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 Chapter

9
Electronic Commerce Systems

McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives

• Identify the following cross-functional enterprise

systems, and give examples of how they can
provide significant business value to a company
• Enterprise application integration
• Transaction processing systems
• Enterprise collaboration systems

7-3
 Learning Objectives

• Give examples of how Internet and other

information technologies support business
processes within the business functions of
• Accounting
• Finance
• Human resource management
• Marketing
• Production
• Operations management

7-4
 Enterprise Business Systems

• E-business means using the Internet, other

networks, and IT to support
• Electronic commerce
• Enterprise communications and collaboration
• Web-enabled business processes
• E-commerce is the buying, selling, and
marketing of products, services, and information
over the Internet and other networks

7-5
 Cross-Functional Systems

• Cross the boundaries of traditional business

functions
• Used to reengineer and improve vital business
processes all across the enterprise

7-6
Enterprise Application Architecture

7-7
 Enterprise Application Architecture

• Provides a conceptual framework

• Helps visualize the basic components, processes,
and interfaces of major e-business applications
• Focuses on accomplishing fundamental
business processes in concert with
• Customers
• Suppliers
• Partners
• Employees

7-8
 Enterprise Application Architecture

• Enterprise Resource Planning (ERP)

• Concentrates on the efficiency of internal
production, distribution, and financial processes
• Customer Relationship Management (CRM)
• Focuses on acquiring and retaining profitable
customers via marketing, sales, and services
• Partner Relationship Management (PRM)
• Aims at acquiring and retaining partners who
can enhance the selling and distribution of
products and services

7-9
 Enterprise Application Architecture

• Supply Chain Management (SCM)

• Focuses on developing the most efficient and
effective sourcing and procurement processes
• Knowledge Management (KM)
• Focuses on facilitating internal group
collaboration and decision support

7-10
 Enterprise Application Integration

• EAI software connects cross-functional systems

• Serves as middleware to provide
• Data conversion
• Communication between systems
• Access to system interfaces

7-11
How EAI Works

7-12
 Transaction Processing Systems

• Cross-functional information systems that

process data resulting from the occurrence of
business transactions
• Transactions include sales, purchases, deposits,
withdrawals, refunds, and payments
• Online transaction processing (OLTP) is a
real-time system that captures transactions
immediately

7-13
Transaction Processing Systems

7-14
The Transaction Processing Cycle

7-15
Enterprise Collaboration Systems (ECS)

• EC systems are cross-functional information

systems that enhance team and workgroup
• Communication
• Coordination
• Collaboration
• Systems may include
• Networked PC workstations
• Servers
• Databases
• Groupware and application packages

7-16
ECS Tools

7-17
 Functional Business Systems

• A variety of types of information systems

that support the business functions of
• Accounting
• Finance
• Marketing
• Operations management
• Human resource management

7-18
IT in Business

7-19
 Marketing Systems

• Marketing systems are concerned with

• Planning, promotion, and sale of existing
products in existing markets
• Development of new products and new markets
• Better attracting and serving present and
potential customers

7-20
Marketing Information Systems

7-21
 Interactive Marketing

• Interactive Marketing
• A customer-focused marketing process
• Uses the Internet, intranets, and extranets
• Establishes two-way transactions between a
business and its customers or potential customers
• Goal
• Profitably use networks to attract and keep
customers
• Get customers to help create, purchase, and
improve products and services

7-22
 Targeted Marketing

• An advertising and promotion management

concept with five targeting components

7-23
 Targeted Marketing Components

• Community: customized ads to appeal to specific

virtual communities
• Content: ads placed on a variety of selected
websites, aimed at a specific audience
• Context: ads placed on web pages that are
relevant to a product or service
• Demographic/Psychographic: web marketing
aimed at specific types or classes of people
• Online behavior: promotions tailored to each
visit to a site by an individual
7-24
 Sales Force Automation

• Outfit sales force with notebook computers,

web browsers, and sales contact software
• Connect them to marketing websites and the
company intranet
• Goals
• Increase personal productivity
• Speed up capture and analysis of sales data
• Gain strategic advantage

7-25
 Human Resource Management (HRM)

