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(E-commerce & ERP Notes By Mohd. Shahid (A.P.

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Q: Define EDI? Ans: An EDI stand for the Electronic Data Interchange is defined as the inter process communication (Computer application to computer communication) of business information in a standardized electronic form. In short, EDI communications information pertinent for business transactions between the computer systems of companies, government organizations, small business and banks. EDI developed in 1960s as a means of accelerating the movement of documents pertaining to shipments and transportation. In mid 1980s, it used in wide range of industries automotive, retail, transportation and international trade. It used in growing and become the standard by which organizations will communicate with each other in the world of electronic commerce. Electronic commerce is often equated with EDI, so it is important to clarify that electronic commerce embraces EDI and much more. In electronic commerce , EDI technique are aimed at improving the interchange of information between trading partners, suppliers and customers by bringing down the boundaries that restrict how they interact and do business with each others. EDI is one well known example of structured document interchange which enables data in the form of document content to be exchanged between software applications that are working together to process a business transaction. Q: What is Business to Consumers E-commerce? Write its classification? Ans: Business to consumer is a form of electronic commerce in which products and services are sold from a firm or company to consumers. Classifications: Online intermediaries: Online intermediaries are companies that facilitate transactions between buyers and sellers and receive a percentage of the transactions value. There firms make up the largest group og B2C companies today. Three are two types of online intermediaries: Brokers and informedieries. An infomediary is a website that provides specialized information on behalf of producers and goods and services and their potential customers. (i) Advertising based models:

Q: What are the advantages and disadvantages of EDI? Ans: Advantages of EDI: Electronic Data Interchange (EDI) is a set of standards for controlling the transfer of business documents such as purchase orders and invoices, between computers. The goal of EDI is the elimination of paperwork and increased response time. For EDI to be effective, users must agree on certain standards for formatting and exchanging information, such as the X-400 protocol. Electronic Commerce includes electronic trading of goods, services and electronic material.Ecoomerce in the process of formulating commercial transactions at a site (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 1

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) remote from the trading partner and then using electronic communications to execute that transaction. The direct advantages of EDI include: EDI has become a major means of business communications among large companies in the U.S. It generates the functional knowledgement whenever an EDI message is received it is electronically transmitted to the sender. EDI eliminates the paper documents associated with common business transaction.EDI orders are sent straight into the network and the only delay is how often the supplier retrieves message from the system. EDI saves time on the exchange of business transitions and has the potential for considerable savings in costs. EDI can cut costs. Eliminate the errors. Straightway information and fast response. Indirect Advantages of the use of EDI can be: Reduce stock holding: It cut the cost of warehousing of keeping the double handling goods and capital requirement to pay for the goods that are in store. Cash Flow: Speeding up the trade cycle by getting invoices out quickly, an direct matched to the corresponding orders and delivers speed up payments and hence improve cash flow. Business opportunities: There is a increase in the number of customers, particularly large powerful ful customers that will only trade with suppliers that do business: via EDI. Customer Lock-in: An established EDI system should be of considerable advantage to the customer and suppliers. Switching to a new supplier requires that in electronic trading system and trading relationship be redeveloped, problem to be avoided if a switch of supplier is not necessary. Disadvantages of EDI Expensive and complex system. To incorporate EDI in the existing system needs more money to spend to upgrade the system. Networking complexities and networking requires heavy investment. The need for extensive telecommunications capability, a major barrier in EDI implementation. There must be specific point to point electronic path for the document to take. So companies either required to develop extensive and expensive networks.

Q: What are the critical success factors in EDI implementation? Ans: 1. Executive commitment is the most important factors in determining the success of an EDI program. By its nature, EDI can change the way an organization does business. To enable such beneficial changes the executive driving a companys EDI program (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 2

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) must build a common understanding regarding EDI among all affected departments, divisions and other organizational units. 2. An EDI implementation consists of an internal and an external phase. During the internal phase, the organization selects and implements the necessary translation and communications software and services, accomplishes the appropriate applications integration and determines what procedures and guidelines are needed to support electronic business practices. In selecting an EDI VAN and translation software, one should consider the requirements of both phases. 3. EDI consists of standardize electronic message formats for common business documents such as request for Quotation, Purchase order, Purchase change order, bill of landing receiving advice, invoice and similar documents. Q: Define EDI Layered Architecture Ans: Electronic Data Interchange (EDI) developed in 1960s as a means of accelerating the movement of documents pertaining to shipments and transportation. After that this technique used in a wide range of industries automotive, retail, transportation and international trade. Its use is growing and it is set to become the standard by which organizations will communicate formally with each other in the world of electronic commerce. The aimed of EDI techniques are to improving the interchange of information between trading partners, suppliers and customers by bringing down the boundaries that restrict how they interact and do business with each other. EDI is one well known example of structured document interchange which enables data in the form of document content to be exchanged between software applications that are working tighter to process a business transaction. EDI architecture specifies four layers: The semantic (or application) layer, the standards translation layer, the packing (or transport) layer and the physical network infrastructure layer. The EDI semantic layer describe the business application that is driving EDI.For a procurement application, this translates into request for quotes, price quotes, purchase orders, acknowledgments and invoices. This layer specific to a company and the software it uses. EDI semantic layer must be translated from a company specific form to a more generic form so that it can be sent to various trading partners who could be using a variety of software application at their end. What complicates matters is the presence of two competing standards that define the content and structure of EDI forms: (i) The X12 standard ,developed by the American National Standard Institute(ANSI) (ii) EDIFACT developed by United Nations Economic Commission for Europe. EDI Semantic Layer Application level services EDIFACT business form standards EDI standard layer ANSI X12 business form standards Electronic mail X.435,MIME EDI transport layer Point to point FTP , TELNET World Wide Web HTTP Physical layer Dial-up lines, Internet, I-way (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 3

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EDI standard specify business form structure and to some extent influence content seen at the application layer. For instance, a purchase order name field in an X12 standard might be specified to hold a maximum of 50 characters. An application using 75- character field length will produce name truncation during the translation from the application layer to the standard layer. The EDI transport layer corresponds with non electronic activity of sending a businesses form from one company A to company B. The business form could be sent via regular postal service, registered mail, certified mail or simply faxed between the companies. EDI document transport is more complex than simply sending e-mail messages or sharing files through a network, a modem, or a bulletin board. These EDI documents are more structured than e-mail. The relationship between EDI and e-mail can be ambiguous as email systems become very sophisticated and incorporate more and more form based features. A good example is Lotus Notes, which started as a simple form based mail system but has evolved into a very sophisticated environment.

Q: What is the difference between EDI and E-mail? Ans: EDI E-mail 1. There is typically no human involvement 1. The data are not necessarily structured to in the processing of the information, as the be software understandable. A human to interface has software to software software interface is involved at a orientation. The data are structured in a minimum of one end of the interchange. software understandable way. 2. The interchange is composed by one 2. The message is composed by a human software for interpretation by software. If a and or interpreted by a human and or reply reply is involved, it is composed by is composed by a human and or interpreted software to be interpreted by software. by a human.

Q: Define E-commerce? Ans: IBMs Definition of E-commerce is The transformation of key business processes through the use of internet technologies. The conducting of business communication and transactions over networks and through computers. As most restrictively defined, electronic commerce is the buying and selling of goods and services and the transfer of funds, through digital communications. E-commerce also includes all inter-company and intra company functions (such as marketing, finance, manufacturing, selling and negotiation) that enable commerce and use electronic mail, EDI, file transfer, fax, video conferencing, workflow or interaction with a remote computer.

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) E-commerce also includes buying and selling over the World Wide Web and the internet, electronic fund transfer, smart cards, digital cash (e.g. Mondex) and all other ways of doing business over digital network. E-commerce describes the process of buying, selling, transferring or exchanging products, services and or information via computers network, including the internet.

We define E-commerce in the following three aspects: (i) From a communication perspective: E-commerce is the delivery of information, products/services or payment via telephone lines, computer network or any other means. (ii) From a business Perspective: E-commerce is the application of technology towards the automation of business transactions and workflows. (iii) From a Service Perspective: E-commerce is the tool that addresses the desire of firms, consumers and management to cut service costs while improving the quality of goods and increasing the speed of service delivery. (iv) From a Learning Perspective-commerce is enabler of online training and education in school, universities and organization.

Q: Briefly mention the need for E-commerce. What are the advantages and disadvantages of E-commerce? Ans: Earlier companies used private networks to exchange orders and invoice information but now E-commerce has made a shift in business paradigm to integrate the various business processes through dissemination of real time information and it is a stage in the evolution of information management technique. This business to business electronic communication is growing rapidly due to electronic data interchange (EDI).For example the internet can be used for the purchase of books that are then delivered by post or the booking of tickets that can be picked up by the clients when they arrive at the event. However the internet is not only the technology used for this type of service and this is not the only use of the internet in e-commerce. Advantages of E-commerce The advantages of e-commerce are as follows: Electronic medium or EDI helps in transmitting EDI standard documents from business to business over web transport protocols. For purely electronic products or information based services the web setting offers distinct advantages. For example, purchased software can be downloaded directly from the web.similarly, online services such as tax preparation or electronic news and analysis, meet their basic fulfillment obligation directly through the web. Low volume trade partners (such as one time or emergency suppliers, merely prospective customers, or ordinary retail customers) are now prime candidates to participate in web commerce. Small business and individual consumers previously all but ineligible for e-commerce are now right in middle of it.

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) No need of setting up of private network individually for business by companies. Private networks are appropriate for trade partners where as a web connection is often already setup before anyone even contemplates doing commerce over the connection. Product Promotion. Internet e-commerce allows direct selling of the product and it does not require retail premises. Direct saving: Selling online cuts out the costs of the retail premises and potentially reduces the staff requirement. Save time and manpower Information from customers can be used to customize products or could be the spark that inspires new products and services.

Disadvantages of E-commerce The limitation of E-commerce can be classified as technological and non-technological. (i) Technological: For the E-commerce system itself, there is no universally accepted standard for quality, security and reliability. (ii) Non Technological: The lack of trust is one main reason why customers are unwilling to accept Ecommerce due to privacy and security concerns. The danger of hackers accessing customer files and corrupting accounts is also related to privacy and legal issues. Example is furniture companies many websites that allow customers to browse but most customers wants to feel touch the items before they make a decision. Some organizations are under an unencrypted payment environment, in which a customers number might be stolen in the payment process; however, recent payment systems such as Pay Pal can solve this kind of problems.

ELECTRONIC PAYMENT SYSTEM Overview of Electronic Payment systems: Electronic payment systems are becoming central to online business process innovation as companies look for ways to serve customer faster and at lower cost. Emerging innovations in the payment for goods and services in electronic commerce promise to offer a wide range of new business opportunities. Electronic payments systems and e-commerce are linked given that on-line consumers must pay for products and services.Clearly, payment is an integral part of the mercantile/business process and prompt payment is crucial/essential. If the claims and debits of the various participants individuals, companies, banks and non banks-are not balanced because of payment delay or even worse default then the entire business chain is disrupted. Hence the important aspect of ecommerce is prompt and secure payment, clearing and settlement of credit or debit claims. To avoid the problems faced by the ancient traders like conflicting local laws and customer regarding commercial practices and incompatible and nonconvertible (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 6

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) currencies that restricted trades, traders invented various forms of payment instruments(promissory notes, bills of exchange, gold coins and barter).The merchants also developed commercial law surrounding the use of these instruments that proved to be one of the turning points in the history of trade and commerce. Everyone agrees that the payment and settlement process is potential/jams in the fast moving electronic commerce environment if we rely on conventional payment methods such as cash, checks, bank drafts or bill of exchange. Electronic replicas of these conventional instruments are not well suited for the speed required in ecommerce purchase processing. For instance, payments of small denominations (micro payments) must be made and accepted by vendors in real time for snippets (bits and pieces) of information. Conventional instruments are too slow for micro payments and high transaction costs involved in processing them add greatly to be overhead. Therefore new methods of payment are needed to meet the emerging demands of ecommerce. These neo-payment instruments must be secure, have a low processing cost, and accepted widely as global currency tender.


