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Management Information Systems
The Concerns of E-Commerce
In Internet time the attention span of customer is just 8 seconds. After that a shopper typically moves on. What’s more is that the Forrester research reports that 42% of the people leave a site unsatisfied will never return (Forrester, 1999). The cost of business in uncompleted orders is simply staggering- early estimates put the monthly retailing losses at $58 million.
The new research indicates that the figure has grown since then. Zona research estimates that slow web response could result in losses as high as $102 million per month for the consumer market alone. This is serious concern for the thousands of online retailing companies and it will soon be a concern for many more.
E-Commerce and Data Warehousing
Integrated Information
An obligation for victorious trade intellect Business brains is about the management a business by means of and examining a company’s most priceless skill, its data. Using business intelligence tools, data can be accessed and examined to provide the decision-maker with important knowledge about the company’s processes and financial performance as well as customers and suppliers. This knowledge can then form the foundation for mutually calculated and strategic decision-making in the company. IDC believes that in the future, global enterprises will increasingly use business intelligence to leverage their market position and achieve leadership. However, business decisions will only be as good as the information they are based on. In order for a company to have an efficient and successful business intelligence and reporting system in place, having a unified perspective of the company’s data is imperative. Without an overview of the entire business, the ability to make sound judgments is lost. Without a global view of a customer it is not possible to provide the optimal service. Without corporate consolidated spend, negotiations with suppliers are weaker. The bottom-line is that without integrated company-wide information, business decisions are uninformed decisions.
Reasons for the Information Integration Challenge
Providing a united view of the company’s information assets to underpin business intelligence is what information integration is all about. IDC has identified a core set of requirements that information should comply with to form an appropriate basis for Business decisions. These are:
Correct : Invalid data must not be permitted.
Complete : All the information relevant to the decision should be available.
Current : The information should be sufficiently up to date for the purpose, and increasingly this means real-time currency.
Consistent : Where information is drawn from different sources, each source should represent the same version of the truth.
While this might seem obvious, the scope of the challenge is considerable. The world of today is characterized by constant change, and getting data that is correct, complete, current and consistent is becoming increasingly difficult. This business reality requires companies to embrace diversity and make the assumption that they and other companies are constantly evolving. It is this reality of continuous change that places the extreme demands of information integration on global organizations today.
Large companies with subsidiaries in many different locations usually operate as a group of local units. Information is stored and managed in databases and packaged applications such as ERP systems that have been bought from multiple vendors or custom-built to meet the specific information management needs of the local subsidiary. These information systems will evolve independently of one another to reflect changes and developments in the local organizations. Trying to get a unified point of view of all systems is the most important confrontation. The result is likely to be inconsistent reporting because of differing terminology or definitions used in the different subsidiaries. Consider the definition of a customer – in one office a company might qualify as a customer as soon as the first contact with the company has been made, but in another office that same company might not be a customer before a contract has been signed. Another issue is that a single customer will have multiple records in a company’s information systems – one for each of the subsidiaries and one for each of the ways the company’s name is written.
There is probably no such thing as a bad e-commerce customer. But which ones are the best, the most likely to take an e-tailer into the promised land of perpetual profits?
E-commerce and CRM (Customer Relationship Management)
According to analysts, the perfect customer is an ever-moving target. Once, e-tailers thrived by catering to young male customers who bought every new technological gadget and computer accessory as soon as it hit the market.
Times are changing. The perfect customer now is just as likely to be an older female with almost no interest in DVDs, scanners or digital cameras.
But finding and holding on to top customers is still a challenge because, by nature, Web shoppers seem to be less loyal and more willing to spread their spending among various sites. In other words, the perfect consumer is as hard to find and retain, as he or she is to define.
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Bargains Talk
E-commerce benefits from bargain shoppers; they really drove buying in 2001. The main reason a lot of consumers turn to the Web is that they perceive it as a place where they can compare prices easily and find bargains. By definition, that means less loyalty.
Because price is such a concern for the new breed of online shoppers, they are far less likely to be loyal to any given e-tailer. And while customer acquisition costs have declined considerably from the high-flying days when e-tailers spent lavishly to attract eyeballs, such costs are still a major concern for companies that are more focused than ever on the bottom line.
