Management Accounting and E-Commerce
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What is electronic commerce?
Electronic commmerce can be understood to encompass any and all business activities and transactions, both internal and external, over the Internet or Internet-type computer networks.
Is management accounting ready for elctronic commerce?
Development in Internet technology and electronic commerce will have a profound effect on the role of mgmt accounting systems in decision support, internal auditing, and control.
THE IMPORTANCE FO INTERNET TECHNOLOGY
- Intranets: internal company networks using the Internet technology.
- Extranets: refer to secure virtual communication channels established over the Internet among business partners.
- Internet technology is likely to become increasingly more hospitable to electronic commerce.
NOW THE NETS FACILITATE LINKS IN THE VALUE CHAIN
- The generic value chain framework encompasses a series of cost/benefit analyses of many sequences of discrete activities that are performed throughout an entire chain of processes.
- Reliable, up to date information must flow among the business units in the value chain.
- Internet technology is emerging as the ideal tool for operating these information links.
ELECTRONIC DATE INTERCHANGE (EDI) OVER THE INTERNET
- U.S and international companies realize significant cost savings and gains in effectiveness by using some form of Electronic Date Interchange systems.
- Small companies cannot afford the setup investments in private network connections, protocol definitions, and software development required for EDI.
- The objective of open standards for EDI over the Internet is to ensure the widest range of interoperational capabilities among diverse EDI packages over the Internet.
ENHANCED ELECTRONIC LINKS TO SUPPLIERS AND SUBCONTRACTORS
- The General Electric alternative to EDI over the Internet is known as GE's Trading Process Network(TPN).
- GE's Purchasers use TPN to disseminate requests electronically for bids including instructions as to the type and scope of information required for bidding. In turn, suppliers bid online.
- The system performs an initial screening of the bids.
- Processing time is shortened significantly, and a substantially larger number of bids can be solicited and reviewed.
ENTERPRISE-WIDE INFORMATION SYSTEMS AND THE INTERNET
- "enterprise-wide" information systems using Internet technology are available commercially.
- They are decision-support systems that initially focused on a company's supply chain but have increasingly broadened their capabilities to include enterprise-wide processes.
- They are fast becoming as essential to the functioning of modern companies as the nerve system is to the functioning of a human being.
- Some of the best known systems on the market:
- SAP R/3-http:/www.sap.cm
- Oracle Applications - http:/www.oracle.com
- People Soft-http:/www.peoplesoft.com
CAPABILITIES OF INTERNET BASED ENTERPRISE INFORMATION SYSTEMS
- System Applications Products(SAP): The system is designed to intergrate numerous data processes by covering a wide range of customer-to-business, business-to -business, and intranet applications in financial accounting, supply chain mgmt, and human resources functions.
- Business Application Programming Interfaces(BAPIs): Provide access to the core functions of SAP. The BAPIs set standards for direct communications between suppliers.
- In the context to business-to-business transactions, Just-in-Time(JIT) systems are faciliated.
- In SAP, KANBAN's and their status are displayed by KANBAN's boards.
ABOUT INTERNET ARCHITECTURE OF ENTERPRISE INFORMATION SYSTEMS
- These systems are built on the principles of clients/server computing. Layered architecture of these systems allows their natural integration with the internet withour drastic changes in the core system architecture.
- The new Internet-based architecture of enterprise information systems reduces the deployment of client software updates to a nonissue.
IMPLICATIONS FOR MANAGEMENT ACCOUNTANTS
- Information system are specilized enough to meet specific needs of individual business units, but by using Internet technology they can interact freely and integrate diverse components of individual business units.
- Internet-based enterprise-wide information systems provide mgmt accountants with a working set of comprehensive intraorganizational, interorganizational, and global decision/support systems.
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