CRM Solutions Comparison and Selection Presentation. 

Contributors: John Richardson, Kim Wandersee, Tanis Stewart

This chapter describes how information systems integrate and support enterprise-wide business processes, as well as the business functions of marketing, manufacturing, human resource management, accounting, and finance. The basic process components of e-commerce systems and important trends, applications, and issues in e-commerce will be discussed.

Information technology is the foundation for the operations of all modern enterprises, from buying a carton of milk to shipping an automobile. Accordingly, the textbook deals with integration of applications, transactions, enterprise collaboration, and the processes common to production—whether that involves strategic planning or aircraft manufacture.

E-Business and E-Commerce

E-business as defined by Turban as "business that uses the Internet and online networks as the channel to consumers, supply chain partners, employees, and so on."

E-commerce is a form of e-business. E-commerce refers to the use of e-business specifically for buying or selling of goods (products and downloadable music, movies, pdf file) and services on-line. The Internet provides a fast and easy way for people to purchase things without having to visit an actual store. An online store can reach customers anywhere in the world. In fact, online shopping has become so popular that many vendors sell only online with no physical location. E-commerce also facilitates the purchase of digital media such as downloadable music and movies: with no physical product, vendors can boast truly instant delivery.

Disintermediation

Disintermediation is a wonderfully big word meaning to bypass the steps in the sales process between the producer and the consumer. Although one result is to put some people out of work, another is to create work for server manufacturers, network providers, software developers, information technology professionals, and e-commerce firms. In essence, new intermediaries substitute for the old ones. This is an example of "creative destruction," described by Austrian-born economist Joseph Alois Schumpeter (1883–1950).

Business-to-Consumer

Early on, business-to-consumer sales for hard products, from food to automobiles, didn't work very well. The reasons were high transaction and shipping costs, lack of strong customer relations, and customer preferences for touching and feeling the product and for getting immediate delivery. Nevertheless, even if sales did not occur, e-commerce provided product information and comparative shopping that might lead to sales off line. On the other hand, for "soft," or digital, products—like software, music, and news—the process was, and is, quite successful. As lower transaction costs and richer Web-based interaction occur, the situation changed for the better so that all kinds of hard goods are successfully marketed and bought. The textbook, further, provides interesting information about how companies like eBay and Dell operate.

Business-to-Business

Business-to-business commerce is more efficient because its transaction costs are a smaller fraction of big-lot sales and supplier-to-producer relationships are stronger and longer lasting.

Consumer-to-Consumer

Craigslist and eBay are examples of consumer-to-consumer electronic commerce. Since its beginnings, eBay has greatly expanded to participate in business-to-consumer activities as well, through partnerships with suppliers of almost every kind of consumer product.

A different example of consumer-to-consumer commerce online is the appearance of the highly popular social networking sites and their diverse features. Yahoo, MySpace, LinkedIn, and Facebook are examples of such sites.

Web Advertisements

Web advertising has arisen as a substantial new sector of the advertising industry, responsible for new job opportunities. It is an example of how new technology creates new economic activity and hence new wealth. Coupled with the ability of information technology to collect demographic and consumer behavioral information to an unprecedented degree, and coupled with search-engine queries, Web advertisements can be targeted, or "narrow-casted," to small groups and even to individuals. Familiar examples are Amazon.com's practice of pushing products related to a particular customer's previous purchases. One consequence of the collection of detailed demographics is the danger of compromising individual privacy—Big Brother is watching you! Do you want a company to reveal inadvertently that you are a big customer for Botox?

E-Commerce Options

Simple, static Web pages using HTML were the first and easiest efforts to break into e-commerce. Such simple Web pages had serious limitations in closing the sale because of lack of interactivity and access to inventory data and billing schemes. With advances in processing, software, networking, databases, and security (all topics of this course), more effective options are available.

Auctions are an interesting market mechanism, both in e-commerce and otherwise. For example, we all know and love eBay. Economic theory states that, where perfect competition is absent, auctions are an efficient method of obtaining the highest price for an item. Let us contrast auctions with perfect competition. On the one hand, Economics 101 states that perfect competition assumes seven conditions:

1. Many small sellers

2. Many small buyers

3. Product homogeneity

4. Perfect information about product and price

5. Equal access to production technologies by all sellers

6. No barriers to market entry by sellers

7. No collusion among sellers or among buyers

Thus, markets in which there are many buyers and sellers characterize competition. Each transaction in the marketplace has a relatively small bearing upon the overall market and each transaction is a small element of overall market volume. A particular product is substantially similar regardless of sellers, and consumers may choose from among a wide range of sellers. Consumers or purchasers will have a high degree of information on which to base choices. They may use product specifications, price, and other criteria to make their market choice. Choosing one supplier over another does not disadvantage the consumer. Consequently, the law of supply and demand acts to produce a definitive equilibrium market price and quantity.

