Acct 316 Acct 316 Acct 316 Introduction to E-Business 3 UAA – ACCT 316 Accounting Information...

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Introduction to E-Business3

UAA – ACCT 316Accounting Information

SystemsDr. Fred Barbee

Ch

ap

ter


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E-Business Defined

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E-Business . . .

The use of information technology and electronic communication networks to exchange business information and conduct transactions in electronic, paperless form.

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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.

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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.

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Interactions With . . .

Suppliers

Customers

Investors

Creditors

The government

Media


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E-Business Models

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E-Business Models

Business to Consumers (B2C): Interactions between individuals and organizations.

Business to Business (B2B): Interorganizational e-business.

Categories of E-Business

Type

Characteristics

B2C Organization-individualSmaller dollar valueOne-time or infrequent transactionsRelatively simple

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B2C Issues

Trust – i.e., is this a legitimate business?

Security – i.e., will this transaction be secure?

Categories of E-Business

Type CharacteristicsB2BB2GB2E

InterorganizationalLarger dollar valueEstablished, on-going relationshipsExtension of credit by seller to

customerMore complex

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B2B Issues

Larger, more complex transactions – typically between business partners.

Accountability

Control


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Report: B2B E-Commerce Gaining Strength

Study by Forrester Research and the Institute for Supply Management (

http://www.ecommercetimes.com) January 17, 2002

http://www.ecommercetimes.com/

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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).

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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.”


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Study: E-Commerce to Top $1 Trillion in 2003

Study by IDC (http://www.idc.com) January

17, 2002

http://www.idc.com/

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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.

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“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.

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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.


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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


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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.


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The Next Wave of E-Commerce Technology

Lou Hirsch E-Commerce Times

July 11, 2002 (http://www.ecommercetimes.com)



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“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.”

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Interactive company portals that can communicate with other portals in real-time could drastically alter the sales process.

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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.

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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.

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Other possibilities . . .

Supercharged Kiosks

Instant Messaging in both the B2B and B2C environments


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E-Business Effects on Business Processes

Electronic Data Interchange (EDI)

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Electronic Data Interchange

Standard protocol, available since the 1970s, for electronically transferring information between organizations and across business processes.

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EDI:

Reduces Inventory

Streamlines business processes,

Eliminates paper, and

Improves the flow of information

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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.

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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!”

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ebXML:

Defines standards for coding common business documents.

Eliminates need for complex software to translate documents created by different companies.

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Integrated Electronic Data Interchange (EDI)

Reaping the full benefits of EDI requires that it be fully integrated with the company’s AIS.

Suppliers

Customers

AIS

Company

EDIPurchase orders

Customer orders

EDI

Integrated EDI System

Suppliers

Customers

AIS

Company

EDI

EDI

Stand-alone EDI System

Sales Order Entry

EDI System

Customer Orders

Purchase Orders

Customer Orders

Phone

Fax


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Purchasing and Inbound Logistics

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

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Better information about inbound shipments enables organizations to reduce the amount of inventory buffers carried.


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Internal Operations, Human Resources, and Infrastructure.

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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.


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Electronic Funds Transfer

1. Inquiries

2. Responses

3. Orders

4. Acknowledgment5. Billing

6. Remittance Data7. Payments

EDI = Steps 1-6; EFT = Step 7; FEDI = Steps 1-7

Information Flows in Electronic Commerce

Nonintegrated EDI and EFT

Company A’sbank

Company B’sbank

Company A Company B

Payment Instructions

(ACH Format)

Receipts Information

(EDI Format)Remittance Data

Financial Electronic Data Interchange (FEDI)

Company A’sbank

Company B’sbank

Company A Company B

Remittance data and payment instruction

Remittance data and funds

Remittance data and receipts instruction

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Other Electronic Possibilities

Financial Value-Added Networks (FVAN)

Electronic bill payments

Electronic cash


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Application Service Providers (ASPs)

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Application Service Provider

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

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Application Service Provider

The ASP owns and hosts the software; the contracting organization accesses the software via the Internet.


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Outbound Logistics

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Outbound Logistics

E-business can improve the efficiency and effectiveness of sellers’ outbound logistical activities.

Timely and accurate access to detailed shipment information.Inventory optimization.For goods and services that can be digitized, the outbound logistics function can be performed entirely electronically.


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Sales and Marketing

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Sales and Marketing

Companies can create electronic catalogs to automate sales order entry.Significantly reduce staffing needs.Customization of advertisements


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Post-Sale Support and Service

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Post-Sale Support and Service

Consistent information to customers.Provide answers to frequently asked questions (FAQs).


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E-Business Success Factors

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E-Business Success Factors

Critical Success Factors (CSFs)

Characteristics of business transactions:

Validity

Integrity

Privacy


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Addressing Validity, Integrity, and Privacy

Concerns

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Encryption

Single-key systems: Same key is used to encrypt and decrypt the message

Simple, fast, and efficient

Example: the Data Encryption Standard (DES) algorithm

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Encryption

Public Key Infrastructure (PKI): Uses two keys:

Public key is publicly available and usually used to encode message

Private key is kept secret and known only by the owner of that pair of keys. Usually used to decode message

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Advantages & Disadvantages of PKI

AdvantagesNo sharing of key necessaryMore secure than single-key systems

DisadvantagesMuch slower than single-key systems

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Digital Signatures and Digests

Digital signature: An electronic message that uniquely identifies the sender of that message.

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Digital Signatures and Digests

Digest: The message that is used to create a digital signature or digital summary.

If any individual character in the original document changes, the value of the digest also changes. This ensures that the contents of a business document have not been altered or garbled during transmission

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Digital Certificates & Certificate Authorities

Digital Certificate: Used to verify the identity of the public key’s owner.

A digital certificate identifies the owner of a particular private key and the corresponding public key, and the time period during which the certificate is valid.

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Digital certificates are issued by a reliable third party, called a Certificate Authority, such as:

Verisign

Entrust

Digital Signature Trust

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The certificate authority’s digital signature is also included on the digital certificate so that the validity of the certificate can also be verified.


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Infrastructure for E-Business

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Types of Networks

Private portion owned or leased by the company

Local-Area Networks (LANs)

Wide-Area Networks (WANs)

The Internet

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Types of Networks

Intranet

Extranet

Virtual Private Network (VPN)


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Infrastructure for E-Business

Network Configuration

Options

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Local Area Networks

Star configuration

Ring configuration

Bus configuration

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Star Configuration

Each device is directly connected to the central server.

All communications between devices are controlled by and routed through the central server.

Typically, the server polls each device to see if it wants to send a message.

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Host computeror server

A B C

G F E

DH

Star Configuration

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Ring Configuration

A

H

B

D

C

EGF

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A B C

GFE

D

H

Host computeror server

Bus channel

Bus Configuration

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Wide Area Networks

Centralized System

Decentralized System

Distributed Data Processing

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Centralized WAN

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Decentralized WAN

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Distributed Data Processing

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Network Configuration Options

Many WANs, and most LANs, are set up as client/server systems.

Each desktop computer is referred to as a client.

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Network Configuration Options

The client sends requests for data to the servers.

The servers perform preprocessing on the database and send only the relevant subset of data to the client for local processing.

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