Final exam

Chapter 7: E-Business and E-Commerce

7.1 Overview of E-Business and E-Commerce

Importance of E-Commerce in Canada

• Canada’s e-commerce retail sales exceed $3 billion per month, showing major growth since 2017

• Growth is driven by a large digital population:

  • 93% of Canadians were internet users in 2023

  • Over 21 million Canadians used e-commerce
    Lecture 6-Ch. 7
    
    

Impact on traditional retail

• Growth of online shopping has pushed brick-and-mortar retail into crisis

• Many physical stores are closing due to online competition

• Example:
  
  

  • Bed Bath & Beyond failed because it relied too long on physical stores and did not adopt e-commerce quickly enough
    Lecture 6-Ch. 7
    
    

Key Definitions (VERY testable)

Electronic Commerce (E-Commerce / EC)

• The process of buying, selling, transferring, or exchanging products, services, or information via computer networks (especially the Internet)
  Lecture 6-Ch. 7

Electronic Business (E-Business)

• A broader concept than e-commerce

• Includes:

  • Servicing customers

  • Collaborating with business partners

  • Performing internal electronic transactions
    Lecture 6-Ch. 7
    
    

Degree of Digitization (Types of Organizations)

• Brick-and-mortar

  • Purely physical

  • No e-commerce

  • Ex: Bakery

• Virtual organizations

  • Digital-only (pure-play)

  • Operate entirely online

  • Ex: Netflix, ChatGPT

• Clicks-and-mortar

  • Combination of physical stores + online presence
    Lecture 6-Ch. 7

  • Ex: Walmart, H&M, Lululemon

Types of E-Commerce

Traditional Types

• B2C (Business-to-Consumer)

  • Businesses sell to individuals

• B2B (Business-to-Business)

  • Businesses sell to other businesses

• C2C (Consumer-to-Consumer)

  • Individuals sell to individuals (ex: resale platforms)
    Lecture 6-Ch. 7
    
    

Newer Forms

• Mobile commerce (m-commerce) – purchases via mobile apps

• Social commerce – buying/selling through social media platforms

• Conversational (chat) commerce – chatbots assisting purchases on websites
  Lecture 6-Ch. 7

Types of E-Business

• B2E (Business-to-Employee)

  • Internal systems that provide services and information to employees

• E-Government

  • G2C: Government to citizens

  • G2B: Government to businesses

  • Delivers public information and services electronically
    Lecture 6-Ch. 7

Major E-Commerce Mechanisms

Electronic Catalogues

• Digital version of a traditional print catalogue

• Allows users to browse, search, and view detailed product info

• Backbone of most e-commerce websites
  Lecture 6-Ch. 7

Electronic Auctions

Competitive buying and selling online

Types of auctions

• Forward auction

  • Sellers solicit bids from buyers

  • Common in C2C and B2C

• Reverse auction

  • Buyer posts a Request for Quotation (RFQ)

  • Sellers compete to offer the lowest price

  • Common in B2B
    Lecture 6-Ch. 7

Electronic Storefronts & Marketplaces

• Electronic storefront

  • Website for a single store

• E-mall (cybermall)

  • Collection of stores under one web address (B2C)

• Electronic marketplace

  • Central virtual market with many buyers and sellers

  • Primarily B2B
    Lecture 6-Ch. 7

Electronic Payment Mechanisms

• Electronic cheques (e-cheques)

  • Mainly used in B2B

• Electronic cards

  • Credit cards

  • Debit cards

  • Purchasing cards (B2B equivalent)

• Stored-value cards

• Digital online payments (payment gateways)

  • Example: PayPal
    Lecture 6-Ch. 7

Benefits & Limitations of E-Commerce

Benefits

• Access to national and international markets

• Lower processing, distribution, and information costs

• 24/7 access to products and services

• Reaches urban, rural, and developing regions
  Lecture 6-Ch. 7

Limitations

• No universally accepted security standards

• Limited bandwidth and expensive access in less-developed countries

• Perception that e-commerce is insecure
  Lecture 6-Ch. 7

7.2 Business-to-Consumer (B2C) E-Commerce

Why B2C is complex

• Involves millions of buyers

• High transaction volume

• Companies must treat each transaction as if the customer is the most important

• Complexity is:

  • Technical

  • Volume-related

• In contrast:

  • B2B complexity is business-process related
    Lecture 6-Ch. 7

Electronic Retailing (E-Tailing)

• Direct sale of products/services online

• Uses:

  • Electronic storefronts

  • Electronic malls

  • Electronic catalogues

  • Auctions

Platforms

• Businesses often use e-commerce software platforms (ex: Shopify) to manage storefronts
  
  

Online Services Industry

Beyond retail, customers also access services online:

• Fintech

  • Online banking, insurance, investing

• Online job markets

  • Indeed, LinkedIn

• Travel services

  • Hotels, booking platforms
    Lecture 6-Ch. 7
    
    

Issues in E-Tailing (Very Testable)

Channel conflict

• Occurs when clicks-and-mortar companies sell directly online

• Can create tension with physical distributors/retailers
  Lecture 6-Ch. 7
  
  

Order fulfillment issues

• Difficulty managing inventory, shipping, and delivery

• Especially problematic during sales surges
  Lecture 6-Ch. 7

Personalized pricing

• Prices vary based on a customer’s perceived ability to pay

• Enabled by:

  • Big Data analytics

  • Competitor price scraping by large retailers
    Lecture 6-Ch. 7

7.3 Business-to-Business (B2B) E-Commerce

Overview

• Both buyers and sellers are organizations

• Enables electronic relationships with:

  • Suppliers

  • Distributors

  • Resellers

  • Partners

• Major models:

  • Sell-side marketplaces

  • Buy-side marketplaces

  • Electronic exchanges
    Lecture 6-Ch. 7

Sell-Side Marketplace

• Businesses sell products/services online

• Can use:

  • Their own private marketplace

  • Third-party platforms

• Expands reach to more buyers

Buy-Side Marketplace

• Businesses procure products/services online

• E-procurement streamlines purchasing

• Example: group purchasing platforms (ex: hospitals)

Electronic Marketplaces (Public Exchanges)

• Owned by a third party

• Connect many buyers and sellers

Types

• Vertical exchanges

  • Industry-specific (ex: hospitality)

• Horizontal exchanges

  • Cross-industry

• Functional exchanges

  • Services traded as needed (temporary labour, office space)
    Lecture 6-Ch. 7

7.4 Ethical & Legal Issues in E-Business

Ethical Issues

• Privacy threats

  • Storing and transferring personal data

  • Tracking users with cookies

• Potential job loss

  • Automation reduces need for employees, brokers, agents
    
    

Legal & Ethical Issues Specific to E-Commerce

Internet fraud

• About 80% of fraud occurs online

• Includes credit card theft

Copyright issues

• Protecting intellectual property online is extremely difficult
  Lecture 6-Ch. 7

Cybersquatting

• Registering domain names to profit from another company’s trademark

• Addressed by the Anti-Cybersquatting Consumer Protection Act (1999) in the U.S.

Chapter 8: Wireless, Mobile Computing & Mobile Commerce (Lecture 7) Master Exam Notes

Introduction: Wireless vs. Mobile (VERY testable distinction)

• Wireless: communication without physical wires
  
  

• Mobile: something that changes location over time
  
  

• Important:
  
  

  • Some technologies are wireless but not mobile
    
    

  • Some are both wireless and mobile (e.g., MiFi)
    Lecture 7-Ch. 8
    
    

8.1 Wireless Technologies

What wireless technologies include

• Wireless devices (e.g., smartphones)
  
  

• Wireless transmission media:
  
  

  • Microwave

  • Satellite

  • Radio
    
    

Wireless Devices

Advantages for users (3 key ones)

1. Small and portable (easy to carry or wear)
   
   

2. Enough computing power to perform productive tasks
   
   

3. Can communicate wirelessly with the Internet and other devices
   
   

Major disadvantage for businesses

• Employees can capture and transmit sensitive, confidential, or proprietary information, increasing security risks
  
  

Wireless Transmission Media

(Also called broadcast media)

• Transmit signals without wires
  
  

• Three main types:
  
  

  • Microwave

  • Satellite

  • Radio
    
    

Microwave Transmission

• Uses electromagnetic waves
  
  

• Supports high-volume, long-distance, line-of-sight communication
  
  

• Towers usually spaced no more than 50 km apart
  
  

• Susceptible to environmental interference, such as heavy rain or snowstorms
  Lecture 7-Ch. 8
  
  

Satellite Transmission

• Uses communication satellites
  
  

• Requires line-of-sight
  
  

• Three satellite types:
  
  

  • GEO (Geostationary Earth Orbit)
    
    

  • MEO (Medium Earth Orbit)
    
    

  • LEO (Low Earth Orbit)
    
    

• Advantage:
  
  

  • Very large footprint (coverage area), which overcomes microwave distance limits
    
    

Radio Transmission

• Uses radio wave frequencies
  
  

• Devices are:
  
  

  • Relatively inexpensive
    
    

  • Easy to install
    
    

• Widely used in:
  
  

  • Wi-Fi
    
    

  • Cellular networks
    
    

• Makes radio transmission very common in everyday communication
  
  

Advantages & Disadvantages of Wireless Media

• Wireless allows flexibility and mobility

• However, it may face:

  • Interference

  • Security risks

  • Performance limitations compared to wired networks

8.2 Wireless Computer Networks & Internet Access

Wireless networks are categorized by distance:

• Short-range

• Medium-range

• Wide-area

Short-Range Wireless Networks

• Range: 30 meters (100 ft) or less
  
  

Bluetooth

• Creates personal area networks (PANs)

• Low-power, radio-based

• Applications:

  • Headsets

  • Music players
    
    
    

Ultra-Wideband (UWB)

• Radio-based communication

• Very high bandwidth (over 100 Mbps)
  
  

• Applications:
  
  

  • Real-Time Location Systems (RTLS)
    
    

  • Mobile robotics
    
    

  • Mining equipment tracking
    
    
    

Near-Field Communication (NFC)

• Shortest range of all wireless networks
  
  

• Embedded in:
  
  

  • Smartphones
    
    

  • Credit cards
    
    

• Used for:
  
  

  • Contactless payments (tap-to-pay)
    
    
    

Medium-Range Wireless Networks (WLANs)

Wi-Fi

• Most common medium-range wireless network
  
  

• Allows devices to connect without physical cables
  
  

Wi-Fi Direct

• Newer version of Wi-Fi

• Enables peer-to-peer connections

• Does not require a wireless access point

• Used for:

  • Screen mirroring

  • Connecting phones, tablets, laptops to smart TVs

MiFi (Mobile Fidelity)

• Small, portable wireless device

• Provides a personal Wi-Fi hotspot wherever the user goes

• Both wireless and mobile

Li-Fi (Light Fidelity)

• Uses light waves to transmit data

• Advantages:

  • Higher bandwidth

  • Improved security compared to Wi-Fi

Wide-Area Wireless Networks

• Connect users across large geographic areas

• Two main categories:

  • Cellular radio

  • Wireless broadband (WiMAX)

Cellular Telephones

• Two-way radio communication
  
  

• Use a network of base stations (cells)
  
  

• Allows seamless handoffs when users move
  
  

• Generations:
  
  

  • 1G, 2G, 2.5G, 3G, 4G, 5G
    Lecture 7-Ch. 8
    
    

Wireless Broadband (WiMAX)

• Stands for Worldwide Interoperability for Microwave Access
  
  

• Covers distances up to 50 km
  
  

• Faster and broader coverage than Wi-Fi
  
  

• Useful in:
  
  

  • Rural or underserved areas
    Lecture 7-Ch. 8
    
    

