I I Test Materials

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Dr. S. Anthony Raj, Faculty - KUBS.

9976097779; anthonyraj@karunya.edu
MANAGEMENT INFORMATION SYSTEM
Unit III
E-COMMERCE & FUNCTIONAL BUSINESS SYSTEMS: E-commerce: Scope, processes, Trends -
Functional systems like manufacturing system, marketing system - Human resources system, Accounting
systems. ERP: Meaning - Benefits/Challenges in implementing /trends/causes of ERP failures.

E-COMMERCE:
Electronic commerce is an emerging model of new selling and merchandising tools in which buyers are
able to participate in all phases of a purchase decision, while stepping through those processes
electronically rather than in a physical store or by phone (with a physical catalog). The processes in
electronic commerce include enabling a customer to access product information, select items to purchase,
purchase items securely, and have the purchase settled financially.
It is an emerging concept that describes the process of buying and selling or exchanging of
products, services; and information via computer networks including the Internet.
From a communications perspective, EC is the delivery of information, products/services, or payments over
telephone lines, computer networks, or any other electronic means.
From a business process perspective, EC is the application of technology to-ward the automation of business
transactions and work flow.
From a service perspective, EC is a tool that addresses the desire of firms, consumers, and management to
cut service costs while improving the quality of goods and increasing the speed of service delivery.
From an online perspective, EC provides the capability of buying and selling products and information on
the Internet and other online services.
The term commerce is viewed by some as transactions conducted between business partners.
Therefore, the term electronic commerce seems to be fairly narrow to some people. Thus, many use the
term e-business. It refers to a broader definition of EC, not just buying and selling but also servicing
customers and collaborating
with business partners, and conducting electronic transactions within an organization

THE SCOPE OF ELECTRONIC COMMERCE
Electronic Commerce (e-Commerce) is a term popularized by the advent of commercial services on the
Internet. Internet e-Commerce is however, only one part of the overall sphere of e-Commerce. The
commercial use of the Internet is perhaps typified by once-off sales to consumers. Other types of
transactions use other technologies. Electronic Markets (EMs) are in use in a number of trade segments
with an emphasis on search facilities and Electronic Data Interchange (EDI) is used for regular and
standardized transactions between organizations. The mainstream of e-Commerce consists of these three
areas;
1. Electronic Markets
An electronic market is the use of information and communications technology to present a range of
offerings available in a market segment so that the purchaser can compare the prices (and other
attributes) of the offerings and make a purchase decision. The usual example of an electronic market is an
airline booking system.
2. Electronic Data Interchange (EDI)
EDI provides a standardized system for coding trade transactions so that they can be communicated
directly from one computer system to another without the need for printed orders and invoices and the
delays and errors implicit in paper handling. EDI is used by organizations that make a large number of
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regular transactions. One sector where EDI is extensively used is the large supermarket chains, which use
EDI for transactions with their suppliers.
3. Internet Commerce
Information and communications technologies can also be used to advertise and make once-off sales of a
wide range of goods and services. This type of e-Commerce is typified by the commercial use of the
Internet. The Internet can, for example, be used for the purchase of books that are then delivered by post
or the booking of tickets that can be picked up by the clients when they arrive at the event. It is to be
noted that the Internet is not the
only technology used for this type of service and this is not the only use of the Internet in e-Commerce.

USAGE OF ELECTRONIC MARKETS
Electronic markets are exampled by the airline booking systems. Electronic markets are also used in the
financial and commodity markets and again the dealing is done via intermediaries; to buy stocks and
shares a member of the public uses the services of a stockbroker. Arguably the use of electronic markets
has served the customer well. With the assistance of a good travel agent the airline customer can be
informed of all the flights available for an intended journey and then select, on the basis of price,
convenience, loyalty scheme, etc. the flight that they wish to book.

CATEGORIES OF E-COMMERCE:
we will divide categorize E commerce according to the parties involved in the business.
1. Business-to-business (B2B). Most of EC today is of this type. It includes the EDI transactions
described earlier and electronic market transactions between organizations.
2. Business-to-consumer (B2C). These are retailing transactions with individual shoppers. The typical
shopper at
Amazon.com is a consumer, or customer.
3. Consumer-to-consumer (C2C). In this category consumer sells directly to consumers. Examples are
individuals selling in classified ads (e.g., www.clas-sified2000.com) and selling residential property, cars,
and so on. Advertising personal services on the Internet and selling knowledge and expertise is another
example of C2C. Several auction sites allow individuals to put items up for auctions. Finally, many
individuals are using intranets and other organizational internal networks to advertise items for sale or
services.
4. Consumer-to-business (C2B). This category includes individuals who sell products or services to
organizations, as well as individuals who seek sellers, interact with them, and conclude a transaction.
5. Nonbusiness EC. An increased number of non-business institutions such as academic institutions,
not-for-profit organizations, religious organizations, social organizations, and government agencies are
using various types of EC to reduce their expenses (e.g., improve purchasing) or to improve their
operations and customer service. (Note that in the previous categories one can usually replace the word
business with organization.)
6. Intrabusiness (organizational) EC. In this category we include all internal organizational activities,
usually performed on intranets that involve exchange of goods, services or information. Activities can
range from selling corporate products to Employees to online training and cost reduction activities.

