Management Information Systems

MBAB5P09
Dr. Anteneh Ayanso Part II of Assignment I

Analyzed and Compiled by | Zhang, Ivory | Borah, Pari | Krysta, Peter | | Chen, Billie | Baidwan, Karan |

Introduction / Context
HF Commercial Equipment Finance wishes to observe its Electronic Payment Systems adoption trends across their clientele of 4000 c ustomers . The customers use various forms of financial products such as loans, traditional and structured leases , etcetera from HF. Historically busines ses have been shy in adopting an elec tronic payment system for handling transaction between businesses . Some of the key reasons for this have integration constraints of IT infrastructure into the existing system, inability of trading partners to send and receive automated remittance information, a slow learning curve with a general diffic ulty in convinci ng customers and supliers to switch over to EPS. However in recent times, the B2B market has seen a growing acceptance of EPS among its merchants with new advances in technology especially areas of security. A good example is Alibaba.com, C hinas leading online tradi ng platform for merchants. Its 2014 IPO is predicted to surpass that of Amazon.com. The objecti ve of this report is to ascertain the trends of EPS adoption that exist among HFs customers on the basis of certain attri butes of the collected data. The data is examined in multiple dimensions with cross tabulations, pivot tables, and pi vot charts to examine if relational trends exis t between any possible pair of those attributes in order to better direct our marketing and other promot ional strategies to improve EPS adoption among HFs customers.

Methods Used
The EPS acceptance rate for each individual data attribute (ex - Paydex, Industry type) was examined. Based on this data, a further multi -dimensional analysis of a combination two different attributes in terms of EPS acceptance was observed for possible indications of trends. Some of the attribute

combinations that were looked i nto are EPS acceptance in terms of number of schedules and product type, or EPS acceptance in terms of reg ion and number of employees, etc.

Observations from Analyses

Out of 10 indust ry types , the Transportati on, Communication and U tility industry made up the largest customer base of HF with a total of 1154 companies or approxi mately 30% of their clientele. However , the sector, even after comprising of three different industries still has the lowest EPS adoption rate of 24% among all other type of customers. The same can be said also for Service and Wholes ale industries which make up approximately 9% and 8% of the customers but have adoption rates of only about 34%. In comparison, the Agriculture, Forestry and Fishing industry makes up less than 1.5 % of the total customer base has an impressive adoption rate of almost 40%. In term of number of employees , the s urface it looks like there is a fairly uniform distribution of EPS penetration across all sizes of companies. However the sudden spi ke in medium scale (50 -250) to 41 % may be indicative of a bell curve li ke distribution of EPS. If so, further appropriate statistical analyses can be performed for a precise picture. When it comes to region , Midwest, Southeast and Southwest regions have a very low EPS penetration compared to other regions. In general customers with higher number of schedules (products) have higher EPS usage but this number dips after 20 or more products . This has proven to be consistent in all two dimensional analyses. A more concise picture is presented when the analysis is conducted with region and type of industry.

When it comes to type of product , lease and quasi products have half the penetration of EPS compared to Loan and Multiple produc ts. This is better examined i n cross tables of product types wi th region and industry type.

Based

on

information

avai lable

at

http://mycredi t.dnb. com/glossaries/paydex we have categorized the customers into three Paydex Risk groups. The risk is indicated by the duration in which the payments are made to HF. Both high and low risk groups have a lower adoption rate of EPS compared to the group of medium risk profile customers. Implementation of EPS into their business systems will significantly reduce the duration of credit and hence bring down risk for all customers overall. In terms of Average previous Payments, companies with a history of higher payments have a higher adoption rate of EPS. Cross tabulated data presents this information more precisely across other attributes such as region, size of the company, number of products purchased, etc. Cross Tables For Type of Indust ry vs. Number of Schedules , there is a steady increase in EPS us age among small scale companies as number of products sold i ncrease. The same can be said for medium scale

companies. Small -scale companies however have an erratic distribution of EPS adoption. For larger purchases of 20 or more products, large scale companies show a sudden decline i n EPS rate. This behaviour is consistent when EPS

usage for number of schedules is compared agai nst a number of other attributes. For Industry Type vs. Region there is hi ghest penetration in the mining industry. While the Midwest region suffers in terms of EPS penetration in a number of industries with marginal penetration figures in

construction and manufacturing industry For Region vs. Product Type , loan and quasi products have a very low eps penetration in midwest and southwest regi ons. They both are mutually responsible for each others poor performance . EPS adoption for Type of Product vs. Type of Industry shows that i n the Services industry, produc t type Quasi has lowest EPS penetration and hence should be examined. In Transport ation Communication and Utility industry, Lease and Quasi product types have lowest EPS adoption rates. Lease products may have a greater scope for improvement as there are 509 companies yet to deploy EPS. The Quasi product however should not be a major area of concern as there are only 26 companies that use this product and do not use EPS. Conclusion : Lease and Quasi type products have not been able to attract customers towards electronic payments in the Midwest, Southeast and Southwest regions. Transportation Com munication and Uti lity despite of bei ng the largest customer base of HF has the leas t EPS adoption rate. High and low risk groups seem to shy away from using EPS m et hods in all attributes, this is mainly because of their volume of purchase both in

terms of their cash worth and quantity, and also the type of products purchased. Product volume quantity and product type also seem to be the key factors in EPS adoption i n terms of average previous payment of customers. Bibliography:

http://www.prnewswire.com/news -releases/b2b-electronic -paym entsgrowing-58783427.html

http://www.itbusiness.ca/news/3 -predictions-for-b2b-e-commerce-in2014/45891

http://ieeexplore.ieee.org/xpl/login.jsp?tp=&arnumber=4958934&url=http% 3A%2F%2Fieeexplore.ieee.org%2Fxpls%2Fabs_all.jsp%3Farnumber%3D49589 34

http://www.dovetailsystems.com/pdfs/DovetailWhitepaper_RisingTideOfUS ElectronicPayments.pdf