E-Commerce and Mobile Commerce Technology

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Description

Locate a real-world organizational example of fraud involving technology and address the following requirements:
Provide a brief overview of what happened in the organizational example.
Outline what fraud-related clues were missed.

Explain how the fraud was detected.
Using theory and research from Chapter 8 of the textbook, what should the organization have done to prevent the fraud from occurring?
Embed course material concepts, principles, and theories, which require supporting citations along with at least two scholarly peer reviewed references supporting your answer.IT for Management: On-Demand Strategies for
Performance, Growth, and Sustainability
Eleventh Edition
Turban, Pollard, Wood
Chapter 8
Retail, E-Commerce, and Mobile Commerce
Technology
Learning Objectives (1 of 5)
Copyright ©2018 John Wiley & Sons, Inc.
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Retailing Technology: Consumer Demands
• Keeping Up With Consumer Demands and Behavior
A dizzying array of new technologies are exciting and
unproven.
o Adoption is vital, but budgets are limited.
o Consumers are demanding, price-conscious, and easily
swayed by competitors.
o Overly aggressive marketing leads to financial ruin, but risk
aversion loses out to competition.
o
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Retailing Technology: Consumer Behavior (1 of 3)
• Trends and Changing Behavior
Empowered Price Sensitivity: using the latest technology to
find the lowest price available.
o Nonlinear Search and Influence Patterns: consumers pursue
path through a range of new communications channels
including social media, mobile ads, e-mail, search marketing,
and other digital communications.
o Channel Hopping: increased communication channels through
which consumers can now purchase products (traditional
retailers, online, and via mobile devices and apps) called
social commerce.
o
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Retailing Technology: Consumer Behavior (2 of 3)
• Consumer Demands and Behavior
Digital Immigrants: older consumers that fundamentally view
retail channels as separate and distinct.
o Digital Natives: first digital generation surrounded by digital
devices and Internet connectivity.
o Digital Dependents: emerging generation growing up in a
world of broadband connections, constant connectivity that
place greater demands on retailers to use technology.
o
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Retailing Technology: Consumer Behavior (3 of 3)
• Need for Convenience
Economic and social factors lead to more stressful lives.
o Consumers look for products and shopping channels that
reduce the impact on time and financial resources.
o An increasing demand to satisfy immediate gratification and
desirable goods and services.
o
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The Omni-Channel Retailing Concept
Figure 8.3 Retail strategy is evolving toward an omni-channel approach
(adapted from National Retail Federation, 2011).
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Retailing Technology
1. Describe the factors that influence consumer shopping
behavior today.
2. What does the concept of digital native, digital
immigrant, and digital dependent help us to
understand about people’s use of technology during
shopping activities?
3. Why are retailers likely to view technology as both a
blessing and a curse?
4. Describe how an omni-channel retailer is likely to be
different from a traditional, single-channel retailer?
Copyright ©2018 John Wiley & Sons, Inc.
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Learning Objectives (2 of 5)
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Business to Consumer (B2C) E-commerce
• Purchasing Online
The most well-known B2C site is Amazon.com, whose IT
developments received U.S. patents that keep it ahead of
competition.
o Broader selection, lower prices, and easy searching and
ordering are featured through e-commerce.
o Electronic Wallet (e-wallet ): a software application that can
store encrypted information about a user’s credit cards, bank
accounts, and other information necessary to complete
electronic transactions.
o
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Business to Consumer (B2C) E-commerce:
Amazon Model
• Amazon
Invested hundreds of millions of dollars in warehouses
designed for shipping small packages to hundreds of
thousands of customers.
o Designed One-Click shopping, highlighted by the e-wallet,
allowing order status viewing and order fulfillment
modifications.
o Numerous patentable e-commerce designs provide continued
competitive advantage.
o
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Business to Consumer (B2C) E-commerce:
Online Banking
• Online Services
Electronic fund transfer (EFT): transfer of funds from one bank
account to another over a computerized network.
o Transaction cost reduction is significant: banks pay $.02 for
online versus $1.07 at a physical branch.
o Investment options and loan rates online easily undercut
those of many brick-and-mortar (conventional) banks.
o
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Business to Consumer (B2C) E-commerce:
Recruiting
• Employment
o Job openings, résumés, and applications can be
transmitted or completed 24/7, 365.
o Job seekers use social media network contacts
(LinkedIn).
o Over 95% of employers use LinkedIn to identify
prospective candidates.
o Online reputation of both job seeker and employer
can be researched and/or built.
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Business to Consumer (B2C) E-commerce:
Retailing Issues (1 of 3)
• Resolving Channel Conflict
o When regular wholesalers (on-ground) and retailers
(on-line) circumvent direct online distributors.
o May limit B2C efforts not to sell directly.
o May force collaboration with existing distributors.
• Conflicts within click-and-mortar organizations
o Online sales may impact offline operations
o Companies may separate online from traditional
divisions, but this may increase expenses and reduce
synergies.
Copyright ©2018 John Wiley & Sons, Inc.
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Business to Consumer (B2C) E-commerce:
Retailing Issues (2 of 3)
• Managing Order Fulfillment and Logistics
o
o
Online sales force the need to design systems to accept and process huge
volumes of small orders, physical delivery including labeling.
Reverse Logistics is the return process.
• Viability and Risk of Online Retailers
o
o
The dot.com era bankrupted many pure online retailers due to cash flow,
customer acquisition, order fulfillment, and demand forecasting problems.
Low entry barriers intensify competition!
• How long to operate while losing money?
• How to finance operating losses?
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Business to Consumer (B2C) E-commerce:
Retailing Issues (3 of 3)
• Identifying Appropriate Revenue Models
o
Early dot.com model:
• Generate enough revenue from advertising to keep the
business afloat until customer base critical mass is reached.
• Too few dotcoms were competing for too few advertising
dollars
• Advertising went to a select group of sites (AOL, MSN, or
Yahoo)
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Business to Consumer (B2C) E-commerce:
Planning
• Online Business and Marketing Planning
Build the marketing plan around the customer, rather than on
products.
o Monitor progress toward the one-year vision for the business
in order to identify when adjustments are needed, and then
be agile enough to respond.
o Identify all key assumptions in the marketing plan. When
there is evidence that those assumptions are wrong, identify
the new assumptions and adjust the plan.
o Make data-driven, fact-based plans.
o
Copyright ©2018 John Wiley & Sons, Inc.
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Business to Consumer (B2C) Ecommerce Review
1. Describe how digital content and services can lead to
significantly lower costs.
2. Why does channel conflict sometimes occur when companies
sell their products through both traditional and online channels?
3. How has Amazon maintained its competitive edge?
4. Describe some of the ways that Ally Bank has become one of the
most successful direct banks in the industry today.
5. Explain why retail banking has become one of the least trusted
industries by consumers since the early 2000s.
6. List three online marketing planning recommendations.
Copyright ©2018 John Wiley & Sons, Inc.
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Learning Objectives (3 of 5)
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Business to Business (B2B) E-commerce
and E-procurement
• Business-to-business (B2B) Markets
The buyers, sellers, and transactions involve only
organizations
o B2B comprises about 85 percent of e-commerce dollar
volume
o Enterprise forms electronic relationships with distributors,
resellers, suppliers, customers, and other partners
o
• Business models for B2B applications:
Sell-side marketplaces
o E-sourcing (the buy-side marketplace)
o
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Business to Business (B2B): Sell-side Marketplaces
• Sell-Side Marketplaces
Where organizations sell their products or services to other
organizations from their own private website or from a thirdparty site.
o Creates greater competition for sellers (a buyer advantage)
o Similar to B2C model, but the ‘C‘ is an organization.
o
• Amazon Business
• Alibaba wholesaling Chinese products
• Dell Computer auctions through eBay
• Overstock.com for obsolete of excess assets
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Business to Business (B2B): E-sourcing
• Different procurement methods that make use of an
electronic venue for identifying, evaluating, selecting,
negotiating, and collaborating with suppliers.
• Primary methods include: Online auctions, Request for
Quotes (RFQ) processing, and private exchanges.
• Secondary activities include: trading partner
collaboration, contract negotiation, and supplier
selection.
Copyright ©2018 John Wiley & Sons, Inc.
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Business to Business (B2B): E-procurement
• Corporate procurement (corporate purchasing):
transactional elements of buying products and services
for operational and functional needs.
• Direct procurement: buying materials to produce
finished goods.
