Introduction

1. 9-1
Foundation Concepts of IS
How businesses store, organize, and manage
their Information has a huge impact on
organizational effectiveness.

2. Outline of Introduction to IS
 Meaning of IS
 IS resources
 Major roles of IS
 Recent technology trends in IS
 Types of IS
 Managerial challenges of IT
 Success and failure with IT
 Developing IS Solutions
 Ethical dimensions of IS

3. IS definition
 IS can be any organized combination of
 people
 hardware
 software
 communication networks,
 and data resources
 that collects, transforms, and disseminates information in
an organization.

4. Information Systems Framework

5.  Foundation Concepts
 Fundamental concepts about the components and roles
of information systems.
 Information Technologies
 Major concepts, developments, and management issues
in information technology.

6. • Business Applications
– The major uses of information systems for operations,
management, and competitive advantage.
• Development Processes
– How business professionals and information specialists plan,
develop, and implement information systems.
• Management Challenges
– The challenge of managing ethically and effectively.

7. INFORMATION System Resources

8. • People Resources
– End Users
– IS Specialists
• Hardware Resources
– Computer systems
– Peripherals
• Software Resources
– System software
– Application software
– Procedures

9. • Data Resources
– Data versus Information
• Network Resources
– Communication media
– Network support

10. Data Versus Information
Your age – a piece of data

11. IS activities
1. Input activities: takes the form of data entry activity
ie recording and editing
2. Processing: activities such as calculating,
comparing, sorting, classifying, summarizing
3. Output: Information product such as messages,
report, forms, graphic images which may be
provided by video display, audio responses, paper
product and multimedia
4. Storage: data & info are retained in an organized
manner for later use
5. Control: IS should produce feed back about input,
processing, output and storage activities

12. Major Roles of IS
• Support Business Processes
• Support Decision Making
• Support Competitive Advantage

13. Supports business process
• As for example most retail stores use CBIS in order
to
• record customer purchases,
• keep track of inventory,
• pay employees, and
• evaluate sales trends.

14. Supports decision making
• IS helps business professionals make better
decision
• As for example what impact will be if
advertisement cost reduced to a certain
percentages.

15. Supports competitive advantages
• Innovative use of IS help to gain competitive
advantages
• As for example store mgt can install touch screen
kiosks in all the branches, with links to their e-
commerce website for online shopping.
• This might attract new customers and build
customer loyalty.

16. Recent trends in IS
9-16

17. Recent trends in IS contd…
 The new emerging technology, Internet-of-
Things (IoT),
 which connects physical objects using electronic
sensors and internet is drawing attention nowadays.
9-17

18. Recent trends in IS contd…
 Blockchain
 According to Harvard Business Review, “Blockchain is an open and
distributed ledger that can record transactions between two parties
efficiently and in a verifiable and permanent way” (Iansiti and R.
Lakhani, 2017).
 In other words, the digitized transactional records are saved in a
database which is distributed and transparent where no possibility to
update and fabrication or erasure.
9-18

19. The Present and the Future
• E-Business
– The use of Internet technologies to internetwork
and empower…PCC
• Business processes
• Electronic commerce, and
• Enterprise communication & collaboration
– Within a company & with its customers, suppliers,
& other business stakeholders.

20. IS in the E-Business Enterprise
• Every business competes globally (whether they
realize it or not)
• IS supports business operations through the use of:
– Intranets
– Extranets
– Internet
– Other information technologies

21. • Enterprise Collaboration Systems
– Support communication, coordination, & collaboration.
• Virtual teams
• Electronic Commerce
– Buying & selling, and marketing & servicing of products,
services, & information.

22. Types of IS
IS
Operation Support
TPS
Process Control
Enterprise Collaboration
System
Management Support
MIS
DSS
ESS

23. Transaction Processing System
– TPS is a computerized system that performs
and records the daily routine transactions
necessary to conduct business, such as
– sales order entry,
– hotel reservations,
– payroll,
– employee record keeping.
– The principal purpose of systems at this level is
to answer routine questions and to track the flow
of transactions through the organization.
– How many parts are in inventory?
– What happened to Mr. Smith’s payment?

24. 9-24
A TPS for payroll processing captures employee payment transaction
data (such as a time card).System outputs include online and hard-
copy reports for management and employee paychecks.