BENEFITS AND LIMITATIONS
The Benefits of EC
Few innovations in human history encompass as many potential benefits as EC does. The global nature
of the technology, low cost, opportunity to reach hundreds of millions of people (projected within 10
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years), interactive nature, variety of possibilities, and resourcefulness and rapid growth of the supporting
infrastructures (especially the Web) result in many potential benefits to organizations, individuals, and
society. These benefits are just starting to materialize, but they will increase significantly as EC expands.
A. Benefits to Organizations
Electronic commerce expands the marketplace to national and international markets. With minimal capital outlay, a
company can easily and quickly locate more customers, the best suppliers, and the most suitable business
partners
worldwide. For example, in 1997, Boeing Corporation reported a savings of 20 percent after a request for
a proposal
to manufacture a subsystem was posted on the Internet. A small vendor in Hungary answered the request
and won the electronic bid. Not only was the subsystem cheaper, but it was delivered quickly.
Electronic commerce decreases the cost of creating, processing, distributing, storing, and retrieving paper-based information.
For example, by introducing an electronic procurement system, companies can cut the purchasing
administrative costs by as much as 85 percent. Another example is benefit payments. For the U.S. federal
government, the cost of issuing a paper check is 430. The cost of electronic payment is 20.
Ability for creating highly specialized businesses. For example, dog toys which can be purchased only in pet
shops
or department and discount e-stores in the physical world, are sold now in a specialized
www.dogtoys.com (also see
www.cattoys.com).
Electronic commerce allows reduced inventories and overhead by facilitating pull-type supply chain management. In a
pull-type system the process starts from customer orders and uses just-in-time manufacturing.
The pull-type processing enables expensive customization of products and services, which provides competitive
advantage to its implementers. A classic example is Dell Computer Corp., whose case will be described later.
Electronic commerce reduces the time between the outlay of capital and the receipt of products and services. Electronic
commerce initiates business processes reengineering projects. By changing processes, productivity of
salespeople, knowledge workers, and administrators can increase by 100 percent or more.
Electronic commerce lowers telecommunications cost-the Internet is much cheaper than VANs.
Other benefits include improved image, improved customer service, newfound business partners, simplified processes,
compressed cycle and delivery time, increased productivity, eliminating paper, expediting access to information, reduced
transportation costs, and increased flexibility.
B. Benefits to Consumers
The benefits of EC to consumers are as follows:
Electronic commerce enables customers to shop or do other transactions 24 hours a day, all year round,
from almost any location.
Electronic commerce provides customers with more choices; they can select Electronic commerce
frequently provides customers with less expensive products and services by allowing them to shop in
many places and conduct quick comparisons.
In some cases, especially with digitized products, EC allows quick delivery.
Customers can receive relevant and detailed information in seconds, rather than days or weeks.
Electronic commerce makes it possible to participate in virtual auctions.
Electronic commerce allows customers to interact with other customers in electronic communities and
exchange ideas as well as compare experiences.
Electronic commerce facilitates competition, which results in substantial discounts.
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C. Benefits to Society
The benefits of EC to society are as follows:
Electronic commerce enables more individuals to work at home and to do less traveling for shopping,
resulting in less traffic on the roads and lower air pollution.
Electronic commerce allows some merchandise to be sold at lower prices, so less affluent people can
buy more and increase their standard of living.
Electronic commerce enables people in Third World countries and rural areas to enjoy products and
services that
otherwise are not available to them.
This includes opportunities to learn professions and earn college degrees.
Electronic commerce facilitates delivery of public services, such as health care, education, and
distribution of government social services at a reduced cost and/or improved quality. Health- care
services, for example, can reach
patients in rural areas.