• Indirect procurement: buying materials for daily
operations.
• E-procurement: reengineered procurement using ebusiness technologies and strategies.
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Business to Business (B2B): E-procurement
Goals
• Control Costs & Simplify Processes
(streamlining)
o Streamline within an organization’s value chain.
o Align the organization’s procurement process with
those of other trading partners, which belong to the
organization’s virtual supply chain.
o Analyze spending patterns in an effort to improve
spending decisions and outcomes.
Copyright ©2018 John Wiley & Sons, Inc.
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Business to Business (B2B): Electronic Data
Interchange (EDI)
• Public and Private Exchanges
o Vertical exchanges serve one industry along the
entire supply chain (automotive, chemical,
manufacturing, etc.).
o Horizontal exchanges serve many industries using
the same products or services (office supplies,
cleaning materials, bearings, etc.). Also called
Maintenance, Repair, and Operations (MRO)
supplies.
Copyright ©2018 John Wiley & Sons, Inc.
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Business to Business (B2B) E-commerce and
E-procurement Review
1. Briefly differentiate between the sell-side
marketplace and e-sourcing.
2. What are the two basic goals of e-procurement?
How can those goals be met?
3. What is the role of exchanges in B2B?
4. Explain why maverick buying might take place
and its impact on procurement costs.
Copyright ©2018 John Wiley & Sons, Inc.
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Learning Objectives (4 of 5)
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Mobile Commerce
• Mobile Commerce, or M-Commerce:
o
The buying or selling of goods and services using a wireless,
handheld device such as a cell phone or tablet (slate)
computer.
• Mobile E-Commerce
o
The use of a wireless handheld devices to order and/or pay
for goods and services from online vendors.
Copyright ©2018 John Wiley & Sons, Inc.
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Mobile Commerce: Retailing & Marketing
• Mobile Retailing
o
The use of mobile technology to promote, enhance, and add
to value to the in-store shopping experience.
• Mobile Marketing
o
A variety of activities used by organizations to engage,
communicate, and interact over Wi-Fi and
telecommunications networks with consumers using wireless,
handheld devices.
Copyright ©2018 John Wiley & Sons, Inc.
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Mobile Commerce: Competitive Advantage
• M-commerce provides competitive
advantage
• In-Store Tracking
o
Tracking a customer’s movement
through a retail store through
mobile technology to optimize
shopping experiences.
• Quick Response (QR) Codes
o
Customers scan the QR code
containing a link to an Internet
webpage.
o
Easier alternative to typing a URL
address into a mobile browser.
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Mobile Entertainment Expanding
• Most notable are music, movies, videos, games, adult
entertainment, sports, and gambling apps.
• Apps can track sporting news, record workout times,
record heart rates, analyze a person’s golf swing.
• The iTunes Store, Google, and Amazon continue to be
leading distributors of digital music, movies, TV shows,
e-books, and podcasts.
• Mobile device improvements are predicted to increase
video clips, movie, and television use on/through
mobile devices toward $20 billion.
Copyright ©2018 John Wiley & Sons, Inc.
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Mobile Travel Services
• Mobile Payment Systems
o
o
In 2016, 38.4 million Americans
will have used a mobile phone
to purchase goods or services
at least once in the last six
months
Proximity mobile payments,
based on RFID technology, will
increase to $314 billion by 2020
• Mobile Phone used for:
o
o
Online shopping or
Payment for traditional
purchases
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Mobile Social Networking
• Facebook added mobile access in recent years to stay
competitive.
• Snapchat is completely app-based.
• Occurs in virtual communities, offering users to access
their accounts from a smartphone or other mobile
device.
• Primary driver of growth in the mobile app industry.
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Mobile Commerce App Features
• Location-Based Marketing
Advertising using mobile GPS systems to determine user
locations.
o Structured as mobile social media games to elicit consumer
information and ratings for special attention or discounts
from retailers.
o
• Augmented Reality (AR)
o
Apps that utilize a special technology to create computergenerated graphic superimposed images based on
where/how a user points their phone or camera.
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Mobile Search
• Almost 60% of all Internet searches are conducted from
a mobile device
• Over half of all web traffic comes from mobile devices
• As a result, Google and other Internet search engines
now use the performance of a company’s mobile
website as part of the criteria for ranking listing in
search results
SEO specialists must now focus on a set of new factors
for optimizing websites for mobile search.
Copyright ©2018 John Wiley & Sons, Inc.
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Mobile Commerce Review
1. Describe some of the ways that people are using mobile devices
to shop for products and services.
2. What are some ways in which traditional brick-and-mortar
retailers can use mobile technology to enhance a customer’s instore shopping experience?
3. List the types of mobile entertainment available to consumers.
4. List some ways that travelers and travel-related businesses are
using mobile technology.
5. How are companies using QR codes to promote products and
services to mobile consumers? Why are QR codes not as popular
in the U.S. as they are in Asia and other parts of the world?
6. Explain why the mobile gaming market represents such a
lucrative market opportunity.
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Learning Objectives (5 of 5)
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Mobile Transactions and Financial Services
• Hotel Services and Travel
o
Airline QR boarding passes and
SMS flight updates
o
Google Maps widely used for
automobile navigation
o
Travel planning with roadside
assistance, Wi-Fi hotspots, and
recommendations
o
Hotel guest reservations, bill
checking, and local services
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Mobile Payment Systems (1 of 2)
• Charge to Phone Bill with SMS Confirmation
o
Uses secure PIN through SMS to validate payment (like
Zong.com).
• Augmented Reality (AR)
o
Apps that utilize a special technology to create computergenerated graphic superimposed images based on
where/how a user points their phone or camera.
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Mobile Payment Systems (2 of 2)
• Transfer of Funds from Payment Account Using SMS
o
Phone sends SMS to transfer payment through third party
(Obopay.com, PayPal.com)
• Mobile Phone Card Reader
o
Phone attached device allows credit card swipe (Square.com,
Paypal.com)
• Micropayments
o
Transactions involving small sums of money (vending
machines, parking meters)
• Mobile Bill Payments
o
Payments made directly from cell phone (Western Union,
Citibank, HDFC Bank in India)
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Mobile Banking Services
• Natural extension of online banking
• Uses combination of mobile media channels
o
(SMS, mobile Web browsers, customized apps)
• Common services include account alerts, balance
information, branch location, bill pay, funds transfers
and verification
• Mobile banking benefits seem to outweigh potential
security threats.
• Increasing mobile banking likely means increased
targeting of mobile financial activities.
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Mobile Banking Security Risks
Cloning Duplicating the electronic serial number (ESM) of one phone and using it in
second phone, the clone. This allows the perpetrator to have calls and other transactions
billed to the original phone.
Phishing Using a fraudulent communication, such as an e-mail, to trick the receiver into
divulging critical information such as account numbers, passwords, or other identifying
information.
Smishing Similar to phishing, but the fraudulent communication comes in the form of an
SMS message.
Vishing Again, similar to phishing, but the fraudulent communication comes in the form
of a voice or voicemail message encouraging the victim to divulge secure information.
Lost or stolen phone Lost or stolen cell phones can be used to conduct financial
transactions without the owner’s permission.
Copyright ©2018 John Wiley & Sons, Inc.
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Mobile Transactions and Financial Services
Review
1.
What are the two basic technologies used for mobile banking and
financial services?
2.
Why have e-wallets not been widely adopted and what will makers of
e-wallets need to do to make this payment method more attractive to
consumers?
3.
What are the most common types of mobile banking activities
consumers perform?
4.
What are the most common security risks associated with mobile
banking?
5.
Describe some of the mobile payment systems currently available to
merchants and consumers.
6.
What is a micropayment and why is it beneficial to consumers and
businesses that mobile payment systems can process these types of
transactions?
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Copyright
Copyright © 2018 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of this work beyond that permitted in
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Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up
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no responsibility for errors, omissions, or damages, caused by the use of these programs
or from the use of the information contained herein.
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IT for Management: On-Demand Strategies for
Performance, Growth, and Sustainability
Eleventh Edition
Turban, Pollard, Wood
Chapter 9
Functional Business Systems
Learning Objectives (1 of 5)
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Business Management Systems and Functional
Business Systems
Two types of information systems support different areas
or activities in an organization:
• Business Management Systems (BMS)
o
designed to support planning and the implementation process
across the entire organization
• Functional Business Systems (FBS)
o
designed to improve the efficiency and performance of a
specific functional area within the organization
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Business Management Systems Modules
• Business Management Systems (BMS) aid leadership
teams by using technology to improve the
organizational planning and implementation process.
