Business Informatics

The field of business informatics explores the interplay between technology, business, and
society. Business informatics utilizes information management tools for the processing,
management, and analysis of data that relates to business.

Organizational Structure & Design

Organizations typically have a centralized headquarters and divisions at different locations.

These divisions can be independent subsidiaries or integral parts of one corporation.
Depending on the organization and its size, a division may be further divided into units (such
as plants), each of which is in a different location. Alternatively, each division may represent
a plant or another organizational entity (for example, a warehouse). A plant is usually
composed of departments and other operating units.
Departmental structure is most widely used in business organizations. It is also referred to as
a functional structure. As discussed in Chapter 1, a functional department specializes in the
delivery of a certain function, such as manufacturing or marketing,

Most organizations have, at minimum, the following departments:

• Accounting
• Finance
• Marketing and Sales
• Production or Operations Management (POM)
• Human Resources Management
• Information Systems
In addition, other, smaller units in organizations provide specialized services such as legal,
engineering, or purchasing.

Mapping Information Systems to Organizational Structure

One way to classify information systems is by the part of the organizational structure they
support. Although some organizations are reengineering themselves into cross functional
teams, the vast majority still have a traditional hierarchical structure
Therefore, the most common arrangement of information systems is one that follow the
hierarchical structure. This arrangement provides a match between the needs organizational
entities and the support provided by IT.
Information technology provides support in three major areas: communication collaboration,
and data processing and access (including knowledge sharing).
Specific types of support are usually given by an application program (or, more simply, an
application). An application is a system developed for a specific purpose, such as facilitating
a production schedule, expediting a financial forecast, or executing the weekl payroll. It is
usually a software program built on exisung do wear, although some applications require
specialized hardware.
Thus, we can categorize information systems by their breadth. Systems and applications can
be built for headquarters, for divisions, for departments, for specific teams(e.g., quality-
assurance teams), and even for individuals. Other systems are: enterprisewide,
interorganizational, and global (international). Such systems are typically interconnected.
Brief descriptions of some of these systems follow.

Departmental information systems.

Frequently, departmental information systems are named to reflect the department they
support, such as accounting information systems or human resources information systems. In
practice, each functional information system is composed of several specific application
programs. For instance, in managing human resources, the HR department might use one
application program for recruiting and another for monitoring employee turnover. The
collection of the various application programs in the human resources area would be called
the human resources information system. Some of the applications might be completely
independent of each other; others might be integrated.

Plant information systems.

Whereas a departmental information system is usually related to a functional area, the
collection of all departmental applications combined with the applications of other business
units comprises the plant information system. The plant information system provides the
necessary communication and collaboration among the departmental entities of the plant as
well as access to data for all authorized people.

Divisional information systems.

The divisional information system connects all of a plant's systems with information systems
of other business units in the same division. It permits communication and collaboration
among the plants and other units in the division, including access to headquarters and the
business environment.

Enterprisewide information systems.

In a similar manner, an enterprisewide information system connects all divisions and other
units of an organization. Burlington's system described at the beginning of the chapter is an
enterprisewide system.

Interorganizational information systems.

Some information systems connect two or more organizations. For example, a worldwide
airline reservation system is composed of several information systems belonging to different
airlines, of which American Airlines' SABRE system is one of the largest. Such
interorganizational information systems (TOSs) are common among business partners. These
systems may provide for communication at the plant, divisional, or enterprise wide level,
depending on the needs of the organizations involved. A special instance of an IOS is an
international or multinational corporation whose computing facilities are located in two or
more countries. Such an IS is called a global information system (GIS). Interorganizational
information systems play a major role in e-commerce, as well as in supply chain management
support.

E-Commerce

A way of doing real-time business transactions via telecommunications networks, when the
customer and the merchant are in different geographical places.
The Definition of Ecommerce is just what it seems like, E(Electronic) + Commerce...
Ecommerce. Any form of commerce(business transactions) which are based on an electronic
medium.

Electronic commerce or e-commerce refers to a wide range of online business activities for
products and services.1 It also pertains to “any form of business transaction in which the
parties interact electronically rather than by physical exchanges or direct physical contact.”

E-commerce is usually associated with buying and selling over the Internet, or conducting
any transaction involving the transfer of ownership or rights to use goods or services through
a computer-mediated network.3 Though popular, this definition is not comprehensive
enough to capture recent developments in this new and revolutionary business phenomenon.
A more complete definition is: E-commerce is the use of electronic communications and digital
information processing technology in business transactions to create, transform, and redefine
relationships for value creation between or among organizations, and between organizations
and individuals.4

Objectives Of Ecommerce

E Commerce is one of the most important facets of the Internet to have emerged in the recent
times. Ecommerce or electronic commerce involves carrying out business over the Internet
with the assistance of computers, which are linked to each other forming a network. To be
specific ecommerce would be buying and selling of goods and services and transfer of funds
through digital communications.
The objectives of Ecommerce:
• Ecommerce allows people to carry out businesses without the barriers of time or
distance. One can log on to the Internet at any point of time, be it day or night and
purchase or sell anything one desires at a single click of the mouse.
• The direct cost-of-sale for an order taken from a web site is lower than through
traditional means (retail, paper based), as there is no human interaction during the
on-line electronic purchase order process. Also, electronic selling virtually eliminates
processing errors, as well as being faster and more convenient for the visitor.
• Ecommerce is ideal for niche products. Customers for such products are usually few.
But in the vast market place i.e. the Internet, even niche products could generate
viable volumes.
• Another important benefit of Ecommerce is that it is the cheapest means of doing
business.
• The day-to-day pressures of the marketplace have played their part in reducing the
opportunities for companies to invest in improving their competitive position. A
mature market, increased competitions have all reduced the amount of money
available to invest. If the selling price cannot be increased and the manufactured cost
cannot be decreased then the difference can be in the way the business is carried out.
Ecommerce has provided the solution by decimating the costs, which are incurred.
• From the buyer’s perspective also ecommerce offers a lot of tangible advantages.
1. Reduction in buyer’s sorting out time.
2. Better buyer decisions
3. Less time is spent in resolving invoice and order discrepancies.
4. Increased opportunities for buying alternative products.
 • The strategic benefit of making a business ‘ecommerce enabled’, is that it helps reduce
the delivery time, labour cost and the cost incurred in the following areas:
1. Document preparation
2. Error detection and correction
3. Reconciliation
4. Mail preparation
5. Telephone calling
6. Credit card machines
7. Data entry
8. Overtime
9. Supervision expenses
• Operational benefits of e commerce include reducing both the time and personnel
required to complete business processes, and reducing strain on other resources. It’s
because of all these advantages that one can harness the power of ecommerce and
convert a business to ebusiness by using powerful turnkey ecommerce solutions made
available by ebusiness solution providers.

Advantages of E-commerce

Lower Cost
Doing e-business is cost effective; it reduces logistical problems and puts a small business on
a par with giants such as Amazon.com or General Motors. In a commercial bank, for example.
a basic over-the-counter transaction costs £0.50 to process; over the Internet, the same
transaction costs about £0.01. Every financial transaction eventually turns into an electronic
process. The sooner it makes the conversion, the more cost-effective the transaction becomes.

Economy
Unlike the brick–and–mortar environment, in e–commerce there is no physical store space,
insurance, or infrastructure investment. All you need is an idea, a unique product, and a well–
designed web storefront to reach your customers, plus a partner to do fulfillment. This makes
e–commerce a lot more economical.

Higher Margins
E–commerce means higher margins. For example, the cost of processing an airline ticket is £5.
According to one travel agency, processing the same ticket online costs £1. Along with higher
margins, businesses can gain more control and flexibility and are able to save time when
manual transactions are done eletronically.

Better Customer Service

E–commerce means better and quicker customer service. Online customer service makes
customers happier. Instead of calling your company on the phone, the web merchant gives
customers direct to their personal account online. This saves time and money. For companies
that do business with other companies, adding customer service online is a competitive
advantage. The overnight package delivery service, where tracking numbers allow customers
to check the whereabouts of a package online, is one good example.

Quick Comparison Shopping

E–commerce helps consumers to comparison shop. Automated online shopping assistants
called hopbots scour online stores and find deals on everything from apples ro printer ribbons.
Productivity Gains
Weaving the web throughout an organization menas improved productivity. For example IBM
incorporated the web into every corner of the firm – products, marketing, and practices. The
company figured it would save $750 million by letting customers find answers to technical
questions via its website. The total cost savings in 1999 alone was close to $1 billion.

Teamwork
E–mail is one example of how people collaborate to exchange information and work on
solutions. It has transformed the way organisations interact with suppliers, vendors, business
partners, and customers. More interactions means better results.

Knowledge Markets
E–commerce helps create knowledge markets. Small groups inside big firms can be funded
with seed money to develop new ideas. For example, DaimlerChrysler has created small teams
to look for new trends and products. A Silicon Valley team is doing consumer research on
electric cars and advising car designers.

Information Sharing, Convenience, And Control

Electronic marketplaces improve information sharing between merchants and customers and
promote quick, just–in–time deliveries. Convenience for the consumer is a major driver for
changes in various industries. Customers and merchants save money; are online 24 hours a
day, 7 days a week; experience no traffic jams, no crowds, and do not have to carry heavy
shopping bags.

Disadvantages Of E–commerce

Security
Security continues to be a problem for online businesses. Customers have to feel confident
about the integrity of the payment process before they commit to the purchase.

System And Data Integrity

Data protection and the integrity of the system that handles the data are serious concerns.
Computer viruses are rampant, with new viruses discovered every day. Viruses cause
unnecessary delays, file backups, storage problems, and other similar difficulties. The danger
of hackers accessing files and corrupting accounts adds more stress to an already complex
operation.

System Scalability
A business develops an interactive interface with customers via a website. After a while,
statistical analysis determines whether visitors to the site are one–time or recurring customers.
If the company expects 2 million customers and 6 million show up, website performance is
bound to experience degradation, slowdown, and eventually loss of customers. To stop this
problem from happening, a website must be scalable, or upgradable on a regular basis.

E–commerce Is Not Free

So far, success stories in e–commerce have forced large business with deep pockets and good
funding. According to a report, small retailers that go head–to–head with e–commerce giants
are fighting losing battle. As in the brick–and–mortar environment, they simply cannot
compete on price or product offering. Brand loyalty is related to this issue, which is supposed
to be less important for online firms. Brands are expected to lower search costs, build trust, and
communicate quality. A search engine can come up with the best music deals, for example, yet
consumers continue to flock to trusted entities such as HMV.

Consumer Search Is Not Efficient or Cost–effective

On the surface, the electronic marketplace seems to be a perfect market, where worldwide
sellers and buyers share and trade without intermediaries. However, a closer look indicates that
new types of intermediaries are essential to e–commerce. They include electronic malls that
guarantee legitimacy of transactions. All these intermediaries add to transaction costs.

Customer Relations Problems

Not many businesses realise that even e–business cannot survive over the long term without
loyal customers.

Products People won't buy online

Imagine a website called furniture.com or living.com, where venture capitalists are investing
millions in selling home furnishings online. In the case of a sofa, you would want to sit on it,
feel the texture of the fabric etc. Beside the sofa test, online furniture sotres face costly returns
which makes the product harder to sell online.

Corporate Vulnerability
The availability of product details, catalogs, and other information about a business through its
website makes it vulnerable to access by the competition. The idea of extracting business
intelligence from the website is called web framing.

High Risk Of Internet Start–up

Many stories unfolded in 1999 about successful executives in established firms leaving for
Internet start–ups, only to find out that their get–rich dream with a dot.com was just that – a
dream.

What forces are fueling e-commerce?

There are at least three major forces fuelling e-commerce: economic forces, marketing and
customer interaction forces, and technology, particularly multimedia convergence. 18

Economic forces.

One of the most evident benefits of e-commerce is economic efficiency resulting from the
reduction in communications costs, low-cost technological infrastructure, speedier and more
economic electronic transactions with suppliers, lower global information sharing and
advertising costs, and cheaper customer service alternatives.
Economic integration is either external or internal. External integration refers to the
electronic networking of corporations, suppliers, customers/clients, and independent
contractors into one community communicating in a virtual environment (with the Internet
as medium). Internal integration, on the other hand, is the networking of the various
departments within a corporation, and of business operations and processes. This allows
critical business information to be stored in a digital form that can be retrieved instantly and
transmitted electronically. Internal integration is
best exemplified by corporate intranets. Among the companies with efficient corporate
intranets are Procter and Gamble, IBM, Nestle and Intel.

SESAMi.NET.: Linking Asian Markets through B2B Hubs

SESAMi.NET is Asia’s largest B2B e-hub, a virtual exchange integrating and connecting
businesses (small, medium or large) to trading partners, e-marketplaces and internal
enterprise systems for the purpose of sourcing out supplies, buying and selling goods and
services online in real time. The e-hub serves as the center for management of content and
the processing of business transactions with support services such as financial clearance and
information services. It is strategically and dynamically linked to the Global Trading Web
(GTW), the world’s largest network of trading communities on the Internet. Because of this
very important link, SESAMi reaches an extensive network of regional, vertical and industry-
specific interoperable B2B e-markets across the globe.

Market forces.

Corporations are encouraged to use e-commerce in marketing and promotion to capture

international markets, both big and small. The Internet is likewise used as a medium for
enhanced customer service and support. It is a lot easier for companies to provide their target
consumers with more detailed product and service information using the Internet.

Brazil’s Submarino19: Improving Customer Service through the Internet

Brazil’s Submarino is a classic example of successful use of the Internet for improved customer
service and support. From being a local Sao Paulo B2C e-commerce company selling books,
CDs, video cassettes, DVDs, toys, electronic and computer products in Brazil, it expanded to
become the largest company of its kind in Argentina, Mexico, Spain and Portugal. Close to a
third of the 1.4 million Internet users in Brazil have made purchases through this site. To
enhance customer service, Submarino has diversified into offering logistical and technological
infrastructure to other retailers, which includes experience and expertise in credit analysis,
tracking orders and product comparison systems.

Technology forces.

The development of ICT is a key factor in the growth of ecommerce. For instance,
technological advances in digitizing content, compression and the promotion of open systems
technology have paved the way for the convergence of communication services into one
single platform. This in turn has made communication more efficient, faster, easier, and more
economical as the need to set up separate networks for telephone services, television
broadcast, cable television, and Internet access is eliminated. From the standpoint of
firms/businesses and consumers, having only one information provider means lower
communications costs. 20
Moreover, the principle of universal access can be made more achievable with convergence.
At present the high costs of installing landlines in sparsely populated rural areas is a
disincentive to telecommunications companies to install telephones in these areas. Installing
landlines in rural areas can become more attractive to the private sector if revenues from
these landlines are not limited to local and long distance telephone charges, but also include
cable TV and Internet
charges. This development will ensure affordable access to information even by those in rural
areas and will spare the government the trouble and cost of installing expensive landlines.

What is EDI?

Electronic Data Interchange is the computer-to-computer exchange of routine business

data between trading partners in standard data formats. This definition contains 3 key
concepts about EDI:
1. Computer-to-computer: EDI in its most efficient form flows directly out of a
sender’s computer system directly into a receiver’s computer system without any
human intervention; however, it is not always possible for EDI to flow in this most
efficient manner.
2. Routing business data: EDI is used for routine business documents like Purchase
Orders and Invoices. It is not used for non-routine business documents like
complicated contracts or information meant for humans to read and analyze.
3. Standard data formats: A standard definition of the location and structure of the
data is provided. Unstructured text is not EDI.

The diagram above illustrates how much slower the conventional paper process than the EDI
process. Additionally, the conventional paper process includes substantially more human
intervention to move business information from one company to another.

