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9.1 Introduction In the earlier unit, you have learnt about new trends in MIS. As you have learnt in the earlier unit about DSS AI and expert systems, it gives you a brief overview of the relationship between AI and expert systems. In this unit you will learn that with the emergence of Internet, business organisation of 20th century has undergone structural, cultural and qualitative change, and a new organisation structure has emerged which is known as E-business enterprise. E-business enterprise enables employees, professionals, teams, groups, vendors, customers to perform business operations through electronic exchange of data and information anywhere at any time. The business operations are performed through E-communication and E-collaboration initiatives. Therefore, E-business enterprise has a global market, reach, source and global competition. Learning Objectives After studying this unit, you will be able to: · Explain the challenges before an E-business management. · Compare and contrast E-enterprise business model with traditional business organisation model. · Explain the four business models that the enabling capabilities of technology have given rise to. · Explain the strength of ERP, SCM and CRM. · Explain how in E-enterprise, manager’s role and responsibilities are changed. · Describe how manager is a knowledge worker in an E-enterprise. · Explain the applications and systems used in E-communication. 9.2 Managing the E-enterprise Due to Internet capabilities and web technology, traditional business organisation definition has undergone a change where scope of the enterprise now includes other company locations, business partners, customers and vendors. It has no geographic boundaries as it can extend its operations where Internet works. All this is possible due to Internet and web moving traditional paper driven organisation to information driven Internet enabled E-business enterprise. E-business enterprise is open twenty-four hours, and being independent, managers, vendors, customers transact business anytime from anywhere. Internet capabilities have given E-business enterprise a cutting edge capability advantage to increase the business value. It has opened new channels of business as buying and selling can be done on Internet. It enables to reach new markets across the world anywhere due to communication capabilities. It has empowered customers and vendors / suppliers through secured access to information to act, wherever necessary. The cost of business operations has come down
significantly due to the elimination of paper-driven processes, faster communication and effective collaborative working. The effect of these radical changes is the reduction in administrative and management overheads, reduction in inventory, faster delivery of goods and services to the customers. In E-business enterprise traditional people organisation based on ‘Command Control’ principle is absent. It is replaced by people organisations that are empowered by information and knowledge to perform their role. They are supported by information systems, application packages, and decision- support systems. It is no longer functional, product, and project or matrix organisation of people but E-organisation where people work in network environment as a team or work group in virtual mode. E-business enterprise is more process-driven, technology-enabled and uses its own information and knowledge to perform. It is lean in number, flat in structure, broad in scope and a learning organisation. In E-business enterprise, most of the things are electronic, use digital technologies and work on databases, knowledge bases, directories and document repositories. The business processes are conducted through enterprise software like ERP, SCM, and CRM supported by data warehouse, decision support, and knowledge management systems. Today most of the business organisations are using Internet technology, network, and wireless technology for improving the business performance measured in terms of cost, efficiency, competitiveness and profitability. They are using E-business, E-commerce solutions to reach faraway locations to deliver product and services. The enterprise solutions like ERP, SCM, and CRM run on Internet (Internet / Extranet) & Wide Area Network (WAN). The business processes across the organisation and outside run on E-technology platform using digital technology. Hence today’s business firm is also called E- enterprise or Digital firm. The paradigm shift to E-enterprise has brought four transformations, namely: · Domestic business to global business. · Industrial manufacturing economy to knowledge-based service economy. · Enterprise Resource Management to Enterprise Network Management. · Manual document driven business process to paperless, automated, electronically transacted business process. These transformations have made conventional organisation design obsolete. The basis of conventional organisation design is command & control which is now collaborates & control. This change has affected the organisation structure, scope of operations, reporting mechanisms, work practices, workflows, and business processes at large. The comparison between conventional organisation design and E-enterprise is summarized in Table – 9.1.