Typical modules in a BMS are:
Definition of Organizational Mission
o Identification of Strengths Weakness Opportunities and
Threats (SWOT Analysis)
o Establishing Goals and Measurable Objectives
o Defining Strategies, and Key Performance Indicators (KPIs)
o Articulation of Tactical or Action Plans – Assigning
Responsibilities and Time Tables
o Monitoring and Reporting Progress and Performance
o
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Business Management Systems Overview
• Mission
o
Set of outcomes an enterprise wants to achieve.
• Strategic Plan
o
A document used to communicate the company’s goals and
the actions needed to achieve them.
• Management Levels
Planning occurs at three levels of the organization – strategic,
managerial, and operational.
o Managers at each level operate with a different timeframe,
which transitions from long-term (a few years) at the strategic
level to “in the moment” (daily) at the operations level.
o
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Business Management Systems
Management Levels
Figure 9.3 Three organizational levels, their concerns, and strategic and tactical
questions, planning, and control.
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Functional Business Systems
• Traditional Functional Business Areas
Finance and Accounting
o Production/Operations & Supply Chain Management
o Marketing and Sales
o Human Resources Management
o
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Cross Functional Coordination and Integration
• Departments or functions must be able to coordinate
in the development of strategic plans and the
performance of operations level actions.
• Integration makes it easier to identify problems or
barriers to achieving objectives and develop solutions
to those problems.
• Complex processes are managed more effectively
through Standard Operating Procedures (SOP), a set of
written instructions on how to perform a function or
activity.
Copyright ©2018 John Wiley & Sons, Inc.
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Standard Operating Procedures: Data Properties
The SOP documents three related data properties in company
information systems:
• Data security
o
the protection of data from malicious or unintentional corruption,
unauthorized modification, theft, or natural causes such as floods.
• Data validity
o
tests and evaluations used to detect and correct errors, for instance
mistakes that might occur during data entry in fields, such as customer
name and address.
• Data integrity
o
the maintenance of data accuracy and validity over its life-cycle including
the prevention of unintended modification or corruption.
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Transaction Processing Systems
• Transaction Processing
o
o
information processing that is divided into distinct, undividable operations
called transactions.
used in the functional business systems of all areas.
For example:
o Production/Operations: The tracking of materials or component parts as
they enter and exit a warehouse or manufacturing facility.
o Marketing and Sales: Management of sales orders and order fulfillment.
o Human Resources: Processing of payroll and employee records.
o Finance/Accounting: Processing of credits and debits to a customer’s
checking account at a bank
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Transaction Processing Systems: The ACID
Test
Transaction processing systems (TPSs) collect, monitor,
store, process and distribute transactional data according
to certain criteria referred to as the ACID test.
• ACID Test
Atomicity: If all steps in a transaction are not completed, then
the entire transaction is cancelled.
o Consistency: Only operations that meet data validity
standards are allowed.
o Isolation: Transactions must be isolated from each other.
o Durability: Backups by themselves do not provide durability.
o
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Transaction Processing Systems: Batch and Real
Time Processing
• Transactions can be processed two ways:
Batch: all events or transactions are processed together (in a
batch) during scheduled times.
o Real Time: events or transactions are processed as soon as
they occur.
o Increasingly, organizations today are employing Online
Transactions Processing Systems (OTPS).
o
• Client server systems that allow transactions to run on multiple
computers on a network, processing transactions in real time.
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Transaction Processing Systems: Batch and Real
Time Processing
• Transactions can be processed two ways:
Batch: all events or transactions are processed together (in a
batch) during scheduled times.
o Real Time: events or transactions are processed as soon as
they occur.
o Increasingly, organizations today are employing Online
Transactions Processing Systems (OTPS).
o
• Client server systems that allow transactions to run on multiple
computers on a network, processing transactions in real time.
Copyright ©2018 John Wiley & Sons, Inc.
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Solving Business Challenges at All
Management Levels
Figure 9.4 Information flows triggered by a transaction or event.
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Solving Business Challenges at All
Management Levels: Review
1. Explain the purpose of Business Management Systems (BMS).
2. Define what a standard operating procedure (SOP) is and give an
example.
3. Explain each component of the ACID test.
4. Explain the differences between batch and online processing.
5. Explain the relationship between Transaction Processing Systems
(TPS) and Functional Business Systems (FBS).
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Learning Objectives (2 of 5)
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Production and Operations Management
• Production Operations Management
Production/Operations is sometimes viewed in the larger
context of supply chain management and supporting
information systems.
o Production operations management and supply chain
management information systems both play a critical role in
managing these important functions.
o These systems facilitate coordination between different
divisions within an organization or between the organization
and its partners.
o
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Production and Operations
Management: SCM
Figure 9.5 Companies recognize that careful management of supply chain
processes is critical for success in the highly competitive global economy
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Transportation Management Systems
• Relied on to handle transportation planning including
shipping consolidation, load and trip planning, route
planning, fleet and driver planning, and carrier
selection.
Four trend factors contributing to TMS growth:
o Outdated transportation systems need to be upgraded or
replaced
o Growth of intermodal transport
o TMS vendors add capabilities
o TMSs handle big data
o
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Logistics Management
• Inbound logistics refers to receiving.
Outbound logistics refers to shipping.
o Inventory control systems are stock control or inventory
management systems.
o Logistics management systems:
o Optimize transportation operations
o Coordinate with all suppliers
o Integrate supply chain technologies
o Synchronize inbound and outbound flows of materials or
goods
o Manage distribution or transport networks
o
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Inventory Control Systems
• Inventory Control Systems
o
Important because they minimize the total cost of inventory while
maintaining optimal inventory levels. Inventory control systems minimize
the following three cost categories:
• Inventory holding costs
• Ordering and shipping costs
• Cost of shortages
• Safety Stock
o
Extra inventory used as a buffer to reduce the risk of stockouts. Also called
buffer stock.
• Stockouts
o Inventory shortage arising from unexpected demand, delays in scheduled
delivery, production delays or poor inventory management.
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Inventory Costs
Figure 9.6 Inventory Control Systems help companies balance inventory
ordering and carrying costs against the cost of inventory shortages.
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Just-in-Time Inventory Management
Systems
• JIT inventory management attempts to minimize holding costs
by not taking possession of inventory until it is needed in the
production process.
• Eliminates costs associated with carrying large inventories at any
given point in time.
• Higher ordering costs because of more frequent orders.
• Higher risk of stockouts
• Must have cooperative production and/or supply partners to
succeed
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Lean Manufacturing Systems
• Leverages suppliers delivering small lots on a daily or frequent
basis, and production machines are not necessarily run at full
capacity.
• Empowers workers so that production decisions can be made by
those who are closest to the production processes.
• JIT success factors also apply to lean manufacturing.
• Requires quality, on-time inventory
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Quality Control Systems
• Stand-alone or part of an enterprise-wide total quality
management (TQM) effort providing data about the quality of
incoming materials or parts, as well as the quality of in-process
semi-finished and finished products.
• Data collection by sensors or RFID and interpreted in real-time,
or stored in a database for future analysis.
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Computer-integrated Manufacturing (CIM)
Systems
• Custom-designed software that controls day-to-day shop floor
activities
• Data-driven automation
• Benefits:
o
o
o
It simplifies manufacturing technologies and techniques
Automates as many of the manufacturing processes as possible,
Integrates and coordinates all aspects of design, manufacturing, and
related functions.
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Manufacturing Execution Systems (MESs)
Systems
• Manage operations in shop factories, sometimes a few critical
machines, sometimes all operations on the shop floor.
• Typically broader infrastructure than CIM.
• Based on standard reusable application software instead of
customer-designed software.
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Manufacturing, Production, and Transportation
Management Systems Review
1. What is the function of supply chain management in an
organization?
2. What trends are contributing to the growing use of TMS?
3. Define logistics management.
4. What are the three categories of inventory costs?
5. What are the objectives of JIT?
6. Explain the difference between EOQ and JIT inventory models.
7. What is the goal of lean manufacturing?
8. What is CIM?
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Learning Objectives (3 of 5)
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Sales and Marketing Systems
• Digital advertising
• Social media monitoring and promotions
• Sales and customer support
• Automated ad placement and media buying
• Market research
• Intelligence gathering
• Distributing products and services to customers
• Order tracking
• Online and mobile order processing
• Online and mobile payment methods
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Sales and Marketing Systems and
Subsystems
Figure 9.7 Sales and Marketing systems and subsystems.