25. 9-25
– Transaction processing systems: performs and
records the daily routine transactions
necessary to conduct business
• Batch – transaction data Firm accumulates over
time & processed periodically.
• Real-time – data processed immediately after a
transaction occurs
• Providers: Quickbooks, MYOB, Tally, Xero

26. – Process/Mfg. Control Systems – monitor &
control physical processes.
– Planning, designing, developing and maintaining
of product
– Enovia PLMS
– mySAP PLMS
– IBM PLS
– Enterprise Collaboration Systems: support
group/team work.
– MS Outlook
– MS Exchange
– IBM Lotus note
9-26

27. TPS

28. • Management Support Systems
– Management Information Systems – pre-specified
reports & displays to support decision-making.
– Xero MIS
– Hyperion MIS solution
– Com Share Mgt. Planning System

29. HOW MIS OBTAIN THEIR DATA FROM THE ORGANIZATION’S TPS

30. 9-30

31. SAMPLE MIS REPORT

32. DSS
 Decision Support Systems – provide interactive
ad hoc support.
 Decision example:
 Contract Cost Analysis, Voyage Estimating DSS –Ship
cost/time—fuel, labor
 Technical report-loading pattern, freight rate, speed, fuel and
water consumption etc
 Providers : IBM Decision Edge, Tibco’s Spotfire, SPSS
9-32

33. VOYAGE-ESTIMATING DECISION-SUPPORT SYSTEM

34. ESS
 Executive Information Systems – Provides critical
information tailored to the information needs of
executives.
 As for example: ESS Shows KPI
 IBM Cognos
 Yahoo Dash board
9-34

35. A
digital
dashboard
delivers
comprehensive
and
accurate
information
for
decision
making
often
using
a
single
screen.
The
graphical
overview
of
key
performance
indicators
helps
managers
quickly
spot
areas
that
need
attention.

36. 8/28/2022 1-36

37. 8/28/2022 1-37

38. 8/28/2022 1-38

39. • Other Classifications
– Expert systems – expert advice
– Knowledge management systems – support the
creation, organization, & dissemination of business
knowledge
– Functional business systems – support the basic
business functions
– Strategic information systems – strategic advantage

40. Managerial challenges of IT
• Success and failure with IT
• Developing IS Solutions
• Ethical dimensions of IS

41. Success and failure with IT
• Success should be measured by both
efficiency and effectiveness
• Efficiency: Minimizing, cost, time and use of
IS resources
• Effectiveness: SEEI

42. Developing IS Solutions to Business Challenges

43. • Manager will be responsible for proposing ,
updating, modifying the system
• Follows systematic development process
– Investigate
– Analyze
– Design
– Implement
– Maintain

44. Ethical Challenges
• What use of IT would be considered as improper
irresponsible ?
• What does it take to be a responsible end user?
• How do you protect yourself from computer crime ?
• Where do we draw the line between customer privacy and
collecting business information?

45. The critical Role of BA
 Is able to create a solution to a particular business problem.
 CFA
 Strong Risk assessment, negotiation and problem resolution skills
 5 to ten yrs. Exp. & an MBA with technical undergraduate

46.  Visit a job-posting Web site such as Monster.com/bdjobs.com.
Spend some time at the site examining jobs for accounting, finance,
sales, marketing, System analyst, database administer and human
resources. Find two or three descriptions of jobs that require some
information systems knowledge.
 What information systems knowledge do these jobs require?
 What do you need to do to prepare for these jobs?
 Write a one- to two-page report summarizing your findings.
9-46

47. Cross Functional/Enterprise System
 Understand the meaning
 Recognize the business benefits of these systems
 Understand the history and evolution
1-47

48. 1-48
Cross Functional/Enterprise System
3 major systems are : ERP CRM & SCM
HOW ENTERPRISE SYSTEMS WORK
Enterprise systems feature a set of integrated software modules and a
central database that enables data to be shared by many different
business processes and functional areas throughout the enterprise..

