Comparison Chart



Question Bank Solution to Manoj Jain – Latest updated on 11.11.2016.What is an ERP? Motive here is to build an Intelligent Enterprise through application of ERP. Intelligent enterprise follows processes, keep a check and do not take rash decisions. Enterprise takes informed decisions enabled by reports/data from MIS which senses from environment, interprets and provides information. It empowers Entrepreneur to decide from repertoire of available responses, execute decision with speed and intensity. Example would be identifying deviations by supervisor from the regular business process resulting in low production output. MIS would enable Production Manager to question such actions of supervisor and prevent such deviations from happening in future. ERP reflects an Enterprise. An Enterprise is like an intelligent being having aspirations derived from Vision. Vision dictates Mission which in turns evolve Vision further. In other words, Vision and Mission keep evolving each other in an iterative cycle.ERP essentially is a packaged software that was traditionally in client-server form and has now evolved to web-based format. ERP is real time and its main task is to integrate Business Processes. It ties diverse geographies with each other there by creating an enterprise wide database. ERP processes company transactions impacting data in real time and enables transaction processing and planning.ERP enables Business without barriers through its four pillars viz., Business Management, Business Architecture, Business Insight and Business Anywhere. Business Management involves convergence of geographies with embedded capabilities of the Virtualized enterprises. Business Architecture comprises of adaptable business processes resulting in adaptable user experience. Business processes are the heart of any Organization and their adaptability dictates how a business will evolve as the world changes. It also imposes logic on strategy, culture and organization. It improves collaborative productivity. An intelligent ERP will have user driven KPIs, facilitates search based analysis and shall provide with Information on demand thereby improving Business Insight of decision makers. Lastly Business anywhere is enabled through smart engine design of ERP enabling information tracking and delivery over smart devices 24X7. oR Alternative answer ERP is an industry acronym for Enterprise Resource Planning.ERP refers to automation and integration of a company's core business to help them focus on effectiveness & simplified success.It is a business process management software that allows an organization to use a system of integrated applications to manage the business and automate many functions related to technology, services and human resources. ERP software integrates all facets of an operation, including product planning, development, manufacturing, sales and marketing.An ERP System automates and integrates core business processes such as:Taking customer ordersScheduling operationsKeeping inventory records and financial dataERP positively affects organizations in the following ways:Assisting in defining business processes and ensuring they are complied with throughout the supply chain.Protecting critical business data through well-defined roles and security access.Enabling to plan your work load based on existing orders and forecasts.Providing you with the tools to give a high level of service to your customers.Translating data into decision making information.Benefits of ERPIntegration across all business processes.Automation enhances productivity.Increase overall performance.Quality Reports and Performance Analysis.Integrates across the entire supply chain.List down 5 major functions of ERP with detailsHuman Resource Module (HR)Helps to HR team for efficient management of human resources.helps to manage employee information, track employee records like performance reviews, designations, job descriptions, skill matrix, time & attendance tracking.One of the important sub module in HR module is Payroll System which helps to manage salaries, payment reports etc.It can also include Travel Expenses & Reimbursement tracking. Employee Training tracking can also managed by ERP.Inventory ModuleCan be used to track the stock of items. Items can be identified by unique serial numbers.Using that unique numbers inventory system can keep track of item and trace its current location in organization.Sales ModuleTypical sales process includes processes like Sales queries & enquiry analysis & handling, quotation drafting, accepting sales orders, drafting sales invoices with proper taxation, dispatch/Shipment of material or service, tracking pending sales order.All these sales transactions are managed by sales module of ERP. CRM module can take help of Sales module for future opportunity creation & lead generation.Purchase ModulePurchase modules take care of all the processes that are part of procurement of items or raw materials that are required for organization.Consist of functionalities like supplier/vendor listing, supplier & item linking, sending quotation request to vendors, receiving & recording quotations, analysis of quotations, preparing purchase orders, tracking the purchase items.It is integrated with Inventory module & Engineering/production module for updating of stocks.Finance & Accounting moduleWhole inflow & outflow of money/capital is managed by finance module.This module keeps track of all account related transactions like expenditures, Balance sheet, account ledgers, budgeting, bank