1 Pertemuan 2 How Electronic Chaning Business Matakuliah: F0662/Web Based Accounting Tahun: 2005...

Pertemuan 2How Electronic Chaning Business

Matakuliah : F0662/Web Based Accounting

Tahun : 2005

Versi : 1/0

Learning Outcomes

Pada akhir pertemuan, diharapkan mahasiswa

akan mampu :

• Menjelaskan Foundations of accounting information systems, computer based accounting information systems (TIK-2)

• How the “E” is chaning the business (TIK-2)

• Accounting information systems in the electronic network environment (TIK-2)

Outline Materi

• Materi 1 Foundations of accounting information systems, computer based accounting information systems.

• Materi 2 How the “E” is chaning the business

• Materi 3 Accounting information systems in the electronic network environment

Electronic CommerceToday

Electronic Commerce Myths

• Its all about technology (hence, the IT Director must be the architect).

• E-Commerce is just about the Internet.• It’s a technology revolution (evolution).• You cannot make money from it.• Websites do not provide too much

opportunities for sales.

Corboy. Martin (1999) E-Commerce: Dispelling the Myths and Exploiting the Opportunities, Management Accounting,

December, p38-42.

Where will the growth be?

Source: Forrester Research cited in Greenstein. Marilyn, and Feinman. Todd. M (2000) Greenstein. Marilyn, and Feinman. Todd. M (2000) Electronic Commerce: Security, Risk Management and Control , New York, McGraw Hill),p8., New York, McGraw Hill),p8.

0 1000 2000 3000 4000 5000 6000 7000 8000

Clothing & footware

Books & Music

Entertainment

Hardware & Software

Financial Services

Travel

This lecture will cover the following topics:

• Definitions

• Benefits

• Cost savings

• Obstacles

• From EDI to e-enterprise

The many definitions of EC

Communication: To deliver information, goods/services and payments over the telephone, network or other means.

Business: To automate business transactions and work flows.

Service: To cut service costs while improving the quality of goods/services and increasing the speed of service delivery.

On-Line: To provide the capability of buying/selling products and information over the internet.

Source: Kalakota. R and Whinston. A, (1997). Electronic Commerce. A Manager’s Guide. Addison Wesley, USA.

What is E-commerce

• Today E- commerce commonly relates to the subset of transactions conducted via computers connected to each other.

• I most cases the computers are connected via the Internet.

• But what amounts to a computer?– Hand held organisers– Mobile phones– Household devices

• What about a refrigerator that can sense it is running out of milk? It could be programmed to place an order at the local shop, pay for the order electronically, and organise its delivery at a specified time.

Putting E-commerce in Context

YourYourBusinessBusiness ProductsProducts

ServicesServices

CommunicationCommunicationChannelsChannels

TTechnologyechnology E Enablednabled R Relationshipelationship M Managementanagement

Value ChainValue Chain

CustomerCustomer

What Is E-Business?EC + TERM + SCM

PotentialCustomers

& Influences

PotentialCompetitors

“Just a URL & a Dream”

SuppliersIndustry

Networks

DistributionChannels

BusinessPartners

Product & ServiceCreation

Logistics&

Fulfilment

Admin &Operations

Marketing,Sales &Service

LegallyDefined

Enterprise

SupplyChain

“Virtual Partners”

Informal Info.Sharing Deals

Competitors

Customers

Supply Chain Management Technology-Enabled Relationship Management

Electronic Commerce Back Office Web Commerce Front Office

BI, KM and CTfor External Info

Electronic Commerce Technology

Electronic Business

Electronic commerce

Internet Commerce

Web Commerce Electronic Data Interchange

Electronic Funds Transfer

Source Orion group

Electronic Business

• Includes:– Electronic advertising– Electronic buying and selling– Electronic distribution– Direct client interaction for marketing and

customer service– Groupware, e-mail, electronic collaboration– Workflow, automated forms distribution– Secure X.400 (e-mail) business transactions

Electronic Business

Electronic Commerce

Internet Commerce

Web Commerce

ElectronicData

Interchange

Electronic Commerce

• Includes :

- Advertising of products

or services

- Electronic shopping

- Direct after-sales service

Electronic Business

Electronic Commerce

Internet Commerce

ElectronicData

InterchangeElectronic Funds Transfer

Web Commerce

Internet Commerce

• Includes

business conducted

only over the internet

Electronic Business

Electronic Commerce

Internet Commerce

ElectronicData

Interchange

Web Commerce

• Business conducted strictly

over the World Wide Web• The www is the Dominant

medium for a large percentage

of internet commerce.