8.3 Mobile Computing & Mobile Commerce

Mobile Computing

• Technology that allows people to use devices while on the move
  
  

Two key characteristics

1. Mobility – users can connect from anywhere
   
   

2. Broad reach – users can be contacted instantly across large distances
   Lecture 7-Ch. 8
   
   

Mobile Commerce (M-Commerce)

Definition

• E-commerce transactions conducted in a wireless environment, mainly via the Internet
  Lecture 7-Ch. 8
  
  

Drivers of m-commerce

• Widespread use of mobile devices
  
  

• Falling device prices
  
  

• Increased bandwidth
  Lecture 7-Ch. 8
  
  

Mobile Commerce Applications

• Mobile banking
  
  

• Mobile payments
  
  

• Location-based services
  
  

• Shopping apps
  Lecture 7-Ch. 8
  
  

8.4 Internet of Things (IoT)

Definitions & Alternate Names

Also known as:

• Internet of Everything
  
  

• Internet of Anything
  
  

• Industrial Internet
  
  

• Machine-to-Machine (M2M) communication
  
  

Definition

• A system where objects have unique identities (IP addresses) and can send/receive data over a network (usually the Internet)
  
  

Wireless Sensors (IoT Foundation)

• Monitor:
  
  

  • Temperature
    
    

  • Sound
    
    

  • Pressure
    
    

  • Vibration
    
    

  • Movement
    
    

• Can also control physical systems (e.g., adjusting temperature automatically)
  Lecture 7-Ch. 8
  
  

IoT Examples

• Smart homes
  
  

• Digital twins
  
  

  • Virtual models of real-world products or systems
    
    

  • Used for simulation, monitoring, and optimization
    Lecture 7-Ch. 8
    
    

RFID Technology

Radio-Frequency Identification (RFID)

• Uses tags with:
  
  

  • Embedded microchips

  • Antennas
    
    

• Sends data to RFID readers via radio signals
  
  

• Developed to replace barcodes
  Lecture 7-Ch. 8
  
  

RFID vs Barcodes vs QR Codes

Barcodes (UPC)

• Require line of sight
  
  

• Easily damaged
  
  

• Store limited information
  
  

QR Codes

• Store more information
  
  

• More durable
  
  

• Can be scanned from any direction
  
  

RFID

• No line of sight required
  
  

• Faster scanning
  
  

• Can track objects automatically

8.2 wireless computer networks and internet access

NFC, wifi, bluetooth, 5G

Chapter 9: Information systems within the Organization

Introduction to Social Computing

Traditional Information Systems vs. Social Computing

• Traditional IS
  
  

  • Support organizational activities and business processes
    
    

  • Focus on cost reduction and productivity improvements
    
    

• Social Computing
  
  

  • A variation of traditional IS
    
    

  • Combines social behavior + information systems to create value
    
    

  • Focuses on collaboration and interaction rather than just efficiency
    Lecture 8-Ch.9
    
    

Social Computing in Business

• Uses:
  
  

  • Social media
    
    

  • Social networking platforms
    
    

  • Collaborative technologies
    
    

• Purpose:
  
  

  • Facilitate human interaction
    
    

  • Improve collaboration inside and outside organizations
    Lecture 8-Ch.9
    
    

Social Commerce

• A business application of social computing
  
  

• Integrates:
  
  

  • E-commerce
    
    

  • Social networking
    
    

• Allows users to:
  
  

  • Shop online
    
    

  • While engaging in social interactions (comments, likes, sharing)
    
    

9.1 Web 2.0

Evolution of the Web

• Web 1.0
  
  

  • First generation of the web
    
    

  • Minimal user interaction
    
    

  • Mostly read-only websites
    
    

• Web 2.0
  
  

  • Second generation of the web
    
    

  • Encourages:
    
    

    • User participation
      
      

    • Interaction
      
      

    • Collaboration
      Lecture 8-Ch.9
      
      

Web 2.0 Technologies (Know ALL of these)

Tagging

• Tag: a keyword that describes content (document, webpage, image, video)
  
  

• Tagging: adding labels to digital content to make it easier to find and share
  Lecture 8-Ch.9
  
  

Folksonomies

• User-generated classification systems based on tags
  
  

• Different from expert-created taxonomies
  
  

Geotagging

• A form of tagging that adds location data to content
  Lecture 8-Ch.9
  
  

Really Simple Syndication (RSS)

• Allows users to:
  
  

  • Receive customized information
    
    

  • Without visiting many websites
    
    

• Requires a feed reader/aggregator (e.g., Feedly)
  Lecture 8-Ch.9
  
  

Blogs

• Personal, public websites
  
  

• Created and maintained by bloggers
  
  

• Used to share:
  
  

  • News
    
    

  • Opinions
    
    

  • Stories
    Lecture 8-Ch.9
    
    

Microblogging

• Blogging with short messages
  
  

• Examples:
  
  

  • X (Twitter)
    
    

  • Weibo (China)
    Lecture 8-Ch.9
    
    

Wikis

• Collaborative websites made entirely of user content
  
  

• Allow multiple users to:
  
  

  • Create
    
    

  • Edit
    
    

  • Delete content
    
    

• Used by organizations for knowledge management
  
  

• Largest wiki: Wikipedia
  Lecture 8-Ch.9
  
  

Major Types of Web 2.0 Sites

Social Networking Sites

• Social network:
  
  

  • A structure of individuals, groups, or organizations
    
    

  • Linked by values, ideas, friendships, or exchanges
    
    

• Social networking
  
  

  • Activities performed using social software tools
    
    

  • Enables easy connection with people of similar interests
    
    

Social Graph

• A visual map of relationships

• Shows connections between individuals, groups, or organizations

Social Capital

• The value derived from social networks
  
  

• Depends on:
  
  

  • Number of connections
    
    

  • Quality of relationships
    Lecture 8-Ch.9
    
    

