Conception and Implementation of Integrated Industrial Enterprise System of Electronic Business

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1 CDQM, An Int. J., Volume 18, Number 2, 2015, pp COMMUNICATIONS IN DEPENDABILITY AND QUALITY MANAGEMENT An International Journal UDC :339]::005 COBISS.SR-ID Conception and Implementation of Integrated Industrial Enterprise System of Electronic Business Slavoljub Milovanovic 1, Ivana Markovic 1 and Ivana Kostadinovic 1 1 University of Nis, Faculty of Economics, University of Nis, Trg kralja Aleksandra 11, Nis, Serbia smilovan@eknfak.ni.ac.rs, ivana.markovic@eknfak.ni.ac.rs, ivana.kostadinovic@eknfak.ni.ac.rs accepted May 1, 2015 Summary In last decade, turbulent technological changes are radically transformed manufacturing management and business of industrial enterprise. First generation of manufacturing information systems of industrial enterprise is dedicated to material resources planning. However concept of manufacturing information system (IS) is improved so that supports management of all manufacturing resources and in later phase of transformation of the system it enables integration of all enterprise departments, business functions and resources through ERP (Enterprise Resource Planning) concept. Manufacturing must be related to the other business functions and analogous information systems. The most important relation is between manufacturing and marketing, because manufacturing function has to design and make products which can be sold on a market. However, newish transformation of industrial enterprise IS goes toward its expansion with electronic commerce applications that enables implementation of integrated system of electronic business. In that light we may view ERP integration with electronic commerce which does not include only sale and the other marketing activities, but materials supply by internet technology support. Key words: Electronic business, electronic commerce, IT, ERP. 1. INTRODUCTION Dynamic technological and business changes are radically transformed management of industrial enterprise. There are various manufacturing enterprises depending of industry where they belong. Manufacturing processes in various industries have specific characteristics. For example, process of paper manufacturing is greatly different in comparison with production of computers or production 13

2 of cars. In addition there are many activities included in manufacturing such as inventory management, creation of machine schemes, human resources management, robotics, plant management, quality control etc. In order to be effective in support to decision making, industrial enterprise IS must integrate all material, human and information resources from material procurement, through manufacturing, until selling of products and after sale services to customers. In its first phase of evolution, enterprise IS is dealt only with material resources but it has been improving to support all manufacturing resources while in later phase of transformation it enables integration of all enterprise departments, business functions and resources through ERP (Enterprise Resource Planning) concept. ERP concept is also changed so the newish transformation of industrial enterprise IS goes toward including electronic commerce (e-commerce) and development of integrated electronic business (e-business) system [2]. Implementation of higher level of business resources integration is great challenge for all industrial enterprises because an enterprise IS is probably developed through long period of time and therefore consists of various technologies, applications and data formats that are often incompatible. For example, modern information technologies related to internet (intranet, extranet, web portals etc.) are used in promotion, advertising and selling. Development of the technologies is the new challenge for enterprise executives because contemporary web applications and technologies enabling enterprise e-commerce also should integrate in existing enterprise IT infrastructure [18]. E-business and e-commerce changed definition of an integral enterprise IS. ERP was traditionally focused on business functions, but now e-business leads the system out of enterprise borders where the greatest challenge for the enterprise is not development of internet space for customers but expansion of ERP system on B2B (Business-to-Business) and B2C (Business-to-Consumers) e- commerce. New extended an enterprise IS is created by integration of the enterprise ERP system with e-commerce that makes business structure which is more effective and competitive than traditional business structure and narrow B2B connection [19]. Terms of e-commerce and e-business are very often comprehended as synonyms in business and academic community. Regardless of similarity between these terms and concepts, there are some differences that have not only theoretical implications (precise definition of the terms) but practical implications (definition of goals and scope of IS projects). Namely IS project goals could be automation only commercial transactions (e-commerce) or automation not only trade transactions but the other business activities and communications (e-business) [14]. Regardless of these definitions, integrated e-business system enables significant improvement of business performances through reinforcing relations between an enterprise and its business partners. Except increasing of sale, marketing and procurement effectiveness, e-business causes efficiency by improving customer service, reduction of costs and modernization of business processes. Beside this, e-business makes strategic business actions focused on a customer resulting in common business benefits. Enterprises uses internet for support to customer relationship management and supply chain management that enables them to connect their businesses with clients and suppliers [20]. In order to explain and analyze concept and implementation of integrated industrial enterprise system of electronic business, this paper is organized in six sections. In next section we will explain evolution of industrial enterprise information system. Third section is dedicated to structure of integrated industrial enterprise system of electronic business consisting of following components or subsystems: Supply Chain Management (SCM), Customer Relationship Management (CRM), Production and Industrial Management (PIM), Enterprise Resources Planning (ERP), Electronic 14

