Chapter 3 – Electronic Business

(e-Business) Systems

Accounting Information Systems 7e

Ulric J. Gelinas and Richard Dull

Copyright © 2008 Thomson Southwestern, a part of The Thomson Corporation. Thomson, the Star logo, and
South-Western are trademarks used herein under license.

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 Learning Objectives
• Appreciate the possible changes to organizational
processes that occur when e-business is introduced
• Understand major approaches to transfer of
electronic data during business events processing
• Recognize the complexities that are introduced as
electronic document management moves us steadily
toward the paperless office
• Understand the complexities surrounding EDI that
are introduced when linking two different
organizations’ computer systems for joint business
event data processing
• Appreciate the challenges faced by organizations
when they pursue direct business links with
customers via the Internet or other networks
• Appreciate the business advantages gained through
effective use of electronic business
 Electronic Business
• Electronically linking business
processes, individuals and
organizations
• Byproduct: elimination of sales staff,
normally intermediary between two
parties to transactions
• Transactions completed more quickly,
more efficiently, and more effectively

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 Batch Processing
• Known as periodic mode because master data is
updated periodically (e.g., nightly)
• Delay occurs between business event and updating
master data
– Business event occurs
– Record business event data
– Update master data
– Generate outputs
• The disadvantage of periodic mode systems is that the
only time the master data are up to date is right after
the processing has been completed.
• As soon as the next business event occurs, the master
data are no longer up to date.

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Automated Equivalent to a Manual System

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 Online Transaction Entry
Entering business events at time and place the
business event occurs
• Computer input device used to enter data at
source
• Input document is eliminated
• Price data is retrieved from the system
• Source documents are printed by the system
• Event information in accumulated on tape or
disk
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Online Transaction Entry (Batch)

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Online Real-time Processing
• Transaction occurrence/recording in
transaction files
• Update master files essentially
instantaneously
• Also known as “immediate mode”
• Generate reports periodically or on
an as needed basis
• Support queries to generate unique
reports for key decisions
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Online real-time processing

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 Communication Networks
• Client server technology
• LAN’s
• WAN’s
• Internet
• Web Browsers
• Extranet

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Methods of Conducting E-Business
• E-Mail—generally requires human translation
and data entry
• Electronic Document Management—capture and
storage of document images instead of paper
• Electronic Data Interchange—computer-to-
computer exchange of business data in
structured formats that allow direct processing of
those electronic documents by the receiving
computer system.
• Internet Commerce

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 EDI
Components
1. An originating
application prepares
an electronic business
document, such as a
purchase
order (PO).
7. At the destination
organization, an
application processes
the business data.

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 EDI
Components
2 and 6. An
application’s
electronic business
document must be
translated from
standard message
format to the
structured EDI
format that will be
recognized by the
receiving computer.

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Electronic Data Interchange Set

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 EDI
Components
3 and 5. Establish a
method to
communicate
electronic message.
EDI service bureaus
or the Internet are may
be used, saving time
and money over other
methods.

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 EDI
Components
4. Rather than
connecting each
trading partner, an
organization can use a
VAN. An organization
can connect to the
VAN when it wants,
leave its outgoing
messages and, at the
same time, pick up
incoming messages
from its “mailbox.”

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 Internet Commerce
• Circles 1 and 7
– Customer connects to vendor in client-server
configuration
• Circles 2 and 5
– Connection to Internet through direct connection
or service provider
• Circles 4 and 6
– Assurance services provide limited assurance that
web site reliable and secure
• Circle 3
– The Internet

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Typical Internet Connection

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