Problems with Social Networking Sites

• False information
  
  

  • Fake news
    
    

  • Deepfakes
    
    

• Psychological impacts
  
  

  • Problematic or excessive use
    
    

  • Especially concerning for younger users
    Lecture 8-Ch.9
    
    

Enterprise Social Networks

• Business-oriented social networks
  
  

• Can be:
  
  

  • Public (e.g., LinkedIn)
    
    

  • Private (corporate social networks for employees, partners, customers)
    Lecture 8-Ch.9
    
    

Mashups

• Websites that combine content from multiple sources
  
  

• Create new functionality
  
  

• Example:
  
  

  • Google Maps integrated into Zillow or Yelp
    Lecture 8-Ch.9
    
    

9.2 Fundamentals of Social Computing in Business

Social Commerce (Revisited)

• Use of social media + social interactions to:
  
  

  • Facilitate online shopping
    
    

  • Enhance the shopping experience
    
    

• Delivers e-commerce transactions through social networking sites
  Lecture 8-Ch.9
  
  

Benefits of Social Commerce

Benefits to Customers

• Faster and better responses to complaints
  
  

• Customers help each other
  
  

• Easy searching, chatting, linking, and buying without leaving social platforms
  Lecture 8-Ch.9
  
  

Benefits to Businesses

• Test new ideas quickly and cheaply
  
  

• Gain deep insights into customer behavior
  
  

• Identify problems early and reduce customer anger
  
  

• Increase sales via positive discussions
  
  

• Build brand awareness and improve marketing campaigns
  Lecture 8-Ch.9
  
  

9.3 Social Computing in Business: Shopping

Social Shopping

• Combines:
  
  

  • Shopping

  • Social interactions

  • Peer discussions

  • Recommendations
    
    

Ratings, Reviews & Recommendations

• Customer reviews are a key influence on online purchasing decisions
  Lecture 8-Ch.9
  
  

Shopping Communities & Clubs

• Shopping communities
  
  

  • Use social media to bring like-minded shoppers together
    
    

• Clubs
  
  

  • Exclusive, membership-based groups
    Lecture 8-Ch.9
    
    

Social Marketplaces

• Platforms that:
  
  

  • Act as online intermediaries
    
    

  • Provide direct sales
    
    

• Example: Etsy
  Lecture 8-Ch.9
  
  

Collaborative Consumption

• Economic model based on:
  
  

  • Sharing
    
    

  • Swapping
    
    

  • Trading
    
    

  • Renting instead of owning
    
    

• Goals:
  
  

  • Reduce waste
    
    

  • Share resources
    
    

• Enabled by community-driven platforms
  Lecture 8-Ch.9
  
  

9.4 Social Computing in Business: Marketing

Marketing Process

• Build profitable customer relationships by:
  
  

  1. Defining target audience
     
     

  2. Developing the message
     
     

  3. Choosing delivery channels
     
     

  4. Following up
     
     

Social Advertising

• Advertising that uses social context

• Relies on:
  
  

  • Peer influence

  • Likes

  • Influencers

  • Friend recommendations
    
    

• Makes ads feel more relatable and persuasive
  
  

Market Research & Social Intelligence

• Social media enables real-time market analysis
  
  

• Businesses analyze social media data to improve:
  
  

  • Marketing
    
    

  • Product design
    
    

  • Customer service
    
    

• This data-driven insight is known as social intelligence
  Lecture 8-Ch.9
  
  

9.5 Social Computing in Business: CRM

Customer Relationship Management (CRM)

• Social computing makes customer service:
  
  

  • Real-time
    
    

  • Transparent
    
    

  • Customer-driven
    
    

• Customers actively shape brand perception
  
  

• Negative experiences can go viral very quickly
  Lecture 8-Ch.9
  
  

9.6 Social Computing in Business: Human Resource Management

Recruiting

• Recruiters use social platforms to:
  
  

  • Post jobs
    
    

  • Analyze hiring effectiveness
    
    

• Example tools: LinkedIn, Bullhorn
  
  

Employee Development

• Internal collaboration platforms:
  
  

  • Salesforce Chatter
    
    

• Used for:
  
  

  • Knowledge sharing
    
    

  • Training
    
    

  • Communication
    Lecture 8-Ch.9
    
    

Finding a Job

• Social networks play a major role in job searching
  
  

• Example: LinkedIn

Chapter 10: Information systems within the organizations 

Introduction: Information Systems in Organizations

• Information Systems (IS) exist in:
  
  

  • Large and small organizations
    
    

• Systems within organizations:
  
  

  • Support business processes
    
    

  • Do not have to be owned by the organization
    
    

• It is important to understand these systems because:
  
  

  • You will interact with them in your future career
    Lecture 9-Ch.10
    
    

10.1 Transaction Processing Systems (TPS)

Transactions

• A transaction is any business event that generates data worth capturing
  
  

• Examples:
  
  

  • Sales
    
    

  • Payments
    
    

  • Orders
    
    

  • Returns
    Lecture 9-Ch.10
    
    

Transaction Processing System (TPS)

• A TPS supports:
  
  

  • Monitoring
    
    

  • Collection
    
    

  • Storage
    
    

  • Processing
    
    

• Of data from an organization’s basic business transactions
  
  

• Key characteristics:
  
  

  • Collect data continuously
    
    

  • Usually operate in real time
    
    

  • Are critical to core operations
    
    

  • Serve as inputs for many other systems
    Lecture 9-Ch.10
    
    

TPS Processing Stages

Data Collection (Source Data Automation)

• Examples:
  
  

  • Barcode scanners
    
    

  • Point-of-Sale (POS) systems
    
    

  • RFID systems
    Lecture 9-Ch.10
    
    

Data Processing

• Batch processing
  
  

  • Transactions processed at set intervals
    
    

• Online processing (OLTP)
  
  

  • Transactions processed immediately, in real time
    Lecture 9-Ch.10
    
    