Q: Write different types of Electronic Payment system? Ans: Electronic Payment systems are proliferating(grow) in banking, retail ,health care ,on-line markets, and even governments-in fact ,anywhere money need to change hands. Organizations are motivated by the need to deliver products and services more cost effectively and provide a higher quality of services to customer. Research into electronic payment systems for consumers can be traced back to the 1940s, and the first applications-credit cards-appeared soon after. In 1970s, the emerging electronic payment technology was labeled electronic funds transfer (EFT). EFT is defined as Any transfer of funds initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape so on as to order, instruct, or authorize a financial institution to debit or credit an account. EFT utilizes computer and telecommunication components both to supply and to transfer money or financial assets. Transfer is information based and intangible/vague/unclear. Thus EFT stands in marked contrast to conventional money and payment modes that rely on physical delivery of cash or check (or other paper orders to pay) by truck, train, or airplane. Work on EFT can be segmented into three broad categories: 1. Banking and financial payments Large-scale or wholesale payments (e.g., bank to bank transfer) Small scale or retail payments(e.g., automated teller machines and cash dispensers) Home banking(e.g., bill payment) (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 7

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) 2. Retailing payments Credit cards(e.g. ,VISA or MasterCard) Private label credit/debit cards(e.g., J.C. Penney card) Charge cards(e.g., American express) 3. On-line electronic commerce payments Token based payment systems Electronic cash(e.g., DigiCash) Electronic Checks(e.g., NetCheque) Smart cards or debit cards(e.g., Mondex Electronic Currency Card) Credit card based payment systems Encrypted credit cards(e.g. World wide web form based encryption) Third party authorization numbers(e.g., First Virtual) Q: Write different E-Commerce payment system Models Ans: An e-commerce payment system facilitates the acceptance of electronic payment for online transactions. Also known as financial electronic data interchange (FEDI), ecommerce payment systems have become increasingly popular due to the widespread use of the internet based shopping and banking. E-Commerce payment system Models Customer to Business In C2B arrangement customer pay business through electronic transaction. The best example of C2B E-Commerce model is debit cards, credit cards and pay pal.

Business to Business In business to business model one business pays to other business by using electronic channels. Online order management and payment systems are common examples which company employee to purchase products and payment through application or online website. Business to Consumer In this type of arrangement business devise a way to transfer funds from business to consumer. EMV (Euro, master, VISA) international payment gateways credit card systems allow the banks to assign line of credit to their customer for cash and purchase transaction over different electronic channels.

Consumer to Consumer After rapid growth of C2B and B2B electronic payment systems the needs of consumer to consumer system arise to great extent. This system allows the electronic transfer of fund payment from one consumer to other. Now a days banking system C2C transaction

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) through debit cards and internet banking, customer just need to know the account number to transfer funds from one account to other account electronically. Business to Employees This model suites the corporate model where company have wide spread operation with thousands of employers. Business can transfer salary at the end of each month electronically by employing electronic banking system. This model will reduce administration and financial tasks and time and increase accuracy and security by directly depositing the amount to employees account rather than handing physical cash to them.

Q: What is Electronic money? Ans: Electronic money (also known as e-money, electronic cash, electronic currency, digital money, digital cash or digital currency) refers to money or scrip which is exchanged only electronically. Typically, this involves use of computer networks, the internet and digital stored value systems. Electronic Funds Transfer (EFT) and direct deposit are examples of electronic money. Also, it is a collective term for financial cryptography and technologies enabling it. Technically electronic or digital money is a representation, or a system of debits and credits, used to exchange value, within another system, or itself as a stand alone system, online or offline. Also sometimes the term electronic money is used to refer to the provider itself. A private currency may use gold to provide extra security, such as digital gold currency. Also, some private organizations, such as the US military use private currencies such as Eagle Cash. Many systems will sell their electronic currency directly to the end user, such as Paypal, Web Money and Wirex, but other systems, such as Liberty Reserve, sell only through third party digital currency exchangers. In the case of Octopus Card in Hong Kong, deposits work similarly to banks'. After Octopus Card Limited receives money for deposit from users, the money is deposited into banks, which is similar to debit-card-issuing banks redepositing money at central banks. Some community currencies, like some LETS systems, work with electronic transactions. Cyclos Software allows creation of electronic community currencies. Ripple monetary system is a project to develop a distributed system of electronic money independent of local currency.

Off-line 'anonymous' electronic money

In the use of off-line electronic money, the merchant does not need to interact with the bank before accepting a coin from the user. Instead he can collect multiple coins Spent by users and Deposit them later with the bank. In principle this could be done off-line, i.e. the merchant could go to the bank with his storage media to exchange e-cash for cash. Nevertheless the merchant is guaranteed that the user's e-coin will either be accepted by the bank, or the bank will be able to identify and punish the cheating user. In this way a (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 9

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) user is prevented from spending the same coin twice (double-spending). Off-line e-cash schemes also need to protect against cheating merchants, i.e. merchants that want to deposit a coin twice (and then blame the user). Q: What is digital token based electronic payment system, illustrate with example? Ans:

Digital token based electronic payment systems:

None of the banking or retailing payment methods is completely sufficient in their present form for the consumer oriented e-commerce environment. Their deficiency is their assumption that the parties will at some time or other be in each others physical presence or that there will be a sufficient delay in the payment process for frauds, overdrafts, and other undesirables to be identified and corrected. These assumptions may not hold for ecommerce and so many of these payment mechanisms are being modified and adapted for the conduct of business over networks. Entirely new forms of financial instruments are being developed. One such new financial instrument is electronic tokens in the form of electronic cash/money or checks. Electronic tokens are designed as electronic analogs of various forms of payment backed by a bank or financial institution. Simply stated, electronic tokens are equivalent to cash that backed by a bank.

Electronic tokens are of three types: 1. Cash or real-time: Transactions are settled with the exchange of electronic currency. An example of on-line currency exchange is electronic cash (e-cash). 2. Debit or prepaid: Users pay in advance for the privilege of getting information; Examples of prepaid payment mechanisms are stored in smart cards and electronic purses that store electronic money. 3. Credit or postpaid: The server authenticates the customers and verifies with the bank that funds are adequate before purchase. Examples of postpaid mechanisms are credit/debit cards and electronic checks. Q: Write notes on the following: (i) E-cash (ii) E- checks (iii) E-billing Ans: (i) Electronic Cash (e-cash): Electronic cash (e-cash) is a new concept in on-line payment systems because it combines computerized convenience with security and privacy that improve on paper cash. its versatility opens up a host of new markets and applications. E-cash presents some interesting characteristics that should make it an attractive alternative for payment over the internet. E-cash focuses on replacing cash as the principal payment vehicle in consumeroriented electronic payments. 10

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) Cash remains the dominant form of payment for three reasons: (i) Lack of trust in the banking system (ii) Inefficient clearing and settlement of noncash transactions and (iii) Negative real interest rates paid on bank deposits. The large number of cash indicates an opportunity for innovative/new business practice that revamps the purchasing process where consumers are heavy users of cash. To really displace cash, the electronic payment systems need to have some qualities of cash that current credit and debit cards lack. For example, cash is negotiable, meaning it can be given or traded to someone else. Cash is legal tender, meaning the payee is obligated/compelled to take it. Cash is bearer instrument, meaning that possession is prima facie proof of ownership. also, cash can be held and used by anyone even those who dont have bank account, and cash places no risk on the part of the acceptor that the medium of exchange may not be good.

(ii) Electronic checks (e- checks): Electronic checks are another form of electronic tokens. They are designed to accommodate the many individual entities that might prefer to pay on credit or through some mechanism other than cash. Buyers must register with a third party account server before they are able to write electronic checks. The account server also acts as a billing service. The registration procedure can vary depending on the particulars account server and may require a credit card or a bank account to back the checks. Transfer electronic check Payer Payee

Forward check for payer authentication Bank Deposit check Accounting Server

Once registered, a buyer can then contact sellers of goods and services. To complete a transaction, the buyers sends a check to the seller for a certain amount of money these checks may be sent using e-mail or other transport methods. 11

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) When deposited, the check authorizes the transfer of account balances from the account against which the check was drawn to the account to which the check was deposited. The e-check method was deliberately created to work in much the same way as a conventional paper check. The account holder will issue an electronic document that contains the name of the payer, the name of the financial institution, the payers account number, the name of the payee and the amount of the check. Most of the information is in encoded form. Like paper check, an e-check will bear the digital equivalence of a signature: a compound number that authenticates the check as coming from the owner of the account. And, again like a paper check, an e-check will need to be endorsed by the payee, using another electronic signature, before the check can be paid. Properly signed and endorsed/approval checks can be electronically exchanged between financial institutions through electronic clearinghouses, with the institutions using these endorsed check as tender to clear up account. The specifies of the technology work in the following manner: On receiving the check, the seller presents it to the accounting server for verification and payment. The accounting server verifies the digital signature on the check using he Kerberos authentication scheme. In the language of Kerberos, an electronic check is a specialized kind of ticket created by the Kerberos system. A users digital signature is used to create one ticket a check which the sellers digital endorsement transforms into another an order to a bank computer for fund transfer. Subsequent endorsers add successive layers of information onto the tickets, precisely as a large number of banks may wind up stamping the back of a check along its journey through the system.

Electronic checks have the following advantages:

They work in the same way as traditional checks, thus simplify customer education. Electronic checks are well suited for clearing micro payments; their use of conventional cryptography makes it much faster then the system based on public key cryptography(c-cash). Financial risk is assumed by the accounting server and may result in easier acceptance. Reliability and scalability are provided by using multiple accounting servers. There can be an interaccount server protocol to allow buyer and seller to belong to different domains, regions, or countries. A prototype electronic check system called NetCheque was developed at information science institute by Clifford Neumann.

(Kerberos is a computer network authentication protocol, which allows nodes communicating over a non-secure network to prove their identity to one another in a secure manner. It is also a suite of free software published by Massachusetts Institute of Technology (MIT) that implements this protocol. Its designers aimed primarily at a client-server model, and it provides mutual authentication both the user and the server (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 12

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) verify each other's identity. Kerberos protocol messages are protected against eavesdropping and replay attacks. Kerberos builds on symmetric key cryptography and requires a trusted third party. Extensions to Kerberos can provide for the use of public-key cryptography during certain phases of authentication.)

Q: Explain Credit card and Debit card. Which is better for use and why? Ans: CREDIT CARD: Every time you use a credit card, you are borrowing money that is made available to you by a bank or other financial institution. the institution pays the debt to the vendor, and in turn you pay the money back to the institution. By signing up for a credit card, you agree to pay back the money that you borrowed, in addition to any interest drawn on the amount you borrowed. DEBIT CARD: You have a debit card in your wallet or purse right now, since many ATM cards are programmed to have debit options. Issued by your bank, debit cards take funds directly from the money that you have in your bank account-in sense acting like a check, just faster. With a debit card, you dont have to carry cash or checks, and it is very convenient to shop at a variety of places including gas stations, grocery stores, restaurants and retail stores. They provide instant access to your money and are accepted worldwide. Debit cards are used like credit cards, meaning that the store you are shopping at swipe them, and then you sign off on the receipt. You dont have to show a picture ID, and there is usually no PIN number for you to punch in.

