Question

E-Business is the use of the Internet and other networks and information technologies to support electronic commerce, enterprise communications and collaboration, and Web-enabled business processes, both within a networked enterprise, and with its customers and business partners. Particularly, Enterprise e-Business Systems outlines the goals and components of customer relationship management (CRM), enterprise resource planning (ERP), and supply chain management (SCM). The current trend is toward implementation of cross-functional integrated enterprise systems such as ERP, CRM and SCM in business. Answer the following questions.

a. Compare and contrast functional information systems and enterprise information systems.

b. What business values could companies derive from such cross-functional integrated enterprise information systems?

Answer 1

Answer:

E-business means Electronic business i.e. conduct of business processes on the internet. It includes e-commerce (i.e. buying and selling products/ services via internet), collaborating business partners, serving customers, processing payments, sharing information etc.

Information System is a system that assists to collect, store and analyse data to produce the desired information for the functioning, betterment and expansion of the business. It consists of: Computer systems, People, Data and Network. It helps in Enterprise collaboration, management and strategic success of the businesses. It also helps in facilitation of E-business operations.

a. Comparison between Functional Information Systems and Enterprise Information Systems (EIS):-

Functional Information Systems:

There are various departments or functions in any organisation like Production, sales, marketing, human resources, finance etc. These are the functional areas of business and each of them requires applications to perform information processing related to their functions.

A functional information system can be defined as a system that provides detailed information for a specific type of activity or related group of activities, as well as summarized information for management control of such activities. We have, accordingly, various information systems for each function. Some of them are:-

• Information System for Production & Manufacturing
• Information System for Marketing (MIS)
• Information System for Human Resource Management (HRIS)
• Information System for Accounts (AIS)
• Information System for Finance Management

Enterprise Information Systems (EIS):

It can be defined as the system which helps organisations and managers to improve their performance by seamlessly sharing data among various departments and with external business partners. It is used to integrate and manage dispersed processes and transactions, using a common data source.

EIS has traditionally been adopted to manage administrative systems such as production, human resources, and finance information systems, i.e. it is implemented as a replacement to aging legacy functional systems.

There are various types of EIS, like:-

• ERP (Enterprise Resource Planning):- It is process management software that allows an organisation to use a system of integrated application to manage the business. It integrates all aspects of an operation like product planning, manufacturing, sales, marketing, finance etc.
• SCM (Supply Chain Management):- Supply chain management is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It involves streamlining of a business's supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.
• CRM (Customer Relationship Management):- It implies managing business relationships of the organisation with their customers (existing as well as potential customers).
• KM (Knowledge management):- It is a multidisciplinary approach or a process of creating, sharing, using and managing the knowledge and information of an organization.

b. Cross-functional integrated enterprise information systems are the systems that combine most of the information systems and are designed to produce information & support decision making at different levels of the management & departments/ functions. For Example: ERP.

The companies can derive following Business values from such cross-functional integrated enterprise information systems:-

• Helps in streamlining business processes with a single integrated system.
• Provide a consolidated picture of sales, inventory and receivables.
• Improves workflow and efficiency.
• Improved customer satisfaction based on:-
  • Timely delivery of goods/services
  • Increased quality of the goods/services etc
• Tracks costs of the activities and perform activity based costing.
• Decreases vendor pricing by taking better advantage of quantity breaks and tracking vendor performance.
• Reduced inventory costs. This is done through:-
  • Better planning
  • Better tracking and forecasting the requirements.
• Reduces redundant data entry and processes.
• It shares information across various departments or functions.
• Turns collections faster based on better visibility into the accounts and fewer billing/delivery errors.