10.2 Functional Area Information Systems (FAIS)

Overview

• Each department has its own information systems
  
  

• Main functional areas:
  
  

  • Accounting & Finance IS
    
    

  • Marketing IS
    
    

  • Production / Operations Management IS
    
    

  • Human Resource Management IS
    Lecture 9-Ch.10
    
    

Information Systems for Accounting & Finance

Primary Mission

• Manage money flows:
  
  

  • Into
    
    

  • Within
    
    

  • Out of the organization
    Lecture 9-Ch.10
    
    

Key Activities

Financial Planning & Budgeting

• Forecasting future performance using:
  
  

  • Past data
    
    

  • Market trends
    
    

• Helps organizations prepare for:
  
  

  • Inflation
    
    

  • Recession
    
    

• Supported by:
  
  

  • Decision Support Systems (DSS)
    
    

  • Business analytics
    
    

  • Expert systems
    Lecture 9-Ch.10
    
    

Budgeting

• Annual budgets:
  
  

  • Help managers allocate resources
    
    

• Budgeting software:
  
  

  • Example: QuickBooks
    Lecture 9-Ch.10
    
    

Investment Management

• Managing investments in:
  
  

  • Stocks
    
    

  • Bonds
    
    

  • Real estate
    
    

• Challenges:
  
  

  • Thousands of investments
    
    

  • Complex regulations and tax laws
    
    

• IS help by:
  
  

  • Automating analysis
    
    

  • Providing real-time financial data
    
    

• Example system:
  
  

  • Bloomberg Terminal
    Lecture 9-Ch.10
    
    

Control & Auditing

• Ensures:
  
  

  • Accuracy
    
    

  • Transparency
    
    

  • Accountability
    
    

• Prevents fraud and mismanagement
  
  

• Supports regulatory compliance
  
  

• Ensures departments stay within budget
  Lecture 9-Ch.10
  
  

Role of IS

• Automates financial tracking
  
  

• Provides real-time data
  
  

• Improves fraud detection (AI tools)
  
  

• Example: SAP Financial Management
  Lecture 9-Ch.10
  
  

Information Systems for Production / Operations Management (POM)

Purpose

• Manage the entire production process
  
  

• Transform inputs into outputs efficiently
  
  

• Responsible for:
  
  

  • Operations
    
    

  • Supply chain management
    Lecture 9-Ch.10
    
    

In-House Logistics & Materials Management

Inventory Management

• Determines:
  
  

  • When to order
    
    

  • How much to order
    
    

• Includes:
  
  

  • Vendor-Managed Inventory (VMI)
    Lecture 9-Ch.10
    
    

Quality Control

• Ensures products meet standards
  
  

• Systems track defects and quality issues
  
  

• Example:
  
  

  • AI-powered defect detection
    Lecture 9-Ch.10
    
    

Planning Production & Operations

Material Requirements Planning (MRP)

• Determines:
  
  

  • What materials are needed
    
    

  • When
    
    

  • In what quantities
    
    

Manufacturing Resource Planning (MRP II)

• Expands MRP to include:
  
  

  • Workforce
    
    

  • Equipment
    
    

  • Scheduling
    
    

Enterprise Resource Planning (ERP)

• Evolution of MRP II
  
  

• Integrates all major business functions
  Lecture 9-Ch.10
  
  

Computer-Integrated Manufacturing (CIM)

• Also called digital manufacturing
  
  

• Automates manufacturing processes
  
  

• Example:
  
  

  • Robotic assembly lines
    Lecture 9-Ch.10
    
    

Product Life Cycle Management (PLM)

• Manages products from:
  
  

  • Design
    
    

  • Production
    
    

  • Disposal
    
    

• Tools include:
  
  

  • CAD (Computer-Aided Design)
    
    

  • CAE (Computer-Aided Engineering)
    
    

  • PDM systems
    Lecture 9-Ch.10
    
    

Information Systems for Human Resource Management (HRM)

Support:

• Recruitment
  
  

• Employee development
  
  

• Workforce planning
  
  

• Payroll
  
  

• Benefits administration
  Lecture 9-Ch.10
  
  

Reports Produced by Information Systems

All IS generate reports:

• Routine (scheduled) reports
  
  

• Ad-hoc (on-demand) reports
  
  

• Drill-down reports
  
  

• Key indicator reports
  
  

• Comparative reports
  
  

• Exception reports
  Lecture 9-Ch.10
  
  

10.3 Enterprise Resource Planning (ERP) Systems

Why ERP Exists

• Historically, organizations had information silos
  
  

• Result:
  
  

  • Poor communication
    
    

  • Inefficiency
    
    

ERP Systems

• Integrate functional area systems using a common database
  
  

• Enable seamless information flow
  
  

• Major vendors:
  
  

  • SAP
    
    

  • Oracle
    
    

  • PeopleSoft
    Lecture 9-Ch.10
    
    

Evolution of ERP

• Initially focused on manufacturing
  
  

• Expanded to include:
  
  

  • Finance
    
    

  • HR
    
    

  • Sales
    
    

  • Marketing
    
    

• Modern ERP:
  
  

  • Web-based
    
    

  • Integrates the entire value chain
    
    

• ERP II:
  
  

  • Interorganizational systems
    Lecture 9-Ch.10
    
    

Benefits of ERP

• Increased flexibility and agility
  
  

• Better decision support
  
  

• Improved efficiency and quality
  Lecture 9-Ch.10
  
  

Limitations of ERP

• Requires business process changes
  
  

• Significant training and change management
  
  

• Expensive and time-consuming to implement
  Lecture 9-Ch.10
  
  

ERP Implementation Approaches

On-Premise ERP

• Vanilla approach
  
  

  • Minimal customization
    
    

• Custom approach
  
  

  • Highly tailored system
    
    

• Best-of-breed
  
  

  • Mix and match ERP modules
    Lecture 9-Ch.10
    
    

SaaS ERP

• Cloud-based ERP
  
  