E-tailers have to figure out a way to whittle down prices enough to keep customers but still stay profitable, they want to attract customers without giving away the store to do it. That's not an easy task.
Money To Spend
Of course, e-tailers also want to attract and retain customers who are going to spend more money. But they must work harder to corral those affluent shoppers.
Affluent buyers may be especially important in a slowing economic environment because they are least likely to curtail their consumption of the types of discretionary items the Web features, according to Forrester Research analyst Christopher Kelley.
Forrester has identified affluent consumers as a key online constituency that set the pace for e-commerce adoption by being among the first to buy items, including big-ticket items, online. Still, sites that attempt to cater to this group often have forgotten the basics of customer service.
In the end, the perfect customer may be any customer who is happy enough with the shopping experience to return and to refer friends. Customers who come back are the best ones to have. There is no price tag you can put on loyalty (Engholm, 69-73).
Internet Effective for Coordination
Companies invest in e-business and in CRM, in large part; because their customers demand it and a Web initiative can improve customer service. More than 50 percent of the respondents said they invested in the Internet because it could improve coordination with suppliers and customers, said Dowling. She noted that the research data supports what the industry has long believed about the influence of the Internet on business relationships. For the right group of people, the Internet is meeting its potential.
The survey found that the results of investing in e-business matched the business goals that companies originally set for investing IT dollars in Web initiatives. The top three reasons to use the Internet were to expand existing markets, to improve coordination with customers and suppliers, and to enter new business markets. The top benefits were more efficient internal processes, improved customer service and coordination with suppliers, and improved competitive position.
Over 50 percent of the businesses surveyed said they already were sharing data with suppliers, said Dowling (Lavin, 224-225).
Two Samples About E-Commerce Implementation Of Business
One of the unsuccessful online businesses are the online retail stores. The reason for their failure is that too often, e-business projects have simply made processes automatic, rather than re-focusing on how the business could improve systems from the top down. An example would be a magazine publishing company, which previously processed all applications for subscriptions by hand. On building a website, the company decides to automate the process so that potential subscribers enter their own address details, rather than a faxed application being copy-typed into a database. Granted this saves time – but with a little more thought, it could have been an entire e-business ecosystem. Part of the application form could invite subscribers to enter their email address for an email news summary or other offers to be sent through on a regular basis. This could lead to additional advertising revenue.
There’s a long-standing misconception that technology is the solution rather than the enabler. Too many businesses are still failing to realize that technology is merely a means of delivering more advanced business strategy. Again, the second half of the 1990s saw huge growth in business interest in the Internet: but what companies were saying was ‘we need a website’ rather than ‘we need to consider how the Internet can improve our business’.
One of the successful online businesses is the online grocery stores and one such example of an online grocery store is the Webvan. Webvan secured its title as the biggest dot-bomb ever; the online grocery segment is slowly reinventing itself. Brick-and-mortar supermarkets are cooking up some early success with hybrids of the original model. Albertson's originally launched its online grocery service in Seattle in November 1999. The company created a Web site and tied the Internet service to existing pricing and inventory systems.
While the Peapods and Webvans of the online grocery world were racing to market with half-baked models, Albertson's took the slow and steady route. The result is that the company matured its model of fulfilling online orders from select regional stores and weathered the storm that drowned the pure-play dot-coms.
By bringing their brick-and-mortar investment to bear on the online portion of their business, they have evolved our online model to take advantage of their retail grocery expertise; brand recognition and existing infrastructure.