3 Commerce (EC) and Business Intelligence (EC). Fourth section analyses necessities and advantages of integration of ERP system with e-commerce while fifth section explains process of strategic planning of e-business and implementation of integrated industrial enterprise system of electronic business. Sixth section is dedicated to concluding remarks. 2. EVOLUTION OF INDUSTRIAL ENTERPRISE INFORMATION SYSTEM IS supporting production and industrial management (PIM system) has central role in implementation of industrial enterprise information system because it controls material procurement, its processing into finished products through manufacturing process, and at the end, processes and controls information related to the finished products that marketing and sale function tries to sell on market. Enterprise PIM system was going through process of integration and transformation. In first phase, main role in PIM system plays material resources planning that is later extended and integrated with planning and controlling the other manufacturing resources. Material procurement is the base of manufacturing process of every industrial enterprise. Because of that, PIM system of every industrial enterprise must have subsystem or module enabling continuous supply of manufacturing with required materials. The subsystem that serves for planning of required material supplies is called MRP (Material Requirement Planning) module or software. In addition, JIT (Just In Time) strategy of materials ordering and supply can be used [1]. MRP software is set of software applications serving for identification of inventory lack, determination of optimal quantity for ordering and sending procurement orders to right materials, in right quantity and in right time be in warehouse. By using the software, manufacturing deadlock due to lack of materials, unnecessary excess of materials, overtime work or some other extra costs that is not necessary for timely provision of materials are eliminated. As a logical step toward improvement in manufacturing management, MRP-II (Manufacturing Resource Planning) software is developed. This software that provides planning of all manufacturing resources is developed from MRP software and makes core of PIM system. Until the present time MRP-II software satisfying requirements of various enterprises is developed (for example, enterprises with mass production, enterprises with serial production, enterprises that manufactures by order and distribution enterprises) [4]. MRP-II software extends MRP concept to finance, marketing and the other business functions although stay mainly in domain of accounting. Fully developed MRP-II software includes modules obtaining material requirement planning, control of manufacturing process, inventory management, capacities planning and modules for access to data on costs through integration with financial and accounting IS. First MRP-II applications are implemented on classical minicomputers and mainframes while later the applications are implemented in Client/Server (C/S) architecture due to higher flexibility [5]. Regardless of this transformation of classical MRP-II applications into C/S applications, some software vendors are adjusted their applications to new concepts of manufacturing, such as ERP (Enterprise Resource Planning) concept that supports planning whole enterprise resources and manufacturing management oriented to customers. Disadvantages of MRP-II applications are weak coordination between sale and manufacturing department. When vendor receives order that implies modification of existing product, then the product must be backed from warehouse to manufacturing for reprocess. As requirements for modifications are increasing, great probability is that product design department is unsynchronized with manufacturing machinery. ERP software corrects these disadvantages. For example, ERP enables direct connection of specific requirements of customers with quality control system in manufacturing process and with product design system. 15

