SBL Notes – DEC 2019 Attempt

Sir Hasan Dossani – VIFHE

Chapter 2
Technology & Data Analytics

Introduction to E-Business
E Business means doing business through internet technologies, which ranges from basic emails to fully
automated web sites.

E Commerce is when a financial transaction is involved through E Business, e.g. online ordering, online payment,
Electronic Fund Transfer

M Commerce (mobile commerce) is when E Commerce is done through wireless device (e.g. cell phone or laptops
in WiFi networks)

Advantages of E Business:
▪ Increased revenue due to globalization
▪ Lower costs (e.g. no need to have physical offices / branches / lower staff)
▪ Better availability of information
▪ Improved marketing
▪ Customer convenience (e.g. 24/7 availability, easy communication, FAQs)
▪ Flexibility / no physical limitation for customers or company

Disadvantages of E Business:
▪ Not all customers use internet
▪ One-time setup cost:
 Hardware cost
 S/W license cost
 Increasing technical staff in your IT dept
 Website development
 Integration with current systems

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▪ Security risks (cybercrimes, hacking, virus, data privacy, frauds, etc.)

▪ Lack of technical capability or resources or culture issue
▪ Legal complexity due to globalization
▪ Redundancy costs

Strategy for E Business:

Why all business are not using E Business? Use of E Business depends on:
▪ Nature of product (e.g. is your product sellable on internet)
▪ Nature of customers (e.g. are your customers high tech, internet culture)
▪ Internal factors (IT structure, cost)

Also, E Business strategy can be assessed using the SFA approach for selecting strategies (chapter C):
▪ Suitability: Will E Business help in achieving organizational objectives particularly related to sales growth
▪ Feasibility: Does organization has technical and financial resources to implement and manage E Business
▪ Acceptability: will key stake holders accept the strategy, e.g. your suppliers might be reluctant to accept
as they are not hi-tech or comfortable with E Business

Varieties of E Commerce:
▪ B2B: Business to Business
▪ B2C: Business to Consumer (e.g. amazon.com)
▪ C2B: Consumer to business (e.g. priceline.com)
▪ C2C: Consumer to Consumer (e.g. ebay.com)

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E Marketing
E Marketing means using internet technologies to achieve marketing objectives (i.e. sell goods and services).
Basic marketing principles remains same in E Marketing, only more options become available

Advantages:
▪ Global reach
▪ Lower cost
▪ 24-hour marketing
▪ Personalized marketing
▪ More interesting / interactive campaigns (using music, graphics, videos)
▪ Cheap way of collecting customer data
▪ Cross selling becomes easier

Disadvantages:
▪ Limited customers using internet

6 I’s of E-Business by McDonald & Wilson

(6 differences between traditional marketing and e-marketing)

▪ Independence: The geographical location of the company does not matter as customers can do entire
shopping / transaction through the website sitting at home. Independence increases the geographical
reach of the company.

This is unlike traditional marketing where customers are restricted to geographical location of the
company.

▪ Interactivity: Develop two-way communication or relationship with customer, such as customer can email
inquiries, specify their requirements, give feedbacks / complaints, place order, make payments, blogs,
forums, threads, communities, etc.

This is unlike traditional marketing where there is only one-way communication (e.g. news paper)

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▪ Individualization: Tailoring marketing information for each individual keeping in mind their interests, i.e.
‘personalization’. Personalization helps in building relationships and improving customer services. Other
areas include personalized screens, providing after sales service / reminders, favourites, upgrades, etc.

This is unlike traditional marketing where same marketing / product information is sent to all customers
alike.

▪ Intelligence: Finding out what the customer is interested in? For e.g which products or which price range?
Website keeps track of activities which a user does on our website, such as web logs, # of visits, visit
patterns, most visited pages, etc. This help companies in gathering market research data and current
‘customer’ needs and interests.

This is unlike traditional marketing where the customer needs are not investigated on a regular basis.

▪ Integration: The website (front-end) is fully integrated with the transaction processing systems (back-end)
such that customer orders / payments are processed quickly and accurately.

This is unlike traditional marketing where the customer has to physically come to the shop to purchase
the product and make the payment.

▪ Industry: New industries have been created due to internet and communication technology such as MP3
downloads, skype, social networking softwares, Apps, etc.

E Procurement
E Procurement means B2B purchases through internet. Done through emails, websites, extranets, etc.

