Information System’s Role in E-business and E-commerce
In today’s world, ICT has become a vital component of almost every office and business. The emerging global economy that is the digital economy has relied mainly on the use of ICT for the proper conduct of business transactions. Business models have changed to attuned to the present needs of the markets. Information Systems plays a big role and is actually a main driving force for the successful conduct of e-business and e-commerce.
BusinessDictionary defines information systems (IS) as “ a combination of hardware , software and trained personnel organized to facilitate planning, control, coordination, and decision making in an organization (2012). Technology is used to process the inputs such as data and information to be able to come up with the desired output usually in the form of a report. In developing IS, feedback mechanisms are usually included to help maintain the system. Electronic networks either wired or wireless enables the connection of each information systems. Connections can be made across departments of a company or across companies.
An information system can be composed of several smaller systems called applications. For example, a school information systems can be composed of several smaller subsystems like the accounting system, its billing system, enrollment systems, and grading system which are all interconnected to form one big IS that caters to all the processes needed by the school. (Turban et. al., 2008)
E-businesses rely mainly on the utilization of information systems for its success. E-business utilizes the use of the digital economy and the internet technology to make the necessary changes in major business processes. Specifically, e-business uses internet technology to deliver products and services to their clients, efficiently deliver the required products and services through the streamlining of the different business systems (supply chain, procurement, production etc) and the automation of business processes to improve the efficiency of the company and help the management in reducing business costs. To help the company in decision making, internet technology is also utilized to “capture, analyze, and share business intelligence about customers and company operations” (Oracle8i Integration Server Overview, 2012).
E-commerce is on the other hand involves the “selling, buying, transferring or exchanging products and services through the utilization of computer networks”. (Turban et. al., 2008) Organizations involved in e-commerce can either be classified as virtual organizations (those businesses who engages in pure e-commerce) and click-and-mortar (those who hold physical offices but engage in e-commerce). Most e-commerce activities are done using the aid of the internet but some are done through the utilization of networks. Ecommerce can be classifies as either business – to – business (two organizations are involved as buyers or sellers), business – to – consumers (seller is the organization and buyer is an individual), consumers – to – business (seller is the consumer and buyer is the business), and consumer –to – consumer (both buyer and sellers are individuals). Several ecommerce business models have arrived recently including online direct marketing, affiliate marketing, viral marketing, online auctions and product customizations are used by most organizations and individuals involved in e-commerce. Another trend is the use of social networking sites for marketing, selling and buying of products. Several big companies which were originally of the brick and mortar types have also shifted to click and mortar. One example is Wal-Mart which now accepts online ordering and marketing.
Information systems are the main driving force behind this successful conduct of e-businesses and e-commerce. The type of information system to be implemented utilized depends on the needs of each businesses. Although, there are existing readymade IS readily available, companies usually create their own IS based on their business needs to ensure that both their needs and their customers are well met. Functional or Departmental systems are usually present is all companies to aid them in more efficient transactions. Functional systems are usually made for the use of employees only. These systems are usually interconnected like a company’s Finance IS, Human Resource IS and Accounting IS. Enterprise information systems on the other hand, serve the whole enterprise. Usually, a transaction processing system is implemented to cater to the company’s routinely tasks. Companies can also implement inter-organizational systems which can connect two or more organizations. A worldwide airline reservation system for example is composed of several airline companies in which several travel agencies can connect to. (Turban et. al., 2008)
Information systems can also be classified according to the kind of e-business support they do. Transaction processing systems (TPS) is a kind of IS system that is developed for the purpose of helping an organization in processing the basic business needs like payroll, billing and purchasing. Specifically, it “monitors, collects, stores, processes, and disseminates information for all routine core business transactions”. The main purpose of implementing a transaction processing system is to provide information needed by either the government or the company itself to keep the proper and efficient running of the business. (Turban et. al., 2008) An example of the uses of TPS in e-business is the automatic check and balance of an account in a bank. A withdrawal transaction cannot be made unless the account balance has been check to ensure that there is a sufficient fund. The transaction process in a TPS is input (data or an event), processing and output (reports, documents or exception reports). A company payroll system can be connected to a employee time monitoring system to automatically compute employees wages eliminating the burden for the company to assign time keepers and another employee to solve the wages of each employee monthly. IS enables the computerization of routinely tasks which gives employees more time in focusing on other more important tasks to improve the company’s business rather that wasting time on routinely tasks.