The conventional process requires someone to handle a printed computer generated form and
mail it. Then, the recipient re-keys the data back into another computer for their internal
processing. (It is estimated that 80% of the data that is keyed into computers is output from
other computers!) The EDI process is a computer transmitting the information directly to
another computer, eliminating the paperwork and human intervention.
Benefits of EDI
1. Speed – Data can move directly out of one computer system and into another
with little to no delay.
2. Accuracy – Errors are reduced because data is not being re-keyed. Error rates
from entering data are between .5 – 3%. On large volumes of transactions, the
possibility for the introduction of errors is enormous.
3. Simplicity – EDI standards specify how data will be formatted and where it can be
found.
4. Security – Much less likely to lose information transmitted through EDI than
information sent via mail. EDI can be accessed only by authorized users, and then
there are audit trails and archives of data. EDI data cannot be easily changed by
unauthorized users. It is also not subject to viruses.
These 4 benefits produce the following results:
• Faster buy-sell cycle time
• Faster cash flow
• Reduced order lead time
• Reduced inventories
• Ability to conduct just-in-time manufacturing
• Improved trading partner relationships

Applications of EDI:

1. Role of EDI in international trade:

• Reduced transaction expenditures

• Quicker movement of imported & exported goods

• Improved customer service through ―track & trace‖ programs

• Faster customs clearance & reduced opportunities for corruption, a huge

problem in trade

2. Interbank Electronic Funds Transfer (EFT)

• EFTS is credit transfers between banks where funds flow directly from the
payer‘s bank to the payee‘s bank.

• The two biggest funds transfer services in the United States are the Federal
Reserve‘s system, Fed wire, & the Clearing House Interbank Payments System
(CHIPS) of the New York clearing house

3. Health care EDI for insurance EDI

 • Providing good & affordable health care is a universal problem

• EDI is becoming a permanent fixture in both insurance & health care

industries as medical provider, patients, & payers

• Electronic claim processing is quick & reduces the administrative costs of

health care.

• Using EDI software, service providers prepare the forms & submit claims via
communication lines to the value-added network service provider

• The company then edits sorts & distributes forms to the payer. If necessary,
the insurance company can electronically route transactions to a third-party
for price evaluation

• Claims submission also receives reports regarding claim status & request for
additional Information

4. Manufacturing & retail procurement using EDI

• These are heavy users of EDI

• In manufacturing, EDI is used to support just-in-time.

• In retailing, EDI is used to support quick response

Types of E-Commerce

The major different types of e-commerce are: business-to-business (B2B); business to -

consumer (B2C); business-to-government (B2G); consumer-to-consumer (C2C); and mobile
commerce (m-commerce).

What is B-B e-commerce?

B2B e-commerce is simply defined as e-commerce between companies. This is the type of e-
commerce that deals with relationships between and among businesses. About 80% of e-
commerce is of this type, and most experts predict that B2B ecommerce will continue to grow
faster than the B2C segment. The B2B market has two primary components: e-frastructure
and e-markets. Efrastructure is the architecture of B2B, primarily consisting of the following:9

● logistics - transportation, warehousing and distribution (e.g., Procter and Gamble);

● application service providers - deployment, hosting and management of packaged software
from a central facility (e.g., Oracle and Linkshare);
● outsourcing of functions in the process of e-commerce, such as Web-hosting, security and
customer care solutions (e.g., outsourcing providers such as eShare, NetSales, iXL Enterprises
and Universal Access);
● auction solutions software for the operation and maintenance of real-time auctions in the
Internet (e.g., Moai Technologies and OpenSite Technologies);
● content management software for the facilitation of Web site content management and
delivery (e.g., Interwoven and ProcureNet); and
● Web-based commerce enablers (e.g., Commerce One, a browser-based, XMLenabled
purchasing automation software).

E-markets are simply defined as Web sites where buyers and sellers interact with each other
and conduct transactions.10
Most B2B applications are in the areas of supplier management (especially purchase order
processing), inventory management (i.e., managing order-ship-bill cycles), distribution
management (especially in the transmission of shipping documents), channel management
(i.e., information dissemination on changes in operational conditions), and payment
management (e.g., electronic payment systems or EPS).11

What is B2C e-commerce?

Business-to-consumer e-commerce, or commerce between companies and consumers,

involves customers gathering information; purchasing physical goods (i.e., tangibles such as
books or consumer products) or information goods (or goods of electronic material or
digitized content, such as software, or e-books); and, for information goods, receiving
products over an electronic network.12
It is the second largest and the earliest form of e-commerce. Its origins can be traced to online
retailing (or e-tailing).13 Thus, the more common B2C business models are the online retailing
companies such as Amazon.com, Drugstore.com, Beyond.com, Barnes and Noble and
ToysRus. Other B2C examples involving information goods are E-Trade and Travelocity.
The more common applications of this type of e-commerce are in the areas of purchasing
products and information, and personal finance management, which pertains to the
management of personal investments and finances with the use of online banking tools (e.g.,
Quicken)

What is B2G e-commerce?

Business-to-government e-commerce or B2G is generally defined as commerce between

companies and the public sector. It refers to the use of the Internet for public procurement,
licensing procedures, and other government-related operations. This kind of e-commerce has
two features: first, the public sector assumes a pilot/leading role in establishing e-commerce;
and second, it is assumed that the public sector has the greatest need for making its
procurement system more effective.15
Web-based purchasing policies increase the transparency of the procurement process (and
reduces the risk of irregularities). To date, however, the size of the B2G ecommerce market
as a component of total e-commerce is insignificant, as government e-procurement systems
remain undeveloped.

What is C2C e-commerce?

Consumer-to-consumer e-commerce or C2C is simply commerce between private individuals

or consumers. This type of e-commerce is characterized by the growth of electronic
marketplaces and online auctions, particularly in vertical industries where firms/businesses
can bid for what they want from among multiple suppliers.16 It perhaps has the greatest
potential for developing new markets. This type of e-commerce comes in at least three forms:

● auctions facilitated at a portal, such as eBay, which allows online real-time bidding on items
being sold in the Web;
● peer-to-peer systems, such as the Napster model (a protocol for sharing files between users
used by chat forums similar to IRC) and other file exchange and later money exchange models;
and

● classified ads at portal sites such as Excite Classifieds and eWanted (an interactive, online
marketplace where buyers and sellers can negotiate and which features “Buyer Leads & Want
Ads”).
Consumer-to-business (C2B) transactions involve reverse auctions, which empower the
consumer to drive transactions. A concrete example of this when competing airlines gives a
traveler best travel and ticket offers in response to the traveler’s post that she wants to fly
from New York to San Francisco. There is little information on the relative size of global C2C
e-commerce. However, C2C figures of popular C2C sites such as eBay and Napster indicate
that this market is quite large. These sites produce millions of dollars in sales every day.

The infomediary

An infomediary collects, analyzes and sells information on consumers and their buying
behavior to other parties who want to reach those consumers. Typically, the infomediary offers
the consumers something for free, such as free hardware or free Internet access. The later is
especially useful, since it allows the infomediary to control and monitor the user's online
activities. After all, the consumer connects through the infomediary's network. The information
which the infomediary collects is extremely valuable for marketing purposes. Often the
infomediary makes money with an advertising-based model, in which the advertisements are
targeted based on the information it collected itself.

The infomediary needs to keep track of its users. A simple way to achieve this is to require
registration for access to the website, preferably for free. This allows inter-session tracking of
users' site usage patterns and thereby generates data of greater potential value in targeted
advertising campaigns. Registration can be made more attractive by offering limited access or
"teasers" to unregistered users, by offering the option to customize the site after registration,
or by allowing only registered users to actively participate in chat or message boards.

The infomediary model is useful in combination with a virtual community model or virtual
mall, since those models offer the ability to collect the necessary information.
THE BROKERAGE MODEL

One Internet business model is the brokerage model. At the heart of this model are third parties
known as brokers, who bring sellers and buyers of products and services together to engage in
transactions. Normally, the broker charges a fee to at least one party involved in a transaction.
While many brokers are involved in connecting consumers with retailers, they also may
connect businesses with other businesses or consumers with other consumers. A wide variety
of different scenarios or business configurations fall under the banner of a brokerage model.
These include everything from Web sites posting simple online classified ads and Internet
shopping malls (Web sites that sell products from a variety of different companies) to online
marketplaces, online auctions, aggregators, and shopping bots.

Some brokers simply focus on fulfillment between buyers and sellers. Travel agents like
Travelocity.com are one example of this approach. According to the company,
Travelocity.com was the third largest e-commerce site in the early 2000s. Along with a large
database of information on different travel destinations, Travelocity.com was able to provide
reservations "for 95 percent of all airline seats sold, more than 49,000 hotels, more than 50 car
rental companies and more than 5,000 vacation and cruise packages."

Online marketplaces are example of brokers with a business-to-business focus. These entities
bring large groups of commercial buyers and sellers together online. In the early 2000s, third-
party companies like Commerce One Inc. and Ariba Inc. offered software and services that
were used to operate different online marketplaces. Numerous other companies provided
similar kinds of services and applications. Online marketplaces existed for many different
industries, ranging from the food and beverage industries to consumer packaged goods and
interior design. The costs for participating in an online marketplace varied. In some cases,
participating companies (sup-pliers, purchasers, or both) were required to purchase special
software from a third party. Third parties also levied different charges for making transactions,
joining the network, updating catalogs of available products, and so on.

What is an Aggregator Model?

An Aggregator Model is a networking E-commerce business model where a firm, known as an

Aggregator, collects (or aggregates) data pertaining to goods and/or services offered by several
competing websites or application software (commonly known as apps) and displays it on its
own website or application software. Typically, an aggregator does not possess any
manufacturing or warehousing capability, but instead, relies on its ability to create a domain
that allows visitors to conveniently match prices and specifications of products and/or
services.This type of service is common among financial lenders and insurance companies.

Attributes of an Aggregator Business Model

Customers: Any aggregator business model has two customer bases - (1) the consumers and
(2) the goods/service providers who act as customers for the aggregator.

Industry: All goods/service providers associated with a particular aggregator belong to the
same or similar industries.
Partnerships: None of the goods/service providers are employed with the aggregator. On the
contrary, they are business partners of the aggregator and are free to make independent business
decisions. These partnerships are formed through partnership agreements that typically
obligate goods/service providers to conform to acceptable levels of quality, while entrusting
the aggregator with the responsibility of marketing and creating more sales opportunities for
their partners.

Brand Image: Brand image is one of the most important attributes of any business. As such,
aggregators allocate a large proportion of their investments in brand-building exercises such as
emphasizing on high quality of products/services, setting practical and attractive price bands,
and offering delivery on demand.

Types of Aggregators

There are several different types of aggregators. Below are some of the most common types:

Search Aggregators are classified as metasearch engines since they simultaneously aggregate
results from several search engines on topics specified by their users. A search aggregator
typically searches parameterized RSS feeds that are published by various sites. Examples
include Scour and WebCrawler.

News or Content Aggregators gather news, updates, insights or general web content from
various online sources and display them at a single location. Examples include Metacritic and
PopUrls.

Review Aggregators are similar to news aggregators. However, they typically collate user or
expert reviews of films and television shows, video games, books, restaurants, automobiles,
software, etc. Examples include Rotten Tomatoes (films and television), OpenCritic (video
games), iDreamBooks (books), Yelp (restaurants), Motor Trends (automobiles) and Software
Advice (software).

Poll Aggregators collate individual opinion poll results conducted by various organizations in
order to estimate public opinion on important matters. Poll aggregators such as Votamatic and
Frontloading HQ offer polling analysis and election forecasting of major US elections.

Social Network Aggregators are also known as real-time feed aggregators. These are typically
websites that aggregate content from multiple social networking sites,such as Facebook,
Twitter, Instagram, Flickr, LinkedIn, etc. and present them in a single domain. Examples
include Hootsuite and FriendFeed (defunct).

Video Aggregators aggregate content from different online video sites and organize them in
categorized lists. Examples include uVouch, Aggrega and VodPod.

Shopping Aggregators collate results of several shopping engines and offer price, product and
ratings comparisons. Shopping aggregators are some of the most popular sites on the web,
especially since they usually provide the best value, most reliable results. Examples include
Amazon and BizRate.

Real Estate Aggregators are websites or software applications that collect and display
information pertaining to real estate and MLS listings from various sources. Real estate
aggregators primarily target home hunters, especially first time home buyers, by displaying
home prices, property details and available deals as listed on various popular property websites.
Examples include Zillow and RealEstate.

Job Aggregators are websites or software applications that aggregate job postings from various
career sites, employer job listings, and other job posting sites. Examples include LinkedIn and
Google Jobs.

Value Chain
• The value chain is a concept from business management that was first described and
popularized by Michael Porter in his 1985 best seller, Competitive Advantage: Creating
and Sustaining Superior Performance.
• A Value Chain is a chain of activities for a firm operating in a specific industry.
• Products pass through all activities of the chain in order and at each activity the product
gains some value. The chain of activities gives the products more added value than the
sum of the independent activities value.
Here we have shown just a basic value chain flow of an Automobile Industry.

• A diamond cutter, as a profession, can be used to illustrate the difference of cost and the
value chain. The cutting activity may have a low cost, but the activity adds much of the
 value to the end product, since a rough diamond is significantly less valuable than a cut
diamond.
• The value chain framework quickly made its way to the forefront of management thought
as a powerful analysis tool for strategic planning. Value chain analysis has also been
successfully used in large Petrochemical Plant Maintenance Organizations to show how
Work Selection, Work Planning, Work Scheduling and finally Work Execution can (when
considered as elements of chains) help drive Lean approaches to Maintenance.

Porter’s Value Chain Model

The idea of the value chain is based on the process of organization, the idea of seeing a
manufacturing (or service) organization as a system, made up of subsystems each with inputs,
transformation processes and outputs. Inputs, transformation processes, and outputs involve
the acquisition & consumption of resources- money, labour, materials, equipment, buildings,
land, administration and management. How value chain activities are carried out determines
costs and affects profits.
Most organizations engage in hundreds, even thousands of activities in the process of
converting inputs to outputs. These activities can be classified generally as either primary or
support activities that all businesses must undertake in some form.
According to Porter (1985), the primary activities are:-
• Inbound Logistics: involve relationships with suppliers and include all the activities
required to receive, store & disseminate inputs.
• Operations: are all the activities required to transform inputs into outputs (products &
services).
• Outbound Logistics: include all activities required to collect, store & distribute the output.
• Marketing & Sales: activities inform buyers about products & services, induce buyer to
purchase them and facilitate their purchase.
• Service: includes all the activities required to keep the product or service working
effectively for the buyer after it is sold and delivered.
Support Activities are:-
• Procurement: is the acquisition of inputs, or resources, for the firm.
• Human Resource Management: consists of all activities involved in recruiting, hiring,
training, developing, compensating and dismissing or laying off personnel.
• Technological Development: pertains to the equipment, hardware, software,
procedures and technical knowledge brought to bear in the firm’s transformation of
inputs into outputs.
• Infrastructure: Serves the company’s needs & ties its various parts together, it consists
of functions or departments such as accounting, legal, finance, planning, public affairs,
government relations, quality assurance & general management.
 Fig PORTER’S GENERIC VALUE CHAIN

E-Payment System:

Electronic payment systems are central to on-line business process as companies look for
ways to serve customers faster and at lower cost. Emerging innovations in the payment for
goods and services in electronic commerce promise to offer a wide range of new business
opportunities.

Electronic payment systems and e-commerce are highly linked given that on-line consumers
must pay for products and services. Clearly, payment is an integral part of the mercantile
process and prompt payment is crucial. If the claims and debits of the various participants
(consumers, companies and banks) are not balanced because of payment delay, then the
entire business chain is disrupted. Hence an important aspect of e-commerce is prompt and
secure payment, clearing, and settlement of credit or debit claims.

Electronic payment systems are becoming central to on-line business transactions nowadays
as companies look for various methods to serve customers faster and more cost effectively.
Electronic commerce brings a wide range of new worldwide business opportunities. There is
no doubt that electronic payment systems are becoming more and more common and will
play an important role in the business world. Electronic payment always involves a payer
and a payee who exchange money for goods or services. At least one financial institution
like a bank will act as the issuer (used by the payer) and the acquirer (used by the payee).

