Abstract. Key Words: Process Reengineering, e-commerce, Enterprise Resource Planning Systems, Program, e-procurement, Educational Process

Transcription

1 Electronic Commerce Implementation in the Educational Process Based on e-procurement Mateja Podlogar, Ph.D. Andreja Pucihar, Ph.D. University of Maribor, Faculty of Organizational Sciences Kidričeva cesta 55a, 4000 Kranj, Slovenia Abstract Electronic commerce and Enterprise Resource Planning systems implementation is topical from the beginning of nineties. These programs are implemented into the enterprises for rising competitive position, reducing costs and time of business data processing. They enable support to business processes inside and between enterprises. Knowledge about these systems is very important and necessary for students too. At the beginning of the paper, basis about e- procurement and process reengineering are displayed. Following e-procurement implementation into educational process of the Faculty of Organizational Sciences, University of Maribor, is presented. Two examples of SAP program implementation into the procurement process are shown. Students results on this field are also described. Key Words: Process Reengineering, e-commerce, Enterprise Resource Planning Systems, Program, e-procurement, Educational Process 1 Introduction Information technology linking and growing is changing our society and economy. Today, communication between computers and other electronic devices keep becoming better all the time. Computers are more connected with other devices via different networks, such as internet. Enterprises use these technologies even more frequently than consumers, especially for the purpose of processes reengineering, direct procurement process, acquirement of new buyers, communication with suppliers and internal activity leading. In the new economy it is useful to take into consideration three primary components: electronic business processes as the base of e-commerce, electronic commerce transactions and supporting infrastructure. First, it is important to note that a common feature of both electronic business processes and electronic commerce transactions is reliance on the use of computer-mediated networks (Mesenbourg 2001, 1-21). Following definitions that are used are taken from Mesenbourg (2001, 1-21) Computer-mediated networks are electronically linked devices that communicate interactively over network channels. Examples of computer-mediated networks are: internet, intranet, local network, Electronic Data Interchange (EDI) and extranet. e-business infrastructure is the share of total economic infrastructure used to support electronic business processes and conduct electronic commerce transactions. It includes hardware, software, telecommunication networks, support services, and human capital used in

2 electronic business and commerce. Examples of e-business infrastructure are: computers, support services, such as web site development and hosting, consulting, electronic payment, and certification services, human capital, such as programmers. Electronic commerce transaction is any transaction completed over a computer-mediated network that involves the transfer of ownership or rights to use goods or services. Transactions occur within selected e-business processes. Electronic commerce transaction is completed when agreement is reached between buyer and supplier to transfer ownership or rights to use goods or services. Electronic business process is any process that a business organization conducts over a computer-mediated network (Mesenbourg 2001, 1-21). Electronic business process is the most important component of electronic commerce. Electronic commerce requests use of modern technology that enables enterprises to reduce costs and time, improve communication between enterprises and reduce delivery time. Business to business electronic commerce directs business processes between suppliers and other business partners (Esichaikul and Chavananon 2001, 274; Berg 1995, 1). 2 Electronic Commerce in Procurement Process: e-procurement Procurement process (figure 1) is divided into seven sub-processes (Podlogar 2002, 8-12; Dai and Kauffman 2001; Gebauer, Segev 2001, 2-7; Gebauer and others 1998, 3; Kalakota, Robinson 1999, , Shaw and others 2000, 399):! a possible supplier s requisition request,! bidding,! supplier selecting,! making an agreement,! ordering from supplier,! delivery receiving and! payment to supplier. While implementing new technologies, a lot of changes in procurement process have to be done. Information technology will support or even automate the whole procurement process in the enterprise. Geographical differences will be reduced and enterprises will procure goods from all suppliers around the world and from everywhere in the world. For electronic procurement, the internet and web are becoming more appropriate technology, especially for the reason of growing communication and rising importance of the information. E-procurement begins with the automation of the requisitioning, the approval purchase order management, and accounting processes through an Internet-based protocol. The key elements of this automation include the following:! A Web-based user interface,! Utilization of standard Internet communication and security protocols, and! A software that supports the requisitioning process, including approval, work flow and product catalog maintenance.