Internet and networking technology has thrown another challenge to enlarge the scope of organisation where customers and vendors become part of the organisation. This technology offers a solution to communicate, co-ordinate, and collaborate with customers, vendors and business partners. This is just not a technical change in business operations but a cultural change in the mindset of managers and workers to look beyond the conventional organisation. It means changing the organisation behaviour to take competitive advantage of the E-business technology. The last but not the least important is the challenge to organise and implement information architecture and information technology platforms, considering multiple locations and multiple information needs arising due to global operations of the business into a comprehensive MIS. 9.3 Organisation of Business in an E-enterprise Internet technology is creating a universal bench or platform for buying and selling of goods, commodities and services. Essentially Internet and networks enable integration of information, facilitate communication, and provide access to everybody from anywhere. And software solutions make them faster and self- reliant as they can analyze data information, interpret and use rules and guidelines for decision- making. These enabling capabilities of technology have given rise to four business models that together work in an E-enterprise organisation. They are:
- E-business • E-communication
- E-commerce • E-collaboration These models work successfully because Internet technology provides the infrastructure for running the entire business process of any length. It also provides e-mail and other communication capabilities to plan, track, monitor and control the business operations through the workers located anywhere. It is capable of linking to disparate systems such as logistics, data acquisition and radio frequency used systems and so on. Low cost connectivity physical, virtual and universal standards of Internet technology make it a driving force to change conventional business model to E-business enterprise model. Internet has enabled organisations to change their business process and practices. It has dramatically reduced cost of data and information processing, its sending and storing. Information and information products are available in electronic media, and is a resident on the network. Once everyone is connected electronically, information can flow seamlessly from any location to any other location. For example, product information is available on an organisation website which also has a feature of order placement. An order placed is processed at the backend and status of acceptance, rejection is communicated instantaneously to the customer. Such order is then placed directly on the order board for scheduling and execution. These basic capabilities of Internet have given rise to number of business models. Some of them are given in Table 9.2. Table 9.2: Business Models
Business Model Description Example Virtual Store Provides information about product, and sells and delivers directly to customer or business organization. amazon.com, rediff.com, ebay.com. Information Store Provides information of interest and earns revenue from sharing and advertising. yahoo.com, msn.com rediff.com, satyaminfoway.com Transaction Process Processes bills for payment, telephone, electricity, money transfer & banking transactions, membership for club registration. icici.com billjunction.com seekandsource.com Online Marketing Provides a marketing platform where buyers and sellers can meet to exchange information, negotiate and place order for delivery. Examples are shoes, commodities. eauction.com seekandsource.com Content Selling News, music, photos, articles, pictures, greetings are stored and sold at a price. timesofindia.com gartner.com aberdeen.com Online Service Offers services to individuals and business at large and generates revenue. Examples: Tours and travels, manpower recruiting and maintenance services. Railway, restaurant, airlines booking. Online maintenance service. Online examination. Virtual Communities Provides platform to meet people of common interests. Software user groups, professional groups like doctors, managers, user groups. Linux Group New Groups Application Package User Groups Community Groups E-Learning Provides contents. E-books, CDs, lessons, conducts test and offers certification. sifyelearning.com The Internet and networks provide platform and various capabilities whereby communication, collaboration, and conversion has become significantly faster, transparent and cheaper. These tech- nologies help to save time, resource and enable faster decision-making. The technology adds speed and intelligence in the business process improving quality of service to the customer. The business process of serving the customer to offer goods, products or services is made up of the following components. · Enquiry processing · Order preparation · Order placement
- In E-enterprise, business is conducted manually.
