E-COMMERCE AND ERP

The evolution of business increased the pace of its activities, including interactive relationships
between customers and suppliers and distributors, commitment with their employees and society,
competing with their rivals and reporting the Government and many more. All of the above
activities made business more complex in terms of their performance, disclosing and sharing of
information. The information flow is vital for the business’s operations, the flow of information
may be vertical, cross-business, and integration of technology with modestly redesigned
processes for order handling, purchasing or customer service.

The speed of information flow towards external parties directly depends upon the generation of
information done by internal parties to business, e.g., if one customer order for particular good
(let say A) to the marketing department, but because of lack of information from the either
production or logistic department marketing department failed to provide the information to
customer which may not be in favor of business, may be lost of customer.

The contemporary need of free-flow, accurate and speed of information is much more needed as
compare to earlier information system. It is very clear from the above discussion that there are
two way of information flow one is outbound and second is inbound information. E-commerce,
E-business and ERP are those techniques which disseminate the information as per the need of
hour. The word ‘E’ in case of commerce and business refers to the electronic exchange of
information. The ERP means Enterprise Resource Planning. Where e-commerce and e-business
are different concept of channelizing the information, on other hand ERP is software that assist
to e-commerce and e-business in generation, storage, sorting and dissemination of information.

E-commerce emphasizes on selling, distribution and making purchase from suppliers. E-business
includes e-commerce but also covers internal processes such as production, inventory
management, product development, risk management, finance, knowledge management and
human resources. E-business strategy is more complex, more focused on internal processes, and
aimed at cost savings and improvements in efficiency, productivity and cost savings. And, ERP
system are the software tools used to manage enterprise data across the different functions. An
ERP system is a packaged business software system that allows a company to “automate and
integrate the majority of its business processes; share common data and practice across the
enterprise; and produce and access information in a real-time environment.”

e.g., you want to purchase one attractive T-shirt of reebok simply click on mouse and cart your
order, make payment through credit-card or debit the amount from your internet banking on-line,
after the specified period your order will be shipped to you. In this example there are three
activities involved and two out of them are to be done electronically.

a. ordering T-shirt is an activity refers to e-commerce,

b. transferring the amount as payment refer to e-business, why??? Because you are directing to
your banker (a business party) to debit or transfer the amount to reebok company (the second
business party).

c. the shipment of the order is the part of either supply chain management or logistic system.
However you made an order of physical good that cannot be transfer electronically that’s why it
has to be done physically. But this only one example, if you want to purchase a software or
download a movie from youtorrent by paying chargeable amount that can be delivered on-line.

Now, as we know the function of each department is different like production, finance etc., how
to console all these function so if one would know to the proceedings of others. For example
marketing department get an order of 500 units of a commodity and promise to the customer
S KUMAR to dispatch the order after two days without having information regarding stock.
Assume that in a working day only 75 units can be produce. When marketing department called
to stock manager they shocked to know that they have only 150 units in the stock. What to
do?????

When finance department came to know that we contract with S KUMAR and he is big defaulter
to make payment. What to do???

That would have been better if marketing department well aware of about customer S KUMAR
in advance. This cause seems the lack of information between all the functions of business. E-
commerce, however, only assist how to sell, purchase and promote electronically. E-business
assists along with e-commerce, how to produce electronically how to exchange information
between two different business parties? But how to console all these functions electronically is
assisted by ERP. The difference between e-commerce and ERP can be done as follows:-

Basis E-commerce ERP

Meaning e-commerce is a concept of ERP is a software system which enables e-
electronic exchange of goods, commerce to execute itself.
services and information
Flow of Outbound information or Internal as well as external information is
information information towards external to considered.
business is being given importance.
Important to Important to and being implemented Important for all levels of management
whom by strategic and tactic level of from operational to strategic level.
management.
Training to Since e-commerce is not technical Training to staff is necessary before getting
end-users anyone who is computer savvy can any benefit from the ERP
make use of it.
Online or E-commerce cannot work without ERP can work with or without internet or
offline internet or extranet. extranet but LAN should be there always.
working
Database e-commerce depends upon other ERP in itself is software package which
software packages to store data and collect, analyze, sort, record the database
buildup database e.g., MS-ACESS along with data warehousing and data
or JAVA etc. mining.
Business e-commerce work differently for One ERP solve all the problem of business
function different function of same business through different module. Module is the
sub-system of ERP according to function
of the business like finance module,
marketing module etc.,
Dependency It is difficult to execute e-commerce ERP is one of the concepts to assist e-
function without e-business and commerce, so ERP in isolation is no
ERP important to implement.
Cost e-commerce is less costlier almost Only large organization can afford the cost
negligible as compare to ERP of ERP software, even they have to done
 cost-benefit analysis before implementing
ERP.
Data e-commerce is not as much secured ERP is sensitive, only specified end-user
security as an ERP can make use of ERP and only for their
own-domain, for example the strategic
information will not be disclosed at any
cost, and however it is consoled or
interlinked software. That can be used only
by specified users only not by all.
Usage at At production, accounting and ERP is useful across the functions of the
internal finance, storage and distribution e- business starting from customer order and
business commerce is not useful and not their request and query to production as per
level being used as well. their demand, collection of dues,
categorizing customer according to their
loyalty, budgeting and database
management and many more.