3 Plan of Goods Requirements Order Supply Order Delivery Order Invoice Payment Order Market Goods Requirements Planning Plan of Goods Requirements s Data A Possible 's Requisition Request List of Possible s Offer Request Bidding Quality Assurance Offer Agreement Document about Selected Selecting Negative Request Selected Agreement with Selected Making an Agreement Goods Requirements Planning Plan of Goods Requirements Catalogue of Goods Order Acknowledgment Ordering from Order Supply Order Delivery Receiving Reclamation Delivery Order Invoice Payment to Payment Order Financial Institution Figure 1: Procurement process

4 A model of the Internet-based B2B e-procurement System is described as follows. We can observe that the buyer has a new electronic system at his or her disposal. Communications from buyers and suppliers, coming over the Internet access system, are linked together in the new procurement network. Through this access, the buyer can select from product catalogs the items needed to meet manufacturing or delivery demands. The approval is accomplished online, significantly cutting the cycle time, and the work flow proceeds through the network (Poirer and Bauer 2001, ; Gebauer and Shaw 2002, 7-17). Buyers can input their needs using the electronic catalog included into the Internet-based program. Needs are input as requests for procurement, the automation of the process is involves all approvals that are needed to purchase goods. In the automation process, different requests for procurement are merged into one request that is passed to the supplier electronically. The entire process is totally automated through the electronic interchange. The position of a classical procurement officer is no longer necessary because copying the paper request for procurement to the electronic one is not needed any longer. In the new environment, procurement officer tries to understand the supplier s needs, and assesses the efficiency and the best procurement conditions in their enterprise (Vaupot 2001, ). The approval is accomplished online, significantly cutting the cycle time, and the work flow proceeds through the network. The purchase ordering process is automated and feeds directly into the enterprise's Enterprise Resource Planning system for retention, payables, and any reconciliation that may be necessary. Financial services (for credit and payment) and logistics services (for pooled shipments and cross-docking) can be accessed online, speeding those processes (Poirer and Bauer 2001, ; Gebauer and Shaw 2002, 7-17). Added value of electronic commerce in the procurement process is as follows (Van Weele 1998, 94-96):! effective development of the procurement process between buyer and supplier,! verification of supplier s order acknowledgment,! development and implementation of computer-based different methods for order and control fulfillment,! development of computer-supported database about critical items of procurement process and suppliers,! development of a well-defined process for order-handling, and! successful problem solving, when necessary. 3 Process Reengineering If we want to implement e-procurement successfully we need to use a new type of job quickly and we also need to reengineer processes (Guay and Ettwein 1998). Today processes are very complex and without reengineering them, electronic commerce implementation into these processes is impossible. Primary electronic business processes are: procurement, selling, production management, logistic, as also internal communication and support activities. Enterprises want to be present on the internet primarily because of improving business process effectiveness based on close relationship between business partners in the supply chain (Podlogar 2002, 34-36). First of all electronic data interchange together with business process optimization, that is held outside the enterprise border, is necessary. Higher control of all sub-processes of the whole procurement process is very important (European Commission