- MIS for E-business is the same as the conventional MIS design of an organisation. 9.4 E-business The scope of E-business is limited to executing core business process of the organisation. These processes would have external interface like suppliers, customers, contractors, consultants and so on. The core business processes of the organisation are procurement, manufacturing, selling, distri- bution, delivery and accounting. These core processes are best run by application packages like Enterprise Resource Planning (ERP). If enterprise definition is made wider including customer, suppliers and distributors, application package like Supply Chain Management (SCM) is best suit- ed for planning and execution of entire business process. In addition to these core processes, organisations use Internet enabled systems and other technologies to handle these processes more effectively. Transaction processing, workflow, work group and process control applications are the backend support systems to main ERP / SCM enterprise management systems. For example, when a supplier sends goods, it is received in the warehouse. This event is processed E-way using E-business systems suite. The receipt, documents and packages are read by bar coding system. Then receipt processing is done to confirm the validity of dispatch by the supplier, confirmation of quality, acknowledging the receipt, updating the inventory, communication of receipt to manufacturing, updating the purchase order, effecting material accounts and supplier accounts, creating a liability in payables and posting it into cash flow projections. You will observe that receipt processing is first done at locations like warehouse, and ‘Procurement’ module of ERP takes over to effect seamlessly all updates and changes. In this event processing, workflow system is used where quality of goods is checked, confirmed and certified in stages by three agencies in the organisation. This event is processed by a work group, which includes receiver at the warehouse, QA inspector, and warehouse manager playing their respective role in the receipt processing as specified in the workgroup application. Having accepted the goods, automated and process controlled goods movement, warehouse system takes over, and reads the receipt record to move the goods physically to assigned bin in a rack. E-business systems use internet / intranet / extranet capabilities to process an event in seamless manner covering all technical, commercial, business aspects and implications of an event. They perform internal business operations and interface with external agencies. E-business system scope manages cross-functional application systems as a single business process. It integrates cross functions seamlessly, automates the tasks, and updates the information in real time. The ERP/ SCM and now Customer Relations Management system (CRM) is a family of software solution packages dedicated to core management of functions of business. They are supported by front-end and back-end systems and applications designed for transaction processing, workflow management, work group processing and automated process control. E-business systems
use client/ server architecture and run on Internet platform. E-business systems lay foundation for other Enterprise applications, namely E-commerce, E-communications, and E-collaboration. The current E-business system scope is built through ERP dedicated to manufacturing resource management for effective use of capacity and enhancing productivity. SCM is dedicated to logistics and distribution management and CRM is dedicated to customer relations management for customer satisfaction. IT, the backbone of E-enterprise, enables more precise target marketing towards intended audi- ence. Organisations use websites and portals to store and share information, use networks to com- municate, co-ordinate, and collaborate amongst structured teams and virtual teams. Employees use notebook computers, Personal Digital Assistant (PDAs). Most of the processes are automated and they use Internet, Intranet, and Extranet for communication and E-business application packages to run the functional systems in integrated manner. In Marketing System, IT helps to reach customer directly and is in the position to understand customer behaviour, customer’s demographic/ psychographic profile; it then helps to segment market by customer for advertising, promotion and contact. In Manufacturing System, IT helps to automate number of management processes relating to resource, capacity, engineering & design, maintenance, and support. The application of IT is so strong that it is termed as Computer Integrated Manufacturing (CIM) or Computer Aided Manufacturing (CAM). CIM adds value in the manufacturing by way of simplification of processes in production and design. Automation of simplified processes using process control devices, numerically controlled machines and robots and lastly integration of all core and support processes contributes to manufacturing excellence. In Accounting and Finance system, IT application is very strong. E-business applications in this area are capable of accounting every business entity such as material, men, machines, cash, customer, vendor and so on. All processes, which deal with transaction, computing, accounting and analysis are automated using system intelligence and knowledge driver intelligent systems. The architecture of these processes enables to receive inputs from other functional systems like marketing, manufacturing, and HR, and process the same to account and analyze the impact on the business performance, be it cost, profit or productivity. An integrated E-business system is capable of forecasting resources requirement, managing resources, budgeting capital, sales, and manpower, and measuring financial performance. 9.5 E-commerce E-commerce is a second big application next to ERP. It essentially deals with buying and selling of goods. With the advent of internet and web technology, E-commerce today covers an entire com- mercial scope online including design and developing, marketing, selling, delivering, servicing,
In all models, there are two channels: one channel deals with information delivery and sharing, and another deals with the commercial aspect of buying and selling. Some illustrations of the two channels are listed below for all the four models. In B2B model, the participants in E-business are two organisations with relations as buyer-seller, distributor-dealer and so on. Information delivery application
- Issuing business circular
- Product catalogues publications
- News clippings
- Messaging Transaction processing application
- Order processing
- Order execution
- Payment processing
- Money transfer In B2C model, the participants in E-business are an organisation, and customer as an individual. The customer is an individual consumer. The E-business applications in B2C are the following: Information delivery and sharing application
- Organisation manual
- Database of knowledge
- Business information Transaction processing application
- Payments to employee
- Issue of shares / bonds
- Delivery through courier
In C2B, the customer / consumer deals with business organisation in individual capacity. Information delivery and sharing application
- Downloading of information from website / portal
- Viewing the bank balance
- Seeing manuals / drawings / pictures / images, and so on Transaction processing application
- Requesting an item
- Obtaining travel advance
- Inquiry processing
- Credit card payment
- Cash withdrawal through ATM In C2C, both the parties are individuals and play the role of buyer / seller as the case may be. Information delivery and sharing application
- Messaging e-mail
- Reports
- News groups
- Interests groups Transaction processing application
- Payment approvals
- Memos
- Sanctions and confirmations
- Issues and receipts Broadly, information delivery and sharing application is built on back-end systems, which collect data and process it to create information databases. The users of these databases could be
have scope of buying and selling besides information sharing. Search engines like Yahoo, Alta Vista, and Lycos are higher-level portals, which help you find web address of buyers and sellers for you to choose your E-business partner. In E-business models, we have considered two parties who engage in business activity. But to perform these activities certain intermediaries are required to handle the communication traffic between the two parties in B2B, B2C, C2B and C2C. The intermediaries are: E-business models are developed using these intermediaries. The components of E-business models are:
- Internet / Extranet for internal communication
- Internet for external communication
- Network and TCP / IP protocols and tools for delivery mechanism
- Web server and web browsers software for access, process and download and mailing.