4 Therefore, an ERP system gives to an enterprise many benefits such as increasing efficiency, quality improvement, increasing productivity and profitability. Main aim of the system is to consolidate information of all departments and functions of the enterprise in one integral IS that satisfies all business needs of the enterprise. All business processes are controlled with unique software architecture in real time. For example, when the enterprise receives order, ERP allows instant access to data on inventory, manufacturing process, credit history of customer and prior orders. ERP system can be implemented on two ways: autonomous application development or purchasing commercial integrated software. For enterprises that choose the second option there are many software solutions on market but the most famous software applications are: SAP R/3 from SAP, software products of CA, Inc. (formerly Computer Associates) and Oracle Corp [10]. ERP software is developed through two phases or generations. Even definition of ERP shows that disadvantage of the first generation of ERP software is weak support to e-commerce. Although interfaces connecting ERP software with e-commerce applications are created, the first generation of ERP systems is not designed for complete support to supply chain in e-commerce. It is mainly transaction-oriented and does not provide models for quick response to instant changes in bid, demand, workforce or capacities and all these things are typical for e-commerce. In addition, ability of planning was minimal because these ERP systems do not provide continual planning that is most important for supply chain management. Because of these facts, the second generation of ERP systems are developed. The aim of these systems is to increase efficiency in transaction processing, improvement of decision making, support to e-commerce and communication with customers and further transformation of enterprise business. ERP software of the second generation enables mainly small and medium enterprises to redesign business processes. By electronic connections between plants and distribution centers this concept causes changes expressed in creation of virtual enterprises and improvement in supply chain management [15]. Thus, SCM systems, CRM systems and BI systems are emerged as complements to ERP systems in order to provide intelligent support to decision making and e-commerce. An enterprise can create plan with support of this extended and complemented ERP system and examine influence of its actions on whole supply chain including customer demand. Evolution and transformation of industrial enterprise information system toward integrated system of e-business is presented on Figure 1. Integrated system of e-business ERP system PIM MRP-II MRP SCM CRM BI E-commerce Figure 1. Evolution of industrial enterprise information system 16

5 Therefore the ERP system obtains unique interface for management of all daily activities achieving in manufacturing from order entry, to coordination of deliveries and after sale customer services. The newish ERP systems incorporate ability of interaction with customers and management of communication with suppliers and customers that belong to e-commerce domain. As we already stressed, great expansion of internet in last decade is gave great opportunities for e-commerce development so connection of ERP software to e-commerce applications is newish phase of integration from which integrated enterprise e-business system should be developed. Components of the system are analyzed in the next section. 3. CONCEPT AND STRUCTURE OF INTEGRATED INDUSTRIAL ENTERPRISE SYSTEM OF E-BUSINESS As we mentioned previously, transformation of industrial enterprise IS is going toward implementation of an integrated system of e-business. The system is result of connection and integration of ERP system with e-commerce and the other components. Therefore the system is consisted of following components (modules) or subsystems (Figure 2): Supply Chain Management (SCM), Customer Relationship Management (CRM), Production and Industrial Management (PIM), Enterprise Resources Planning (ERP), Electronic Commerce (EC) and Business Intelligence (EC). Supply Chain Management. In order to timely deliver products to customers, enterprises intend to accelerate business processes in supply chain management (SCM). SCM integrates logistical requirements of suppliers, distributors and customers in cohesive process which enables reduction of delivery time and inventory costs. There are many IT and software solutions supporting integration, optimization and management of supply chains [3]. IT, particularly internet technology, enables connection of all participants in supply chain. IT makes SCM more efficient by integration of demand planning, forecasting of manufacturing, material procurement, order processing, inventory allocation, order fulfillment, transport services, receiving of goods, invoicing and payment. IT enables free flow of material, financial and information resources in supply chain. IT supports SCM in three different segments: purchase side of supply chain, internal part of supply chain and sell side of supply chain. Figure 2. Structure of integrated industrial enterprise system of e-business Source: Adapted from Bhardwaj, 2013,