Electronic Business

Electronic Commerce

Internet Commerce

ElectronicData

Web Commerce

Electronic Data Interchange

• EDI started in the early 60s and precedes modern day electronic commerce by about 20 years

• EDI is one form of Electronic Commerce– uses standard formats for a variety of business documents

Electronic Business

Electronic Commerce

Internet Commerce

ElectronicData

Web Commerce

• EFT is an aspect of

Electronic Commerce

• Can be conducted over the internet

or private networks

• May or may not be conducted over the WWW

• Can use EDI standards or be done in non-EDI fashion

Electronic Business

Electronic Commerce

Internet Commerce

ElectronicData

Web Commerce

E-commerce - Critical Success Factors

• 1 add value• 2 focus on a niche …then expand• 3 maintain flexibility• 4 segment geographically• 5 get the technology right• 6 manage critical perceptions• 7 provide exceptional customer service• 8 ensure website can be found • 9 understand internet culture

Huff, Wade, Parent, Schneberger &Newson 2000

Critical Success Factorsfor

Adding Value

– Convenience– Disintermediation– Re-intermediation– Price– Choice– QUALITY !!!!

Critical Success Factors – Focus on a Niche and Then Expand

• Don’t offer an average product and hope to compete successfully with all the others.

• Barriers to entry into internet based businesses are low.• A niche can be a starting point for growth.

Benefits of EC

• Reduces transaction times;

• Improves customer service (improves response times);

• Reduces costs (sales, marketing, purchasing);

• Improves forecasting (accuracy & currency of data);

• Reduces inventory;• Lower production

cycles;• Competitive

advantage.

EC cost savings

• General Electric saved $US240,000 a year in printing costs.

• British Telecom made a 5:1 return on its investment.

• Hewlett Packard estimates it will reduce administrative costs by $US 200 million.

Corboy. Martin (1999) E-Commerce: Dispelling the Myths and Exploiting the Opportunities, Management Accounting,

December, p38-42.

Obstacles to EC

Organisational1. Integrating into legacy

systems;2. Choosing the right

business model & technology (Wilder, 1999).

3. Obtaining senior management support;

4. Changing organisational culture;

Costs5. Effects of

disintermediation;

6. Logistics;

7. Investment;

8. Integration with existing infrastructure;

9. Capacity planning;

10. Bandwidth.

Obstacles to EC - Maintenance

11.Recruiting traffic to your site.

12.24 hour, 7 days a week availability.

13.Security & privacy issues

14.Building brand awareness;

15.Standards and Government regulations.

A question of balance

Business NeedsTechnology

Getting funds;Recruiting expertise;Retraining staff;Keeping up with technology;Integration.

Staying ahead of competitors;Staying ahead of customer needs;Changing culture to support EC;Changing business processes.

Adapted from Greenstein. Marilyn, and Feinman. Todd. M (2000) Electronic Commerce: Security, Risk Management and Control, New

York, McGraw Hill, p12.

An evolution

Brochureware

1995 20001997 1999

Business impact

E-Commerce

E-Business

E-Enterprise

First there was EDI

• In the 1970s, the first form of electronic commerce was known as EDI.

• EDI can be defined as the transfer of structured documents between computers.

• EDI is well established in the supply arena.• The structure of EDI documents is defined by

two standards (ANSI X12 or UN EDIFACT).• Many industries have developed their own

specific standards.

Electronic Data Interchange

Jan DamsgaardDept. of Informatics

Copenhagen Business School

http://www.cbs.dk/staff/damsgaard/

What is Electronic Data Interchange

A FAX message to announce the arrival of

a container to Cape Town port

A truck with a 40 ft. container loaded with 40 pallets of

premium beer in bottles is on its way to your terminal.

It will arrive there around noon. The container has to be loaded for New York on the vessel “Queen Beatrix” of Holland Lines, scheduled to depart from Cape Town on Wednesday August 14th. The container number is HOLI673625 and the number of the seal on the back door is 344523. The license plate of the truck is JB-40-JZ, and it is owned by Wijngaarden trucking.