Which is better? The features that make debit cards convenient-instant access to your money, lack of a
PIN number, and not having to drag out your photo ID when you use it make fraud that much easier. Unless reported quickly, theft of you debit card can quickly devastate your bank account. This is the difference between credit and debit cards. Credit card companies are held to restrict liability laws; the limits consumer limits liability for credit card fraud to $50. for example if you notice suspicious charges on your credit card statement such as double billing or incorrect charge, the credit card company is obligated to investigate if you send in a written request with in 60 days. For debit card fraud, your liability is $50 if you notify the bank within two days of noticing the fraudulent charges. After two days, your liability increases to $500 and up to your entire account balance after 60 days. So if you notice that your card is missing within two days and report it, you can only be made to pay up to $50.However if you report the theft after two days, you can be held responsible for paying for purchases or charges or charges that you didnt make. (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 13

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Q: what is e-payment system? Describe the special features required in payment systems for e-commerce. OR What do you mean by electronic payment systems? Discuss the features of good electronic payments system? Ans: Electronic payment systems have been in operation since 1960s and have been expanding rapidly as well as growing in complexity. However, in most of the major industrialized countries, an inverse relationship exists between the volume and number of transaction handled electronically. Typically, of business payments around 85-90% or more of monetary value will be processed electronically while less than 5-10% of the total number of payment transactions will be handled in this way. this can be due to the following four related factors (i) Proprietary closed networks were developed by banks to handle large and increasingly internationally base payment systems. (ii) Large value payments are increasingly associated with foreign exchange and global securities transactions, thereby becoming divorced from underlying world trade. (iii) Large value p[payment systems were not designed nor are they cost effective for small value payments. (iv) Paper based non automated payment systems remain an established part of accepted business practice for varying institutional reasons, thereby remaining ingrained in the economic system. The internet is experiencing rapid growth which is being largely driven by new commercial users of the network. Other commercial online services provided by companies such as CompuServe, America on-lne and prodigy are also expanding rapidly. The creation of an internet electronic payment system will provide opportunities for the creation of completely new sets of global and national trading relationships. The internet offers the possibility of an open systems payment and settlement system which operates in parallel to existing, more traditional bank based network, and which is particularly suited to meet the currently unsatisfied requirements for processing low value payments electronically. It is estimated that an increasing amount of commerce will take place via the internet In both business-to-business and business to-consumer markets in the coming years however, the electronic commerce to take place, a method of payment must be developed for the use of internet-an electronic payment systems. Currently there are several proposed electronic payment systems swaying for dominance as a preferred system, and they can be classified under one of two (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 14

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) categories. The first category is the cash-like or debit payment system, where the customer prepays money to receive tokens with intrinsic value that can be used for purchases at a later time. Examples of the first category include DigiCash, Millicent and Mondex. The second category is the check-like or credit payment system, where the customer receives an identifying designation that allows them to make purchases-the identifier has no built-in value on its own. It is only at the time of the transaction, or shortly after, that money is taken from the customers possession (control). Examples of this category include First Virtual Holdings, CyberCash and Electronic Check.

Electronic Payment System

Cash Like Payment System OR Debit Payment System

Check Like Payment System OR Credit Payment system

1. DigiCash 2. Millicent 3. Mondex 4. NetCash

1. CyberCash 2. First Virtual Holding 3. Secure Electronic Transactions(SET) 4. FSTC Electronic check Project

The electronic payment systems examined may be evaluated under the following criteria:(i) Convenience: The payment system should require the least amount of effort, special equipment and time for both the customer and merchant to process the transaction, such as an on-line authorization process. In contrast a less convenient system would require the customer and/or the merchant to go offline in order to process the transaction with a significant time delay. (ii) Security: the greatest restriction for customers embracing internet commerce is the possibility of fraud-the MasterCard, Visa and Verifone study found that the greatest concern for internet commerce transactions was the possibility of credit card fraud. The payment system should be secure, covering some aspects of transaction: 15

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) 1. The customer must be positively identified such that all financial transactions are carried out with the correct customer. 2. Information related to the customer such as credit card numbers, bank account numbers or passwords must be protected from unauthorized access. The data should be protected from alteration or manipulation as it is transmitted via the internet. That means the customer can receive authentication from the merchant to ensure that the merchant has been authorized to process the payment. 3. Both the merchant and the customer should be protected in the event of loss, either from the result of system failure of fraud. Some electronic payment system providers have guaranteed payment to merchants for processed transactions and offered coverage for consumers who lose their electronic currency. (iii) Anonymity: Another concern of on-line consumers is the confidentiality of transactions-keeping payment activities private preventing thired parties from observing and tracking spending habits. (iv) Universality: The payment system should have a few constraints on its use to allow adoption by any customer or merchant regardless of what browser software they use or what country they are in. (v) Support of Micro Payments: Micro payments are the series of small denomination payments that are made in rapid sucession, that would be used in a pay-per-play kind of environment, such as on-line gaming or fort he payment of per page service fees. (vi) Cost: The cost of payment system, to both the customer and the merchant, should be inexpensive, especially if micro payments are supported.

Q: Describe the various types of e-payment systems. OR Discuss the major electronic payment systems. Ans: E-payment systems are mainly two types. They are as follows:Cash-like Payment systems OR Debit Payment System (1) DigiCash: Digicash originating from the Netherlands and having undergone trails since 1994.Digicash is a pure electronic currency, not requiring any hardware other than an internet capable PC. The consumers buy Digicash coins of various denominations from an issuing bank and are then stored on the consumers hard drive. Each one of these coins is an encrypted number with an encoded signature of the issuing bank to serve as a check against unauthorized duplication. When a sale is made, the customer encrypts a sum of the Digicash and transmits it to the merchant, either by e-mail or via the merchants web site. Digicash is so flexible that, if needed the currency can be printed on paper or saved onto a disk to be sent to the merchant. Not having any special hardware requirements, any merchant can accept Digicash without having to undergo a lengthy qualification process. 16

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) Both the merchant and the customer must have world-currency access accounts at the Mark Twain Bank of Missouri. However, because of the denominations of the coins, consumers may have to deal with the accumulation of the spare change. Digicash uses 64-bit encryption to make each coin unique and in the fraud, each coin can be split into its component parts to determine the issuing source of the coin. While the merchant is paid immediately with little risk upon acceptance of Digicash, there is only one bank in North America that buys and sells Digicash, the Mark twain Bank in St.Louis-if the bank goes out of business, and then Digicash could be worthless without a bank to redeem them. All Digicash transaction are untraceable by both the merchant and the issuing bank.Digicash is recognized internationally and it is currently accepted at over one hundred internet vendors.however,only two banks in the world issue Digicash,the Mark Twain Bank in the United States and the Merit Bank of Finland which will limit its international adoption. (2) Millicent Millicent was created by Digital Equipment Corporation and was intended to be an industry standard for micro payments. Under the Millicent payment system, merchants generate their own currency, called Scrips, which are good for purchases at their own websites. This scrips are then sold in bulk to brokers, from where the customer can purchase them with credit cards. Once purchased, the scrips reside in the customers browser and are automatically downloaded from the browser to the merchant whenever the customer uses a web site that charges by the scrip. Though the customer doesnt have to set up an account with the merchant to transact business, they still have to find a broker that will sell the relevant scrip. Scrips have many security features built-in tamper resistance, difficult to counterfelt, spendable only by its owner, vendor specific serial numbers, expiration dates, and the use of unique digital signature. Since the owner identity is coded into the scrip, anonymity is not possible. However the creators of Millicent feel that it is an inconsequential/minor feature, since it will be used by customers for use on web sites that charge bythe-byte. (3) Mondex The mondex payment system started out as a smart card for use in cafeterias and evolved into a universal smart card based payment system. The Mondex smart cards hold a preprogrammed amount of value, and consumers can pay for items in the real world by swiping the cards through specially designed kiosks at retailers. Online consumers can also use their Mondex cards for Internet purchases if their PC is outfitted with a smart cards reader. Though mondex requires the customer to have a smart card reader, reloading a spent card can be done quickly and easily. There are several channels in development for reloading the Mondex card; via the internet with the customers bank, over the phone, from card-to-card, or from automated banking machines (ABMs). (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 17

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) The security and encryption on the smart cards and the readers is of paramount importance to the creators of the Mondex system, since it is designed to allow value exchange between merchant and customers without intervention of an authorizing authority (such as bank). Electronic money stored on the Mondex cards can be exchanged for the government currency any time at a bank or an ABM, an advantage over the DigiCash and Millicent systems. Because all transactions are carried out in an off-line basis, they are untraceable. The greatest advantage of the Mondex system is the ability to use it in real world, giving it the most versatility and liquidity of any electronic payment system.

(4) Net Cash Net cash is the electronic payment system being offered by the Netbank, and is designed to support low value exchanges on the internet. A customer must first set up US checking account in order to buy Net-Cash coupons of exact denominations-each coupon is a serial number with an exact value. When a purchase is made, the customer must pay the merchant in exact change by e-mailing the serial numbers and values of the coupons being used. Like the digicash system, Netcash can become Messy (confuse) if customer have lots of spare change, though there is a change; function where the customer or the merchant can have their loose bills and change consolidated into higher denominations. Net cash relies on the security of the browser or the email program being used, since it has no encryption of its own. Though NetBank scrutinizes all transactions to ensure that coupons are not being used more than once, the responsibility is on merchant to check validity of every coupon received with NetBank for authenticity. All Net cash transactions are anonymous/unknown.Net cash is currently not for global use since customers must have a US checking account to buy or trade in. However this can be avoided by spending ones build up Net cash coupons on other web goods and services. There is time delay for reimbursement/compensation of the merchant, and penalties for low value redemptions/recovery encourage merchants to allow their Net Cash reserves to accumulate. Net cash can be used for payments as low as $0.25.there are no transaction fees for the use of Net Cash, through there is a 2% conversion fee with a $2 minimum ($4 minimum for merchants).

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Cheque-like Payment systems OR Credit Payment System

(1) CyberCash CyberCash acts as an intermediary between the internet merchant and the bank and authorizes the payment directly from the customers bank account or credit card. A CyberCash customer must first open an account with Cyber cash, after which they are given electronic wallet software that contains an encrypted copy of the customers credit or debit card information. When a purchase is made, a payment request is sent to CyberCash, which then contacts the customers bank and transfers the funds to the merchants own account. Both the merchant and the customer must have CyberCash account setup. Once the payment is approved by Cyber cash, the payment to the merchant is guaranteed, through the merchant is made legally responsible for any fraudulent transactions. To reduce the possibility of diversion, all credit or debit card numbers are transmitted over closed system dedicated banking networks, as opposed to the internet, an open system. In the eyes of merchant the customer is unidentified with only a deposit appearing in the merchants account. However, the customers banks receive detailed into on transactions. The CyberCash software is universally available, and can be downloaded from the companys website for free and is supported by all browsers. The CyberCash payment system also accepts major credit cards in lieu of banking information, so it is not necessary to have a US bank account to use this system. (2) First Virtual Holdings or (VPIN): First Virtual Holdings has implemented an off-line system for payment that does not require credit card numbers to be transmitted across the internet. Both merchant and customers have established accounts with first virtual accounts, the customer provides the merchant with their first Virtual account number (called a Virtual PIN) when a payment is to be made. The merchant then contacts first virtual holdings with the details of the sale and the customers account number. An e-mail is then sent to the customer to confirm the charges, and upon confirmation, a charge is put on the customers credit card. However, according to Visa, this third party authorization of credit cards may be in breaking of the law. The setting up of the accounts and the use of e-mail to confirm payments is time consuming and cumbersome.However, First virtual holdings has automated the process as much as possible, with all the information collection being done at their web site and one phone call for provision of the credit card number.