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Data-Driven Marketing
• Data-driven, fact-based decision making relies on hot, current
data, that has immediate impact on the business.
• Pay-per-click (PPC) advertising is one use of this type of data.
• FaceBook pushes ads to people based on their self-reported
demographics
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Sales and Distribution Channels
• Ways to optimize product and service distribution.
• Example channels:
Electronic channels.
o Mobile channels.
o Physical channels.
o
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Social Media Customer Service
• Monitoring Social Media
Many companies now employ customer support
representatives to monitor social media platforms.
o Offer support and solutions to customer problems
o Retains the customer’s loyalty and demonstrates the brand’s
commitment to customer satisfaction.
o Companies stand to benefit by demonstrating their
responsiveness to a wide audience of prospective customers
o
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Marketing Management
• Pricing of Products or Services
o
Sales volumes as well as profits are determined by the prices
of products or services.
• Salesperson Productivity
o
Collected in the sales and marketing TPS and used to compare
performance along several dimensions, such as time, product,
region, and even the time of day.
• Profitability Analysis
o
Profit contribution or profit margin of certain products and
services derived from the cost accounting system.
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Sales and Marketing Systems
1. Explain pay-per-click marketing.
2. List two sales and distribution channels.
3. Describe profitability analysis.
4. How do some online businesses determine the
prices they will charge to customers?
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Learning Objectives (4 of 5)
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Accounting, Finance, and Regulatory
Systems
• Income Statement
Summarizes a company’s revenue and expenses for one
quarter of a fiscal year or the entire fiscal year.
o Also known as a P&L (profit and loss) or earnings statement.
o
• Compliance
o
Generally accepted accounting principles (GAAP) and the
Financial Accounting Standards Board (FASB).
• Financial Misrepresentation
o
Occurs when a company has intentionally deceived one or
more other parties.
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XBRL Tagging
• eXtensible Business Reporting Language (XBRL)
Reporting (disclosure) system designed by the SEC to
eliminate document “search and find” difficulties and improve
how investors find and use information.
o Designed to:
o
• Generate cleaner data, including written explanations and
supporting notes.
• Produce more accurate data with fewer errors that require followup by regulators.
• Transmit data more quickly to regulators and meet deadlines.
• Increase the number of cases and amount of information that
staffers can handle.
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Creation of XBRL Documents
Figure 9.9 Overview of the creation of SBRL documents.
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Fraud Prevention and Detection
• Why Fraud Occurs
Fraud occurs because internal controls to prevent insider
fraud – no matter how strong – will fail on occasion.
o Terms used for Insider fraud are internal, employment, or
occupational fraud.
o Insider fraud is a term referring to a variety of criminal
behaviors perpetrated by an organization’s employees or
contractors.
o
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Fraud Risk Management
• Fraud Risk Management
o A system of policies and procedures to prevent and detect illegal acts
committed by managers, employees, customers, or business partners
against a company’s interests.
• Fraud Risk Factors
1.
A high level of trust in employees without sufficient oversight to verify
that they are not stealing from the company.
2.
Relying on informal processes of control.
3.
A mindset (belief) that internal controls and fraud prevention systems
are too expensive to implement.
4.
Assigning a wide range of duties for each employee, giving them
opportunities to commit fraud.
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Internal Controls
• Strong Internal Controls to prevent fraud consist of:
Segregation of duties
o Job rotation
o Oversight
o Safeguard of assets
o IT policies
o
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Auditing Systems
• Auditing Information Systems
Fraud can be easy to commit and hard to detect.
o Information systems can provide a federated approach to
auditing payroll, scheduling, accounts payable/receivable, and
other electronic data.
o Federated systems are the combination of independent
systems designed with unique functions.
o
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Financial Planning and Budgeting (1 of 2)
• Financial Planning and Budgeting
Budgeting: allocation of financial resources among
participants, activities, and projects. Includes the process of
analyzing and selecting investments with the highest ROI for
the organization or capital budgeting.
o Forecasting: estimating expenses, inventory, or other
corporate assets to secure sufficient cash flow.
o
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Financial Planning and Budgeting (2 of 2)
• Financial Planning and Budgeting
Financial Ratio Analysis: used by external parties when they
decide whether to invest in an organization, extend credit, or
buy it.
o Profitability Analysis: understanding the profitability of
individual products or services, product lines, or the financial
health of the entire organization.
o Cost Control: financial management of assets, through proper
estimation, to assure financial health and cash flow.
o
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Accounting, Finance, and Regulatory
Systems Review
1. What is eXtensible Business Reporting Language (XBRL)?
2. Why does the SEC mandate data disclosure, whereby data items
are tagged to make them easily searchable?
3. What is insider fraud? What are some other terms for insider
fraud?
4. What is fraud risk management?
5. What four factors increase the risk of fraud?
6. Explain how accounting ISs can help deter fraud.
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Learning Objectives (5 of 5)
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Human Resource Systems, Compliance,
and Ethics
• HR Information Systems (HRIS)
Systems that focus on legal and compliance responsibilities,
employee development, talent management, hiring, and
succession planning.
o HRIS moved into intranets or clouds, including leasing external
information system software as a service (SaaS):
o
• Reduce demand on internal businesses and IT resources.
• Dramatically improve time to value without overstretching internal
IT resources.
• Reduce development/implementation times for new systems.
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HR Management Activities
Figure 9.11 HR management activities.
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Management and Employee Development
Activities
• Management and Employee Development
o
Performance Evaluation
• Corporate managers can analyze employees’ performances with
the help of intelligent systems, which provide systematic
interpretation of performance over time.
o
Training and Human Resources Development
• Provide career development plan for each employee. IT can support
the planning, monitoring, and control of these activities by using
workflow applications.
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HR Planning, Control, and Management
• HR Planning, Control, and Management
o
Personnel Planning and HR Strategies
• Forecasts requirements for people and skills, planning how to
locate sufficient human resources or develop them from within.
o
Benefits Administration
• Salary/wage, bonuses, and other rewards for service.
o
Employee Relationship Management
• Self-service personal information tracking, online training, and
other employee-focused tasks.
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HRIS Ethics
• Ethical Challenges and Considerations
Recruiting, training, and performance evaluation procedures
may involve ethical issues.
o Information and employee privacy should be protected.
o Employment laws make securing HR information necessary
for the protection of employees and the organization
o
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Human Resource Systems, Compliance, and
Ethics Review
1. What are the key HR functions?
2. What are the benefits of moving HRISs to intranets or the cloud?
3. What concerns have deterred companies from implementing
SaaS HR?
4. How can companies reduce the cost of recruiting qualified
employees?
5. Describe IT support for HR planning and control.
6. What are ethical issues related to HRM apps?
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98
Copyright
Copyright © 2018 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of this work beyond that permitted in
Section 117 of the 1976 United States Act without the express written permission of the
copyright owner is unlawful. Request for further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up
copies for his/her own use only and not for distribution or resale. The Publisher assumes
no responsibility for errors, omissions, or damages, caused by the use of these programs
or from the use of the information contained herein.
Copyright ©2018 John Wiley & Sons, Inc.