- Back-end systems for application processes The people involved in E-business model other than users of the models are:
- Web master • Content provider
- Web designer • Content designer
- Web developer / programmer • Web administrator Web master controls the website inflow/outflow, content management and regulation of the traffic. The role is similar to DBA in RDBMS environment. Web designer conceptualizes and visualizes the requirement of the parties and creates a web design, which is attractive, useful and easy to handle. He plays a role of an architect and an interior designer of the website. Web developer/programmer writes web pages using HTML, DHTML, XML, CGI script and other tools. They are also involved in programme writing for transaction processing, information processing, providing links to other sites, writing interfaces for connectivity to other databases and to back-end ERI or legacy system. Content providers are responsible to create text, images and a multimedia input to the site. These people are subject experts and are key people in making a website a grand success. They have to write contents of the website looking into the needs of the target website visitors. The contents should address the needs of the users of the website. The content designers give website layout, icons, positioning and display ideas to deliver the contents to the viewers immediately they provide input in terms of aesthetics, colours, navigating through different information layers and so on.
Web administrator maintains the website. He is a trouble-shooter. In case of any problem, the administrator is the first contact point of users / viewers to solve their difficulties. The job is to keep the website very responsive and keep contents latest and up-to-date. Web administrator is responsible to make viewer analysis in terms of visits to website, areas visited and business. All buying and selling does not succeed through E-commerce. The products and services, which are standard in nature, and customer does not have a great need of interaction with seller, are best- suited for E-commerce. E-commerce culture is mostly virtual and impersonal. E-commerce site must create confidence in the buyer showing competitive prices, performance assurance and post sale support. Faster processing in every step and covering entire buying and selling cycle are very much essential. The look and feel of E-commerce website should be customer-friendly and attractive. Finally, security and reliability of information, transactions, and order fulfilment is an absolute necessity. Self Assessment Questions
- E-business systems use _____________ and run on Internet platform.
- Inter organisation communication applications, like news bulletin, communicating change of rules, announcements and price revisions are very common in _____________.
- In ______________ model, a customer interacts with information databases such as product catalogues, price information, configures the product, compares the cost, places the order and gets it delivered after the electronic payment process.
- __________ business models actually run with the help of B2C, C2B and C2C models.
- _____________ controls the website inflow/outflow, content management and regulation of the traffic.
- The look and feel of E-commerce website should be ______________
- The job of ____________ is to keep the website very responsive and keep contents latest and up-to-date. 9.6 E-communication In E-business world, E-communication system is a backbone of all processes whose role is to share information by messages or store information to download on access by the customer. This is done through many applications and systems. Most popular and widely used messaging systems are e- mail & voice-mail. Through these systems both parties communicate on ongoing basis. It provides facilities to store delete and search mails supporting the reference need of the user. This system is popular when one to one communication is needed.