• Software is rented from vendor
  Lecture 9-Ch.10
  
  

10.4 ERP Support for Business Processes

• ERP supports end-to-end, cross-departmental processes
  
  

• A cross-departmental process:
  
  

  • Starts in one department and ends in another
    
    

  • Or involves multiple departments
    Lecture 9-Ch.10
    
    

Key Business Processes Supported by ERP

Procurement Process

• Starts in:
  
  

  • Warehouse (need identified)
    
    

• Ends in:
  
  

  • Accounting (payment sent)
    
    

Fulfillment Process

• Starts with:
  
  

  • Customer order
    
    

• Ends with:
  
  

  • Payment received
    
    

Production Process

• Not used in all companies
  
  

• Integrated through ERP when applicable

Chapter 11: Customer Relationship Management (CRM) & Supply Chain Management (SCM)

Introduction: CRM & SCM

• CRM and SCM are information systems that extend outside the organization to:
  
  

  • Customers (CRM)
    
    

  • Suppliers (SCM)
    
    

• Both are critical to all enterprises
  
  

• Modern organizations take a customer-centric approach
  
  

• SCM helps:
  
  

  • Improve customer service
    
    

  • Reduce operating costs
    Lecture 10-Ch. 11
    
    

11.1 Customer Relationship Management (CRM)

Definition

• Customer Relationship Management (CRM) is a customer-focused and customer-driven organizational strategy
  
  

• Core idea:
  
  

  • Treat customers differently
    
    

  • Because their needs differ and their value to the company differs
    Lecture 10-Ch. 11
    
    

CRM Systems

• CRM systems are information systems designed to support an organization’s CRM strategy
  
  

Types of CRM systems

• Low-end CRM
  
  

  • Designed for firms with many small customers
    
    

  • Example: Amazon
    
    

• High-end CRM
  
  

  • Designed for firms with few large customers
    
    

  • Example: Boeing
    Lecture 10-Ch. 11
    
    

Two Elements of Successful CRM

All effective CRM systems share:

1. Identifying Customer Touch Points

• Customer touch points = any interaction between a customer and an organization
  
  

• Example channels:
  
  

  • Website
    
    

  • Call center
    
    

  • Social media
    
    

  • In-store
    
    

• Omni-channel marketing
  
  

  • Creates a seamless customer experience across all channels and devices
    Lecture 10-Ch. 11
    
    

2. Data Consolidation

• CRM systems must manage customer data effectively
  
  

• Data warehouses:
  
  

  • Store all customer-related data
    
    

  • Enable a 360-degree view of the customer
    Lecture 10-Ch. 11
    
    

CRM Components

An organization’s CRM system has two major components:

1. Operational CRM
   
   

2. Analytical CRM
   Lecture 10-Ch. 11
   
   

11.2 Operational CRM Systems

Purpose

• Support front-office processes
  
  

• Processes that directly interact with customers:
  
  

  • Sales
    
    

  • Marketing
    
    

  • Customer service
    Lecture 10-Ch. 11
    
    

Two Types of Operational CRM Applications

1. Customer-Facing Applications

Help organizations interact with customers efficiently

Customer service & support

• Automates:
  
  

  • Service requests
    
    

  • Complaints
    
    

  • Returns
    
    

  • Requests for information
    
    

• Often handled through Customer Interaction Centers (CICs) such as call centers
  Lecture 10-Ch. 11
  
  

Salesforce Automation (SFA)

• Automates sales processes
  
  

• Includes:
  
  

  • Contact management
    
    

  • Sales lead tracking
    
    

  • Sales forecasting
    Lecture 10-Ch. 11
    
    

Marketing & Campaign Management

• Identify best customers
  
  

• Build purchase profiles
  
  

• Increase revenue via:
  
  

  • Cross-selling
    
    

  • Upselling
    
    

  • Bundling
    
    

• Campaign management:
  
  

  • Sends the right message
    
    

  • To the right customer
    
    

  • Through the right channel
    Lecture 10-Ch. 11
    
    

2. Customer-Touching Applications (E-CRM)

• Direct interaction between customers and technology
  
  

• Customers use the systems themselves
  
  

• Examples:
  
  

  • Search and comparison tools
    
    

  • FAQs
    
    

  • Customized products/services
    
    

  • Technical support portals
    Lecture 10-Ch. 11
    
    

Analytical CRM Systems

Purpose

• Analyze customer data to:
  
  

  • Design targeted marketing campaigns
    
    

  • Increase customer acquisition
    
    

  • Improve cross-selling and upselling
    
    

  • Support pricing and product development decisions
    Lecture 10-Ch. 11
    
    

Operational CRM vs Analytical CRM

• Operational CRM:
  
  

  • Collects customer data through interactions
    
    

• Analytical CRM:
  
  

  • Analyzes that data to support strategic decisions
    Lecture 10-Ch. 11
    
    

11.3 Other Types of CRM Systems

• On-demand CRM (SaaS)
  
  

• Mobile CRM
  
  

• Open-source CRM
  
  

• Social CRM
  
  

• Real-time CRM
  Lecture 10-Ch. 11
  
  

11.4 Supply Chains

Definition

• A supply chain is the flow of:
  
  

  • Materials
    
    

  • Information
    
    

  • Money
    
    

  • Services
    
    

• Flow runs:
  
  

  • From raw material suppliers
    
    

  • Through factories and warehouses
    
    

  • To end customers
    
    

• Includes all organizations and processes involved in creating and delivering products/services
  Lecture 10-Ch. 11
  
  

Structure of Supply Chains

Three segments:

1. Upstream

• Sourcing and procurement from suppliers
  
  

2. Internal

• Packaging
  
  

• Assembly
  
  

• Manufacturing
  
  

3. Downstream

• Distribution to customers
  
  

Reverse logistics

• Bidirectional flows
  
  

• Returns of damaged or unwanted products
  Lecture 10-Ch. 11
  
  

