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  • 1. Introduction to E-Business UAA – ACCT 316 Accounting Information Systems Dr. Fred Barbee 3 Chapter
  • 2. E-Business Defined
  • 3. E-Business . . .
    • The use of information technology and electronic communication networks to exchange business information and conduct transactions in electronic, paperless form.
  • 4. E-Business . . .
    • Refers to technology-enabled interactions between individuals and organizations
      • B2C  Popular for purchasing books, music, or airline tickets.
      • B2B  Has a far larger impact on the economy.
  • 5. E-Business . . .
    • . . .refers to all uses of advances in IT, particularly
      • networking and
      • communications technology,
    • to improve the ways in which an organization performs all of its business processes.
  • 6. Interactions With . . .
    • Suppliers
    • Customers
    • Investors
    • Creditors
    • The government
    • Media
  • 7. E-Business Models
  • 8. E-Business Models
    • Business to Consumers (B2C): Interactions between individuals and organizations.
    • Business to Business (B2B): Interorganizational e-business.
  • 9. Categories of E-Business
    • Organization-individual
    • Smaller dollar value
    • One-time or infrequent transactions
    • Relatively simple
    B2C Characteristics Type
  • 10. B2C Issues
    • Trust – i.e., is this a legitimate business?
    • Security – i.e., will this transaction be secure?
  • 11. Categories of E-Business
    • Interorganizational
    • Larger dollar value
    • Established, on-going relationships
    • Extension of credit by seller to customer
    • More complex
    B2B B2G B2E Characteristics Type
  • 12. B2B Issues
    • Larger, more complex transactions – typically between business partners.
      • Accountability
      • Control
  • 13. Report: B2B E-Commerce Gaining Strength Study by Forrester Research and the Institute for Supply Management ( http://www.ecommercetimes.com ) January 17, 2002
  • 14. B2B E-Commerce Gaining Strength
    • Nearly half of all large U.S. corporations are now using the Internet to cut down on supply costs.
    • 45% of firms that spend US$100 million or more per year on supplies used the Internet in the 4 th Quarter of 2002 (up from 28% in 3 rd Quarter).
  • 15. B2B E-Commerce Gaining Strength
    • 53% described the Internet as “very important” or “critical” to purchasing and cost savings plans in 2002.
    • 87% described the Internet as ”important.”
  • 16. Study: E-Commerce to Top $1 Trillion in 2003 Study by IDC ( http://www.idc.com ) January 17, 2002
  • 17. E-Commerce to Top $1 Trillion in 2003
    • By the end of 2002, more than 600 million people worldwide will have access to the Web.
    • They will spend more than US$1 trillion shopping online.
    • E-commerce grew to $600 billion in 2001, a 68% increase over 2000.
  • 18. E-Commerce to Top $1 Trillion in 2003
    • “Once people get over the security and privacy hiccups, as well as other problems that are not directly related to e-commerce, and have access to wider product offerings, e-commerce will become as widespread as offline commerce.”
    Carol Glasheen, Vice President IDC Research.
  • 19. E-Commerce to Top $1 Trillion in 2003
    • B2B will account for 83% of online sales in 2002, and 88% in 2006.
    • The majority of B2B sales consists of volume purchasing, meaning that companies are spending huge amounts of money online.
  • 20. Report: Online B2B Surge May Herald Overall Recovery Study by Forrester Research and the Institute for Supply Management ( http://www.ecommercetimes.com ) September 11, 2002
  • 21. Online B2B Surge . . .
    • 84% of the companies surveyed said they use the Web to purchase indirect materials.
    • Up from 78% in the first quarter.
    • 65% said they buy materials directly from suppliers online.
  • 22. The Next Wave of E-Commerce Technology Lou Hirsch E-Commerce Times July 11, 2002 ( http:// www.ecommercetimes.com )
  • 23. The Next Wave of E-Commerce Technology
    • “In the not-too-distant future, e-commerce technology will become smarter and faster and will completely transform the way companies deal with internal information and customer service.”
