e-commerce '-'. business transaction executed т e;tionically between parties such companies (business-to-; л ness), companies and con-: - "iers (business-to-consumer),: - s.ness and the public sector, and.:"sumers and the public sector |
- -Ђ-3dy a huge portion of the _■?mmerce market, business-■ cosiness transactions—such -' '"-'s paycheck service by - - zmated Data Processing—are ?cted to pass the $1 trillion iat the beginning of 2003. |
ELECTRONIC COMMERCE
E-commerce involves any business transaction executed electronically between parties such as companies (business-to-business), companies and consumers (business-to-consumer), business and the public sector, and consumers and the public sector. People may assume that e-commerce is reserved mainly for consumers visiting Web sites for on-line shopping. But Web shopping is only a small part of the e-commerce picture; the major volume of e-commerce—and its fastest-growing segment—is business-to-business transactions that make purchasing easier for corporations. This growth is being stimulated by increased Internet access, user confidence, better payment systems, and rapidly improving Internet and Web security. E-commerce offers opportunities for small businesses, too, by enabling them to market and sell at a low cost worldwide, thus offering them an opportunity to enter the global market right from start-up.
Consumers who have tried on-line shopping appreciate the ease of e-commerce. They can avoid fighting the crowds in the malls, shop on-line at any time from the comfort of their home, and have goods delivered to them directly. In addition, under current laws governing on-line purchases, state sales taxes do not need to be paid. However, e-commerce is not without its downside. Consumers continue to have concerns about sending credit card information over the Internet to sites with varying security measures where high-tech criminals could obtain it. In addition, denial-of-service attacks that overwhelm the capacity of some of the Web's most established and popular sites have raised new concerns for the future growth of e-commerce. There are additional concerns about what data is gathered when a consumer visits a Web site and what companies do with the collected data; some have sold data to multiple sources, leading marketing companies to know more than we would like. The "Ethical and Societal Issues" box discusses privacy on the Internet.
Yet, in spite of the concerns, e-commerce offers many advantages for streamlining work activities. Figure 1.9 provides a brief example of how e-commerce can
t-iu IiudtO*H>p< I Hi" j1 pi - if* i a |
ADP Employer Service* ' Ptfrtoll.HP &BeraM.'AdnwnftirttfiHi S*r*c*e m ifte U.S. tastudflsg • fcii'.4'J:ir>j&Ai © ^^кЖ^^^^Шж-^Ж |
DoubleCtick Tempers Marketing with Customer Privacy
As e-commerce becomes an integral part of virtuaily all companies, many are finding themselves faced with new ethical dilemmas. The hottest ethical issues in e-commerce have to do with privacy.
Society, in generaf, is conducting more of its daily activities electronically on the Internet. We use the Internet for communication, for access to information, and to purchase merchandise. The Internet is wonderfully convenient, putting the world at our fingertips, For marketing specialists, the Internet is also a wonderful tool for collecting telltale data that define user interests and trends.
Busmess-to-consumer (B2C) retailers are able to track each contact a customer makes with their organization on the Net. By storing information on the customer's computer, in data packages called cookies, businesses can track a customer's movement around the Web site. By recording the amount of time a customer views each page, a practice known as collecting click-stream data, a company can build a fairly accurate customer profile that defines the interests of that customer. By enticing the customer to supply his or her name and other personal information, for instance, by signing up for a "free" user account to access special services, the, retailer is able to connect the user profile with a name and to store that information in its database. Through a technique called data mining, companies can sift through the combined information of any one customer or group of customers to recognize trends and tendencies—and ultimately pitch products and services specifically for that customer's interests.
This type of data collection takes place on a variety of levels in a variety of environments: retailers track the movements of customers around the Web, cell phone companies store information about the location of cell phones (and presumably their owners} around geographic regions, employers may track their employees' e-mail and internet use on the corporate network. But all of this information collection raises,some concerns, among them:
• How far can organizations go in the pursuit of personal information?
• Do customers need to be aware of what personal data is being collected?
