electronic business (e-business) systems

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Electronic

Business

(E-Business) Systems

Learning Objectives• Appreciate the possible changes to

organizational processes that occur when e-business introduced

• Understand major approaches to transfer of electronic data during business events processing

• Recognize the complexities that are introduced as electronic document management moves us steadily toward the paperless office

• Understand the complexities surrounding EDI that are introduced when linking two different organizations’ computer systems for joint business event data processing

• Appreciate the challenges faced by organizations when they pursue direct business links with customers via the Internet or other networks

• Appreciate the business advantages gained through effective use of electronic business

Electronic Business

(E-Business)Systems

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Electronic Business

• Electronically exchanging information and linking business processes, individuals and organizations

• Transactions completed more quickly, more efficiently, and more effectively

• Eliminates paper trail (eventually)

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E-business

• Record electronic business events– Interconnects back-office processes and/or front

office processes of two or more organizations– elimination of sales staff, normally intermediary

between two parties to transactions• Is this a good idea?

– Save costs, but...

– Efficiency gains• Including price efficiencies

– Ease at which purchasing agents get access prices

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Recording Business Events (Accounting for Events)

• Technology (E-business)– New processes– New business events

• Reengineering– Hugely Increased Efficiency– Hugely Increased Effectiveness

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Modes of Accounting for Events

• Periodic– Delay between event and recording that event– Batch processing

• Aggregation of multiple business events over a period of time for later processing

– the only time the master data are up to date is right after the processing has been completed.

– As soon as the next business event occurs, the master data are no longer up to date.

• Immediate– Little or no delay occurs business event and

recording that event

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Methods of Accounting

• Automated Manual System

• Online Transaction Entry (OLTE)

• Online Real-Time (OLRT)

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Automated Manual System

• Four Sub-processes– Business Event Occurs

• Recorded on Source Document

– Record Business Event• Batch Processed and Input by data-entry clerk

– Event Data Store (Sales, Purchases, etc.)

• Data Store = Table

– Update Master Data– Generate Output

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Automated Equivalent to a Manual System

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Online Transaction Entry (OLTE)

• Entering business events at time and place the business event occurs – Computer input device used to enter data at

source at time of business event• Merging Step 1 & 2 of Automated Manual System

– Input/Source document is eliminated– Price data is retrieved from the system– Source documents are printed by the system– Event information in accumulated on tape or disk

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Online Transaction Entry (Batch)

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Online Real-time (OLRT)

• Three Sub-processes– Business event occurs and is recorded

• Transactions saved

– Update Master data• Immediate mode

– Generate Reports and Support Queries• Reports periodically or on an as needed basis• Support queries to generate unique reports for

key decisions on demand

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Online real-time processing

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Methods of Conducting E-Business

• E-Mail– Electronic communication of non-Standardized

messages via communication network• Requires human interpretation

• Electronic Document Management– capture and storage of document images instead of

paper• Electronic Data Interchange

– computer-to-computer exchange of business data in structured formats that allow direct processing of those electronic documents by the receiving computer system.

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Electronic Document Management

• Document Storage and Retrieval

• Business Event Data Processing– Workflow Management

• Route documents to appropriate people and appropriate time AND

• Manage the flow of documents

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#9 AICPA Technology 2006

• Paperless Digital Technologies– process of capturing, indexing, storing, retrieving,

searching, and managing documents electronically including database management

– Knowledge management then brings structure and control to this information, allowing organizations to harness the intellectual capital contained in the underlying data.

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Document Mgmt Demo

Lotus Notes Demo

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Electronic Data Interchange (EDI)

• Computer-Computer• Business Data• Direct processing• Standardized

– ANSI X12• US and Canada

– EDIFACT• International

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EDI Components

1. An originating application prepares an electronic business document, such as a purchaseorder (PO). 7. At the destination organization, an application processes the business data.

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EDI Components

2 and 6. An application’s electronic business document must be translated from standard message format to the structured EDIformat that will be recognized by the receiving computer.

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Electronic Data Interchange Set

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ANSI X12 Document Types

• EDI Service Bureau

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EDI Components

3 and 5. Establish a method to communicate electronic message. EDI service bureaus or the Internet are may be used, saving time and money over other methods.

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EDI Components

4. Rather than connecting each trading partner, an organization can use a VAN. An organizationcan connect to the VAN when it wants, leave its outgoing messages and, at the same time, pick up incoming messages from its “mailbox.”

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EDI Process Changes

• Significant reduction in human interaction (Purchaser & Salespeople)

• Elimination of erroneous data• Online Real Time Processing• Forces organization to change

processes as a result of instantaneous information flows– Business Process Reengineering

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Control Considerations

• Proper Authorization– Authenticate EDI transmission

• Prevent rather then Detect errors in data

• Program changes & Security over IS

• VAN vs. direct communication– Prevent compromise of data

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Controls Needed

• All transactions are sent/received

• All transactions are recorded only once

• Accuracy of data (sent/received/translated)

• Authenticate Senders

• Messages are not intercepted/altered

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Control Plans

• EDI has built in controls– Batch, Counts, Control #’s, Headers/Footers

• Reasonableness checks• Access• Data Encryption• Digital Signatures• Continuous Audition

– Integrated Tests• Dummy Data is tested

– Imbedded Audit Modules• Alerts auditor to suspect data

– Hmmm, sounds like a use of Complex Event Processing

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Internet Commerce

• Computer-Computer

• Exchange of Business Data

• Structured and semi-structured

• Via Internet

• Forms

• XML possible replacement of EDI

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XML

• eXtensible Markup Language– Describes Data– Use of Tags– Facilitates sharing of data across systems

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XML Example

– <?xml version="1.0" encoding="UTF-8"?>– <recipe name="bread" prep_time="5 mins" cook_time="3 hours">– <title>Basic bread</title>– <ingredient amount="3" unit="cups">Flour</ingredient>– <ingredient amount="0.25" unit="ounce">Yeast</ingredient>– <ingredient amount="1.5" unit="cups“

state="warm">Water</ingredient>– <ingredient amount="1" unit="teaspoon">Salt</ingredient>

<instructions>– <step>Mix all ingredients together, and knead thoroughly.</step>– <step>Cover with a cloth, and leave for one hour in warm

room.</step> – <step>Knead again, place in a tin, and then bake in the

oven.</step> – </instructions>– </recipe>

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Typical Internet Connection

Client/Server

1 and 7. Customer connects to vendor in client-server configuration. Customer is Client (secure), Vendor is Server (receive and translate data)

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Typical Internet Connection

Network Providers

2 and 5. Connection to Internet through direct connection or service provider

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Typical Internet Connection

Assurance Providers

4 and 6. Assurance services provide limited assurance that web site reliable and secure:

WebTrust; Verisign

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Typical Internet Connection

Internet Connection

3. The Internet (public network) E-business is open to all Revolutionizes Business