99

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Description Locate a real-world organizational example of fraud involving technology and address the following requirements: Provide a brief overview of what happened in the organizational example. Outline what fraud-related clues were missed. Explain how the fraud was detected. Using theory and research from Chapter 8 of the textbook, what should the organization have done to prevent the fraud from occurring? Embed course material concepts, principles, and theories, which require supporting citations along with at least two scholarly peer reviewed references supporting your answer.IT for Management: On-Demand Strategies for Performance, Growth, and Sustainability Eleventh Edition Turban, Pollard, Wood Chapter 8 Retail, E-Commerce, and Mobile Commerce Technology Learning Objectives (1 of 5) Copyright ©2018 John Wiley & Sons, Inc. 2 Retailing Technology: Consumer Demands • Keeping Up With Consumer Demands and Behavior A dizzying array of new technologies are exciting and unproven. o Adoption is vital, but budgets are limited. o Consumers are demanding, price-conscious, and easily swayed by competitors. o Overly aggressive marketing leads to financial ruin, but risk aversion loses out to competition. o Copyright ©2018 John Wiley & Sons, Inc. 3 Retailing Technology: Consumer Behavior (1 of 3) • Trends and Changing Behavior Empowered Price Sensitivity: using the latest technology to find the lowest price available. o Nonlinear Search and Influence Patterns: consumers pursue path through a range of new communications channels including social media, mobile ads, e-mail, search marketing, and other digital communications. o Channel Hopping: increased communication channels through which consumers can now purchase products (traditional retailers, online, and via mobile devices and apps) called social commerce. o Copyright ©2018 John Wiley & Sons, Inc. 4 Retailing Technology: Consumer Behavior (2 of 3) • Consumer Demands and Behavior Digital Immigrants: older consumers that fundamentally view retail channels as separate and distinct. o Digital Natives: first digital generation surrounded by digital devices and Internet connectivity. o Digital Dependents: emerging generation growing up in a world of broadband connections, constant connectivity that place greater demands on retailers to use technology. o Copyright ©2018 John Wiley & Sons, Inc. 5 Retailing Technology: Consumer Behavior (3 of 3) • Need for Convenience Economic and social factors lead to more stressful lives. o Consumers look for products and shopping channels that reduce the impact on time and financial resources. o An increasing demand to satisfy immediate gratification and desirable goods and services. o Copyright ©2018 John Wiley & Sons, Inc. 6 The Omni-Channel Retailing Concept Figure 8.3 Retail strategy is evolving toward an omni-channel approach (adapted from National Retail Federation, 2011). Copyright ©2018 John Wiley & Sons, Inc. 7 Retailing Technology 1. Describe the factors that influence consumer shopping behavior today. 2. What does the concept of digital native, digital immigrant, and digital dependent help us to understand about people’s use of technology during shopping activities? 3. Why are retailers likely to view technology as both a blessing and a curse? 4. Describe how an omni-channel retailer is likely to be different from a traditional, single-channel retailer? Copyright ©2018 John Wiley & Sons, Inc. 8 Learning Objectives (2 of 5) Copyright ©2018 John Wiley & Sons, Inc. 9 Business to Consumer (B2C) E-commerce • Purchasing Online The most well-known B2C site is Amazon.com, whose IT developments received U.S. patents that keep it ahead of competition. o Broader selection, lower prices, and easy searching and ordering are featured through e-commerce. o Electronic Wallet (e-wallet ): a software application that can store encrypted information about a user’s credit cards, bank accounts, and other information necessary to complete electronic transactions. o Copyright ©2018 John Wiley & Sons, Inc. 10 Business to Consumer (B2C) E-commerce: Amazon Model • Amazon Invested hundreds of millions of dollars in warehouses designed for shipping small packages to hundreds of thousands of customers. o Designed One-Click shopping, highlighted by the e-wallet, allowing order status viewing and order fulfillment modifications. o Numerous patentable e-commerce designs provide continued competitive advantage. o Copyright ©2018 John Wiley & Sons, Inc. 11 Business to Consumer (B2C) E-commerce: Online Banking • Online Services Electronic fund transfer (EFT): transfer of funds from one bank account to another over a computerized network. o Transaction cost reduction is significant: banks pay $.02 for online versus $1.07 at a physical branch. o Investment options and loan rates online easily undercut those of many brick-and-mortar (conventional) banks. o Copyright ©2018 John Wiley & Sons, Inc. 12 Business to Consumer (B2C) E-commerce: Recruiting • Employment o Job openings, résumés, and applications can be transmitted or completed 24/7, 365. o Job seekers use social media network contacts (LinkedIn). o Over 95% of employers use LinkedIn to identify prospective candidates. o Online reputation of both job seeker and employer can be researched and/or built. Copyright ©2018 John Wiley & Sons, Inc. 13 Business to Consumer (B2C) E-commerce: Retailing Issues (1 of 3) • Resolving Channel Conflict o When regular wholesalers (on-ground) and retailers (on-line) circumvent direct online distributors. o May limit B2C efforts not to sell directly. o May force collaboration with existing distributors. • Conflicts within click-and-mortar organizations o Online sales may impact offline operations o Companies may separate online from traditional divisions, but this may increase expenses and reduce synergies. Copyright ©2018 John Wiley & Sons, Inc. 14 Business to Consumer (B2C) E-commerce: Retailing Issues (2 of 3) • Managing Order Fulfillment and Logistics o o Online sales force the need to design systems to accept and process huge volumes of small orders, physical delivery including labeling. Reverse Logistics is the return process. • Viability and Risk of Online Retailers o o The dot.com era bankrupted many pure online retailers due to cash flow, customer acquisition, order fulfillment, and demand forecasting problems. Low entry barriers intensify competition! • How long to operate while losing money? • How to finance operating losses? Copyright ©2018 John Wiley & Sons, Inc. 15 Business to Consumer (B2C) E-commerce: Retailing Issues (3 of 3) • Identifying Appropriate Revenue Models o Early dot.com model: • Generate enough revenue from advertising to keep the business afloat until customer base critical mass is reached. • Too few dotcoms were competing for too few advertising dollars • Advertising went to a select group of sites (AOL, MSN, or Yahoo) Copyright ©2018 John Wiley & Sons, Inc. 16 Business to Consumer (B2C) E-commerce: Planning • Online Business and Marketing Planning Build the marketing plan around the customer, rather than on products. o Monitor progress toward the one-year vision for the business in order to identify when adjustments are needed, and then be agile enough to respond. o Identify all key assumptions in the marketing plan. When there is evidence that those assumptions are wrong, identify the new assumptions and adjust the plan. o Make data-driven, fact-based plans. o Copyright ©2018 John Wiley & Sons, Inc. 17 Business to Consumer (B2C) Ecommerce Review 1. Describe how digital content and services can lead to significantly lower costs. 2. Why does channel conflict sometimes occur when companies sell their products through both traditional and online channels? 3. How has Amazon maintained its competitive edge? 4. Describe some of the ways that Ally Bank has become one of the most successful direct banks in the industry today. 5. Explain why retail banking has become one of the least trusted industries by consumers since the early 2000s. 6. List three online marketing planning recommendations. Copyright ©2018 John Wiley & Sons, Inc. 18 Learning Objectives (3 of 5) Copyright ©2018 John Wiley & Sons, Inc. 19 Business to Business (B2B) E-commerce and E-procurement • Business-to-business (B2B) Markets The buyers, sellers, and transactions involve only organizations o B2B comprises about 85 percent of e-commerce dollar volume o Enterprise forms electronic relationships with distributors, resellers, suppliers, customers, and other partners o • Business models for B2B applications: Sell-side marketplaces o E-sourcing (the buy-side marketplace) o Copyright ©2018 John Wiley & Sons, Inc. 20 Business to Business (B2B): Sell-side Marketplaces • Sell-Side Marketplaces Where organizations sell their products or services to other organizations from their own private website or from a thirdparty site. o Creates greater competition for sellers (a buyer advantage) o Similar to B2C model, but the ‘C‘ is an organization. o • Amazon Business • Alibaba wholesaling Chinese products • Dell Computer auctions through eBay • Overstock.com for obsolete of excess assets Copyright ©2018 John Wiley & Sons, Inc. 21 Business to Business (B2B): E-sourcing • Different procurement methods that make use of an electronic venue for identifying, evaluating, selecting, negotiating, and collaborating with suppliers. • Primary methods include: Online auctions, Request for Quotes (RFQ) processing, and private exchanges. • Secondary activities include: trading partner collaboration, contract negotiation, and supplier selection. Copyright ©2018 John Wiley & Sons, Inc. 22 Business to Business (B2B): E-procurement • Corporate procurement (corporate purchasing): transactional elements of buying products and services for operational and functional needs. • Direct procurement: buying materials to produce finished goods. • Indirect procurement: buying materials for daily operations. • E-procurement: reengineered procurement using ebusiness technologies and strategies. Copyright ©2018 John Wiley & Sons, Inc. 23 Business to Business (B2B): E-procurement Goals • Control Costs & Simplify Processes (streamlining) o Streamline within an organization’s value chain. o Align the organization’s procurement process with those of other trading partners, which belong to the organization’s virtual supply chain. o Analyze spending patterns in an effort to improve spending decisions and outcomes. Copyright ©2018 John Wiley & Sons, Inc. 24 Business to Business (B2B): Electronic Data Interchange (EDI) • Public and Private Exchanges o Vertical exchanges serve one industry along the entire supply chain (automotive, chemical, manufacturing, etc.). o Horizontal exchanges serve many industries using the same products or services (office supplies, cleaning materials, bearings, etc.). Also called Maintenance, Repair, and Operations (MRO) supplies. Copyright ©2018 John Wiley & Sons, Inc. 25 Business to Business (B2B) E-commerce and E-procurement Review 1. Briefly differentiate between the sell-side marketplace and e-sourcing. 