Partnering for Success Similarly, Safeway is taking a similar approach, with a twist. The company is offering online grocery service through Grocery Works, an Internet-based home-shopping service that it co-owns with Tesco (NASDAQ: TESOF), a UK food retailer. The online grocery business in the U.S. has dramatically changed in a few short years. It is estimated that successful online grocery models will come from brick-and-mortar retailers with well-established brands, purchasing power, and existing distribution infrastructures (Shapiro, 191-199). Businesses are going to be on the Internet because it represents an additional and inexpensive resource for finding customers. Using the network, one can market directly, with less advertising and a smaller sales force. The immediate consumer feedback that businesses can obtain when they are wired to their customers is the most powerful strategic advantage conferred by the Internet. It allows you to adapt and tune both your message and your product itself to maximize customer response. In a larger sense, what on-line marketing represents, on both the Internet and the proprietary information services, is a paradigm shift away from information disseminated through mass media (top down) to information which is customer-driven--a bottom up model of information sourcing. Advertising on line involves two-way interaction. The key word is "participation." The Internet infrastructure is maintained by dedicated companies and research labs. The leverage you can obtain by using these MIS resources is significant. No matter how much money you feed your MIS department, it never is going to be able to keep up with multimedia computing, communications, and the other technology it would need to provide in order to replicate what already is available on the Internet. Finally, there are new business opportunities created by the technology. You can reach customers overseas. You can present in-depth information about products, not just a superficial image. You can obtain systematic data on marketing effectiveness, rather than having to guess the impact as you do with mass media advertising. Nearly all papers and studies about telecommunication describe this technology crucial for the development of economic and social progress in our world. Intensifying the use of telecommunication and especially the use of international computer networks would reduce the gap between the rich North and the poor South and would help overcome poverty in opinion of the most important representatives of telecommunication firms in the North. In cooperation from World Bank, U nesco, Usaid and other international institutions they try to convince decision makers of the Third World , that an investment in the new media would be inevitable for participation in progress and improvement of life conditions for all. Here the particular interest of multi national consortiums of industrialized countries is obvious, because they will mainly participate in implementing telephone and data lines in developing countries. They all will get a big part of the estimated 500 billion Dollars cake in the communication sector. The Internet fundamentally affects all business and intelligent strategic thinking is required no matter what your company does. The real winners will be those who understand how the Internet changes the way that businesses interact with their customers and stakeholders. Now you are any part of the world internet has become an essential feature. Business entities all round the world are engaging heavily in internet usage so as to build more and more customers. Millions of people all round connect to the network and the potential for the business is unlimited. Compared to the West the countries of the Middle East are still developing their networks. Most of the countries here like the Arab ones and Palestine for example is not progressing the way the West has. Internet in many organizations here is still a new phenomenon. Although large multi-nationals have fully automated systems and web pages designed for their companies but many small entities forming the major part of the corporate world do not use the latest technology (Deans, 13-19). How are Internet related technologies going to affect any industry and hence a company? "If you are not spending time now trying to answer this question you run the risk of being severely disadvantaged as the economy is reorganized into a new order. Already there are many industries that have been reshaped by the Internet, particularly in the United States . These include computer software and hardware, financial services, travel, news, automobile sales and auctioning. The revolution has only just begun (Engholm, 65-68). The key to successful exploitation of this opportunity is to find innovative ways to add value for your existing customers or by providing solutions for new clients. The Internet will continue to evolve towards being a resource that makes our lives simpler rather than being a series of applications. As Bill Reichert of Garage.com says "In reality, you should anticipate a need and invent a market". If you can look ahead to what might be, you will hold a considerable advantage over those who see the technology through today’s restrictive spectacles. Although it is always worthwhile checking out what your competitors are doing, the reality is that today the major threats will come from startups or other industries exploiting new technologies or innovatively leveraging the power of the Internet. In the Middle East the resources of the country are being used for providing the basic facilities of life and in encouraging industries to set up. Working on these grounds the business sector has fewer resources for establishing the networks linking them with the rest of the world: the web. In these countries most of the labor is unskilled and computer literacy is not very high. Therefore employing the internet means placing many out of jobs. Financial support is also another deterrent. The