsor and marketing manager as well as the product, a technical writer, a
database manager and the software development team.
Setting up a cross functional team can be a challenge for project managers.
Without having worked previously with the individuals involved, it can be
difficult to balance the team's soft skills and hard skills and not end up with too
many individuals who have similar skill sets while neglecting other possible team
members that would aid the team's goal.
All business processes must be supported by cross-functional information
system that crosses the boundaries of several business functions. Many companies
are moving one step ahead and trying to install integrated cross-functional clientserver applications. They are typically falling in these categories:

Enterprise applications integration (EAI)

Enterprise resource planning (ERP)
Supply chain management (SCM)
Customer relationship management

Supply Chain Management

A Supply Chain is a network of supplier, manufacturing, assembly,
distribution, and logistics facilities that perform the functions of procurement of
materials, transformation of these materials into intermediate and finished

products, and the distribution of these products to customers. Supply chains arise
in both manufacturing and service organizations.
Supply Chain Management (SCM) is a systems approach to managing the
entire flow of information, materials, and services from raw materials suppliers
through factories and warehouses to the end customer. SCM is different from
Supply Management, which emphasizes only the buyer-supplier relationship. All
organizations have supply chains of varying degrees, depending upon the size of
the organization and the type of product manufactured. These networks obtain
supplies and components, change these materials into finished products and then
distribute them to the customer. The supply-chain is the all-inclusive set of links
into an end-to-end business process, for example:

From the need to the fulfillment

From order to delivery
From raw materials to shipping
From order to cash
From an inquiry to a satisfactory response

Customer Relationship Management

Customer Relationship Management (CRM) is concerned with the
creation, development and enhancement of individualized customer relationships
with carefully targeted customers and customer groups resulting in maximizing
their total customer life-time value. It is a business strategy that aims to
understand, anticipate and manage the needs of an organizations current and
potential customers. And also, it is a comprehensive approach which provides
seamless integration of every area of business that touches the customer- namely
marketing, sales, customer services and field support through the integration of
people, process and technology.
CRM is a shift from traditional marketing as it focuses on the retention of
customers in addition to the acquisition of new customers. The expression CRM is
becoming standard terminology, replacing what is widely perceived to be a
misleadingly narrow term, relationship marketing.
The purpose of CRM:

The focus of CRM is on creating value for the customer and the
company over the longer term. When customers value the customer
service that they receive from suppliers, they are less likely to look to

alternative suppliers for their needs.

CRM enables organizations to gain competitive advantage over
competitors that supply similar products or services.

Todays businesses compete with multi-product offerings created and

delivered by networks, alliances and partnerships of many kinds. Both retaining
customers and building relationships with other value-adding allies are critical to
corporate performance. The adoption of C.R.M. is being fuelled by recognition
that long-term relationships with customers are one of the most important assets
of an organization.
CRM developed for a number of reasons:

The 1980s onwards saw rapid shifts in business that changed customer

power.
Supply exceeded demands for most products
Sellers had little pricing power
The only protection available to suppliers of goods and services was in
their relationships with customers.

CRM involves the following:

Organizations must become customer focused

Organizations must be prepared to adapt so that it take customer needs

into account and delivers them

Market research must be undertaken to assess customer needs and
satisfaction.

Enterprise Application Integration

EAI (enterprise application integration) refers to the plans, methods, and

tools aimed at modernizing, consolidating, and coordinating the computer
applications in an enterprise. Typically, an enterprise has existing legacy
applications and databases and wants to continue to use them while adding

or migrating to a new set of applications that exploit the Internet, e

commerce, extranet, and other new technologies.

EAI may involve developing a new total view of an enterprise's business
and its applications, seeing how existing applications fit into the new
model, and then devising ways to efficiently reuse what already exists

while adding new applications and data.

Enterprise application integration (EAI) entails integrating applications
and enterprise data sources so that they can easily share business processes
and data. Integrating the applications and data sources must be
accomplished without requiring significant changes to these existing

applications and the data.

Before EAI, integrating applications and data within a corporate
environment has been an expensive and risky proposition.

Enterprise Application
EAI Software

EAI software 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.

Thus, 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. For example, a typical rule
might be: When an order is complete, have the order application tell the

accounting system to send a bill and alert shipping to send out the product.
EAI Software Connects Major e-Business Applications Like CRM and
ERP.

