Electronic Business (E-Business) Systems

Electronic Business (E-Business) is the application of electronic networks

(including the internet) to exchange information and link business process among
organizations and/or individuals. These processes includes interaction between
back office (i.e., internal) processes, such as distribution, manufacturing, and
accounting; and front office (i.e., external) processes such as those that connect
an organization to its customer and suppliers.

A Comparison of Manual and Automated Accounting Information Systems

Over the past several decades, there has been a major shift from manual
to automated accounting information system. It is very important to understand
the flow of data through a manual accounting system and how those manual
steps have become automated.

Manual
1. The first activity in the manual
accounting process is to
journalize the business event in
a book of the original entry.
Automated
Input stage, this stage includes
capturing data and if necessary,
converts the data into machine
readable form.

In the same manner that accounting transactions are recorded in general or

special journal, data input to a computer normally recorded in a business event
data store. a business event data store (also known as a transaction file) is a
book of original entry used for recording business events.

2. The second activity is to post the

business event from the journal Update SL master data, is
to the subsidiary ledger. equivalent to post of business event
data to the subsidiary ledger.

3. The third activity is to post the Update GL master data, is

total from the journal to the equivalent to the post of the total of
general ledger. the journal to the general ledger and
to the processing/ update stage.

Master data are repositories of relatively permanent data maintained over an

extended period of time. Master data contained data related to entities-persons
and organization.

Two types of update can be made to master data

• Information Processing includes data processing functions related to

economic events.
 • Data Maintenance includes activities related to adding, deleting or
replacing the standing data portion of the master data. Standing Data
include relatively permanent portions of master data.

4. The fourth activity is to summarize Output is summarizing the business

the business event by preparing a trial events by preparing a trial balance. This
balance process retrieves general ledger master
data from storage and prints the trial
balance.

Automating an Accounting Information System

Batch processing is the aggregation of several business events over

some period of time which the subsequent processing of these data as a group
by the information system. The periodic mode is the processing mode in which
a delay exists between the various data processing steps. The batch mode was
originally chosen as the automation technique because it is so closely resembled
the steps in the manual process

Batch processing systems typically require four basic sub processes.

1. Business event occurs. At the point of occurrence for the business
events, the information for the event is recorded on a source document.
2. Record business event data. A batch of source documents is transferred
to a data entry operator who takes the information from the source documents
and enters the data in a computerized format.
3. Update master data. After all the data have been entered into the
system, the event data store is brought to the computer to be processed and
any calculations and summarizations completed. This information is used to
update master data.
4. Generate outputs. After al calculations have been completed and the
data updated, the system periodically generates the applicable reports.
Online Transaction Entry (OLTE)

Online transaction entry (OLTE) system, use of data entry devices allows
business events data to be entered directly into the information system at the
time and place that the business event occurs. These systems merge the
traditional sub processes of business event occurrences and record business
event data into a single operation. At the point the business events, a computer
input device or a PC is used to enter the event data into the data entry system
rather than onto source document. Generally, prices are automatically generated
by the system as the computer retrieves the data from data system stores. Such
system is considered online because the data entry device is connected to the
computer to the computer. The input system prints documents because source
documents are still required. As the business events occur, they are accumulated
either on a magnetic tape or on disk.

Online Real-Time (OLRT) Processing

Online real-time (OLRT) systems gather business event data at the time of
occurrence, update the master data essentially instantaneously, and provide the
results arising from the business event within a very short amount of time-that is,
in real-time. OLRT systems complete all stages of business event data
processing in immediate mode. Immediate mode is the data processing mode in
which little or no delay occurs between any two data processing steps (as
opposed to periodic mode where a significant delay occurs between two or more
data processing steps)

OLRT systems typically require three basic sub processes to be completed

before an event is converted into information that can be used by the decision
makers.
1. Business event occurs and record business event data. At the time of the
business event, the related data are entered directly into the system. Source
documents are almost never used because they significantly slow the process
and remove some of the advantages of non redundant data entry.
2. Update master data. Each Business event that has been entered into the
system is processed individually and any calculations and summarizations
completed. This information is then used to update the master data.
3. Generate reports (and support queries). It is neither practical nor desirable
that reports be generated after each business events is recorded and master
data have been updated. Typically, applicable reports will still be generated
by the system on a periodic basis. At the same time, however, these reports
will usually be instantaneously available through access of the system on an
as-needed basis with the communication links to the managers.