  • 24. The Next Wave of E-Commerce Technology
    • Interactive company portals that can communicate with other portals in real-time could drastically alter the sales process.
  • 25. The Next Wave of E-Commerce Technology
    • One promising concept is the idea of “collaborative commerce,” in which companies set up smart hubs that are not only used by their own customers, but also interact with other companies’ sites.
  • 26. The Next Wave of E-Commerce Technology
    • There will be movement in the next three years toward shared portals.
    • Using these portals, companies that regularly do business with one another will be able to access real-time information about product availability and pricing.
  • 27. The Next Wave of E-Commerce Technology
    • Other possibilities . . .
      • Supercharged Kiosks
      • Instant Messaging in both the B2B and B2C environments
  • 28. E-Business Effects on Business Processes Electronic Data Interchange (EDI)
  • 29. Electronic Data Interchange
    • Standard protocol, available since the 1970s, for electronically transferring information between organizations and across business processes.
  • 30. E-Business Effects on Business Processes
    • EDI:
      • Reduces Inventory
      • Streamlines business processes,
      • Eliminates paper, and
      • Improves the flow of information
  • 31. Recent EDI Facilitators
    • Traditional EDI was expensive. New developments that have removed this cost barrier are:
    • The Internet: Eliminates the need for special proprietary third-party networks.
  • 32. Recent EDI Facilitators
    • XML: Extensible Markup Language – Set of standards for defining the content of data on Web pages.
    • XML + EDI = XML/EDI
    • “By combining XML and EDI we create new powerful paradigm different from XML or EDI!”
  • 33. Recent EDI Facilitators
    • ebXML:
      • Defines standards for coding common business documents.
      • Eliminates need for complex software to translate documents created by different companies.
  • 34. Integrated Electronic Data Interchange (EDI)
    • Reaping the full benefits of EDI requires that it be fully integrated with the company’s AIS.
  • 35. AIS Company EDI Purchase orders Customer orders EDI Integrated EDI System Suppliers Customers
  • 36. AIS Company EDI EDI Stand-alone EDI System Sales Order Entry EDI System Customer Orders Purchase Orders Customer Orders Phone Fax Suppliers Customers
  • 37. E-Business Effects on Business Processes Purchasing and Inbound Logistics
  • 38. Purchasing and Inbound Logistics
    • The Internet improves the purchasing activity by making it easier for a business to identify potential suppliers and to compare prices.
  • 39. Purchasing and Inbound Logistics
    • Better information about inbound shipments enables organizations to reduce the amount of inventory buffers carried.
  • 40. E-Business Effects on Business Processes Internal Operations, Human Resources, and Infrastructure.
  • 41. Internal Operations, Human Resources, and Infrastructure
    • Advanced communications technology can significantly improve:
      • The efficiency of internal operations.
      • Planning.
      • The efficiency and effectiveness of the human resource support activity.
      • The efficiency and effectiveness of customer payments.
  • 42. E-Business Effects on Business Processes Electronic Funds Transfer
  • 43. EDI = Steps 1-6; EFT = Step 7; FEDI = Steps 1-7 Information Flows in Electronic Commerce Buyer Seller 1. Inquiries 2. Responses 3. Orders 4. Acknowledgment 5. Billing 6. Remittance Data 7. Payments
  • 44. Nonintegrated EDI and EFT Company A’s bank Company B’s bank Company A Company B Payment Instructions (ACH Format) Receipts Information (EDI Format) Remittance Data
  • 45. Financial Electronic Data Interchange (FEDI) Company A’s bank Company B’s bank Company A Company B Remittance data and payment instruction Remittance data and funds Remittance data and receipts instruction
  • 46. Other Electronic Possibilities
    • Financial Value-Added Networks (FVAN)
    • Electronic bill payments
    • Electronic cash
  • 47. E-Business Effects on Business Processes Application Service Providers (ASPs)
  • 48. Application Service Provider
    • An Application Service Provider (ASP) is a company that provides access to and use of application programs via the Internet.
  • 49. Application Service Provider
    • The ASP owns and hosts the software; the contracting organization accesses the software via the Internet.
  • 50.  
