1. Electronic Business Systems7
Electronic Business Systems
© 2002 McGraw-Hill Companies

2. Enterprise resource planning Customer relationship management
Chapter Objectives
Identify each of the following cross-functional e-business systems and give examples of how they can provide significant business value to a company and its customers and business partners.
Enterprise resource planning
Customer relationship management
Enterprise application integration
Supply chain management
Online transaction processing
Enterprise collaboration
© 2002 McGraw-Hill Companies

3. Chapter Objectives
Give examples of how Internet and other information technologies support business processes within the business functions of accounting, finance, human resource management, marketing, and production and operations management.
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4. The e-Business Application Architecture
This figure gives you a good overview of the interrelatedness, interdependence, and integration of the e-business applications that are vital components of the successful operations and management of an e-business enterprise.
This Figure represents an e-business application architecture, which illustrates the application components, interrelationships, and interfaces with customers, employees, business partners, and other stakeholders of an e-business enterprise.
Notice how many e-business applications are integrated into cross-functional enterprise application clusters like:
1. Enterprise resource planning
2. Customer relationship management
3. Decision support.
4. Supply chain management
5. Selling chain management.
Teaching Tips
This slide corresponds to Figure 7.2 on pp. 216 relates to the material on pp
© 2002 McGraw-Hill Companies

5. Enterprise Resource Planning
Integrated
Logistics
Production
Planning
Sales
Distribution,
Order
Management
Customer/
Employee
Accounting
and Finance
Enterprise resource planning (ERP) is a cross-functional enterprise system that serves as a framework to integrate and automate many of the business processes that must be accomplished within the manufacturing, logistics, distribution, accounting, finance, human resource functions of a business.
ERP software is a family of software modules that supports the business activities involved in these vital back office processes.
ERP is being recognized as a necessary ingredient for the efficiency, agility, and responsiveness to customers and suppliers that an e-business enterprise needs to succeed in the dynamic world of e-commerce.
Companies are finding major business value in installing ERP software in two major ways:
1. ERP creates a framework for integrating and improving their back-office systems that results in major improvements in customer service, production, and distribution efficiency.
2. ERP provides vital cross-functional business processes and supplier and customer information flows supported by ERO systems.
Teaching Tips
This slide corresponds to Figure 7.4 on pp. 218 relates to the material on pp
Human
Resources
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6. Customer Relationship Management
Sales
Cross-Sell
Up-Sell
TeleSales
Store Front
and Field
Service
Marketing and
Fulfillment
Customer
Service and
Support
Retention
and Loyalty
Programs
Contact Management
Customer relationship management (CRM): A cross-functional e-business application that integrates and automates many customer serving processes in sales, direct marketing, account and order management, and customer service and support.
CRM systems also create an IT framework that integrates all of these processes with the rest of a company’s business operations. CRM systems consist of a family of software modules that perform the business activities involved in such front office processes. CRM software provides the tools that enable a business and its employees to provide fast, convenient, dependable, and consistent service to its customers.
Business benefits of CRM are many. Examples include:
1. Allows a business to identify and target their best customers; those who are the most profitable to the business, so they can be retained as lifelong customers for greater and more profitable services.
2. Enables real-time customization and personalization of products and services based on customer wants, needs, buying habits, and life cycles.
3. Also used to keep track of when a customer contacts the company, regardless of the contact point.
4. Enables a company to provide a consistent customer experience and superior service and support across all the contact points a customer chooses.
Teaching Tips
This slide corresponds to Figure 7.6 on pp. 220 relates to the material on pp
© 2002 McGraw-Hill Companies

7. Cross-Functional Integrated Systems
Front Office
Applications
CRM Application
Customer Service
Field Service
Sales Order
Product Config
Back Office
ERP Application
Distribution
Manufacturing
Scheduling
Finance
Enterprise
Application
Integration
Enterprise Application
Cluster
Customers
Suppliers
Business Partners
Enterprise application integration (EAI) software is becoming available that interconnects several e-business application clusters.
EAI is a cross-functional e-business application that integrates front-office applications like customer relationship management with back-office applications like enterprise resource management.
EAI enables users to model the business processes involved in the interactions that should occur between business applications. EAI also provides middleware that performs data conversion and coordination, application communication and messaging services, and access to the application interfaces involved.
EAI software can integrate a variety of enterprise application clusters by letting them exchange data according to rules derived from the business process models developed by users.
Teaching Tips
This slide corresponds to Figure 7.7 on pp. 221 relates to the material on pp
© 2002 McGraw-Hill Companies

