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Activities
Activity 6.1 (P. 222)
Figure 6.2 provides a convenient tool for discussing the interrelationship between
e-commerce and e-business. Based on the definitions provided above, state which of
the three alternatives is most appropriate to describe the relationship between ebusiness and e-commerce.
In Figure 6.2 (a) there is a relatively small overlap between e-commerce and e-business. From Fig
6.1 we can reject Fig 1.2(a) since the overlap between buy-side and sell-side e-commerce is
significant.
Figure 6.2 (b) seems to be more realistic, and indeed many commentators seem to consider ebusiness and e-commerce to be synonymous.
It can be argued, however, that Fig 6.2 (c) is most realistic since e-commerce does not include
reference to many of the transactions within a business such as processing a purchase order that
are part of e-business.
In an international benchmarking study analysing the adoption of e-business in SMEs the
Department of Trade and Industry emphasises the application of technology in the full range of
business processes, but also emphasise how it involves innovation. They describe e-business as:
... when a business has fully integrated information and communications technologies (ICTs)
into its operations, potentially redesigning its business processes around ICT or completely
reinventing its business model e-business is understood to be the integration of all these
activities with the internal processes of a business through ICT.
DTI (2000) See Chapter 6 references.
So e-commerce can best be conceived as a subset of e-business and this is the perspective we will
use in this book. Since the interpretation in Fig 6.2(b) is equally valid, what is important within
any given company, is that managers involved with the implementation of e-commerce/ebusiness are agreed on the scope of what they are trying to achieve!
Activity 6.2 (P. 223)
To examine estimates of the current and future size of e-commerce trade and critically
review the validity of these estimates.
No solution required.
Activity 6.3 (P. 227)
Explain the variation in online purchases for different products shown in Figure 6.6
using the Electronic Shopping Test.

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Note: This activity should not refer to Fig 6.6 but to Fig 6.7.
Rather than referring to each product on a case by case basis, it could be suggested that students
consider three groups. High proportion of online purchases (more than 20% of online users have
purchased); medium (5-20%) and low (less than 5%).
The characteristics of products within each group can then be assessed. Within the first group the
product characteristics are such that the product is standardised. It can be argued that some
comparison is needed as part of the buying process, for example in selecting a book, but the
reviews online are sufficient to enable this choice to be made. Books can be bought from new
online brands such as Amazon or existing retailers. Consumer attributes are such that it is
straightforward to purchase a book online.
Alternatively, in the group with the low proportion of online purchases (<5%) the products are
more complex (e.g. financial services) or have characteristics that are less amenable to online
purchase (e.g. cars, cosmetics).
Activity 6.4 (PP. 260 263)
For the second example of outdoor equipment, develop a matrix showing the
dimensions and categories of information in the same form as that for the car sales
matrix. List your assumptions where insufficient information is available.
The matrix produced will be similar to that of Table 6.5 (P. 261) except for these columns:
Locations this can also include retailers, mail-order and online as different channels for
purchase.
Products Product category, from Fig 6.27, e.g. Tents, back packs, etc.
Other good areas for this analysis that students can relate to are financial services and holiday
products. All are similar in areas other than product characteristics.

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Case Studies
Case Study 6.1: European SME adoption of e-business (P. 228)
1. Summarise the current usage of the Internet by SMEs according to the article. Use
online resources to find specific figures for your country.
2. Discuss the reasons for the lower than expected take-up of Internet services
amongst SMEs.
3. Identify the factors that will be important in determining the future use of the Internet
by SMEs.
1. A suitable location for finding further information is the summary of reports at Nua
(www.nua.com/surveys). E-business should be categorised according to the different levels of
usage described earlier in Chapter 6 (PP. 222 227) i.e.
Access to the Internet
Use for sourcing products
Use for managing buying process
Use for buying online transactions, unintegrated systems
Use for buying online transactions, integrated with internal systems.
We return to this topic in the chapter on e-commerce strategy (see Fig 14.2, P. 574) for a further
example.
2. Some of the reasons are given on P. 228 (right-hand column)
Overestimates of demand from consumers for purchasing online.
Technology confusing for managers in a small business who do not have the time or
inclination to learn about it.
On P. 229 (left-hand column) research is quoted suggesting that smaller businesses are less
convinced by the cost-effectiveness of introducing new technology.
3. On P. 230, the financial harmonisation of Europe is thought to be one driver. However, given
that the Internet hype has failed to migrate many SMEs online, the main driver which will make a
difference is when SMEs become convinced that they are losing business from not having an
online presence.
Case Study 6.2: Tesco develops buy-side e-commerce (P. 234)
1. What benefits does Tescos information exchange offer to the retailer and its
suppliers
2. What differences have the use of TiE added over the original EDI system?
3. Discuss reasons why only two of Tescos suppliers have fundamentally altered the
way they work as a result of TiE.