Global Growth all over focuses on emerging Internet populations in various regions of the world. Online growth in areas such as the Asia-Pacific region and Latin America has surpassed expectations as e-commerce initiatives and personal Internet use have blossomed. Despite the bright outlook for continued Internet penetration, there is a significant global digital divide, primarily between the North and South. For example, only 1.5 million people are online in Africa , 1 million of whom are in South Africa . Poverty and inadequate telecommunications infrastructure in the developing world must be alleviated in order for Internet use to become fully established. Many companies in the Middle East are using the internet for just helping them in the business itself where the element of being connected with the world is still missing. The internet is being used for communication in the business sector but interaction with customers is quite limited. There are very few sites available that sell products online. The objective up till now has been to aid the operations inside the business firm but to expand on the international scene the use of web-sites is crucial. The usage of internet creates an image for a firm. The Social Trends provide a discussion of the fundamental changes taking place in the way people communicate and conduct business (Peha, 3a). Although the digital divide still exists in the U.S. , tremendous strides have been made in eliminating it, thus permitting more Americans to communicate via the Internet and opening up a world of new opportunities to low-income families. The Internet is quickly becoming an essential part of every classroom as students at all levels of education utilize it to do research and participate in a variety of online educational activities. Additionally, the emergence of virtual communities has drawn the world closer together as people from all walks of life may speak to each other in chat rooms and find a community with similar interests. The whole society is taking a different shape with the emergence of the internet. Communication has become so effortless that the world has actually become a small place. Perhaps the E-Business section provides the best glimpse into the future of the Internet, which has given industry an entirely new way of conducting business. Companies have revolutionized industry practices, creating greater efficiency and monetary savings. E-commerce has similarly exploded with online retailing and industry marketplaces. Business-to-consumer and business-to-business e-commerce promise to continue seizing an increasingly larger share of the goods and services market in the coming years. Outside the U.S. , companies have begun to take note of the online successes of North American businesses and are starting to follow suit. Although most governments have maintained a laissez-faire approach to the online industry, there is more and more pressure by citizens concerned about privacy and security for some degree of regulation and monitoring. Within the U.S. and European countries, legislative bodies have already instituted minor measures geared towards the protection of personal information. Without a doubt, greater Internet regulation will occur in the coming years; however, industry and government should work together to insure that any regulation fully supports the continued growth of the Internet economy while protecting the interests of individuals. This is not just a national effort. The countries and companies of the world must collaborate and standardize guidelines for the Internet industry to avoid costly international disputes and to continue the dissemination of Internet technology to the entire world (Shapiro, 191-199).
Use of the Internet can provide opportunities for inquiry-based learning. Students and teachers can network, study, and collaborate with others around the world. Teaching strategies can be shared through communication with other educators and may be integrated across the curriculum. The real significance of the Internet is that it defines an instantly ubiquitous highway. There will be fascinating implications here for the way people work, for example, the Internet makes an individual's geographical location less relevant... (Lavin, 223).
Example Of Amazon.com
INTRODUCTION: Started in July 1995, Amazon.com (Amazon) immediately became the largest online retailer. Amazon has a constantly growing database of over 29 million customers in more than 160 countries. The company built a foundation as an online bookstore, but has quickly began selling other items such as CDs, videos, DVDs, etc.
The driving forces behind Amazon’s strategic direction are not any different from the driving forces behind most companies. Amazon wants to conduct business indefinitely. Moreover, Amazon wants to increase revenue and market share and fight off competition. Amazon must become profitable in order to remain in business longterm. Investors want to see results! Investors are really getting tired of valuing internet companies on the basis of potential profits and Amazon definitely is no exception to this. Increasing revenue is extremely important for Amazon now considering the current state of the economy. Amazon can no longer put market share ahead of profits.
Amazon’s share price is currently trading around its low of $13. If Amazon’s share price continues to go down, it will be strapped for cash. Over the past year several internet companies have closed their virtual doors for business as their cash flow has dried up. Amazon could be facing the same fate as some of these companies if it doesn’t begin to produce profits. Competition is heating up as brick and mortar companies begin to do more business over the internet. Amazon must be concerned about these companies because they built their foundations with physical stores unlike Amazon. Amazon doesn’t have the same luxury as brick and mortar stores do in diversifying any loses from doing business on the internet.