8. Supply Chain Management
Schedule
Make
Deliver
Transportation
Planning
Demand
Order
Commitment
Advance
Scheduling
Manufacturing
Distribution
Internetworked Supply Chain Management
Supply
Chain
Life Cycle
SCM
Functional
Processes
Integrated
Solution
Commit
Supply Chain Management: Integrating management practices and information technology to optimize information and product flows among the processes and business partners within a supply chain.
SCM is a top strategic objective for many companies. It is an absolute requirement if they want to meet their e-commerce customer value imperative: what the customer wants, when and where it’s wanted, at the lowest possible cost.
The interrelationships with other businesses needed to build and sell a product make up a network of business relationships that is called the supply chain.
Cross-functional e-business systems like supply chain management reengineer and streamline traditional supply chain processes. The demands of e-commerce are pushing manufacturers to use their intranets, extranets, and e-commerce Web portals to help them reengineer their relationships with suppliers, distributors, and retailers. The objective is to significantly reduce costs, increase efficiency, and improve supply chain cycle times. SCM software can also help to improve interenterprrise coordination among supply chain process players. The result is much more effective distribution and channel networks among business partners. All of the objectives of supply chain management are aimed at achieving agility and responsiveness in meeting the demands of a company’s customers and the needs of their business partners.
Teaching Tips
This slide corresponds to Figure 7.8 on pp. 223 relates to the material on pp
© 2002 McGraw-Hill Companies

9. Transaction Processing Systems
Database
Maintenance
Transaction
Processing
Batch
Online/Realtime
Data
Entry
Document
and Report
Generation
Inquiry 1 2 3 4 5
Transaction Processing Systems (TPS) are information systems that process data resulting from the occurrence of business transactions. Transactions are events that occur as a part of doing business, including sales, purchases, deposits, withdrawals, refunds, and payments. The key steps in the transaction processing cycle include:
Data Entry. In data entry, data is captured or collected by recording, coding, and editing activities. As some of these methods traditionally are not ready for computer processing, data entry has always slowed down the effectiveness of information systems. The trend today is toward more automatic data entry that records data initially in computer-usable form.
Transaction Processing. Moving beyond manual data entry, several forms of source data automation speed up data entry:
Electronic Data Interchange. This involves the electronic transmission of business transaction data over telecommunications links between computers of trading partners. Instructor's Note: This topic is covered in greater detail on the following slide.
Electronic Fund Transfer. The EFT systems use source data automation technologies to capture and process money and credit transfers between banks and businesses and their customers.
Batch Processing. This involves accumulating transactions data over a period of time and processing at specified intervals.
Real Time Processing. This involves processing transactions data immediately through the system at the time it occurs.
Database Maintenance. IS specialists must keep the records and files up to date and accurate. Day to day transactions must be entered and backed up.
Document and Report Generation. The system must be capable of producing information products needed by managers such as action documents, information documents, and turnaround documents.
Inquiry Processing. This is the realtime interrogation of online files and databases by end users.
Teaching Tips
This slide corresponds to Figure 7.11 on pp. 226 and relates to the material on pp
© 2002 McGraw-Hill Companies

10. Tools for Enterprise Collaboration
System
Electronic
Communications
Tools
Conferencing
Collaborative
Work
Management
Voice Mail, I Phone
Web Publishing
Faxing
Data Conferencing
Voice Conferencing
Videoconferencing
Discussion Forums
Electronic Meetings
Calendaring
Task and Project Mgt
Workflow Systems
Knowledge Mgt
Document Sharing
Enterprise collaboration systems (ECS): The use of groupware tools and the Internet, intranets, extranets, and other computer networks to support and enhance communication, coordination, collaboration, and resource sharing among teams and workgroups in an internetworked enterprise.
Electronic communications tools: Software that helps you communicate and collaborate with others by electronically sending messages, documents, and files in data, text, voice, or multimedia over the Internet, intranets, extranets, and other computer networks.
Electronic conferencing tools: Software that helps networked computer users share information and collaborate while working together on joint assignments, no matter where they are located.
Collaborative Software that helps people accomplish or manage joint work activities.
Teaching Tips
This slide corresponds to Figure 7.12 on pp. 227 and relates to the material on pp
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11. Functional Business Information Systems
Production
Operations
Marketing
Human Resource
Management
Finance
Accounting
Functional
Business
Systems
Functional Business Systems: Information systems within a business organization that support one of the traditional functions of business such as marketing, finance, or production. Functional business systems can be either operations or management information systems.
Marketing: Accounting:
- Customer relationship management - Order processing
- Interactive marketing - Inventory control
- Sales force automation - Accounts receivable
- Accounts payable
Human Resource Management - Payroll
- Compensation analysis - General ledger
- Employee skills inventory
- Personnel requirements forecasting Finance:
- Cash management
Productions/Operations - Credit management
- Manufacturing resource planning - Investment management
- Manufacturing execution systems - Capital budgeting
- Process control - Financial forecasting
Teaching Tips
This slide corresponds to Figure 7.12 on pp. 232 and relates to the material on pp
© 2002 McGraw-Hill Companies