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) Since credit card numbers are never transmitted over the internet, no encryption is required. Responsibility is on the customer to stop any unwanted transactions by responding to their e-mails. For the merchant, payment is delayed as all transactions are passed through an automated clearing house. While the merchant will only know the customer by their account number, First virtual holdings keep detailed record of all purchases. Any customer anywhere in the world can setup an account to receive a virtual PIN provided they have internet access and a major credit card. The cost of each credit card transaction and the need for e-mail confirmation from the customer make this payment system too costly and too slow for use for micro payment environment.

(3) Secure Electronic Transactions (SET) This payment system, a security protocol for the express purpose of safely communicating credit card numbers over the internet, was the result of a joint effort by MasterCard, Visa, IBM, Microsoft, Netscape etc. The SET system grew from the merging of two competing systems that were separated by MasterCard and Visa. Under SET protocol, the merchant presents to the customer a digital certificate proving that they are an authorized SET merchant. The customer then encrypts a digital payment slip with the dollar amount and the credit card number, which is then set to the merchant, which is then authorized. This payment system is growing in popularity, and plays a role in electronic payment systems. Convenience is the strength of this electronic payment system with no need to set up accounts, no prior relationship required between the merchant and the customer, and many internet merchants already using it to process payments. One disadvantage of SET is that the security algorithms used by system requires a lot of computing power, making SET very expensive. Though the possibility of fraud is reduced with this system, it is still the responsibility of the customer to check their credit card statements for authorized charges. Like any regular credit card transactions, detailed records of activity are kept by both the merchant and the credit card issuer. SET is perhaps the most universal of all electronic payment systems, taking advantage of the wide production of credit cards, and being designed to work with any software or hardware platform. (4) FSTC Electronic Check Project The electronic check was developed by the Financial Service Technology Consortium, an organization formed in 1993 which includes banks, financial services companies, technology suppliers, government labs, etc. It is essentially an electronic version of a paper check, which contain all the information necessary to process payment without requiring the interference of an authorizing financial institution to complete the transaction. (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 20

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) Authentication of the electronic check is done via digital signature from a smart card-based device. No previous relationship would be required between the merchant and the customer to process an electronic check payment, the electronic check are portable, and any bank would honor them, since they are designed to be compatible with the existing financial services information infrastructure. However, for a customer to write electronic checks, they require a smart card reader. The electronic check integrates security elements that can authenticate both the check and the signer, and detect any tempering that has occurred while the check was in transit. The electronic checks are designed to be able to be cashed by anyone at any financial institution.

Q: Describe risk management options in electronic payment system and its components? Ans: One essential challenge of e-commerce is risk management.Opertaion of the payment systems incurs three risks: fraud or mistake, privacy issues, and credit risk. (A) Risks from Mistake Virtually all electronic payment needs some ability to keep automatic records, for obvious reasons. From a technical standpoint, this is no problem for electronic systems. Credit and debit cards and even the paper based check create an automatic record. Once information has been captured electronically, it is easy and inexpensive to keep. For example, in transaction processing systems, old or blocked accounts are never eliminated and old transaction histories can be kept forever on magnetic tape. The intangible nature of electronic transactions and dispute resolution relying solely on records, a general law of payment dynamics and banking technology might be: No data need ever be discarded. The features of these automatic records include (1) Permanent storage (2) Accessibility and traceability (3) A payment system database (4) Data transfer to payment maker, bank or monetary authorities. The need for recode keeping for purposes of risk management conflicts with the transaction secrecy of cash.

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Q1: Write short notes on ERP, discussing its evolution, characteristics, features components and needs. Ans: ERP is a business management system that integrates all facets of the business, including planning, manufacturing, sales and marketing. ERP is the concept that defines how bits and bytes i.e. organizational pieces or components or sub systems should be logically interconnected. ERP aims at optimum utilization of organizational resources for higher productivity. ERP consists of three essential parts i.e. Enterprise (The business organization), resources (Organizational resources like men, machine, material) and planning (the way resources should be planned for optimization in the enterprise). Enterprise An enterprise is a group of people having some common goal. The assemblage has some key functions to perform in order to accomplish its goal. In other words, we define the enterprise as any organization that has a physical presence in more man one geographical region and which require as its IT infrastructure to be available 24x7 theory. An enterprises is a group of people having some common goal. The assemblage has some key functions to perform in order to accomplish its goal. In other words, we define the enterprise as any organization that has a physical presence in more man one geographical region and which require as its IT infrastructure to be available 24x7 theory. Resources Resources incorporated are Money, Manpower, Materials and all the supplementary things that are required to run the enterprise. e.g. in case of a Airline, machinery is Aircraft, labour are flight crews and pilots and materials are jet fuel and components.

Planning Planning is done to make certain that nothing goes wrong. Planning is putting necessary function in place and more importantly, putting them in concert. (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 22

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In the ever growing business environment the following demand are placed on the industry: Make emphasis on customer rather than other factors like market share, brand image etc. Aggressive cost control initiatives. Need to analyze cost/revenues on a product or customer basis. Flexibility to respond to changing business requirements. More informed management decision making Changes in ways of doing business. Difficulties in getting accurate data, timely information and improper interface of the complex natured business functions have been identified as the hurdles in the growth of any business. Depending upon the velocity of the growing business needs, one or the other applications and planning systems have been introduced into the business world for crossing these obstacles and for achieving the required growth. They are: Management Information System (MIS) Integrated Information System(IIS) Executive Information System(EIS) Corporate Information System(CIS) Artificial Intelligence(AI) Knowledge Management(KM) Enterprise Wide System(EWS) Business Intelligence System(BIS) Material Requirement Planning(MRP) Manufacturing Resource Planning(MRP-II) Money Resource Planning(MRP-III) (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 23

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) The Latest planning tools added to the above list is Enterprise Resource Planning. Successful implementation is the obvious goal of any organization that has chosen to go in for Enterprise Resource Planning. ERP implementation is one of the top growing segments in the information technology industry today. ERP implementation is one of the top growing segments in the information technology today. To take advantage of emerging technologies and business practices and meet the evolving business requirements of the thriving industry, companies like People soft,SAP-AG,Baan,QaD,IFS, Siebel,Oracle,Makess,Ramco etc. have launched their product in this field.

Need of ERP
Most organizations across the world have realized that in a speedily changing environment, it is impossible to create and maintain a custom designed software package, which will cater to all their requirements, and also be completely up-to-date. Realizing the requirement of users organizations some of the leading software companies have designed Enterprise resource planning software which motivation offer an integrated software solution to all the functions of an organization. ERP systems are all in relation to the enterprise and not about systems. Their success greatly depends on the responsibility of the top management and active participation of the HR people. Implementation of an ERP is not an expertise decision. In fact, it is a decision that ideally should be based on business needs and benefits. The first step for implementing an ERP package is to recognize the reasons for going in for ERP solution. Some basic questions such as the following need to be evaluated and answered. Why should we implement an ERP package? Will it significantly improve our profitability? Will it lead to reduced delivery times for our products? Will it enhance our customers satisfaction level in terms of cost, delivery time, service and quality? Will it help to reduce the cost of our product? Will it enable us to reengineer our business processes? Will it enable us to achieve the same business volume with reduced manpower? Also, the emerging (and historical) needs of the organization require to be considered for instance. Need for quick flow of information between business partners. Effective management information system for quick decision making. Elimination of manual documentation work for various statutory statements. Need for a high level of integration between the various business functions.

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Characteristics of ERP
An ERP system is not merely the incorporation of various organization processes. Any system has to posses some key characteristics top qualify for an accurate ERP solution. These features are: Elasticity: An ERP system should be flexible to respond to the changing needs of an enterprise. The client server technology enables ERP to run across various databases back ends through open database connectivity (ODBC). Modular & Unwrap: ERP system has to have open system architecture. This means that any modules can be interfaced or detached whenever required without affecting the other modules. It should support multiple hardware platforms for the companies having mixed collection of systems. It must support some third party add-n also Wide Ranging: It should be able to support variety of organizational function and must be stable for a wide range of business organization. Beyond the company: it should not be confined to be organizational boundaries rather than support the on-line connectivity to the other business entities of the organization. Most excellent business live out: it must have the collection of the business processes applicable world wide. Reproduction of Reality: It must simulate the reality of business process on the computers. In no way it should have the control beyond the business processes and its must be able to assign accountabilities the system.

Features of ERP
Some of the major features of ERP with what it can do for the business system are as follows: ERP assist companywide integrated information system, covering all functional areas like manufacturing ,selling and distribution payables, receivables, inventory, accounts, human resources and purchases etc. ERP perform core business behavior and increases customer service and thereby augmenting the corporate image. ERP fills sequence break across the organizations. ERP provides for comprehensive integration of system not only transversely the departments in a company but also across the companies under the same management. ERP is a single explanation for better project management. ERP permit automatic introduction of latest technologies like Electronic fun transfer (EFT), Electronic Data Interchange (EDI), internet intranet and Video conferencing E-commerce etc. ERP eliminates the most of the business problems like material shortages productivity enhancement customer service, Cash management, inventory problem, Quality problems, Prompt delivery etc. (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 25

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) ERP not only addresses the current requirement of the company but also provides the opportunity of persistently improving and cleansing business processes. ERP provides business intelligence tools like Decision Support System (DSS), Executive information system (EIS), Reporting, Data Mining and Early Warning System (Robots) for enabling people to make better decision and accordingly improve their business processes.

If the necessities go beyond the capabilities of accounting software and other application software, we find the prospect of implementing conventional ERP software. The worlds most excellent easy to use ERP solution. It fully web enabled integrated, ERP software that can be implemented in weeks. And can computerize your entire operations globally. ERP can help achieve unbelievable efficiency of operations, significant cost savings and maximize profits. ERP is packed with powerful features, extremely easy to implement and use, comprehensive in its scope, modular and flexible, fully customizable, totally secure, and incredibly robust. Imagine your supplier notify you that a delivery will be late, and with the click of a button, you could graphically demonstrate all of the affected shop orders, as well as related sales orders-----enabling your customer service department to immediately notify customers and giving instantaneous visibility to your production management to act in response to the late shipment To enable the easy handling of the system ERP has been divided into the following core subsystem: A. Planning With better-quality planning capabilities and user interfaces, ERP make available the information required to quickly and easily act in response to scheduling problems as they take place. This advanced planning functionality allows you to condense and diminish costs and increase productivity by eliminating stock shortage, improve delivery performance and increasing flexibility in building your demand schedule. B. Inventory & Material Management Effectual management of finished goods, work in process and raw material is critical to your entire operation. ERP system provides a healthy and structured materials management system ---- everything you need to accurately control inventory transactions, product costs, and material usage. From material procurement to allocation of finished products, ERP permit you to administer important inventory information with a multi attribute item card. Instant access to real time data let you to track inventory levels by item, location, warehouse, product family and historical usage with the click of mouse. C. Finance & Accounting ERP takes care of complete Financial Accounting of the enterprise over the web. It maintains all the books and records that are essential for proper book keeping stock analysis and accounting. All transactions effect and update the entire system, and all (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 26