2. What are the two basic goals of e-procurement? How can those goals be met? 3. What is the role of exchanges in B2B? 4. Explain why maverick buying might take place and its impact on procurement costs. Copyright ©2018 John Wiley & Sons, Inc. 26 Learning Objectives (4 of 5) Copyright ©2018 John Wiley & Sons, Inc. 27 Mobile Commerce • Mobile Commerce, or M-Commerce: o The buying or selling of goods and services using a wireless, handheld device such as a cell phone or tablet (slate) computer. • Mobile E-Commerce o The use of a wireless handheld devices to order and/or pay for goods and services from online vendors. Copyright ©2018 John Wiley & Sons, Inc. 28 Mobile Commerce: Retailing & Marketing • Mobile Retailing o The use of mobile technology to promote, enhance, and add to value to the in-store shopping experience. • Mobile Marketing o A variety of activities used by organizations to engage, communicate, and interact over Wi-Fi and telecommunications networks with consumers using wireless, handheld devices. Copyright ©2018 John Wiley & Sons, Inc. 29 Mobile Commerce: Competitive Advantage • M-commerce provides competitive advantage • In-Store Tracking o Tracking a customer’s movement through a retail store through mobile technology to optimize shopping experiences. • Quick Response (QR) Codes o Customers scan the QR code containing a link to an Internet webpage. o Easier alternative to typing a URL address into a mobile browser. Copyright ©2018 John Wiley & Sons, Inc. 30 Mobile Entertainment Expanding • Most notable are music, movies, videos, games, adult entertainment, sports, and gambling apps. • Apps can track sporting news, record workout times, record heart rates, analyze a person’s golf swing. • The iTunes Store, Google, and Amazon continue to be leading distributors of digital music, movies, TV shows, e-books, and podcasts. • Mobile device improvements are predicted to increase video clips, movie, and television use on/through mobile devices toward $20 billion. Copyright ©2018 John Wiley & Sons, Inc. 31 Mobile Travel Services • Mobile Payment Systems o o In 2016, 38.4 million Americans will have used a mobile phone to purchase goods or services at least once in the last six months Proximity mobile payments, based on RFID technology, will increase to $314 billion by 2020 • Mobile Phone used for: o o Online shopping or Payment for traditional purchases Copyright ©2018 John Wiley & Sons, Inc. 32 Mobile Social Networking • Facebook added mobile access in recent years to stay competitive. • Snapchat is completely app-based. • Occurs in virtual communities, offering users to access their accounts from a smartphone or other mobile device. • Primary driver of growth in the mobile app industry. Copyright ©2018 John Wiley & Sons, Inc. 33 Mobile Commerce App Features • Location-Based Marketing Advertising using mobile GPS systems to determine user locations. o Structured as mobile social media games to elicit consumer information and ratings for special attention or discounts from retailers. o • Augmented Reality (AR) o Apps that utilize a special technology to create computergenerated graphic superimposed images based on where/how a user points their phone or camera. Copyright ©2018 John Wiley & Sons, Inc. 34 Mobile Search • Almost 60% of all Internet searches are conducted from a mobile device • Over half of all web traffic comes from mobile devices • As a result, Google and other Internet search engines now use the performance of a company’s mobile website as part of the criteria for ranking listing in search results SEO specialists must now focus on a set of new factors for optimizing websites for mobile search. Copyright ©2018 John Wiley & Sons, Inc. 35 Mobile Commerce Review 1. Describe some of the ways that people are using mobile devices to shop for products and services. 2. What are some ways in which traditional brick-and-mortar retailers can use mobile technology to enhance a customer’s instore shopping experience? 3. List the types of mobile entertainment available to consumers. 4. List some ways that travelers and travel-related businesses are using mobile technology. 5. How are companies using QR codes to promote products and services to mobile consumers? Why are QR codes not as popular in the U.S. as they are in Asia and other parts of the world? 6. Explain why the mobile gaming market represents such a lucrative market opportunity. Copyright ©2018 John Wiley & Sons, Inc. 36 Learning Objectives (5 of 5) Copyright ©2018 John Wiley & Sons, Inc. 37 Mobile Transactions and Financial Services • Hotel Services and Travel o Airline QR boarding passes and SMS flight updates o Google Maps widely used for automobile navigation o Travel planning with roadside assistance, Wi-Fi hotspots, and recommendations o Hotel guest reservations, bill checking, and local services Copyright ©2018 John Wiley & Sons, Inc. 38 Mobile Payment Systems (1 of 2) • Charge to Phone Bill with SMS Confirmation o Uses secure PIN through SMS to validate payment (like Zong.com). • Augmented Reality (AR) o Apps that utilize a special technology to create computergenerated graphic superimposed images based on where/how a user points their phone or camera. Copyright ©2018 John Wiley & Sons, Inc. 39 Mobile Payment Systems (2 of 2) • Transfer of Funds from Payment Account Using SMS o Phone sends SMS to transfer payment through third party (Obopay.com, PayPal.com) • Mobile Phone Card Reader o Phone attached device allows credit card swipe (Square.com, Paypal.com) • Micropayments o Transactions involving small sums of money (vending machines, parking meters) • Mobile Bill Payments o Payments made directly from cell phone (Western Union, Citibank, HDFC Bank in India) Copyright ©2018 John Wiley & Sons, Inc. 40 Mobile Banking Services • Natural extension of online banking • Uses combination of mobile media channels o (SMS, mobile Web browsers, customized apps) • Common services include account alerts, balance information, branch location, bill pay, funds transfers and verification • Mobile banking benefits seem to outweigh potential security threats. • Increasing mobile banking likely means increased targeting of mobile financial activities. Copyright ©2018 John Wiley & Sons, Inc. 41 Mobile Banking Security Risks Cloning Duplicating the electronic serial number (ESM) of one phone and using it in second phone, the clone. This allows the perpetrator to have calls and other transactions billed to the original phone. Phishing Using a fraudulent communication, such as an e-mail, to trick the receiver into divulging critical information such as account numbers, passwords, or other identifying information. Smishing Similar to phishing, but the fraudulent communication comes in the form of an SMS message. Vishing Again, similar to phishing, but the fraudulent communication comes in the form of a voice or voicemail message encouraging the victim to divulge secure information. Lost or stolen phone Lost or stolen cell phones can be used to conduct financial transactions without the owner’s permission. Copyright ©2018 John Wiley & Sons, Inc. 42 Mobile Transactions and Financial Services Review 1. What are the two basic technologies used for mobile banking and financial services? 2. Why have e-wallets not been widely adopted and what will makers of e-wallets need to do to make this payment method more attractive to consumers? 3. What are the most common types of mobile banking activities consumers perform? 4. What are the most common security risks associated with mobile banking? 5. Describe some of the mobile payment systems currently available to merchants and consumers. 