• Once a company has gathered this information, how can it be used?
In general, consumer privacy advocates maintain that consumers have the right to know what information is being stored about them and to control how that information is used.
Take, for example, New York-based Internet advertising company DoubleClick. Doubleclick is a marketing company that, among other things, provides Internet-based advertising services through direct e-mail and banner ads on the Web. DoubleCtick has taken some heat over allegations that it used technology in its banner ads placed on other companies' Web sites to collect personally identifiable information on Web users. By placing banner ads on numerous Web sites, DoubteCitck can collect customer information from multiple sources to get a complete picture of a person's buying patterns and preferences. Consumer advocates were further enraged when it was discovered that DoubleClick intended to share customer information with an off-line marketing firm.
To ease public concern and regain customer confidence, DoubleClick changed course, joined the National Advertising Initiative (NAI), and adopted its principles. The NAI worked with the Federal Trade Commission and the U.S. Department of Commerce to develop regulations concerning consumer profiling, whereby member companies would police themselves. Under the NAI Principles, DoubleClick and other members must provide consumers with a clear explanation of the types of data they collect and the way they use them, as well as the ability to opt out of data-collecting efforts if users choose not to participate. Concurrent with joining NAI, DoubleClick decided to discontinue its Intelligent Targeting product, stating, "Given the focus of our business, we have decided that the Intelligent Targeting product is not something we plan to pursue in today's environment."
The balance between effective marketing and respect for customer privacy is difficult to reach. Like DoubleClick, most e-commerce retailers, or e-tailers, have published privacy policies by which they are legally bound. The Federal Trade Commission has ruled that, unless otherwise stated, these policies extend to a company's off-line data practices as well. To deal with these ethical dilemmas, some e-commerce firms are hiring ethics consultants such as Tom Shanks. Shanks says he hopes to find ways to help companies curb the abuse of consumer information by offering incentives to respect end users' privacy and by providing them with up-to-date information about privacy legislation.
Discussion Questions
1. Some consider the term business ethics to be an oxymoron. Does the new information economy provide more fertile ground for ethical considerations in business? If you were an ethics consultant, how would you sell your client on the benefits of applying ethical principles to business practices?
2. What methods of collecting consumer information were used prior to the Internet? How do you think the Internet has changed marketing approaches in general?
Critical Thinking Questions
3. Aside from public concerns over customer profiling, are there any customer benefits to profiling? List some.
4. How can the Web be used successfully for marketing products without upsetting consumers?
Sources: Zachary Tobias, "Putting the Ethics in E-Business," ComputerWorid, November 6, 2000. http://www.computerworid.com; "DoubleClick Drops 'Intelligent Targeting Product," Newsbytes, January 9, 2002, http://vJww.washingtonpost.com/wp-dyn/technology; Brian Ktebs, "Online Privacy Policies Apply to Offline Data Practices—FTC," Newsbytes, December 10, 2001; http://www.networkadveftising.org, follow (inks to "About NAI" and "Principles," accessed January 27, 2002; http://www.doubieclick.net, follow links to "Privacy Policy,' accessed January 27,2002,
|
|
:; rtmerce greatly simplifies the casing process.
One study reported that e-commerce could have a positive impact on stock prices and the market value of firms.24 Today, several e-commerce firms have teamed up with more traditional brick-and-mortar firms to draw from each's strengths. Amazon.com, for example, is joining forces with Circuit City Stores, Inc.25 With the new venture, customers will be able to order products through Amazon on the Internet and pick up products at one of the 600 local Circuit City stores or get them shipped to an address through Amazon.com's home or office delivery system.