The Limitations of EC
The limitations of EC can be grouped into technical and nontechnical categories.
A. Technical Limitations of EC
The technical limitations of EC are as follows:
There is a lack of system security, reliability, standards, and some communication protocols.
There is insufficient telecommunication bandwidth.
The software development tools are still evolving and changing rapidly.
It is difficult to integrate the Internet and EC software with some existing applications and databases.
Vendors may need special Web servers and other infrastructures, in addition to the network servers.
Some EC software might not fit with some hardware, or may be incompatible with some operating
systems or other components.
As time passes, these limitations will lessen or be overcome; appropriate planning can minimize their
impact.
B. Non-Technical Limitations
Of the many nontechnical limitations that slow the spread of EC, the following are the major ones.
Cost and justification. The cost of developing EC in-house can be very high, and mistakes due to lack of
experience may result in delays. There are many opportunities for outsourcing, but where and how to do
it is not a simple issue. Furthermore, to justify the system one must deal with some intangible benefits
(such as improved customer service and the value of advertisement), which are difficult to quantify.
Security and privacy. These issues are especially important in the B2C area, especially security issues which
are perceived to be more serious than they really are when appropriate encryption is used. Privacy
measures are constantly improved. Yet, the customers perceive these issues as very important, and, the
EC industry has a very long and difficult task of convincing customers that online transactions and
privacy are, in fact, very secure.
Lack of trust and user resistance Customers do not trust an unknown faceless seller (sometimes they do not trust
even known ones), paperless transactions, and electronic money. So switching from physical to virtual
stores may be difficult.
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Other limiting factors. Lack of touch and feel online. Some customers like to touch items such as clothes
and like to know exactly what they are buying.
Many legal issues are as yet unresolved, and government regulations and standards are not refined enough for many
circumstances.
Electronic commerce, as a discipline, is still evolving and changing rapidly. Many people are looking for a stable area
before they enter into it.
There are not enough support services. For example, copyright clearance centers for EC transactions do not
exist,
and high-quality evaluators, or qualified EC tax experts, are rare.
In most applications there are not yet enough sellers and buyers for profitable EC operations.
Electronic commerce could result in a breakdown of human relationships.
Accessibility to the Internet is still expensive and/or inconvenient for many potential customers. (With Web TV, cell
telephone access, kiosks, and constant media attention, the critical mass will eventually develop.)

FUNCTIONAL BUSINESS SYSTEMS
Supporting Business Functions in an Enterprise with Information
The principal business functions in a business firm are:
1. Marketing and sales
2. Production
3. Accounting and finance
4. Human resources
Emphasize that management support systems (MRS), decision support systems (DSS), and
executive information systems (EIS), rest on the foundation of transaction processing systems (TPS) that
support business operations. TPSs are the major source of data used by the higher-level systems to derive
information. Professional support systems (PSS) and office information systems (OIS), which support
individual and group knowledge work, are also a part of this foundation.

I. Marketing Information Systems:
Marketing activities are directed toward planning, promoting, and selling goods and services to satisfy the
needs of customers and the objectives of the organization. Marketing information systems support
decision making regarding the marketing mix. These include:
1. Product
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2. Price
3. Place
4. Promotion
In order to support decision making on the marketing mix, a marketing information system draws on
several sources of data and information.
Sources of Data and Information for Marketing: Boundary-Spanning and Transaction Processing
Subsystems
A marketing information system relies on external information to a far greater degree than other
organizational information systems. It includes two subsystems designed for boundary spanning -
bringing into the firm data and information about the marketplace.
The objective of marketing research is to collect data on the actual customers and the potential
customers, known as prospects. The identification of the needs of the customer is a fundamental starting
point for total quality management (TQM). Electronic commerce on the WEB makes it easy to compile
statistics on actual buyer behaviour.

