Understanding Enterprise Systems and E-Commerce: A Comprehensive Guide
Chapter 9: Enterprise Systems
Enterprise Resource Planning (ERP) Systems
ERP systems are suites of integrated software modules and a common central database that collect data from various divisions of a firm. This data is then used in nearly all of the firm’s internal business activities, with information entered in one process becoming immediately available for other processes.
Enterprise Software
Enterprise software is built around thousands of predefined business processes that reflect best practices in areas such as finance and accounting, human resources, manufacturing and production, and sales and marketing. To implement these systems, firms select the functions they wish to use, map their business processes to the software processes, and utilize the software’s configuration tables for customization.
Business Value of Enterprise Systems
- Increase operational efficiency
- Provide firm-wide information to support decision making
- Enable rapid responses to customer requests
- Include analytical tools to evaluate organizational performance and improve decision-making
The Supply Chain
The supply chain is a network of organizations and processes involved in procuring materials, transforming them into products, and distributing those products. It consists of upstream, downstream, and internal components.
Supply Chain Management
Inefficiencies in the supply chain can waste up to 25 percent of a company’s operating expenses. Supply chain management strategies like just-in-time inventory and safety stock aim to address these inefficiencies. The bullwhip effect, where information about product demand gets distorted as it passes through the supply chain, is a challenge that needs to be managed.
Supply Chain Management Software
Supply chain planning systems model the existing supply chain, enable demand planning, optimize sourcing and manufacturing plans, establish inventory levels, and identify transportation modes. Supply chain execution systems manage the flow of products through distribution centers and warehouses.
Global Supply Chains and the Internet
Global supply chains face challenges such as greater geographical distances, time differences, and varying performance standards and legal requirements among participants from different countries. The internet helps manage these complexities through warehouse management, transportation management, logistics, and outsourcing.
Demand-Driven Supply Chains
The internet has enabled a shift from push-based (build-to-stock) to pull-based (demand-driven) supply chain models. In pull-based models, customer orders trigger events in the supply chain, allowing for more efficient and responsive operations.
Benefits of Supply Chain Management Systems
- Match supply to demand
- Reduce inventory levels
- Improve delivery service
- Speed product time to market
- Use assets more effectively
- Increase sales
Customer Relationship Management (CRM)
CRM systems help large businesses manage their interactions with a vast number of customers. They capture and integrate customer data from across the organization, consolidate and analyze it, and distribute customer information to various systems and touch points, providing a single enterprise view of customers.
Customer Relationship Management Software
CRM software packages range from niche tools to large-scale enterprise applications. More comprehensive packages include modules for partner relationship management (PRM) and employee relationship management (ERM). They also typically include tools for sales force automation (SFA), customer service, and marketing.
Operational and Analytical CRM
Operational CRM focuses on customer-facing applications such as sales force automation, call center and customer service support, and marketing automation. Analytical CRM analyzes customer data from operational CRM systems and customer touch points to provide insights into customer behavior and value.
Business Value of CRM Systems
- Increased customer satisfaction
- Reduced direct-marketing costs
- More effective marketing
- Lower costs for customer acquisition/retention
- Increased sales revenue
Enterprise Application Challenges
Implementing enterprise applications can be expensive and complex. Challenges include technology changes, business process changes, organizational learning and change management, switching costs and vendor dependence, and data standardization, management, and cleansing.
Next-Generation Enterprise Applications
Next-generation enterprise applications are becoming more flexible, web-enabled, and integrated with other systems. Trends include enterprise solutions/suites, SOA standards, open-source applications, on-demand solutions, cloud-based versions, and functionality for mobile platforms.
Social CRM and Business Intelligence
Social CRM incorporates social networking technologies to engage with customers and monitor social media activity. Business intelligence is increasingly being included with enterprise applications to provide flexible reporting, ad hoc analysis, “what-if” scenarios, digital dashboards, and data visualization.
Chapter 10: E-Commerce Today
E-Commerce Overview
E-commerce, the use of the Internet and web to transact business, has experienced exponential growth since its beginnings in 1995. The new e-commerce landscape is characterized by social, mobile, and local trends, with a significant shift from desktop to smartphone usage.
Why E-Commerce is Different
- **Ubiquity:** The virtual nature of the marketspace reduces transaction costs.
- **Global reach:** Transactions cross cultural and national boundaries.
- **Universal standards:** The internet provides a single set of technology standards.
- **Richness:** E-commerce supports video, audio, and text messages.
- **Interactivity:** E-commerce platforms enable two-way communication between businesses and customers.
- **Information density:** Greater price and cost transparency allows for price discrimination.
- **Personalization/customization:** Technology enables the modification of messages and goods to suit individual preferences.
- **Social technology:** E-commerce platforms promote user content generation and social networking.
Key Concepts in E-Commerce
The internet and digital markets have transformed the way companies conduct business by reducing information asymmetry, menu costs, search costs, and transaction costs. E-commerce also enables dynamic pricing and influences switching costs, delayed gratification, and disintermediation.
Digital Goods
Digital goods, which can be delivered over a digital network, have a low cost of reproduction and delivery. This characteristic has led to revolutionary changes in industries such as publishing and music.
Types of E-Commerce
- **Business-to-consumer (B2C):** Selling products or services directly to consumers (e.g., Barnes and Noble.com).
- **Business-to-business (B2B):** Transactions between businesses (e.g., ChemConnect).
- **Consumer-to-consumer (C2C):** Transactions between consumers (e.g., eBay).
- **Mobile commerce (m-commerce):** E-commerce conducted on mobile devices.
E-Commerce Business Models
E-commerce business models include portals, e-tailers, content providers, transaction brokers, market creators, service providers, and community providers.
E-Commerce Revenue Models
E-commerce revenue models include advertising, sales, subscription, free/freemium, transaction fees, and affiliate marketing.
E-Commerce and Marketing
The internet provides new ways to identify and communicate with customers. E-commerce has led to the rise of long tail marketing, various internet advertising formats, behavioral targeting, programmatic ad buying, and native advertising.
Social E-Commerce and Social Network Marketing
Social e-commerce leverages the digital social graph and features such as newsfeeds, timelines, social sign-on, collaborative shopping, network notifications, and social search. Social network marketing seeks to leverage individuals’ influence over others by targeting social networks of people sharing interests and advice.
E-Commerce and B2B Transactions
The internet and networking technologies have automated procurement processes in B2B transactions. Technologies used in B2B e-commerce include electronic data interchange (EDI), private industrial networks, net marketplaces, and exchanges.
Electronic Data Interchange (EDI)
EDI involves the computer-to-computer exchange of standard transactions such as invoices and purchase orders. While major industries have EDI standards, more companies are moving towards web-enabled private networks for greater flexibility and information sharing.
New Ways of B2B Buying and Selling
Private industrial networks and net marketplaces (e-hubs) facilitate B2B transactions. Exchanges are independently owned third-party net marketplaces for spot purchasing.
M-Commerce
M-commerce is the fastest-growing form of e-commerce, with major growth areas in mass market retailing, sales of digital content, and in-app sales. Location-based services and applications are also popular, along with financial account management apps and mobile advertising.
Building an E-Commerce Presence
Key challenges in building an e-commerce presence include developing a clear understanding of business objectives and choosing the right technology. Businesses should develop an e-commerce presence map and a timeline with milestones to guide their efforts.