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Business Systems:Business Systems:Electronic Commerce, Transaction Processing Electronic Commerce, Transaction Processing

Systems (TPS), Management Information Systems (TPS), Management Information Systems (MIS), Enterprise Resource Planning Systems (MIS), Enterprise Resource Planning (ERP), Decision Support System (DSS), Group (ERP), Decision Support System (DSS), Group Decision Support System (GDSS), Executive Decision Support System (GDSS), Executive

Support System (ESS/EIS)Support System (ESS/EIS)

Chapter 5 and 6

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Electronic Commerce HistoryElectronic Commerce History

Began in the early 1970sinnovations such as electronic transfer of funds (EFT)were limited to large corporations and a few daring small businesses

Electronic Data Interchange (EDI)added other kinds of transaction processing and extended the types of participating companiesANSI X.12 standardized in 1983EDIFACT standardized in 1986-87

Over the last five yearsinnovative applications, from advertisement to auctions and procurementfueled by the internet

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Types of Electronic CommerceTypes of Electronic Commerce

Business-to-consumer EC (B2C)companies sell directly to consumers over the Internet

Business-to-business EC (B2B)two (or more) businesses make transactions electronicallyMore than $7.3 trillion volume by 200415x volume of B2CMostly done by EDI – 95% of EC is EDI!

Consumer-to-consumer (C2C)E.g. E-bay, Classifieds

Government-to-citizens (G2C) and to others Doing taxes online etc.

Mobile commerce (m-commerce)Wireless commerce. E.g. Using cell phone to pay for gas

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Supply Chain ManagementSupply Chain Management

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Value Chains in E-CommerceValue Chains in E-Commerce

Conversion to e-commerce supply chain management provides businesses with an opportunity to:

increase revenues or decrease costs by eliminating time-consuming and labor-intensive steps throughout the order and delivery processimprove customer satisfaction by enabling customers to view detailed information about delivery dates and order statusreduce inventory including raw materials, safety stocks, and finished goods

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Product and Information Flow for Product and Information Flow for HP Printers Ordered Over the WebHP Printers Ordered Over the Web

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E-Commerce ApplicationsE-Commerce Applications

Retail and WholesaleCybermallElectronic exchange

ManufacturingMarketingInvestment and Finance

On-line Stock TradingOn-line Banking

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Electronic RetailingElectronic Retailing

Solo storefrontsExamples: walmart.com, buy.comCan use services like http://store.yahoo.com

CybermallsStores give up some freedom to be part of the mallSome solo stores expand to become malls

Amazon.com, Buy.comSome malls are more like intelligent agents for comparing prices (pricegrabber.com)

Companies can both be in a mall and a solo storefront

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Issues in E-tailingIssues in E-tailing

Channel conflictLego.com: Keeping consumers and retailers happy (very small percent of revenue from online sales)

Order fulfillmentShipping small quantities to many customers. How to handle returns?

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B2B E-commerceB2B E-commerce

Sell-side marketspacesOne company trying to sell its goods to many companiesCustomized catalogs, auctions

Buy-Side marketspaces / E-procurementOne large buyer, many smaller suppliersExamples: Supermarket chains, Ford, BoeingAlternative: Group procurement (e.g. shop2gether.com)

Electronic ExchangesMany sellers and many buyers

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An Electronic ExchangeAn Electronic Exchange

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Key Technical ComponentsKey Technical Components

Decision: Develop or outsource?

•Catalog Management•Product Configuration•Shopping Cart•E-commerce Transaction Processing•Web Site Data Analysis

Electronic Payment Systems•Credit cards, smart cards•Digital certificate•Electronic cash•Electronic wallet•P2P payment (PayPal)

•Apache Web server•Oracle•Web construction

•Linux•Unix•Windows

•PC•Mainframe•Mid-range

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Transaction Processing Transaction Processing Information SystemsInformation Systems

What is a transaction?Grocerystore purchase, airline ticket reservation, deposit money to an account.Something is exchanged (money, goods, ...)What data is collected?What transactions did you take part in yesterday?