Lns action
: J5:ness-related exchange. i= payments to employees, -" ': customers, or payments to
-nsaction processing -:em (TPS)
:r."ized collection of people, -:-.res, software, databases, '. т. 'ces used to record com--: z jsmess transactions
TRANSACTION PROCESSING SYSTEMS, WORKFLOW SYSTEMS, AND ERP
Transaction Processing Systems
Since the 1950s, computers have been used to perform common business applications. The objective of many of these early systems was to reduce costs by automating many routine, labor-intensive business systems. A transaction is any business-related exchange such as payments to employees, sales to customers, or payments to suppliers. Thus, processing business transactions was the first application of computers for most organizations. A transaction processing system (TPS) workflow system
rule-based management software that directs, coordinates, and monitors execution of an interrelated set of tasks arranged to form a business process
enterprise resource planning (ERP) system
a set of integrated programs capable of managing a company's vital business operations for an entire multisite, global organization
is an organized collection of people, procedures, software, databases, and devices used to record completed business transactions. To understand a transaction processing system is to understand basic business operations and functions.
One of the first business systems to be computerized was the payroll system (see Figure 1.10). The primary inputs for a payroll TPS are the numbers of employee hours worked during the week and pay rate. The primary output consists of paychecks. Early payroll systems were able to produce employee paychecks, along with important employee-related reports required by state and federal agencies, such as the Internal Revenue Service. Simultaneously, other routine processes, including sales ordering, customer billing, and inventory control, were computerized as well. For example, the NASDAQ stock market developed the Small Order Execution System (SOES) to help speed buy and sell orders.26 DaimlerChrysler uses its TPS to buy about $3 billion of needed parts each year through an Internet site called Covisint.27 Because these systems handle and process daily business exchanges, or transactions, they are all classified asTPSs.
In improved forms, these transaction processing systems are still vital to most modern organizations. Consider what would happen if an organization had to function without its TPS for even one day. How many employees would be paid and paid the correct amount? How many sales would be recorded and processed? Transaction processing systems represent the application of information concepts and technology to routine, repetitive, and usually ordinary business transactions, but transactions that are critical to the daily functions of that business.
Workflow Systems
A workflow system is rule-based management software that directs, coordinates, and monitors execution of an interrelated set of tasks arranged to form a business process. The primary purpose of workflow systems is to provide employees with tracking, routing, document imaging, and other capabilities designed to improve business processes. Transactional workflow systems hold the promise of improving the productivity and dependability of business processes. Procter & Gamble, a major U.S. consumer goods manufacturer, implemented an expense reporting workflow application to enter, submit, process, and track expense reports. The system streamlines the reimbursement process by simplifying expense entries and automating the approval process. The system cuts the time employees spend filling out expense reports and reduces the manual retyping and editing typically associated with expense report reconcilation.
Enterprise Resource Planning
An enterprise resource planning (ERP) system is a set of integrated programs that is capable of managing a company's vital business operations for an entire multisite, global organization. Although the scope of an ERP system may vary from company to company, most ERP systems provide integrated software to support the manufacturing and finance business functions of an organization.
Hours worked |
A Payroll Transaction Processing System
The inputs (numbers of employee hours worked and pay rates) go through a transformation process to produce outputs (paychecks).
-= AG, a German software com---. is one of the leading suppli-::' ERP software. The company ""Ols 15 percent of an estimated -. ciHion worldwide ERP market. |
■.inagement information ■ stem (MIS)
: -ganized collection of people,. inures, software, databases,: zevices used to provide rou-■. formation to managers and -:: on makers
In such an environment, a demand forecast is prepared that estimates customer demand for several weeks. The ERP system checks what is already available in finished product inventory to meet the projected demand. Any shortcomings then need to be produced. In developing the production schedule, the ERP system checks the raw material and packing material inventory and determines what needs to be ordered to meet the planned production schedule. Most ERP systems also have a purchasing subsystem that orders the items required. In addition to these core business processes, some ERP systems may be capable of supporting additional business functions such as human resources, sales, and distribution. PeopleSoft, for example, recently launched an Internet-based ERP to manage cus-
tomer relationships. The primary benefits of implementing an ERP system include easing adoption of improved work processes and improving access to timely data for operational decision making.