49. 1-49
ERP Systems
 Major investment
 Cost between $5,000 and $100,000+
 Variety of business justifications
 Replace legacy systems
 Reduce cycle times
 Lower operating costs
 Enables better management decisions
 Real-time
 On-line

50. 1-50
 ERP is cross functional system
 It integrates and automates many internal business process and IS
system with in mfg, logistics, distribution, accounting, and
finance and HRM
 It’s a business backbone
 Large company started to introduce ERP in 1990
 ERP is needed to gain efficiency, agility, and responsiveness
ERP: The business backbone

51. ERP Characteristics
i. Modular design comprising many distinct business functions
ii. A centralized database that organizes and manages information
iii. Integrated functions that provide seamless information flow among them
iv. Flexible best practices
v. Functions that work in real time
vi. Internet-enabled
1-51

52. 1-52
ERP Characteristics :a modular design

53. 1-53
Overall Business Benefits
i. Eliminating legacy systems
 Reduces incompatible data
 Can cause fragmentation
ii. Allows sharing and monitoring of information across organization
 Provides timely information
 Integrates information throughout supply chain
iii. Minimizes response time
iv. Reduces costs
v. Cuts inventory
vi. Improves operating performance

54. 1-54
Department Benefits
 Sales
 Increased efficiency
 Lower quotes, reduced lead time, improved responsiveness
 Manufacturing
 Concurrent engineering
 Faster design and production
 Accounts Payable
 Suppliers paid accurately

55. 1-55
1-55
Major ERP Vendors

56. 1-56
Major ERP Vendors

57. Snap shots of ERP
1-57

58. Evaluating NetSuite Versus the Standard Model ERP Software Solution
9-58

59. 1-59
Challenges
 Realization of benefits
 On-time, on-budget implementations
 Applying multi-stage approach
 Markus
 Three phases: project, shakedown, and onward and upward phases
 Business results not achieved until last phase
 Parr and Shanks
 Four phases: planning, re-engineering, design, and configuration and
testing phases
 Benefits not achieved until last two phases
 Holland and Light
 Benefits occur after implementation of advanced modules

60. 1-60
CRM System
 (CRM) system – uses information about customers to gain
insight into their needs, wants, and behaviors in order to serve
them better
 CRM is a cross functional enterprise system that integrates and
automates many of the customer servicing processes in sales,
marketing and customer services.
 Providers are :
 Net suite,
 Siebel,
 salesforce.com and
 MS Dynamics
 Visit…http://www.oracle.com/us/products/applications/siebel
/overview/index.html

61. 1-61
1-61
NetSuite CRM+
• NetSuite CRM+ offers you the following key SFA
features:
• Team Selling
• Territory Tracking and Assignment
• Opportunity Management
• Standard & Advanced Forecasting
• Quote Generation
• Order Management
• Incentive Management
• Offline Sales Client
• Multiple Quotas, Multiple Forecasts

62. 1-62
CRM
1-62

63. 9-63

64. 9-64

65. 9-65

66. CUSTOMER LOYALTY MANAGEMENT PROCESS MAP
1-66

67. 1-67
1-67
CRM Modules
• Focuses on
1. Sales force automation
2. Customer service and support
3. Marketing campaign management and analysis

68. CRM…
 Sales force automation (SFA) systems – automatically track
all the steps in the sales process:
 Sales lead tracking or Listing potential customers
 Offer product configuration
 Getting repeat customers
 sales prospect and contact information,
 product information,
 and sales quote generation capabilities.
1-68

69. CRM….
 CSS:3 types
 Help desk
 Call center
 Web based self service
 MCMA:
 Market and customer analysis
 analyze customer and business value of a company’s direct marketing
campaign
 Help capture and manage customer response data
 Identifying profitable and unprofitable customers,
 identifying opportunities for cross-selling :is the marketing of complementary
products to customers. Forexample,
 in financial services, a customer with a checking account might be sold a
money market account or a home improvement loan.
1-69

70. 1-70
Phases of CRM
i. Acquire
ii. Enhance
iii. Retain
 Acquire: Acquire new customers by superior job of contact
mgt, direct selling and so on.
 Enhance : Web enabled CRM account mgt and customer
service and support tools help keep customers happy
 Retain: CRM analytical tools help a company proactively
identify and reward its most loyal and profitable customers