Transaction processing systems

Transaction processing systems capture and process data describing
business transactions. Then they update organizational files and databases, and

produce a variety of information products for internal and external use. A

transaction processing cycle consists of several basic activities, which involve:
Data entry activities
Transaction processing activities
Database maintenance activities
Document and report generation
Inquiry processing activities.
a) Data entity Activities
Purpose of TPS is to capture, store and process data pertaining to all
transaction. The input activity in TPS involves a data entry process. In this
process, data is captured or collected by recording, coding, and editing activities.
Trend: Move from traditional (manual) data entry systems toward source data
automation (automated systems). The reason for this trend is that direct methods
are more efficient and reliable than manual systems. Examples of devices used in
data automation include:

Point-of-sale (POS) transaction terminals.

ATM (Automated Teller Machine) terminals.
Optical character recognition (OCR) scanners.
PCs and network computers with cash drawers as intelligent POS

terminals.
Portable digital radio terminals and pen-based tablet PCs for remote

date entry.
PCs equipped with touch screens and voice recognition systems for

data entry.
Bar coded tags.
Magnetic stripe cards.
Electronic website on the Internet.
b) Transaction processing activities
Transaction processing systems process data in two basic ways:
a. Batch Processing: Transaction data are accumulated over a period of time and
processed periodically.
b. Real-time Processing: (Also called online processing), where data are
processed immediately after a transaction occurs. All online transaction
processing systems incorporate real-time processing capabilities. Many online
systems also depend on the capabilities of fault tolerant systems that can
continue to operate even if parts of the system fail.

c) Database maintenance activities

An organizations data must be maintained by its transaction processing
systems so that they are always correct and up-to-date. Therefore, transactionprocessing systems update the corporate database of any organization to reflect
changes resulting from day-to-day business transactions.
d) Document and report generation
Transaction processing systems produce a variety of documents and reports.
Examples of transaction documents include:

Purchase orders
Paychecks Sales receipts
Invoices Customer statements.
Transaction reports might take the form of a transaction listing such as a
payroll register, or edit reports that describe errors detected during

processing.
e) Inquiry Processing
Many transaction processing systems allow you to use the Internet, intranets,
extranets, and Web browsers or database management query languages to make
inquiries and receive responses concerning the results of transaction processing
activity. Typically, responses are displayed in a variety of pre-specified formats or
screens. Examples of queries include:

Checking on the status of a sales order

Checking on the balance in an account
Checking on the amount of stock in inventory

Enterprise collaboration system

An Enterprise Collaboration System (ECS) is an information system used to
facilitate efficient sharing of documents and knowledge between teams and
individuals in an enterprise. ECS tools include the Internet, groupware, various
forms of software and hardware and internal and external networks. ECS
functions optimally in a collaborative working environment (CWE).
ECS solutions include a variety of enterprise communication tools,
including email, video conferencing, project management software and
collaborative software. ECS has facilitated the creation of the modern e-

professional by enabling achieved goals of project teams, workgroups and

participants. ECS allows team members to work from different physical locations,
divisions, departments or remote areas.

Functional Business System

Functional business system is an information system that is intended to provide
information relating to the companys business to a group of people who are in
parts of the company.
Marketing Systems
Marketing Information Systems provide information technologies that
support major components of the marketing function.

Interactive Marketing
Customer focused marketing process
Based on using Internet, intranets, & extranets to establish
two-way communications between customers or potential
customers and the business
Customers become involved in product development,
delivery, & service issues

Market Research

Statistical models help market researchers find the best populations

for new and existing products

Targeted Marketing

Database management systems (DBMS) help define potential

customers as narrowly as possible

Five targeting components of marketing systems

Community: Customize their Web advertising messages and promotion
methods to appeal to people in specific communities. Virtual communities.

 Content: Advertising such as electronic billboards or banners can be

placed on various Web site pages, in addition to a companys home page .
These message reach the targeted audience.
Context: Advertising appears only in Web pages that are relevant to the
content of a product or services. So advertising is targeted only at people
who are already looking for information about a subject matter.
Demographic/psychographic: Marketing efforts can be aimed only at
specific type of class of people: unmarried, twenty-something , middle
income , male college graduates
Online behavior: Advertising and promotion efforts can be tailored to each
visit to a site by individual. This strategy is based on Web cookie files
recorded on the visitors disk drive from previous visits.
Sales Force Automation
The sales force is connected to marketing websites on the Internet,
extranets, & the company intranet
Equipping

salespeople

with

information

technology

to

facilitate

productivity
IT allows salespeople to present different options for products and
services on the spot.
Increases productivity of sales force Speeds up the capture &
analysis of sales data.
Allows management to provide improved delivery information &
better support of the sales force.
Manufacturing systems.
Support the production/operations function
Assists firms in,
Planning, monitoring, & controlling inventories, purchases, & the
flow of goods and services
Plant activity scheduling
Material requirement assessment