6 Enterprise Resources Planning (ERP). Beside SCM software solutions, many companies use ERP software for management of internal part of supply chain. As we explained previously, intent of ERP is to integrate all business processes in organization and to use this integration for performance improvement in relations to customers [16]. An ERP is set of software modules enabling an organization to automate transactions included in its business processes. The ERP system enables greater data integration, use of available database and consolidation of great number of various incompatible systems. The system usually includes finance, order tracking, forecasting, sale analysis, local and global distribution and quality control. The systems have powerful tools for monitoring and reporting, but they are quite rigid and require well defined data [17]. Customer relationship management. CRM is technological and organizational concept for managing a company's interactions with existing and future customers. In order to organize, automate, synchronize and integrate sales, marketing, customer service, and technical support the company can use various technologies where the most significant are web technologies. The company should have software and usually internet capabilities that support management of customer relationships in an organized way. For example, the company can develop a database about its customers. The database is used by management, salespeople, people providing service and customers. Relationships with customers in the database should be well described so these users could directly access information, match customer needs with product offerings, remind customers of service requirements, know what other products a customer has purchased, and so forth [13]. The synergy between ERP, CRM, and SCM is evident if we put the entire issue into perspective. CRM deals with more issues in the front-end processes and applications than ERP. ERP, to a considerable extent, targets back-end processes and applications, and provides a central focus for the entire business that is integrated with the internet-oriented supply chain. Also we must take into account new technical requirements expected in the near future such as mobile access to ERP systems and use of cloud technology to create environment for ERP, CRM, and SCM [8, 12]. IS for production and industrial management. This system supports production and industrial management (PIM) and all activities needed for obtaining manufacturing of industrial enterprise. These activities can include estimation of plant location, development and maintenance of machinery, definition of production goals for accomplishment of forecasted sale that is determined by marketing system. Except planning and providing workforce, equipment, and materials this system supports planning of the resources use on integrative way for manufacturing of right product quantities, in right time for forecasted requirements of marketing system. During manufacturing in progress, the system also has to control use and consumption of these resources. Therefore PIM provides the tools to control access to and manage all product definition data. It is basically the use of software or other tools to track and control data related to a particular product. The use of PIM allows a company to track the various costs associated with the creation and launch of a product [4]. PIM systems obtain data needed for planning, organizing, function, control and generally for management of manufacturing systems. The systems can be categorized on information systems supporting operative decision making, tactical decision making and strategic planning with remark that the categorization is conditional. Operative PIM systems collect, process and present information on manufacturing tasks, tactical PIM systems collect, process and present information relevant for management and control of resources and strategic PIM systems obtain support to executives in definition of strategic goals of industrial enterprise. Business intelligence (BI) represents the combination of software applications, methodologies and systems that play a key role in the decision-making process of an enterprise. The most enterprises 18

7 collect huge amounts of data from its business operations. To keep track of that information requires a wide range of software programs and different database applications for various departments (e.g. sales, finance, supply) throughout the organization to access and use the data. Using multiple software programs makes it difficult to retrieve information in a timely manner and to perform analysis of the data. A business intelligence solution replaces the multiple tools traditionally used to collect and analyze the data. Business intelligence software is also designed to use data that is stored by the organization in any type of data storage system or data warehouse [9]. Although it is hard to define term BI because of its broad meaning, the effect of a business intelligence system is much easier to define. The system provides the means to report, analyze and then present the data. The BI system takes all the raw data and provides management and decisionmakers of an organization with useful and relevant reports and graphs. Management then makes sense of the reports, and uses it to analyze business trends in order to take benefit from the business trends and opportunities. By using of the system, management is able to better understand an organization's strengths and weaknesses and to better see the relationship between different data for effective decision-making and deployment of resources. BI software plays a key role in the strategic planning process of the organization in the areas of customer profiling, customer support, market research, market segmentation, product profitability, statistical analysis, and inventory and distribution analysis etc. E-commerce. As we already stressed, many people do not strictly separate e-commerce and e- business. However, the definition of e-business is more complex and in this paper, e-business is viewed as a superset of e-commerce. E-business are those business activities that are a part of a value network; address the customer process; and use information and communication technologies (ICT) in an integrative way based on the organizational and cultural rules of the networked economy. On the other hand, e-commerce is narrower concept than e-business that encompasses buying and selling over digital media, so that e-commerce is the trade (sales, commerce, distribution) of goods and services by electronic means [19]. Most definitions assume that e-business is enabled by the development and implementation of electronic media such as the internet. In this paper, we accepted definition of e-business as doing business electronically, particularly via internet that enables a dynamic set of technologies, applications and business processes that link enterprises, consumers and communities. Regardless of communication medium and technology through which business is doing, there are following basic e-commerce models: business-to-consumer (B2C) and business-to-business (B2B) model. B2C model is used by companies which sell their products and services to consumers through internet. The model involves a service or product exchange from a company to a consumer, whereby merchants sell products to consumers. B2B model refers to transactions between enterprises, taking place electronically through Internet, internal networks or private networks. Key factors influencing B2B model expansion are: possibility of secure communication through internet infrastructure, emergence of private and public B2B markets, requirement for collaboration between suppliers and buyers and technology improvement for internal and external organization integration. 4. INTEGRATION OF ERP SYSTEM AND E-COMMERCE In many enterprises, ERP is separated from e-commerce that makes business performances of an enterprise weak. Also database of the system does not obtain compatibility, consistency between financial and distributional data that leads to problem of its integrity. Integration and increasing 19

