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Note for E-Commerce And Erp - ECOM By subham Kumar sah

  • E-Commerce And Erp - ECOM
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  • Computer Science Engineering
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Subham Kumar Sah
Subham Kumar Sah
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INTRODUCTION TO ELECTRONIC COMMERCE Electronic commerce (e-commerce) remains a relatively new, emerging and constantly changing area of business management and information technology. E-commerce is digitally enabled commercial transactions between and among organizations and individuals. Digitally enabled transactions include all transactions mediated by digital technology e.g. Internet. For the most part, this means transactions that occur over the Internet and the Web. Commercial transactions involve the exchange of value (e.g., money) across organizational or individual boundaries in return for products and services. Exchange of value is important for understanding the limits of e-commerce. Without an exchange of value, no commerce occurs. Some of the definitions of e-commerce often heard and found in publications and the media are: • • • • Electronic Commerce (EC) is where business transactions take place via telecommunications networks, especially the Internet. Electronic commerce describes the buying and selling of products, services, and information via computer networks including the Internet. Electronic commerce is about doing business electronically. E-commerce is defined as the conduct of a financial transaction by electronic means. THE DIFFERENCE BETWEEN E-COMMERCE AND E-BUSINESS E-business refers primarily to the digital enablement of transactions and processes within a firm, involving information systems under the control of the firm as shown in figure below. 1

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For the most part, in our view, e-business does not include commercial transactions involving an exchange of value across organizational boundaries. For example, a company’s online inventory control mechanisms are a component of e-business, but such internal processes do not directly generate revenue for the firm from outside businesses or consumers, as e-commerce, by definition, does. It is true, however, that a firm’s e-business infrastructure provides support for online e-commerce exchanges; the same infrastructure and skill sets are involved in both ebusiness and e-commerce. E-commerce and e-business systems blur together at the business firm boundary, at the point where internal business systems link up with suppliers or customers, for instance. E-business applications turn into e-commerce precisely when an exchange of value occurs (see Mesenbourg, U.S. Department of Commerce, August 2001 for a similar view). BENEFITS OF E-COMMERCE The benefits of e-commerce can be seen to affect three major stakeholders: organisations, consumers and society. 1) Benefits of e-commerce to organisations International marketplace. What used to be a single physical marketplace located in a geographical area has now become a borderless marketplace including national and international markets. By becoming e-commerce enabled, businesses now have access to people all around the world. Operational cost savings. The cost of creating, processing, distributing, storing and retrieving paper-based information has decreased. Mass customisation. E-commerce has revolutionised the way consumers buy good and services. In the past when Ford first started making motor cars, customers could have any colour so long as it was black. Now customers can configure a car according to their specifications within minutes on-line via the www.ford.com website. Enables reduced inventories and overheads by facilitating ‘pull’-type supply chain management – this is based on collecting the customer order and then delivering through JIT (just-in-time) manufacturing. This is particularly beneficial for companies in the high technology sector, where stocks of components held could quickly become obsolete within months. For example, companies like Motorola (mobile phones), and Dell (computers) gather customer orders for a product, transmit them electronically to the manufacturing plant where they are manufactured according to the customer’s specifications (like colour and features) and then sent to the customer within a few days. Lower telecommunications cost. The Internet is much cheaper than value added networks (VANs) which were based on leasing telephone lines for the sole use of the organisation and its authorised partners. It is also cheaper to send a fax or e-mail via the Internet than direct dialling. 2

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Digitisation of products and processes. Particularly in the case of software and music/video products, which can be downloaded or e-mailed directly to customers via the Internet in digital or electronic format. No more 24-hour-time constraints. Businesses can be contacted by or contact customers or suppliers at any time. 2) Benefits of e-commerce to consumers 24/7 access. Enables customers to shop or conduct other transactions 24 hours a day, all year round from almost any location. For example, checking balances, making payments, obtaining travel and other information. More choices. Customers not only have a whole range of products that they can choose from and customise, but also an international selection of suppliers. Price comparisons. Customers can ‘shop’ around the world and conduct comparisons either directly by visiting different sites. (for example www.moneyextra.co.uk for financial products and services). Improved delivery processes. This can range from the immediate delivery of digitised or electronic goods such as software or audio-visual files by downloading via the Internet, to the on-line tracking of the progress of packages being delivered by mail or courier. An environment of competition where substantial discounts can be found or value added, as different retailers for customers. 3) Benefits of e-commerce to society Enables more flexible working practices, which enhances the quality of life for a whole host of people in society, enabling them to work from home. It also potentially reduces environmental pollution as fewer people have to travel to work regularly. Connects people. Enables people in developing countries and rural areas to enjoy and access products, services, information and other people which otherwise would not be so easily available to them. Facilitates delivery of public services. For example, health services available over the Internet (on-line consultation with doctors or nurses), filing taxes over the Internet through the Inland Revenue website. LIMITATIONS OF E-COMMERCE There was much hype surrounding the Internet and e-commerce over the last few years of the twentieth century. Much of it promoted the Internet and e-commerce as the panacea for all ills, which raises the question, are there any limitations of e-commerce and the Internet? 3

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Isaac Newton’s 3rd Law of Motion, ‘For every action there is an equal and opposite reaction’ suggests that for all the benefits there are limitations to e-commerce. These again will be dealt with according to the three major stakeholders – organisations, consumers and society. Limitations of e-commerce to organisations Lack of sufficient system security, reliability, standards and communication protocols. There are numerous reports of websites and databases being hacked into, and security holes in software. For example, Microsoft has over the years issued many security notices and ‘patches’ for their software. Several banking and other business websites, including Barclays Bank, Powergen and even the Consumers’ Association in the UK, have experienced breaches in security where ‘a technical oversight’ or ‘a fault in its systems’ led to confidential client information becoming available to all. Rapidly evolving and changing technology, so there is always a feeling of trying to ‘catch up’ and not be left behind. Under pressure to innovate and develop business models to exploit the new opportunities which sometimes leads to strategies detrimental to the organisation. The ease with which business models can be copied and emulated over the Internet increase that pressure and curtail longerterm competitive advantage. Facing increased competition from both national and international competitors often leads to price wars and subsequent unsustainable losses for the organisation. Problems with compatibility of older and ‘newer’ technology. There are problems where older business systems cannot communicate with webbased and Internet infrastructures, leading to some organisations running almost two independent systems where data cannot be shared. This often leads to having to invest in new systems or an infrastructure, which bridges the different systems. In both cases this is both financially costly as well as disruptive to the efficient running of organisations. Limitations of e-commerce to consumers Computing equipment is needed for individuals to participate in the new ‘digital’ economy, which means an initial capital cost to customers. A basic technical knowledge is required of both computing equipment and navigation of the Internet and the World Wide Web. Cost of access to the Internet, whether dial-up or broadband tariffs. Cost of computing equipment. Not just the initial cost of buying equipment but making sure that the technology is updated regularly to be compatible with the changing requirement of the Internet, websites and applications. 4

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