11.5 Supply Chain Management (SCM)

Definition

• SCM is the process of:
  
  

  • Planning
    
    

  • Organizing
    
    

  • Optimizing
    
    

• All activities across the supply chain
  Lecture 10-Ch. 11
  
  

Five Basic Components of SCM

1. Plan

• Develop strategies to manage resources
  
  

• Create metrics to monitor supply chain performance
  
  

2. Source

• Select suppliers
  
  

• Set pricing, delivery, and payment terms
  
  

3. Make

• Manufacturing activities
  
  

• Measure:
  
  

  • Quality
    
    

  • Production output
    
    

  • Worker productivity
    
    

4. Deliver (Logistics)

• Coordinate:
  
  

  • Customer orders
    
    

  • Warehousing
    
    

  • Transportation
    
    

  • Invoicing and payments
    
    

5. Return

• Handle defective, returned, or excess products
  
  

• Support customers with delivery problems
  Lecture 10-Ch. 11
  
  

Push vs Pull Models

• Push model (Make-to-stock)
  
  

  • Production begins with forecasted demand
    
    

• Pull model (Make-to-order)
  
  

  • Production begins with customer order
    Lecture 10-Ch. 11
    
    

Problems Along the Supply Chain

Main Sources of Problems

Uncertainty

• Demand forecasts affected by:
  
  

  • Competition
    
    

  • Prices
    
    

  • Weather
    
    

  • Economy
    
    

• Delivery delays caused by:
  
  

  • Machine failures
    
    

  • Traffic
    
    

  • Logistics disruptions
    
    

Coordination Complexity

• Must align:
  
  

  • Multiple activities
    
    

  • Internal units
    
    

  • External partners
    Lecture 10-Ch. 11
    
    

Bullwhip Effect

• Major challenge in inventory management
  
  

• Small changes in customer demand cause large fluctuations in orders
  
  

• Amplified as you move up the supply chain
  Lecture 10-Ch. 11
  
  

Solutions to Supply Chain Problems

Vertical Integration

• Company acquires its suppliers
  
  

Inventory Strategies

• Just-in-Time (JIT)
  
  

  • Keep inventory as low as possible
    
    

  • Receive goods only when needed for production or sale
    
    

Information Sharing

• Example:
  
  

  • Vendor-Managed Inventory (VMI)
    
    

  • Supplier manages inventory for the retailer
    
    

  • Example: Walmart & P&G
    Lecture 10-Ch. 11
    
    

11.6 IT Support for SCM

Three Key Technologies

1. Electronic Data Interchange (EDI)

• Communication standard for exchanging documents electronically
  
  

• Used for:
  
  

  • Purchase orders
    
    

  • Invoices
    
    

• Reduces processing time and errors
  Lecture 10-Ch. 11
  
  

2. Extranets

• Secure networks that link business partners
  
  

• Provide controlled access to intranets
  
  

• Use VPN technology for security
  
  

• Improve collaboration
  Lecture 10-Ch. 11
  
  

3. Portals & Exchanges

• Corporate portals provide one access point to business information
  
  

Types

• Procurement portals
  
  

  • For suppliers (upstream)
    
    

• Distribution portals
  
  

  • For customers (downstream)

Chapter 12: Business Analytics

Introduction to Business Analytics (BA)

Business Analytics (BA)

• Business analytics is the process of developing actionable decisions or recommendations
  
  

• Based on insights generated from historical data
  
  

• Uses applications, technologies, and processes
  Lecture 11-ch. 12
  
  

Business Intelligence (BI)

• A broad category of:
  
  

  • Applications
    
    

  • Technologies
    
    

  • Processes
    
    

• Used to:
  
  

  • Gather
    
    

  • Store
    
    

  • Access
    
    

  • Analyze data
    
    

• Goal: help business users make better decisions
  
  

• BA and BI are often used interchangeably
  Lecture 11-ch. 12
  
  

12.1 Managers & Decision Making

Management

• Management is the process of achieving organizational goals using resources
  
  

• Inputs: people, money, materials, information
  
  

• Outputs: achievement of goals
  
  

• Productivity = ratio of outputs to inputs
  
  

• Managers are evaluated on how efficiently they use resources
  Lecture 11-ch. 12
  
  

Decision Making

• Decision making is a systematic process
  
  

• Three major phases:
  
  

  1. Intelligence – identify and understand the problem
     
     

  2. Design – develop possible solutions
     
     

  3. Choice – select the best solution
     Lecture 11-ch. 12
     
     

Framework for Computerized Decision Analysis

Two Dimensions

1. Problem Structure

• Structured decisions
  
  

  • Routine, repetitive, clear procedures
    
    

• Semi-structured decisions
  
  

  • Partly structured, partly judgment-based
    
    

• Unstructured decisions
  
  

  • Novel, complex, no clear procedures
    
    

2. Nature of Decisions

• Operational control
  
  

  • Day-to-day operations
    
    

• Management control
  
  

  • Efficient use of resources
    
    

• Strategic planning
  
  

  • Long-term goals and policies
    Lecture 11-ch. 12
    
    

12.2 The Business Analytics Process

Definition

• BA is the process of developing actionable decisions or recommendations
  
  

• Based on historical data analysis
  
  

• BA is a competitive necessity for organizations
  Lecture 11-ch. 12
  
  

Business Analytics Tools

Common tools include:

• Excel
  
  

• OLAP (Online Analytical Processing / multidimensional analysis)
  
  

• Data mining
  
  

• Decision Support Systems (DSS)
  
  

Statistical Procedures Used in BA

• Descriptive statistics
  
  

• Affinity (market-basket) analysis
  
  

• Linear regression
  
  

• Multiple regression
  
  

• Logistic regression
  Lecture 11-ch. 12
  
  

12.3 Descriptive Analytics

Definition

• Descriptive analytics summarizes what has happened in the past
  
  

• Helps decision makers learn from historical behavior
  
  

• Examples:
  