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1. Benefits to Tesco:
Reduced lead times seven to three days
Shifts management of supplying product to supplier this in turn
Reduces inventory
Improves product availability
Gives more power over suppliers
Benefits to suppliers:
Can monitor demand in real-time and then have more time to react to ensure product is
delivered to customers
Can analyse sales by store or TV region which is important for promotions (St Ivel has
reduced these costs by 30%)
Gives a catalyst to change their processes (although only two have done so)
Arguably strengthens their relationship with Tesco (soft lock-in)
2. Information flow was one-way with the original system and not real time. Now there is a twoway information flow which can be monitored in real time. This enables better forecasting and
the analysis which has been used for promotions.
3. This is not clear from the case, but it can be suggested that inertia (conservatism) and the
differences in links to a range of suppliers have caused this.
Mini Case Study: Retail applications of TPS by Sainsburys (P. 240)
1. Draw a diagram summarising the links between all the parties who access
Sainsburys TPS.
2. What benefits will Sainsburys gain compared to the time before the introduction of
TPS?
3. Can you think of any problems with using TPS so extensively? What can be done to
counter these problems?
1. This diagram should be similar to Figure 6.12, with the following parties shown:
customers (possibly via the Internet or through checkout assistants);
suppliers (direct and indirect via merchants);
branch managers and departmental managers at each branch;
distribution and logistics managers at head office and regional distribution centres.
2. Benefits at different management levels include:
Operational:
better customer service through better availability of products for customers and better quality
of perishable products;
lower cost of managing supply chain through just-in-time ordering in response to fluctuations
in demand.

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Tactical:
analysis of customer buying behaviour in response to sales promotions and loyalty card
schemes;
better matching of fluctuating demand and supply.
Strategic:
increased customer loyalty from card schemes and better customer service;
related services such as banking can be tied into TPS;
more choice of and competition between suppliers;
better cost management.
3. The problems anticipated are those that occur when the system fails since it is so critical to
customer service. Losses in sales on the day of failure and loss of loyalty could result. The
solution is the careful testing of new systems and building fault tolerance into new systems. For
example:
ensuring the system can deal with a power failure (extra generators);
providing dual or mirrored servers or disks that can take over in the event of failure;
well-defined service levels with the IT and networking suppliers to agree that problems are
resolved quickly;
ensuring that the local system is decoupled from the company network, so that if the company
network fails the system in the branch can continue to operate.
Case Study 6.3: Cambridge Consultants reduce costs through e-procurement (P.
265)
1. Given the scale of the purchasing operation at Cambridge Consultants, what benefits
do you think e-procurement has brought?
2. Why are procurement costs currently as high as 60 to 100 per order?
3. How are procurement costs reduced through e-procurement?
4. What staff benefits occur for Cambridge Consultants as a result of e-procurement?
1. The large number of suppliers (4,000) and range of items (needed for over 120 projects) mean
that many purchases are made annually. If it is possible to reduce the cost of each one, then large
potential financial savings may be possible. Through using e-procurement it is also possible to
reduce the cycle time for ordering items for products which will help achieve on-time completion
of projects and satisfied customers.
2. Procurement costs were high since there were many stages involving identifying needs
paperwork, together with hand-offs, required between up to 8 to 10 staff in the process.
3. E-procurement enabled distributed purchasing that required less involvement from purchasing
staff and hence faster ordering. The use of paper has been eliminated. Combined reductions in
staff time and physical resources have helped reduce purchase costs to an average of 10 per
order.

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4. The benefits to the internal customers at Cambridge Consultants include ordering whenever
required (out-of-hours) and more flexibility in the delivery of different items meaning that urgent
items can be delivered more rapidly since they are not awaiting other elements of a combined
order.