TPS is the most common IS used in e-business and e-commerce. Another use of TPS is for order processing which helps in a customer satisfaction. Online ordering systems are a key to the conduct of e-businesses and e-commerce involved in ordering of products. Clients have their personal accounts and would just need to login in order to place their orders. This lessens the burden on the part of the client as well as on the part of the company. Additional features of ordering systems nowadays is the capability of the clients to view an online catalog and just clicking what they want to order. A sales and inventory management system is also another implementation of a TPS that can be used together with an ordering system. Implementing a sales and inventory system will help the company determine how much inventory they need to keep since both overstocking and under stacking can cost a lot. With this system, sales can be monitored by the company while it also helps in its decision making, that is, determining what inventories they need and when. (Economywatch, 30 June 2010) E-business comes in when companies allows their supplier to gain specific access to their inventory systems and automatically send supplies. This way, the burden of sending purchase orders by the company is eliminated. Wal-Mart for example uses this type of information system.
Tracking Systems are also common to companies involved in package forwarding like FedEx. Fed-Ex shifted from an e-commerce based business model which proved to be beneficial to both its costumers and the company itself. It utilized e-business logistic enterprise that enables their customers and employees to conduct real time follow-up on their packages though a tracking number.
Reservation Systems are common among hotels and airlines. With today’s capability of conducting e-business, customers need not call or personally come to a specific hotel or airlines for its reservations. Online reservations are readily available giving the companies less expenses for the man power and the customer efficient reservation services. Companies are gradually shifting to paperless transactions through the use of different kinds of information systems that are applicable to them.
Communication and collaboration systems is the use of online communication tools like emails, call centers and other group collaboration tools to conduct businesses online. Effective communication is very essential to the success of e-business and e-commerce. Email, is one of the most common methods used by both customers and businesses as a means of communicating. Call centers on the other hand are usually common to businesses that provide technical support systems to its clients. Mobile companies, for example utilize call centers together with transaction processing systems to cater to inquiries and technical problems related to their services of their clients. Some ordering systems on the other hand, utilize the emails to send their purchase orders. This way, communication is faster in such a way that in an instant the orders are placed as long as there is internet connectivity. Group collaboration software such as skype is utilized by companies to conduct virtual meetings. Virtual meetings are beneficial to a company in the sense that it reduces the transportation costs to a company at the same time enhancing its communication. (Boros, 2004) Conferences are made more interactive and engaging through the utilization of different presentation software that enable better understanding of the concepts being presented not only during meetings but also used as online advertisements.
The different types of Information Systems available are the backbone of e-businesses and e-commerce. Without IS, e-business and e-commerce would not be possible. It creates more entrepreneurial opportunities because a big capital is not the requirement. Small businesses have the same business ground with the big ones because it all uses internet technology. It just boils down on how technology is being utilized to improve their business processes.
References:
Boro, Elizabeth (2004). Virtual Shareholder Meetings. Retrieved from http://www.law.duke.edu/journals/dltr/articles/pdf/2004DLTR0008.pdf
Businessdictionary (2004). Retrieved from http://www.businessdictionary.com/definition/information-system.html
Economywatch (30 June 2010). E Business Strategy -e commerce business strategies. Retrieved from http://www.economywatch.com/business/e-business-strategy.html
Oracle8i Integration Server Overview (2012). Retrieved from http://docs.oracle.com/cd/A87860_01/doc/ois.817/a83729/adois01.htm#998568
Pant, Somendra and Ravichandran, T. (2001). A framework for information systems planning for e-business. Retrieved from http://www.free.pdf-hunter.net/pdf_a_framework_for_information_systems_planning_for_e_business.html
Rajedran, R. (2008). Exploring relationship between information systems strategic orientation and small business Performance. Retrieved from http://www.irma-international.org/viewtitle/1904/
Turban et. Al. (2008). Information Technology for Management. http://books.google.com/books/about/Information_technology_for_management.html?id=UV5GAAAAYAAJ&redir_esc=y