Transaction Processingmajor business processesprovide the mission-critical activitiestransaction may generate additional transaction

Transaction Processing System (TPS)computerized information systemsupports the transaction processes

Critical to the well-being of the organization!!

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Characteristics of TPSCharacteristics of TPS

Large amounts of data are processedThe TPS processes information on a regular basisHigh level of detail in dataLow complexity of calculationsSystems must be very reliableLarge storage (database) capacity is requiredNeed lots of processing speed due to the high volumeInput and output data are structuredNeed high level of accuracy, data integrity, and security Must allow for queries of data

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Transaction Processing OverviewTransaction Processing Overview

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Transaction Processing SystemsTransaction Processing SystemsBatch Processing System

Transactions are accumulated over time and processed in a single group

On-line Transaction Processing (OLTP)Each transaction is processed immediately

Examples?Does anyone use a batch processing system?

Know of one?

Heard of one?

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TPS, MIS/DSS, and AI/ESTPS, MIS/DSS, and AI/ES

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Transaction Processing ActivitiesTransaction Processing Activities

Data CollectionSource data automation makes it easier

Data EditingCheck for validity and completeness

Data CorrectionRe-enter invalid data

Data ManipulationSimple calculations

Data StorageUpdate databases

Document ProductionBusiness documents and Reports

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Example: Point-of-Sale SystemExample: Point-of-Sale System

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Order Processing SystemsOrder Processing SystemsSystems that process order entry, sales configuration, shipment planning, shipment execution, inventory control, invoicing, customer interaction, and routing and scheduling

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Integration of Integration of TPSsTPSs

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Management Information SystemsManagement Information Systems

Provide routine information to managers in the functional areasProvide information in exception reports and ad hoc (demand) reportsTerminology

Originally: ’MIS’ used for everything having to do with IT and ISToday: ’MIS’ used for this type of system (except in a few universities!)

MIS gets input from TPS

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Management Information SystemManagement Information System

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Sources of Managerial InformationSources of Managerial Information

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Enterprise Resource Planning (ERP)Enterprise Resource Planning (ERP)

Provide real-time monitoring of business functionsPermits timely analysis of issues such as quality, availability, customer satisfaction, performance, and profitability.

Combines TPS and MIS (among other things)Advantages

Elimination of costly, inflexible legacy systemsImprovement of work processesIncrease in access to data for operational decision makingUpgrade of technology infrastructure

DisadvantagesExpense and Time in ImplementationDifficulty Implementing ChangeDifficulty Integrating with Other SystemsRisks in Using One Vendor

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Decision Support SystemsDecision Support Systems

Support for Problem-Solving PhasesDifferent Decision Frequencies

One-time: ad hoc DSSRepetitive: Institutional DSS

Different Problem Structures

Highly structued vs. Semi or unstructured

Support for Various Decision-Making Levels

Operational, tactical, strategic

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Decision Making LevelDecision Making Level

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Book, p. 238

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Model of a DSSModel of a DSS •Financial Models•Statistical Analysis Models•Graphical Models•Project Management Models

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Group Decision Support SystemGroup Decision Support System

Software application that consists of most elements in a DSS, plus software needed to provide effective support in a group decision making

Special designEase of useFlexibilityDecision-making supportAnonymous input

Reduction of negative group behaviorParallel communicationAutomated record keeping

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GDSS ConfigurationGDSS Configuration

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GDSS AlternativesGDSS Alternatives

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Executive Support SystemExecutive Support System

Tailored to individual executivesEasy to useDrill down capabilitiesSupport need for external dataCan help when uncertainty is highFuture-orientedLinked to value-added processesSupport for

defining an overall visionstrategic planningstrategic organizing and staffingstrategic controlcrisis management

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Next WeekNext Week

ThanksgivingDecember 4

LectureChapter 8

Group PresentationsTeam 4, 5 and 6