MANAGEMENT INFORMATION AND DECISION SUPPORT SYSTEMS
The benefits provided by an effective transaction processing system are tangible and can be used to justify their cost in computing equipment, computer programs, and specialized personnel and supplies. They speed business activities and reduce clerical costs. Although early accounting and financial transaction processing systems were already valuable, companies soon realized that the data stored in these systems can be used to help managers make better decisions in their respective business areas, whether human resources, marketing, or administration. Satisfying the needs of managers and decision makers continues to be a major factor in developing management information and decision support systems.
Management Information Systems
A management information system (MIS) is an organized collection of people, procedures, software, databases, and devices used to provide routine information to managers and decision makers. The focus of an MIS is primarily on operational efficiency. Marketing, production, finance, and other functional areas are supported by management information systems and linked through a common database. Management information systems typically provide standard reports generated with data and information from the transaction processing system (see Figure 1.11).
Management information systems were first developed in the 1960s and are characterized by the use of information systems to produce managerial reports. In most cases, these early reports were produced periodically—daily, weekly, monthly, or yearly. Today, Foxwoods Resort Casino generates daily reports that
tell the company what specific customers like. Foxwoods knows whether a customer likes flowers in her room or a drink in his hand and can accommodate individual needs or desires. Periodic reports such as Foxwoods' are printed regularly, so they are called scheduled reports. Scheduled reports help managers perform their duties. For example, a summary report of total payroll costs might help an accounting manager control future payroll costs. Because of their value to managers, MISs have proliferated throughout the management ranks. For instance, the total payroll summary report produced initially for an accounting
TPS |
Functional management information systems draw data from the organization's transaction processing system.
decision support system (DSS)
an organized collection of people, procedures, software, databases, and devices used to support problem-specific decision making
Marketing management information system
Financial management information system
Manufacturing management information system
Other
management
information
systems
Declsioneering provides decision support software called Crystal Ball, which helps businesspeople of all types assess risks and make forecasts. Shown here is the Standard Edition being used for oil field development.
(Source: Crystal Ball screenshot courtesy of Declsioneering Inc)
manager might also be useful to a production manager to help monitor and control labor and job costs. Other scheduled reports are used to help managers from a variety of departments control customer credit, payments to suppliers, the performance of sales representatives, inventory levels, and more.
Other types of reports were also developed during the early stages of management information systems. Demand reports were developed to give decision makers certain information upon request. For example, prior to closing a sale, a sales representative might seek a demand report on how much inventory exists for a particular item. This report would tell the representative whether enough inventory of the item is on hand to fill the customer order. Exception reports describe unusual or critical situations, like low inventory levels. The exception report is produced only if a certain condition exists—in this case, inventory falling below a specified level. For example, in a bicycle manufacturing company, an exception report might be produced by the MIS if the number of bicycle seats is too low and more should be ordered.
Oil Field D. v> |1>рмш||£*С5^&гЯЗ£Ж |
»i; yaw |
P
л — *
Decision Support Systems
By the 1980s, dramatic improvements in technology resulted in information systems that were less expensive but more powerful than earlier systems. People at all levels of organizations began using personal computers to do a variety of tasks; they were no longer solely dependent on the information systems department for all their information needs. So, people quickly recognized that computer systems could support additional decision-making activities. A decision support system (DSS) is an organized collection of people, procedures, software, databases, and devices used to support problem-specific decision making. The focus of a DSS is on decision-making effectiveness. Whereas an MIS helps an organization "do things right," a DSS helps a manager "do the right thing."
A DSS supports and assists all aspects of problem-specific decision making. As seen in the "IS Principles in Action" box, a DSS can also support customers by rapidly responding to their phone and e-mail inquiries. A DSS goes beyond a traditional management information system. A DSS can provide immediate assistance in solving complex problems that are not supported by a traditional MIS. Many of these problems are unique and not straightforward. For instance, an auto manufacturer might try to determine the best location to build a new manufacturing facility, or an oil company might want to discover the best place to drill for oil. Chevron, for example, uses a DSS to track and manage projects and employees in 40 countries.30Traditional MISs are seldom used to solve these types of problems; a DSS can help by suggesting alternatives and assisting final decision making.
