Chapter 6: Information Technologies in Business

E-business

E-business can be defined as the usage of the Internet technologies to enhance business processes. Some examples to these business processes may be organizational communication and e-commerce. This organizational communication can be between the company and its own departments, the company and its customers, the company and its suppliers, the company and its stakeholders. If any financial transaction takes place during e-business processes, we call this process as e-commerce rather than e-business. The scope of ebusiness is not restricted with financial transactions. So, we can think that e-commerce is basically a subset of ebusiness. E-business allows companies to work more closely with their suppliers and partners.

E-commerce

E-commerce basically helps businesses to use the Internet to sell their products and services. It is similar to traditional commerce in terms of functionalities where the main difference is the usage of the Internet for transactions. In traditional commerce, the exchange of goods and services can only take place during working hours. On the other hand, in e-commerce, the buying and selling of goods can occur anytime. In recent years, businesses of many companies rely on the Internet. With the development and spread of the Internet technologies in worldwide, the term e-commerce became widely known in 1990s. Some examples to widely-known international ecommerce companies are eBay and Amazon. com. However, there exist some local e-commerce companies working in some countries or regions. GittiGidiyor and Hepsiburada are some examples to e-commerce companies in Turkey. Categorization about e-commerce systems are realized with respect to the nature of transactions or the relationships between participants. We mention 7 different e-commerce models in this chapter. These e-commerce models are business-to-business (B2B), business-to-consumer (B2C), consumer-toconsumer (C2C), consumer-to-business (C2B), businessto-government (B2G), government-to-business (G2B), and government-to-consumer (G2C). While some of these models are more common than the others, all of these models have some usages at a certain level.

B2B is a type of e-commerce model where the two sides of exchange are businesses. So, we can refer one side of the exchange to buyer business and the other side as seller business. For example, orders from a company are sent to suppliers through the Internet and the appropriate action is started. Alibaba.com is a well-known B2B e-commerce website and companies can perform various transactions via this website.

B2C is a type of e-commerce model where the one side of exchange is businesses and the other side of exchange is consumers. This model provides an opportunity to a consumer or customer for placing an order from a company via the Internet. Consumers can easily find the most competitive price for a product or service. A widely known example to B2C e-commerce companies in Turkey is Hepsiburada.

C2C is a type of e-commerce model where the two sides of exchange are both consumers. This model provides an opportunity to consumers to sell their assets via the Internet. These assets can be anything such as their previously used electronic devices and books. A transaction takes place directly between two consumers. C2C e-commerce companies generally earn money by charging some fees or commissions from sellers for the items they listed on the website. They basically act as intermediaries for matching buyers and sellers and they have not so much control over the quality of the products being sold. Craigslist, which is a widely used website in U.S.A., can be given as an example to C2C e-commerce companies. Well-known examples of C2C e-commerce companies in Turkey are Sahibinden.com and GittiGidiyor.com

C2B is a type of e-commerce model where the one side of exchange is consumers and the other side of exchange is businesses. In C2B e-commerce model, they may be two different approaches. In the first approach, consumers may sell its products or services to businesses. In the second approach, the transactions are initiated by consumers. Consumer sends a request to businesses for a product or service and then businesses make a bid. Then, consumer decides where the product or service will be bought from. For example, we assume that a consumer wants to buy a flight ticket from Ankara to Antalya. When the consumer posts the flight information via the Internet, some competing airlines give offers for this flight ticket. During these kind of transactions, consumers are proactive and they can make offers about the price they are prepared to pay for the flight ticket. Then, the consumer makes a decision about the company that the flight ticket will be bought. An example to websites using this type of C2B ecommerce model is Priceline.com.

B2G is a type of e-commerce model where the one side of exchange is businesses and the other side of exchange is government. Businesses use the Internet for transactions with public sector or any other governmental services. Businesses may sell products or services to public sector.

G2B is a type of e-commerce model where the one side of exchange is government and the other side of exchange is businesses. In this model, government provides services or information to businesses via the Internet. Government approaches business organizations with G2B model.

G2C is a type of e-commerce model where the one side of exchange is government and the other side of exchange is consumers. G2C model is used by governments to approach consumers or citizens. Governments can provide some services, such as registration for birth, marriage, or death certificates via the Internet.

Case Studies about E-Commerce

This section gives detailed information about some widely known e-commerce companies. This information includes such things as story of the companies and the e-commerce models they applied. The e-commerce companies mentioned in this section are Amazon.com and e-Bay.