Types of Electronic Payment Systems:

Electronic payment systems are proliferating in banking, retail, health care, on-line markets,
and even government—in fact, anywhere money needs to change hands.

Organizations are motivated by the need to deliver products and services more cost
effectively and to provide a higher quality of service to customers. The emerging electronic
payment technology labeled electronic funds transfer (EFT).

EFT is defined as ―any transfer of funds initiated through an electronic terminal telephonic
instrument, or computer or magnetic tape so as to order, instruct, or authorize a financial
institution.

EFT can be segmented into three broad categories:

Banking and financial payments

• Large-scale or wholesale payments (e.g., bank-to-bank transfer)

• Small-scale or retail payments (e.g., automated teller machines

• Home banking (e.g., bill payment)

Retailing payments

• Credit Cards (e.g., VISA or MasterCard)

• Private label credit/debit cards (e.g., J.C. Penney Card)

• Charge Cards (e.g., American Express)

On-line electronic commerce payments

• Token-based payment systems

o Electronic cash (e.g., DigiCash)

o Electronic checks (e.g., NetCheque)

o Smart cards or debit cards (e.g., Mondex Electronic Currency Card)

• Credit card-based payments systems

o Encrypted Credit Cards (e.g., World Wide Web form-based encryption)

o Third-party authorization numbers (e.g., First Virtual)

Payment Gateway
A payment gateway is an e-commerce application service provider service that authorizes
payments for e-businesses, online retailers, bricks and clicks, or traditional brick and
mortar. It is the equivalent of a physical point of sale terminal located in most retail outlets.
Payment gateways protect credit card details by encrypting sensitive information, such
as credit card numbers, to ensure that information is passed securely between the customer and
the merchant and also between merchant and the payment processor
A payment gateway facilitates the transfer of information between a payment portal (such as a
website, mobile phone or IVR service) and the Front End Processor or acquiring bank. When a
customer orders a product from a payment gateway-enabled merchant, the payment gateway
performs a variety of tasks to process the transaction:
1. A customer places order on website by pressing the 'Submit Order' or equivalent
button, or perhaps enters their card details using an automatic phone answering
service.
2. If the order is via a website, the customer's web browser encrypts the information to
be sent between the browser and the merchant's webserver. This is done
via SSL (Secure Socket Layer) Decryption.
3. The merchant then forwards the transaction details to their payment gateway. This is
another SSL encrypted connection to the payment server hosted by the payment
gateway.
4. The payment gateway forwards the transaction information to the payment
processor used by the merchant's acquiring bank.
5. The payment processor forwards the transaction information to the card association (e.g.,
Visa/MasterCard)
1. If an American Express or Discover Card was used, then the processor acts as
the issuing bank and directly provides a response of approved or declined to
the payment gateway.
2. Otherwise, the card association routes the transaction to the correct
card issuing bank.
6. The credit card issuing bank receives the authorization request and sends a response
back to the processor (via the same process as the request for authorization) with a
response code. In addition to determining the fate of the payment, (i.e. approved or
declined) the response code is used to define the reason why the transaction failed
(such as insufficient funds, or bank link not available)
7. The processor forwards the response to the payment gateway.
8. The payment gateway receives the response, and forwards it on to the website (or
whatever interface was used to process the payment) where it is interpreted as a
relevant response then relayed back to the cardholder and the merchant.
9. The entire process typically takes 2–3 seconds.
10. The merchant submits all their approved authorizations, in a "batch", to their acquiring
bank for settlement via their processor.
11. The acquiring bank deposits the total of the approved funds in to the merchant's
nominated account. This could be an account with the acquiring bank if the merchant
does their banking with the same bank, or an account with another bank.
12. The entire process from authorization to settlement to funding typically takes 3 days.
Many payment gateways also provide tools to automatically screen orders for fraud and
calculate tax in real time prior to the authorization request being sent to the processor. Tools to
detect fraud include geolocation, velocity pattern analysis, delivery address verification,
computer finger printing technology, identity morphing detection, and basic AVS checks.

E-Cash

While many different companies are rushing to offer digital money products, currently e-cash
is cash is represented by two models. One is the on-line form of e-cash (introduced by
DigiCash) which allows for the completion of all types of internet transactions. The other form
is off-line; essentially a digitially encoded card that could be used for many of the same
transactions as cash. This off-line version (which also has on-line capabilities) is being tested
by Mondex in partnership with various banks.
The primary function of e-cash is to facilitate transactions on the Internet. Many of these
transactions may be small in size and would not be cost efficient through other payment
mediums such as credit cards. Thus, WWW sites in the future may charge $0.10 a visit, or
$0.25 to download a graphics file. These types of payments, turning the Internet into a
transaction oriented forum, require mediums that are easy, cheap (from a merchants
perspective), private (see Privacy), and secure (see Security). Electronic Cash is the natural
solution, and the companies that are pioneering these services claim that the products will meet
the stated criteria. By providing this type of payment mechnism, the incentives to provide
worthwhile services and products via the Internet should increase. Another prospective
beneficiary from these developments would be Shareware providers, since currently they rarely
receive payments. To complete the digital money revolution an offline product is also required
for the pocket money/change that most people must carry for small transactions (e.g. buying a
newspaper, buying a cup of coffee, etc...).
The concept of electronic money is at least a decade old. [Hewitt 1994] demonstrates that check
writing is a pre-cursor to E-cash. When one person writes a check on his bank account and
gives the check to another person with an account at a different bank, the banks do not transfer
currency. The banks use electronic fund transfer. Electronic money, removes the middleman.
Instead of requesting the banks to transfer the funds through the mechnism of a check, the E-
cash user simply transfers the money from his bank account to the account of the receiver.
The reality of E-cash is only slightly more complicated, and these complications make the
transactions both secure and private. The user downloads electronic money from his bank
account using special software and stores the E-cash on his local hard drive. To pay a WWW
merchant electronically, the E-cash user goes through the software to pay the desired amount
from the E-cash "wallet" to the merchants local hard drive ("wallet") after passing the
transaction through an E-cash bank for authenticity verification. The merchant can then pay its
bills/payroll with this E-cash or upload it to the merchant's hard currency bank account. The
E-cash company makes money on each transaction from the merchant (this fee is very small,
however) and from royalties paid by banks which provide customers with E-cash
software/hardware for a small monthly fee. Transactions between individuals would not be
subject to a fee.

Credit Cards

A credit card is a small plastic card issued to users as a system of payment. It allows its holder
to buy goods and services based on the holder's promise to pay for these goods and
services.[1] The issuer of the card creates a revolving account and grants a line of credit to
the consumer (or the user) from which the user can borrow money for payment to
a merchant or as a cash advance to the user.
A credit card is different from a charge card: a charge card requires the balance to be paid in
full each month.[2] In contrast, credit cards allow the consumers a continuing balance of debt,
subject to interest being charged. A credit card also differs from a cash card, which can be
used like currency by the owner of the card. Most credit cards are issued by banks or credit
unions, and are the shape and size specified by the ISO/IEC 7810 standard as ID-1. This is
defined as 85.60 × 53.98 mm (3.370 × 2.125 in) (33/8 × 21/8 in) in size.
Credit cards are issued by a credit card issuer, such as a bank or credit union, after an account
has been approved by the credit provider, after which cardholders can use it to make purchases
at merchants accepting that card. Merchants often advertise which cards they accept by
displaying acceptance marks – generally derived from logos – or may communicate this
orally, as in "Credit cards are fine" (implicitly meaning "major brands"), "We take (brands X,
Y, and Z)", or "We don't take credit cards".
When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder
indicates consent to pay by signing a receiptwith a record of the card details and indicating the
amount to be paid or by entering a personal identification number (PIN). Also, many
merchants now accept verbal authorizations via telephone and electronic authorization using
the Internet, known as a card not present transaction (CNP).
Electronic verification systems allow merchants to verify in a few seconds that the card is valid
and the credit card customer has sufficient credit to cover the purchase, allowing the
verification to happen at time of purchase. The verification is performed using a credit card
payment terminal or point-of-sale (POS) system with a communications link to the
merchant's acquiring bank. Data from the card is obtained from amagnetic stripe or chip on
the card; the latter system is called Chip and PIN in the United Kingdom and Ireland, and is
implemented as anEMV card.
For card not present transactions where the card is not shown (e.g., e-commerce, mail order,
and telephone sales), merchants additionally verify that the customer is in physical possession
of the card and is the authorized user by asking for additional information such as the security
code printed on the back of the card, date of expiry, and billing address.
Each month, the credit card user is sent a statement indicating the purchases undertaken with
the card, any outstanding fees, and the total amount owed. After receiving the statement, the
cardholder may dispute any charges that he or she thinks are incorrect (see 15 U.S.C. § 1643,
which limits cardholder liability for unauthorized use of a credit card to $50, and the Fair Credit
Billing Act for details of the US regulations). Otherwise, the cardholder must pay a defined
minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the
entire amount owed. The credit issuer charges interest on the amount owed if the balance is
not paid in full (typically at a much higher rate than most other forms of debt). In addition, if
the credit card user fails to make at least the minimum payment by the due date, the issuer may
impose a "late fee" and/or other penalties on the user. To help mitigate this, some financial
institutions can arrange for automatic payments to be deducted from the user's bank accounts,
thus avoiding such penalties altogether as long as the cardholder has sufficient funds.

What credit card numbers mean

Specifications for credit card numbering have been drawn up by the International Standards
Organization (ISO/IEC 7812-1:1993) and the American National Standards Institute (ANSI
X4.13).
The first digit of your credit card number is the Major Industry Identifier (MII), which
represents the category of entity which issued your credit card. Different MII digits represent
the following issuer categories:

MII
Digit Issuer Category
Value
0 ISO/TC 68 and other industry assignments
1 Airlines
2 Airlines and other industry assignments
Travel and entertainment (such as American Express
3
and Diners Club)
4 Banking and financial (Visa)
5 Banking and financial (MasterCard)
6 Merchandizing and banking (Discover)
7 Petroleum
8 Telecommunications and other industry assignments
9 National assignment

For example, American Express, Diner's Club, and Carte Blanche are in the travel and
entertainment category, VISA, MasterCard, and Discover are in the banking and financial
category, and SUN Oil and Exxon are in the petroleum category.
The first 6 digits of your credit card number (including the initial MII digit) form the issuer
identifier. This means that the total number of possible issuers is a million.
Some of the better known issuer identifiers are listed in the following table:
Card Number
Issuer Identifier
Length
34xxxx,
American Express 15
37xxxx
VISA 4xxxxx 13, 16
51xxxx-
MasterCard 16
55xxxx
Discover 6011xx 16
300xxx-
305xxx,
Diner's Club/Carte Blanche 14
36xxxx,
38xxxx

The final digit of your credit card number is a check digit, akin to a checksum. The algorithm
used to arrive at the proper check digit is called the Luhn algorithm, after IBM scientist Hans
Peter Luhn (1896-1964), who was awarded US Patent 2950048 ("Computer for Verifying
Numbers") for the technique in 1960. The most succint description of the Luhn algorithm is:
"For a card with an even number of digits, double every odd numbered digit and subtract 9 if
the product is greater than 9. Add up all the even digits as well as the doubled-odd digits, and
the result must be a multiple of 10 or it's not a valid card. If the card has an odd number of
digits, perform the same addition doubling the even numbered digits instead."

For American Express, digits three and four are type and currency, digits five through 11 are
the account number, digits 12 through 14 are the card number within the account and digit 15
is a check digit.

For Visa, digits two through six are the bank number, digits seven through 12 or seven through
15 are the account number and digit 13 or 16 is a check digit.

For MasterCard, digits two and three, two through four, two through five or two through six
are the bank number (depending on whether digit two is a 1, 2, 3 or other). The digits after the
bank number up through digit 15 are the account number, and digit 16 is a check digit.

Let’s analyze a sample number of 4408 0012 3456 7890 to see whether it is a valid credit card
number.

The Major Industry Identifier (MII) is 4 (banking and financial), the issuer identifier is 440800
(a VISA partner), the account number is 123456789, and the check digit is 0. Let's apply the
Luhn check to 4408 0012 3456 7890. (4*2)+4+(0*2)+8+(0*2)+0+(1*2)+2+(3*2)+4+(5*2-
9)+6+(7*2-9)+8+(9*2-9)+0 = 8+4+0+8+0+0+2+2+6+4+1+6+5+8+9+0 = 63, which is not a
multiple of 10. Therefore we conclude that the number 4408 0012 3456 7890 is an invalid
credit card number.

Smart Card

A smart card, chip card, or integrated circuit card (ICC), is any pocket-sized card with
embedded integrated circuits. A smart card or microprocessor cards contain volatile memory
and microprocessor components. The card is made of plastic. Smart cards may also provide
strong security authentication for single sign-on (SSO) within large organizations.
A smart card may have the following generic characteristics:
• Dimensions similar to those of a credit card. ID-1 of the ISO/IEC 7810 standard defines
cards as nominally 85.60 by 53.98 millimetres (3.370 × 2.125 in). Both are 0.76
millimetres (0.030 in) thick.
• Contains a tamper-resistant security system and provides security services (e.g.,
protects in-memory information).
• Managed by an administration system which securely interchanges information and
configuration settings with the card, controlling card blacklisting and application-data
updates.
• Communicates with external services via card-reading devices, such as ticket
readers, ATMs, etc.
Smart cards can provide identification, authentication, data storage and application
processing.[1]
The benefits of smart cards are directly related to the volume of information and applications
that are programmed for use on a card. A single contact/contactless smart card can be
programmed with multiple banking credentials, medical entitlement, driver’s license/public
transport entitlement, loyalty programs and club memberships to name just a few. Multi-
factor and proximity authentication can and has been embedded into smart cards to increase
the security of all services on the card. For example, a smart card can be programmed to only
allow a contactless transaction if it is also within range of another device like a uniquely
paired mobile phone. This can significantly increase the security of the smart card.
Governments gain a significant enhancement to the provision of publicly funded services
through the increased security offered by smart cards. These savings are passed onto society
through a reduction in the necessary funding or enhanced public services.
Individuals gain increased security and convenience when using smart cards designed for
interoperability between services. For example, consumers only need to replace one card if
their wallet is lost or stolen. Additionally, the data storage available on a card could contain
medical information that is critical in an emergency should the card holder allow access to
this.

Contact Smart Cards

Contact smart cards have a contact area of approximately 1 square centimetre (0.16 sq in),
comprising several gold-plated contact pads. These pads provide electrical connectivity when
inserted into a reader.

Contactless Smart Cards

A contactless smart card is any pocket-sized card with embedded integrated circuits that can
process and store data, and communicate with a terminal via radio waves. There are two broad
categories of contactless smart cards. Memory cards contain non-volatile memory storage
components, and perhaps some specific security logic. Contactless smart cards do not contain
an ordinary read-only RFID, but they do contain a re-writeable smart card microchip that can
be transcribed via radio waves.

What Is an Electronic Check?

An electronic check, or e-check, is a form of payment made via the Internet, or another data
network, designed to perform the same function as a conventional paper check. Since the
check is in an electronic format, it can be processed in fewer steps.

Additionally, it has more security features than standard paper checks including
authentication, public key cryptography, digital signatures, and encryption, among others.

Key Takeaway

• An electronic check is a form of payment made via the internet that is designed to
perform the same function as a conventional paper check.
• One of the more frequently used versions of the electronic check is the direct
deposit system offered by many employers.
• Generally, the costs associated with issuing an electronic check are notably lower
than those associated with paper checks.
• An electronic check has more security features than standard paper checks.
How an Electronic Check Works
An electronic check is part of the larger electronic banking field and part of a subset of
transactions referred to as electronic fund transfers (EFTs). This includes not only electronic
checks but also other computerized banking functions such as ATM withdrawals and
deposits, debit card transactions and remote check depositing features. The transactions
require the use of various computer and networking technologies to gain access to the
relevant account data to perform the requested actions.
Electronic checks were developed in response to the transactions that arose in the world
of electronic commerce. Electronic checks can be used to make a payment for any transaction
that a paper check can cover, and are governed by the same laws that apply to paper checks.
This was the first form of Internet-based payment used by the U.S. Treasury for making large
online payments.