Marketing research software supports statistical analysis of data. It enables the firm to correlate
buyer behaviour with very detailed geographic variables, demographic variables, and psychographic
variables.
Marketing (competitive) intelligence is responsible for the gathering and interpretation of
data regarding the firm's competitors, and for the dissemination of the competitive information to the
appropriate users. Most of the competitor information comes from corporate annual reports, media-
tracking services, and from reports purchased from external providers, including on-line database
services. The Internet has become a major source of competitive intelligence.
Marketing Mix Subsystems
The marketing mix subsystems support decision making regarding product introduction, pricing,
promotion (advertising and personal selling), and distribution. These decisions are integrated into the
sales forecast and marketing plans against which the ongoing sales results are compared.
Marketing mix subsystems include:
1. Product subsystem
2. Place subsystem
3. Promotion subsystem
4. Price subsystem
5. Sales forecasting
Product Subsystem
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The product subsystem helps to plan the introduction of new products. Continually bringing new
products to market is vital in today's competitive environment of rapid change. The product subsystem
should support balancing the degree of risk in the overall new-product portfolio, with more aggressive
competitors assuming higher degrees of risk for a potentially higher payoff.
Although decisions regarding the introduction of new products are unstructured, information systems
support this process in several ways:
1. Professional support systems assist designers in their knowledge work
2. DSSs are used to evaluate proposed new products
3. With a DSS, a marketing manager can score the desirability of a new product.
4. Electronic meeting systems help bring the expertise of people dispersed in space and time to bear on the problem
5. Information derived from marketing intelligence and research is vital in evaluating new product ideas.
Place Subsystem
The place subsystem assists the decision makers in making the product available to the customer at the
right place at the right time. The place subsystem helps plan the distribution channels for the product and
track their performance.
The use of information technology has dramatically increased the availability of information on product
movement in the distribution channel. Examples include:
1. Bar-coded Universal Product Code (UPC)
2. Point-of-sale (POS) scanning
3. Electronic data interchange (EDI)
4. Supports just-in-time product delivery and customized delivery
Promotion Subsystem
The promotion subsystem is often the most elaborate in the marketing information system, since it
supports both personal selling and advertising. Media selection packages assist in selecting a mix of
avenues to persuade the potential purchaser, including direct mail, television, print media, and the
electronic media such as the Internet and the WEB in particular. The effectiveness of the selected media
mix is monitored and its composition is continually adjusted.
Database marketing relies on the accumulation and use of extensive databases to segment potential
customers and reach tem with personalized promotional information.
The role of telemarketing, marketing over the telephone, has increased. Telemarketing calls are well
supported by information technology.
Sales management is thoroughly supported with information technology. Customer profitability analysis
help identify high-profit and high-growth customers and target marketing efforts in order to retain and
develop these accounts.
Sales force automation, involves equipping salespeople with portable computers tied into the corporate
information systems. This gives the salespeople instantaneous access to information and frees them from
the reporting paperwork. This increases selling time and the level of performance. Access to corporate
databases is sometimes accompanied by access to corporate expertise, either by being able to contact the
experts or by using expert systems that help specify the product meeting customer requirements.
Price Subsystem
Pricing decisions find a degree of support from DSSs and access to databases that contain industry prices.
These highly unstructured decisions are made in pursuit of the companys pricing objectives. General
strategies range from profit maximization to forgoing a part of the profit in order to increase a market
share.
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Information systems provide an opportunity to finely segment customer groups, and charge different
prices depending on the combination of products and services provided, as well as the circumstances of
the sale transaction.
Sales Forecasting
Based on the planned marketing mix and outstanding orders, sales are forecast and a full marketing plan
is developed. Sale forecasting is an area where any quantitative methods employed must be tempered
with human insight and experience. The actual sales will depend to a large degree on the dynamics of the
environment.
Qualitative techniques are generally used for environmental forecasting - an attempt to predict the
social, economic, legal, and technological environment in which the company will try to realize its plans.
Sales forecasting uses numerous techniques, which include:
1. Group decision making techniques are used to elicit broad expert opinion
2. Scenario analysis in which each scenario in this process is a plausible future environment
3. Extrapolation of trends and cycles through a time-series analysis.
II. Manufacturing Information Systems
Global competitive pressures of the information society have been highly pronounced in manufacturing
and have radically changed it. The new marketplace calls for manufacturing that are:
1. Lean - highly efficient, using fewer input resources in production through better engineering and
through production processes that rely on low inventories and result in less waste.
2. Agile - fit for time-based competition. Both the new product design and order fulfilment are drastically
shortened.
3. Flexible - able to adjust the product to a customer's preferences rapidly and cost effectively.
4. Managed for quality - by measuring quality throughout the production process and following world
standards, manufacturers treat quality as a necessity and not a high-price option.
Structure of Manufacturing Information Systems
Information technology must play a vital role in the design and manufacturing processes. Manufacturing
information systems are among the most difficult both to develop and to implement.
TPSs are embedded in the production process or in other company processes. The data provided
by the transaction processing systems are used by management support subsystems, which are tightly
integrated and interdependent.
Manufacturing information subsystems include:
1. Product design and engineering
2. Product scheduling
3. Quality control
4. Facilities planning, production costing, logistics and inventory subsystems
Product Design and Engineering
Product design and engineering are widely supported today by computer-aided design (CAD) and
computer-aided engineering (CAE) systems. CAD systems assist the designer with automatic
calculations and display of surfaces while storing the design information in databases. The produced
designs are subject to processing with CAE systems to ensure their quality, safety, manufacturability, and
cost-effectiveness. CAD/CAE systems increasingly eliminate paperwork from the design process, while
speeding up the process itself. As well, the combined techniques of CAD/CAE and rapid prototyping cut
time to market.