Advantages:
▪ Global options
▪ Faster
▪ Reduced stock levels
▪ Cheaper

Disadvantages:
▪ Limited suppliers using internet
▪ Risk of unauthorized purchase
▪ Data security
▪ Privacy, fraud, unreliable

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Supply Chain Management

Supply Chain encompasses all activities necessary for transformation of goods from raw materials till its
consumption by final consumers

Push model of supply chain:

▪ Production based on sales forecasting
▪ Leads to over stocking or shortage
▪ High product obsolescence
▪ Low reliance on IT support

Pull model of supply chain:

▪ Production based on customer’s request (e.g. JIT)
▪ Reduced over stocking or shortage
▪ Reduced product obsolescence
▪ Focus on customer service (e.g. tailor made products)
▪ High reliance on IT (e.g. integration, communication)

Virtual Supply Chain

▪ Traditional practices were paper-based, e.g. a purchase order sent to the supplier or invoice sent to the
customer
▪ Virtual supply chain is based on communication links (internet / extranet) through which the supplier as
well as the customers are online with the Organizations systems

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E Business & 7 Ps
Product:
▪ Better product displays / visuals
▪ Customized products
▪ Find out customer needs
▪ Customer feedback and complaints
▪ Make product virtual (if possible) e.g. e-university, e-book, e-music, etc.

Promotion:
▪ Websites
▪ Forums / communities
▪ Social networking sites such as face book, twitter, etc.
▪ E mails
▪ Search engines
▪ Online discounts
▪ Links on related websites
▪ News letters

Place:
▪ Counter-mediation (have both physical and online options simultaneously)
▪ Dis-intermediation & Re-intermediation (completely eliminate physical channel and only operate online)

Price:
▪ Differential pricing (e.g. for different countries, different customer groups, different timing/months, etc)
▪ Dynamic pricing (based on customer demand and product availability, e.g. air tickets)
▪ Online discounts
▪ Payment modes (credit card, pay pals, etc.)
▪ Should be secured

People:
▪ Website is acting as company’s representative
▪ The website should be of high quality (see below)

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Qualities of a good website:

 Complete up to date
 User friendly
 Members’ login
 Search options
 Subscribe us option
 Multi language options
 Place order
 Secured payment options
 FAQs
 Links to useful / related sites
 Site maps
 Complaint / feedback option
 Contact us details (email, address, telephone, etc.)

Processes:
▪ Transaction procession systems are linked with the website
▪ Orders / payments can be processed real time 24/7

Physical evidence:
▪ Peep through facilities
▪ Downloads and printouts
▪ Confirmation / Response to emails

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Customer Relationship Management

Customer Relationship Management helps in building one-to-one relationship with customers using internet
technologies. There are two broad stages of relationships:

Customer Acquisition:
Includes marketing activities to acquire new customers through:
▪ Collect email data
▪ Interaction / marketing
 Sending relevant mails and articles
 Demos / videos

Customer Retention:
Includes activities to retain existing customers through:
▪ Order placing and tracking
▪ Reminders / notifications
▪ Auto payments
▪ Reports and summaries

Features of a good CRM Application

▪ Multiple communication options (e.g. email, sms, social media, google, etc.)
▪ Integration with back office / transaction systems
▪ Maintaining customer history and database
▪ Privacy and security

Four Benefits of CRM Application

▪ Marketing and relationship building (emails, notifications, individualization)
▪ Sales management (inquiries, order placing, order tracking, auto payments)
▪ After sales service (feedbacks, complaints, reminders, FAQs)
▪ Analysis (trend analysis, data mining, intelligence, big data)

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 SBL Notes – DEC 2019 Attempt
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Big Data & Analytics

Introduction
Traditionally, organizations collected data of transactional nature (i.e. structured information), e.g. customer
orders, payments, transaction history, etc. however now, there is significant data available relating to non-
transactional data (i.e. unstructured information) such as browsing history, data from social network, youtubes,
contact lists, discussion forums, etc.

Big data refers to extremely large collections of data (mostly unstructured data) that may be analyzed to reveal
trends and patterns, especially relating to customer habits and behavior. The data size is so big that it is measured
in peta bytes. For e.g. imagine the amount of data held by Google, Amazon, Facebook, Wallmart, cell phone
companies, financial institutions etc. The size of the data of these organizations is so large that it would require
10-20 million PCs to store data of each organization.

Big data is becoming important as organizations are able to extract valuable information about customers, based
on which important strategic decisions can be made. Hence big data is now an important tool for strategic
planning and organizations are now investing in Big Data.