6. What is a micropayment and why is it beneficial to consumers and businesses that mobile payment systems can process these types of transactions? Copyright ©2018 John Wiley & Sons, Inc. 43 Copyright Copyright © 2018 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein. Copyright ©2018 John Wiley & Sons, Inc. 44 IT for Management: On-Demand Strategies for Performance, Growth, and Sustainability Eleventh Edition Turban, Pollard, Wood Chapter 9 Functional Business Systems Learning Objectives (1 of 5) Copyright ©2018 John Wiley & Sons, Inc. 46 Business Management Systems and Functional Business Systems Two types of information systems support different areas or activities in an organization: • Business Management Systems (BMS) o designed to support planning and the implementation process across the entire organization • Functional Business Systems (FBS) o designed to improve the efficiency and performance of a specific functional area within the organization Copyright ©2018 John Wiley & Sons, Inc. 47 Business Management Systems Modules • Business Management Systems (BMS) aid leadership teams by using technology to improve the organizational planning and implementation process. Typical modules in a BMS are: Definition of Organizational Mission o Identification of Strengths Weakness Opportunities and Threats (SWOT Analysis) o Establishing Goals and Measurable Objectives o Defining Strategies, and Key Performance Indicators (KPIs) o Articulation of Tactical or Action Plans – Assigning Responsibilities and Time Tables o Monitoring and Reporting Progress and Performance o Copyright ©2018 John Wiley & Sons, Inc. 48 Business Management Systems Overview • Mission o Set of outcomes an enterprise wants to achieve. • Strategic Plan o A document used to communicate the company’s goals and the actions needed to achieve them. • Management Levels Planning occurs at three levels of the organization – strategic, managerial, and operational. o Managers at each level operate with a different timeframe, which transitions from long-term (a few years) at the strategic level to “in the moment” (daily) at the operations level. o Copyright ©2018 John Wiley & Sons, Inc. 49 Business Management Systems Management Levels Figure 9.3 Three organizational levels, their concerns, and strategic and tactical questions, planning, and control. Copyright ©2018 John Wiley & Sons, Inc. 50 Functional Business Systems • Traditional Functional Business Areas Finance and Accounting o Production/Operations & Supply Chain Management o Marketing and Sales o Human Resources Management o Copyright ©2018 John Wiley & Sons, Inc. 51 Cross Functional Coordination and Integration • Departments or functions must be able to coordinate in the development of strategic plans and the performance of operations level actions. • Integration makes it easier to identify problems or barriers to achieving objectives and develop solutions to those problems. • Complex processes are managed more effectively through Standard Operating Procedures (SOP), a set of written instructions on how to perform a function or activity. Copyright ©2018 John Wiley & Sons, Inc. 52 Standard Operating Procedures: Data Properties The SOP documents three related data properties in company information systems: • Data security o the protection of data from malicious or unintentional corruption, unauthorized modification, theft, or natural causes such as floods. • Data validity o tests and evaluations used to detect and correct errors, for instance mistakes that might occur during data entry in fields, such as customer name and address. • Data integrity o the maintenance of data accuracy and validity over its life-cycle including the prevention of unintended modification or corruption. Copyright ©2018 John Wiley & Sons, Inc. 53 Transaction Processing Systems • Transaction Processing o o information processing that is divided into distinct, undividable operations called transactions. used in the functional business systems of all areas. For example: o Production/Operations: The tracking of materials or component parts as they enter and exit a warehouse or manufacturing facility. o Marketing and Sales: Management of sales orders and order fulfillment. o Human Resources: Processing of payroll and employee records. o Finance/Accounting: Processing of credits and debits to a customer’s checking account at a bank Copyright ©2018 John Wiley & Sons, Inc. 54 Transaction Processing Systems: The ACID Test Transaction processing systems (TPSs) collect, monitor, store, process and distribute transactional data according to certain criteria referred to as the ACID test. • ACID Test Atomicity: If all steps in a transaction are not completed, then the entire transaction is cancelled. o Consistency: Only operations that meet data validity standards are allowed. o Isolation: Transactions must be isolated from each other. o Durability: Backups by themselves do not provide durability. o Copyright ©2018 John Wiley & Sons, Inc. 55 Transaction Processing Systems: Batch and Real Time Processing • Transactions can be processed two ways: Batch: all events or transactions are processed together (in a batch) during scheduled times. o Real Time: events or transactions are processed as soon as they occur. o Increasingly, organizations today are employing Online Transactions Processing Systems (OTPS). o • Client server systems that allow transactions to run on multiple computers on a network, processing transactions in real time. Copyright ©2018 John Wiley & Sons, Inc. 56 Transaction Processing Systems: Batch and Real Time Processing • Transactions can be processed two ways: Batch: all events or transactions are processed together (in a batch) during scheduled times. o Real Time: events or transactions are processed as soon as they occur. o Increasingly, organizations today are employing Online Transactions Processing Systems (OTPS). o • Client server systems that allow transactions to run on multiple computers on a network, processing transactions in real time. Copyright ©2018 John Wiley & Sons, Inc. 57 Solving Business Challenges at All Management Levels Figure 9.4 Information flows triggered by a transaction or event. Copyright ©2018 John Wiley & Sons, Inc. 58 Solving Business Challenges at All Management Levels: Review 1. Explain the purpose of Business Management Systems (BMS). 2. Define what a standard operating procedure (SOP) is and give an example. 3. Explain each component of the ACID test. 4. Explain the differences between batch and online processing. 5. Explain the relationship between Transaction Processing Systems (TPS) and Functional Business Systems (FBS). Copyright ©2018 John Wiley & Sons, Inc. 59 Learning Objectives (2 of 5) Copyright ©2018 John Wiley & Sons, Inc. 60 Production and Operations Management • Production Operations Management Production/Operations is sometimes viewed in the larger context of supply chain management and supporting information systems. o Production operations management and supply chain management information systems both play a critical role in managing these important functions. o These systems facilitate coordination between different divisions within an organization or between the organization and its partners. o Copyright ©2018 John Wiley & Sons, Inc. 61 Production and Operations Management: SCM Figure 9.5 Companies recognize that careful management of supply chain processes is critical for success in the highly competitive global economy Copyright ©2018 John Wiley & Sons, Inc. 62 Transportation Management Systems • Relied on to handle transportation planning including shipping consolidation, load and trip planning, route planning, fleet and driver planning, and carrier selection. Four trend factors contributing to TMS growth: o Outdated transportation systems need to be upgraded or replaced o Growth of intermodal transport o TMS vendors add capabilities o TMSs handle big data o Copyright ©2018 John Wiley & Sons, Inc. 63 Logistics Management • Inbound logistics refers to receiving. Outbound logistics refers to shipping. o Inventory control systems are stock control or inventory management systems. o Logistics management systems: o Optimize transportation operations o Coordinate with all suppliers o Integrate supply chain technologies o Synchronize inbound and outbound flows of materials or goods o Manage distribution or transport networks o Copyright ©2018 John Wiley & Sons, Inc. 64 Inventory Control Systems • Inventory Control Systems o Important because they minimize the total cost of inventory while maintaining optimal inventory levels. Inventory control systems minimize the following three cost categories: • Inventory holding costs • Ordering and shipping costs • Cost of shortages • Safety Stock o Extra inventory used as a buffer to reduce the risk of stockouts. Also called buffer stock. • Stockouts o Inventory shortage arising from unexpected demand, delays in scheduled delivery, production delays or poor inventory management. Copyright ©2018 John Wiley & Sons, Inc. 65 Inventory Costs Figure 9.6 Inventory Control Systems help companies balance inventory ordering and carrying costs against the cost of inventory shortages. Copyright ©2018 John Wiley & Sons, Inc. 66 Just-in-Time Inventory Management Systems • JIT inventory management attempts to minimize holding costs by not taking possession of inventory until it is needed in the production process. • Eliminates costs associated with carrying large inventories at any given point in time. • Higher ordering costs because of more frequent orders. • Higher risk of stockouts • Must have cooperative production and/or supply partners to succeed Copyright ©2018 John Wiley & Sons, Inc. 67 Lean Manufacturing Systems • Leverages suppliers delivering small lots on a daily or frequent basis, and production machines are not necessarily run at full capacity. • Empowers workers so that production decisions can be made by those who are closest to the production processes. • JIT success factors also apply to lean manufacturing. • Requires quality, on-time inventory Copyright ©2018 John Wiley & Sons, Inc. 68 Quality Control Systems • Stand-alone or part of an enterprise-wide total quality management (TQM) effort providing data about the quality of incoming materials or parts, as well as the quality of in-process semi-finished and finished products. • Data collection by sensors or RFID and interpreted in real-time, or stored in a database for future analysis. Copyright ©2018 John Wiley & Sons, Inc. 69 Computer-integrated Manufacturing (CIM) Systems • Custom-designed software that controls day-to-day shop floor activities • Data-driven automation • Benefits: o o o It simplifies manufacturing technologies and techniques Automates as many of the manufacturing processes as possible, Integrates and coordinates all aspects of design, manufacturing, and related functions. Copyright ©2018 John Wiley & Sons, Inc. 70 Manufacturing Execution Systems (MESs) Systems • Manage operations in shop factories, sometimes a few critical machines, sometimes all operations on the shop floor. • Typically broader infrastructure than CIM. • Based on standard reusable application software instead of customer-designed software. Copyright ©2018 John Wiley & Sons, Inc. 71 Manufacturing, Production, and Transportation Management Systems Review 1. What is the function of supply chain management in an organization? 