Regards John Broekema, BeerCo. Ltd.

What is Electronic Data Interchange

The equivalent in EDI-like formatSTART_OF_MESSAGE;RECEIVER: TheContainerTerminal;SENDER: BeerCo: John Broekema;TYPE: Container pre-arrival notice;CONTAINER: HOLI673625:40ft.:40:344523CARGO: 40 Pallets of premium beers in bottles;TRUCK: JB-40-JZ: Wijngaarden Trucking: 970806:1200;VESSEL: Holland Lines: Queen Beatrix: New York:

970814;END_OF_MESSAGE;

Or in EDIFACT…

UNH+000001+ORDERS:2:932:UN'

BGM+220+AC6464'

DTM+4:20000305:102'

NAD+BY+6464326::91'

NAD+SU+1149646::91'

UNS+D'

LIN+1++PT-1073-R:VP'

QTY+21:1600'

LIN+2++PT-1073-S:VP'

QTY+21:1200'

UNT+11+000001' Source: E-Commerce ©David Whiteley/McGraw-Hill, 2000

Outline

• Motivation• What is EDI?• Benefits of EDI• 7 characteristics of EDI• Functional analysis of EDI• War and Peace in the

supply chain

EDI is the future

An EDI setup

InformationSystems

Converter

Communicationhard/software

InformationSystems

Converter

Communicationhard/software

Network operator

Key features of EDI

• The use of an electronic transmission medium

• The use of structured and formatted messages

based on agreed standards

• Relatively fast delivery from sender to receiver

• Direct processing by receiver’s application

software, usually resulting in some response to

the sending party

EDI benefits

• Reduced re-keying of redundant information• Reduced manual reconciliation of different documents• Reduced sorting, distributing, and filling of documents• Reduced correction of errors caused by incorrect data

entry• Reduced document mailing or telephoning of

information• Reduced transmission time

Characteristics of EDI

• EDI is interorganizational in nature• EDI links organizations by electronic means• EDI is innovative, abstract and complex• EDI relies on a mature and reliable

telecommunication infrastructure• EDI standards are essential• EDI has large network externalities• EDI implementations are often based on third

party operated VANs

EDI is interorganizational in nature

• At least two organizations must agree to exchange data between their independent computerized systems– High number and high frequency of

transactions– Standard product or service– Long term relationships– Time critical

EDI links organizations by electronic means• The organization’s boundary is depleted

and information about its interior is exposed to trade partners

• The participating organizations must commit resources to establish and maintain a link, therefore EDI creates a high degree of interdependence between the adopting organizations.

EDI is innovative, abstract and complex• Innovative and learning intensive

– Use new technology to solve well known problems

• Stand alone PC with modem (Manual EDI)• Automatic data mapping

– Use well known technology to solve new problems

• Existing systems modified• New systems developed

EDI is innovative, abstract and complex

• Abstract– Hard to measure

• The business value of telephones• The business value of mail service

EDI is innovative, abstract and complex

• Mature organization

EDI relies on a mature and reliable telecommunication infrastructure

• The telecommunication infrastructure is not under the control of the organization– Illegal to send and receive data– Power or network failures– Security breaches– Other regulations

EDI standards are essential

• Standards are the key• Standards sets the structure and syntax of an

EDI message. It should also denote the interpretation

• Several standards coexists– Older standards

• UN/EDIFACT (UN promoted)• EANCOM (EDIFACT subset tailor made for retail)• ANSI X.12 (the US)

– More recent standards• XML• ebXML

The need for standards Customer Supplier

Best Bread

Freshest Fruit

Mighty Meat

Very Veg

Super Food

Save on Food

Sava Store

– Three customers– Four suppliers– Twelve formats or

one standard

Source: E-Commerce ©David Whiteley/McGraw-Hill, 2000

EDI standards are essential

Data Element

Interchange

Data Segment

Message Header

Message Trailer

Message

I’change Header

I’change Trailer

ple ED

interchangeUNB+UNOA:1+6464:xx+1141:xx+ Interchange Header BEN0273'UNH+000001+ORDERS:2:932:UN' Message 1 HeaderBGM+220+AC6464' •DTM+4:20000315:102' •NAD+BY+6464326::91' •NAD+SU+1149646::91' •UNS+D' •LIN+1++PT-1073-R:VP' •QTY+21:1600' •LIN+2++PT-1073-S:VP' •QTY+21:1200' •UNT+13+000001' TrailerUNH Message 2. . .. . .UNTUNZ+1+BEN0273' Trailer