Furthermore, brick and mortar companies can offer face-to-face interaction that Amazon currently can not match. In an attempt to diversify and stay ahead of the competition, Amazon has begun offering products other than books such as electronics, kitchen products, books, music, DVDs, videos, camera and photo items, toys, software, computer and video games, tools and hardware, lawn and patio items, and wireless products. Expansion is propelling the company in many directions; it owns stakes in online sellers of prescription drugs, cars, groceries, and more (www.Amazon.com). While Amazon is concentrating on expanding its business, it might be forgetting about some of the basics.
Amazon must pay attention to the price of its products. If product prices are higher than other companies, Amazon will miss the opportunity to capture the customers purchases. Amazon must focus on providing competitive value to customers. It doesn’t have to be the lowest price retailer, but there better be some incentive for customers to purchase products from them versus other companies. Value is especially important when factoring in the cost of shipping and handling as opposed to going to a store directly to purchase the product. Also, not to mention the potential hassle of having to return products through the mail rather than going to the store directly.
Customer Friendly and Technologically Advanced Website
The layout of Amazon’s web site definitely shows that Amazon has clearly focused objectives. Obviously, this is a company that understands customers are the reason why they are in business. Amazon clearly had the customer in mind when it developed its web site. The web site is extremely customer friendly. The website is divided into sections that can be accessed via tabs at the top of the default screen. Customers have easy access to search fields and navigation buttons have been placed conveniently at the top of each page. Furthermore, the simplified low-bandwidth graphics allow customers to easily select the type of media they are interested in purchasing. Customers can read product reviews to assist them in making purchases as well as create their own reviews.
Amazon’s goal is to provide the best shopping experience possible and it has succeeded. Amazon has really put its workforce to use by creating in house technology such as affinity lists. Affinity lists automatically display similar items that were purchased by people who bought the item the customer is looking at. In addition to using in house technology, Amazon uses the Secure Netscape Commerce Server for handling online sales. Technology has really served Amazon and its customers well and it will continue to positively impact both parties as long as it is used properly.
Amazon must carry through on its promise to provide the best shopping experience for customers. It can accomplish its promise by creating technology that will make it even easier for customers to do business with them. Data Rules the World Companies can not have enough data about its customers and Amazon is no exception. If used properly customer data can be an excellent tool in determining the shopping habits of customers. The more a company knows about customers habits, the easier it is to cross-market additional products and services to them. On the other hand, if the data is not used properly it can cause problems for customers. Customers are inundated with junk mail.
The last problem customers want to deal with is having their personal information sold to another company. Amazon must uphold its commitment not to sell its customers information to other companies. If Amazon doesn’t uphold its commitment, it could see a significant drop in future customers. Recognizing the growing importance of sharing data, Amazon has acquired and invested in several companies such as Junglee and Planet All. Amazon acquired Junglee for $185 million in stock and Planet All for $93 million in stock. Junglee developed technology allowing databases to be efficiently merged together. Therefore, helping customers locate other internet stores. Planet All created a reminder service enabling users to maintain contact with friends and associates.
Conclusion
If Amazon doesn’t begin to produce revenues it will meet the same fate as several other now defunct internet companies. Thereby, forcing its 29 million customers to do business with other internet companies or go to physical stores. No one knows whether Amazon can survive an economic downturn. Although, it is common knowledge that Amazon has several obstacles it must overcome if it wants to remain in business long-term.
Works Cited
Post, G., & Anderson, D. (2000). Management Information Systems.
Boston : Irvin McGraw-Hill. www.Amazon.com Date retrieved:
February 2, 2001
http://quicken.excite.com/investments/quotes/?symbol=amzn
Date retrieved: February 2, 2001
Himelstein, L. (2000, December). Going Back To Dot-coms.
Business Week. pp. 90-92.
Deans, C. & Dakin, S. The Thunderbird guide to international
business resources on the World Wide Web. New York : Wiley.
(1997), pp 13-19.
Lavin, M. R. Business information: How to find it, how to use
it. (2nd. ed., new & expanded). Phoenix : Oryx Press,
(1992), pp 223-225.
Engholm, C. & Grimes, S. The Prentice Hall directory of online
business information. Paramus , NJ : Prentice Hall, (1988),
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Shapiro L. Andrew; The Control Revolution: How the Internet Is
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Know, Public Affairs, 1999, pp 191-199. |
