Chapter 10Chapter 10

E-business and Enterprise Resource Planning Systems

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

OutlineOutline

• Objectives

• Definition of e-business

• Benefits and costs of e-business

• Forms of e-business

• Structure of ERP systems

• ERP system implementations

• Application service providers

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ObjectivesObjectives

When you finish this chapter, you should be able to:– Explain the nature of e-business, comparing and contrasting it

with traditional “brick and mortar” organizations

– Discuss major forms of e-business, including business-to-business, business-to-consumer, government-to-business and government-to-consumer

– Describe the basic nature, purpose and structure of enterprise resource planning systems

– Give examples and analyze the causes of ERP system failures

– List and discuss steps associated with successful ERP implementations

– Discuss the role of application service providers in e-business.

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Definition of e-businessDefinition of e-business

• Exchange of goods and services by means of the Internet or other computer networks

• Same basic principles as traditional commerce• Buyers and sellers transact business over

networked computers• Networks could be: proprietary, electronic fund

transfer networks between companies, internal or others

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Benefits and costs of e-Benefits and costs of e-businessbusiness

• Benefits– Marketing: geographic

market expansion, hard-to-reach markets, more targeted marketing

– Reduced operating costs: marketing, telecommunications, transaction processing

– Streamlined operations– Quicker, easier product

and service delivery

• Costs– Financial costs associated

with setting up networks– Need to develop different,

better internal control systems

– Potential for customer distrust

– Severe consequences for technology breakdowns

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Forms of e-businessForms of e-business

Type Example

Business to consumer Travelocity

Business to business Dell Computers

Government to consumer Internal Revenue Service

Government to business EDGAR (SEC)

Consumer to consumer eBay

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Structure of ERP systemsStructure of ERP systems

• Based on relational database technology

• Modular organization– Customer relationship management– Financial management– Human resource management– Supply chain management

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ERP system implementationsERP system implementations

Common causes of failure• Poor leadership from top management • Automating existing redundant or non-

value-added processes in the new system• Unrealistic expectations • Poor project management • Inadequate education and training • Trying to maintain the status quo

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ERP system implementationsERP system implementations

Common causes of failure (continued)

• A bad match between ERP software and organizational processes

• Inaccurate data in the system

• ERP implementation is viewed as an IT project

• Significant technical difficulties

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ERP system implementationsERP system implementations

Necessary conditions for success– Obtain organizational commitment – Communicate strategic goals clearly – View ERP as an enterprise-wide venture – Select a compatible ERP system – Resolve multi-site issues – Ensure data accuracy

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Application service providersApplication service providers

• Third party entity that deploys, hosts and manages access to a packaged application (www.ASPNews.com)

• Types– Enterprise– Local / regional– Specialist– Vertical market– Volume business

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Application service providersApplication service providers

• Examples– Human resources

administration– Accounting cycle steps– Income tax returns– Personal financial

planning

• ASP benefits– Increased flexibility– Element of a disaster

recovery plan

• ASP risks– Service interruptions– Inability to pay ongoing

fees

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