 Material reallocation between orders

Resource qualification for task completion

Computer-Integrated Manufacturing (CIM)

The manufacturing approach of using computers to control the entire
production process
Objectives of CIM
Simplify 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 machines and robots.
Integrate all production and support processes using computers
telecommunications networks and other information technologies.
Supports the concepts of flexible manufacturing systems, agile
manufacturing, & total quality management
Computer-Aided Engineering (CAE)
Computer-Aided Design (CAD)
Material Requirements Planning (MRP)
Computer-Aided Manufacturing (CAM)
Systems that Automate the production process
Manufacturing Execution Systems (MES)
Performance monitoring systems for factory floor operations
Track, schedule, and control manufacturing processes Collect data
such as:
Hours machine operates every day of the month
Hours the machine is idle and why
MES includes shop floor scheduling and control, machine control, robots
control, and process control systems.
Process Control
The use of computers to control an ongoing physical process

 Machine Control
The use of a computer to control the actions of a machine.
Also called numerical control

Accounting Systems.
AISs automatically post transactions in the books and automate generation of
reports for management and legal requirements
Record and report business transactions and other economic events
Online Accounting Systems
Accounting Information Systems
are being affected by Internet and client/Server technologies.
Using the internet ,intranets, extranets and other networks changes how
accounting information systems monitor and track business activity.
Six widely used accounting systems
Order processing
Captures & processes customer orders and produces data
needed for sales analysis and inventory control
Inventory Control
Processes data reflecting changes in items in inventory.

 Helps provide high-quality service while minimizing

investment in inventory & inventory carrying costs
Accounts Receivable
Keeps records of amounts owed by customers from data
generated by customer purchases and payments
Accounts Payable
Keeps track of data concerning purchases from, and
payments to, suppliers
Payroll
Receives and maintains data from employee time cards and
other work records
General Ledger
Consolidates data received from accounts receivable,
accounts payable, payroll, & other accounting information
systems
Electronic Data Processing (EDP) Audits
Ensure electronic systems comply with standard regulations and
acceptable rules
Ensure systems cannot be manipulated to avoid acceptable
principles

Financial information system.

The job of financial managers is to manage money as efficiently as
possible by:

Collecting payables as soon as possible

Making payments by the latest time allowed by contract or law

Ensuring sufficient funds are available for day-to-day operations

Taking advantage of opportunities to accrue the highest yield on

funds not used for current activities

Supports financial managers in decisions concerning

The financing of the business

The allocation & control of financial resources within the business.

Major financial management system categories

Cash Management
Collects information on all cash receipts and disbursements
on a real-time or periodic basis

Investment Management
Helps the financial manager make buy, sell, or hold
decisions for each type of security
Helps the financial manager develop the optimum mix of
securities in order to minimize risk and maximize return

Capital Budgeting
Involves evaluating the profitability and financial impact of
proposed capital expenditures
Allows

financial

managers

to

analyze

long-term

expenditure proposals for plant and equipment

Financial Forecasting & Planning

Evaluate the present and projected financial performance of
the company
Help determine financing needs and analyze alternative
methods of financing
Explore what-if and goal-seeking questions

EXAMPLE & BENEFIT OF E-BUSINESS

Example of E-business
The Internet is a powerful tool for communication and research, but it also
provides businesses with a means of connecting with consumers and generating
income. Businesses that generate revenue primarily using the Internet are
sometimes called e-businesses. E-businesses can vary greatly in terms of how they
provide value to and earn income from consumers.

Online businesses also known as e-businesses include traditional

businesses, but can also include other more nontraditional business models. The
Internet offers a place where anyone can start up a business and make money
online with very little cash up front. Business models include a wide vary of
markets and approaches where anyone can become successful if they work at it
and keep their business website updated and fresh.
Auction and Classified Sites

Many successful e-businesses owners started out by selling products

online via auction or classified sites. Some auction sites even allow you to
create your own "store" to sell your goods online at discounted prices.
Another business model may include finding items in disrepair, fixing
them and selling them online. A good example of this is finding old
bicycles, repairing or painting them, and selling them through a classified
site or your own website.