8 efficiency of procurement and relations with customers, implementation of e-commerce and then reduction of transaction and agency costs leads to improvement of competitiveness of an enterprise on market. As long as existing or prospect customers can access to marketing information of the enterprise, such as product catalogues, prices, discount rates and inventory they can decide whether or not to make order. According the definition and its functions, traditional ERP systems supports internal supply chains, while e-commerce establish value chain on market in specific industry. More and more enterprises build such architectures of their systems integrating ERP system with e-commerce. They use interface based on internet such as corporative portals connected to external entities and then integrate additional modules such as CRM, SCM etc. [7]. As we can see on Figure 2, main activity in design and implementation of integrated system of an enterprise is joining and integration specialized components or modules such as: SCM, CRM, PIM, e-commerce and BI. Although traditional ERP integrates basic business functions such as logistics, finance, inventory control, manufacturing planning, human resources and sale, still there are business processes that are not encompassed by ERP system. Traditional ERP system does not meet today demand of customers but with technology based on internet information can easily move through entire value chain. So the enterprises must respond fast by complementing functionality to the system and implementation of specialized applications that can meet customer needs. Deployment of internet for communication, collaboration and trade with customers and business partners cause fundamental change in the way how an organization define and manage its business processes. As a result, business systems and processes can not stay isolated any more but its relations with customers and business partners have to be considered and analyzed. When e- commerce is connected and integrated with ERP system, e-business transactions are supported and the entire system give vision of business processes spanning through many enterprises and companies [2]. Presently ERP systems integrate all resources of enterprise into unique system where all data from various modules of system is saved in unique databases. ERP assists to replace independent applications such as CRM, SCM, BI etc. and to integrate them into one package obtaining greater flexibility and interactivity between business processes. When e-commerce is integrated to ERP, whole extended system gives vision of business processes expanding through many enterprises. Many enterprises face challenge to link heterogeneous platforms, applications and data formats in value chain including not only suppliers but customers as well. In addition, enterprise should keep flexibility or ability to change and add functions in applications as requirements of business are evolving [11]. Therefore extension of ERP system out of an industrial enterprise border has goal to electronic integrate basic business processes with customers and suppliers. This integration implies that the enterprise should be adjustable to changes in market conditions with comprehensive use of internet, information sharing and interactivity. Bridge between the enterprise and its business partners is internet technology that e-business can make possible while e-business makes ERP system more transparent and open. Instead of ERP system directed only to internal functions of the enterprise, there is extended ERP system consisted of whole value chain. Database is made of integrated data on all ERP subsystems and internet has role to connect a customer with these subsystems. In fact, the customer can access to ERP systems easily. The customer exactly accesses server of internet application that the business application makes flexible to combine ERP functionalities with the other sources of data and to execute business logic of the application without any changes in ERP system. As we mentioned previously, presently enterprises directs attention to internet and web 20

9 service. As the most basic business processes take place on internet so there is intention to move ERP functionalities on internet. The entire system gives extended vision of business processes covering many enterprises if the ERP system is integrated with e-commerce. That makes basic for industrial enterprise to link various platforms, applications and data format in value chain including suppliers and customers. 5. IMPLEMENTATION OF INTEGRATED INDUSTRIAL ENTERPRISE SYSTEM OF E-BUSINESS Integrated system of e-business should be main part of e-business strategy of industrial enterprise and its implementation is, in fact, realization and achievement of the strategy in practice. Primary feature of environment where e-business strategy is formulated is great changeability reflecting in acceleration of new technologies acceptance that development and implementation of integrated system of e-business makes complicated. Enterprises which are not able to adjust to new technologies will let their competitors to get into their part of market. It is possible that they never recover their business and come back on the market. Thus it is significant to choose adequate model of e-business strategic planning that emphasizes to complete application of IT in business processes and implementation of integrated system of e-business. First, appropriate enterprise business strategy must be formulated and then IT strategy is developed for support to the business strategy. Before formulation of the strategy, following steps need to undertake: decision whether internal experts will develop the strategy or experts outside enterprise, creation of project team that will start with elaboration of the project, allocation of adequate resources or staff from various business functions who deals with strategy development, gathering of existing documentation and creation a list of people who should be interviewed [6]. In formulation of e-business strategy, project team has to undertake following activities: 1. Declare fundamental goal (vision) of an enterprise in form of documented statement. This is long-range purpose of existence of the enterprise. 2. Determine strategic goals of e-business. In this phase, the enterprise must decide what are its specific business aims or project aims. Primary vision of the enterprise stays the same, but aims can be changed according to environment. 3. Collection and analysis of information considering situation in the enterprise and environment. Great number of questions must be set in order to make analysis of environment. Before enterprise continues with planning of its e-business strategy, it should analyze Strength, Weaknesses, Opportunities and Threats (SWOT analysis). 4. Development of e-business strategy for various situations, such as future dangers and business opportunities. The strategy should be based on abilities of the enterprise to use its resources strategically and financial an managerial risks that the enterprise can take regardless it attacks competitors or defends. This is only part of preparations for implementation of e-business. 5. Now project team can make implementation plan and create list of initiatives considering e- business with exact schedule of phases. This plan also includes allocation of resources, development of project teams and creation of criteria for performance measurement and redefinition of goals. Starting with fundamental goal based on vision of an enterprise, steps 3 and 4 are designed to obtain information related to potential that e-business brings to the enterprise. Which e-business strategy the enterprise will choose depends on Strengths, Weaknesses, Opportunities and Threats that dominates in environment of the enterprise. The enterprise must make efforts to comprehend customers needs and to set many questions related to customers. Beside this, the enterprise has to 21