  

  • Sales reports
    
    

  • Financial reports
    
    

  • Inventory reports
    
    

  • Customer reports
    Lecture 11-ch. 12
    
    

Tools Used in Descriptive Analytics

Online Analytical Processing (OLAP)

• Also called multidimensional analysis
  
  

• Allows users to analyze data from multiple perspectives
  
  

Key OLAP Operations

• Drill down – move from summary to detailed data
  
  

• Roll up – aggregate data to a higher level
  
  

• Slice – select a single dimension
  
  

• Dice – select multiple dimensions
  Lecture 11-ch. 12
  
  

Data Mining

• Process of discovering valuable information in large datasets
  
  

• Performs two key tasks:
  
  

  • Identifies previously unknown patterns
    
    

  • Predicts trends and behaviors (used in predictive analytics)
    
    

• Example:
  
  

  • Affinity (market-basket) analysis
    Lecture 11-ch. 12
    
    

Decision Support Systems (DSS)

• Combine:
  
  

  • Data
    
    

  • Models
    
    

• Used for:
  
  

  • Semi-structured
    
    

  • Unstructured problems
    
    

• Provide:
  
  

  • Sensitivity analysis
    
    

  • What-if analysis
    
    

  • Goal-seeking analysis
    Lecture 11-ch. 12
    
    

12.4 Predictive Analytics

Definition

• Predictive analytics uses historical and recent data to:
  
  

  • Detect patterns
    
    

  • Predict future outcomes
    
    

• Focuses on probabilities, not certainty
  Lecture 11-ch. 12
  
  

Tools for Predictive Analytics

• Data mining
  
  

• Statistical techniques:
  
  

  • Linear regression
    
    

  • Multiple regression
    
    

  • Logistic regression
    Lecture 11-ch. 12
    
    

Unintended Consequences of Predictive Analytics

• Can produce harmful or controversial outcomes
  
  

• Examples:
  
  

  • Retailer predicting personal events (e.g., pregnancy)
    
    

  • Dynamic pricing increasing prices during sensitive events
    
    

• Raises ethical concerns around:
  
  

  • Privacy
    
    

  • Fairness
    Lecture 11-ch. 12
    
    

12.5 Prescriptive Analytics

Definition

• Goes beyond describing or predicting
  
  

• Recommends specific actions
  
  

• Identifies likely outcomes of each decision
  
  

• Goal: optimize results and guide decision-makers
  Lecture 11-ch. 12
  
  

Characteristics

• Recommends one or more courses of action
  
  

• Predicts outcomes associated with each action
  Lecture 11-ch. 12
  
  

Tools Used in Prescriptive Analytics

• Optimization – finds best solution given constraints
  
  

• Simulation – models complex systems and scenarios
  
  

• Decision trees – maps decisions and consequences
  Lecture 11-ch. 12
  
  

Example: Driverless Cars

• Continuously make decisions based on predictions
  
  

• Evaluate multiple possible actions
  
  

• Choose the option with the best expected outcome
  Lecture 11-ch. 12
  
  

12.6 Presentation Tools & Data Visualization

Data Visualization

• Presents analytical results visually:
  
  

  • Charts
    
    

  • Graphs
    
    

  • Tables
    
    

• Makes data easier to understand and more engaging
  Lecture 11-ch. 12
  
  

Dashboards

• Most common BA presentation tool
  
  

• Features:

  • User-friendly

  • Graphical

  • Provides real-time access to key metrics

  • Allows drill-down and exception reporting

Management Cockpit

• A dashboard designed specifically for executives
  
  

• Displays critical performance indicators
  Lecture 11-ch. 12

Geographic Information Systems (GIS)

• Systems that capture, analyze, and display data using maps
  
  

• Enable geocoding (data linked to geographic locations)
  
  

• Used in:
  
  

  • Policing
    
    

  • Marketing
    
    

  • Urban planning

Chapter 13: Acquiring information systems and applications

Introduction

• Organizations must plan, evaluate, and justify every IT application they acquire
  
  

• Decisions are based on:
  
  

  • Costs
    
    

  • Benefits
    
    

  • Strategic alignment
    
    

• Chapter 13 focuses on how organizations acquire information systems
  Lecture 12-Ch.13
  
  

13.1 Planning for & Justifying IT Applications

Application Portfolio

• A prioritized list of:
  
  

  • Existing IT applications
    
    

  • Proposed IT applications
    
    

• Created after analyzing organizational needs and performance
  Lecture 12-Ch.13
  
  

IT Planning Process

1. Starts with the organizational strategic plan
   
   

2. Inputs:
   
   

   • Strategic plan
     
     

   • Existing IT architecture
     
     

3. Output:
   
   

   • IS Strategic Plan
     
     

     • Long-term IT goals
       
       

     • Description of IT infrastructure
       
       

     • Major IT initiatives needed to support business goals
       Lecture 12-Ch.13
       
       

Evaluating & Justifying IT Investments

Why justification is needed

• Organizations have limited resources
  
  

• Every IT investment must be justified
  
  

Cost-Benefit Analysis

• Compares costs vs benefits
  
  

• Includes:
  
  

  • Costs
    
    

    • Fixed costs
      
      

    • Ongoing (operational) costs
      
      

  • Benefits
    
    

    • Tangible (easy to measure)
      
      

    • Intangible (harder to quantify, e.g., improved customer satisfaction)
      Lecture 12-Ch.13
      
      

Common Cost-Benefit Evaluation Methods

Know all four:

1. Net Present Value (NPV)
   
   

2. Return on Investment (ROI)
   
   

3. Break-even analysis
   
   

4. Business case approach
   Lecture 12-Ch.13
   
   

13.2 Strategies for Acquiring IT Applications

After approval, organizations decide how to acquire the system by answering:

• How much code will we write?
  
  

• How will we pay?
  
  

• Where will the system run?
  
  

• Where will it originate?
  Lecture 12-Ch.13