CHAPTER FOUR

ELECTRONIC COMMERCE AND ENTERPRISE

SYSTEMS

5.1. An Introduction to Electronic Commerce

5.2. Electronic and Mobile Commerce

Applications

5.3. Technology Infrastructure Required to

Support E Commerce and M-Commerce

5.4. Transaction Processing Systems

5.5. Enterprise Systems

 Why Learn about Electronic and Mobile Commerce
and Enterprise Systems?
• Electronic commerce has transformed many areas
of our lives and careers.
• One fundamental change has been the manner in
which companies interact with their suppliers,
customers, government agencies, and other
business partners.
• As a result, most organizations today have set up
business on the Internet or are considering doing
so.
• To be successful, all members of the organization
need to plan and participate in that effort.
 Cont,d
• As a sales or marketing manager, you will be expected to
help define your firm’s e-commerce business model.
• As a customer service employee, you can expect to
participate in the development and operation of your
firm's Web site.
• As a human resource or public relations manager, you will
likely be asked to provide Web site content for use by
potential employees and shareholders.
• As an analyst in finance, you will need to know how to
measure the business impact of your firm's Web
operations and how to compare that to competitors'
efforts.
 An introduction to Electronic
Commerce
• Electronic commerce (e-commerce) is the
conducting of business activities (e.g.,
distribution, buying, selling, marketing, and
servicing of products or services) electronically
over computer networks.
• It includes any business transaction executed
electronically between companies (business-to-
business), companies and consumers (business-
to-consumer), consumers and other consumers
(consumer-to-consumer), public sector and
business;
 Cont,d
• (government to-business), public sector to
citizens (government-to-citizen), and
public sector to public sect or
(government-to-government).
• Business activities that are strong
candidates for conversion to e-commerce
are ones that are paper based, time
consuming, and inconvenient for
customers.
 Business-Io-Business E-Commerce
• Business-to-business (B2B) e-cornmerce is a
subset of e-commerce in which all the
participants are organizations.
• B2B e-commerce is a useful tool for connecting
business partners in a virtual supply chain to
cut resupply times and reduce costs.
• Although the business-to-consumer market
grabs more of the news headlines, the B2B
market is considerably larger and is growing
more rapidly.
 Business-to-Consumer E-Commerce
• Business-to-consumer (B2C) e-cormrnerce is a form of e-
commerce in which customers deal directly with an
organization and avoid intermediaries.
• By using B2C e-commerce to sell directly to consumers,
producers, or providers of consumer products can
eliminate the middlemen, or intermediaries, between them
and the consumer.
• In many cases, this squeezes costs and inefficiencies out
of the supply chain and can lead to higher profits for
businesses and lower prices for consumers.
• The elimination of intermediate organizations between
the producer and the consumer is called disintermediation.
 Consumer-to-Consumer E-Commerce
• Consumer-to-consumer (C2C) e-commerce is a
subset of e-commerce that involves electronic
transactions between consumers using a third
party to facilitate the process.
• eBay is an example of a C2C e-commerce site;
customers buy and sell items to each other through the
site.
• Founded in 1995, eBay has become one of the most
popular Web sites in the world, with 2015 net revenue of
$8.5 billion" Other popular C2C sites include Bidz.com,
Craigslist, eBid, Etsy, Fiverr, Ibidfree, Kijiji, Ubid, and
Taobao.
 E-Government
• E-government is the use of information and
communications technology to simplify the
sharing of information, speed formerly paper-
based processes, and improve the relationship
between citizens and government.
• Government to-citizen (G2C), government-to-
business (G2B), and government-to-
government(G2G) are all forms of e-
government, each with different applications.
 Mobile Commerce
• Mobile commerce (m-commerce) relies on the
use of mobile devices, such as tablets and
smartphones, to place orders and conduct
business.
• Smartphone manufacturers such as Apple,
Huawei, Lenovo, LG, Samsung, and Xiaomi are
working with communications carriers such as
AT&T, Sprint/Nextel, T-Mobile, and Verizon to
develop wireless devices, related technology,
and services to support m-commerce.
 Advantages of Electronic and Mobile
Commerce
• Conversion to an e-commerce or m-
commerce system enables organizations to;
 reach new customers,

 reduce the cost of doing business,

 speed the flow of goods and information,

 increase the accuracy of order processing

and order fulfillment, and
 improve the level of customer service.
 E-Commerce Challenges
• A company must overcome many challenges to
convert its business processes from the traditional
form to e-commerce processes, especially for B2C e-
commerce.
• As a result, not all e-commerce ventures are
successful.
• The following are three key challenges to e-commerce:

i. dealing with consumer privacy concerns,

ii. overcoming consumers' lack of trust, and

iii.Overcoming global issues.

