【ISE328: Technology and Applications of Electronic Business Systems】

Resources from The Hong Kong Polytechnic University ISE328 Technology and Applications of Electronic Business Systems course

Lecture 1: Introduction to eBusiness and Application

Idea of e-business

e-electronic (components)

1. e-Business was defined as “the transformation of key business process through the use of Internet Technologies”.

2. use Electronic Means to conduct business / any business processes.

Business means a company, a corporation, partnership, or have any such formal organization
Business is:

• the activity of making money
• producing or buying and selling products (goods and services)
• Shipping
• procurement
• Manufacturing
• ERP or management

e-commerce refers to buying and selling online, while e-business encompasses all business conducted online. E-commerce can be viewed as a subset of e-business.

Business categories:
Banking, retail, telecommunication, entertainment, tourism, public transport

Examples of e-business

e-Banking (HSBC, Hang Seng Bank)
Online Auction (e-Bay)
Online Book Seller (Amazon)
Online Game Providers
e-Government
e-Public Services
e-Health
e-Learning

Analysis of e-banking

1. Analyze the existing process e.g, Flow Chart.

2. Identify the advantages and disadvantages of the existing processes.

3. Determine what processes can be (to) improve.
   Outcome, will be system.

4. Identify how e-business is applied for the new approach.
   Apply electronic means to replace existing process.

5. Identify the advantages of new approach.
   What processes have improved?

6. Identify the disadvantages of new approach.
   Any drawback?

Function of a bank

1.Banking

• Deposit money, Withdraw Cash, Money Transfer, Bill Payment, etc.
  2.Investment
• Securities, Foreign currency exchange, IPO, Investment Deposits, Gold Margin, etc.
  3.Insurance
• Travelsure, Home Care, Personal Accident, Term Life, etc.
  4.Personal Credit
• Loan, Tax Comforter, Overdraft Facility, etc.
  5.Mortgage
• Valuation, Mortgage Loan, etc.
  6.Credit Card
• Credit Card Application, Card Security Service, etc.

E-banking example

Tradition approach:
-Deposit Money
Step 1: Process-person-time = a table to make existing analysis

Step 2: pros and cons for company and customers of the existing process
Disadvantages for the company:
Cost

1. Staffing cost
   Types of staffs: Counter service officer, shop manager, security guards, etc.
2. Rent
   Depends on the size of the shop.
3. Facilities cost
   Decoration, electricity, etc.
4. Maintenance cost.
   Repair/replacement, etc.
   5.Various insurance costs.
   Processing
   6.Limited office hours.
   7.Non-environmental friendly.
   Wasting paper: various of documentation work, receipt, etc.
   8.Risks of Human Error.
   Miscalculation of money, input incorrect data, etc.
   9.Time consuming.
   Counting money, input data, etc.

Cost-detail-money= cost analysis

Disadvantages for the customers:

1. Wasting time
   -Go to the shop, Queuing, etc.
2. Inconvenience
   -Office hours, etc.

Step 3: Determine what processes can be (to) improve.

• Save Cost, Reduce processing time.
  Step 4: Identify how e-business is applied for the new approach.
  Improved approach: (Quick Deposit Machine)

Step 5: advantages of new approach

• Shop size smaller.

• Decoration much lesser.

• Staff number reduced.

• Manual process reduced.

• Risk of human error reduced.

• Lead time of the process reduced.

• No office hour limitation.

Step 6: disadvantages
-Machine costs.
-Installation fee.
-Maintenance costs.
-Security.
-Inconvenience to elders

Tradition approach:
-Securities
Processes involved:

2. Disadvantages for the company:

• Human mistakes.
  - Listening to others spoken language.
  “command”, “stock code”, “quantity”.
  - Incorrect in Input data.
  Mistakes lead to:
  - Financial lost.
  - Lost of customers.
  - Damage in company reputation.
• Staff.
  • required many staff to receive calls.
• High cost in making records.
  • voice recording.

Disadvantages for the customers:
- Hard for Real time transaction.
- Stock Prices changes every sec.
- Transaction must be quick.
- Can’t wasting time in queuing.
- Long lead time for customer identification/verification.
- Can’t wasting time in contacting servicing staff on call

3. Save Cost, Reduce processing time.
   Improved approach: (Internet)

4. Identify how e-business is applied for the new approach.

5. Advantages of company:

• Avoid human error made by staff.
• Customers become self servicing.
  Advantages of customer:
• Transaction faster.
• Response to the market faster.
• Wider Accessibility.
• More command support.