2. What trends are contributing to the growing use of TMS? 3. Define logistics management. 4. What are the three categories of inventory costs? 5. What are the objectives of JIT? 6. Explain the difference between EOQ and JIT inventory models. 7. What is the goal of lean manufacturing? 8. What is CIM? Copyright ©2018 John Wiley & Sons, Inc. 72 Learning Objectives (3 of 5) Copyright ©2018 John Wiley & Sons, Inc. 73 Sales and Marketing Systems • Digital advertising • Social media monitoring and promotions • Sales and customer support • Automated ad placement and media buying • Market research • Intelligence gathering • Distributing products and services to customers • Order tracking • Online and mobile order processing • Online and mobile payment methods Copyright ©2018 John Wiley & Sons, Inc. 74 Sales and Marketing Systems and Subsystems Figure 9.7 Sales and Marketing systems and subsystems. Copyright ©2018 John Wiley & Sons, Inc. 75 Data-Driven Marketing • Data-driven, fact-based decision making relies on hot, current data, that has immediate impact on the business. • Pay-per-click (PPC) advertising is one use of this type of data. • FaceBook pushes ads to people based on their self-reported demographics Copyright ©2018 John Wiley & Sons, Inc. 76 Sales and Distribution Channels • Ways to optimize product and service distribution. • Example channels: Electronic channels. o Mobile channels. o Physical channels. o Copyright ©2018 John Wiley & Sons, Inc. 77 Social Media Customer Service • Monitoring Social Media Many companies now employ customer support representatives to monitor social media platforms. o Offer support and solutions to customer problems o Retains the customer’s loyalty and demonstrates the brand’s commitment to customer satisfaction. o Companies stand to benefit by demonstrating their responsiveness to a wide audience of prospective customers o Copyright ©2018 John Wiley & Sons, Inc. 78 Marketing Management • Pricing of Products or Services o Sales volumes as well as profits are determined by the prices of products or services. • Salesperson Productivity o Collected in the sales and marketing TPS and used to compare performance along several dimensions, such as time, product, region, and even the time of day. • Profitability Analysis o Profit contribution or profit margin of certain products and services derived from the cost accounting system. Copyright ©2018 John Wiley & Sons, Inc. 79 Sales and Marketing Systems 1. Explain pay-per-click marketing. 2. List two sales and distribution channels. 3. Describe profitability analysis. 4. How do some online businesses determine the prices they will charge to customers? Copyright ©2018 John Wiley & Sons, Inc. 80 Learning Objectives (4 of 5) Copyright ©2018 John Wiley & Sons, Inc. 81 Accounting, Finance, and Regulatory Systems • Income Statement Summarizes a company’s revenue and expenses for one quarter of a fiscal year or the entire fiscal year. o Also known as a P&L (profit and loss) or earnings statement. o • Compliance o Generally accepted accounting principles (GAAP) and the Financial Accounting Standards Board (FASB). • Financial Misrepresentation o Occurs when a company has intentionally deceived one or more other parties. Copyright ©2018 John Wiley & Sons, Inc. 82 XBRL Tagging • eXtensible Business Reporting Language (XBRL) Reporting (disclosure) system designed by the SEC to eliminate document “search and find” difficulties and improve how investors find and use information. o Designed to: o • Generate cleaner data, including written explanations and supporting notes. • Produce more accurate data with fewer errors that require followup by regulators. • Transmit data more quickly to regulators and meet deadlines. • Increase the number of cases and amount of information that staffers can handle. Copyright ©2018 John Wiley & Sons, Inc. 83 Creation of XBRL Documents Figure 9.9 Overview of the creation of SBRL documents. Copyright ©2018 John Wiley & Sons, Inc. 84 Fraud Prevention and Detection • Why Fraud Occurs Fraud occurs because internal controls to prevent insider fraud – no matter how strong – will fail on occasion. o Terms used for Insider fraud are internal, employment, or occupational fraud. o Insider fraud is a term referring to a variety of criminal behaviors perpetrated by an organization’s employees or contractors. o Copyright ©2018 John Wiley & Sons, Inc. 85 Fraud Risk Management • Fraud Risk Management o A system of policies and procedures to prevent and detect illegal acts committed by managers, employees, customers, or business partners against a company’s interests. • Fraud Risk Factors 1. A high level of trust in employees without sufficient oversight to verify that they are not stealing from the company. 2. Relying on informal processes of control. 3. A mindset (belief) that internal controls and fraud prevention systems are too expensive to implement. 4. Assigning a wide range of duties for each employee, giving them opportunities to commit fraud. Copyright ©2018 John Wiley & Sons, Inc. 86 Internal Controls • Strong Internal Controls to prevent fraud consist of: Segregation of duties o Job rotation o Oversight o Safeguard of assets o IT policies o Copyright ©2018 John Wiley & Sons, Inc. 87 Auditing Systems • Auditing Information Systems Fraud can be easy to commit and hard to detect. o Information systems can provide a federated approach to auditing payroll, scheduling, accounts payable/receivable, and other electronic data. o Federated systems are the combination of independent systems designed with unique functions. o Copyright ©2018 John Wiley & Sons, Inc. 88 Financial Planning and Budgeting (1 of 2) • Financial Planning and Budgeting Budgeting: allocation of financial resources among participants, activities, and projects. Includes the process of analyzing and selecting investments with the highest ROI for the organization or capital budgeting. o Forecasting: estimating expenses, inventory, or other corporate assets to secure sufficient cash flow. o Copyright ©2018 John Wiley & Sons, Inc. 89 Financial Planning and Budgeting (2 of 2) • Financial Planning and Budgeting Financial Ratio Analysis: used by external parties when they decide whether to invest in an organization, extend credit, or buy it. o Profitability Analysis: understanding the profitability of individual products or services, product lines, or the financial health of the entire organization. o Cost Control: financial management of assets, through proper estimation, to assure financial health and cash flow. o Copyright ©2018 John Wiley & Sons, Inc. 90 Accounting, Finance, and Regulatory Systems Review 1. What is eXtensible Business Reporting Language (XBRL)? 2. Why does the SEC mandate data disclosure, whereby data items are tagged to make them easily searchable? 3. What is insider fraud? What are some other terms for insider fraud? 4. What is fraud risk management? 5. What four factors increase the risk of fraud? 6. Explain how accounting ISs can help deter fraud. Copyright ©2018 John Wiley & Sons, Inc. 91 Learning Objectives (5 of 5) Copyright ©2018 John Wiley & Sons, Inc. 92 Human Resource Systems, Compliance, and Ethics • HR Information Systems (HRIS) Systems that focus on legal and compliance responsibilities, employee development, talent management, hiring, and succession planning. o HRIS moved into intranets or clouds, including leasing external information system software as a service (SaaS): o • Reduce demand on internal businesses and IT resources. • Dramatically improve time to value without overstretching internal IT resources. • Reduce development/implementation times for new systems. Copyright ©2018 John Wiley & Sons, Inc. 93 HR Management Activities Figure 9.11 HR management activities. Copyright ©2018 John Wiley & Sons, Inc. 94 Management and Employee Development Activities • Management and Employee Development o Performance Evaluation • Corporate managers can analyze employees’ performances with the help of intelligent systems, which provide systematic interpretation of performance over time. o Training and Human Resources Development • Provide career development plan for each employee. IT can support the planning, monitoring, and control of these activities by using workflow applications. Copyright ©2018 John Wiley & Sons, Inc. 95 HR Planning, Control, and Management • HR Planning, Control, and Management o Personnel Planning and HR Strategies • Forecasts requirements for people and skills, planning how to locate sufficient human resources or develop them from within. o Benefits Administration • Salary/wage, bonuses, and other rewards for service. o Employee Relationship Management • Self-service personal information tracking, online training, and other employee-focused tasks. Copyright ©2018 John Wiley & Sons, Inc. 96 HRIS Ethics • Ethical Challenges and Considerations Recruiting, training, and performance evaluation procedures may involve ethical issues. o Information and employee privacy should be protected. o Employment laws make securing HR information necessary for the protection of employees and the organization o Copyright ©2018 John Wiley & Sons, Inc. 97 Human Resource Systems, Compliance, and Ethics Review 1. What are the key HR functions? 2. What are the benefits of moving HRISs to intranets or the cloud? 3. What concerns have deterred companies from implementing SaaS HR? 4. How can companies reduce the cost of recruiting qualified employees? 5. Describe IT support for HR planning and control. 6. What are ethical issues related to HRM apps? Copyright ©2018 John Wiley & Sons, Inc. 98 Copyright Copyright © 2018 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein. Copyright ©2018 John Wiley & Sons, Inc. 99 Purchase answer to see full attachment

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