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Product Scheduling
Production scheduling is the heart of the manufacturing information system. This complex subsystem has
to ensure that an appropriate combination of human, machinery, and material resources will be provided
at an appropriate time in order to manufacture the goods.
Production scheduling and the ancillary processes are today frequently controlled with a manufacturing
resource planning system as the main informational tool. This elaborate software converts the sales
forecast for the plants products into a detailed production plan and further into a master schedule of
production.
Computer integrated manufacturing (CIM) is a strategy through which a manufacturer takes control
of the entire manufacturing process. The process starts with CAD and CAE and continues on the factory
floor where robots and numerically controlled machinery are installed - and thus computer-aided
manufacturing (CAM) is implemented. A manufacturing system based on this concept can turn out very
small batches of a particular product as cost-effectively as a traditional production line can turn out
millions of identical products. A full-fledged CIM is extremely difficult to implement; indeed, many firms
have failed in their attempts to do so.
Quality Control
The quality control subsystem of a manufacturing information system relies on the data collected on the
shop floor by the sensors embedded in the process control systems.
Total quality management (TQM) is a management technique for continuously improving the
performance of all members and units of a firm to ensure customer satisfaction. In particular, the
principles of TQM state that quality comes from improving the design and manufacturing process, rather
than Ainspecting out@ defective products. The foundation of quality is also understanding and reducing
variation in the overall manufacturing process.
Facilities Planning, Production Costing, Logistics and Inventory Subsystems
Among the higher-level decision making supported by manufacturing information systems are facilities
planning - locating the sites for manufacturing plants, deciding on their production capacities, and laying
out the plant floors.
Manufacturing management requires a cost control program, relying on the information systems. Among
the informational outputs of the production costing subsystem are labor and equipment productivity
reports, performance of plants as cost centers, and schedules for equipment maintenance and
replacement.
Managing the raw-materials, packaging, and the work in progress inventory is a responsibility of the
manufacturing function. In some cases, inventory management is combined with the general logistics
systems, which plan and control the arrival of purchased goods into the firm as well as shipments to the
customers.
III. Accounting and Financial Information Systems
The financial function of the enterprise consists in taking stock of the flows of money and other assets
into and out of an organization, ensuring that its available resources are properly used and that the
organization is financially fit. The components of the accounting system include:
1. Accounts receivable records
2. Accounts payable records
3. Payroll records
4. Inventory control records
5. General ledgers
Financial information systems rely on external sources, such as on-line databases and custom produced
reports, particularly in the areas of financial forecasting and funds management. The essential functions
that financial information systems perform include:
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1. Financial forecasting and planning
2. Financial control
3. Funds management
4. Internal auditing