6. Disadvantages of customer:

• Risk of inaccessible.

• E-book store example

2. Disadvantages for the company:
   High Fixed cost.
   • Wide space,
   • High level decoration to provide
     a leisure reading environment.

Risk of stock keeping.
- Stocks are “books”.
- Damage by customers.

High inventory holding cost.

• Keep humidity of the room temperature.
  High/Distributed inventory level.
• Each shop keeps certain inventory.

4. e-bookstores

• Apply electronic means to replace existing process: internet.

5&6. advantages for company
Avoid high fixed cost.
Reduce the risk of book damaging.
Keeping low inventory cost. [physical shops distributed in different areas which need more considerations on how to deliver the book to different customers.]
Centralized warehouse. [online shops deliver the products from one place only, which is centralized and efficient]

Disadvantages of company:

• Relatively higher transportation cost. [need to transport to different customers point-by-point]
  Advantages of customer:
• Accessible 24 hrs.
• Easier to search for specify books.

E-publication

In tradition: (Publication)

• Printing out the manual script,
• Submit manual script to publisher,
• Editing,
• Send to the printer,
• Doing the printing and binding,
• Deliver to different book stores,
• Display.

Advantages to company.

• More unique books.
• Increase the diversity of collections.

Advantages to authors.

• Reduce the publication lead time.
  Readers can come from world wide.

Music stores

In Tradition: (Music Store)
Disadvantages for the company:

• High Fixed cost.
  • Wide space,
  • Leisure environment,
  • Numerous of high quality
    music players / displayers.
• Risk of stock keeping.
• Distributed inventory.

Advantages for the company:

• Avoid High Fixed cost.
• Search function.
• Sample music / video.
• Keeping low inventory cost.
• Centralized warehouse.
• Availability of electronic version.
  Disadvantages of company:
  Relatively higher transportation cost.

Reasons of driving e-Business

1. Customer-Oriented Trends

◦ Service availability, Servicing time, Self-service,
More product choices, Integrated solutions. (through different platforms)
Service Availability (Ability to provide immediate service)
- first step to attract consumers to use your service.
- most customers count the speed of service as a key reason.
- they like to get the service as fast as possible.
- they hate waiting for service.
e.g. Choosing a bank service provider
Do you like waiting in line for 30mins in bank? If others don’t have to wait, which one will you prefer?

Servicing Time
- important factor to retain consumer.
- customers look for companies that provide faster service.
- to customers, time is money.
- companies are forced to reduce the number of steps it takes to serve customers.
- enhance the efficiency by technology.
e.g. Deposit money
How to reduce the number of processes, and time required for each process.
Reducing the processing time of counting, form filling, and data entry.

Self-service
- customers are looking for self-service solutions that not only save them time but also empower them.
- they can finish their transaction (buying what they want) without the help of sales personnel.
- they are able to shop at anytime, and if possible should be in anywhere.

Example: Online Shopping
Consumers are changing their buying habit from traditional face-to-face model to purchase online.
In the survey, 67% of the respondents said they had searched for the company name, product or service names, or advertising slogan that they saw in offline marketing or ads. And of those online searchers who started with an offline marketing message, 39% eventually made a purchase.

More product choices
-customers love one-stop locations that offer them everything under one roof.
-however, impossible in traditional retailer.
-because of the limited shelf space and inventory constraints, especially in Hong Kong
-online companies can offer more different merchandise than a physical company does.

Integrated solutions
- Consumers don’t like to go to many places to look for different services they want.
- They want integrated-service business that provide them one-stop shopping needs.
- In today’s business, customers usually have too many choices, products, and stores.
- To solve the “choice” problem, customers increasingly looking for integrated solutions that can make their decision process easier.

2. Service

◦ Integrated sales and service, Seamless support, Flexible fulfillment, and Convenient service delivery.

Integrated sales and service:
- Its idea is to narrow the gap between sales and services.
- Provide better customer relationship.
- Customers usually like to have some access about the information of product and the services they will have before they purchase the product.
What is Sales?
In economics, it is an exchange process between two parties.
It involved in selling products or services in return for money or other compensation.
What is Service?
It is a form of product that consist of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.

Seamless support
- Provide user friendly and easy-to-use customer service
processes with single point of contact.
- Named “customer service easy” and “solution oriented” are the most important trends in today’s business. E.g., AI robot
Flexible fulfillment and convenient service delivery
- home delivery and other unique fulfillment services continue to gain importance.
- in old model, companies waiting for customer to come.
- in new model, companies bring their services to customers.

Increased process visibility
- Provide customers with access to a