71. BUSINESS VALUE OF CRM SYSTEMS
 Companies with effective customer relationship management
systems realize many benefits, including
 increased customer satisfaction,
 reduced direct-marketing costs,
 more effective marketing, and
 lower costs for customer acquisition and retention
 CLTV
 Churn Rate
1-71

72. BUSINESS VALUE OF CRM SYSTEMS contd..
 The churn rate measures the number of customers who stop
using or purchasing products or services from a company.
 It is an important indicator of the growth or decline of a firm’s customer base.
 Another important output of analytical CRM is CLTV
 Customer lifetime value (CLTV) is based on the relationship
between the revenue produced by a specific customer, the
expenses incurred in acquiring and servicing that customer, and
the expected life of the relationship between the
customer and the company.
1-72

73. 1-73
SCM
 SCM is the mgt of supplier, manufacturer, retailer and customer.
 Helps company rprtrp at proper quantity at an acceptable cost
 Goal of SCM is to manage the process by
 forecasting demand,
 controlling inventory and
 enhancing the network relationship with scm partners

74. NIKE’S SUPPLY CHAIN
1-74

75. 1-75
 One recurring problem in supply chain management is the
bullwhip effect,
 in which information about the demand for a product gets
distorted as it passes from one entity to the next across the
supply chain.
 A slight rise in demand for an item might cause different
members in the supply chain—distributors, manufacturers,
suppliers, secondary suppliers (suppliers’ suppliers), and tertiary
suppliers (suppliers’ suppliers’ suppliers)—to stockpile inventory
.

76. THE BULLWHIP EFFECT
1-76
Inaccurate information can cause minor fluctuations in demand for a
product to be amplified as one moves further back in the supply
chain. Minor fluctuations in retail sales for a product can create
excess inventory for distributors, manufacturers, and suppliers.

77. SCM…
1-77
• Supply chain management (SCM) system – IT system
that supports supply chain management activities.
• Automating the tracking of inventory and information
among business processes and across companies

78. SCM Providers
1-78
 SCM can be of
 SCM planning &
 SCM Execution software.
 Examples of SCM software are
 i2’s SCM software used by Sun Microelectronics.
 SCEM by Hi jump software
 Manugistic
 Manhattan associates’ X-suite solution : for order, logistic and
warehouse mgt.

79. 1-79
SCM System (manh.com)

80. 9-80

81. Cloud Computing
 Cloud computing is the delivery of computing services – servers,
storage, databases, networking, software, analytics and more – over
the Internet (“the cloud”).
 Companies offering these computing services are called cloud
providers and
 typically charge for cloud computing services based on usage,
similar to how you’re billed for gas or electricity at home.

83. Top benefits of cloud computing
 Cloud computing is a big shift from the traditional way businesses think about IT resources. What
is it about cloud computing? Why is cloud computing so popular? Here are 6 common reasons
why organisations are turning to cloud computing services:
 Cost Cloud computing eliminates the capital expense of buying hardware and software, and
setting up and running on-site data centres – the racks of servers, the round-the-clock electricity
for power and cooling, the IT experts for managing the infrastructure. It adds up quickly.
 Speed :Most cloud computing services are provided as self service and on demand, so even
vast amounts of computing resources can be provisioned in minutes, typically with just a few
mouse clicks, giving businesses a lot of flexibility and taking the pressure off capacity planning.
 Global scale: The benefits of cloud computing services include the ability to scale elastically. In
cloud speak, that means delivering the right amount of IT resources – for example, more or less
computing power, storage, bandwidth – exactly when it’s needed, and from the right geographic
location.

84.  4. Productivity: On-site data centres typically require a lot of “racking
and stacking” – hardware setup, software patching and other time-
consuming IT management chores. Cloud computing removes the
need for many of these tasks, so IT teams can spend time on
achieving more important business goals.
 5. Performance: The biggest cloud computing services run on a
worldwide network of secure data centres, which are regularly
upgraded to the latest generation of fast and efficient computing
hardware. This offers several benefits over a single corporate data
centre, including reduced network latency for applications and
greater economies of scale.
 6. Reliability: Cloud computing makes data backup, disaster
recovery and business continuity easier and less expensive,
because data can be mirrored at multiple redundant sites on the
cloud provider’s network.