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) reporting is on the fly, for the most accurate information at all times. ERP helps in managing all kinds of taxes, bank reconciliation inventory cashed and everything else that is required for efficient and complete financial accounting, modules for bookkeeping and making sure the bills are paid on time. Examples: General ledger keeps centralized charts of accounts and corporate financial balances. Accounts receivable tracks payments due to a company from its customers. Accounts payable Schedules bill payments to suppliers and distributors. Fixed assets manage depreciation and other costs associated with tangible assets such as building, property and equipment. Treasury management monitors and analyses cash holdings, financial deals and investment risks. Cost control analyses corporate costs related to overheads, products and manufacturing orders. D. Purchasing Manage all purchasing activities from preferred vendor selection to entering bids and from purchase order admission to receiving and inspecting the materials as they are received. Empower the purchase function like Sales, Indents, orders, and ERP covers all aspects of production, including issues, quality control, material receipts, purchase invoices and production receipts, multiple bills of material, supplier database and comprehensive purchase analysis, production batches, cost sheets, standard costing, variance reports, and the valuation of work in progress. E. Manufacturing & Logistics ERPs fully-featured manufacturing functionality assist you manage your work-inprocess activities and increase the productivity of your production staff with laboursaving features that make available more control over production and scheduling. A group of application for planning production, taking orders, and delivering products to the customer. Examples: Production Planning performs capacity planning and creates a daily production schedule for a companys manufacturing plants. Materials management controls purchasing of raw materials needed to built products. Manages inventory stocks, order entry and processing automates the data entry process of customer order and keeps track of the status or orders. Warehouse management maintains records of warehoused goods and processes movement of products through warehouses. Transaction management arranges schedules and monitors delivery of products to customers via trucks, train and other vehicles. Project management monitors costs and work schedules on a project by project basis. Plant maintenance seta plans and oversees upkeep of internal facilities. Customer Service management administers installed base service agreements and cheeks contracts and warranties when customers call for help. F. Account Payable/Receivable Complete management of receivables and payables with bill wise accounting, due dates and overdue bills, interest calculations, ageing analysis. E. Production Planning & Control ERP enables you to plan for material requirements based on a production planning processes. The system reports inventory requirements based on work orders initiated, (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 27

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) stocks committed and exiting stocks. It helps in determining the optimum mix of inputs at all times.

Q: What is Business Process Re-engineering? BUSINESS PROCESS RE-ENGINEERING The formal definition of BPR ,as given by Hammer And Champhy and acknowledged to a great extent is reproduced hare: BPR is the fundamental; rethinking and radical redesign of processes to achieve dramatic improvement in critical, contemporary measures of performance such as cost,quality,service and speed. Radical redesign means, BPR is re-inventing and not pleasing to the improving. Fundamental rethinking means asking the question why you do? And what you do? A good example is that of asking for an invoice from the supplier for payment when the company has already received and accepted a particular quantity of materials physically and at an agreed price. Only make the supplier unhappy for delayed payments. Thus, BPR endeavors for major modification of the business processes to achieve dramatic improvement.

THE BAAN APPROACH The BAAN approach is to conduct a concurrent Business Process Re-engineering during the ERP implementation and aim to shorten the total implementation time frame. 1. Two circumstances can be distinguished A. Comprehensive Implementation Scenario: Here the focus is more on business improvement than on technical improvement during the implementation. This approach is suitable when: Improvements in business processes are required. Customizations are necessary. Different alternative strategies need to be evaluated high level of integration with other systems are required. Multiple sites have to be implemented. B. Compact Implementation Scenario: Here the focus is on technical migration during the implementation with enhanced business improvements coming at a later stage. This approach is suitable when: Improvements in business processes are not required immediately. Change minded organization with firm decision making process. Company operating according to common business practices. Single site has to be implemented.

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Concurrent Business Process Re-Engineering

Two Circumstances

Three Approach

Comprehensive Implementation Scenario

Compact Implementation Scenario

Pure BPR

Channeled BPR

Pure ERP

Three Approaches for ERP implementation A. Pure BPR: In this approach business processes are re-engineered into ideal form. Each and every process is revisited and the best possible method is found. Pure BPR is complete transformation in the business processes before going for ERP implementation. The business model re-engineered after analyzing its AS-IS status along with the enterprise need and vision. A To-Be positioning of the business model is evolved.Re-enginnering is used to reconfigure the enterprise so as o make it a best fit model for the ERP package. B. Channeled BPR: channeled BPR, in distinction, begins with a strategic choice of software package based on high-level requirement and a selection exercise. Business processes are designed around the known capabilities of the package. After a through study of the system, a package is chosen; ERP is implemented and redesigned, keeping in view the distinctiveness of the package. C. Pure ERP: In this approach the effort is on mapping the current business processes on the ERP package. There is not much effort on deciding the To-Be position of the (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 29

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) enterprise since, the effort is quite high in developing the package, his strategy calls for high expertise in software development. The business processes of the enterprise must be standardized and well established. This strategy is onlr recommended when the processes are difficult to change and it is world class standard. Use in I.T. in BPR I.T. helps in BPR in the following ways: 1. Old Rule: Managers make all the decisions I.T.: Provides Decision Tools. New Rule: Decision making is part of everyones job. 2. Old Rule: Only expert can perform complex work I.T.: Provides Expert Systems New Rule: Now a general can do the work of an expert. 3. Old Rule: Information can appear in only one place at one time. I.T.: Provides shared databases via. Internet, intranet, & Extranets. New Rule: Now information can appear simultaneously in as many places as needed.

BPR and ERP Business processes Re-engineering is a pre-requisite for going ahead with an influential planning tool, ERP. An in depth BPR study has to be prepared prior to ERP. Business process re-engineering fetches deficiencies out of the existing system and attempts to make best use of the efficiency from side to side restructuring and recognizing the human resources as well as partitions and departments in the organization. Business process Re-engineering evolves the following steps: Step-1: Study the existing system design and build the new system. Step-2: Describe process, organization structure and formula. Step-3: Describe tailor-made and modify the software. Step-4: Instruct community Step-5: Execute new system. The principle followed for BPR may be defined as USA principle. USA PRINCIPLE UNDERSTAND Understanding the existing practice SIMPLIFY Simplifying the processes AUTOMATE Automate the processes.

Various tools used for this principle are charted below: Comprehend simplify Automate Diagramming eradicate EDI Storyboard unite ERP Brain storming reshuffling.

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Understand Existing Process

Simplify Process by eliminating waste

Automate the Process




Diagramming Storyboarding walking the process

Rearranging Eliminating Combining Increasing

EDI ERP Manufacturing Execution system

How BPR connected to ERP BPR suggest radical changes to improve the competitiveness of company & users. IT is one of its most important tools. ERP Packages integrates business processes enable the seamless flow of information across departmental barriers and help in automating business processes and procedures. So ERP is an ideal solution for the reengineering process.

Q: What is Supply Chain Management? SUPPLY CHAIN MANAGEMENT SCM is process of planning, implementing and controlling cost effective flow of raw material and associated to conform to customer needs. SCM is a complete process of interconnecting various entities like suppliers, manufacturers distribution channel in a predetermined direction. The demands are made to a manufacturer by a client are dependent upon demands made by clients customers. This dependence is a natural progression. All suppliers, manufacturers, distributors, etc. are dependent upon the same end customer. All of them will be more successful if they cooperate in satisfying that demand. If they do not fulfill demand, another supply chain will. Now there is a competition not between organizations but between supply chains. Supply Chain management is the management of resources to design, procure, fabricate, produce, assemble, store, distribute, use, maintain, recycle and dispose of goods and services. 31

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COMPONANTS OF SCM 1. Plan: This is the strategic portion of supply chain management, strategy for managing all the resources that go toward meeting customer demand of the product. A big piece of planning id developing a set of matrices to monitor the supply chain so that it is efficient, cost effective and delivers quality a nd value to customers. 2. Source: Choose the suppliers that will deliver the goods required for the products, besides develop a set of pricing, delivery and payment processes with suppliers and create matrices of monitoring the timely delivery and improving the relationships. 3. Make: This is manufacturing and scheduling the activities necessary of the production, testing, packaging and preparation of delivery. 4. Deliver : This refers to as Logistics i.e. to coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments. 5. Return: The problem part is to create a network for receiving defective and excess products who have problems with delivered products, along with after sale service support. Meaning The meaning of SCM is that the SCM (Supply Chain Management) we can get the right goods and services to where they are needed at the right time, in the right quantity and at an acceptable cost. To do this, you manage relationship with suppliers and customers, control inventory, forecast demand and get constant feedback on events at every link in the chain. It is the fundamental business system that integrates companys internal resources to manage and work with the external supply chain .The objective is to enhance the companys performance through improved manufacturing or service capability, market responsiveness, and customer supplier relationship.

SCM can be defined as a loop: It starts with the customer and ends with the customer. A supply chain in the link that means product between suppliers manufacturers wholesalers, distributors and retailers to finally customers. All materials, finished products, information and even all transaction flow through the loop.

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Suppliers Fig: Supply Chain Loop CHARATERSTICS, ELEMENTS AND NATURE OF SCM An ability of source raw material or finished goods from anywhere in world. A centralized, global business and management strategy. On line, real time distributed information processing of the desktop, providing total supply chain management information visibility. The ability to manage information not only within a company but across industries and enterprise. Elements 1. Logistics and distribution: logistics deals with integration of material management and physical distribution. 2. Integrated market and distribution: Most managers often do not realize that order processing and fulfillment processes may exceed 15% of the cost of the sale. Traditionally, the customer order process is initiated by sales personal that have in depth understanding of customer product. 3. Agile Manufacturing: Consumers and manufacturing are stressing quality and speed. One of the most influential visions of the production goes by the name of agile manufacturing.

Nature of SCM (a) Business Supply Chain, consisting of a company, immediate supplier, immediate customer directly linked by upstream and on-stream flow of products, services information etc. (b) Extended supply chain, consisting of suppliers of the immediate supplier and customers of the immediate customer, all linked by one or more of upstream and downstream flow of products services information etc. (c) Ultimate supply chain, consisting of all the companies involved in all the upstream and downstream flows of the products services information etc. from initial supplier to the ultimate customer.

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) Q: Differentiate between ERP and SCM ERP 1. For enterprise 2. Transaction Processing 3. Sequential Planning 4. Inflexible 5. Time consuming implementation 6. Body of the Enterprise 7. excels in the transaction management 8. ERP system are linear and interactive SCM 1. For Supply Chain 2. Analysis and Planning 3. Concurrent Planning 4. Flexible 5. Fast implementation 6. Brain of the enterprise 7. Forecasting & the Decision support 8. SCM is constraint based and optimized

Advantage of Supply Chain Management The quality of the supply chain is a major key area that is its core-surrounding, which is emerging and flourishing key man enrolled in the supply chain operations to look after. 1. Demand uncertainty in supply chains can be addressed by lesser response time. 2. A bsic product supply chain should have shorter lead times and batch manufacturing of large lot sizes to meet the demand. 3. Supply chain needs to be improved upon its performance and once stable it can move towards maturity. 4. Supply chain is an integration of so many aspects of the business that this type of analysis as such becomes all the more important and thus the core advantage of SCM means the smooth performance, better response time, more number of order fulfillment etc.

Q: What is Customer Relationship Management? CUSTOMER RELATIOSHIP MANAGEMENT Preserving existing customer and providing better services to gain the loyalty is termed as CRM. Under stand customer needs and going customer loyalty is part of the CRMs objective. CRM software organization administers its customers in a better way. Different business entities like salesperson, customers, representative come together with the help of CRM.