• Information systems designed to support

• Planning to meet personnel needs
• Development of employees to their full potential
• Control of all personnel policies and programs

7-26
HRM Systems

7-27
 Accounting Information Systems

• The oldest and most widely used information

system in business
• Records and reports business transactions and
economic events
• Produces financial statements
• Forecasts future conditions

7-28
 Accounting Information Systems

• Typically consists of
• Order processing
• Inventory control
• Accounts receivable
• Accounts payable
• Payroll
• General ledger systems

7-29
Financial Management System Example

7-30
The Scope of e-Commerce

9-31
E-Commerce Technologies

9-32
 Categories of e-Commerce

• Business-to-Consumer
• Virtual storefronts, multimedia catalogs,
interactive order processing, electronic payment,
online customer support
• Business-to-Business
• Electronic business marketplaces, direct links
between businesses, auctions and exchanges
• Consumer-to-Consumer
• Online auctions, posting to newspaper sites,
personal websites, e-commerce portals
9-33
Essential e-Commerce Architecture

9-34
 Access Control and Security

• E-commerce processes must establish mutual

trust and secure access between parties
• User names and passwords
• Encryption key
• Digital certificates and signatures
• Restricted access areas
• Other people’s accounts
• Restricted company data
• Webmaster administration areas

9-35
 Profiling and Personalizing

• Profiling gathers data on you and your website

behavior and choices
• User registration
• Cookie files and tracking software
• User feedback
• Profiling is used for
• Personalized (one-to-one) marketing
• Authenticating identity
• Customer relationship management
• Marketing planning
• Website management
9-36
 Search Management

• Search processes help customers find the specific

product or service they want
• E-commerce software packages often include
a website search engine
• A customized search engine may be acquired
from companies like Google or Requisite
Technology
• Searches are often on content or by parameters

9-37
 Content and Catalog Management

• Content Management Software

• Helps develop, generate, deliver, update, and
archive text and multimedia information at
e-commerce websites
• Catalog Management Software
• Helps generate and manage catalog content
• Catalog and content management software works
with profiling tools to personalize content
• Includes product configuration and
mass customization
9-38
 Workflow Management

• E-business and e-commerce workflow manage-

ment depends on a workflow software engine
• Contains software model of business processes
• Workflow models express predefined
• Sets of business rules
• Roles of stakeholders
• Authorization requirements
• Routing alternative
• Databases used
• Task sequences
9-39
Example of Workflow Management

9-40
 Collaboration and Trading

• Processes that support vital collaboration

arrangements and trading services
• Needed by customers, suppliers, and other
stakeholders
• Online communities of interest
• E-mail, chat, discussion groups
• Enhances customer service
• Builds loyalty

9-41
 Electronic Payment Processes

• Complex processes
• Near-anonymous and electronic nature
of transactions
• Many security issues
• Wide variety of debit and credit alternatives
• Financial institutions may be part of the process

9-42
 Electronic Payment Processes

• Web Payment Processes

• Shopping cart process
• Credit card payment process
• Debit and other more complex processes
• Electronic Funds Transfer (EFT)
• Major payment system in banking, retail
• Variety of information technologies capture
and process money and credit card transfers
• Most point-of-sale terminals in retail stores
are networked to bank EFT systems
9-43
Electronic Payment Example

9-44
 Securing Electronic Payments

• Network sniffers easily recognize credit card

formats
• Encrypt data between customer and merchant
• Encrypt data between customer and financial
institution
• Take sensitive information off-line

9-45
E-Commerce Application Trends

9-46
 E-Commerce Success Factors

• Some of the success factors in e-commerce

• Selection and value
• Performance and service
• Look and feel
• Advertising and incentives
• Personal attention (one-to-one marketing)
• Community relationships
• Security and reliability

9-47
Differences in Marketing

9-48
Web Store Requirements

9-49
 Developing a Web Store

• Build a website
• Choose or set up web hosting
• Use simple design tools and templates
• Include a shopping cart and payment support
• Market the website
• Include Web page and e-mail advertising
and promotions
• Exchange advertising with other Web stores
• Register with search engines and directories
• Sign up for affiliate programs