85. Types of cloud services: IaaS, PaaS, SaaS
 Most cloud computing services fall into three broad categories:
infrastructure as a service (IaaS), platform as a service (PaaS) and
software as a service (SaaS). These are sometimes called the cloud
computing stack, because they build on top of one another. Knowing
what they are and how they’re different makes accomplishing your
business goals easier.
 Infrastructure as a service (IaaS)
 The most basic category of cloud computing services. With IaaS,
you rent IT infrastructure – servers and virtual machines (VMs),
storage, networks, operating systems – from a cloud provider on a
pay-as-you-go basis. To learn more, see What is IaaS?

86. Categories and Works

88.  Platform as a service (PaaS)
 Platform as a service (PaaS) refers to cloud computing services that
supply an on-demand environment for developing, testing, delivering
and managing software applications. PaaS is designed to make it
easier for developers to quickly create web or mobile apps, without
worrying about setting up or managing the underlying infrastructure of
servers, storage, network and databases needed for development. To
learn more, see What is PaaS?
 Software as a service (SaaS)
 Software as a service (SaaS) is a method for delivering software
applications over the Internet, on demand and typically on a
subscription basis. With SaaS, cloud providers host and manage the
software application and underlying infrastructure, and handle any
maintenance, such as software upgrades and security patching. Users
connect to the application over the Internet, usually with a web browser
on their phone, tablet or PC. To learn more, see What is SaaS?

89. Types of cloud deployments: public, private, hybrid
 Not all clouds are the same. There are three different ways to deploy
cloud computing resources: public cloud, private cloud and hybrid
cloud.
 Public cloud
 Public clouds are owned and operated by a third-party cloud service
provider, which delivers computing resources such as servers and
storage over the Internet. Microsoft Azure is an example of a public
cloud. With a public cloud, all hardware, software and other
supporting infrastructure are owned and managed by the cloud
provider. You access these services and manage your account
using a web browser.
 Private cloud

90. Public, private and hybrid

91.  A private cloud refers to cloud computing resources used exclusively
by a single business or organisation. A private cloud can be
physically located on the company’s on-site data centre. Some
companies also pay third-party service providers to host their private
cloud. A private cloud is one in which the services and infrastructure
are maintained on a private network.
 Hybrid cloud
 Hybrid clouds combine public and private clouds, bound together by
technology that allows data and applications to be shared between
them. By allowing data and applications to move between private
and public clouds, hybrid cloud gives businesses greater flexibility
and more deployment options.

93.  E-commerce meaning
 Features of e-commerce
 E-commerce technologies
 Categories of e-commerce
 E- commerce process
 Internet/e-commerce business model
 E-commerce success factors
 Brick and click strategy
 M-commerce
 Management challenges
1-93
Electronic Commerce Systems

94. E-commerce
1-94
 developing, marketing, selling, delivering, servicing,
and paying for products & services through online.
 Digitally enabled commercial transaction between
organization and individuals
 Use of internet and web for business transaction
 Buying and selling goods and services through on line

95. Main Features are:
 Ubiquity: everywhere
 Global reach: across culture and nation seamlessly
 Universal standard: same technology i.e. internet
 Interactivity: can engage in dialog
 Richness: VAT are possible: Video, audio and text enabled
 Information density: Total amount and quality info
 Price transparency and cost transparency
9-95

96. Snap Shot of e-commerce
1-96

97. 1-97
Three Basic Categories
 Business-to-Consumer (B2C):electronic commerce involves
retailing products and services to individual shoppers. BarnesandNoble.com,
which sells books, software, and music to individual consumers, is an example
of B2C e-commerce.
 Business-to-Business (B2B)
 involves sales of goods and services among businesses. ChemConnect’s
Web site for buying and selling chemicals and plastics is an example of
B2B e-commerce.
 Consumer-to-Consumer (C2C)
 involves consumers selling directly to consumers. For
example, eBay,

98. 1-98

99. The Growth of B2C E-commerce
1-99

100. The Growth of B2B E-commerce
1-100

101. 1-101
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How we can use?

102. B2B
1-102

103. B2B
1-103
8/28/2022 1-103

104. C2C
1-104
8/28/2022 1-104

105. Electronic Commerce Technologies
1-105
 Network technologies
 Server technologies
 Database technologies
 Security technology
 Other software and hardware technology.

