Matakuliah Tahun Versi

Session 25 & 26

: Enterprise Resource Planning : 2009 :1

ERP and the World Wide Web

Mary Summer, ENTERPRISE RESOURCE PLANNING, Prentice Hall, 2005

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Objectives
Types of E-commerce ERP essential success of company in e-commerce ASP

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( Brady,Monk,Wagner Concepts in Enterprise Resource Planning Course Technology,2001, Chapter 6 )

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After Completing This Chapter,you should be able to:

Name and describe the types of e-commerce State why ERP is essential to the success of a company engaged in e-commerce. Describe what an ASP does. State how ERP is delivered to users by an ASP. Provide Examples of wireless connectivity to ERP systems and explain why they are important.

ERP and the World Wide Web

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 This Chapters is about how companies are using Enterprise Resource Planning (ERP) systems with the World Wide Web. As youve read, an ERP system lets a company accomplish things that cannot be done well, if at all, without ERP. And youll learn how effectively competing in high-volume e-commerce may be impossible without the infrastructure provided by ERP. In addition, you will learn how companies can use the Web and rent ERP software from special-purpose software companies. Also in this chapter, youll read about connectivity. Original ERP designs usually assumed that a certain number of users would access the system from designated computers. In the past few years, mobile workers have been asking for remote access to companies internal systems ERP vendors have worked hard to provide Internet and wireless connectivity to their systems.

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E-Commerce Background
In the not-too-distant future, most companies will conduct at least part of their business operations through ecommerce, that is, on the Internet. When people think of e-commerce, they often think of retail e-commerce, typified by companies like Amazon.com Most of the sales growth on the Internet, however, has been in the area of business-to-business (Bto-B) e-commerce, rather than in retail business-to-consumer (B-to-C) e-commerce. Lets look at B-to-C e-commerce, then at Bto-B e-commerce.
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Business-to-Consumer ECommerce

There are many reasons why companies want to use ecommerce to sell their products to the public: E-commerce is a good way to reach customers. By 2004 B-toC e-commerce sales are expected to reach $180 billion. Web transactions allow a company to use data-mining techniques to record and analyze information about its customers. With that information, a company can improve marketing, this making more sales and increasing profit. For example, when a customer goes to Amazon.com, she is presented with product suggestions that are based on her previous purchases. E-commerce allows companies to be more efficient, streamlining operations and lowering costs. Streamlining operations often begins with changing the way in which a company interacts with its customers. For example, instead of employing.
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Business-to-Consumer ECommerce

E-commerce provides customers with incentives to order. For some buyers, the incentive is convenience: Ordering is quick and easy---and it can even be done from home. Other buyers are attracted to unique services. For example, one company created a toy wish list during a holiday season. Parents and relatives could view a childs online wish list and make their purchases directly from the list. Other companies (Lands End, for example) offer a digital dressing room on their site where customers can see clothes on figures shaped like their own. Still other companies offer Web only bargains. The Web gives small companies access to huge markets that once were only available to large companies. Using WebBased commerce technology is rapidly becoming a necessity, however, as competitors adopt the same practices. For example, offering online banking was once a competitive advantage, but now most banks offer the service as a competitive necessity. In fact, customers now expect sellers to be on the Internet.
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Internet Auctions and Reverse Auctions

B-to-B E- commerce also features online biding through auctions and reverse auctions. In a standard auction, a company might put up for bid its products or even its obsolete equipment. In a reverse auction, a company might ask for bids to supply it with goods, services, or even telecommunications capacity. Heres how a reverse auctions works. Internet-based auctions are changing the way in which commodities area purchased. A few years ago, commodities would have been purchased through a supplier, or middleman, who negotiated prices of raw materials with suppliers.
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E-commerce and ERP

You might ask yourself, what does e-commerce have to do with ERP? The answer is that each technology complements the other, and each is necessary for total success. Without e-commerce, a company cannot complete with companies offering similar goods. Without ERP, a company cannot fill Web order expeditiously When a company receives an order through its Web site, the company cant merely file or print orders for later handling, like e-mail updates and order tracking. The orders must be efficiently fed into the companys marketing, manufacturing, shipping, and accounting systems, a series of steps sometimes called back-office processing. 8/13/2009 10