Methods of Conducting E-Business

Commerce Through E-Mail

Electronic mail (e-mail) is the electronic transmission of nonstandardized

messages between two individuals who are linked via a communications network
(usually an intranet or the Internet). E-mail represents a weak form for e-business
because of the nonstandardized format by which messages are transmitted. E-
mail tends to be a very free mode of expression and, for the most part, a fairly
casual and informal mode of communication. This unstructured nature of the
communication modes makes data capturing more difficult and generally requires
human translation and entry of data. This increases the likelihood of error and
requires more stringent data control procedures to be in place. The e-mail
essentially becomes a source document for use in business event data
processing. Organizations using e-mail as a source document also must have a
mechanism in place to deal with unsolicited, nondocument mail (spam).

Despite of limitations, e-mail does have several characteristics that make it

tolerable for some e-business events. From a sales standpoint, a targeted market
can often be identified by locating an appropriate e-mail list. Much like their
mailing list counterparts that are used for postal delivery, lists of e-mail
addresses for individuals that are likely to be interested in a given product can be
useful. Generally, if the marketing medium is e-mail, then the purchase request
also will be transmitted in this manner.

As a means of getting around the unstructured nature of e-mail transmissions,

marketers frequently provide an electronic order form that adds structure to the
information content of the message. However, even with the electronic order
form, entry of the data into the system generally requires some keying by data
personnel. Thus, the general objectives of e-business – to avoid the need for a
salesperson to make the contact and to avoid the business event recording
activities during business event data processing – are not achieved.

Electronic Document Management

Electronic document management (EDM) is the capturing, storage,

management, and control of electronic document images for the purpose of
supporting management decision making and facilitating business event data
processing.

In general, business applications of EDM fall into two categories:

• Document storage and retrieval: For example, mortgages, deeds, and

liens are archived and made available to the public foe such uses as title
searches. Other documents in this category include birth certificates,
death certificates, marriage licenses, banking-account signatures cards,
user manuals, price lists, and catalogs. An EDM system stores the images
(e.g., PDF files) of these items and displays or prints a copy of them upon
request. Document storage and retrieval also could be implemented using
micrographic-based image processing systems (i.e., microfilm).

• Business event data processing: For example, loan and insurance

applications must pass through several stages, such as origination,
underwriting, and closing. The EDM system can manage the workflow and
route the documents to the appropriate people – even if these people are
geographically dispersed. Electronic-based image processing systems
 must be used for this type of application. An organization’s
communications networks also must be interconnected in a manner that
facilitates access and transmission of document images.

Typical benefits of EDM systems include the following:

• Reduced cost of handling and storing paper.

• Improved staff productivity.
• Superior customer service.
• Enhanced management of operational workflow.
• Faster processing.

Electronic Data Interchange

Electronic data interchange (EDI) is the computer-to-computer exchange of

business data (i.e., documents) in structured formats that allow direct processing
of those electronic documents by the receiving computer system.

Electronic Data Interchange Components

Components of the EDI System

• Trade Partners: The trading partners can be any combination of

organization or business types.

• Application program: AP’s are responsible for generating and processing

data in business documents

• Business document: A business document is a legal document that

defines the transaction conducted between trading partners.

• Translator: The translator is responsible for mapping application data to

the EDI standard format.

• EDI Message: The standards EDIFACT /ANSIX12 defined various EDI

messages that govern the rules, format, and content of data in a
transaction.

• Value-Added Network: The VAN provides a mailbox on the network to

each trading partner. This mail box is polled periodically for messages.
The application software does not have to be connected or running at the
time of message exchange.

Internet Commerce

Internet commerce is the computer-to-computer exchange of business event

data in structured or semistructured formats via Internet communication that
allows the initiation and consummation of business events. In many cases, the
goods or services that are contracted for through the Internet are immediately (or
soon thereafter) forwarded back to the consumer via the Internet as well (i.e.,
when the goods or services can be provided in electronic format, such as
software and music). Internet commerce radically simplifies e-business by
allowing the organization that is receiving and processing business event data to
project template formats across the Internet to business partners for easy data
entry and data transmission.

Other Internet Uses for E-Business

Internet Auction Markets

Internet auction markets provide an Internet base for companies to place

products up for bid or for buyers to put proposed purchase up for bid.
Internet Market Exchanges

Internet market exchanges bring together a variety of suppliers in a given

industry with one or more buyers in the same industry to provide Internet
commerce through organized markets. Suppliers can put their products online,
generally feeding into electronic catalogs that allow the buyer(s) to sort through
alternatives from different suppliers and electronically place an order. Often, only
one supplier will carry a certain item, but efficiencies are still gained by avoiding
the purchase order process and executing an order through selection from a web
catalog. In some cases, buyers make their needs known on the marketplace, and
suppliers review the needs and determine whether to fill the orders. The key is to
make sure the market is efficient enough to assure that the buyer will get the
product purchased on a timely basis for when it is needed – often meaning what
the purchased goods arrive at an assembly line within an hour of when the goods
will be needed for production. This part is tricky, and the exchange must be set
up carefully.