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Electronic

Business

(E-Business) Systems

Learning Objectives• Appreciate the possible changes to

organizational processes that occur when e-business introduced

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

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

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

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

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

Electronic Business

(E-Business)Systems

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E-Business and the AIS Wheel

• E-Business is a part of every aspect of accounting

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Electronic Business

• Electronically linking business processes, individuals and organizations

• Byproduct: elimination of sales staff, normally intermediary between two parties to transactions

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

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Batch Processing• Known as periodic mode because master data is

updated periodically (e.g., nightly)• Delay occurs between business event and updating

master data– Business event occurs– Record business event data– Update master data– Generate outputs

• The disadvantage of periodic mode systems is that the only time the master data are up to date is right after the processing has been completed.

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

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Automated Equivalent to a Manual System

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Online Transaction Entry

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

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

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Online Transaction Entry (Batch)

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Online Real-time Processing

• Transaction occurrence/recording in transaction files

• Update master files essentially instantaneously

• Also known as “immediate mode”• Generate reports periodically or on

an as needed basis• Support queries to generate unique

reports for key decisions

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Online real-time processing

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Online Transaction Processing

• RT system that performs all or part of processing at data terminal location

• Updating of master data may be immediate or delayed

• Can have memorandum update in RT and full batch update at night (referred to as remote batch)

• Common applications are ATMs and online reservation systems

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Traditional real-time processing system

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Online transaction processing system

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Methods of Conducting E-Business

• E-Mail—generally requires human translation and data entry

• Electronic Document Management—capture and storage of document images instead of paper

• Electronic Data Interchange—computer-to-computer exchange of business data in structured formats that allow direct processing of those electronic documents by the receiving computer system.

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EDI Components

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

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EDI Components

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

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Electronic Data Interchange Set

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EDI Components

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

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EDI Components

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

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Internet Commerce

• Circles 1 and 7– Customer connects to vendor in client-server

configuration• Circles 2 and 5

– Connection to Internet through direct connection or service provider

• Circles 4 and 6– Assurance services provide limited assurance that

web site reliable and secure• Circle 3

– The Internet

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Typical Internet Connection