Financial Forecasting
Financial forecasting is the process of predicting the inflows of funds into the company and the outflows
of funds from it for a long term into the future. Outflows of funds must be balanced over the long term
with the inflows. With the globalization of business, the function of financial forecasting has become
more complex, since the activities in multiple national markets have to be consolidated, taking into
consideration the vagaries of multiple national currencies. Scenario analysis is frequently employed in
order to prepare the firm for various contingencies.
Financial forecasts are based on computerized models known as cash-flow models. They range from
rather simple spreadsheet templates to sophisticated models developed for the given industry and
customized for the firm or, in the case of large corporations to specify modeling of their financial
operations. Financial forecasting serves to identify the need for funds and their sources.
Financial Control
The primary tools of financial control are budgets. A budget specifies the resources committed to a plan
for a given project or time period. Fixed budgets are independent of the level of activity of the unit for
which the budget is drawn up. Flexible budgets commit resources depending on the level of activity.
Spreadsheet programs are the main budgeting tools. Spreadsheets are the personal productivity tools in
use today in budget preparation.
In the systems-theoretic view, budgets serve as the standard against which managers can compare the
actual results by using information systems. Performance reports are used to monitor budgets of various
managerial levels. A performance report states the actual financial results achieved by the unit and
compares them with the planned results.
Along with budgets and performance reports, financial control employs a number of financial ratios
indicating the performance of the business unit. A widely employed financial ratio is return on
investment (ROI). ROS shows how well a business unit uses its resources. Its value is obtained by
dividing the earnings of the business unit by its total assets.
Funds Management
Financial information systems help to manage the organization's liquid assets, such as cash or securities,
for high yields with the lowest degree of loss risk. Some firms deploy computerized systems to manage
their securities portfolios and automatically generate buy or sell orders.
Internal Auditing
The audit function provides an independent appraisal of an organization's accounting, financial, and
operational procedures and information. All large firms have internal auditors, answerable only to the
audit committee of the board of directors. The staff of the chief financial officer of the company
performs financial and operational audits. During a financial audit, an appraisal is made of the reliability
and integrity of the company's financial information and of the means used to process it. An operational
audit is an appraisal of how well management utilizes company resources and how well corporate plans
are being carried out.
IV. Human Resource Information Systems
A human resource information system (HRIS) supports the human resources function of an organization
with information. The name of this function reflects the recognition that people who work in a firm are
frequently its most valuable resources. The complexity of human resource management has grown
immensely over recent years, primary due to the need to conform with new laws and regulations.
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A HRIS has to ensure the appropriate degree of access to a great variety of internal stakeholders,
including:
1. The employees of the Human Resources department in performance of their duties
2. All the employees of the firm wishing ti inspect their own records
3. All the employees of the firm seeking information regarding open positions or available benefit plans
4. Employees availing themselves of the computer-assisted training and evaluation opportunities
5. Managers throughout the firm in the process of evaluating their subordinates and making personnel
decisions
6. Corporate executives involved in tactical and strategic planning and control
Transaction Processing Subsystems and Databases of Human Resource Information Systems
At the heart of HRIS are its databases, which are in some cases integrated into a single human resource
database. The record of each employee in a sophisticated employee database may contain 150 to 200 data
items, including the personal data, educational history and skills, occupational background, and the history
of occupied positions, salary, and performance in the firm. Richer multimedia databases are not
assembled by some firms in order to facilitate fast formation of compatible teams of people with
complementary skills.
Other HRIS databases include:
1. Applicant databases
2. Position inventory
3. Skills inventory
4. Benefit databases
5. External databases
Information Subsystems for Human Resource Management
The information subsystems of HRIS reflect the flow of human resources through the firm, from
planning and recruitment to termination. A sophisticated HRIS includes the following subsystems:
1. Human resource planning
2. Recruiting and workforce management
3. Compensation and benefits
4. Government reporting and labour relations support

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Human Resource Planning
To identify the human resources necessary to accomplish the long-term objectives of a firm, we need to
project the skills, knowledge, and experience of the future employees.
Recruiting and Workforce Management
Based on the long-term resource plan, a recruitment plan is developed. The plan lists the currently
unfilled positions and those expected to become vacant due to turnover.
The life-cycle transitions of the firm's workforce - hiring, promotion and transfer, and termination - have
to be supported with the appropriate information system components.
Compensation and Benefits
Two principal external stakeholders have an abiding interest in the human resource policies of
organizations. These are:
1. Various levels of government
2. Labor unions
V. Integrating Functional Systems for Superior Organizational Performance
Functional information systems rarely stand alone. This reflects the fact that the functions they support
should, as much as possible, connect with each other seamlessly in order to serve the firms customers.
Customers expect timely order delivery, often on a just-in-time schedule; quality inspection to their own
standards; flexible credit terms; post-delivery service; and often, participation in the product design
process.
Information technology provides vital support for integrating internal business processes, cutting across
functional lines, and for integrating operations with the firm's business partners, its customers and
suppliers.