Data segments

Order message

LIN Line itemLIN+1++PT-1073-R:VP'LIN+2++PT-1073-S:VP'Line item number 1 and 2Item numberPT-1073-R and PT-1073-SItem line number VP i.e. vendor part number

QTY QuantityQTY+21:1600'QTY+21:1200'Quantity qualifier 21 i.e. ordered quantityQuantity 1600 and 1200

EDI has large network externalities• Network externalities

– The more adopters the more beneficial it is to adopt. Thus it is better to wait!

– Metaphors: the telephone and VCR’s

• Critical mass of users

EDI implementations are often based on third party operated VANs

Customer Supplier VANS

postbox mailbox

Best Bread

Freshest Fruit

Mighty Meat

Very Veg

Super Food

Save on Food

Sava Store

EDI implementations are often based on third party operated VANs

• Value added network provides different services to subscribers

• Time Independence• Protocol Independence• Time stamping• Collection of fees• Connection to other networks• Privacy, Security and Reliability• Message Storage and Logging• Message Validation:• Software and Consultancy

Coding

EAN/UPC codes• Standard codes for grocery and general retail:

– Coded as Bar Codes on products– Used in order processing / stock control– Used in EDI messages.

• EAN European Article Number13 digit – 2 digit country code

• UPC Universal Product Code (American)12 digit – 1 digit country code

• Administered by National Article Numbering Associations (ANA). See www.ean.be

EDI agreements

• Legal (and related) aspects:– The point in its transmission and processing at which

a message will be deemed to be legally binding– The timescale for processing EDI massages.– The time that message will be retained.– The procedure for settling any disputes.– The legal jurisdiction for settling disputes.

• Technical aspects– The coding systems for identifying entities.– The EDI standard that is to be employed.– The network that is to be used.

EDI Implementation

• A big difference between electronic transactions and their paper equivalents is that with electronic transactions there is no paperwork to fall back on should anything go wrong - all incoming transactions need to be secured

• Frequency of operation needs to meet the requirements of the business cycle – it can be daily, hourly or as required

Next step!

• EDI is a learning intensive, complex, and networked technology that is highly dependent on standards, has high network externalities and relays on a mature supporting infrastructure both internally and externally.

• Next how may EDI be implemented to support various business functions internally as well as externally?

EDI in the trading cycle

Search

Negotiate

Deliver

Invoice

Payment

After Sales

Pre-Sale

Execution

Settlement

After Sale

Porter’s value chain

ProcurementHuman resources

Technology developmentCorporate infrastructure

Inboundlogistics

ProductionOutboundlogistics

Marketing&

SalesServices

Profit margin

An industry

ConsumerRawmaterial

An example industry

Procurement

Human resources

Technology development

Corporate infrastructure

Inboundlogistics

Marketing&

SalesServices

Profit margin

Procurement

Human resources

Inboundlogistics

Marketing&

SalesServices

Profit margin

Supermarket

Supermarket chainDairy Outlet Consumer

Inbound logistics

• Materials receiving, storing, and distribution to manufacturing premises

• Examples of EDI support• Suppliers have to maintain inventory at customers’

premises• Just-In-Time delivery• Zero Inventory

• Automatic and direct updates of suppliers’ computer systems. Forecasting systems.