Definition: Berry defines CRM as an attractive maintaining and enhancing relationship with holders in multi service organization. He proposes that CRM concerns attracting, developing and retaining relationship with customer. Berry stressed that the attraction of new customers should be viewed only as intermediate step in the marketing process. Solidifying the relationship, transforming indifferent customers into loyal ones and serving customers as (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 34

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) clients should also be considered as marketing. He outlined five strategy elements for practicing CRM. Developing a core service around which to build a customer relationship with customer. Customizing the relationship with the individual customers. Augmenting the core service with extra benefits. Softing Price for services to encourage customer loyalty and retainers. Marketing the USPs of the Employee so that they in turn will perform well for customers. J.D. Edwards Customer Lifecycle Management Solutions expands the definition of CRM to include all of the business processes and associated systems that touch a customer, including billing and delivery. Interpretation of CRM with the help of five letter C, A, L, F & S which consolidated together to make a word CALFS. C Communicate effectively & efficiently with the customer through marketing automation, storefront, and self service. A Acquire new customers with sales force automation, partner relationship management, advanced sales, contact order configuration, storefront, selfservice and order promising. Learn about your customers though knowledge management, business L intelligence and marketing automation, public opinion. F Fulfill customer demands through collaborative design, billing and account receivable and shipping. S Service your customers with field service, contact centre, self service and asset tracking, on-line support via internet.

MECHANISM OF CRM Mechanism of CRM is nothing but the segregation of CRM into three parts known as Customer, Relationship & Management. Customer is a Human Being, Relationship is the Feeling and Management is Tact or skills respectively. So, the CRM is a joint activity of these three aspects, which perform well only when it will be used in totality. Customer: The customer is the source of the companys profit and future growth. Sometimes it is difficult to9 find out who is the real customer because the buying decision is a collaborative activity among participants of the decision-making process. CRM have got the skill to provide the abilities to distinguish and manage your customers. Relationship: The relationship between a company and its customers involves continuous bi-directional communication and interaction. CRM involves managing this relationship so it is profitable and mutually beneficial. Managing the key customer relationships efficiently is critical to the success of the company. Relationship is the essence of life. It is difficult to think about any society or organization to survive without (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 35

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) relationship. They are the invisible threads which build a unique bond between individuals & organization. Management: CRM is an activity within a corporate. It involves continuous corporate change in culture and proceses.The customer information colleted and analyzed continuously is transformed into corporate knowledge that leads to activities that take advantage of the information and of market opportunities. CRM management software enables you to make required a comprehensive change in the organization and its people. Managing relationship & customer in such a way so that to satisfy the customer in a best way and reduced customer turnover, service cost & time. CRM features Customer relationship management is a comprehensive term. CRM solution contributing greater user adoption, an enhanced user experience and real time intelligence for your enterprise to make smarter in taking decisions. Every customer interaction can be an opportunity to built business value with your customers:

CRM Features

Fast to Implement

Easy to Use

Develop Business Process

Fast to Implement: Deploy quickly with our pre-integrated business processes, data and applications and built in 3rd party connectors. Easy to use: Provide your enterprise with a 360 degree view of relevant customer and enterprise data navigate with ease and obtain the information you need with our Pure Internet Architecture. Develop Business Processes: Predict your customer needs for triumphant cross sell and up sell opportunities, employ personalized recommendations and utilize for real time alerts. Q: Difference between ERP and CRM ERP CRM 1. Companies traditionally focused on 1. With companies becoming more processes and technologies with objective customers oriented, they are realizing the of optimizing these processes using MRP1 benefits of including customers and and ERP systems. The focus was always business partners in the value chain. inward. i.e. to integrate all the modular in Companies are becoming more outwardly such manner so all can execute in totality. focused. This has twisted this need of integrating ERP systems with CRM and Supply Chain Management software. (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 36

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) 2. Companies use ERP systems to integrate and manage different operations and process. ERP system integrates functions like Accounting, Human Resources, Inventory Control and Manufacturing process to create an integrated enterprise. 3. Companies are replacing material requirement planning with supply chain planning software as it enables companies to create optimal plans for producing, delivering goods through collaboration. 2. Companies have started to realize the value of strategic extensions like Supply chain management and Customer Relationship Management applications. This softwares enable companies to collaborate. 3. Companies software and applications with what is being enterprise. are integrating CRM other Internet based ERP packages to create termed as expected

Q: What do you understand by integrated functionality in enterprise and cross enterprise functionality? How is each one of them achieved? Ans: Integrated functionality of an enterprise means the central database shared by all functions of the enterprise, and the ability to share business critical data more efficiently, both internally and across the extended supply chain. Cross enterprise functionality enables all then departments and the divisions in an enterprise not only to share information, but also to work seamlessly with salespeople and suppliers and the communicate easily with customers. The interaction of the enterprise with entities outside it so that it can compete and succeed globally is called cross enterprise functionality.





Fig: Cross enterprise Functionality

In figure SCM (supply Chain Management) provides for interaction between suppliers and enterprise. CRM (Customer Relationship Management) provides for interaction between enterprise and customer. Enterprises interact with each other through B2B business to business integration.

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) Q: what are the various resources an ERP has to optimize? How does intelligent resource planning help this? Ans: The various resources that an ERP has to optimize are: Human resources Equipment Time Money These basically constitute the 4 ms (Man, Money, Machines, Materials).Apart from these information is also a vital resource which needs to be managed and kept up to date. Methods dealing with optimizing the overall flow of demand and supply data is known as IRP (Intelligent Resource Planning). In order to optimize these resources, intelligent resource planning allows an enterprise to build relationship between various activities. This identification of relationship between activities enables one to optimally identify the demand-supply chain. It should include interplant order processing, availability checking, and cost optimization. IRP helps in managing resources by creating alternate scenarios in terms of resource utilization and delivery performance.

Material Requirements Planning (MRP) is software based production planning and inventory control system used to manage manufacturing processes. Although it is not common now-a-days, it is possible to conduct MRP by hand as well. An MRP system is intended to simultaneously meet three objectives:

Ensure materials and products are available for production and delivery to customers. Maintain the lowest possible level of inventory. Plan manufacturing activities, delivery schedules and purchasing activities.

The scope of MRP in manufacturing Manufacturing organizations, whatever their products, face the same daily practical problem - that customers want products to be available in a shorter time than it takes to make them. This means that some level of planning is required. Companies need to control the types and quantities of materials they purchase, plan which products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand, all at the lowest possible cost. Making a bad decision in any of these areas will make the company lose money. A few examples are given below:

If a company purchases insufficient quantities of an item used in manufacturing, or the wrong item, they may be unable to meet contracts to supply products by the agreed date.

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If a company purchases excessive quantities of an item, money is being wasted the excess quantity ties up cash while it remains as stock and may never even be used at all. However, some purchased items will have a minimum quantity that must be met, therefore, purchasing excess is necessary. Beginning production of an order at the wrong time can cause customer deadlines to be missed.

MRP is a tool to deal with these problems. It provides answers for several questions:

What items are required? How many are required? When are they required?

MRP can be applied both to items that are purchased from outside suppliers and to subassemblies, produced internally, that are components of more complex items. The data that must be considered include:

The end item (or items) being created. This is sometimes called Independent Demand or Level 0 on BOM (Bill of materials). How much is required at a time. When the quantities are required to meet demand. Shelf life of stored materials. Inventory status records. Records of net materials available for use already in stock (on hand) and materials on order from suppliers. Bills of materials. Details of the materials, components and sub-assemblies required to make each product. Planning Data. This includes all the restraints and directions to produce the end items. This includes such items as: Routings, Labor and Machine Standards, Quality and Testing Standards, Pull/Work Cell and Push commands, Lot sizing techniques (i.e. Fixed Lot Size, Lot-For-Lot, and Economic Order Quantity), Scrap Percentages, and other inputs.

Problems with MRP systems

The major problem with MRP systems is the integrity of the data. If there are any errors in the inventory data, the bill of materials (commonly referred to as 'BOM') data, or the master production schedule, then the outputted data will also be incorrect (GIGO: Garbage in, garbage out). Most vendors of this type of system recommend at least 99% data integrity for the system to give useful results. Another major problem with MRP systems is the requirement that the user specify how long it will take a factory to make a product from its component parts (assuming they are all available). Additionally, the system design also assumes that this "lead time" in manufacturing will be the same each time the item is made, without regard to quantity being made, or other items being made simultaneously in the factory. 39

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) A manufacturer may have factories in different cities or even countries. It is no good for an MRP system to say that we do not need to order some material because we have plenty thousands of miles away. The overall ERP system needs to be able to organize inventory and needs by individual factory, and intercommunicate needs in order to enable each factory to redistribute components in order to serve the overall enterprise. This means that other systems in the enterprise need to work properly both before implementing an MRP system, and into the future. For example systems like variety reduction and engineering which makes sure that product comes out right first time (without defects) must be in place. Production may be in progress for some part, whose design gets changed, with customer orders in the system for both the old design, and the new one, concurrently. The overall ERP system needs to have a system of coding parts such that the MRP will correctly calculate needs and tracking for both versions. Parts must be booked into and out of stores more regularly than the MRP calculations take place. Note, these other systems can well be manual systems, but must interface to the MRP. For example, a 'walk around' stock intake done just prior to the MRP calculations can be a practical solution for a small inventory (especially if it is an "open store"). The other major drawback of MRP is that takes no account of capacity in its calculations. This means it will give results that are impossible to implement due to manpower or machine or supplier capacity constraints. However this is largely dealt with by MRP II

Write the difference between ERP and MRP ERP MRP 1. ERP is the next step in system evaluation 1. It can be existence before ERP and meant for raw materials planning and procurement 2. ERP system are designed to be platform 2. MRP system were character based and independent with client/server architecture written with proprietary software on proprietary hardware 3. ERP is Proactive 3. MRP is typically Reactive. 4. ERP is MRP-1 or material Resource 4. MRP is Material Requirement Planning. Planning.

What is MRPII (Manufacturing Resource Planning)

MRP was in existence right from the year 1960. MRP II otherwise referred to as manufacturing resource planning enabled to overcome the setback of MRPI the acronym of material resource planning. The analysis of MRP 1 reveals that it is made on the basis of finding out the quantum of materials that have to be given in order to gain the said optimum productivity levels depending on other parameters like production capacity and factors. The MRP systems were in existence before ERP technology was invented. (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 40

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) MRP II was developed with all the features of MRP I .There were also some other elements in addition to those contained in MRPI.

OLAP (Online analytical processing)

Online analytical processing or OLAP is an approach to quickly answer multidimensional analytical queries. OLAP is part of the broader category of business intelligence, which also encompasses relational reporting and data mining. The typical applications of OLAP are in business reporting for sales, marketing, management reporting, business process management (BPM), budgeting and forecasting, financial reporting and similar areas. The term OLAP was created as a slight modification of the traditional database term OLTP (Online Transaction Processing). Databases configured for OLAP use a multidimensional data model, allowing for complex analytical and ad-hoc queries with a rapid execution time. They borrow aspects of navigational databases and hierarchical databases that are faster than relational databases. The output of an OLAP query is typically displayed in a matrix (or pivot) format. The dimensions form the rows and columns of the matrix; the measures form the values.

Q: What is OLAP? Ans: OLAP or On-line Analytical Processing is decision support software allows the user to quickly analyze information that has been summarized into multi dimensional views and hierarchies. For example, OLAP tools are used to perform trend analysis in sales and financial information. They can enable users to drill down into masses of sales statistics in order to isolates the products that are the most volatile. Simply put, OLAP describes a class of technologies that are designed for live ad-hoc data access and analysis. While transaction processing (OLTP) generally relies on relational; databases, OLAP has become synonymous with multidimensional views of business data. These multidimensional views are supported by multidimensional database technology and provide the technical basis for the calculations and analysis required by Business intelligence applications. OLAP technology is being used in an increasing wide range of applications. The most common are sales and marketing analysis; financial reporting and consolidation; and budgeting and planning. Increasingly however, LAP is being used for applications such as product profitability and pricing analysis; activity based costing, manpower planning; quality analysis, in fact for any management system that require flexible top down view of an organization.