106. 1-106
Essential e-Commerce Processes
Eight key components of an e-commerce process architecture
i. Access control and security
ii. Profiling and personalizing
iii. Search management
iv. Content & Catalog management
v. Workflow management
vi. Event notification
vii. Collaboration and trading
viii. Payment

107. 1-107
 Access control and security
 Processes MUST establish mutual trust and secure
access through
 Authenticating users
 Authorizing access
 Enforcing security features
 Must protect the resources of e-commerce sites from
threats
 Hackers
 Theft of passwords or credit card numbers
 System failures

108. Profiling and personalizing
1-108
 Build electronic profile of each customer
 One-to-one marketing strategy
 Personalized view of the website
 Based on…
 Personal data
 Website behavior and choices
 Tools: web registration software, website behavior tracking software
and cookie file and feedback
 Providers: Beselcet and double click

109. 1-109
Cookies are written by a Web site on a visitor’s hard drive. When the
visitor returns to that Web site, the Web server requests the ID number
from the cookie and uses it to access the data stored by that server on
that visitor. The Web site can then use these data to display personalized
information.
How Cookies Identify Web Visitors

110. Search management
1-110
 Helps customers find the specific product or service
they want
 Software may include a search engine component or a
company may acquire a customized e-commerce
search engine
 Content and parameter based
 Provider: Excite requisite and Google search engine

111. Content and catalog management
1-111
 Content management software helps companies
develop, generate, deliver, update, and archive text data
and multimedia information
 Frequently takes the form of multimedia catalogs of
product information
 May be expanded to include product configuration
processes that support mass customization of a
company’s products
 Providers;Storyserver, centerstage software

112. Workflow management
1-112
 Workflow software engine sets
 Predefined sets of business rules
 Roles of stakeholders
 Authorization requirements
 Routing alternatives
 Databases used
 Sequence of tasks
 Workflow systems ensure that..
 Proper transactions, decisions, & work activities are
performed
 Correct data and documents are routed to the right
employees, customers, suppliers, and other business
stakeholders

113. Event notification
1-113
 Most applications are event driven
 New customer’s first visit
 Payment and delivery processes
 Customer relationship & supply chain management activities
 Notifies those concerned when an event
occurs that might affect their status in a
transaction

114. Collaboration and trading
1-114
 Supports the collaboration arrangements &
trading services needed by customers,
suppliers, & other stakeholders
 May be provided by Internet-based trading
services

115. 1-115
Electronic Payment Processes
 Processes are complex
 Near anonymous nature of transactions
 Security issues
 Wide variety of debit and credit alternatives
 Wide variety of financial institutions and intermediaries
 Includes
i. Web payment process
ii. EFT
iii. Securing electronic payment

116. 1-116
 Web payment processes
 Credit cards
 Purchase orders
 shopping cart Providers: 3d cart, x-cart cloud,
pinnacle cart, zen cart

117. 1-117

118. 1-118
 Electronic funds transfer (EFT)
 Uses a variety of IT to capture and process money and credit
transfers between banks and businesses and their customers
 ATMs
 Pay-by-phone
 Web-based
 PayPal & Bill Point (cash transfers)
 CheckFree and PayTrust (automatic bill paying services)

119. 1-119
 Electronic funds transfer (continued)
 Electronic bill payment
 Point-of-sale terminals linked to bank EFT systems

120. 1-120
 Secure electronic payments
 Addresses vulnerability to network sniffers
 Encrypt data passing between customer and merchant
 Encrypt the data passing between the customer and the company authorizing
the credit card transaction
 Secure Socket Layer (SSL)
 Digital Wallet
 Secure Electronic Transaction standard
 Transmit sensitive info through offline.