 Electronic and Mobile Commerce
Applications .
• E-commerce is being used in innovative and
exciting ways.
• This section examines a few of the many B2B,
B2C, C2C, and m-commerce applications in retail
and wholesale, manufacturing, marketing,
advertising, bartering, retargeting, price
comparison, couponing, investment and finance,
and banking.
• As with any new technology, m-commerce will
succeed only if it provides users with real
benefits.
 Manufacturing
 One approach taken by many manufacturers
to raise profitability and improve customer
service is to move their supply chain
operations onto the Internet.
 Here, they can form an electronic exchange,
an electronic forum where manufacturers,
suppliers, and competitors buy and sell goods,
trade market information, and run back-office
operations, such as inventory control.
 Marketing
 The nature of the Web enables firms to gather more
information about customer behavior and preferences
as customers and potential customers gather their own
information and make their purchase decisions.
 Analysis of this data is complicated because of the
Web's interactivity and because each visitor voluntarily
provides or refuses to provide personal data such as
name, address, email address, telephone number, and
demographic data.
 Internet advertisers use the data to identify specific
markets and target them with tailored advertising
messages.
 Advertising
• Mobile ad networks distribute mobile ads to
publishers such as mobile Web sites,
application developers, and mobile operators.
• Mobile ad impressions are generally bought
at a cost per thousand (CPM), cost per click
(CPC), or cost per action (CPA), in which the
advertiser pays only if the customer clicks
through and then buys the product or
service.
 Bartering
• During the recent period of slow economic growth
and stagnant wages, many people and businesses
turned to bartering as a means of gaining goods
and services.
• Some businesses are willing to barter to reduce
excess inventory, gain new customers, or avoid
paying cash for necessary raw materials or
services.
• Cash-strapped customers may find bartering to be
an attractive alternative to paying scarce dollars.
 Retargeting
• An average of 74 percent of all online shopping carts
are abandoned, representing more than $4 trillion
worth of merchandise in 2013.
• "Retargeting" is a technique used by advertisers to
recapture these shoppers by using targeted and
personalized ads to direct shoppers back to a
retailer's site.
• For example, a visitor who viewed the men's clothing
portion of a retailer's Web site and then abandoned
the Web site would be targeted with banner ads
showing various men's clothing items from that
retailer.
 Technology Infrastructure Required to Support E-
Commerce' an"
Successful
• Successful implementation of e-business
requires significant changes to existing
business processes and substantial
investment in IS technology.
• These technology components must be
chosen carefully and be integrated to
support a large volume of transactions with
customers, suppliers, and other business
partners worldwide.
 Hardware
• A Web server hardware platform complete with
the appropriate software is a key ingredient to e-
commerce infrastructure.
• The amount of storage capacity and computing power
required of the Web server depends primarily on two
things:

• the software that must run on the server and the volume
of e-commerce transactions that must be processed.

• The most successful e-commerce solutions are designed

to be highly scalable so that they can be upgraded to
meet unexpected user traffic.
 Web Server Software
• In addition to the Web server operating
system, each e-commerce Web site must have
Web server software to perform fundamental
services, including security and identification,
retrieval and sending of Web pages, Web site
tracking, Web site development, and Web
page development.
• The two most widely used Web server
software packages are Apache HTTP Server
and Microsoft Internet Information Services.
 E-Commerce Software
• After you have located or built a host server,
including the hardware, operating system,
and Web server software, you can begin to
investigate and install e-commerce software
to support five core tasks:
 catalog management to create and update
the product catalog,
 product configuration to help customers
select the necessary components and options,
 Cont,d
 shopping cart facilities to track the items
selected for purchase,
 e-commerce transaction processing, and