Enterprise Resource Planning - ERP
Enterprise resource planning (ERP) is business process management software that allows an organization
to use a system of integrated applications to manage the business and automate back office functions.
ERP software integrates all facets of an operation, including product planning, development,
manufacturing processes, sales and marketing.
Enterprise resource planning systems or enterprise systems are software systems for business
management, encompassing modules supporting functional areas such as planning, manufacturing, sales,
marketing, distribution, accounting, financial, human resource management, project management,
inventory management, service and maintenance, transportation and e-business. The architecture of the
software facilitates transparent integration of modules, providing flow of information between all
functions within the enterprise in a consistently visible manner. Corporate computing with ERPs allows
companies to implement a single integrated system by replacing or re-engineering their mostly
incompatible legacy information systems.
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Challenges of ERP implementation
Lack of senior manager commitment
Ineffective communications with users
Insufficient training of end-users
Failure to get user support
Lack of effective project management methodology
Attempts to build bridges to legacy applications
Conflicts between user departments
Composition of project team members
Failure to redesign business process
Misunderstanding of change requirements
ERP Software Modules
ERP software typically consists of multiple enterprise software modules that are individually purchased,
based on what best meets the specific needs and technical capabilities of the organization. Each ERP
module is focused on one area of business processes, such as product development or marketing. A
busines scan use ERP software to manage back-office activities and tasks including the following:
Top ERP Trends
The ERP field can be slow to change, but the last couple of years have unleashed forces which are
fundamentally shifting the entire area. According to Enterprise Apps Today, the following new and
continuing trends affect enterprise ERP software:
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1. Mobile ERP
Mobility continues to be a big trend. Executives and employees want real-time access to information,
regardless of where they are. It is expected that businesses will quickly embrace mobile ERP, not just for
reports and dashboards, but for conducting key business processes.
2. Cloud ERP
The cloud has been advancing steadily into the enterprise for some time, but many ERP users have been
reluctant to place data cloud. Those reservations have gradually been evaporating, however, as the
advantages of the cloud become apparent.
3. Social ERP
There has been much hype around social media and how important or not -- it is to add to ERP
systems. Certainly, vendors have been quick to seize the initiative, adding social media packages to their
ERP systems with much fanfare. But some wonder if there is really much gain to be had by integrating
social media with ERP.
4. Two-tier ERP
Enterprises once attempted to build an all-encompassing ERP system to take care of every aspect of
organizational systems. But some expensive failures have gradually brought about a change in strategy
adopting two tiers of ERP.
ERP Vendors
Depending on your organization's size and needs there are a number of enterprise resource planning
software vendors to choose from in the large enterprise, mid-market and the small business ERP market.
Large Enterprise ERP (ERP Tier I)
The ERP market for large enterprises is dominated by three companies: SAP, Oracle and Microsoft.
(Source: EnterpriseAppsToday; Enterprise ERP Buyer's Guide: SAP, Oracle and Microsoft; Drew Robb)
Mid Market ERP (ERP Tier II)
For the midmarket vendors include Infor, QAD, Lawson, Epicor, Sage and IFS. (Source:
EnterpriseAppsToday; Midmarket ERP Buyer's Guide; Drew Robb)
Small Business ERP (ERP Tier III)
Exact Globe, Syspro, NetSuite, Visibility, Consona, CDC Software and Activant Solutions round out the
ERP vendors for small businesses. (Source: EnterpriseAppsToday; ERP Buyer's Guide for Small
Businesses; Drew Robb)

Page - 16

UNIT IV
NETWORKS AND SECURITY MANAGEMENT: Types of Telecommunications Networks:-
LAN,MAN,WAN-Application of network-Topology- Meaning and uses of cloud computing in business-
Business use of Internet Role of intranet, extranet in business-Wireless technologies Role of WiFi and
challenges-Internetworked security defences - Other Security measures (Security code, backup files,
security monitors , biometric, computer failure control, disaster recovery, Information system control&
audit).

NETWORK AND SECURITY MANAGEMENT
Network management refers to the broad subject of managing computer networks. There exists a wide
variety of software and hardware products that help network system administrators manage a network.
Network management covers a wide area, including:
Security: Ensuring that the network is protected from unauthorized users.
Performance: Eliminating bottlenecks in the network.
Reliability: Making sure the network is available to users and responding to hardware
and software malfunctions.
Network security consists of the provisions and policies adopted by a network administrator to prevent
and monitor unauthorized access, misuse, modification, or denial of a computer network and network-
accessible resources. Network security involves the authorization of access to data in a network, which is
controlled by the network administrator. Users choose or are assigned an ID and password or other
authenticating information that allows them access to information and programs within their authority.
Network security covers a variety of computer networks, both public and private, that are used in
everyday jobs conducting transactions and communications among businesses, government agencies and
individuals. Networks can be private, such as within a company, and others which might be open to
public access. Network security is involved in organizations, enterprises, and other types of institutions. It
does as its title explains: It secures the network, as well as protecting and overseeing operations being
done. The most common and simple way of protecting a network resource is by assigning it a unique
name and a corresponding password.
Network security concepts
Network security starts with authenticating, commonly with a username and a password. Since this
requires just one detail authenticating the user name i.e. the password this is sometimes termed one-
factor authentication. With two-factor authentication, something the user 'has' is also used (e.g. a security
token or 'dongle', an ATM card, or a mobile phone); and with three-factor authentication, something the
user 'is' is also used (e.g. a fingerprint or retinal scan).
Once authenticated, a firewall enforces access policies such as what services are allowed to be
accessed by the network users.
[2]
Though effective to prevent unauthorized access, this component may
fail to check potentially harmful content such as computer worms or Trojans being transmitted over the
network. Anti-virus software or an intrusion prevention system (IPS)
[3]
help detect and inhibit the action
of such malware. An anomaly-based intrusion detection system may also monitor the network like
wireshark traffic and may be logged for audit purposes and for later high-level analysis.
Communication between two hosts using a network may be encrypted to maintain privacy.
Honeypots, essentially decoy network-accessible resources, may be deployed in a network as
surveillance and early-warning tools, as the honeypots are not normally accessed for legitimate purposes.
Techniques used by the attackers that attempt to compromise these decoy resources are studied during
Page - 17