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Exercises (PP. 278 279)

Self-assessment exercises
1. Distinguish between e-commerce and e-business and explain what are meant by buyside and sell-side e-commerce.
Can best be explained by referring to a diagram of the different elements shown in Fig 6.1 i.e.
sell-side e-commerce
buy-side e-commerce
internal use of electronic communications to support business processes.
E-business is generally understood to include all three elements. E-commerce is commonly used
to refer to either the first one or first two of these elements, but less commonly the third. Ebusiness is broader in scope than e-commerce.
2. Summarise the consumer and business adoption levels in your country. Outline the
reasons why a business may wish to adopt e-commerce. What seem to be the main
barriers to adoption for businesses and consumers?
Cyberatlas (www.cyberatlas.com) is a good source of country-specific information. For business,
the main barriers are highlighted by the DTI (2000) survey:
lack of imperative;
security risks.
For consumers, the Which report (2000) highlights fears about security and privacy as well as the
lack of a perceived need.
3. Summarise the impact of the introduction of e-business on different aspects of an
organisation.
One approach to this question is to refer to the McKinsey 7S framework:

Structure how will be the e-business change be managed? Is a separate division required or
can the change be matrix managed (Chapter 10)?
Systems Do new operating procedures or business processes need to be introduced? Can
existing IS be used to implement change or will new systems be required?
Style Is the current, possibly conservative, style of the company consistent with the way the
company wants to project its image? Will decisions be made fast enough? Will risks be taken
to trial new business models and new technology?
Staff Is the appropriate mix of staff available?
Skills Are the correct skills available internally? What training is required? Do we need to
outsource some services?
Superordinate goals this refers to the higher goals of the company that may be encapsulated
in the mission statement. In modern parlance, do the senior manages get the significance of
the Internet and will they act?
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A possible criticism of the 7S model is that it is internally focused. How well the company forms
and leverages partnerships with suppliers and customers is now seen as a key element of strategy.
Related to this is how well the company responds to the industry restructuring that has occurred
as part of e-commerce. Can it take advantage of disintermediation and reintermediation within the
industry.
Alternatively, e-business can be reviewed by referring to different functional areas:
Procurement
Production
Marketing
Finance
Human resources.
4. Describe the purpose of workflow management and groupware in an e-business
context.
Both of these solutions are used to increase the efficiency of internal processes and are
implemented as intranet/e-mail systems. The type of processes include:

Procurement authorisation of new purchases

Production alerts about problems
Marketing managing customer interactions during purchase, managing product dispatch,
managing new product development
Finance integrating with procurement and marketing systems
Human resources online systems for booking holidays and training courses (administrative
workflow).

5. Evaluate the role of transaction processing systems in an organisation.

TPS perform routine transactions which serve the operational level of the organisation, e.g. sales
order processing. Although supporting routine transactions, TPS is often essential to the operation
of the organisation.
6. How can information systems support the manufacturing process?
Support for the manufacturing process includes:
Production planning and materials management. Information is provided on the progress of
work through the manufacturing system in relation to the due-date for a customer order.
Enables plans to be developed for resources (e.g. labour, materials, equipment) needed for
production and to schedule order and quantity of components on a day-to-day basis. Materials
management approaches include MRP, JIT and OPT.
Product/service design. A database of information required for aspects such as customer
needs and material costings for the design process. CAD provides graphic design assistance.
Facility design. Software allows the use of the SPC technique for quality control.

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CIM. Provides a range of facilities coordinated over a network system using the
manufacturing automation protocol (MAP).

7. Explain how decision support systems can support different parts of an organisation.
Decision support systems can support the full range of organisational decisions from strategic
through tactical to operational. We can draw on the following examples from different functions:
Manufacturing see question 6, above
Marketing see question 8, below
Finance identifying debtors
8. Which information systems tools can be used to support the marketing function?
Marketing information systems include:
Sales information systems. Employees involved in the sales area are required to identify
potential customers, negotiate the sale of goods and services with those customers and
provide a follow-up service. Systems are available to support each of these tasks. Prospect
information systems provide lists of potential customers by categories such as product range
or geographic area.
Distribution information systems. Speed of delivery is often an important aspect of service to
the customer. In order to ensure this, it is important that tracking systems are in place which
can locate products during the distribution process.
Sales order processing (sop) systems. The sales order processing (SOP) system is usually
based in the financial area and provides a variety of data which can be used for marketing
purposes such as assessing the timing and value of orders from customers. These can be used
for applications such as sales forecasting which is a major input into the sales planning
process. Other data supplied by the SOP system includes inventory levels. If inventory levels
are high then this might trigger a discount programme for a particular product line.
Sales and campaign management information systems. The sales management information
system provides information in support of decision making at the tactical level. It will hold
information on such aspects as sales performance by geographic area, by product group and by
sales person. This information can be used to determine sales effort in different areas and
products and level of bonus payments to an individual sales person. The data can also be used
to investigate the strength of relationship between such factors as customer types and product
sales. This information can be used as the basis for a marketing plan based around an
advertising and promotion scheme aimed at a particular customer segment, (e.g. targeting of
designer label drinks at people in the 1825 age range).
Product pricing information systems. The price of a product will be dependent on a variety of
factors such as the cost of producing the product or providing the service, the required profit
margin and the price of competitors goods. The price may also be affected by a marketing
strategy to build market share by lowering the price. The product pricing information system
will collate information on costs and predicted market demand at different price points and
discounts in order to support the pricing decision. More sophisticated software in the form of a
pricing model enables the user to input various market and product attributes and based on
relationships formalised in the model provides a suggested price.
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Sales forecasting information systems. At a strategic level it is necessary to provide sales