12. Marketing Information Systems
Interactive
Sales Force
Automation
Customer
Relationship
Management
Sales
Market
Research and
Forecasting
Advertising
and
Promotions
Product
Marketing is concerned with the planning, promotion, and sale of existing products in existing markets and the development of new products and new markets to better serve present and potential customers. Marketing information systems assist marketers in meeting the information needs in each of the following areas:
Sales Management. Here the information system helps plan, monitor, and support the performance of salespeople and sales of products and services.
Sales Force Automation. Here the information system automates the recording and reporting of sales activity by salespeople and the communications and sales support from sales management.
Product Management. Here the IS helps plan, monitor, and support the performance of products, product lines, and brands.
Advertising and Promotion. Here information systems help select media and promotional methods and control and evaluate advertising and promotion results.
Sales Forecasting. An information system can rapidly produce short- and long-term sales forecasts.
Market Research. The tools of an information system can assist researchers in collecting and analyzing internal and external data on market variables, development, and trends.
Marketing Management. Information systems can help marketing managers develop marketing strategies and plans based on corporate goals and market research and sales activity data, and monitor and support overall marketing activities.
© 2002 McGraw-Hill Companies

13. Targeted Marketing Context Content Demographic/ Psychographic
Online Behavior
Community
Context
Demographic/
Psychographic
Content
Targeted Marketing: has become an important tool in developing advertising and promotion strategies for a company’s electronic commerce websites. Targeted marketing is an advertising and promotion management concept that includes five targeting components.
1. Community: Companies can customize their Web advertising messages and promotion methods to appeal to people in specific communities.
2. Content. Advertising such as electronic billboards or banners can be placed on various website pages, in addition to a company’s home page.
3. Context. Advertising appears only in Web pages that are relevant to the content of a product or service.
4. Demographic/Psychographic. Marketing efforts can be aimed only at specific types or classes of people.
5. Online Behavior. Advertising and promotion efforts can be tailored to each visit to a site by an individual.
Teaching Tips
This slide corresponds to Figure 7.17 on pp. 234 and relates to the material on pp
© 2002 McGraw-Hill Companies

14. Manufacturing Information Systems
Engineering
Systems
CAD
CAE
Computer-
Aided
Process
Planning
Manufacturing
Execution
Shop Floor
Scheduling
Machine Control
Process Control
Robotic Control
Computer Integrated Manufacturing
Resource
Production
Forecasting
Quality Control
Remote
Worker
Supplier
Extranet
Intranet
Manufacturing Information Systems support the production/operations function, which includes all activities concerned with the planning and control of the processes that produce goods and services. These operational systems can be divided into the following categories:
Computer-Integrated Manufacturing. CIM stresses that the computer use in factory automation must be to:
Simplify (reengineer) production processes, product designs, and factory organization as a vital foundation to automation and integration.
Automate production processes and the business functions that support them with computers and robots.
Integrate all production and support processes using computers and telecommunications networks.
Process Control. Process control is the use of computers to control an ongoing physical process. Process control software uses mathematical models to analyze the ongoing process and compare it to standards or forecasts of required results.
Machine Control. Also called numerical control, it uses computer programs for machine tools to convert geometric data from engineering drawings and machining instructions from process planning into commands that control the machines.
Robotics. Robotics is the technology of building and using machines (robots) with computer intelligence and computer-controlled human like physical capabilities.
Computer-Aided Engineering. Manufacturing engineers use powerful workstations with enhanced graphics and computational capabilities to simulate, analyze, and evaluate models of product design in less time and at lower cost than constructing physical prototypes.
© 2002 McGraw-Hill Companies