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OAS (office Automation System)

OAS is configuration of hardware and software. A variety of office automation system are now applied to business and communication functions that used to be performed manually or in multiple locations of a company such as preparing written communications and strategic planning. Functions that once required coordinating the expertise of outside specialist in typesetting, printing or electronic recording can now be integrated into the everyday worth of an organization, saving both time and money.

Types of functions integrated by office automation systems include: (i) Electronic Publishing (ii) Electronic Communication (iii) Electronic Collaboration (iv) Image Processing (v) Office Management The LAN allows users to transmit data, voice, mail and images across the network to any destination; either that destination is in the local office on the LAN, or in another country or continents through a connecting network. An OAS makes office work more efficient and increases productivity. (i) Electronic Publishing: Electronic Publishing systems include word processing and desktop publishing. Word processing software (e.g. Microsoft Word, Corel, Word-Perfect) allows users to create, edit, revise, store and print documents such as letters, memos. Desktop publishing software (e.g. Adobe PageMaker, Corel, and Microsoft Publishing) enables users to integrate text, images, photographs software is used on a microcomputer with mouse scanner and printer to create professional looking publications. These may be newsletters, magazines or books. (ii) Electronic Communication Electronic communication system include electronic mail(e-mail),voice mail, facsimile(Fax) and desktop videoconferencing E-MAIL: Email is a software that allows users, via their computer keyboards to create send and receive message and files to or from anywhere in the world. Most email system do another tasks such as filter, file messages, forward copies of messages to other users, create and save drafts or messages send, carbon copies and request automatic confirmation of the delivery of the message. Email is very popular because it is easy to use, offers fast delivery and is inexpensive. Example of email software: Eudora, Lotus Notes and Microsoft outlook. Voice Mail: (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 42

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) Voice mail is a sophisticated telephone answering machine. It digitizes incoming voice messages and stores them on disk, when the recipient is ready to listen, the message is converted from its digitized form back to audio or sound.Reciepienmts may save messages for future use, delete them or forward them to other people. Facsimile: A Facsimile or FAX Facsimile transmission machine scans a document containing both text and graphics and send it as electronic signals over ordinary telephone lines to a receiving fax machine. This receiving fax recreates the image on paper. Fax can also scan and send a document to a fax modem inside a remote computer. Desktop Videoconferencing It requires a network and a desktop computer with special application software (e.g. CUSeeMe) as well as a small camera installed on the top of the monitor. Images of a computer user from the desktop computer are captured and sent across the network to the other computers and users that are participating in the conference. (3) Electronic Collaboration: Electronic Collaboration is made possible tom electronic meeting and collaborative work systems and teleconferencing electronic meeting and collaborative work systems allow teams of coworkers to use networks of microcomputers to share information, update schedules and plans and cooperate on projects regardless of geographic distance special software called groupware is needed to allow two or more people to edit or work on the same times simultaneously. Teleconferencing is also known as videoconferencing. This technology y allows people multiple locations to interact and work collaboratively using real time sound and images. Full teleconferencing as compared to desktop version, requires special purpose meeting rooms with cameras, video display monitors and audio microphones and speakers. Telecommuting and collaborative systems Telecommute perform some of all of their work at home instead of traveling to an office each day, usually with the aid of office automation systems including those that allow collaborative work or meetings. Microcomputer modem software that allows the sending and receiving of work and an ordinary telephone lines are the tools that make this possible.

(4) Image Processing Image processing system includes electronic document management, presentation graphics and multimedia systems. Imaging systems convert text, drawing, and photographs into digital form that can be stored in a computer system. This digital form can be manipulated, stored, printed or sent via a modem to another computer. Imaging systems may use scanners, digital cameras, and video capture cards, or advances graphic computers, companies use imaging systems for a variety of documents such as insurance forms, medical records, dental records and advance applications.

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) Presentation graphics software uses graphics and data from other software tools to create and display presentation. The graphics include charts, text, sound, photos, animation and video clips. Example of such software is Micro PowerPoint (4) Office Management Office management systems include electronic office accessories, electronic scheduling and task management. These systems provide an electronic means of organizing people, project, and data. Business dates, appointments, notes, and client contact information can be created, edited, stored and retrieved. Additionally automatic remainders about crucial dates and appointments can be programmed. Projects and tasks can be allocated, subdivided and planned. All of these actions can be done individually or for an entire group. Computerized system that automates these office functions can be dramatically increase productivity and improve communication within an organization.

Q Notes on Inventory control? Inventory Control Inventory control - supervision of the supply and storage and accessibility of items in order to insure an adequate supply without excessive oversupply It can also be referred as internal control - an accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets or avoid fraud and error etc. Inventory control can refer to several concepts:

In economics, the inventory control problem, which aims to reduce overhead cost without hurting sales. In the field of loss prevention, systems designed to introduce technical barriers to shoplifting (theft).

The basic function of Inventory (Stock) is to insulate the production process from changes in the environment as shown below:

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh)

Raw material Stock

Finished good Stock

Manufacturing Cost

Work in progress stock

Revenue Raw material Arrival (Restocking) Sales of finished goods destocking)

Note here that we refer in this note to manufacturing other industries also have stock e.g. stock of money in a bank available to be distributed to customer, the stock of policemen in an area etc. One point to note from the above diagram is that most of the activities are a cost. It is only at the final point (sales of finished goods) that we get the revenue to set against our cost and hopefully make a profit (=Revenue-cost).hence if we have cost associate with stock than we need to deal with that associate with stock than we need to deal with that stock in an effective, efficient and economic manner. The question that arises how much stock should we have? It is the simple question that inventory control theory attempt to answer. There is the extreme answer to this question A lot This ensures we never run out. Is an easy way of manufacturing stock Is expensive in stock cost, cheap in management cost. None /Very little This is known (effectively) as just in time Is a difficult way of managing cost Is cheap in stock cost, expensive in management cost. We shall consider the problem of ordering raw material stock but the same basic theory can be applied to the problem of Deciding the finished good stock (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 45

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) Deciding the size of batch in a batch production process. We need to consider the cost so that we can decide the amount of stock to be divided into stock holding costs and stock ordering cost and receiving cost as below note here that conventionally, management cost are ignored here: Holding costs- Association with keeping stock over time Storage costs Rent/Depreciation Labor Overheads (e.g. heating, lighting, security) Money tied up class of interest, opportunity cost) Insurance Ordering Costs-Associated with ordering and receiving an order Clerical/Labor cost for processing Inspection and return of poor quality products transport cost Handling cost Q: What is Virtual Enterprise? Virtual Enterprise A virtual enterprise (VE) is temporary alliance of enterprise that come together to share skills or core competencies and recourses in order to better respond to business opportunities, and whose cooperation is supported by computer networks. It is a manifestation of collaborative network and a particular case of virtual enterprise. A large community of the virtual enterprise area gather a annually around the PROVE conference. Virtual enterprise (VE) is a new and major trend in the cooperative business or B2B scenario. Virtual enterprise allows the business to specialize and be flexible within their environment. In the past, it has been applied to outsourcing and supply chains as well as temporary consortiums. Due to the fact that the formulation of virtual enterprise is an intricate (complex) process, a new form of technological support has been developed. The most ambitious of the support systems actually intends to automate part of the creation process, as well as the operation of these enterprises. The strategic guideline of virtual enterprise is the electronic commerce model, which is made up of three factors: Content, Community and Commercialization. The first two factors, content and community are used to attract web surfers to the web site initially and to keep them coming back. The third factor commercialization is extremely important in determining the success of virtual enterprise. After the contents and community have been established, the virtual enterprise must use commercialization techniques to come up with ways to earn profit. The implementation of the three elements of the electronic commerce model greatly influences the operational performance of natural enterprise.

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) As with all types of enterprises, virtual enterprises present both benefits and challenges: Organization can benefit from virtual enterprises through more economical connections with suppliers, greater opportunities to create revenue, more efficient operations and a reduction in administrative costs. Virtual Organisatoions defy the conventional role for operating an organization. They do so by accomplishing tasks traditionally meant for an organization much bigger, resourceful and financially stable then the ones who are actually able to do because of being a collaborative effort. A company having technical capability, one with the right human skill set, the other with the solution, coming together to put it all together. Information Economy gifts a virtual organization composition for entrepreneurs who want to achieve dreams. Today, there are numerous virtual enterprises on the internet. Virtual music is one of the examples of virtual enterprise.

Technologies for the Virtual Enterprise: Development of the internet, coupled with the development of technologies for the knowledge management and work management, will have deep influence on the way economic actors play their role in the worldwide market place. This will lead to the development of a new form of economic understanding, the Virtual Enterprise where sets of economic actors are associating their strengths to provide a specific service traditionally provide by a single enterprise. The economy and enterprise development strategies are: (i) Launching a new product or service on the internet will become accessible to much smaller organization with a portion of the capital required in a traditional way. This will intensify completion on the traditional organization. (ii) Localization of partners of virtual enterprise will become irrelevant;this will accelerate the international co-operation and intensify work mobility between countries and areas. (iii) Overall,this will accelerate product and services diversification and innovation,a condition for further economic development. (iv) Traditionally organizations will have to face emerging competition from nontraditional competitions, and probably have to invent new ways to organize their product. New Technologies: We can classify major technologies into three main areas of applications: (1) Knowledge Management (KM): This technology provides the way to share and organize strategies, research and development, market research and so on. (2) Enterprise Resource Planning (ERP): Represented by applications from vendors like SAP, People Soft, and Baan. They are used for traditional accounting like Activities: Accounting inventory management, sales statistics etc.

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) (3) Work Management (WM): Technologies provide assistance to groups work and enhance productivity and quality of work. They are used to assist day to day production work. Q: How are ERP projects organized? OR Write the different ways of installing ERP? Ans: There are 3 ways of installing ERP in the enterprise as: 1. Big Bang This is one of the most difficult approaches to ERP implementation. Companies do anything and cast off all their legacy systems at once and install a single ERP system across the entire company. Though this method dominated early ERP implementations. Some companies hesitate attempting it as it calls for the whole company to assemble and change at once. Getting any one to cooperate and accept a new software system at the same time is a tedious and challenging effort because the new system has not been experienced by anyone in the company. ERP involves certain compromises. Many departments have computer systems that have been tailored to match the ways they work. ERP offers neither the range of functionality nor the comfort of familiarity that a custom system can offer. Speed of the new system may be poor as initially it is serving the entire company rather than a single department. ERP implementation requires a direct permission from the CEO. 2. Franchising strategy This approach is suitable for large companies that do not share many common processes across business units i.e. department and other units. Independent ERP systems are installed in each unit and common processes are linked like financial bookkeeping in the enterprise. This has come as the most common and better way of implementing ERP. In most cases, the business units each have their own instances of ERP system, which means it is separate system and database. The system are interconnected to share the information necessary for the corporation to get a better performance processes that dont change much from one business unit like HR policies. Once the project team implements the system up and running and works out all the bugs and problems related the team begins selling other units on ERP. Plan for this strategy to take a long time. 3. Slam-dunk This methods focus on just a few key processes like only those contained in an ERP systems financial module or sales module. The slam-dunk is generally for the smaller companies expecting to grow into ERP. The objective here is to have the ERP functional and running quickly escaping the fancy reengineering in the ERP system. (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 48

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) Some companies that have approached ERP using slam dunk method can claim much payback from the new system. This method is use commonly to support more diligent installation efforts down the path of ERP system in the enterprise, many discover that a slammed in ERP system is little better than a legacy system as it does not force employees to change an y of their old habits which goes in their favor. Q: Who are called the big-5 in the ERP market? Ans: The big -5 are SAP-AG, People Soft, Oracle Corp., Baan Company and JD Edwards. Q: What are the factors that are critical for the success of the ERP implementation? Ans: The factors that are important for the success of any ERP implementation are: Selection of the right package. Commitment of top management. Participation and dedication of the systems future users. Backing, support and cooperation of the IT personnel. Development of interfaces with current operational systems and with those under development. Effort of consultants, who have respect for the companies know how and work culture. Spirit and collaboration on the part of all. Q: What are the different phases of the ERP implementation lifecycle? Ans: The different phases of the ERP implementation are: Pre- evaluation screening Package evaluation Project planning phase Gap analysis Reengineering Configuration Implementation Team Training Testing Going Live End user training Post implementation What is ERP: Enterprise Resource planning covers all the techniques and methods employed for the integrated management of business as a whole from the view point of the efficient use of the management resources to improve the efficiency of the enterprise. ERP package are the integrated software p[packages that support all the above ERP concepts. ERP Lifecycle (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 49

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) ERP lifecycle highlights the various stages in the implementation of ERP. The ERP implementation project goes through these different phases of the ERP lifecycle implementation.