forecast data in order to help form the long-range strategic plan. Sales forecast data is
essential in order that demand can be met and resource employed in the correct areas. For
instance, marketing needs to inform other functions such as operations of predicted demand
so they can organise their resources to meet this demand. The information system is required
because of the range of data that goes into the forecast and the need to continually update the
database in order that the forecast is as accurate as possible.
Marketing Research and analysis information systems. In order to ensure that there is a
demand for the goods and services of the organisation it is necessary to undertake market
research. For a new product this may include information on demographic changes and
customer feedback from questionnaires and interviews that indicate customer preferences.
Competitive tracking. Knowledge of competitors prices, products, sales and promotions is an
important factor in the development of a marketing strategy. For example, the organisation
would need to consider its reaction to a competitor move to build market share.
Telemarketing software. This software is designed to dial potential customers automatically
based on customer files maintained in a database. The software will also allow notes to be
stored on customer requests, generate follow-up letters and display information gathered on
the customer for reference as the call is taking place.
Geographical information systems (GIS). GIS are used to display information on maps.
Performance of distribution channels such as branches can be shown by colour coding them.
Colour-coded areas on the map can be used to show variation in the demand of customers for
products or the characteristics of people living in different areas such as average disposable
income.

9. Explain the reasons for the adoption of enterprise resource planning systems by
organisations.
ERP provides a single package which replaces a number of separate packages. This allows better
integration between modules and simplified support and maintenance. The ERP system typically
supports several functional areas or different parts of the value chain such as inbound logistics,
manufacturing, distribution, sales and finance.