The collaboration team or group could be within the organisation and between the organisations as well. Since, E-collaboration works on an Internet platform and uses web technology, work group / team need not be at one physical location. They can be at different locations and form a virtual team to work on project or assignment. E-collaboration uses E-communication capabilities to perform collaborative tasks, or project assignment. Its effectiveness is increased by software ‘GroupWare’ that enables the members of the group to share information, invoke an application and work together to create documents and share them and so on. GroupWare is collaboration software. E-collaboration helps work effectively on applications like calendaring and scheduling tasks, event, project management, workflow applications, work group applications, document creation and sharing, and knowledge management. E-collaboration system components are Internet, Intranet, Extranet and LAN, WAN networks for communication through GroupWare tools, browsers. Application packages are software suit, which help process customer requirements. It is supported by databases present on various servers like mail server, material database, knowledge server, document server and so on. Let us illustrate these two models using an event in the business such as receipt of material for a job to be processed on the shop floor. In this event there is a transaction receipt of material, which needs to be processed, and then a workgroup will use this information of material receipt. Each member of this workgroup has a different goal. In workflow application, different members with a single goal of processing receipt of material for inventory, process transaction in its logical serial order. While in work group application, the members have different assignments, in a sense independent of each other but they share information of receipt of material to complete their assignment. All four applications: E-business, E-commerce, E-communication and E-collaboration run Internet, Intranet, Extranet and other networks and use web technology extensively. In the execution of these applications, E-organisation uses GroupWare software and tools. GroupWare is capable of handling core processes like communication, integration, collaboration and delivery, and expedites processing of transaction, application and system. The GroupWare thus becomes an integral part of the enterprise E-solution, designed to manage the enterprise business. For all four applications, packaged software solutions are available broadly called as Enterprise Resource Planning (ERP), Customer Relation Management (CRM), and Supply Chain Management (SCM). All three packages are then integrated in one customise suit known as Enterprise Application Integration (EAI). EAI supports E-organisation functioning through MIS.
MIS in E-organisation deviates from traditional report formats to automated intelligent knowledge driven system. It enforces manager to act quickly to response displayed on the screen. Most of the decisions of middle and operational management are delegated to IT-enabled information and knowledge-driven systems. They are supported by the rule-based transaction processing system, decision support systems, expert systems, artificial intelligence (AI) systems, and data warehouse and mining systems. MIS in E-organisation deviates from the conventional model of ‘Capture • Compute – Process – Analyse – Report – Think and Act’ to ‘Point – Click – Respond – Act’. Self Assessment Questions
- Most popular and widely used messaging system are _____________
- When there is a need for communication in real time, systems available are ___________, _____________ and ________________
- ________________provides capabilities of video and audio for participants situated at different locations.
- Video conferencing also becomes an interacting and effective communication system when it has a feature of _______________and ______________
- In _____________, participants sit in a meeting room with networked PCs and online screen projector to discuss the meeting agenda.
- _____________ uses websites and portals for storing documents, catalogues, drawings, pictures and so on for sharing.
- Internet and web technologies are used for forming different interest groups to communicate and share the information. These groups are popularly known as ______________
- The biggest advantage of ______________ is that it taps the collective wisdom, knowledge and experience of the members.
- ____________ help in automatic scheduling, notification and reminding to the participants. 9.8 Summary · In E-business enterprise, traditional people organisation based on ‘Command Control’ principle is strengthened. · E-business enterprise is more a process driven, technology enabled and uses its own information and knowledge to perform. · Customer satisfaction and high level customer service is possible using knowledge-based proactive management systems.
- Explain the applications and systems used in E-communication. 9.10 Answers Self Assessment Questions Answers to Self Assessment Questions
- False
- True
- True
- False
- False
- Client / server architecture
- B2C
- C2B
- B2B
- Web master
- Customer-friendly and attractive
- Web administrator
- E-mail & voice-mail
- Voice conferencing, Video conferencing and electronic meeting.
- Video conferencing
- White boarding ; document sharing
- Electronic meeting system
- Web publishing
- User groups
- E-collaboration
- GroupWare tools Answers to Terminal Questions
- Refer to 2.
- Refer to 2.
- Refer to 2.
- Refer to 2.
- Refer to 2.
- Refer to 2. Copyright © 2009 SMU Powered by Sikkim Manipal University .
MB0047-Unit-10-Decision Making in MIS
Unit-10-Decision Making in MIS Structure: 10.1 Introduction Objectives 10.2 Decision-making Concepts Rational Decision-making The Problems in Making Rational Decisions 10.3 Decision-making Process Types of Decision-making Systems Types of Decisions Nature of Decisions