10 study circumstances on market related to its products and its competitiveness in environment in order to develop business strategy. Answers to these questions provide analytical tools for estimation of e-markets potential in the competitive environment. The last phase or implementation of e-business (creation of list of initiatives) comes after the enterprise estimates its strategic potential and determine its future business politics. We can perceive that classical strategic elements and steps such as environment analysis, goal determination and strategy definition are still necessary. However even more emphasis is put on restructuring and providing of resources through new technologies use. Main goal of restructuring and providing of resources is infrastructure building and acquiring additional managerial knowledge, in order to give more quality services to customers. Since the enterprise estimated potentials of e-business and made preparation, it can go to final phase of implementation of e-business strategy. Project team creates list of initiatives for various projects of e-business systems (ERP, CRM, SCM, BI, PIM, EC) to finally implement these systems. Implementation phase encompasses e-business infrastructure building, e-business application development, necessary organizational changes and eventual reconstruction of enterprise. Also existing level of e-business implementation should be determined in order to plan desired level enabling the enterprise to meet defined strategic goals [9]. An enterprise develops e-business infrastructure on base of strategic vision and results of strategic analysis. Interorganizational nature of e-commerce projects requires that implementation of applications directed to customers takes place in steps. Every step must be fundamentally tested and internally checked before it is extended to environment. In the first phase of the project, starting infrastructure must be developed on base of strategic vision of enterprise. Main feature of e-business is online interaction in real time with the other enterprises and external entities such as consumers and suppliers. There are three basic elements that make e-business infrastructure: 1. business processes and information systems that make physical base of enterprise activities; 2. e-business applications directed to customers that represent exit on external side; 3. value chain using existing processes and systems to create final product that enterprise delivers to customers. Value chain includes communication between trade partners of enterprise and its internal processes and systems. IT and human resources support this communication and together make complete e-business infrastructure [18]. This model of e-business strategy formulation and implementation can be applied both in B2B and B2C domain. In B2B domain customers are the other enterprises and value chain extends into network consisting of many other organizations. Thus this e-business infrastructure operates in interaction with similar infrastructures of other enterprises. In B2C domain, although customers can be individuals, value chain spans on the other enterprises (suppliers, distributors, logistic and transport enterprises) so interaction of an enterprise must be supported by the infrastructure. Therefore all e-commerce systems are interorganizational and the enterprise must develop infrastructure that is able to cross its borders. Building of the infrastructure includes following processes: Development of processes for collaboration and relations with customers. Customers in e- commerce want on-line applications obtaining transparent and comprehensive services that meet their on-line requirements. CRM prepares an enterprise for these functions and provides specification of requirements for applications that must be developed for servicing customers. Development of processes directed to customers, also defines requirements considering value chain. 22