On the other hand, how does one price a unique work of art, say, or a toasted cheese sandwich with the image of Elvis Presley on it (recall eBay), where the conditions for perfect competition are absent? An auction, offline or online, is the answer.

Web Services

For firms without the resources to create and manage their own integrated e-commerce Web sites, many Web services are available from third parties. There are Internet Service Providers that offer limited space for Web pages. There are Web commerce hosting companies that provide servers and billing services for many companies. There are Web traffic reporting companies that track and analyze traffic to a company's Web site for the purpose of identifying usage and trends. There are Web application service providers that offer such services as real-estate listings or real-time restaurant reservations.

Mobile Commerce

Apple's iPhone shows how mobile commerce will likely develop in the future. Internet information is ubiquitously available to individuals on the go. Naturally, they wish to act on this information by buying theater tickets, making restaurant reservations, finding stores, and even trading stocks. Consequently, mobile commerce must adapt its capabilities to these new demands for presentation that is adequate on small screens, for customer interaction, and for billing.

Taxes

Two kinds of taxes apply here: sales taxes and Internet Service Provider (ISP) taxes. Complex sales-tax codes in all the many U.S. counties and cities show why the collection of sales taxes, whether from municipalities, states, or foreign countries, is almost beyond solution. As to ISP taxes, legislative opinion was long split between the view that the Internet had become mature and hence taxable and the view that the Internet was still an infant industry in which taxes would stifle extension, innovation, and investments. On October 25, 2007, the U.S. Senate, in a cliffhanger vote, approved a seven-year extension of the ISP tax moratorium, just in time to forestall its expiration on November 1, 2007. However, states are renewing the battle for such taxes and making some progress.

Global e-Commerce

Prospects for seamless global e-commerce are less encouraging than for domestic e-commerce, for reasons of shipping costs, diverse customs duties, tariffs, product and content regulation, and unclear legal jurisdictions. In an ideal world, these may all become harmonized, but not yet.

E-Commerce Advancements

Technology has enabled many different customer touch points for consumers to interact with an organization. E-Commerce professionals must transform how they market, transact, serve, and organize around changing customer experiences. This requires IT professionals supporting customer-facing interactions to design, develop, and support these touch points uniquely, while integrating them all into a common enterprise technology environment. This requires integrating enterprise content and commerce platforms to support a diverse set of touch points, such as the Web, in-store, call center, mobile, and social media. Organizations will need to integrate e-commerce solutions into CRM solutions, business intelligence (BI) solutions, and centralized order management systems (OMS).

The on-line marketplace has also opened a potential avenue for fraud and scams. Site protection and data security are key considerations in the implementation of an on-line store front. When implementing a store front, the following should be considered:

1. Storage Space: How many transactions will the site process. Be sure to have sufficient storage for peak seasons.

2. Safety Protocols: SSL technology is essential to all e-commerce sites as it keeps transitions secure so they can be trusted.

3. Site Design: The site should be user-friendly as well as designer friendly. Consider also the "look" of your site. Well-designed menus, filters, and sorting options will minimize the amount of time it takes to find a product and purchase it. Many e-commerce site builders offer professionally-designed templates.

As with all technology, there is security standards which must be followed. Data thieves look to steal payment card information, which can be sued to create counterfeit cards and commit other forms of crime. Vulnerabilities for security breaches can occur at the point-of-sale, wireless hotspots or Web shopping applications, unsecured transmission of cardholder data and the backend system and storage devices. The Payment Card Industry Data Security Standard (PCI DSS) identifies the proper security safeguards to protect customers’ payments and information.

In 2013, Target experienced a security breach during the December peak shopping time which affected up to 70 million individuals and approximately 40 million credit and debit cards between November 27 and December 15, 2013. Criminals obtained unauthorized access into the system and gained access to guest credit and debit card information and other personal information. Bank Info Security, “Disagreement on Target Breach Cause Experts Debate Whether Third-Party Breach to Blame”, February 10, 2014 discusses whether or not the Target security breach was caused by one vendor stealing electronic credentials from another vendor to gain access to the network.