The Benefits of Electronic Checks

Generally, the costs associated with issuing an electronic check are notably lower than those
associated with paper checks. Not only is there no requirement for a physical paper check,
which costs money to produce, but also electronic checks do not require physical postage in
cases of payments being made to entities outside the direct reach of the entity issuing the
funds.

Electronic wallet
An electronic wallet is no different than an ordinary wallet, except that you don’t keep it in
your pocket but on the web – in an online service. Similar to a physical wallet you put in and
take out money from it by deposits and withdrawals, you can transfer funds to other people’s
e-wallets and you can also pay for purchases – especially on the web. Last but not least, how
much money you put on it (the amount of your deposit), is how much you can spend. No
more.

Internet wallet or a prepaid card

Put simply, an electronic wallet is a method which enables buyers to deposit money and
make quick payments. Is is a kind of a prepaid card (virtual, but often also physical) topped
up by us with a certain amount. Your funds are deposited on a account number assigned to
your wallet. It is a technical account, with limited functionalities. It is usually used to transfer
a specific sum of money to it, which will be available to use by the e-purse, check the
account balance and transaction history. Not all electronic wallets can be topped up.
Paysafecard for example, after the balance is cleared, has to be exchanged for a new coupon
with the functions of a e-wallet. Similar to when paying by cash taken out from a leather
purse, you won’t spend more than you have in your wallet. It is a protection from an
unwanted overdraft which can be found on debit cards. The exception to it, is when you can
attach payment cards to your e-wallet. You can then choose the payment for your shopping
by charging the card, not the money that you have deposited on the online wallet. If you feel
like it, of course.

E-wallet as a simplification for online players

Electronic wallets are known for facilitating the use of the services of casinos, poker rooms
and bookmakers. They are also necessary for people that make money online, eg. from blogs
or RevShares (commercial programs). As an example, the Paymenticon electronic wallet
supports one of the few legal bookmakers LV BET Zakłady Bukmacherskie. As a result, a
user with a registered account in Paymenticon is automatically registered on the LVBet.pl
platform. This gives the possibility to bet, deposit and withdraw funds in real time. Not only
between Paymenticon and LVBet accounts, but you can also use Paymenticon as a payment
gateway and deposit and withdraw electronic money into a bank account.

The main advantages of an e-wallet: convenience, speed and security

Why is an electronic wallet often a better solution than a simple transfer from account to
account or payment with a debit card? The main reasons are: convenience, speed and
security. And often savings, because a lot of the time transfers of funds between e-wallets are
cheaper than ordinary bank transfers, especially foreign ones.

Faster and more convenient with the electronic wallet

Transfer order of funds from an e-wallet is much simpler and convenient than a traditional
bank transfer. The process of a transfer order in a bank is an operation that can take a long
time and can be complicated. You have to log in to your bank using a long identification
number, enter all the recipient’s data, wait for an SMS with a password, enter the password
from the user panel… Also uncomfortable and time consuming is entering the payment card
details for the transfer, especially when you want to carry out a transaction on a mobile
website or via an application. When making a transfer using an electronic wallet, you shorten
the time of the transaction to a minimum – to make a transfer to another e-wallet you simply
log in to your e-wallet account and enter the name, surname and e-mail address or telephone
number of the recipient. The transaction takes effect in real time (immediately). You can also
make a transfer to your bank account easily and quickly. All you have to do is log in to your
e-wallet account, enter the name of the recipient and the bank account number.

e-Marketing

eMarketing or electronic marketing refers to the application of marketing principles and

techniques via electronic media and more specifically the Internet. The terms eMarketing,
Internet marketing and online marketing, are frequently interchanged, and can often be
considered synonymous.
eMarketing is the process of marketing a brand using the Internet. It includes both direct
response marketing and indirect marketing elements and uses a range of technologies to
help connect businesses to their customers.
By such a definition, eMarketing encompasses all the activities a business conducts via the
worldwide web with the aim of attracting new business, retaining current business and
developing its brand identity
e-Marketing is a subset of e-Business that utilises electronic medium to perform marketing
activities and achieve desired marketing objectives for an organisation. Internet Marketing,
Interactive Marketing and Mobile Marketing for example, are all a form of e-Marketing
The benefits of eMarketing over traditional marketing

Reach
The nature of the internet means businesses now have a truly global reach. While
traditional media costs limit this kind of reach to huge multinationals, eMarketing opens up
new avenues for smaller businesses, on a much smaller budget, to access potential consumers
from all over the world.

Scope
Internet marketing allows the marketer to reach consumers in a wide range of ways and
enables them to offer a wide range of products and services. eMarketing includes, among
other things, information management, public relations, customer service and sales. With the
range of new technologies becoming available all the time, this scope can only grow.

Interactivity
Whereas traditional marketing is largely about getting a brand's message out there,
eMarketing facilitates conversations between companies and consumers. With a two-way
communication channel, companies can feed off of the responses of their consumers,
making them more dynamic and adaptive.

Immediacy
Internet marketing is able to, in ways never before imagined, provide an immediate impact.
Imagine you're reading your favourite magazine. You see a double-page advert for some new
product or service, maybe BMW's latest luxury sedan or Apple's latest iPod offering. With
this kind of traditional media, it's not that easy for you, the consumer, to take the step from
hearing about a product to actual acquisition.

With eMarketing, it’s easy to make that step as simple as possible, meaning that within a few
short clicks you could have booked a test drive or ordered the iPod. And all of this can
happen regardless of normal office hours. Effectively, Internet marketing makes business
hours 24 hours per day, 7 days per week for every week of the year.

By closing the gap between providing information and eliciting a consumer reaction, the
consumer's buying cycle is speeded up and advertising spend can go much further in creating
immediate leads.

Disadvantages

• Lack of personal approach

• Dependability on technology
• Security, privacy issues
• Maintenance costs due to a constantly evolving environment
• Higher transparency of pricing and increased price competition
• Worldwide competition through globalisation

Forms of e-marketing:

SEO
SEO is the process of optimizing content or websites so that they show up in search results
in search engines like Google. Search engines decide which websites to show for a search
term based on keywords mentioned on the website and links that refer to this website. That
means SEO has a lot to do with using the right keywords or keyphrases in the copy of a
website or within the content you want to show in search and getting links to this website
or content.

Search Engine Marketing

While SEO describes the process of getting unpaid traffic from search engines – SEM refers
to the paid traffic from search engines. The most common form of search engine marketing
is probably Google Adwords for the simple reason that Google is by far the most used
search engine.

Social Media Marketing

The Social Ms has a strong focus on social media marketing. So that is where we are going to
start our list of types of digital marketing. Social Media certainly has a rightfully earned
place in this list.
Social Media Marketing is „the use of social media platforms and websites to promote a
product or service.“
That means all sharing of information and engagement with followers, fans, partners or
competitors on social media platforms with the goal of promoting your products is part of
digital marketing. In essence, social media marketing is the targeted use of social media
conversations to increase the awareness for a brand or product.

Content Marketing
Content marketing is the art of using storytelling and valuable information to increase brand
awareness with the goal of getting your target audience to take a profitable action. Content
marketing aims at building relationships with potential customers and becoming a partner
rather than an advertiser.

Pay Per click Advertising

Similar to SEM other forms of PPC advertising also describe marketing methods where the
marketer pays for each click on a link to a website. Apart from search engines, almost all
social networks offer the opportunity for Pay Per Click advertising. These ads then appear in
the feed of the targeted social media users.

Affiliate Marketing
Affiliate marketing is a performance-based type of digital marketing. In contrast to PPC
advertising with affiliate marketing, the advertiser does not pay for traffic but rather for
conversions. The rates are usually higher but the risk on the side of the advertiser are
limited since he only pays for conversions.
Affiliate marketing is popular with bloggers and high-traffic website owners who make
money from selling other people’s products to their audience.

Email Marketing
Email marketing is one of the best converting marketing channels. By sending regular
updates to your email subscribers you can build and nurture a relationship. By providing
value with your email updates you can build trust – eventually, you will be able to turn a
percentage of your audience into customers.

Supply Chain Management:

It is the process of planning, implementing, and controlling the operations of the supply
chain with the purpose to satisfy customer requirements as efficiently as possible. Supply
chain management spans all movement and storage of raw materials, work-in-process
inventory, and finished goods from point-of-origin to point-of-consumption.

Supply chain management must address the following problems:

Distribution Network Configuration: Number and location of suppliers, production facilities,

distribution centers, warehouses and customers. Distribution Strategy: Centralized versus
decentralized, direct shipment, cross docking, pull or push strategies, third party logistics.

Information: Integrate systems and processes through the supply chain to share valuable
information, including demand signals, forecasts, inventory and transportation. Inventory
Management: Quantity and location of inventory including raw materials, work- in-process
and finished goods.

Features Of Supply Chain Management:

In electronic commerce, supply chain management has the following features.

An ability to source raw material or finished goods from anywhere in the world A
centralized, global business and management strategy with flawless local execution

On-line, real-time distributed information processing to the desktop, providing total supply
chain information visibility The ability to manage information not only within a company
but across industries and enterprises

The seamless integration of all supply chain processes and measurements, including third-
party suppliers, information systems, cost accounting standards, and measurement systems
The development and implementation of accounting models such as activity based costing
that link cost to performance are used as tools for cost reduction

A reconfiguration of the supply chain organization into high-performance teams going from
the shop floor to senior management.

Components Of Supply Chain Management:

The following are five basic components of SCM.

Plan: This is the strategic portion of SCM. You need a strategy for managing all the
resources that go toward meeting customer demand for your product or service. A big piece
of planning is developing a set of metrics to monitor the supply chain so that it is efficient,
costs less and delivers high quality and value to customers.

Source: Choose the suppliers that will deliver the goods and services you need to create
your product. Develop a set of pricing, delivery and payment processes with suppliers and
create metrics for monitoring and improving the relationships. And put together processes
for managing the inventory of goods and services you receive from suppliers, including
receiving shipments, verifying them, transferring them to your manufacturing facilities and
authorizing supplier payments.

Make: This is the manufacturing step. Schedule the activities necessary for production,
testing, packaging and preparation for delivery. As the most metric-intensive portion of the
supply chain, measure quality levels, production output and worker productivity.

Deliver: This is the part that many insiders refer to as logistics. Coordinate the receipt of
orders from customers, develop a network of warehouses, pick carriers to get products to
customers and set up an invoicing system to receive payments.

Return: The problem part of the supply chain. Create a network for receiving defective and
excess products back from customers and supporting customers who have problems with
delivered products.

Measuring A Supply Chain’s Performance:

The performance of a supply chain is evaluated by how it reduces cost or increases value.
SCM performance monitoring is important; in many industries, the supply chain represents
roughly 75 percent of the operating budget expense. Three common measures of
performance are used when evaluating SCM performance:

Efficiency focuses on minimizing cost by decreasing the inventory investment

or value relative to the cost of goods sold. An efficient firm is therefore one with a
higher inventory turnover or fewer weeks‘ worth of inventory on hand.

Responsiveness focuses on reduction in both inventory costs and missed

sales that comes with a faster, more flexible supply chain. A responsive firm is
proficient in an uncertain market environment, because it can quickly adjust
production to meet demand.

Effectiveness of the supply chain relates to the degree to which the supply
 chain creates value for the customer. Effectiveness-focused supply chains are called
―value chains‖ because they focus more on creating customer value than reducing
costs and improving productivity. To examine the effect of the Internet and
electronic commerce on the supply chain is to examine the impact the Internet has
on the efficiency, responsiveness, effectiveness, and overall performance of the
supply chain.

Advantages of Internet/E-Commerce Integrated Supply Chain:

The primary advantages of Internet utilization in supply chain management are speed,
decreased cost, flexibility, and the potential to shorten the supply chain.

Speed: A competitive advantage accrues to those firms that can quickly

respond to changing market conditions. Because the Internet allows near
instantaneous transfer of information between various links in the supply chain, it is
ideally suited to help firms keep pace with their environments. Many businesses
have placed a priority upon real-time information regarding the status of orders and
production from other members of the supply chain.

Cost decrease: Internet-based electronic procurement helps reduce costs by

decreasing the use of paper and labor, reducing errors, providing better tracking of
purchase orders and goods delivery, streamlining ordering processes, and cutting
acquisition cycle times.

Flexibility: The Internet allows for custom interfaces between a company

and its different clients, helping to cost-effectively establish mass customization. A
manufacturer can easily create a custom template or Web site for a fellow supply
chain member with pre-negotiated prices for various products listed on the site,
making re-ordering only a mouse click away. The information regarding this
transaction can be sent via the Internet to the selling firm‘s production floor and the
purchasing firm‘s purchasing and accounting departments. The accuracy and
reliability of the information is greater than the traditional paper and pencil
transaction, personnel time and expense is reduced, and the real-time dissemination
of the relevant information to interested parties improves responsiveness. These
advantages can benefit both firms involved in the transaction.

Shortening the supply chain: Dell computers has become a classic example
of the power the Internet can have on a supply chain. Dell helped create one of the
first fully Internet-enabled supply chains and revolutionized the personal-computer
industry by selling directly to businesses and consumers, rather than through
retailers and middlemen. In mid-1996, Dell began allowing consumers to configure
and order computers online. By 1998, the company recorded roughly $1 billion in
 ―pure‖ Internet orders. By reducing sales costs and attracting customers who spend
more per transaction, Dell estimates that it yields 30 percent greater profit margins
on Internet sales compared to telephone sales.

Disadvantages of Internet/E-Commerce Integrated Supply Chain:

Increased interdependence: Increased commoditization, increased competition, and

shrinking profit margins are forcing companies to increase outsourcing and subcontracting
to minimize cost. By focusing on its core competencies, a firm should be able to maximize its
economies of scale and its competitiveness. However, such a strategy requires increased
reliance and information sharing between members of the supply chain. Increased
dependency on various members of the supply chain can have disastrous consequences if
these supply chain members are unable to handle the functions assigned to them.

The costs of implementation: Implementation of a fully-integrated Internet-based supply

chain is expensive. This expense includes hardware cost, software cost, reorganization cost,
and training costs. While the Internet promises many advantages once it is fully integrated
into a supply chain, a significant up front investment is needed for full deployment.

Keeping up with the change in expectations: Expectations have increased as Internet use
has become part of daily life. When customers send orders electronically, they expect to get
a quick confirmation and delivery or denial if the order can not be met. Increasingly, in this
and other ways, customers are dictating terms and conditions to suppliers. The introduction
of Internet-based supply chains make possible the change to a ―pull‖ manufacturing
strategy replacing the traditional ―push‖ strategy that has been the standard in most
industries.

E-CRM (Customer Relationship Management)

In today’s world a company can survive only if they can manage to keep its customers
happy:
• Promising latest and top class success to customers
• Building a customer environment and using other means to maintain customer
attention have now become the top priorities for any company that wants to make it
big in the market.
• As technology changes, more people all over the world have started buying and
selling activities over the Internet.
• As a consequence companies also have to give customers a good in easy online
environment.
• The result is nothing but E-CRM.
All organisations involved in on-line business to business and/or business to consumer
selling need to educate themselves about the new phenomenon of electronic customer
relationship management (E-CRM). ECRM is concerned with attracting and keeping
economically valuable customers and eliminating less profitable ones. E-CRM will continue
to develop as an important area of study in MIS and such relevant referent disciplines as
Computer Science, Marketing and Psychology. What, then, is the relationship between
customer behaviors and corporate opportunities to implement E-CRM? Each day, business
and consumer purchasing over the Internet increases. Customers purchase on-line for a
number of different reasons. A research study of 70 retailers found that convenience was
the number one ranked reason (84%) for purchasing on-line versus off-line. The fact that
customer service ranks near the bottom of the list of reasons to purchase on-line suggests
that customers are willing to trade off better levels of “off-line” service for the convenience
afforded by on-line purchasing. Looked at another way, on-line customers are not coming to
companies’ web sites with very high expectations for the service levels. However, on-line
retailers need to acknowledge that first-time purchasers at their sites will not necessarily, or
even likely, become repeat customers.
E-CRM provides companies with a means to conduct interactive, personalised and relevant
communications with customers across both electronic and traditional channels. It utilises a
complete view of the customer to make decisions about the following:
• Messaging
• Promotional offers, and
• Channel delivery
It synchronises communications across otherwise disjointed customer facing systems. It asks
for the permission of the potential customer before talking to him about product or
services.It focuses on understanding how the economics of customer relationships affect
the business CRM strategy along with its electronic component constitutes E-CRM. The trust
of E-CRM is not what an organisation is doing on the web but how fully an organisation ties
its online channel back to its traditional channel or customer touch points.