 An efficient back-office operation is crucial for any companys success E-commerce often exacerbates problems and reveals, weakness in current back-office system. For example, Amazone.com invests its cash flow back into warehouse and other support that the company needs to keep its back office in order, so it can continue its success. Some Web-only businesses are frightened that companies like Wal-Mart will enter the Web market. Why? Because those companies already have well-established, integrated back-office and distribution systems.
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Using ERP Through an ASP

Many companies today outsource their operations to a third party. For example, the bank J.P. Morgan & Co. outsourcers all of its IS work. Next, lets look at a special kind of outsourcing.

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Application Services Providers

An application services provider (ASP) is a company that delivers software application to a company over a network. Usually that network is the Internet. Using an ASP to get software is analogous to leasing a car. First, leased cars are usually new and few of them break down, so leasing offers low maintenance. Second, leasing provides a way to have a car to drive without the obligation of the high purchase price. Third, leasing allows you to have a new car. Finally, the cost of leasing is constant and predictable. The company using the ASP does not own the software or the hardware and does not employ the people running the system. The ASP owns the hardware and the rights to ERP software, and it employs he workers. For example, suppose an ASP were to run an ERP package like SAP R/3 for FS
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Advantages of Using an ASP

Many companies are finding it advantageous to use an ASP for ERP or other IS applications.Some of those benefits include the following :

Affordability Companies that once thought they couldnt afford an ERP system can now play for it on a monthly basis.Gaining access to an ERP system through the Internet is even cheaper than using private leased line.ASP services can be received through an Internet connection using a regular browser and the SAP graphical user interface.
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 Shorter implementation times The time for implementation is shorter for those who choose to implement ERP through an ASP.ASPs already have similiar systems running and are experienced in software delivery.They have servers, telecommunication,and highly trained personnel already in place.

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 Expertise ASPs are experts in delivering IS applications.They do all the maintenance,including backups, training,and customizing of the system.That lets their customers eliminate IT headcount to focus on their business.ASPs can also run information system more efficiently because they do it on a large scale.ASPs can spread fixed costs over many users,thus achieving economies of scale that might translate into low leases rates.And, in this tight IS labor market,an ASP may have a better chance of attracting and retaining a talented work force.

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Disadvantages of Using an ASP

There are some potential problems with using an ASP :

Security Companies using ASPs are turning their information system over to a third party;therefore,they must be confident that the ASP has a high level of security.How hardware will be shared is also a security concern:The ASP will have multiple users on a single piece of hardware.Each customers data must be shielded from other customer.An ASP might have better security,however,technology than a small company can obtain. 8/13/2009 17

 Bandwidth/response time The telecommunications channel from the ASP to its customers must be fast enough to handle multiple users.An ASPs servers must be sufficient in terms of processing capabilities. Flexibility An ASP should be flexible in working with its users and satisfying their requests for processing modifications.
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 No frills An ASP can usually provide basic systems well,but asking for unusual configurations may cause problems.An ASP might not allow for third-party add-ons either.Further,the ASP might not want to do much customization using the SAP R/3 programming language,ABAP. Technical,not business An ASP knows the technical aspect of the software,but it will need the customer to define the business processes and make the confoguration decisions.
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Other Considerations
As with all form of outsourcing,companies considering an ASP should carefully scrutinize the ASPs contract before signing.There may be hidden costs and potential problems. Interestingly,ERP companies are excited about ASP,companies like SAP relied on a small number of very large sales to make their yearly profit.Now income is steadier because SAP can deliver software on a monthly basis.For example,SAP might have a great third quarter of a given year because it made some very large sales,but the next quarter it might not sell another such package.By delivering software through an ASP,however,the leases payment will privode SAP with a steady monthly income.SAPs customers benefit,too:SAP says that in a small company,SAP R/3 delivered via mySAP.com can be up and running in a mere five days!
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THE END

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