Introduction to E-Business

1. Introduction to E-Business 3 Chapter UAA – ACCT 316 Accounting Information Systems Dr. Fred Barbee

2. E-Business Defined

3. E-Business . . . • The use of information technology and electronic communication networks to exchange business information and conduct transactions in electronic, paperless form.

4. E-Business . . . • Refers to technology-enabled interactions between individuals and organizations • B2C  Popular for purchasing books, music, or airline tickets. • B2B  Has a far larger impact on the economy.

5. E-Business . . . • . . .refers to all uses of advances in IT, particularly • networking and • communications technology, • to improve the ways in which an organization performs all of its business processes.

6. Suppliers Customers Investors Creditors The government Media Interactions With . . .

7. E-Business Models

8. E-Business Models • Business to Consumers (B2C): Interactions between individuals and organizations. • Business to Business (B2B): Interorganizational e-business.

9. Categories of E-Business

10. B2C Issues • Trust – i.e., is this a legitimate business? • Security – i.e., will this transaction be secure?

11. Categories of E-Business

12. B2B Issues • Larger, more complex transactions – typically between business partners. • Accountability • Control

13. Report: B2B E-Commerce Gaining Strength Study by Forrester Research and the Institute for Supply Management (http://www.ecommercetimes.com) January 17, 2002

14. B2B E-Commerce Gaining Strength • Nearly half of all large U.S. corporations are now using the Internet to cut down on supply costs. • 45% of firms that spend US$100 million or more per year on supplies used the Internet in the 4th Quarter of 2002 (up from 28% in 3rd Quarter).

15. B2B E-Commerce Gaining Strength • 53% described the Internet as “very important” or “critical” to purchasing and cost savings plans in 2002. • 87% described the Internet as ”important.”

16. Study: E-Commerce to Top $1 Trillion in 2003 Study by IDC (http://www.idc.com) January 17, 2002

17. E-Commerce to Top $1 Trillion in 2003 • By the end of 2002, more than 600 million people worldwide will have access to the Web. • They will spend more than US$1 trillion shopping online. • E-commerce grew to $600 billion in 2001, a 68% increase over 2000.

18. E-Commerce to Top $1 Trillion in 2003 • “Once people get over the security and privacy hiccups, as well as other problems that are not directly related to e-commerce, and have access to wider product offerings, e-commerce will become as widespread as offline commerce.” Carol Glasheen, Vice President IDC Research.

19. E-Commerce to Top $1 Trillion in 2003 • B2B will account for 83% of online sales in 2002, and 88% in 2006. • The majority of B2B sales consists of volume purchasing, meaning that companies are spending huge amounts of money online.

20. Report: Online B2B Surge May Herald Overall Recovery Study by Forrester Research and the Institute for Supply Management (http://www.ecommercetimes.com) September 11, 2002

21. Online B2B Surge . . . • 84% of the companies surveyed said they use the Web to purchase indirect materials. • Up from 78% in the first quarter. • 65% said they buy materials directly from suppliers online.

22. The Next Wave of E-Commerce Technology Lou Hirsch E-Commerce Times July 11, 2002 (http://www.ecommercetimes.com)

23. The Next Wave of E-Commerce Technology • “In the not-too-distant future, e-commerce technology will become smarter and faster and will completely transform the way companies deal with internal information and customer service.”

24. The Next Wave of E-Commerce Technology • Interactive company portals that can communicate with other portals in real-time could drastically alter the sales process.

25. The Next Wave of E-Commerce Technology • One promising concept is the idea of “collaborative commerce,” in which companies set up smart hubs that are not only used by their own customers, but also interact with other companies’ sites.

26. The Next Wave of E-Commerce Technology • There will be movement in the next three years toward shared portals. • Using these portals, companies that regularly do business with one another will be able to access real-time information about product availability and pricing.

27. The Next Wave of E-Commerce Technology • Other possibilities . . . • Supercharged Kiosks • Instant Messaging in both the B2B and B2C environments

28. E-Business Effects on Business Processes Electronic Data Interchange (EDI)

29. Electronic Data Interchange • Standard protocol, available since the 1970s, for electronically transferring information between organizations and across business processes.

30. E-Business Effects on Business Processes • EDI: • Reduces Inventory • Streamlines business processes, • Eliminates paper, and • Improves the flow of information

31. Recent EDI Facilitators • Traditional EDI was expensive. New developments that have removed this cost barrier are: • The Internet: Eliminates the need for special proprietary third-party networks.

32. Recent EDI Facilitators • XML: Extensible Markup Language – Set of standards for defining the content of data on Web pages. • XML + EDI = XML/EDI • “By combining XML and EDI we create new powerful paradigm different from XML or EDI!”

33. Recent EDI Facilitators • ebXML: • Defines standards for coding common business documents. • Eliminates need for complex software to translate documents created by different companies.

34. Integrated Electronic Data Interchange (EDI) • Reaping the full benefits of EDI requires that it be fully integrated with the company’s AIS.

35. Suppliers Customers Integrated EDI System EDI Company AIS Purchase orders EDI Customer orders

36. Suppliers Customers Stand-alone EDI System Company EDI System EDI Purchase Orders Customer Orders AIS EDI Sales Order Entry Phone Customer Orders Fax

37. E-Business Effects on Business Processes Purchasing and Inbound Logistics

38. Purchasing and Inbound Logistics • The Internet improves the purchasing activity by making it easier for a business to identify potential suppliers and to compare prices.

39. Purchasing and Inbound Logistics • Better information about inbound shipments enables organizations to reduce the amount of inventory buffers carried.

40. E-Business Effects on Business Processes Internal Operations, Human Resources, and Infrastructure.

41. Internal Operations, Human Resources, and Infrastructure • Advanced communications technology can significantly improve: • The efficiency of internal operations. • Planning. • The efficiency and effectiveness of the human resource support activity. • The efficiency and effectiveness of customer payments.

42. E-Business Effects on Business Processes Electronic Funds Transfer

43. 1. Inquiries 2. Responses 3. Orders 4. Acknowledgment Buyer Seller 5. Billing 6. Remittance Data 7. Payments Information Flows in Electronic Commerce EDI = Steps 1-6; EFT = Step 7; FEDI = Steps 1-7

44. Nonintegrated EDI and EFT Remittance Data (EDI Format) Company A Company B Payment Instructions Receipts Information Company A’s bank Company B’s bank (ACH Format)

45. Financial Electronic Data Interchange (FEDI) Company A Company B Remittance data and payment instruction Remittance data and receipts instruction Company A’s bank Company B’s bank Remittance data and funds

46. Other Electronic Possibilities • Financial Value-Added Networks (FVAN) • Electronic bill payments • Electronic cash

47. E-Business Effects on Business Processes Application Service Providers (ASPs)

48. Application Service Provider • An Application Service Provider (ASP) is a company that provides access to and use of application programs via the Internet.

49. Application Service Provider • The ASP owns and hosts the software; the contracting organization accesses the software via the Internet.