Electronic Business (E-Business) Systems

Learning Objectives Electronic Business (E-Business) Systems Appreciate the possible changes to organizational processes that occur when e-business introduced Understand major approaches to transfer of electronic data during business events processing Recognize the complexities that are introduced as electronic document management moves us steadily toward the paperless office Understand the complexities surrounding EDI that are introduced when linking two different organizations’ computer systems for joint business event data processing Appreciate the challenges faced by organizations when they pursue direct business links with customers via the Internet or other networks Appreciate the business advantages gained through effective use of electronic business Electronic Business (E-Business) Systems

E-Business and the AIS Wheel E-Business is a part of every aspect of accounting

Electronic Business Electronically linking business processes, individuals and organizations Byproduct: elimination of sales staff, normally intermediary between two parties to transactions Transactions completed more quickly, more efficiently, and more effectively

Batch Processing Known as periodic mode because master data is updated periodically (e.g., nightly) Delay occurs between business event and updating master data Business event occurs Record business event data Update master data Generate outputs The disadvantage of periodic mode systems is that the only time the master data are up to date is right after the processing has been completed. As soon as the next business event occurs, the master data are no longer up to date.

Automated Equivalent to a Manual System

Online Transaction Entry Entering business events at time and place the business event occurs Computer input device used to enter data at source Input document is eliminated Price data is retrieved from the system Source documents are printed by the system Event information in accumulated on tape or disk

Online Transaction Entry (Batch)

Online Real-time Processing Transaction occurrence/recording in transaction files Update master files essentially instantaneously Also known as “immediate mode” Generate reports periodically or on an as needed basis Support queries to generate unique reports for key decisions

Online real-time processing

Online Transaction Processing RT system that performs all or part of processing at data terminal location Updating of master data may be immediate or delayed Can have memorandum update in RT and full batch update at night (referred to as remote batch) Common applications are ATMs and online reservation systems

Traditional real-time processing system

Online transaction processing system

Methods of Conducting E-Business E-Mail—generally requires human translation and data entry Electronic Document Management—capture and storage of document images instead of paper Electronic Data Interchange—computer-to-computer exchange of business data in structured formats that allow direct processing of those electronic documents by the receiving computer system.

EDI Components 1. An originating application prepares an electronic business document, such as a purchase order (PO). 7. At the destination organization, an application processes the business data.

EDI Components 2 and 6. An application’s electronic business document must be translated from standard message format to the structured EDI format that will be recognized by the receiving computer.

Electronic Data Interchange Set

EDI Components 3 and 5. Establish a method to communicate electronic message. EDI service bureaus or the Internet are may be used, saving time and money over other methods.

EDI Components 4. Rather than connecting each trading partner, an organization can use a VAN. An organization can connect to the VAN when it wants, leave its outgoing messages and, at the same time, pick up incoming messages from its “mailbox.”

Internet Commerce Circles 1 and 7 Circles 2 and 5 Circles 4 and 6 Customer connects to vendor in client-server configuration Circles 2 and 5 Connection to Internet through direct connection or service provider Circles 4 and 6 Assurance services provide limited assurance that web site reliable and secure Circle 3 The Internet

Typical Internet Connection