 Web traffic data analysis to provide details

to adjust the operations of the Web sit.
 Mobile Commerce Hardware and
Software
• For m-commerce to work effectively, the
interface between the mobile device and its
user must improve to the point that it is nearly
as easy to purchase an item on a wireless
device as it is to purchase it on a Pc.
• In addition, network speeds must continue to
improve so that users do not become
frustrated.
• Security is also a major concern, particularly in
two areas:
 Cont,d
• the security of the transmission itself and the
trust that the transaction is being made with
the intended party. Encryption can provide
secure transmission.
• Digital certificates can ensure that transactions are
made between the intended parties.
• The mobile devices used for m-commerce have several
limitations that complicate their use.
• Their screens are small, perhaps no more than several
square inches, and might be able to display only small
portions of a Web site.
 Electronic Payment Systems
• Electronic payment systems are a key
component of the e-commerce
infrastructure.
• Current e-commerce technology relies on
user identification and encryption to
safeguard business transactions.
• Actual payments are made in a variety of
ways, including electronic cash, electronic
wallets, and smart, credit, charge, and debit
cards.
 Cont,d
• Authentication technologies are used by many
organizations to confirm the identity of a user
requesting access to information or assets.
• A digital certificate is an attachment to an
email message or data embedded in a Web site
that verifies the identity of a sender or Web
site.
• A certificate authority (CA) is a trusted third-
party organization or company that issues
digital certificates.
 Transaction Processing Systems
• Organizations employ transaction processing
systems (TPSs) to capture and process the
detailed data necessary to update records
about the fundamental business operations of
the organization.
• These systems include order entry, inventory
control, shipment processing, payroll,
accounts payable, accounts receivable, and
the general ledger, to name just a few.
 batch processing system:
• A form of data processing whereby business
transactions are accumulated over a period of time
and prepared for processing as a single unit or
batch.
• With batch processing systems, business
transactions are accumulated over a period of time
and prepared for processing as a single unit or
batch.
• The essential characteristic of a batch processing system is
the delay between an event and the eventual processing of
the related transaction to update the organization's records
 online transaction processing (OLTP),
• each transaction is processed immediately without
the delay of accumulating transactions into a batch.
• Consequently, at any time, the data in an online
system reflects the current status.
• This type of processing is essential for businesses
that require access to current data such as airlines,
ticket agencies, and stock investment firms.
• Many companies find that OLTP helps them
provide faster, more efficient service-one way to
add value to their activities in the eyes of the
customer.
 Enterprise Systems
• An enterprise system is central to individuals and
organizations of all sizes and ensures that
information can be shared with authorized users
across all business functions and at all levels of
management to support the running and
managing of a business.
• Enterprise systems employ a database of key operational
and planning data that can be shared by all, eliminating
the problems of missing information and inconsistent
information caused by multiple transaction processing
systems that each support only one business function or
one department in an organization.
 Cont,d
• Businesses rely on enterprise systems to
perform many of their daily activities in areas
such as product supply, distribution, sales,
marketing, human resources, manufacturing,
accounting, and taxation.
• so that, work can be performed quickly without
waste or mistakes.
• Without such systems, recording and processing
business transactions would consume huge
amounts of an organization's resources.
 Enterprise Resource Planning
• Enterprise resource planning (ERP) is a set of
integrated programs that manage a company's
vital business operations for an entire
organization, even an complex, multisite, global
organization.
• Recall that a business procedure is a set of
coordinated and related activities that takes one
or more types of input and creates an output of
value to the customer of that procedure.
• An example of such a procedure is capturing a sales
order, which takes customer input and generates an
order.
 Advantages of ERP
• Increased global competition, new needs of executives
for control over the total cost and product flow through
their enterprises, and evermore- numerous customer
interactions drive the demand for enterprise-wide
access to real-time information.
• ERP offers integrated software from a single vendor to
help meet those needs.
• The primary benefits of implementing ERP include
improved access to quality data for operational decision
making, elimination of costly, inflexible legacy systems,
improvement of work processes, and the opportunity to
upgrade and standardize technology infrastructure.
 Leading ERP Systems
• ERP systems are commonly used in
manufacturing companies, colleges and
universities, professional service
organizations, retailers, and healthcare
organizations.
• The business needs for each of these types of
organizations varies greatly.
• In addition, the needs of a large multinational
organization are far different from the needs
of a small, local organization.
 Customer Relationship Management
• A customer relationship management (CRM) system
helps a company manage all aspects of customer
encounters, including marketing, sales, distribution,
accounting, and customer service.
• The goal of CRM is to understand and anticipate the
needs of current and potential customers to increase
customer retention and loyalty while optimizing the
way that products and services are sold.
• CRM is used primarily by people in the sales,
marketing, distribution, accounting, and service
organizations to capture and view data about
customers and to improve communications.
 The key features of a CRM system
include the following:
• Contact management: The ability to track data on
individual customers and sales leads and then access
that data from any part of the organization.
• Sales management: The ability to organize data
about customers and sales leads and then to prioritize
the potential sales opportunities and identify
appropriate next steps.
• Customer support: The ability to support customer
service representatives so that they can quickly,
thoroughly, and appropriately address customer
requests and resolve customer issues while collecting
and storing data about those interactions.
 Cont,d
• Marketing automation: The ability to
capture and analyze all customer interactions,
generate appropriate responses, and gather
data to create and build effective and efficient
marketing campaigns.
• Analysis: The ability to analyze customer
data to identify ways to increase revenue and
decrease costs, identify the firm's "best
customers," and determine how to retain and
find more of them.
 Cont,d
• Social networking: The ability to create and
join sites such as Facebook, where salespeople
can make contacts with potential customers.
• Access by mobile devices: The ability to
access Web-based customer relationship
management software by smartphones, tablets,
and other mobile devices.
• Import contact data: The ability for users to import
contact data from various data service providers that
can be downloaded for free directly into the CRM
application.
 Cont,d
• The focus of CRM involves much more
than installing new software.
• Moving from a culture of simply selling
products to placing the customer first is
essential to a successful CRM deployment.