Digital and Affiliate Marketing

One of the most common e-business models includes selling other people's
products or services and receiving a commission for the sale. If you decide
on the digital or affiliate marketing e-business model, you need to research
specific product niches to create your own niche website to market these
products. The Federal Trade Commission requires affiliate marketers to be
truthful and honest on their recommendations, but many affiliate marketers
have been able to successfully transition from full-time day jobs to
working from home online using this model.

Freelance Services

The Internet provides an excellent place to offer your freelance services to

other business entrepreneurs. Whether creating websites for others,
generating content for their websites, writing articles for their marketing
efforts or selling your photos as a freelancer, the Internet has plenty of

room for you to start a freelance e-business. With the explosion of e-book
sales through various online retailers, a whole market has sprung up that
needs freelance editors, book cover creators, graphic designers,
ghostwriters and book marketers.
Online Store

Some website companies, for a small monthly fee, take all the hassle out
of starting an online e-business. These companies typically provide you a
domain name, an e-commerce shopping cart, website, marketing tools,
reports and payment gateway without you having to obtain these items
independently. These companies can even give you access to drop
shippers, who send the products to your customers directly without you
even having to maintain an inventory. Some of these companies even offer
you the option to make your site compatible for mobile devices to increase
your sales.

Advantages of E-business:
1. Removes location and availability restrictions
The internet reaches across the world and spans all time zones. That means that
when businesses take their operations online, they have the same capabilities.
With a physical store, customers are limited by how close the store is and its hours
of operation. E-businesses, on the other hand, are accessible from any area with
internet access and open 24 hours a day. Additionally, with commerce on the rise,
ebusiness has yet another advantage: being accessible to anyone with a mobile
device. Customers are only limited by their mobile network coverage, which goes
practically everywhere.

2. Reduces time and money spent

With bills for rent, electricity, telephones and general office upkeep, expenses for
physical locations can start to pile up. By taking your business online, you reduce

or eliminate a lot of these overhead costs. Plus, things get a lot easier from a
logistical standpoint, since one person can do the work of several people. Take
mass communicating with customers, for example. Sending a bulk email to a list
of customers is easier than sending out 100 direct mailings (paper, postage, staff,
etc.). In addition to customer-facing processes, inside processes also become
friendlier on the pocketbook when going online. For example, transaction costs
are lessened, since theres no need to hire a cashier when shopping cart software
lets customers check out themselves. And if thats not enough, ebusiness
marketing is often more affordable too, as online advertising tends to cost less
than traditional marketing channels.
3. Expedites customer service
When customers contact you, they want answers fast. Thanks to email and live
chat software, ebusinesses have no trouble fulfilling that need. Plus, these flexible
forms of customer service can extend past a physical stores hours of operation.
Ebusinesses also offer the convenience of delivering products straight to a
customers front door, no braving of traffic needed.
4. Shows you how to improve
When it comes to learning more about your customers, a physical store is no
match for an ebusiness. With tools like Google Analytics, its much easier to
access information on your sales and customers, at no extra cost. Want to know
how a product has fared over the past three months? What about how many
returning customers youve had? Unless youre doing some extreme recordkeeping, you dont have easy access to this kind of data with a brick and mortar
store. This data gives insight into your customers buying behaviors and interests,
which is invaluable to improving your business.

5. Keeps your business relevant

The internet is a big part of our lives, and isnt showing signs of leaving anytime
soon. Opening an ebusiness keeps you in touch with whats current: it levels the

playing field and gives you the resources needed to compete in todays
increasingly digital marketplace. For example, having an online presence on
social media websites is a big part of getting your name out there. To stay
relevant, businesses need to consistently post content on these outlets that interest
their consumers. Whats more relevant than the latest online sale or contest?
When it comes to ebusiness, both the consumer and the business reap the benefits.
Being online makes a business convenient, accessible, affordable and better
equipped to help its customers, and when businesses are focused on benefiting
their customers, everyone wins.

Conclusion

References :
James hall, Accounting Information system, Cengage
Learning, Australia, 2008

Dave

Chaffey,

E-business

and

E-commerce

Management 4th Edition, marketing insights limited,

2009
james

o brien,

George m.

marakas Management

information systems, ,
( http://www.sltda.lk)

(http://www.techopedia.com)
Examples of E-Business: (http://www.ehow.com)

(http://onlinebusiness.volusion.com)