Characteristics of Big Data – 3Vs model

1. Volume
▪ The data size has to be really big
▪ The bigger the data, the better the analysis and findings of trends and patters

2. Variety
▪ The data contains ALL sort of information (i.e. variety), and not only financial transactions
▪ Variety of data includes:
o Browsing activities
o Buying habits and interests
o Financial transactions
o Geographical information
o Social and business contacts
o Reaction to advertisements
o Comments and discussions

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3. Velocity
▪ Velocity means speed
▪ Information needs to be obtained, analysed and actioned upon processed quickly, as information is
changing every hour
▪ Timing is important as there is no point in sending marketing information to a customer after he
has made a purchase

Advantages (Opportunities) of Big Data

▪ Deeper insight into data
▪ Better marketing and pricing strategies
▪ Improved customer service and relationship
▪ Increased competitiveness
▪ Development of bespoke products
▪ New sources of revenue

Disadvantages (Threats) of Big Data

▪ Data security / leakage
▪ Data storage and management issues (hardware and software)
▪ Costly
▪ Legal issues / regulations

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Cloud Computing
Introduction
Traditionally, IT activities (hardware, software, servers, databases, website hoisting, etc.) were done locally, i.e.
companies used to own physical servers & software, store data and manage entire IT themselves.

Cloud computing is delivery of computing services over the internet. Companies offering these services are called
cloud providers and charge based on usage. For e.g. you can store your data online on google (onedrive). When
organizations opt for cloud computing, they eliminate capital expenditure of buying hardware / servers,
eliminate maintaining onsite data centers and eliminates the need of having a large IT department. This leads to
significant savings in costs (e.g. space, staff, overheads, etc.).

Advantages of Cloud / Mobile Computing

▪ Flexibility i.e. staff can access data from anywhere
▪ Higher level of storage capacity
▪ High technical standards (e.g. higher security, regular backups, etc.)
▪ Eliminate heavy investment in IT equipment
▪ Significant savings in IT operation cost
▪ Small firms can benefit a lot as they cannot afford to invest in fixed IT infrastructure

Disadvantages of Cloud / Mobile Computing

▪ High reliance on internet connectivity
▪ High reliance on cloud provider
▪ Loss of direct control
▪ Cloud provider has access to all your data
▪ Regulatory requirements for privacy of data may not be complied with
▪ High risk of hacking as Cloud providers are main targets by hackers

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Information Technology & Information Systems

Introduction to IT & IS and Cyber
Information Technology refers to the physical hardware side, i.e. PCs, servers, networking, etc.

Information System refers to the intangible aspects, such as software, data, website, etc,

IT / IS Infrastructure refers to collective use of hardware and software to support the overall IT/IS operations of
the organization including the data / information management.

Risks to Hardware

E.g. of Hardware E.g. of Risks to Hardware

▪ PCs (desktop, laptop, handheld) ▪ Damage / malfunction
▪ Printers ▪ Poor operating conditions
▪ Networking and communication ▪ Fire
infrastructure (LAN/WAN) ▪ Natural calamities (earthquake, flood)
▪ Servers and mainframes ▪ Power failure
▪ Data storage devices ▪ Lost or theft (e.g. USB, laptop, tab)
▪ Unauthorized access

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Risks to Software
E.g. of Software E.g. of Risks to Software / Data
▪ Operating system ▪ Unauthorized access / transactions
▪ Application software (e.g. accounting ▪ Hacking
software, inventory software etc.) ▪ Virus
▪ Development software (Java, VB, C++) ▪ Cybercrime / frauds
▪ Utility software (backups, anti-virus) ▪ Security of data is breached
▪ Database ▪ Data loss
▪ Software malfunction / errors / bugs
▪ High dependency of IT service providers (e.g.
cloud computing, internet provider, software
vendor, etc.)
▪ Violation of personal data / Data Protection Act
▪ Accidental mistakes in data entry or processing
▪ IT staff misusing their access rights
▪ Unhappy employee deliberately destroy data

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IS/IT Security
Importance of IS/IT Security
It is very important to protect business data as well customer / personal data so that it is not leaked or hacked,
etc. Data breaches have severe business consequences, including:

▪ Business disruption
▪ Legal cases by customers
▪ Regulatory fines (e.g. breach of Data Protection Act)
▪ Reputational issues
▪ Loss of customers / market share
▪ Incorrect decision making based on erroneous data

IT controls includes the following broad categories:

1. Physical access controls
2. General controls
3. Application controls

Physical Access Controls

Physical access controls focus on preventing unauthorized access to physical assets, such as computers, laptops,
server room, etc. It also includes safeguarding IT assets and infrastructure from other hazards such as fire, earth
quake, terrorist activities, accidents, etc. E.g. of physical access controls includes:

▪ Physical safeguarding of data centre through:

 Security guards
 Numeric Locks
 Swipe cards
 Biometrics (finger prints, eye)
 CC TVs / cameras
▪ Control over laptops, USB, Tabs
▪ Fire protection
▪ Earthquake / flood resistant measures
▪ All USB or printouts to be kept inside under lock and key

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General Controls
General controls are policies and procedures relating to the overall IT environment and are applicable to all
softwares running in the organization. The objective is to ensure smooth and continued running of the IT
function. E.g. of general controls includes:

