Introduction to e business

Chapter 5
 Electronic Business: definition

• The conduct of transactions by means of electronic

communications networks (e.g., via the Internet
and/or possibly private networks) end-to-end.

• E-business is the conducting of business on the

Internet, not only buying and selling but also servicing
customers and collaborating with business partners.
 Characteristics of e-Business
• Collaborative product development.
– It contributes towards making products in a short time span while maintaining quality and
reducing cost.
– By integrating design and testing cycles of products with those of suppliers, a firm can
shorten the complete cycle of its products.
– it reduces the time that is needed to bring products to the marketplace.
– Collaborative product development solutions offer ERP integration and SCM.

• Collaborative planning, forecasting and replenishment.

– This is a process in which Manufacturers, Distributors and Retailers work together to plan,
forecast and replenish products
– collaboration takes the form of sharing information like sales forecasts, inventory
requirements, manufacturing and logistic lead times, seasonal set schedules, new/remodel
storage plans, promotional plans etc
– Goal: lower supply cycle times, improve customer service, lower inventory costs, improve
inventory levels and achieve better control of planning activities
• Procurement and order management.
– E‐Procurement can achieve significant savings
– Benefits: cost savings, better customer service by controlling the supply
base, negotiating effective buying preferences, and streamlining the
overall procurement process.
• Operations and logistics.
– Logistics in the e‐Business era is all about Collaboration ‐ the sharing of
critical and timely data on the movement of goods as they flow from raw
material, all the way to the end‐user.
– transportation, distribution, warehousing, purchasing & order
management functions must work together.
– Operations and Logistics processes are based on open communication
between networks of trading partners
Elements of e-business
1. Customer Relationship Management (CRM) systems:

– “front-office” systems that help the enterprise deal

directly with their customers.

– CRM is the process of creating relationships with

customers through the introduction of reliable service-
automated processes, personal information gathering and
processing, and self‐service throughout the supplying
,the enterprise create value for customers.
There are 3 categories of user applications under CRMs:

•Customer‐facing applications:
–Applications which enable customers to order products and services

•Sales‐force facing applications

–Applications that automate some of the company’s sales and sales‐force management functions
to deliver effective customer service
–support dispatch and logistic functions.

•Management‐facing applications

–Applications that analyze data gathered by other applications and provide management reports
2. Enterprise Resource Planning systems (ERP):

• Back-office systems means customers are not directly involved

• ERP systems are management information systems that

integrate & automate many of the business practices
associated with the operations or production aspects of a
company.

• It includes manufacturing, logistics, distribution, inventory,

shipping, invoicing and accounting
• An ERP system is designed around four primary business process:

–Buying a product:
• procurement process

–Production:
• manufacturing resource planning and execution Process

–Sales of products and services:

• customer order management Process

–Costing, paying bills and collecting:

• financial/management accounting and reporting process.
3. Supply Chain Management (SCM):

• A supply chain is a network of facilities and distribution

options that performs the functions of procurement of
materials; transformation of these material into
intermediate and finished products & distribution of
these finished products to customers.

• Successful SCM allows an enterprise to deliver the right

product, at right place, at the right time
 Supply chain has 3 main parts :
• Supply side: concentrates on how, where from,
and when raw materials are procured and
supplied to manufacturing.
• Manufacturing side: converts raw materials to
finished products.
• Distribution side: ensures that finished products
reach the final customers through a network of
distributors, warehouses and retailers
4. Knowledge management:

• This relates to the identification and analysis of available and

required knowledge about markets, products, processes,
technologies, & organizations

• Knowledge assets comprise of all knowledge that a business

has or needs to have in order to generate profits and add value.

• Also includes the subsequent planning and control of actions

which fulfill organizational objectives.
 5. e-Market:
• an electronic gathering place for multiple
buyers & sellers
• provides its participants a unified view of sets
of goods & services & enables them to
transact via automated means.
 e-Business Roles and their
Challenges
• e-Business applications have two sides:
• Buy side: organizations that use e-Business
facilities for their buying needs, e.g., spot
purchasing and/or enterprise-wide
procurement.
• Sell side: businesses that sell their products
via the transaction mechanisms offered in e-
Business applications.
 These two types of e-business help to define two principal
roles:
• Buyers:
– Are the organization that purchase goods and services directly from
suppliers
– Buyers(customers) can review product information, order service,
customize or modify order, make payment
• Suppliers:
– Are the organization that market and sell goods or service directly to
buyers or indirectly through diverse sales channels like e marketplaces
– Supplier provides buyers the services like payment, logistics, credit
and shipping
e-Business Roles and their Challenges contd..
• Manage multiple selling channels.

• Ability to take multiple types of orders from customers.

• Ability to differentiate and customize products and

services from other suppliers.

• Ability to adapt and grow the e-Business irrespective of

technology changes, organizational restructurings,
business processes or radical new investments.
e-Business Requirements/challenges
(traditional business to e business)

• Identify/measure quantifiable business objectives

• Ensure organizational/operational flexibility
• Re-think entire company supply chains
• Transform the company to a process-centric one
• Define business processes
• Understand security requirements
• Align business organizations with a flexible IT
architecture
• Establish ubiquity within standards
 Advantages of Electronic
Business
• Improved operational efficiency and productivity.
• Reduction in operating costs and costs of goods and services.
• Improved competitive position.
• Penetration into new markets through new channels.
• Improved communications, information and knowledge
sharing.
• Harmonization and standardization of processes.
• Improved internal information access.
• Improved relationships with suppliers and improved customer
service.
Inhibitors of Electronic Business
1) Management/Strategy Issues
– Lack of a clearly defined e-Business strategy
– Organizational changes required by e-Business
– Management attitudes and organizational inflexibility

2) Cost/Financing
– Costs of implementation of e-Business
– Calculating the Return on Investment (ROI)

3) Insufficient security & trust

4) Legal issues

5) Technological Concerns

6) Arguments against investment

 ECommerce EBusiness
Ecommerce involves Ebusiness is conduct of business
commercialtransactions done over internet. processeson the internet.

Ecommerce is subset of Ebusiness. Ebusiness is superset of Ecommerce.

Ecommerce is use of electronic transmission In addition, Ebusiness also includes

medium that caters for buying and sellingof theexchange of information directly
products and services. related to buying and selling of products.

Thus, Those activities which essentially involve In addition it includes activities like
monetary transactions are termed as “e- procurement of raw materials or goods,
commerce”. customer education, looking for suppliers
etc.

Ecommerce usually requires the use of just Ebusiness involves the use of CRM’s, ERP’s
aWebsite. that connect different business processes.
Ecommerce covers outward facing E-business covers internal processes such
processes that touch customers,suppliers and as production, inventory management,
external partners. product development, risk management,
finance etc.

Ecommerce just involves Buying and selling of Ebusiness includes all kinds of pre-sale and
products and services. post-sale efforts.

Ecommerce is narrower concept and restricted It is a broader concept that involves market
to buying and selling. surveying, supply chain and logistic
management and using Datamining.

It is more appropriate in B2C context. It is used in the context of B2B transactions.