Need of E-CRM

E-CRM is needed for following reasons:

The CRM offerings remain channel centric not customer centric
The CRM offerings remain channel centric rather customer centric. Host CRM offerings
focus in improving the effectiveness of the individual channel that their systems support.
While this is a necessary step, it does not address the fundamental question of which
customers should be targeted in the channel and how much should be invoked in them. At a
typical bank, the majority of customers are unprofitable. Regardless of how efficient
customer communications may be through any channel, these customers will remain
unprofitable.
Contemporary customers facing traditional systems
Customer centric metrics do not exist. Most CRM offerings have weak metrics and
measurement capabilities. Generally those with customer profitability return on investment
of customer interaction and lifetime value of a customer because data needed for this falls
outside the reach and design of channel centric system. Instead they focus on operational
metrics such as wait time on calls, the number of annoyed callers. While these metrics are
important to run various channels operationally, they fail to address the question. Are we
investing the right amount of resource on customers with the most value? Answering the
question requires a holistic view of customer experience.
Customer centric metrics is non-existence
Customer facing systems create new islands of non-integrated information. Contemporary
customers facing traditional systems such as sales force automation and customer care
often have their own data models and data stores that manage only the information that
their application requires and generates. These systems rarely interact with others, as they
remain isolated.

Example: A customer, who has ordered a product and has a question about the status of
that order, rather than calling a customer service number, the customer is able to return to
the web site and inquire about the order through self service, which queries the company’s
order processing system automatically to return the status of the order. The customer can
do this whenever it is convenient, and the company saves thousands of dollars in customer
service costs.

Benefits of E-CRM
The following objectives can be achieved with a proper ECRM implementation (increased customer loyalty,
more effective marketing, improved customer service and support and greater efficiency and cost reduction):
Increased customer loyalty
An effective ECRM system lets a company communicate with its customers using a single and
consistent voice, regardless of the communication channel. This is because, with ECRM software,
everyone in an organisation has access to the same transaction history and information about the
customer. Information captured by an E-CRM system helps a company to identify the actual costs of
winning and retaining individual customers. Having this data allows the firm to focus its time and
resources on its most profitable customers. Classifying one’s “best” customers in this way allows an
organisation to manage them more efficiently as a premium group, with the understanding that it is
neither necessary nor advisable to treat every customer in the exact same way
Rules-based personalisation software
This software allows direct control of the type of sites shown to users. Companies structure the rules
to reduce the volume of available information down to digestible levels. Unfortunately, rules-based
software is hard to scale because rules require manual updating. On large web sites, this updating
becomes unwieldy. Collaborative filtering personalisation
software This software inspires browsing of sites and choices based on personal taste. For example,
Amazon.com shows purchasers of particular items sets of related items that other shoppers with
similar shopping patterns have purchased. This encourages increased sales activity and adds value for
the customer by presenting items that they may not have known would interest them. In business-to-
business applications, personalisation software can show customers pricing that reflect their own
firm’s specifically negotiated rates and can prevent customers from being shown the same
advertisement over and over. In the first case, personalisation software overcomes the generic feel
that many web sites still have. In the second case, it eliminates the chance that a customer will feel
harassed by unwanted “spam”.
More effective marketing
Having detailed customer information from an E-CRM system allows a company to predict the kind of
products that a customer is likely to buy as well as the timing of purchases. In the short to medium
term, this information helps an organisation create more effective and focused marketing/sales
campaigns designed to attract the desired customer audience. E-CRM allows for more targeted
campaigns and tracking of campaign effectiveness. Customer data can be analysed from multiple
perspectives to discover which elements of a marketing campaign had the greatest impact on sales
and profitability. In addition, customer segmentation can improve marketing efforts. Grouping
customers according to their need similarities allows a company to effectively market specific
products to members of the targeted groups.
Improved customer service and support
An E-CRM system provides a single repository of customer information. This enables a company to
serve customer needs quickly and efficiently at all potential contact points, eliminating the
customer’sfrustrating and time-consuming “hunt” for help. E-CRM-enabling technologies include
 search engines, live help, e-mail management, and news feeds/content management and multi-
language support. With an E-CRM system in place, a company can:
• more accurately receive, update and close orders remotely
• log materials, expenses and time associated with service orders
• view customer service agreements
• search for proven solutions and best practices
• subscribe to product-related information and software patches • access knowledge tools
useful in completing service orders
Greater efficiency and cost reduction
Data mining, which is the analysis of data for exploring possible relationships between sets of data,
can save valuable human resources. Integrating customer data into a single database allows
marketing teams, sales forces, and other departments within a company to share information and
work toward common corporate objectives using the same underlying statistics. Examples of this are
identifying unproductive/underutilised resources, closer tracking of costs, better forecasting for the
pipeline and setting realistic project metrics and measurements to quantify return on investment.
Pre-implementation considerations
Once a company has identified the need for E-CRM, it can begin to plan for implementation. The
following focal points should be considered at the pre-implementation phase. The basic framework
for pre-implementation consisting of business strategies, retooling business functions, process re-
engineering, technology and training.

How to Plan Out Your Ecommerce Projects

Ecommerce is a rapidly growing industry that’s shaking up the way we buy online. Unlike
traditional retail, ecommerce has low barriers to entry, smaller startup costs, and better
margins.
Because of this, more and more people than ever before are starting online businesses.
However, unlike traditional retail, ecommerce stores don’t attract customers off the street,
they aren’t competing with a small selection of stores in one location, and online retail
doesn’t deal with people face-to-face.
To counteract the challenges that arise from these differences, ecommerce stores need
solid project plans from the outset to help generate success.
A lack of a clear project plan leads to projects getting over-complicated, vital tasks being
missed, sales suffering, profit being lost, and stores closing down.
Thankfully, by carefully planning processes and implementing the right workflows, you can
make running your ecommerce store simple and straightforward.
With a range of software and tools, discovering how to plan your ecommerce projects is
easier than ever before.
We’ve broken down the three key steps you need to take to properly plan out your
ecommerce projects below. Take a look:
Power up your workday
1. Choose a project management strategy
Planning out an ecommerce project starts by choosing a project management strategy that
will help guide your project from start to finish.
There are a variety of project management strategies that you may find helpful. These
include:
Scrum
Created to make IT projects more simple, this project management strategy is ideal for
managing ecommerce projects. Its key features are:
• Daily 15-minute meetings to plan key tasks for the day
 • Project sprints: A one- to four-week-long period focused on one task or goal
• Sprint reviews to analyze and learn from sprint periods
• Backlogs to keep track of projects you’d like to implement down the line
• Burndown charts to help keep track of whether tasks are on schedule or whether
things are being slowed down
Kanban
Kanban is similar to Scrum project management but it is less restrictive. Kanban project
management has a softer focus that allows you to categorize tasks as ‘To do’, ‘Doing,’ and
‘Done.’
These tasks are usually tracked using a project management app or by moving sticky notes
across a whiteboard. Kanban’s key features are:
• Continuous release: Making small changes and updates on a very regular basis to
contribute to the progress of the overall task
• A focus on lead times and the strategizing of projects around how long deliverables
will take to execute
• A visual understanding of the project and what’s coming next
2. Plan ecommerce projects
Once you’ve finalized which project management methodology you will use for your
ecommerce projects, it’s time to start planning them out.
To run a successful ecommerce store, you’ll have to balance a number of key projects.
These might include:
• Competitor analysis
• Website planning
• Payment process organization
• Design and layout of your site and marketing
• Copywriting
• Product photography and optimization
• Email and social media marketing
• Social and search advertising
Balancing all of these projects requires absolute focus and a clear strategy. Utilizing the
project management methodologies above will help you keep things organized and moving
properly.
That, combined with the right tools, will allow you to automate ecommerce tasks such as
email campaigns, customer support, and much more.When working out how to plan your
ecommerce projects, start by setting the groundwork. Prepare documentation or project
blueprints that outline your goals, audience, vision, and how you’re going to get there.
Understanding what those in your niche or industry are doing can help set your goals, guide
your strategy, and help refine your approach.

Sample ecommerce project plan

The great thing about ecommerce is that you can see the effects of your efforts relatively
quickly through the sales of your products.
Start each project with a clear audit of what’s being done by competitors already and then
begin to strategize your desired areas of advantage and success. Doing so will allow you to
approach your projects from an informed perspective and prevent you from wasting time
on non-essential tasks.
Here’s what a sample project plan might look like at a high level:
Set goals and objectives: What do you want to accomplish? The more specific the better; A
5% increase in sales this quarter, for example.
Competitive research: Who is already in this space? What’s working for them and how can
you build on that or separate your brand from theirs?
Determine roles and major projects for a set timeframe: Which skills do you have available
and who do you need to hire to accomplish these goals?
Break projects into tasks: And assign them to different people on your team. If you’re using
sprints, make sure each task will take the duration of one sprint so it’ll be easier to focus on
one aspect of the project at a time
Implement and test: A/B testing is a great tool for ecommerce businesses
Compile learnings: What worked? What didn’t? Where are the gaps that you need to
address?
Refine the process: Cut out what’s not working in your process and find ways to continually
streamline so you get better and faster at completing projects.
When sales aren’t increasing despite your investment in marketing or in your online store,
something must be off.
That’s why every project plan should include these last two steps: compiling learnings and
refining your process.
3. Monitor and refine your ecommerce projects
As you work through your ecommerce projects in sprints or using the Kanban system, it’s
important to track your progress and performance.
Each style of project management incorporates clear reviews, which are essential to running
a successful ecommerce project.
Just as you use a URL shortener or cookies to track the performance of your ecommerce ads
and marketing, use time and project management tools to keep track of your internal
efforts.
This data can help you improve and refine processes over time — a must for ecommerce
companies of all sizes.
Manage time and tasks with ease
To get an even better understanding of how your team and project is performing on a
granular level, consider using a project management and time tracking tool such
as Hubstaff.
Hubstaff helps ecommerce brands and project managers manage their staff better by giving
them more, and better, data to analyze.
The software tracks the amount of time your members of staff spend on tasks each day and
monitors productivity levels by tracking keyboard and mouse usage. This allows you to
match productivity data with task completion rates, turnaround times, and individual tasks.

By gaining access to better data about time spent on projects and the impact they have on
your bottom line, you can begin to spot key roadblocks in your ecommerce project plan and
start to optimize your team’s workflow, processes, and daily habits.
Being able to identify how productive your staff members are being and how much time key
tasks are taking helps improve efficiency, cut down on project development and execution
time, and helps reduce the overall cost of projects.
Start to plan your ecommerce projects
Now that you have a clear idea of how to plan your ecommerce projects, it’s time to get
started. Launching a successful ecommerce store takes focus, strategy, and execution, so
look to implement these ideas from the start.
With all the available tools, ecommerce project management and project tracking have
never been easier.
Make sure to incorporate these into your workflow and processes in order to achieve
ecommerce success.

Mobile Commerce
M-commerce (mobile commerce) is the buying and selling of goods and services through
wireless handheld devices such as cellular telephone and personal digital assistants (PDAs).
Known as next-generation e-commerce, m-commerce enables users to access the Internet
without needing to find a place to plug in.
While electronic commerce (e-commerce) continues to impact the global business
environment profoundly, technologies and applications are beginning to focus more on
mobile computing and the wireless Web.
Mobile commerce (M-commerce) can be defined as the delivery of electronic commerce
capabilities directly into the consumer’s hand, anywhere, via wireless technology.
In very simple terms, one can say:
M-commerce = E-commerce + Wireless Web

Mobile delivery Technologies & Switching Methods

GSM:- GSM (Global System for Mobile Communication) operates in the 900 MHz and the
1800 MHz (1900 MHz in the US) frequency band and is the prevailing mobile standard in
Europe and most of the Asia-Pacific region. GSM is being used by more than 864 million
people (end May2003). Now GSM accounts for approximately 72 percent of the total digital
wireless market today. Today's GSM platform is a hugely successful wireless technology and
an unprecedented story of global achievement. In less than ten years since the first GSM
network was commercially launched, it became the world's leading and fastest growing
mobile standard.
HSCSD:- HSCSD (High Speed Circuit Switched Data) is a circuit switched protocol based on
GSM. It is able to transmit data up to 4 times the speed of the typical theoretical wireless
transmission rate of 14.4 kbps (kilo bytes per second), i.e. 57.6 kbps, simply by using 4 radio
channels simultaneously. The key problem in the emergence of this market is that there is
currently only few manufacturers who can provide PCMCIA modem cards for HSCSD clients,
which offers a transmission speed of 42.3 kbps downstream and 28.8 kbps upstream.
GPRS:- GPRS (General Packet Radio Service) is a packet switched wireless protocol that
offers instant access to data networks. It will permit burst transmission speeds of up to 115
kbps (or theoretically even 171 kbps) when it is completely rolled out. The real advantage of
GPRS is that it provides a connection (i.e. instant IP connectivity) between the mobile
terminal and the network but the actual capacity would be consumed only when data is
actually transmitted.
EDGE:- Enhanced Data Rates for Global Evolution (EDGE) is a higher bandwidth version of
GPRS permitting transmission speeds of up to 384 kbps. The number of EDGE users
worldwide is set to reach 331.4 million by the year 2007, according to predictions by the
experts. This will achieve the delivery of advanced mobile services such as the downloading
of video and music clips, full multimedia messaging, high-speed colour Internet access and
e-mail on the move. It will bring about the modulation changes that will be necessary for
UMTS at a later stage.
3G/UMTS:- Standing for "Universal Mobile Telecommunications System", UMTS represents
an evolution in terms of services and data speeds from today's "second generation" mobile
networks. As a key member of the "global family" of third generation (3G) mobile
technologies identified by the ITU, UMTS is the natural evolutionary choice for operators of
GSM networks, currently representing customer base of more than 850 million end users in
195 countries and representing over 70% of today's digital wireless market. Using fresh
radio spectrum to support increased numbers of customers in line with industry forecasts of
demand for data services over the next decade and beyond, "UMTS" is synonymous with a
choice of WCDMA radio access technology that has already been selected by approaching
120licensees worldwide.
SMS:- SMS, or text messaging, is the oldest of these technologies and the most widely used.
SMS messages can transmit one-way “push” notifications such as alerts, news, offers and
other data from content providers to subscribers. In addition, SMS can carry binary data, so
it can be the wireless delivery mechanism for downloads such as ringtones and operator
logos as well as encrypted messages
WAP/MobileWeb:- Using XHTML – a variation of HTML – for mobile Web access, WAP 2.0
has been available on most feature phones since 2004. Since the launch of iPhone, most
smart phones have supported browsers that support HTML.WAP 2.0 provides a mobile
experience much closer to a desktop and laptop Web experience than the original WAP
standards did, but it is still different enough that a WAP experience and Web experience will
not be exactly the same. A WAP user experience can be close to what you get with a basic
mobile app. WAP does not have access to the mobile phone’s features like an app does, but
it is still a good back-up plan for users without smart phones.
Bluetooth:- Bluetooth is a wireless technology standard for exchanging data over short
distances (using short-wavelength UHF radio waves in the ISM band from 2.4 to 2.485 GHz)
from fixed and mobile devices, and building personal area networks (PANs).Bluetooth is
managed by the Bluetooth Special Interest Group (SIG).Bluetooth is a packet-based protocol
with a master-slave structure. One master may communicate with up to seven slaves in a
piconet (a computer network which links a wireless user group of devices using Bluetooth
technology protocols). At any given time, data can be transferred between the master and
one other device. The master chooses which slave device to address; typically, it switches
rapidly from one device to another in a round-robin fashion.
m-Commerce Security Issues

• Security is a key enabling factor in M-commerce. GSM provides a relatively secure

connection through the PIN (personal Identification Number) when turning on the
handset. An authentication protocol between handset and the network through SSL
Encryption of voice and data is also there in GSM.
 • But it is not enough to convince people.
• In order to get the confidence of critical mass of consumers, more is expected in the
field of security.
• It looks that the smart cards will be the preferred way of gaining access to a secure
system. The smart card can be in the form of a credit card or in the form of a SIM like
miniature card.
• It is possible to run a variety of application on a single small SIM card. Encryption is
being used to ensure confidentiality through a secret key in association with the
algorithm.
• This produces a scrambled version of the original message that the recipient can
decrypt using the original key to retrieve the content. The key must be kept secret
between the two parties.
• There are two basic methods, which can be used to encrypt a document: symmetric
and asymmetric.
• With the symmetric method the same key is used for encryption and decryption. The
problem is that the key has to be transmitted to the recipient of the message, and a
third party could gain access to the key during this transmission.
• Within symmetric encryption both parties have typically a key of 1024 2048 bits.
Using asymmetric algorithm, also known as public key methods, a set of two keys is
used a private and a public key.
• Information encrypted using the public key can only be retrieved using the
complementary private key.

