1 Chapter 3: Inter-organizational applications of EC IT357 Electronic Commerce

9 June 2008IT Chapter 32 Inter-organizational applications of EC 1.Inter organizational applications of EC 2.Business to Consumer EC

9 June 2008IT Chapter 33 Introduction Most of the inter organizational applications are based on Electronic Data Interchange (EDI). EDI –The interprocess communication of business information... –... pertinent for business transactions between computer systems... –...of companies, government organizations, small businesses and banks. Financial Applications –Comprises of electronic transmission of payments and remittance information between a payer, payee and their respective banks. –Traditionally done by EFT or Automated Clearing House transfers (ACH)

9 June 2008IT Chapter 34 Inter-organizational Applications of EDI Financial Applications: EDI Vs. ACH Vs. EFT EFT - credit transfers between banks where funds flow directly from the payer’s bank to the payee’s. ACH - processes high volume small payments EDI - Involves more than transfer of funds. EFT- Instantaneous payments ACH -Settlement in 1-2 business days EDI - Instantaneous with buffering facilities.

9 June 2008IT Chapter 35 Inter-organizational Applications of EDI Manufacturing and Procurement Manufacturing - EDI is used to support Just -in- Time delivery (JIT) Retail - EDI supports Quick Response (QR) Just - in - Time delivery –A manufacturing philosophy –Based on waste elimination and productivity improvement –No stocking of parts in advance. –Parts are ordered daily based on daily production schedules ….. –…..and delivered just in time for production.

9 June 2008IT Chapter 36 Cont’d: Inter-organizational Applications of EDI Manufacturing and Procurement: JIT JIT aims: –Stock only the required inventory - when it is needed –Zero defects –Reduced lead times through: reduced set up times queue lengths lot sizes –Minimize costs JIT Benefit: Streamlined cash flow –When a company receives an invoice it pays for parts… –…. that are actually in use… –….in products ready to be sold.

9 June 2008IT Chapter 37 Cont’d: Inter-organizational Applications of EDI Manufacturing and Procurement: Quick Response Aims at reducing lead times.....by using event driven EDI… … to increase service levels and availability of products and services to customers. Scenario –Inventory falls below the reorder level…. –…..a chain of events is triggered by the QR systems that…. –…..automatically orders from one company’s application directly into another’s.

9 June 2008IT Chapter 38 Cont’d: Inter-organizational Applications of EDI Manufacturing and Procurement: Quick Response Benefits –Mutually beneficial relationship between the retailer and the supplier Benefits for the retailer –Reduced inventory carrying costs –Increased in-stock position –Greater dependability and accuracy from the supplier. Benefits for the supplier –Commitment from the retailer. –Access to information for better planning of operations.

9 June 2008IT Chapter 39 Business to consumer EC In the experimentation phase The typical candidates for the mode include easily digitized products and services. List five products that can be considered the dream products of E- entrepreneurs….....Now list five that can be the worst nightmares. B2C EC – Categories –Entertainment –Financial services –Essential services –Education and Training

9 June 2008IT Chapter 310 Cont’d: Business to consumer EC B2C: Entertainment –Movies on demand, Video cataloguing, Interactive ads, Multi-user games –The principle is customer control over programming To give viewers total control over what when and where to watch. B2C: Home Banking –EC technologies facilitate Home/PC/Internet banking and Investment banking (e.g. - on line trading)

9 June 2008IT Chapter 311 Cont’d: Business to consumer EC B2C: Home Banking –Aiding factors The concept is valuable to bank customers and banks have realized it. Increasing computer literacy and PC ownership Strong marketing and increased customer awareness in the area Modem installed computers critical mass enables business returns. High costs of paper checks processing Increased competition in the banking sector. The two way communication channels offered by the internet technologies.

9 June 2008IT Chapter 312 The three -tier banking services Basic services –Account statement reporting. –Round the clock banking with ATMs –Funds transfer –Bills payment Intermediate services –Household budgeting –Updating stock portfolios –Tax return preparation Advanced services. –Insurance and mutual funds planning –Home financing –Real time execution of forex deals.

9 June 2008IT Chapter 313 Home Shopping: Virtual Malls One of the most popular and widely used EC application. A substantial revenue generating opportunity.

9 June 2008IT Chapter 314 Education and Training Singapore Management University Advertising, Publishing, Travel

9 June 2008IT Chapter 315 B2C sites - What makes them successful? Critical mass of buyers and sellers. Opportunity for independent evaluations and customer dialogue and discussion. Negotiation and bargaining facilities. Newness of products and services. Seamless interface with standardization Resources for disgruntled buyers.