11 Development of value chain. This activity implies integration of an enterprise business processes with its business partners' processes that is needed for applications in relationships with customers. There are various technologies, standards and technics that can be used for these purposes. Project team of the enterprise must manage this development process so it creates the most of the tools. Development of business processes and information systems. By using method chosen by enterprise management (autonomous development, using services of the other firms or using components) project team must develop information and operational e-business infrastructure. It encompasses building databases and information systems, building and integration of various applications, development of business activities etc. However developed systems should be managed by people employed in the enterprise who might have not technical knowledge so education programs should be implemented. Building of technical infrastructure. Systems quoted here and which make integrated system of e- business can operate only when effective technical infrastructure supports links between them. Development project of integrated e-business system requires management of processes related to integration of various technologies and facilitation of infrastructure implementation. Beside development of information and communication infrastructure and providing integration of various intra and interorganizational systems enterprise must find solution for warehousing and storage of data. Providing of human resources. It implies building of systems for support to human resources needed for operation of e-business. In this phase of project development, management and operative responsibilities for e-business initiatives must be allocated. Project managers must obtain people with proper skills inside enterprise and set information and operative infrastructure that can support everyday requirements of users. Thus developed systems and processes should be acceptable and usable from users, on contrary it becomes absolutely unsuccessful. People charged for system development and project managers must understand significance of interaction between people and computers in process of information systems development. As we can see, these phases of e-business infrastructure building are not isolated from each other. There are many overlaps between activities in these phases and activities mentioned in one phase can emerge as a part of another phase. When the enterprise finishes with these phases it starts development of e-business applications in the beginning on internal level and then on external level encompassing customers, suppliers and the other business partners. Before development of e-business applications, an enterprise should select development mode and appropriate development methodology. Development of e-business applications can be achieved on three modes: 1. internal building of all components; 2. use of experience of service companies; 3. integration of existed software components [19]. 1. Internal development of e-business applications requires technical expertise inside an enterprise. Integration of enterprise old systems with e-business applications, creation of platform that is compatible with platforms of its business partners, etc. are demanding long-range tasks. On the other side, this mode of e-business applications development if it is successful can meet all demands of the enterprise and obtain significant benefit to the enterprise. 2. Use of external expertise or outsourcing is popular option for e-business applications development. There are various levels of external services: development of front-end applications by application development service providers, hiring service firm that will provide on-site management services for all e-commerce applications, outsourcing of data storage or simple use of provider for internet connection. Using external services has advantages: availability of expertise, 23

12 reduced risk of errors, time and money saving etc. However problems could emerge due to conflicts of management responsibilities, lost control inside enterprise, poor relationships between providers and enterprise etc. 3. Development of e-business applications by join of existing components is approach based on philosophy of object-oriented system development. Applications are developed as software modules (objects) where every object gives one or many business services. For example, one business object can support data forwarding while the another object can provide hierarchical access control for management of protection and security of system. As we already mentioned, every of quoted approaches has advantages and disadvantages. An enterprise can choose one approach or make combination of many approaches so its application needs can be met on appropriate way. This decision can be made on base of technological politics adopted by the enterprise in phase of preparation for e-business implementation. Regardless of used approach, the enterprise must follow methodology of e-business applications development leading progress from starting phase of establishing application requirements to final phase of implementation. 6. CONCLUSIONS Main feature of environment where strategic planning of e-business takes place is great dynamic and turbulence reflecting in acceleration of new technologies acceptance that complicates development and implementation of integrated e-business system. Enterprises which are not able to adjust to new technologies will let their competitors to get into their part of market. We can perceive that classical strategic elements and steps such as environment analysis, goal determination and strategy definition are still necessary. However even more emphasis is put on restructuring and providing of resources through new technologies use. Main goal of restructuring and providing of resources is infrastructure building and acquiring of additional managerial knowledge, in order to give more quality services to customers. Bridge between an enterprise and its business partners is internet technology that e-business makes possible while ERP system becomes more transparent and open to environment of the enterprise. Instead of ERP system directed only to internal functions of enterprise, there is extended ERP system consisted of whole value chain. Database of this system is made of integrated data on all ERP subsystems and internet has role to connect a customer with these subsystems such as CRM, SCM, BI, PIM, EC. Since the enterprise established business aims, defined e-business strategy, analyzed environment and estimated potentials of e-business it can go to implementation of e-business strategy or integrated e-business system. Project team creates list of initiatives for various projects of e- business systems (ERP, CRM, SCM, BI, PIM, EC) to finally implement these systems. Implementation phase encompasses e-business infrastructure building, e-business application development, necessary organizational changes and eventual reconstruction of enterprise. Also existing level of e-business implementation should be determined in order to plan desired level enabling enterprise to meet defined strategic goals. REFERENCES [1] Aggarwal C.: MRP, JIT, OPT, FMS?, Harvard Business Review, September-October, 1985, pp

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