Production

• Transforming input into finished output

• Examples of EDI support• Customized mass production• Flexible production plan• Production schedule to suppliers• Just-In-Production

• Direct and automatic link to suppliers’ computer systems with production plans (both short term and long term)

Outbound logistics

• Storing and distribution of products

• Examples of EDI support• Maintain inventory at buyers premises• Automatic updates of use• Just-In-Time delivery• Zero Inventory

• Direct links to customers inventory and production scheduling systems

Sales and marketing

• Promotion and sales force

• Examples of EDI support• Provision of software and hardware to customers

to enables use of EDI• The possibility of EDI will often be a powerful sales

argument

• Triggers on sales variations

• Intangible benefits, such as corporate image

Service

• Service to maintain or enhance product value

• Examples of EDI support• More accurate information• More timely information (information travels before;

earlier after or with products)• More information

• Electronic delivery and/or service advice

• Support of entire value chain, such a general management, planning, finance, accounting, legal service, government affairs, and quality management

• Examples of EDI support• Input to MIS, monitoring, reactive to proactive• Triggers on variations in sales, logistics, and

operations

• Surveillance of timely data

Human resource management

• Recruiting, hiring, training and development of human resources

• Examples of EDI support• Freeing up of human resources that may be

reallocated with the organization• Closer monitoring of employees’ efficiency

• Electronic evidence of employees’ behavior is available on-line

• Improving product and manufacturing processes

• Examples of EDI support• Streamlining/innovation of

production processes supported by EDI• From batch to order scheduled production• Support Just-In-Time and Zero Inventory

implementations• Learning circles in applying EDI

Procurement

• Function of purchasing input• Examples of EDI support

• Procurement transformed by EDI use• Fast response from suppliers• Flexible updates of need for supply

• Setup EDI links with business partners and negotiates business conditions (such as stock-out levels and inventory levels, and delivery frequency)

EDI patterns

• Hubs and Spokes– The Hub: the major manufacturer or retailer– Spokes: suppliers to the hub.

• EDI can be a condition of trade:‘Therefore, when the Hub says, “thou shall trade electronically”, the suppliers have little option but to reply “anything you say, Sir”.’

• Arrangement can become problematic for a supplier serving several hubs – each with differing requirements

Spoke order

invoice

Spoke order

invoice

order invoice

EDI patterns

Henry’s Office Supply

Wholesale

Kent Council

Benny Bank

Instant

Insurance Sue Shop

Andy Agent

Pete’s Paper

Pam’s Pencils

Penny’s

•Wholesale network

EDI patterns

• Open User Community– Networks

• Trading partners use differing VADS (possibly in different countries)

– EDI Standards• Trading partners using differing EDI standards• Hubs defining subsets or dialects of EDI standards

– Product Coding• Inconsistent/non-standard use of coding and/or

Classical examples

• American hospital supply• APPOLO/SABRE airline reservation systems• From manufacturer to network hub (clothing)• Supermarket

– Vendor managed inventory (VMI)– Customized promotion campaign– Every Day Low Cost (EDLC), Zero Inventory (ZI),

Just-In-Time (JIT)

• Customized mass production

EDI, IOS, Internet, E-commerce

Internet e-Commerce

Manufacturer / Retailer

Materials Supplier Product

Supplier

Customer

Moving towards E-Business

• E-Commerce is the selling/buying of goods & services over a network (Fellenstein et al, 2000; 30).

• While E-Business is the use of networks to transmit & receive information in a variety of media (Fellenstein et al, 2000; 33).

The 3 pillars of EC

1. Information

2. Relationships

3. Transactions

Electronic Information

The web is a virtual repository of documents:

• The key is how to find information;

• Design sites to ensure users find information

• Provide up to date information.

Electronic Relationships

Building a site is not a guarantee for business.

• Return patronage;

• Form partnerships with other organisations;

Electronic Transactions

Not just brochureware:• EC involves transactions (eg. shopping

carts);• Need to integrate and change business

processes;• Deal with the perception of security and

privacy risks.

Adapted from Peter Fingar, 1998 cited in Greenstein. Marilyn, and Feinman. Todd. M (2000) Electronic Commerce: Security, Risk Management and Control,

New York, McGraw Hill, p18.

Difference between EC & EB

• At many EC sites customers are interacting with a web site team, not sales staff.

• Customer loyalty is promoted by interaction with trained and appropriate staff.

• A true e-business allows e-customers to interact with all staff.– The web site is an extension to your business.

• EB is customer, rather than management driven.

Siegel. David (2000) Futurize Your Enterprise, Canada, John Wiley & Sons.Siegel. David (2000) Futurize Your Enterprise, Canada, John Wiley & Sons.

E-business

• Is an attitude shift.• Involves personalisation.• Focuses on the customer.• Involves getting

customers involved in one aspect of the service and then extending:– eg. at marriott.com you can

order airline tickets online. The next step is to offer other travel arrangements.