15. Human Resource Management
Manpower
Planning
Labor Force
Tracking
Labor Cost
Analysis
Turnover
Recruitment
Workforce
Skill assessment
Performance
evaluation
Payroll
control
Benefits
Administration
Compensation
effectiveness
Contract
costing
Salary forecast
Succession
planning
appraisal plans
Training
Career
matching
Staffing
Training &
Development
Strategic
Systems
Tactical
Operational
The human resource management (HRM) function involves the recruitment, placement, evaluation, compensation, and development of employees
Goal of HRM is the effective and efficient use of the human resources of a company. Human resource information systems are designed to support:
1. Planning to meet the personnel needs of the business
2. Development of employees to their full potential
3. Control of all personnel policies and programs.
Originally, businesses used computer-based information systems to: (1) Produce paychecks and reports, (2) maintain personnel records,and (3) analyze the use of personnel in business operations. Many firms have developed HRIS that support:
1. Recruitment, selection, and hiring.
2. Job placement
3. Performance appraisals
4. Employee benefits analysis
5. Training and development
6. Health, safety, and security.
Teaching Tips
This slide corresponds to Figure 7.21 on pp. 239 and relates to the material on pp
© 2002 McGraw-Hill Companies

16. Accounting Information Systems
Accounting Information Systems are the oldest and most widely used information systems in business. They record and report business transactions and other economic events. Operational accounting systems emphasize legal and historical record-keeping and the production of financial statements. Management accounting systems focus on the planning and control of business operations. Six common purposes of accounting systems include:
Order Processing. Or, sales order processing is an important transaction processing system which captures and processes customer orders and produces invoices for customers and data needed for sales analysis and inventory control.
Inventory Control. These systems track and monitor levels of and changes in inventory. They may be programmed to notify managers if some threshold level of inventory is reached that requires a decision. They may also be equipped to handle routine re-order information.
Accounts Receivable. Accounts receivable systems keep records of amounts owed by customers from data generated by customer purchases and payments.
Accounts Payable. Accounts payable systems keep track of data concerning purchases from and payments to suppliers.
Payroll. Payroll systems receive and maintain data from employee time cards and other work records to produce paychecks and other documents such as earning statements, payroll reports, and labor analysis reports.
General Ledger. General ledger systems consolidate data received from accounts receivable, accounts payable, payroll, and other accounting information systems.
Teaching Tips
This slide corresponds to Figure 7.23 on pp. 241 and relates to the material on pp
© 2002 McGraw-Hill Companies

17. Financial Information Systems
Planning
Cash
Management
Investment
Financial Information Systems support financial managers in decisions concerning the financing of the business and the allocation and control of financial resources. Key areas for financial information systems include:
Cash and Securities Management. Information systems collect information on all cash receipts and disbursements within a company on a realtime or periodic basis. Further, many businesses invest their excess cash in short-term marketable securities and these portfolios can be managed by systems software.
Capital Budgeting. The IS assists the capital budgeting process by helping to evaluate the profitability and financial impact of proposed capital expenditures.
Financial Forecasting. The financial information system package of the organization will have a variety of statistical forecasting packages to provide analytical techniques that result in economic or financial forecasts of national and local economic conditions, wage levels, price levels, and interest rates.
Financial Planning. Financial planning systems use financial planning models to evaluate the present and projected performance of a business or of one of its divisions or subsidiaries. They also help determine the financing needs of a business and analyze alternative methods of financing.
Teaching Tips
This slide corresponds to Figure 7.26 on pp. 243 and relates to the material on pp
Capital
Budgeting
© 2002 McGraw-Hill Companies

18. Chapter Summary
The e-Business Application Architecture reflects the key e-business applications and their interrelationships.
Cross-functional enterprise applications cross the boundaries of traditional business functions. These systems focus on supporting integrated clusters of business processes.
Supply Chain Management relies on information technology and management practices to optimize information and product flows among the processes and business partners within the supply chain.
© 2002 McGraw-Hill Companies

19. Chapter Summary (cont)
A transaction processing system is an information system that processes data resulting from the occurrence of business transactions.
Traditional functional business systems support specific business functions including marketing, accounting, finance, production/operations, and human resource management.
Marketing information systems support traditional and e-commerce processes and management of the marketing function.
© 2002 McGraw-Hill Companies

20. Chapter Summary (cont)
Computer-based manufacturing systems help a company simplify, automate, and integrate many of the activities needed to quickly produce high-quality products to meet changing customer demands.
Human resource information systems support human resource management in organizations.
Several different types of electronic payment systems are used to support e-commerce transactions.
© 2002 McGraw-Hill Companies

21. Chapter Summary (cont)
Because the Internet is not a secure network special security measures must be undertaken to protect sensitive customer information.