9-50
 Serving Your Customers

• Convert visitors into loyal customers

• Develop one-to-one relationship with customers
• Create incentives to encourage registration
• Use Web cookies to identify visitors
• Use tracking services to record and analyze
website behavior and customer preferences
• Create an attractive, friendly, efficient store
• Offer fast order processing and payment
• Notify when orders are processed and shipped
• Provide links to related websites

9-51
 Managing a Web Store

• Manage both the business and the website

• Record and analyze traffic, inventory, sales
• Use CRM features to help retain customers
• Link sales, inventory data to accounting systems
• Operate 24 hours a day, seven day a week
• Protect transactions and customer records
• Use security monitors and firewalls
• Use redundant systems and power sources
• Employ passwords and encryption
• Offer 24-hour tech support
9-52
 B2B E-Commerce

• B2B is the wholesale and supply side of

the commercial process
• Businesses buy, sell, or trade with other
businesses
• Relies on multiple electronic information
technologies
• Catalog systems
• Trading systems
• Data interchange
• Electronic funds transfers

9-53
 E-Commerce Marketplaces

• One to Many
• Sell-side marketplaces
• One supplier dictates product offerings and prices
• Many to One
• Buy-side marketplaces
• Many suppliers bid for the business of a buyer
• Some to Many
• Distribution marketplaces
• Unites suppliers who combine their product
catalogs to attract a larger audience
9-54
 E-Commerce Marketplaces

• Many to Some
• Procurement marketplaces
• Unites major buyers who combine purchasing
catalogs
• Attracts more competition and thus lower prices
• Many to Many
• Auction marketplaces
• Dynamically optimizes prices

9-55
 E-Commerce Portals

• B2B e-commerce portals offer multiple

marketplaces
• Catalogs
• Exchanges
• Auctions
• Often developed and hosted by third-party
market-maker companies
• Infomediaries serve as intermediaries in
e-business and e-commerce transactions

9-56
B2B E-Commerce Web Portal

9-57
 Clicks and Bricks

• Success will go to those who can integrate

Internet initiatives with traditional operations
• Merging operations has trade-offs

9-58
 E-Commerce Integration

• The business case for merging e-commerce

with traditional business operations
• Move strategic capabilities in traditional
operations to the e-commerce business
• Integrate e-commerce into the traditional
business
• Sharing of established brands
• Sharing of key business information
• Joint buying power and distribution efficiencies

9-59
 Other Clicks and Bricks Strategies

• Partial e-commerce integration

• Joint ventures and strategic partnerships
• Complete separation
• Spin-off of an independent e-commerce company
• Barnes and Noble’s experience
• Spun off independent e-commerce company
• Gained venture capital, entrepreneurial culture,
and flexibility
• Attracted quality management
• Accelerated decision making
• Failed to gain market share
9-60
 E-Commerce Strategy Checklist

• Questions to ask and answer

• What audiences are we attempting to reach?
• What action do we want those audiences to take?
• Who owns the e-commerce channel within the
organization?
• Is the e-commerce channel planned alongside
other channels?
• Is there a process for generating, approving,
releasing, and withdrawing content?
• Will our brand translate to the new channel?
• How will we market the channel itself?
9-61
 Customer Relationship Management

• A customer-centric focus
• Customer relationships have become a company’s
most valued asset
• Every company’s strategy should be to
find and retain the most profitable
customers possible

8-62
 What is CRM?

• Managing the full range of the customer

relationship involves
• Providing customer-facing employees with a
single, complete view of every customer at
every touch point and across all channels
• Providing the customer with a single, complete
view of the company and its extended channels
• CRM uses IT to create a cross-functional
enterprise system that integrates and automates
many of the customer-serving processes

8-63
Application Clusters in CRM

8-64
 Customer Service and Support

• A CRM system gives service reps real-time

access to the same database used by sales
and marketing
• Requests for service are created, assigned,
and managed
• Call center software routes calls to agents
• Help desk software provides service data
and suggestions for solving problems
• Web-based self-service enables customers
to access personalized support information

8-65
 Benefits of CRM

• Benefits of CRM
• Identify and target the best customers
• Real-time customization and personalization
of products and services
• Track when and how a customer contacts
the company
• Provide a consistent customer experience
• Provide superior service and support across
all customer contact points

8-66