  • 51. E-Business Effects on Business Processes Outbound Logistics
  • 52. Outbound Logistics
    • E-business can improve the efficiency and effectiveness of sellers’ outbound logistical activities.
      • Timely and accurate access to detailed shipment information.
      • Inventory optimization.
      • For goods and services that can be digitized, the outbound logistics function can be performed entirely electronically.
  • 53. E-Business Effects on Business Processes Sales and Marketing
  • 54. Sales and Marketing
    • Companies can create electronic catalogs to automate sales order entry.
    • Significantly reduce staffing needs.
    • Customization of advertisements
  • 55. E-Business Effects on Business Processes Post-Sale Support and Service
  • 56. Post-Sale Support and Service
    • Consistent information to customers.
    • Provide answers to frequently asked questions (FAQs).
  • 57. E-Business Effects on Business Processes E-Business Success Factors
  • 58. E-Business Success Factors
    • Critical Success Factors (CSFs)
    • Characteristics of business transactions:
      • Validity
      • Integrity
      • Privacy
  • 59. E-Business Effects on Business Processes Addressing Validity, Integrity, and Privacy Concerns
  • 60. Encryption
    • Single-key systems : Same key is used to encrypt and decrypt the message
      • Simple, fast, and efficient
      • Example: the Data Encryption Standard (DES) algorithm
  • 61. Encryption
    • Public Key Infrastructure (PKI): Uses two keys:
      • Public key is publicly available and usually used to encode message
      • Private key is kept secret and known only by the owner of that pair of keys. Usually used to decode message
  • 62. Advantages & Disadvantages of PKI
    • Advantages
    • No sharing of key necessary
    • More secure than single-key systems
    • Disadvantages
    • Much slower than single-key systems
  • 63. Digital Signatures and Digests
    • Digital signature: An electronic message that uniquely identifies the sender of that message.
  • 64. Digital Signatures and Digests
    • Digest: The message that is used to create a digital signature or digital summary.
      • If any individual character in the original document changes, the value of the digest also changes.
      • This ensures that the contents of a business document have not been altered or garbled during transmission
  • 65. Digital Certificates & Certificate Authorities
    • Digital Certificate: Used to verify the identity of the public key’s owner.
      • A digital certificate identifies the owner of a particular private key and the corresponding public key, and the time period during which the certificate is valid.
  • 66. Digital Certificates & Certificate Authorities
    • Digital certificates are issued by a reliable third party, called a Certificate Authority, such as:
      • Verisign
      • Entrust
      • Digital Signature Trust
  • 67. Digital Certificates & Certificate Authorities
    • The certificate authority’s digital signature is also included on the digital certificate so that the validity of the certificate can also be verified.
  • 68. Infrastructure for E-Business
  • 69. Types of Networks
    • Private portion owned or leased by the company
      • Local-Area Networks (LANs)
      • Wide-Area Networks (WANs)
    • The Internet
  • 70. Types of Networks
    • Intranet
    • Extranet
    • Virtual Private Network (VPN)
  • 71. Infrastructure for E-Business Network Configuration Options
  • 72. Local Area Networks
    • Star configuration
    • Ring configuration
    • Bus configuration
  • 73. Star Configuration
    • Each device is directly connected to the central server.
    • All communications between devices are controlled by and routed through the central server.
    • Typically, the server polls each device to see if it wants to send a message.
  • 74. Star Configuration Host computer or server A B C G F E D H
  • 75. Ring Configuration A H B D C E G F
  • 76. Bus Configuration A B C G F E D H Host computer or server Bus channel
  • 77. Wide Area Networks
    • Centralized System
    • Decentralized System
    • Distributed Data Processing
  • 78. Centralized WAN
  • 79. Decentralized WAN
  • 80. Distributed Data Processing
  • 81. Network Configuration Options
    • Many WANs, and most LANs, are set up as client/server systems.
    • Each desktop computer is referred to as a client.
  • 82. Network Configuration Options
    • The client sends requests for data to the servers.
    • The servers perform preprocessing on the database and send only the relevant subset of data to the client for local processing.