The different phases of the ERP implementation are: 1. Pre- evaluation screening 2. Package evaluation 3. Project planning phase 4. Gap analysis 5. Reengineering 6. Configuration 7. Implementation Team Training 8. Testing 9. Going Live 10. End user training 11. Post implementation

Company Management

Pre Selection Process Package Evaluation Project Planning

ERP Vendors

GAP Analysis Implementation. Team Training

Re-Engineering Testing

Configuration End user Training

Going Live

Post-Implementation Phase

Figure: ERP Implementation Life Cycle (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 50

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh)

1. Pre-Evaluation Screening Search for the perfect package. Infinite number of ERP vendors. Screening eliminates those packages that are not at all suitable for the business process. This limits the number of packages that are to be evaluated by the committee. This screening is done on the basis of the product literature of the vendors, external consultants etc. Once you select a few packages after the screening, you can start the detailed evaluation process.

2. Package Evaluation This is one of the important phases of the ERP implementation, because the package that one selects will decide the success or the failure of the project. Implementation of ERP system involve a huge investment, so once a package is purchased, it is not an easy task to switch to another one. So it is a do-it-right-thefirst-time proposition. The objective is to find a package that is flexible enough to meet the companys needs, that is it may be not a perfect fit but a GOOD FIT. Once the packages to be evaluated are identified, the company needs to develop selection criteria that will permit the evaluation of all the available packages on the same scale. While evaluating the following points must be kept in mind: (i) Should be user friendly. (ii) Regular updates must be available. (iii) Complexity. It is always better to form a selection committee for the evaluation of the packages. This committee should comprise of people from the various departments like the functional experts etc.

3. Project Planning In this phase the implementation process is designed. In this phase the details of how to go about the implementation are decided. Time schedules, deadlines etc for the project are decided. Roles are identified and the responsibilities are assigned. The implementation team members are selected and the task allocation is done. This phase decides WHEN to begin the project, HOW to do it, and WHEN it should be completed. This phase is usually carried out by a committee constituted of the team leaders of each implementation group. 51

(E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh)

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) 4. Gap Analysis This is the most crucial phase in the ERP implementation. This is the process through which the companies create a complete model of where they are now, and in which direction will they opt in the future. The model helps the company to anticipate and cover any functional gaps. It has been estimated that even a best ERP package, custom tailored to meet the companys needs, meets only 80 % of the companys functional requirements. The remaining 20 % of these requirements present a problematic issue for the companys BPR.

5. Reengineering It is in this phase that human factors are taken into consideration. While every implementation is going to involve a significant change in number of employees and their job responsibilities, as the process becomes more automated and efficient, it is best to treat ERP as an investment as well as cost cutting measure rather than a downsizing tool. 6. Configuration This is the main functional area of the ERP implementation. Here in this phase a simulation a PROTOTYPE-that is a simulation of the actual business processes of the company will be used, so that the company can carry on with their work when the mapping process is taking place. The prototype allows for the thorough testing of the to be model in a controlled environment. Through this the consultants configure and test the prototype and attempt to solve any inherent problem in the BPR before going live. This also helps to reveal the strength and the weakness of a companys business process which enables those who are configuring the system to point out what fits into the package and where the functional gaps occur. 7. Implementation Team Training Takes place along with the process of implementation. Company trains its employees to implement and later, run the system. Employee become self sufficient to implement the software after the vendors and consultant have left. 8. Testing In this phase, we try to break the system. That is we try to find the weakest link so that it can be rectified before going live. 9. Going Live The work is complete, data conversion is done, databases are up and running, the configuration is complete & testing is done. The system is officially proclaimed. Once the system is live the old system is removed and the new system is used for doing the business. 10. End-User Training

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) In this phase the actual users of the system are identified and trained on HOW to use the system. This training is very important because the success of the ERP system lies in the hands of the End-users. This makes this phase very crucial. 11. Post -Implementation Once the implementation is over, the vendor and the hired consultants will go. To reap the fruit of the implementation it is very important that the system has wide acceptance. There should be enough employees who are trained to handle problems those crops up time to time. The system must be updated with the change in technology. The post-ERP organization will need a different set of roles and skills than those with less integrated kind of systems. However, an organization can only get the maximum value of these inputs if it successfully adopts and effectively uses the system. Q: What are the Pre implementation and the Post implementation? Ans: Pre-Evaluation Screening Search for the perfect package. Infinite number of ERP vendors. Screening eliminates those packages that are not at all suitable for the business process. This limits the number of packages that are to be evaluated by the committee. This screening is done on the basis of the product literature of the vendors, external consultants etc. Once you select a few packages after the screening, you can start the detailed evaluation process.

Post -Implementation Once the implementation is over, the vendor and the hired consultants will go. To reap the fruit of the implementation it is very important that the system has wide acceptance. There should be enough employees who are trained to handle problems those crops up time to time. The system must be updated with the change in technology. The post-ERP organization will need a different set of roles and skills than those with less integrated kind of systems. However, an organization can only get the maximum value of these inputs if it successfully adopts and effectively uses the system.

(E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh)


(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) Q: What are the direct benefits of the ERP systems? Ans: The following are some of the direct benefits of an ERP system: Business Integration Flexibility Better Analysis and Planning Capabilities Use of Latest Technology Q: Why is it said that ERP systems are flexible? Ans: One of the advantages of ERP packages is their flexibility, Different languages, currencies, accounting standards and so on can covered in one system, and functions that comprehensively manage multiple locations of a company can be packaged and can be implemented automatically. To manage with company globalization and system unification, this flexibility is essential, and one can say that it has major advantages not simply for development and maintenance but also the terms of management. Q: What are the limitations of ERP? Ans: ERP systems have three significant limitations: 1. Managers cannot generate custom report or queries without help from a programmer and this inhabits them from obtaining information quickly, so that they can act on it for competitive advantage. 2. ERP systems provide current status only, such as open orders, managers often need to look past the current status, to find trends and patterns that aid better decision making. 3. The data in the ERP application is not integrated with other enterprise or division systems and does not include external intelligence. Q: What is Data Warehouse? Why do we need data warehouse? Ans: A data warehouse is a database designed to support decision making in an organization. It is updated batch wise and is structured for fasts online questions and summaries for managers. Data warehouses can contain enormous amounts of data. The amount of data in the operational database of an organization increases, the performance of the database begin to degrade. So, it is essential to separate the operational and non-operational data. Data archiving is not a good option because if the non-operational data is archived, there is little or no use for it. Especially since this data is a very valuable resource and is too precious to be kept in some archive. In this situation that a data warehouse comes in handy. The primary concept of data warehousing is that the data stored in business analysis can most effectively be accessed, by separating it from the data in the operational systems. The most important reason for separating data for business analysis, from the operational data, has always been the potential performance degradation the operational system that can result from the analysis processes. High performance and quick response time is almost universally critical for operational systems. The reason to separate the operational data from analysis data have not significantly changed with the evolution of the data warehousing systems, except that now they are considered more formally during the data warehouse building process. Advances in technology and changes in nature of business have made many of the business analysis (E-commerce & ERP Notes By Mohd. Shahid ,PDMCE , Bahadurgarh) 54

(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh) processes much more complex and sophisticated. In addition to producing standard reports, todays data warehousing systems support very sophisticated online analysis, including multidimensional analysis. Q: What are the main characteristics of a management information system? Ans: The main characteristics of a management information system are: The MIS supports the data processing functions of transaction handling and record keeping. A MIS uses an integrated database and supports a variety of functional areas. A MIS provides operational, tactical and strategic levels of the organization with timely, but for most part, structured information. A MIS is flexible and can be adapted to the changing needs of the organization. Q: What is DSS? Ans: A DSS (Decision Support system) is information and planning system that provides the ability to interrogate computers on an ad-hoc basis, analyse information and predict the impact of decisions before they are made. DBMSs let you select data and derive information for reporting and analysis, Spread sheets and modeling programs provide both analysis and what if? planning. However, any single application that supports decision making is not a DSS. A DSS is cohesive and integrated set of programs that share data and information. An integrated DSS has a direct impact on the managements decision-making process and it can be a very cost beneficial computer application. Q: How is a DSS different from a MIS? Ans: A DSS does not replace the MIS; instead it supplements the MIS. There are distinct differences between them. A MIS emphasizes on planned reports on a verity of subjects; a DSS focuses on decision making. A MIS is standard scheduled, structured and routine; a DSS is quite unstructured and is available on request. A MIS is constraint by the organizational system; a DSS is immediate and user friendly. Q: What is EIS? Ans: EIS or Executive Information System is information systems that consolidates and summaries are the ongoing transactions within an organization. It should provide management with all the transaction it requires, at all times, from internal as well as external sources. Executive decision making also requires access to outside information from competitors, governmental regulations, trade groups, news gathering agencies and so on. A high degree of uncertainty and future orientation is involved in most executive decisions. A successful EIS is easy to use, is flexible and consumable and uses the latest technologies innovations.

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(E-commerce & ERP Notes By Mohd. Shahid (A.P.) ,PDMCE, Bahadurgarh)

Q: Can ERP handle multiple currencies? Ans: ERP is fully multi-currency enabled, allowing for an unlimited number of currencies including the EURO. The multiple currency capability includes currency gains/losses (realize and unrealized), currency transfers, reports written in the vendors/customers languagae,default

Expected Questions: Q1: Write short notes on ERP, discussing its evolution, characteristics, features components and needs. Q2: Difference between ERP and SCM. Q3: What is HRD? Explain the role of HRD in ERP. Q4: What do you understand by integrated functionality in enterprise and Cross Enterprise functionality? How is each one of them achieved? Q5: Difference between ERP and CRM. Q6: (a) Explain Credit card and Debit card. Which is better for use and why? Q7: What is digital token based electronic payment system, illustrate with example? Q8: Write short notes: (i) Cyber cash (ii) First Virtual Holdings (VPIN) Q9: Write short notes on ERP, discussing its evolution, characteristics, features components and needs. Q10: Difference between ERP and MRP. Q11 what do you understand by integrated functionality in enterprise and cross enterprise functionality? How is each one of them achieved? Q12: Describe the various types of e-payment systems. Q13: Write short notes: (a) CRM (b) OAS Q13: What are the Pre implementation and post implementation in ERP life Cycle? Q14: What is OLAP?

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