121. Internet business model
 BM- describe how it PDS,showing how it delivers value
to customers and how it creates wealth
 Internet helps company creates and capture profit in new
ways by adding extra value to existing products and
services
1-121

122. 1-122

123. Value proposition
 Defines how a company’s product or service fulfills the needs of
customers
 Questions to ask:
 Why will customers choose to do business with your firm
instead of another?
 What will your firm provide that others do not or cannot?
 Examples of successful value propositions:
 Personalization/customization
 Reduction of product search costs
 Reduction of price discover costs
 Facilitation of transactions by managing product delivery
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124. E-commerce models
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 Six major e-commerce models
 Virtual storefront ;Amazon
 Info broker : edmunds.com,kbb.com,insweb.com
 Transaction broker:E*trade.com,expedia.com
 Content provider: cnn,bbc,wj,nyt
 Virtual community:ivillage.com,sailnet.com
 Portal:yahoo,msn,

125. 1-125

126. E-commerce revenue model
 Advertising Revenue Model
 Sales Revenue Model
 Subscription Revenue Model
 Free/Freemium Revenue Model
 offer basic services or content for free, while charging a premium for advanced or special
features. For example, Google offers free applications but charges for premium services.
 Transaction Fee Revenue Mode
 Affiliate Revenue Model
 Web sites (called “affiliate Web sites”) send visitors to other Web sites in return
for a referral fee or percentage of the revenue from any resulting sales. For
example, MyPoints makes money by connecting companies to potential
customers by offering special deals to its members.
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127. Changing economies of Information
 Info. asymmetry: exist when one party in a transaction
has more info that is important for the transaction than
the other party.
 Richness: refers depth and detail info
 Reach: How many people a business can contact with
and how many product it can offer those people.
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128. Success factors
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Key success factors are as follows
i. Selection & Value
ii. Performance & Service
iii. Look & Feel
iv. Advertising & Incentive
v. Personal attention
vi. Community relationship
vii. Security & Reliability

129. Success factors
1-129
 Selection and value
 Offer a good selection of attractive products and services
 Build a reputation for high quality, guaranteed satisfaction, and top
customer support

130. 1-130
 Success factors (continued)
 Performance and service
 Site must be efficiently designed for ease of access, shopping, and buying
 Service must be friendly and helpful
 Products should be available in inventory

131. 1-131
 Success factors (continued)
 Look and feel
 Attractive storefront, shopping areas, and multimedia product catalogs

132. 1-132
 Success factors (continued)
 Advertising and incentives
 Targeted, personalized ads
 Incentives include
 Coupons
 Discounts
 Special offers
 Vouchers for other web services

133. 1-133
 Success factors (continued)
 Personal attention
 Encourages customers to buy and make return visits
 Welcomed by name
 Greeted with special offers
 Guided to the parts of the site that you are most interested in
 Relationship building

134. 1-134
 Success factors (continued)
 Community relationships
 Giving customers with special interests a feeling of belonging to a unique
community
 Virtual communities
 Discussion forums
 Newsgroups
 Chat rooms
 Message boards
 Cross-links to related web communities

135. 1-135
 Success factors (continued)
 Security and reliability
 Customers must feel confident regarding the security of their…
 Credit card
 Personal information
 Transaction details

136. 1-136
 Success Factors (continued)
 Must feel that you are dealing with a trustworthy business.
 Reliability
 Orders filled and shipped as you requested
 Orders shipped in the timeframe promised
 Good customer support

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EDI: Electronic data interchange
 Electronic Data Interchange (EDI)
Companies use EDI to automate transactions for B2B e-commerce
and continuous inventory replenishment. Suppliers can
automatically send data about shipments to purchasing firms. The
purchasing firms can use EDI to provide production and inventory
requirements and payment data to suppliers.

138. 1-138
Clicks and Bricks
 Bridges the physical and virtual world
 Benefits and drawbacks of separation and integration
 Separation ensures
 Greater focus
 More flexibility
 Access to venture funding

139. 1-139
 Integration ensures
 Established brand
 Shared information
 Distribution efficiency
 Purchasing leverage
Clicks and Bricks

140. 1-140
 Alternatives (continued)
 Gaining strategic benefits such as..
 Sharing established brands
 Sharing key business information
 Joint buying power
 Distribution efficiencies

141. Challenges
i. Finding a successful internet business model
ii. Organizational change challenge
iii. Trust, security and privacy
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142. 1-142
 Alternatives (continued)
 Partial e-commerce integration using joint
ventures and strategic partnerships
 Complete separation via the spin-off of an
independent e-commerce company

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Companies can use mobile wireless devices to deliver new value-added
services directly to customers at any time and in any place, extending
personalization and deepening their relationships.
M-Commerce

144. M-commerce services
 Location based service
 Transaction based service
 Personalized service
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