Amazon.com was founded by Jeff Bezos in 1994. Bezos decided to explore the business opportunities and he decided to set up an online bookselling business. He believed that most people would take the risk of online buying for a product such as a book. Some of the key components of Amazon.com are as follows:

1. Browsing
2. Searching
3. Reviews and content
4. Secure credit card payment
5. High level of customer service

Amazon.com was one of the first companies using B2C ecommerce model. By 1998, the net sales of the company were 540 million dollars. Recently, the net sales of the company are more than 100 billion dollars per year.

eBay was founded by Pierre Omidyar in 1995. Pierre Omidyar is an Iranian-American who arrived in America in the early 1970s from France. He graduated from Tufts University with a bachelor’s degree in computer science in 1988. The first item listed on eBay was a broken laser pointer. Recently, it is a multibillion dollar business with operations in many countries. eBay is known as one of the first companies using C2C e-commerce model. However, more companies are having their own virtual store on EBay in recent years. So, it also acts as a B2C ecommerce website.

ERP

ERP is a type of software solution that aims to meet the needs of an organization for its business process flow. It must take into account the business processes in the organization and incorporate all the functions of an organization. It must also manage the organization’s connections with its outside stakeholders. So, it is possible to say that ERP integrates all departments and functions across a company into a single computer system. These functions can be anything, such as finance, customer relationship management (CRM), human resource management (HRM), supply chain management (SCM), inventory, purchase, production planning, and sales. An ERP software is generally based on a common database and a modular software design. This common database allows every department of an organization to store and retrieve information in real-time. Since the software designs are modular, organizations can choose some of the modules they need. However, some existing modules can be customized and some new modules can be added to the ERP systems according to the needs of organizations. Some common modules in ERP systems can be listed as finance, customer relationship management (CRM), human resource management (HRM), supply chain management (SCM), inventory, purchase, production planning, and sales.

Finance module is a part of ERP software that gathers financial data and generates reports, such as overall balance sheets and quarterly financial statements. Some basic components of ERP finance module can be general ledger, accounts payable, accounts receivable, fixed assets, and financial reporting. Also, treasury management, revenue flow, cash flow, account balances, fund transfers, and tax assessments may be listed as some other components in ERP finance module.

CRM is an approach to building and sustaining long-term business with customers. Building long-term relationships with customers is essential for any sustainable business. Companies use this approach to manage and analyze customer interactions. CRM modules are designed to compile information on customers across different channels. These channels may be the company’s website, telephone, live chat, direct mail, marketing materials, and social media.

HRM module in ERP systems allows the Human Resources Department Staff to maintain information on employees. It is designed to maximize employee performance depending on employers’ strategic objectives. HRM module can be used to track some functions like payroll, administration, and hiring.

SCM module helps coordinating all supply activities of an organization. This module includes planning, execution, control, and monitoring of all supply activities.

Inventory module is necessary to maintain the items of inventory and their movements regardless of the size of organizations. Inventory module in ERP systems aims to provide the good inventory management that organizations need.

Purchase module handles the processes related to procurement of items that are required for organizations. This module contains information about suppliers for various items. Efficient operations about purchase processes help cost savings for manufacturing organizations.

Production planning module helps an organization for optimization of all available resources while delivering products. Organizations can track product creation processes with the help of this ERP module. It is mainly designed to monitor day-to-day production progress.

Sales module allows an organization to track the sales processes in an efficient way. It helps such functions as order placement, order scheduling, shipping, and invoicing. Prices for items are maintained with this module. ERP vendors sometimes offer online store front integrated with sales module considering this situation.

Various factors may affect the ERP software choice of companies. These factors may be related to requirements of companies, licence price of ERP software, hardware requirements, cost of integration, cost of maintenance, and cost of software consultancy. The size of companies and industry they included help determining their requirements. There exist both commercial software and open-source software solutions for ERP systems. Commercial software is a kind of software that is designed and developed by anyone for selling to customers with a license fee. Open-source software is a kind of software whose source code is available for modification. However, most open-source softwares are free. Some commercial ERP softwares are SAP ERP, Oracle ERP, Microsoft Dynamics ERP, Netsis 3 Enterprise, and Abas ERP (P:115, Table 6.1). Some open-source ERP softwares are Openbravo ERP, iDempiere Business Suite, ERPNext, Odoo, and Dolibarr (P:116, Table 6.2).