5 2000, 1-201). Enterprises throw away billions of dollars because of un-effective procurement processes (Ody 2001a in 2001b; Kalakota, Robinson 1999, ). Firstly, if we want to implement e-commerce successfully, business processes of one enterprise have to be connected with processes of others business partners. This is the reason why electronic commerce can t be limited to only one enterprise, regardless of its business strategy (Berg 1995, 1). There is a business process flowing inside and outside an enterprise. Different processes are connected to joint processes. Joint processes of all business partners in the supply chain enable access to all data, that are needed to each business partner in the supply chain at that time that are needed (European Commission 2000, 1-201; Lindemann in Schmit , 7-21). Importance of business process connection is very important. Connected processes are synonym for Enterprise Resource Planning ERP systems. These systems reduce costs and enlarge effectiveness through business process integration and through cooperation along whole supply chain. They make value through cooperation inside the whole business communities. The most important is to find maximum effectiveness as soon as possible and to improve simultaneously buyer s satisfaction. Process analyze has to be done carefully and before starting the process integration. Electronic commerce integration require appropriate user interface, business logic and data. At the same time, compliance with the technical requirements has to be done: and other internet standards (more suppliers), the highest range of scalation and reliability (more messages), detail analyze of business processes (greater complication). It is necessary to connect programs and enterprises. By process reengineering and electronic commerce implementation into procurement process enterprises try to reduce business costs and time and also make better connections with suppliers. All the above mentioned increases importance of measuring electronic commerce in business processes. 4 Electronic Commerce Implementation into the Educational Process Based on e- Procurement Educational process of the Faculty of Organizational Sciences, University of Maribor, implements electronic commerce with emphasis on procurement process in two steps:! Electronic commerce inside the enterprise,! Electronic commerce between enterprises. In the first step students (three of them together) go to an enterprise and investigate procurement process. They analyze the whole process, problems inside the process and then try to find suggestions/solutions how to implement electronic commerce into the process successfully. This first step refers to one enterprise. In the second step student s work with two enterprises: one is usually a supplier and the other is a buyer. In this step students get knowledge about business to business e-commerce problems between two or more enterprises. Problem and process analyzes are connected to the newest information technology. Students work out different prototypes as a result of the seminar. For example, prototype titled Connecting SAP R/3 & Microsoft BizTalk Server based on Procurement Process, has been done.

6 Following is the short description of this prototype. Business-to-Business (B2B) requires enterprises to communicate, despite using different information systems. Transactions between businesses require the sender and receiver to understand the message in the same way. An -based purchase order in one enterprise must be acceptable for another enterprise. The main advantage of electronic communication is cost and time reduction. The greatest problem is that the enterprises use different information systems, which can t communicate with each other unless there is a kind of connection is established. The prototype (figure 2) was developed for one Slovenian enterprise. They use SAP R/3 Enterprise Resource Planning system for internal operations. At the faculty two groups of undergraduate students were established to carry out this project. One group represented the buyer s perspective and the other supplier s perspective. In the prototype these two groups exchanged purchase order and purchase order confirmation in the electronic form. Two different software, SAP R/3 system and Microsoft BizTalk Server, were used in the prototype. We tested three different possibilities for the connection between these two systems: SAP DCOM Connector, BizTalk Adapter for SAP and SAP Business Connector. SAP R/3 SAP R/3 SAP SAP BC BC Internet / HTML Web Content Server interface interface Non SAP System Web Applications HTML Web Browser Figure 2: Connecting SAP R/3 with other information systems via SAP Business Connector The interaction between systems can be established in two ways. Firstly, the SAP R/3 system is possible to be initiator. The new document is thus created in SAP R/3 system and immediately sent to the other system (in this case to BizTalk Server). Secondly, the client can be the initiator. Client checks in its partner s system (SAP R/3) if there is a document waiting. In the prototype, the second choice was used. In this project students learned about purchasing and procurement processes, discovered SAP R/3 information system and Microsoft BizTalk Server, searched and tested different possibilities to connect these two systems, developed the prototype: Connecting SAP R/3 and Microsoft BizTalk Server, using SAP Business Connector. Example of SAP R/3 Implementation Since 2001 Faculty of Organizational Sciences University of Maribor together with two enterprises SAP Slovenia and IDS Scheer Slovenia, has been implementing SAP R/3 (Module for Materials Management). At the class exercises students make prototype in the following steps:

7 " Material Master Data! Review Material Master Data! Create Material Master Data " Master Data! Create Master Data! Change Master Data " Create Info Record! Create Conditions " Goods Purchase in Stock! Create Purchase Requisition " Selecting "Ordering! Create Purchase Order! Display Purchase Order! Purchase Order Print Preview! Save Purchase Order "Goods Receipt! Goods Receipt Purchase Order! s opened purchase orders list! Delivery Order Posting " Stock Overview! Review Temporary Quantity Stock! Review Stock-requirements List! Review Stock Value "Goods Purchase in Cost Center! Create Purchase Requisition! Purchase Requisition Transformation into Order "Payment to Only the newest and the best information technology such as SAP and Microsoft Business Solutions Navision, is used in the educational process. We can make this possible only with strong relationship between business/technology world and students/laboratories on the Faculty with emphasis on procurement processes. For better knowing these technologies we organize different workshops to present these programs to all student. Some diplomas from this field are also in progress. We can say that these diplomas are very useful for enterprises because every diploma include prototype using these programs. Servers that we are using are very strong machines and make possible to do prototypes in the class or from home or work. 5 Conclusions Today, in business to business electronic commerce, procurement process is one of the most important business process. These days enterprises try to make electronic commerce common solutions, Customer Relationship Management and supply chain effective as much as they can. Different researches predict, that between 30 to 40 percentage of all enterprises will sell goods via internet and 80 to 90 percentage will procure goods in this way. Global market requests quick response to buyer s demand. Enterprises can be competitive only by very well organized internal and external processes with all business partners. It is important to have on one side buyers that are able to create orders on-line and on the other side suppliers that are able to deliver goods in time in cooperation with external logistics partners, that are able to deliver ordered goods in time to the right place (Lesničar 2002, Poirer and Bauer 2001). Process reengineering as basis of electronic commerce is a field that enterprises are faced with all the time. Knowledge transmission as a part of educational process is very important. The knowledge transfer has to be done in the field of process reengineering and information technology adoption. Both are necessary for successful electronic commerce implementation into strategic process such as e-procurement. By using reliable and open information infrastructure, which support business processes and also enable enterprises to be flexible, we can make an optimization of the whole procurement process. Procurement process is of strategic importance to enterprises business processes and present central part of changes, which has to be executed for web strategy support. E- commerce in procurement process reduces cost and simplifies processes.

8 Especially because of rising necessity of implementing Enterprise Resource Planning systems and e-commerce, it is necessary to present both to students, who will become sooner or later these enterprises employees. Students need to have strong connections with enterprises and the newest technology. Information technology only isn t sufficient. Besides, students need knowledge of process reengineering. Faculty of Organizational Sciences University of Maribor will endeavour to use technology such is SAP as much as possible. The survey Status of ERP Integration in Business Curricula (ninety-six responses were received over a three month period) also shows that most schools have adopted SAP (56%) followed by Oracle (31%) ( short description of Survey Report that we also participate).these data show the right way and technology such is SAP is necessary and very well choosed, to implement in the educational process. References Berg, T. (1995): "The Business Value of Electronic Commerce." Strategic Analysis Report, R GartnerGroup, 15. September. Dai, Q.; Kauffman, R. J. (2001): "Business Models for Internet-Based E-Procurement Systems and B2B Electronic Markets: An Exploratory Assessment. Thirty-Fourth Annual Hawai'i International Conference on Systems Sciences (HICSS-34), Maui, HI - January 3 6. Esichaikul, V., Chavananon, S. (2001): "Electronic Commerce and Electronic Business Implementation Success Factors." Proceedings of 14th Bled Electronic Commerce Conference, e-everything: e-commerce, e-government, e-household, e-democracy, June, Bled, Slovenia, Bob O'Keefe, Claudia Loebbecke, Jože Gričar, Andreja Pucihar, Gregor Lenart, Editors, Moderna organizacija, Kranj, European Commission (2000): "EcaTT Final Report, Electronic Commerce and Telework Trends: Benchmarking Progress on New Ways of Working and New Forms of Business across Europe." EMPIRICA, Project EcaTT98, EP29299, julij. Gebauer, J., Shaw, M.J. (2002): "Introduction to the Special Section: Business-to-Business Electronic Commerce." International Journal of Electronic Commerce, Vol.: 6, No.: 4, Summer. Gebauer, J., Segev, A. (2001): "Changing Shapes of Supply Chains How the Internet Could Lead to a more Integrated Procurement Function." Fisher Center Working Paper 01- WP-1041, Submitted to Revue Internationale de l'achat. Gebauer, J., Beam, C., Segev, A. (1998): "Impact of the Internet on Procurement." Fisher Center Paper, Submitted to Acquisition Review Quarterly, February, 1-14.

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