Decision support systems are used when the problem is complex and the information needed to make the best decision is difficult to obtain and use. So, a DSS also involves managerial judgment. In addition, managers often play an active role in the development and implementation of the DSS. A DSS operates from a managerial perspective, and it recognizes that different managerial styles and decision types require different systems. For example, two production managers in the same position trying to solve the same problem might require different information and support. The overall emphasis is to support rather than replace managerial decision making.
The essential elements of a DSS include a collection of models used to support
, a decision maker or user (model base), a collection of facts and information to
4?)----------------- assist in decision making (database), and systems and procedures (user interface)
: isential DSS Elements that help decision makers and other users interact with the DSS (see Figure 1.12).
Home Depot Invests Big in Information Systems
Although 2002 was a year of caution for most businesses when it came to information system spending, research shows that hard-goods retailers may increase their investment in information systems. Greg Buzek, president of IHL Consulting Group, which produced a report on the subject, stated that "leading-edge home improvement and electronics retailers like Home Depot, Lowes, Best Buy. and Circuit City will continue to invest heavily in new information technology. These retailers achieved their dominant market positions by deploying advanced technology during the slower economic times of the early 1990s. We are looking at another period where there will be favorable vendor and lender terms on capital IT spending. As a result, we expect to see these types of retailers maintain or even increase their level of capital spending to take advantage of these favorable terms."
Home Depot's recent commitments to major information system overhauls certainly bear this out. The Atlanta-based retailer of home improvement goods has embarked on a sweeping plan to tie together thousands of its software applications, stores, and systems in real time. The new unified system will provide relevant and up-to-date data and information for use in the company's MISs and DSSs to assist top management in making critical corporate decisions. Charlie Weston, director of information services at Home Depot, said the EAI implementation will probably run into milfions of dollars but should pay for itself in the next several years.
Home Depot isn't stopping there—it is also changing the way it handles customer phone and e-mail inquiries. In the past, when customers phoned their local Home Depot with questions, the operator would connect them with a salesperson on the floor. Overburdened salespeople sometimes had to choose between either leaving the person waiting on the phone or making customers on the floor wait. Now Home Depot routes its calls to regional call centers. The Tampa call center employs 1,000 customer agents who handle customer calls in the company's southern division. These agents are able to access specific, detailed information for each store location using customer relationship management (CRM) solutions from Avaya Inc. Avaya's Interaction Management software links multiple databases in local stores and then delivers information to the regional agents, who seamlessly respond to customers by phone, e-mail, or other electronic media. By handling all contacts regionally, Home Depot frees store associates to spend more time with in-store customers.
Customers contacting the company by phone or e-mail also receive more efficient and accurate service, with little or no time spent on hold or waiting for a response.
"For us, contact center technology is more than getting a call to an agent," said Ed Buter, Senior Manager—Information Services, Home Depot. "We have approximately a million products in more than 1,200 stores, with numerous databases kept at the stores for things like product orders, delivery and installation schedules, tool rentals, or promotional events. Our challenge is to get this information to the agents while quickly and effectively integrating all channels of communication into a system that supports the business."
it's clear that Home Depot understands that the quality of information flow within an organization is critical to the organization's ability to gain a competitive advantage. By connecting all its stores in a real-time network, Home Depot can more effectively view its stores (expected to number more than 2,300 by 2005) as a single entity. Such collective information allows the chain's management to examine up-to-the-minute nationwide statistics and trends, which ultimately supports more effective and timely decisions. With the addition of regional call centers, Home Depot makes more effective use of its employees' time to serve their customers. Add to this the services offered at the Web site, homedepot.com, and it's hard to imagine what more this company could do to improve itself.
Discussion Questions
1. What types of information, statistics, and trends might Home Depot managers be interested in tracking with their new system in order to meet the organization's goals?
Дата добавления: 2015-09-30; просмотров: 39 | Нарушение авторских прав
| <== предыдущая лекция | | | следующая лекция ==> |