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Discussion questions
1. Discuss the following statement with reference to how an organisation should react to
the Internet. Is the Internet a typhoon force, a ten times force, or is it a bit of wind? Or is
it a force that fundamentally alters our business? (Andy Grove, Chairman of Intel).
Suggested approach:
This statement is useful in that it indicates the impact of the Internet will vary according to the
type of business that an organisation is in. Students should look at a range of industries from
those where the impact is high, e.g. media and information services to low e.g., retailer. The ES
test referred to on P. 277 can be used for consumer industries. Examples can be taken where those
that have reacted e.g. EasyJet or General Electric in comparison to those that havent. The
analogy may also be apt since the Internet phenomenon may be transitory. This can also be
considered.
2. Data warehouses are only the latest in a long line of reporting tools. They will not
make a significant impact on business. Discuss.
There is a strong argument that data warehouses are simply a repackaging by marketers of
existing technologies. Since companies started storing operational transactions there has been a
desire to analyse this data. Software has been available to achieve this and is has been referred to
as decision support systems, executive information systems, or more recently OLAP. If the
functions of these systems are reviewed they are similar; providing summary reports, graphs and
drill-down to view more detailed data. Data warehouses themselves are now being re-branded as
business intelligence systems.
The counter argument would be that data warehouses have introduced new features such as data
mining. They have also introduced a different approach to how businesses approach data analysis.
Differences include:
The scale of data warehouses all operational data is stored for a long time period;
The offline storage of information separate from the operational system;
The storage of data from different functional parts of the organisation;
The detailed breakdown of data into dimensions and categories;
Different analysis techniques such as data mining.
On balance, our opinion would be that data warehouses have introduced new techniques and
raised the profile and expenditure on decision support systems.
3. Workflow systems are currently mainly in large organisations. This is likely to remain
the case. Discuss.
To answer this question adequately requires a distinction between large-scale production
workflow systems and smaller scale administrative and ad hoc workflow systems. The former
tends to be for functions such as operational processing of customer services such as issuing a
loan or processing an insurance claim these tend to be the preserve of the large companies. The
latter are e-mail enabled administrative applications for purchase order processing or in travel
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claims for example. These could be used by small companies since the expenditure will be
justified by the cost. Given the above, the arguments against the first statement are weak, but
there are stronger arguments against the second statement. As more small companies use e-mail
and intranets and as the cost of administrative workflow falls, adoption in small companies will
grow. This is less likely to be the case with production workflow which is likely to remain
expensive for small to medium organisations.
4. Neural networks, fuzzy logic and genetic programming are some of the latest artificial
intelligence ideas. Are they likely to remain lab-based products, or is there potential for
their use in industry?
This question is difficult to answer since there are relatively limited applications of these
technologies. Their development has tended to be in academic labs, albeit in partnership with
companies. There are no examples of mass-market applications for these products, rather they are
used in niche markets such as assessing financial risk. However, it is an oversimplification to
suggest that they are solely lab based they are widely used within this and other niches. A full
answer will review how each of the techniques can be used after reviewing what is meant by
each.
Neural networks. Hardware or software that attempts to emulate the processing patterns of the
biological brain.
Fuzzy-logic. Rule-based AI that tolerates imprecision by using non-specific terms to solve
problems.
Neural networks. Most widely used in industry, genetic algorithms are a relatively recent
development.
5. Enterprise resource planning software is likely to replace packages used in a single
area of the organisation, such as accounting, logistics, production and marketing.
Discuss.
ERP is likely to be restricted to larger organisations due to the cost of customisation of the
software for the client. Mass produced and thus cheaper off-the-shelf packages are likely to be the
most suitable option for the small organisation. Enterprise resource planning (ERP) software is a
single system which gives applications for all the major business functions discussed in this
chapter such as production, distribution, marketing and sales, finance and human resources
management. It is normally purchased as an off-the-shelf package with modules for each major
business process or business function which are tailored by a consultant. A single package
typically replaces many different previous packages. The benefits of this approach include:
reduced cost of buying from a single supplier;
better transfer of information within the organisation since all the modules of the system are
compatible;
simplified support and maintenance through a single supplier;
use of best of breed solutions employed by other companies.
The main disadvantage of the use of ERP systems seem to be the high costs charged by suppliers
due to the demand for this type of system. This high demand has also given rise to skills
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shortages. The other disadvantages of ERP systems are shared with all off-the-shelf systems,
namely, that the business often has to change its processes or way of working in order to fit the
way the software works. This may not present a problem if a company is looking to re-engineer
its processes since then the ERP software can provide a framework.
Owing to the high cost of ERP solutions only large companies can afford the cost of the software
and the consultants, which will often be measured in millions of pounds. Smaller companies can
take advantage of the features of integrated accounting packages which now provide modules
beyond those of the basic accounting package.
In summary, there is overwhelming evidence that ERP will replace functional applications in
large organisations. In smaller organisations the role of ERP applications is likely to be assumed
by integrated accounting packages with similar functions.