• Lines of communication improve.– Bottlenecks will develop,

but then will disappear.

• Every one is involved, not just the web team/marketing.– Management support.

• Automate business processes.

Siegel. David (2000) Futurize Your Enterprise, Canada, John Wiley & Sons.Siegel. David (2000) Futurize Your Enterprise, Canada, John Wiley & Sons.

E-Enterprise

• An organisation that utilises traditional bricks and mortar operations with electronic commerce strategies.

• Why? The need to respond to customer demands in real time.

• Business driven technology.

• Holistic, not fragmented approach.

Source: E-Enterprise Transformation (1999) Metagroup, http:www.metagroup.com/metaview/mv0255/mv02555.html

E-Business support strategies

• Portals– Auctions (ebay)– Exchanges (corprocure)– Office supplies (officedepot)

• Vortals– E-Steel

• ASPs– mySAP– PeopleSoft

E-business objectives

1. Improve customer satisfaction;

2. Improve customer service;

3. Improve business processes;

4. Reduce operating costs;5. Transform business

models;6. Increase market share;7. Improve revenue

growth;

8. Increase profit margins;9. Improve brand

awareness;10. Improve employee

productivity;11. Learn more about

markets & customers.12. Increase supply chain

efficiency;13. Improve employee

communication.

Source: E-Business 100 (1999) InformationWeek, December 13,http://www.informationweek.com/765/ebizchts.fhtml

Quality

Of Offering

Time to Market

2. Imitate

•Competitor Successes

•Competitor Business Innovations

•Proven enterprise Architectures

•Gap analysis

1. Investigate

• Competitor Strategies

• Competitor alliances

• Enabling Technologies

• Market opportunities

• Intelligence Plan of the Battle space

3. Innovate

•Mass Customisation/CRM

•New alliances

•New channels

•Enterprise Architecture

•Digital Innovation Strategy

4. Infiltrate

Multi-channel sales Distribution

Traditional and “E” Marketing

Traditional and “E”Branding

Metcalf's Law

Four I’s of E-commerce Strategy

Meta Group (2000)

Where are we doing e-business?

1. Not just Web sites (brochureware);

2. Web based e-commerce (transactions);

3. Customer Relation Management s/ware (can be included in package by ASPs);

4. Intranets;

5. Extranets;

6. Business to business supply chain sites;

7. Web based tools for custom product configuration (eg. IMCO);

8. Enterprise portal (supporting business decisions on an Intranet/Extranet);

9. EDI;10. Call centre integration.

Tips from the experts

• Research local and overseas online strategies.– This process is continuous.– Exemplary managers keep track of their

industry, competitors, customer support & tracking (Larson, 1999).

• Examine business processes;• Develop EC strategies;

Tips from the experts (cont.)

• Appoint an exclusive EC manager (too many add this responsibility to someone’s long list of tasks);

• Set timelines and incentives;• Strengthen key partnerships;• Remembers it’s a continuous process;

David. Natasha (1999) “Planning, Strategy vital to beat E-Business Minefield”, December 3, Computerworld, page 6.

Tips from the experts (cont.)

• EC is multi-disciplinary – you need experts from all disciplines;

• The average lifecycle for a site is 90 to 100 days (Larson, 1999).

New Businesses - Intermediaries

• Web based brokers or intermediaries attempt to link customers to third parties.– E-loan matches consumer profiles to

mortgage products.– InsWeb provides customers with insurance

quotes.– Auto-by-Tel and Microsoft Car Point provide

information on cars/dealers (Larson, 1999).

New businesses – Intermediaries (cont.)

• Comparison sites are also intermediaries.

• These sites use robots to scan sites and rank prices/products.

Survive or perish?

• If you do not move onto the Internet, you will perish

• (Hogan, Vice President of General Motors).

• The Internet is challenging every traditional business model.

E-Commerce Applications

• Retail and Wholesale• Manufacturing• Marketing• Investment and Finance• Auctions

Retail and Wholesale

• Electronic retailing - the direct sale from business to consumer through electronic storefronts

• Cybermall - a single Web site that offers many products and services at one Internet location

Summary

• Mahasiswa diwajibkan membuat summary

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