M commerce Applications
M-Commerce for finance
The customer (using the mobile) can pay from their bank account using mobile commerce
facilities. Mobile users can transfer funds between account or receive any information related
to finance from financial institutions or banks. WAP based mobile devices allow the user to
access the internet or the website of the financial institutions.

For example, a user of the credit card gets reminded from the institution stating the amount of
outstanding balance, minimum amount due and the due date. Likewise, when the customer
pays through cheque or when the payment is made by him, the institution sends an
acknowledgement through SMS stating the amount that has been received by the institution.

For example, ICICI Bank has launched iMobile. iMobile allows the customers to carry out all
internet banking transactions through mobile phones. Customers can transfer funds to ICICI
and non ICICI Bank accounts with the help of their mobile. It allows customers to request for
a cheque book or stop payment of a cheque through mobile device. Customers can also pay
their utility bills through this facility. It allows them to know their transaction details and
payment due dates through mobile phones.
The M-Commerce is very much prevalent in stock broking services. The user can access the
stock market quotes. The share brokers send details about the market trends to client and offer
some tips for trading. After receiving the information, the client responds or gives instructions
to the stock broker. Such transaction takes place either in his/her form of SMS or call.
M-Commerce for Retail and After sale Services
Companies can also make online catalog of products so that the mobile users can access the
catalog from their mobile devices. Customers are able to shop, place orders or hire services
and pay for dues through mobile phones.

M-Commerce and Mobile Marketing

It is easy for business organizations to send text messages to promote a new product or carryout
any form of promotional campaign. For example, Reliance Fresh sends the customer an SMS
stating the reward points earned by them when they purchase goods from Reliance. Even if
some changes are brought in providing reward points, they are informed to the customer in
order to encourage sales.

M-Commerce and Mobile Ticketing

Airline tickets can be purchased through mobile phone. It also enables users of mobile phone
to make changes in their tickets. For example, With “flybuy SMS” launched by Kingfisher
Airlines and paymate, customers can get the details of Kingfisher airlines flights by sending
SMS. The customer can book the ticket after receiving a reply. Besides the above, movie tickets
can also be booked through mobile phones.

M-Commerce and Mobile Entertainment

Mobile terminal acts as a portable music player. Downloading ringtones has become successful
m-commerce application. Mobile phone manufacturers and wireless providers are making
good money by selling different kinds of customized ringtones.

M-Commerce for Hotel Reservations

Using mobile devices, customer can reserve for restaurants and hotels according to their needs.

M-Commerce in Healthcare and Medicine

Wireless services are used in healthcare and medicine for billing, lab ordering, referrals,
prescriptions and clinical decisions. For example, in United States, healthcare professionals are
able to obtain patient information from any location by getting connected wirelessly to the
hospital’s information system. They are able to access the pharmaceutical information of
patients and provide better patient care.

M-commerce for Intra-Office Communication

Sales personnel, who are always on the move, may need to access to the company information
system to check price of products. But mobile allows the traveling sales personnel to track
inventory and maintain communication with seniors at ease. Traveling salesmen do not have
to wait for long to get approval from the seniors. Any information could be transferred easily
and quickly with the help of mobile devices. It removes barriers in intra-office communication.

M-Commerce for Information

Mobiles enable customers to get information like sport news or political news of their choice.
For example, today through SMS, students are able to check their university results or public
examination results.

M-Commerce for Gaming

Customers can play multi player games through mobiles. Mobile games are very popular with
colourful displays and it generates good revenue.
E-commerce Security Risks

Security risks associated with e-commerce can be as a result of human error, an accident or

unauthorized access to systems. Online retailers are most likely to face credit card fraud or

data errors. Their online stores are also likely to face phishing attacks, distributed denial of

service (DDoS) attacks and man-in-the-middle attacks as explained below.

Credit Card Fraud

Credit card fraud is the most common security threat that online retailers face. It occurs
when a hacker gains unauthorized access to customers’ personal and payment information.

To access this data, the hacker may penetrate the database of an e-commerce site using

malicious software programs. At times, a hacker’s intention when stealing customers’ data

is to sell it on black markets.

Distributed Denial of Service (DDoS) Attacks

This type of security threat aims at taking down an online retail store by sending

overwhelming requests to its servers. The attacks originate from thousands of untraceable

IP addresses. When this type of threat hits the servers, they slow down or completely shut

down. An e-commerce site can also go offline temporarily when a DDoS attack affects its
servers.

Man-in-the-middle Attacks

As hackers are becoming smarter with technology, they are devising ways of listening to the

communications made by users of an e-commerce website. Through an approach known as

a man-in-the-middle attack, these hackers maliciously trick users into connecting to a public

wireless network. They gain access to people’s devices once they are on public wireless
networks. Hackers get to see a people’s browsing history, credit card numbers, passwords

and usernames if the websites they are visiting lack strong encryptions.

Bad Bots

Bots, either good or bad, are all over the worldwide web. Search engines such as Bing and

Google use good bots for indexing search results. On the other hand, there are hackers that

use malicious bots for gathering data such as product data, inventories and pricing data.

These bots are also capable of accessing the database of an e-commerce site and listing the

logins of user accounts.

Malware

In information technology, malware simply refers to malicious software programs. Attackers

usually inject web pages or files with these malicious programs to help them in gaining

access to online retails stores. Through means such as SQL injection, they can easily insert

the malware into a website’s database allowing it to compromise the data stored in the

database.

Phishing Scams

E-commerce sites are also prone to phishing scams sent by known or unknown people in

form of emails. These scams focus on targeting important user data like credit card numbers

and login credentials. An attacker may use a scheme known as social engineering to lure
online shoppers to give out their personal information. When sent in an email to an online

shopper, a phishing scam may contain a link to a malicious site that resembles an e-

commerce site.

Types of Threats to E-commerce:

E-Commerce security requirements can be studied by examining the overall process,

beginning with the consumer and ending with the commerce server. Considering each
logical link in the commerce chain, the assets that must be protected to ensure secure e-
commerce include client computers, the messages travelling on the communication
channel, and the web and commerce servers – including any hardware attached to the
servers. While telecommunications are certainly one of the major assets to be protected,
the telecommunications links are not the only concern in computer and e-commerce
security. For instance, if the telecommunications links were made secure but no security
measures were implemented for either client computers or commerce and web-servers,
then no communications security would exist at all.

Client threats

Until the introduction of executable web content, Web pages were mainly static. Coded in
HTML, static pages could do little more than display content and provide links to related
pages with additional information. However, the widespread use of active content has
changed this perception.

Active content:

Active content refers to programs that are embedded transparently in web pages and that
cause action to occur. Active content can display moving graphics, download and play audio,
or implement web-based spreadsheet programs. Active content is used in e-commerce to
place items one wishes to purchase into a shopping cart and to compute the total invoice
amount, including sales tax, handling, and shipping costs. The best known active content
forms are Java applets, ActiveX controls, JavaScript, and VBScript.

Malicious codes:

Computer viruses, worms and trojan horses are examples of malicious code. A trojan horse
is a program which performs a useful function, but performs an unexpected action as well.
Virus is a code segment which replicates by attaching copies to existing executables. A
worm is a program which replicates itself and causes execution of the new copy. These can
create havoc on the client side.

Server-side masquerading:

Masquerading lures a victim into believing that the entity with which it is communicating is
a different entity. For example, if a user tries to log into a computer across the internet but
instead reaches another computer that claims to be the desired one, the user has been
spoofed. This may be a passive attack (in which the user does not attempt to authenticate
the recipient, but merely accesses it), but it is usually an active attack.

Communication channel threats

The internet serves as the electronic chain linking a consumer (client) to an e-commerce
resource. Messages on the internet travel a random path from a source node to a
destination node. The message passes through a number of intermediate computers on the
network before reaching the final destination. It is impossible to guarantee that every
computer on the internet through which messages pass is safe, secure, and non-hostile.

Confidentiality threats:

Confidentiality is the prevention of unauthorized information disclosure. Breaching

confidentiality on the internet is not difficult. Suppose one logs onto a website – say
www.anybiz.com – that contains a form with text boxes for name, address, and e- mail
address. When one fills out those text boxes and clicks the submit button, the information is
sent to the web-server for processing. One popular method of transmitting data to a web-
server is to collect the text box responses and place them at the end of the target server‘s
URL. The captured data and the HTTP request to send the data to the server is then sent.
Now, suppose the user changes his mind, decides not to wait for a response from the
anybiz.com server, and jumps to another website instead – say www.somecompany.com.
The server somecompany.com may choose to collect web demographics and log the URL
from which the user just came (www.anybiz.com). By doing this, somecompany.com has
breached confidentiality by recording the secret information the user has just entered.

Integrity threats:

An integrity threat exists when an unauthorized party can alter a message stream of
information. Unprotected banking transactions are subject to integrity violations. Cyber
vandalism is an example of an integrity violation. Cyber vandalism is the electronic defacing
of an existing website page. Masquerading or spoofing – pretending to be someone you are
not or representing a website as an original when it really is a fake – is one means of
creating havoc on websites. Using a security hole in a domain name server (DNS),
perpetrators can substitute the address of their website in place of the real one to spoof
website visitors. Integrity threats can alter vital financial, medical, or military information. It
can have very serious consequences for businesses and people.

Availability threats:

The purpose of availability threats, also known as delay or denial threats, is to disrupt
normal computer processing or to deny processing entirely. For example, if the processing
speed of a single ATM machine transaction slows from one or two seconds to 30 seconds,
users will abandon ATM machines entirely. Similarly, slowing any internet service will drive
customers to competitors‘ web or commerce sites.

Server threats
The server is the third link in the client-internet-server trio embodying the e-commerce path
between the user and a commerce server. Servers have vulnerabilities that can be exploited
by anyone determined to cause destruction or to illegally acquire information.

Web-server threats:

Web-server software is designed to deliver web pages by responding to HTTP requests.

While web-server software is not inherently high-risk, it has been designed with web service
and convenience as the main design goal. The more complex the software is, the higher the
probability that it contains coding errors (bugs) and security holes – security weaknesses
that provide openings through which evildoers can enter.

Commerce server threats:

The commerce server, along with the web-server, responds to requests from web browsers
through the HTTP protocol and CGI scripts. Several pieces of software comprise the
commerce server software suite, including an FTP server, a mail server, a remote login
server, and operating systems on host machines. Each of this software can have security
holes and bugs.

Database threats:

E-commerce systems store user data and retrieve product information from databases
connected to the web-server. Besides product information, databases connected to the web
contain valuable and private information that could irreparably damage a company if it
were disclosed or altered. Some databases store username/password pairs in a non-secure
way. If someone obtains user authentication information, then he or she can masquerade as
a legitimate database user and reveal private and costly information.

Common gateway interface threats:

A common gateway interface (CGI) implements the transfer of information from a web-
server to another program, such as a database program. CGI and the programs to which
they transfer data provide active content to web pages. Because CGIs are programs, they
present a security threat if misused. Just like web-servers, CGI scripts can be set up to run
with their privileges set to high – unconstrained. Defective or malicious CGIs with free
access to system resources are capable of disabling the system, calling privileged (and
dangerous) base system programs that delete files, or viewing confidential customer
information, including usernames and passwords.
Password hacking:

The simplest attack against a password-based system is to guess passwords. Guessing of

passwords requires that access to the complement, the complementation functions, and
the authentication functions be obtained. If none of these have changed by the time the
password is guessed, then the attacker can use the password to access the system.

E-commerce security Tools

E-commerce security is the protection of e-commerce assets from unauthorized access, use,
alteration, or destruction. While security features do not guarantee secure system, they are
necessary to build a secure system. Dimensions of E-commerce Security:

Integrity - The ability to ensure that information being is played on a web site or transmitted
or received over the interne has not been altered in any way by an unauthorized party.

Nonrepudiation- he ability to ensure that e-commerce participants do not deny (i.e.

repudiate) their online actions.

Authenticity - The ability to identify the Identity of a person or entity with whom you are
dealing in the internet.

Confidentiality- The ability to ensure that messages and data are available only to those who
are authorized to view t e

Privacy-The ability to control the use of information about oneself,

Availability- The ability to ensure that a e-commerce continues top function as intended.

E-Commerce Security Tools

Security is an essential part of any transaction that place over the internet, his/her faith in e-
business if its security is compromised. The various e-Commerce security tools are as
follows:

1. Firewalls - Software and Hardware.

2. Public Key infrastructure.

3. Encryption software.

4. Digital certificates.

5. Digital Signatures.

6. Biometrics- retinal scan, fingerprints, voice etc.

 7. Locks and bars - network operations centres.
Firewalls - Software and Hardware

Firewalls are frequently used to prevent unauthorized internet users from accessing private
networks connected to the Internet, especially intranets, All, messages entering or leaving
the intranet pass through the firewall; which examines each message and blocks those that
do not meet the specified security criteria. Firewalls can be Either hardware or software but
the ideal firewall configuration will consist of both, In addition to limiting access to your
computer and network, a firewall is also useful for allowing remote access to a private
network through secure authentication certificates and logins.

Public Key infrastructure

A public key infrastructure (PKI) supports the distribution and identification of public
encryption keys enabling users and computers to both securely exchange data over
networks such as the Internet and verify the identity of the other party. The purpose of a
PKI is to facilitate the secure electronic transfer of information for a range of network
activities such as e-commerce, internet banking and confidential email.

Encryption software

Encryption is a generic term that refers to the act of encoding data, in this context so that
those data can be securely transmitted via the Internet. Encryption software is software
that can encrypt and decrypt data, often in the form of files on a hard drive or packets sent
over a network. Software encryption is a fundamental part of modern computer
communications and file protection-The purpose of encryption is to prevent third parties
from recovering pry of original data, or even any information about the data, from the
encrypted data.

Digital certificate

Digital Certificates are a means by which consumer and business can utilise the security
applications of Public Key infrastructure(PKI). PKI comprises of the technology to enables
secure e-commerce and Internet based Communication.