and after an attack to keep an eye on new exploitation techniques. Such analysis may be used to further
tighten security of the actual network being protected by the honeypot.A honeypot can also direct an
attacker s attention away from legitimate servers. A honeypot encourages attackers to spend their time
and energy on the decoy server while distracting their attention from the data on the real server. Similar to
a honeypot, a honeynet is a network set up with intentional vulnerabilities. Its purpose is also to invite
attacks so that the attacker s methods can be studied and that information can be used to increase
network security. A honeynet typically contains one or more honeypots.
[4]

Security management
Security management for networks is different for all kinds of situations. A home or small office may only
require basic security while large businesses may require high-maintenance and advanced software and
hardware to prevent malicious attacks from hacking and spamming.
Homes & Small Businesses
basic firewall or a unified threat management system.
For Windows users, basic Antivirus software. An anti-spyware program would also be a good
idea. There are many other types of antivirus or anti-spyware programs available.
When using a wireless connection, use a robust password. Also one could try to use the strongest
security supported by their wireless devices, such as WPA2 with AES. TKIP may be more widely
supported by their devices and should only be considered in cases where they are NOT
compliant with AES.
If using Wireless: Change the default SSID network name, also disable SSID Broadcast; as this
function is unnecessary for home use. (Security experts consider this to be easily bypassed with
modern technology and some knowledge of how wireless traffic is detected by software).
[5]

Enable MAC Address filtering to keep track of all home network MAC devices connecting to
one's router. (This is not a security feature per se; However it can be used to limit and strictly
monitor one's DHCP address pool for unwanted intruders if not just by exclusion, but by AP
association.)
Assign STATIC IP addresses to network devices. (This is not a security feature per se; However
it may be used, in conjunction with other features, to make one's AP less desirable to would-be
intruders.)
Disable ICMP ping on router.
Review router or firewall logs to help identify abnormal network connections or traffic to the
Internet.
Use passwords for all accounts.
For Windows users, Have multiple accounts per family member and use non-administrative
accounts for day-to-day activities.
Raise awareness about information security to children.
[6]

Medium businesses
A fairly strong firewall or Unified Threat Management System
Strong Antivirus software and Internet Security Software.
For authentication, use strong passwords and change them on a bi-weekly/monthly basis.
When using a wireless connection, use a robust password.
Raise awareness about physical security to employees.
Use an optional network analyzer or network monitor.
An enlightened administrator or manager.
Use a VPN, or Virtual Private Network, to communicate between a main office and satellite
offices using the Internet as a connectivity medium. A VPN offers a solution to the expense of
leasing a data line while providing a secure network for the offices to communicate. A VPN
Page - 18

provides the business with a way to communicate between two in a way mimics a private leased
line. Although the Internet is used, it is private because the link is encrypted and convenient to
use. A medium sized business needing a secure way to connect several offices will find this a
good choice.
[7]

Clear employee guidelines should be implemented for using the Internet, including access to non-
work related websites, sending and receiving information.
Individual accounts to log on and access company intranet and Internet with monitoring for
accountability.
Have a back-up policy to recover data in the event of a hardware failure or a security breach that
changes, damages or deletes data.
Disable Messenger.
Assign several employees to monitor a group like CERT
[8]
which studies Internet security
vulnerabilities and develops training to help improve security.
Large businesses
A strong firewall and proxy, or network Guard, to keep unwanted people out.
A strong Antivirus software package and Internet Security Software package.
For authentication, use strong passwords and change it on a weekly/bi-weekly basis.
When using a wireless connection, use a robust password.
Exercise physical security precautions to employees.
Prepare a network analyzer or network monitor and use it when needed.
Implement physical security management like closed circuit television for entry areas and
restricted zones.
Security fencing to mark the company's perimeter.
Fire extinguishers for fire-sensitive areas like server rooms and security rooms.
Security guards can help to maximize physical security.
Types of Telecommunications Networks:- LAN,MAN,WAN
-Application of network-Topology- Meaning and uses of cloud computing in business- Business use of
Internet Role of intranet, extranet in business-Wireless technologies Role of WiFi and challenges-
Internetworked security defences - Other Security measures (Security code, backup files, security
monitors , biometric, computer failure control, disaster recovery, Information system control& audit).
(Kindly refer the files)

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Dr. S. Anthony Raj, Faculty - KUBS.

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