▪ Logical access control (passwords) ▪ Firewalls

▪ Backups ▪ S/W acquisition, change and maintenance
▪ Anti-virus ▪ Vendor assessment criteria
▪ Audit trails ▪ Segregation of duties
▪ Disaster recovery plans ▪ Employee hiring controls / screening
▪ Data encryption

Good Password Controls include:

▪ Should be alpha numeric character, upper case and lower case
▪ Should be atleast 8 characters long
▪ Mandatory password change periodically
▪ Should not be disclosed or written anywhere
▪ Should not be shared with anyone
▪ Should not be guessable
▪ Same password not to be used for multiple user IDs
▪ System lockout after 3 incorrect attempts
▪ Two factor verification / One Time Code through mobile phone or email

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Application Controls
Application controls focuses on individual softwares. The objective is to ensure that transactions are accurately
entered, processed, complete, authorized, etc. They ensure that the data is valid, accurate and complete. E.g.
of application controls includes:

▪ Input controls:
 Completeness check
 Format check
 Sequence check
 Validity check
▪ Processing controls (batch totals)
▪ Drop down menus
▪ Authorization check

Cyber Crime & Cyber Security

Cyber crimes are criminal activities carried out using computers and internet. Cyber crimes include online frauds,
hacking, identity theft, credit card thefts, scams, piracy, dark web, child pornography, drug dealing, etc.

Cyber Security Measures:

▪ Strong passwords management

 Mandatory password change periodically

 Two factor verification / One Time Code through mobile phone or email

 System lockout after 3 incorrect attempts

 Infact all points regarding good password management mentioned earlier

▪ Firewalls

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Bespoke & Off The Shelf Software

Bespoke software means a software which has been specially designed / developed for your organization only
(i.e. tailor made)

Off the Shelf (OTS) software is designed / developed in general and every organization can use it (i.e. ready made).
Also known as Software Package Solution.

‘Customized’ off the shelf software are basically off the shelf software in which slight alterations are made in
order to fulfill all your requirements.

Advantages of bespoke software

▪ Fulfils 100% of your requirements
▪ Will give you comp edge
▪ Future alternation / modification is easy
▪ No dependency on external vendors

Disadvantages of bespoke software:

▪ Takes a lot of time to develop
▪ Costly
▪ Automatic updates or new versions are not available
▪ Free ‘Trial’ or ‘Demo’ not possible
▪ Chances of bugs / errors are higher as it is a new software

Enterprise Resource Planning Software (ERPs)

ERPs are integrated software covering major functions of the Organization, such as purchases, inventory
management, accounting, HR, customer and marketing, etc. ERPs are basically off-the-shelf packages, keeping
in mind a wide range of experience, with some options for limited customization.

Advantages:
▪ Cheaper
▪ Quicker
▪ Quality
▪ Documentation and training
▪ Maintenance support
*

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Disadvantages:
▪ May not meet all requirement
▪ No comp edge
▪ Dependency on the supplier

Software Evaluation, Selection &Implementation Process

STEPS:
1. Decide bespoke or Off the shelf

2. Business case / feasibility study / cost benefit analysis

3. Send Invitation to Tender – ITT

▪ Company background
▪ IT background
▪ User requirements
▪ Technical requirements
▪ Tender deadline and details

4. Evaluation of the software

▪ Functionality: meeting user requirements

▪ Usability: should be user friendly

▪ Technical Review: Compatibility, programming language, data conversion, security, backups are
reviewed by IT dept to see whether the S/W is technically strong

▪ Supplier evaluation: Experience, reliability, goodwill and going concern of supplier is thoroughly
checked as S/W will require supplier support on a long term basis

▪ Cost: Cost of S/W

▪ Selection: select the most appropriate option based on above criteria

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5. Implementation
▪ Contract review and negotiation (specially support and maintenance clauses)
▪ Testing
▪ Functionality
▪ Usability
▪ Load and stress testing
▪ Training of users
▪ Data migration from old software
▪ Change over
▪ Direct changeover
▪ Parallel

If dealing with new or risky S/W Vendor

▪ Obtain financial statements regularly and review to identify any going concern issue (ideally every 6
months)
▪ Acquire source code or the software house (this option is not available most of the time)
▪ Both parties enter into an Escrow Agreement with a 3rd party

Practice Questions
P3 – Dec 2010 Q2: Adv of E-Business | E-Marketing & 7Ps (TMP)

P3 – Jun 2011 Q4: 6I | E-Procurement (Cronin Auto Retail)

P3 – Jun 2014 Q3: S/W selection | Bespoke & Off The Shelf (Bridge Co)

P3 – Mar/Jun 2016 Q2: IT Controls | Ethical Dilemmas (Shop Reviewers Online)

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