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Essay questions
1. Write a report on how an organisation can evaluate the impact of the Internet on their
business
Suitable frameworks to use are:
How appropriate are: buy-side, sell-side and in-side applications (P. 221)?
What is the demand for different types of e-business services (P. 222)?
Assess drivers and barriers (P. 232) and benefits (P. 234)
Assess suitable e-business applications (P. 237 and subsequent)
2. Review the changing tools available for decision making at a strategic level within the
organisation. What does this mean for senior managers?
There is a move away from EIS to the use of OLAP to interrogate data warehouses. Question 2 in
the Discussion questions section discusses whether or not this represents a genuine change in
facilities available to users. For senior managers there is now a greater choice of tools available.
The data warehouse provides the facility, in a single system, to analyse data from across an
organisation and to drill-down to identify the source of problems. Such facilities were not always
available in earlier generations of EIS.
3. Was the promise of expert systems in the 1980s delivered in the 1990s? Justify your
answer.
Expert systems have not widely replaced human experts in many fields as had been envisaged. It
has been found difficult to match the flexibility of humans. Expert Systems are most relevant to
complex problems in a well-defined subject area, such as assessing the credit risk of a loan
applicant. The justification is that ES are not used in the majority of businesses.
4. How must transaction processing systems be managed, given their mission-critical
role in many organisations?
TPS are usually essential for achieving sales and providing customer service. It is important that
they perform well. This means:
Availability throughout the time customers place orders.
Good performance so that customer details cannot be accessed.
Good quality data.
To achieve good availability:
The network connections must be reliable.
The software must be reliable.
Good support arrangements with suppliers must be in place.
5. Critically assess the importance of data warehouses to large organisations. Are they
relevant for the small or medium enterprise?
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The benefits that are provided by data warehouses were described in Discussion question 2. In
this question, the importance of data warehouses as a management tool could be contrasted with
TPS which are often mission critical for the large organisation. In this context data warehouses
can be considered to be less important. Data warehouses are less relevant for small and medium
organisations unless they have a wide variation in customer segments, product variants or sales
territories. In this case spreadsheet and personal databases will not be adequate.
6. Do you believe that the advantages of enterprise resource planning applications
outweigh their disadvantages? Illustrate your answer with reference to company
examples.
The benefits of ERP include:
Reduced cost of buying from a single supplier.
Better transfer of information within the organisation since all modules of the system are
compatible.
Simplified support and maintenance through a single supplier.
Use of best of breed solutions employed by other companies.
The main disadvantage of the use of ERP systems seem to be the high costs charged by suppliers
due to the demand for this type of system. This high demand has also given rise to skills
shortages. The other disadvantages of ERP systems are shared with all off-the-shelf systems,
namely, that the business often has to change its processes or way of working in order to fit the
way the software works. This may not present a problem if a company is looking to re-engineer
its processes since then the ERP software can provide a framework.
Owing to the high cost of ERP solutions only large companies can afford the cost of the software
and the consultants which will often cost millions of pounds. Smaller companies can take
advantage of the features of integrated accounting packages which now provide modules beyond
those of the basic accounting package.
In summary, for large companies, the advantages of ERP systems would appear to outweigh the
disadvantages, but they are too costly for smaller companies.

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Examination questions
1. Explain the relationship between the concepts of e-commerce and e-business.
E-commerce is generally understood to be a subset of e-business. E-commerce refers to financial
and non-financial transactions between organisations. These transactions are often considered in
the context of a supplier organisation distributing and selling its products to consumers. Ebusiness includes transactions from a buy-side and sell-side e-commerce perspective and also the
use of communications technology to improve internal process efficiencies.
2. Distinguish between buy-side and sell-side e-commerce and give an example of the
application of each.
Buy-side e-commerce refers to electronic transactions concerned with the purchase and inbound
logistics of goods such as a supermarket coordinating purchases from its suppliers. Sell-side ecommerce concerns transactions related to the sale and distribution of goods such as a
supermarket selling direct to its customers.
3. Summarise three reasons why a company may wish to introduce e-commerce.

Cost reductions in purchasing or selling through less human involvement and lower resource
costs.
Increased efficiency enabling faster cycle times for purchasing or sale of goods.
Capability to sell to overseas markets or previously untargeted markets

4. Describe three of the main barriers to adoption of e-commerce by consumers and

suggest how a company could counter these.

Security fears fraudelent use of credit cards.

Privacy fears personal data held by companies or criminals.
Cost of access devices and online costs.
Lack of perceived need (costs do not exceed the benefits).

5. What is the purpose of data warehouses?

Data warehouses are large database systems (often measured in gigabytes or terabytes) containing
detailed company data on sales transactions which are analysed to assist in improving the
marketing and financial performance of companies. This can be achieved through identifying the
most profitable customers and targeting them or optimising the product mix to fulfil customer
needs better.
6. How can workflow software and groupware assist in re-engineering an organisation?
Both technologies can support the restructured organisation that often occurs as a consequence of
re-engineering. Groupware functions such as e-mail and document sharing can help
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communication. Workflow software can be used to support a process by managing the subtasks
that make up a process. It can also manage routing of information between staff and provide
statistics on the efficiency of a process.
7. What special precautions need to be taken when using IT for managing human
resources?
It is important that security measures are taken for human resource IT systems to protect the
privacy of such information as salary details.
8. Define an enterprise resource planning application. Name two main disadvantages of
this type of approach.
Enterprise resource planning software provides integrated applications for major business
functions such as production, distribution, sales, finance and human resources management. It is
normally purchased as an off-the-shelf package which is tailored by a consultant. A single
package typically replaces many different previous packages.
The main disadvantage of the use of ERP systems seems to be the high costs charged by suppliers
due to the demand for this type of system. This high demand has also given rise to skills
shortages. The other disadvantages of ERP systems are shared with all off-the-shelf systems,
namely, that the business often has to change its processes or way of working in order to fit the
way the software works. This may not present a problem if a company is looking to re-engineer
its processes since then the ERP software can provide a framework.

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