Digital Signatures

Digital signatures are the public-key primitives of message authentication. In the physical
world, it is common to use handwritten signatures on handwritten or typed messages. They
are used to bind signatory to the message. Similarly, digital signature å technique that binds
a person/entity to the digital data, Like a written signature, the purpose of a digital
signature is to guarantee that the individual sending the message really is who He or she
claims to be, Digital signatures are especially important for electronic commerce arid are
key component of most authentication schemes. To be effective, digital signatures must be
unforgeable, There are a number of different encryption techniques to guarantee this level
of security.
Biometrics

Biometrics generally refers to the study of measurable biological characteristics. In

computer security, biometrics refers to authentication techniques that rely on measurable
physical characteristics that can be automatically checked.

There are several types of biometric identification scheme:

face: the analysis of facial characteristics

fingerprint: the analysis of an individual’s unique fingerprints
retina: the analysis of the capillary vessels located at the back of the eye
iris: the analysis of the colored ring that surrounds the eye’s Pupil
signature: the analysis of the Way a person signs his name,
vein: the analysis of pattern of veins in the back if the hand and the wrist
voice: the analysis of the tone, pitch cadence and frequency of a person's voice.

Network operations centres

A network operations centre (NOC) is place from which administrators supervise, monitor
and maintain a telecommunications network. Large enterprises with large networks as well
as large network providers typically have a network operations centre; a room containing
visualizations of the network or networks that are being monitored, workstations at which
the detailed status of the network can be seen, and the necessary software to manage the
networks, The' network operations centre is the focal point for network for troubleshooting
software distribution and updating, router and domain name management, performance
monitoring, and coordination with affiliated networks.

The Information Technology Act, 2000 and Objectives

The Information Technology Act, 2000 was enacted in the backdrop of the Global recognition
of the need for the exposition of the cyber regulatory framework. UNCITRAL (United Nations
Commission International Trade Law) in the year 1996 adopted the model law on e-
commerce to bring uniformity amongst the countries of the globe regarding Cyber regulation.
The Information Technology Act elaborates on Data privacy, wherein, with the growth of the
Internet, the data of people are online and is vulnerable to be misused. The big data analysis is
something which stands testimonial to this concern. Big Data analysis suggests that the
searches made by people can be used to persuade the choices of people analysing their pattern
of search made.
The new Information technology legislation has by defining cyber café created a better
institution for catching hold of the perpetration of cyber phishing, which used to be earlier
executed by such Cafe but now after the notification, the personal id has to be submitted to the
shopkeeper in order to trace the perpetrator and create deterrence.

The Act by authorizing an inspector to investigate a cyber offence has increased the resource
of the cyber investigation by manifolds. Earlier only a commissioner was allowed to investigate
into the cyber crimes but after the amendment now the inspector may also investigate into a
cyber offence.

The Legislation fundamentally aimed:

• To grant legal recognition to E-commerce which is the transactions carried out by

electronic data interchange and other means of electronic means of
communication.
• To recognize to keep the books of accounts by the bankers in electronic form: the
books of accounts maintained by the bankers have always been a source of
evidence and also subjected to scrutiny whereby making the banks answerable.
• To amend the Indian Penal Code, Indian Evidence Act, the Banker’s Book Evidence
Act and the Reserve Bank of India Act, the Information Technology Act has
recognised the e-evidence in a court of law making access to justice easier and
making the Indian legal system dynamics with time.
• To recognize documents filed with the government: the e-Governance has been a
great boon to the society in general as the resources are at easier access via the
internet and also effectively reduces the need of middle man and hence cutting
the need of corruption.
• To recognize Electronic data storage: the government recognises the Digi locker
wherein the citizens can access their important documents such as voter id, PAN
card, Driving License etc. Another news in hype was the demand made by the
government towards the internet service providers to save the data in India.
• To recognize Electronic fund transfer between banks and financial institution: the
advent of e-banking has infused a never seen before pace in the banking sector. It
may not be wrong to suggest that the advent of net banking has almost brought
the bank at the palm of the account holder.
 • To recognize the authenticity of digital signature for authentication of any
information or matter requiring authentication under law.

Enterprise Resource Planning

Enterprise Resource Planning can be described as:

• An enterprise-wide set of management tools that balances de- mand and supply,
• containing the ability to link customers and suppliers into a com- plete supply chain,
• employing proven business processes for decision-making, and
• providing high degrees of cross-functional integration among sales, marketing,
manufacturing, operations, logistics, purchasing, finance, new product development,
and human resources, thereby
• enabling people to run their business with high levels of customer service and
productivity, and simultaneously lower costs and in- ventories; and providing the
foundation for effective e-commerce.

Kumar et al. (2000) define enterprise resource planning (ERP) systems as “configurable
information systems packages that integrate information and information-based processes
within and across functional areas in an organization”

Nah et al. (2001) defines ERP as “An enterprise resource planning (ERP) system is typically
defined as a packaged business software system that facilitates a corporation to manage the
efficient and effective use of resources (materials, human resources, finance, etc.) by
providing a total integrated solution for the organization’s information- processing
requests, through a process-oriented view consistent across the company.”

Here are some descriptions of ERP, not definitions but certainly good examples.

Enterprise Resource Planning is a company increasing its sales by 20 percent in the face of
an overall industry decline. Discussing how this happened, the vice president of sales
explained: “We’re captur- ing lots of business from our competitors. We can out-deliver
’em. Thanks to (ERP), we can now ship quicker than our competition, and we ship on time.”

Enterprise Resource Planning is a Fortune 50 corporation achiev- ing enormous cost savings
and acquiring a significant competitive advantage. The vice president of logistics stated:
“ERP has provided the key to becoming a truly global company. Decisions can be made with
accurate data and with a process that connects demand and supply across borders and
oceans. This change is worth billions to us in sales worldwide.”
THE EVOLUTION OF ENTERPRISE RESOURCE PLANNING

Step One—Material Requirements Planning (MRP)

ERP began life in the 1960s as Material Requirements Planning (MRP), an outgrowth of
early efforts in bill of material processing. MRP’s inventors were looking for a better method
of ordering mate- rial and components, and they found it in this technique. The logic of
material requirements planning asks the following questions:
• What are we going to make?
• What does it take to make it?
• What do we have?
• What do we have to get?
This is called the universal manufacturing equation. Its logic ap- plies wherever things are
being produced whether they be jet aircraft, tin cans, machine tools, chemicals, cosmetics . . .
or Thanksgiving dinner.
Material Requirements Planning simulates the universal manu- facturing equation. It uses the
master schedule (What are we going to make?), the bill of material (What does it take to
make it?), and in- ventory records (What do we have?) to determine future require- ments
(What do we have to get?).

Step Two—Closed-Loop MRP

MRP quickly evolved, however, into something more than merely a better way to order.
Early users soon found that Material Require- ments Planning contained capabilities far
greater than merely giving better signals for reordering. They learned this technique could
help to keep order due dates valid after the orders had been released to production or to
suppliers. MRP could detect when the due date of an order (when it’s scheduled to arrive)
was out of phase with its need date (when it’s required).
This was a breakthrough. For the first time ever in manufacturing, there was a formal
mechanism for keeping priorities valid in a constantly changing environment. This is
important, because in a manufacturing enterprise, change is not simply a possibility or even a
probability. It’s a certainty, the only constant, the only sure thing. The function of keeping
order due dates valid and synchronized with these changes is known as priority planning.

Closed-loop MRP has a number of important characteristics:

• It’s a series of functions, not merely material requirements planning.
• It contains tools to address both priority and capacity, and to sup- port both planning
and execution.
• It has provisions for feedback from the execution functions back to the planning
functions. Plans can then be altered when necessary, thereby keeping priorities valid
as conditions change.

Step Three—Manufacturing Resource Planning (MRP II)

The next step in this evolution is called Manufacturing Resource Planning or MRP II (to
distinguish it from Material Requirements Planning, MRP). A direct outgrowth and extension
of closed-loop MRP, it involves three additional elements:
1. Sales & Operations Planning— a powerful process to balance demand and supply at
the volume level, thereby providing top management with far greater control over
operational aspects of the business.
2. Financial interface—the ability to translate the operating plan (in pieces, pounds,
gallons, or other units) into financial terms (dollars).
3. Simulation—the ability to ask “what-if” questions and to obtain actionable answers in
both units and dollars. Initially this was done only on an aggregate, “rough-cut” basis,
but to- day’s advanced planning systems (APS) enable effective simulation at very
detailed levels.

MANUFACTURING RESOURCE PLANNING (MRP II)—

A method for the effective planning of all resources of a manufacturing company. Ideally, it
addresses operational planning in units, financial planning in dollars, and has a simulation
capability to answer “what-if” questions. It is made up of a variety of functions, each linked
together: business planning, sales and operations planning, production planning, master
scheduling, mate- rial requirements planning, capacity requirements planning, and the
execution support systems for capacity and material. Output from these systems is integrated
with financial reports such as the business plan, purchase commitment report, shipping
budget, and inventory projections in dollars. Manufacturing resource planning is a direct
outgrowth and extension of closed-loop MRP.

Step Four—Enterprise Resource Planning (ERP)

The latest step in this evolution is Enterprise Resource Planning (ERP). The fundamentals of
ERP are the same as with MRP II. How- ever, thanks in large measure to enterprise software,
ERP as a set of business processes is broader in scope, and more effective in dealing with
multiple business units. Financial integration is even stronger. Supply chain tools, supporting
business across company boundaries, are more robust.

ENTERPRISE RESOURCE PLANNING (ERP) predicts and balances demand and supply. It
is an enterprise-wide set of fore- casting, planning, and scheduling tools, which:

• Links customers and suppliers into a complete supply chain,

• employs proven processes for decision-making, and
• coordinates sales, marketing, operations, logistics, purchasing, finance, product
development, and human re- sources.

Its goals include high levels of customer service, productivity, cost reduction, and inventory
turnover, and it provides the foundation for effective supply chain management and e-
commerce. It does this by developing plans and schedules so that the right re- sources —
manpower, materials, machinery, and money — are available in the right amount when
needed.
a) Enterprise Resource Planning is a direct outgrowth and extension of Manufacturing
Resource Planning and, as such, includes all of MRP II’s capabilities. ERP is more
powerful in that it: applies a single set of resource planning tools across the entire
enterprise,
b) provides real-time integration of sales, operating, and financial data, and
c) connects resource planning approaches to the extended supply chain of customers and
suppliers.
The primary purpose of implementing Enterprise Resource Planning is to run the business, in
a rapidly changing and highly competitive environment, far better than before.

Benefits of ERP:

Business Integration: The reason ERP packages are called integrated is the automatic data up
gradation between related business components. In the case of ERP packages the data of
related business functions is also automatically updated at the time a transaction occurs. with
this reason, managers at different roles and designations are able to grasp business details in
real time, and carry out various types of management decisions in a timely manner and with
more accurately based on thisinformation.

Flexibility: Diverse multi functional environments such as language, currency, accounting

standards and so on are covered in one system and functions that comprehensively managed
multiple locations of company branches can be implemented automatically. To cope with
company globalization and system unification, this flexibility is essential, for development
and maintenance, but also in terms of management.

Better Analysis and Planning Capabilities: By enabling the comprehensive and unified
management of related business and its data, it becomes possible to fully utilize many types
of decision support systems and stimulation systems. It becomes possible to carry out
flexibility and in real time the feeling and analysis of data from a variety of dimensions,
decision makers able to the information what ever they want in time, thus enabling them to
make better and informed decisions.
Use of latest Technology (IT). The ERP vendors were very quick to realize that in order to
grow and to sustain that growth: they have to implement the latest developments in the field
of information technology. So they quickly adopted their systems to take advantages of the
latest technologies like open systems, client server technology, internet/ intranet, computer
aided acquisition and logistics support, electronic commerce etc. It is this quick adaptation to
the latest changes in information technology that makes the flexible adaptation to changes to
future business environments possible. It is this flexibility that makes the incorporation of the
latest technology possible during the system customization, maintenance and expansion
phases.

Reduced Inventory and Inventory Carrying Cost: ERP system allows customers to obtain
information on cost, revenues and margins, which allow it to better, manage its overall
material cost structure and lead to inventory reductions to the order of 20 per cent or better.
This provides not only a one time reduction in assets (cost of the material stocked), but also
provides ongoing savings of the inventory carrying costs, costs of warehousing, handling,
obsolescence, insurance, taxes, damage andshrinkage.

Reduced Manpower cost: Improved manufacturing practices lead to fever shortages and
interruptions and to less rework and overtime allows 10 per cent reduction in direct and
indirect labor costs. By minimizing rush jobs and parts shortages, less time is needed for
expediting, material handling, extra setups, disruptions and tracking splits lots odd jobs that
have been set aside. Production supervisors have better visibility of required work and can
adjust capacity or loads to meet schedules. Supervisors have more time for managing,
directing and training people.

Reduced Material Costs: Improves procurement practices lead to better vendor negotiations
for prices, typically resulting in cost reductions of 5 per cent or better. Valid schedules permit
purchasing people to focus on vendor negotiations and quality improvements rather than
spending their time on shortages and getting material at premium prices. ERP systems
provide negotiation information, such as projected material requirements by commodity
group and vendor performance statistics. Giving suppliers better visibility of future
requirements help them achieve efficiencies that can be passed on as lower material costs.

Improves Sales and Customer Service: Sales people can focus on selling instead of verifying
or apologizing for late deliveries. In custom product environment, configurations can be
quickly identified and prices, often by sales personnel or even the customer rather than the
technicalstaff. Taken together, these improvements in customer service can lead to fewer lost
sales and actual increase in sales, typically 10 per cent or more. Corrective actions can be
taken early such as determining shipment priorities, notifying customers of changes to
promise delivery dates, or altering production schedules to satisfy demand.

Efficient Financial Management: Improves collection procedures can reduce the number of
days of outstanding receivables, thereby providing additional available cash. Credit checking
during order entry and improved handling of customer inquires further reduces the number of
problem accounts. Improved credit management and receivable practices typically reduce the
days of outstanding receivables by 18 per cent or better. Trade credit can also be maximized
by taking advantage by supplier discounts and cash planning, and paying only those invoices
with matching recipients. This can lead to lower requirements for cash-on- hand.
Data Warehouse Introduction

A data warehouse is a collection of data marts representing historical data from different
operations in the company. This data is stored in a structure optimized for querying and data
analysis as a data warehouse. Table design, dimensions and organization should be consistent
throughout a data warehouse so that reports or queries across the data warehouse are
consistent. A data warehouse can also be viewed as a database for historical data from
different functions within acompany.
The term Data Warehouse was coined by Bill Inmon in 1990, which he defined in the
following way: "A warehouse is a subject-oriented, integrated, time-variant and non- volatile
collection of data in support of management's decision making process".

Other important terminology

Enterprise Data warehouse: It collects all information about subjects (customers, products,
sales, assets, personnel) that span the entire organization

Data Mart: Departmental subsets that focus on selected subjects. A data mart is a segment of
a data warehouse that can provide data for reporting and analysis on a section, unit,
department or operation in the company, e.g. sales, payroll, production.

Decision Support System (DSS): Information technology to help the knowledge worker
(executive, manager, and analyst) makes faster & betterdecisions

Drill-down: Traversing the summarization levels from highly summarized data to the
underlying current or old detail

Metadata: Data about data. Containing location and description of warehouse system
components: names, definition, structure…

What is data mining?

Data mining refers to extracting or mining" knowledge from large amounts of data. There are
many other terms related to data mining, such as knowledge mining, knowledge extraction,
data/pattern analysis, data archaeology, and data dredging. Many people treat data mining as
a synonym for another popularly used term, Knowledge Discovery in Databases".
Data mining is a process that is useful for the discovery of informative and analyzing the
understanding of the aspects of different elements.

SUCCESS FACTORS OF ERP IMPLEMENTATION:

Not quite. In order to keep your ERP solution working at peak efficiency – and providing the
business advantages you’re paying for – you need to have a plan for maintenance or you risk
having your ERP system eventually become obsolete. Without a maintenance plan, the
efficiency of your system will decline and its lifespan will be shortened. However, this kind
of maintenance isn’t so much nuts-and-bolts as it is figuring out how your company uses the
ERP solution and figuring out ways to enhance its performance for yourcompany.

Stay Up-to-date: Of course, one of the primary components of ERP maintenance is keeping
abreast of upgrades from your vendor. Not only do these updates contain important bug fixes
and increase your security, they also keep your solution from getting stale since many
upgrades improve the functionality of your solution or add features. This is one way you can
ensure that your ERP solution continues to meet your company’s needs. You may feel that
some upgrades aren’t necessary for your company, but many need to be done sequentially. If
you fall too far behind on the updates, it may be too difficult to catchup.

Changing Business Operations: Your business is constantly changing and so are your
needs. If you don’t have regular maintenance and support your ERP solution is likely to
become static. The longer that goes on, the less it will fulfill your requirements. You may
have added new customers, new services, or new technology – all of which can have an
impact on how your run your organization. If your ERP solution can’t keep up with these
changes, employees will develop ways to get their desired results by working around it, thus
diminishing the efficiency of the system. You should have an annual review of your
business, its needs, and how it has changed so you can ensure that your ERP solution is
keeping up with the times.

Training: Remember that people are an important component of ERP success. Yes, you had
them trained when you installed the system, but do they remember everything they learned?
Brush up training can help them use the system more efficiently, learn about the system’s
new functionalities, and get rid of bad habits that impede efficiency. Not to mention that you
probably have new employees who have only learned the system through on-the-jobtraining.

Improving the System: You will probably want to make adjustments to the system as the
employees get used to it. They will use it differently after a year than they do when they’re
newly trained. Ask your employees for suggestions on how to enhance thesystem’s
functionality. You’ll get more out of your solution if it can adapt to more knowledgeable
users.

Equipment: Hardware can decrease in efficiency or wear out. Look at your equipment’s
metrics to see if there’s been a drop off in performance. Sometimes the technology needs
maintenance or such declines point to where you need maintenance on your ERP solution. Or
there might be new technology on the market that can really improve your ERP solutions
efficiency or effectiveness. You owe it to yourself to review your hardware needs and
capabilities on a regular basis.

Failure of ERP Implementation:

Doing it in the firstplace.
Even before implementation the company is dilemma whether they really require it or not.
Often large ERP implementation projects fail before they even start. Companies unhappy
with their current system become convinced their reporting, integration, or efficiency
problems lie in the software they are using. Convinced the grass is greener on the other side
of the fence, they embark on a large, risky, and expensive ERP replacement project, when a
simple tune-up of their current system, or a small add-on application, such as a better
reporting system or employee portal, would address the problem at a fraction of the cost.
Even a reimplementation of the same software is usually less costly than switching to another
software vendor.

No clear destination.
To be clear with the expectations. Once an organization makes the decision to implement a
new ERP system, the first step is to have a clear definition of success. Often, lack of
consensus on the problems being solved, the outcome desired, or the specific financial
justification of the project, leads to challenges later controlling the scope and maintaining
executive sponsorship. Having a clear destination means defining the important business
processes, financial benefits, and deadlines up front and making certain stakeholders agree
how to address them. Without a strong definition of success, the end point becomes a
moving target.

A good plan or just aplan?

A detailed plan is very necessary for successful implementation. All projects of this size start
with some kind of plan. However, more times than not, the plan are not realistic, detailed, or
specific enough. Companies build a high-level plan with broad assumptions or underestimate
the amount of business change involved. Despite how obvious this sounds, it remains the
most common mistake companies make. To be a good plan, it needs to identify all the
requirements and the people who are going to work on them. It needs to be at a level of detail
where a knowledgeable person can visualize the work, usually in work blocks of a few days.
It needs to have a logical sequence of tasks, like leaving time in the schedule to fix bugs
found in test cycles. Until you have a good plan, you really do not know when the project
will end or how much it will cost.

Part-time project management.

A person experienced in project management makes lot of difference. There is some debate
whether project management is a skill all good managers should have or whether the field
will eventually develop into its own professional discipline, just like there are registered
engineers, nurses, and lawyers. Putting that debate aside, it is clear software projects of this
size need their own dedicated, experienced project managers. Asking the executive sponsor
or the business owner to also manage the project as a part-time adjunct to their main role
means neither job will be done well. Not just a scorekeeper, the project manager needs to be
an active leader pushing for accountability, transparency, anddecisiveness.

Under-estimating resourcesrequired.
Most common blunder to happen is with resources projected. Having a solid understanding of
the internal and external resources needed to complete the project is critical. For internal
resources, understanding the time commitment needed from business users, typically in the
Finance, Accounting, or Human Resources departments, is one of the most commonly
underestimated areas. During critical phases of the project, it is often necessary to backfill the
majority of transactional employees by bringing in temporary resources. This frees up the
users of the new systems. They have time for implementation and training. For external
resources, having an agreement up-front with your consultants and contractors about the
specific duration, skills, and quantity of resources needed is critical.

Over-reliance on the consultants.

Too much dependability on consultant can make the team more redundant. Most ERP
implementation projects involve consultants, for the expertise, best-practices, and additional
resources they bring. While their outside experience is definitely helpful for a project, there is
a risk that the company can become over-reliant on the consultants. The company needs to
maintain control over the key business decisions, hold the consultants accountable, and have
an explicit plan to transfer the knowledge from the consultants to the internal employees
when the project is winding down.

Customization.
This aspect makes it or breaks it for an ERP tool. Most companies these days understand that
customizing their ERP system adds risk, time, and cost to the project. In fact, customizations,
along with interfaces and data conversion, are the main areas of technical risk in ERP
implementations. Perhaps more surprising is that in a recent survey, less than 20% of
respondents implemented their ERP system with little or no customization. Despite the risk
and expense of customizations, most companies find it enormously difficult to control the
project scope by turning down customizations. Customizations always start out small, but
incrementally grow to become the technical challenges that derail these projects. Few ERP
implementations have zero customizations, but take a very firm line on justifying even the
smallest ones and manage themtightly.

On the job training.

Experience makes a lot of difference. The typical lifespan an ERP system within an
organization is 10 to 12 years. With that in mind, most employees in a company have been
through one or two ERP implementations in their career. Just as you would not be
comfortable with a surgeon as their first or second patient, the leaders of your ERP project,
both internal and external, need to have experience implementing your specific chosen
system several times. This is one of the major benefits to working closely with an outside
consultant or directly with the software vendor.

Insufficient testing.
It should be treated as rectifying stage. When schedules get tight, reducing the number and
depth of test cycles is one of the first areas that often get cut. The purpose of testing in an
ERP project is not to see if the software works. The purpose is to see if the system meets your
business needs and produces the output you need. Reducing testing may not leave defects
undiscovered, but it certainly increases the risk the ERP system will be missing important
functions or not be well accepted by end users.

Not enough user training.

The management shouldn’t hurry to start using the tool without adequate training to users.
Today’s modern ERP systems are being used by more and more personnel within a company.
Beyond the Finance and Accounting departments, modern systems also cover procurement,
supply chain functions, compliance, customer relationships, sales, and much more. If the
system includes human resources or expense reporting, then essentially all employees use the
system. Training hundreds or thousands of users, to the right depth, at just the right time, is
no easy task. Leaving training to a small phase at the end of the project makes it very difficult
for users to get the training they need to understand the system and have a positive first
impression at the rollout.

System
System is group of interrelated components, which works together to achieve a common
objective or goal.
The system concept of MIS is, therefore one of optimizing the output of the organization by
connecting the operating subsystems through the medium of information exchange.

Properties of a System
A system has the following properties −

Organization
Organization implies structure and order. It is the arrangement of components that helps to
achieve predetermined objectives.

Interaction
It is defined by the manner in which the components operate with each other.
For example, in an organization, purchasing department must interact with production
department and payroll with personnel department.

Interdependence
Interdependence means how the components of a system depend on one another. For proper
functioning, the components are coordinated and linked together according to a specified
plan. The output of one subsystem is the required by other subsystem as input.

Integration
Integration is concerned with how a system components are connected together. It means that
the parts of the system work together within the system even if each part performs a unique
function.

Central Objective
The objective of system must be central. It may be real or stated. It is not uncommon for an
organization to state an objective and operate to achieve another.
The users must know the main objective of a computer application early in the analysis for a
successful design and conversion.

Category of System

Physical or Abstract : Physical system is tangible entities that may be static or dynamic in
nature. Abstract system is conceptual or non-physical. The abstract is conceptualization of
physical situations.

Open and Closed : An open system continually interacts with its environment. It receives
input from the outside and delivers output to outside. A closed system is isolated from
environment influences.

Sub System and Super System : Each system is part of a large system. The business firm is
viewed as the system or total system when focus is on production, distribution of goal and
sources of profit and income.

The total system consists of all the objects, attributes and relationship necessary to
accomplish an objective given a number of constraints. Sub systems are the smaller systems
within a system. Super system denotes extremely large and complex system

Permanent and Temporary System : A permanent system is a system enduring for a time span
that is long relative to the operation of human. Temporary system is one having a short time
span.

Natural and Man Made System : System which is made by man is called man made system.
Systems which are in the environment made by nature are called natural system.
Deterministic and Probabilistic : A Deterministic system is one in which the occurrence of
all events is perfectly predictable. If we get the description of the system state at a particular
time, the next state can be easily predicted. Probabilistic system is one in which the
occurrence of events cannot be perfectly predicted.

Man-made Information System : It is generally believed that the information reduces

uncertainty about a state or event. An information system is the basis for interaction between
the user and the analyst. It determines the nature of relationship among decision makers.

Types of Information Processing System

Transaction Processing System (TPS)

Transaction processing systems are used to record day to day business transactions of the
organization. They are used by users at the operational management level. The main
objective of a transaction processing system is to answer routine questions such as;

• How printers were sold today?

• How much inventory do we have at hand?
• What is the outstanding due for John Doe?

By recording the day to day business transactions, TPS system provides answers to the above
questions in a timely manner.

• The decisions made by operational managers are routine and highly structured.
• The information produced from the transaction processing system is very detailed.

For example, banks that give out loans require that the company that a person works for
should have a memorandum of understanding (MoU) with the bank. If a person whose
employer has a MoU with the bank applies for a loan, all that the operational staff has to do is
verify the submitted documents. If they meet the requirements, then the loan application
documents are processed. If they do not meet the requirements, then the client is advised to
see tactical management staff to see the possibility of signing a MoU.

Examples of transaction processing systems include;

• Point of Sale Systems – records daily sales

• Payroll systems – processing employees salary, loans management, etc.
• Stock Control systems – keeping track of inventory levels
• Airline booking systems – flights booking management

Management Information System (MIS)

Management Information Systems (MIS) are used by tactical managers to monitor the
organization’s current performance status. The output from a transaction processing system is
used as input to a management information system.
The MIS system analyzes the input with routine algorithms i.e. aggregate, compare and
summarizes the results to produced reports that tactical managers use to monitor, control and
predict future performance.

For example, input from a point of sale system can be used to analyze trends of products that
are performing well and those that are not performing well. This information can be used to
make future inventory orders i.e. increasing orders for well-performing products and reduce
the orders of products that are not performing well.

Examples of management information systems include;

• Sales management systems – they get input from the point of sale system
• Budgeting systems – gives an overview of how much money is spent within the
organization for the short and long terms.
• Human resource management system – overall welfare of the employees, staff
turnover, etc.
Tactical managers are responsible for the semi-structured decision. MIS systems provide the
information needed to make the structured decision and based on the experience of the
tactical managers, they make judgement calls i.e. predict how much of goods or inventory
should be ordered for the second quarter based on the sales of the first quarter.

Decision Support System (DSS)

Decision support systems are used by senior management to make non-routine decisions.
Decision support systems use input from internal systems (transaction processing systems
and management information systems) and external systems.

The main objective of decision support systems is to provide solutions to problems that are
unique and change frequently. Decision support systems answer questions such as;

• What would be the impact of employees’ performance if we double the production lot
at the factory?
• What would happen to our sales if a new competitor entered the market?
Decision support systems use sophisticated mathematical models, and statistical techniques
(probability, predictive modeling, etc.) to provide solutions, and they are very interactive.

Examples of decision support systems include;

• Financial planning systems – it enables managers to evaluate alternative ways of

achieving goals. The objective is to find the optimal way of achieving the goal. For
example, the net profit for a business is calculated using the formula Total Sales less
(Cost of Goods + Expenses). A financial planning system will enable senior
executives to ask what if questions and adjust the values for total sales, the cost of
goods, etc. to see the effect of the decision and on the net profit and find the most
optimal way.
• Bank loan management systems – it is used to verify the credit of the loan applicant
and predict the likelihood of the loan being recovered.

Online Analytical Processing (OLAP)

Online analytical processing (OLAP) is used to query and analyze multi-dimensional data
and produce information that can be viewed in different ways using multiple dimensions.
Let’s say a company sells laptops, desktops, and Mobile device. They have four (4) branches
A, B, C and D. OLAP can be used to view the total sales of each product in all regions and
compare the actual sales with the projected sales.

Each piece of information such as product, number of sales, sales value represents a different
dimension

The main objective of OLAP systems is to provide answers to ad hoc queries within the
shortest possible time regardless of the size of the datasets being used.

Experts Systems
Experts Systems include knowledge to assist management in identifying and fixing problems.
These systems are based on artificial intelligence research concepts.

• Experts Systems is an information system that is built on knowledge. It acts as an

expert counsellor to consumers by utilizing its expertise in a particular area.

• An expert system's components include a knowledgebase and software modules.

These modules make inferences based on knowledge and respond to a user's query.

OLTP

OLTP, or online transactional processing, enables the real-time execution of large numbers of
database transactions by large numbers of people, typically over the internet.

A database transaction is a change, insertion, deletion, or query of data in a database. OLTP

systems (and the database transactions they enable) drive many of the financial transactions
we make every day, including online banking and ATM transactions, e-commerce and in-
store purchases, and hotel and airline bookings, to name a very few. In each of these cases,
the database transaction also remains as a record of the corresponding financial transaction.
OLTP can also drive non-financial database exchanges, including password changes and text
messages.

In OLTP, the common, defining characteristic of any database transaction is its atomicity (or
indivisibility)—a transaction either succeeds as a whole or fails (or is canceled). It cannot
remain in a pending or intermediate state.

Characteristics of OLTP systems

In general, OLTP systems do the following:

Process a large number of relatively simple transactions: Usually insertions, updates, and
deletions to data, as well as simple data queries (for example, a balance check at an ATM).

Enable multi-user access to the same data, while ensuring data integrity: OLTP systems rely
on concurrency algorithms to ensure that no two users can change the same data at the same
time and that all transactions are carried out in the proper order. This prevents people from
using online reservation systems from double-booking the same room and protects holders of
jointly held bank accounts from accidental overdrafts.
Emphasize very rapid processing, with response times measured in milliseconds: The
effectiveness of an OLTP system is measured by the total number of transactions that can be
carried out per second.

Provide indexed data sets: These are used for rapid searching, retrieval, and querying.
Are available 24/7/365: Again, OLTP systems process huge numbers of concurrent
transactions, so any data loss or downtime can have significant and costly repercussions. A
complete data backup must be available for any moment in time. OLTP systems require
frequent regular backups and constant incremental backups.

Learning Management System

A learning management system (LMS) is a software application or web-based technology

used to plan, implement and assess a specific learning process. It is used for eLearning
practices and, in its most common form, consists of two elements: a server that performs the
base functionality and a user interface that is operated by instructors, students and
administrators.

Typically, a learning management system provides an instructor with a way to create and
deliver content, monitor student participation and assess student performance. A learning
management system may also provide students with the ability to use interactive features
such as threaded discussions, video conferencing and discussion forums.

LMSes are frequently used by businesses of all sizes, national government agencies, local
governments, traditional educational institutions and online/eLearning-based institutions. The
systems can improve traditional educational methods, while also saving organizations time
and money. An effective system will allow instructors and administrators to efficiently
manage elements such as user registration, content, calendars, user access, communication,
certifications and notifications.