statements ,payment receipts, tax management etc.Financial reporting is easy task for this module of ERP.Customer Relationship Management (CRM) moduleCRM department is helps to boost the sales performance through better customer service & establishing the healthy relationship with customers.Helps to manage & track detailed information of the customer like communication history ,calls, meetings, details of purchases made by customer, contract duration etc.CRM module can be integrated with Sales module to enhance sales opportunities.Engineering / Production moduleProduction module is great help for manufacturing industry for delivering product.This module consist of functionalities like production planning, machine scheduling, raw material usage,(Bill of material)preparation, track daily production progress production forecasting & actual production reporting.Supply Chain Management (SCM)SCM module manages the flow of product items from manufacturer to consumer & consumer to mon roles involved are manufacturer, Super Stockiest, Stockiest, distributors, retailers etc. SCM involves demand & supply management, sales returns & replacing process, shipping & transportation tracking etc.What is eBusiness? And Its 5 major benefits and 5 major challenges.Or Write pros & cons of eBusinesseBusiness Definition: Exchange of Goods and/or Service over electronic medium.eBusiness shifts business towards digitalization. The objective here is to use internet as the medium as was the case in the first phase. In the new wave, key will be application of Cloud for conducting eBusiness. Salient features of eBusiness: eBusiness has not contributed to GDP.New jobs were created in the first phase of IT Revolution.eBusiness, in its first avtaar, didn’t attain its true potential as it was only mapping rudimentary traditional models into online mechanism.In the new revolution, it is cannibalizing on existing jobs and business by getting rid of intermediate layers. It therefore is changing the way Business is done. For example, Amazon has taken away business of book shops.The need for eBusiness: Working with people is very difficult. They don’t follow standards, rules and policies. Government policies are not very conducive either. Business world is begging for cost while common may is begging for survival. Government which is largest employer contributes virtually zero to GDP. The answer lies in application of Technology which will change the way business is done. Example given is of Google which tracks your location and recommends you choices as per the time of the day in addition to reminding you of events scheduled by you in your calendar.Penetration of Internet through Mobile devices have increased interest in building mobile based eBusiness solutionsBenefits and challenges of e-business usageThe internet and the emergence of e-business have provided entrepreneurs with many new advantages and opportunities. The internet has created a business environment in which time and distance are less important, people have access to more information to help them make decisions and consumers have better access to a broader range of products and services.A significant benefit for entrepreneurs is that the initial investment for starting up an e-business is generally lower than the costs associated with starting an equivalent business using a traditional model. The technology used to setup and operate an e-business is becoming more advanced whilst also becoming cheaper to obtain. Many successful e-businesses are started using only a home based office with a personal computer, some basic software and a connection to the internet.Low start-up costs mean that more people are able to enter the market E-business Advantages with their business ideas. Many of the barriers to opening your own business have been reduced or removed, with many people able to operate an e-business whilst remaining employed in their regular day job. People who lacked the confidence to start a full scale business are now able to test their abilities and ideas online for a relatively small initial outlay.The increases in technology and falling prices also provide online businesses with a steady stream of new customers as more people move online to shop for products and services. Cost and access is becoming less of a barrier for consumers and people are becoming increasingly comfortable with making purchasers online.E-business makes it easier, faster and cheaper for businesses to communicate with their suppliers and their customers. Using email and online ordering systems, communication and transactions can occur almost instantly between organizations situated anywhere in the world.The internet is accessible twenty-four hours a day, seven days a week. This means that buyers and sellers can conduct transactions at any time, as opposed to the regular trading hours of traditional business models. The internet can also make it easier and more cost effective for business managers to track and analyze the buying patterns of their customers, and in turn tailor the business to better suit their needs and expectations.E-business can provide cost saving advantages for both buyers and sellers. Online sellers are able to reduce their overheads as they don't need expensive shop fronts, as many employees or need to hold as much inventory on hand. In turn, this allows them to reduce their prices and pass the savings on to their customers, who save time and money by shopping from their own homes. The fact that consumers have such wide access to a diverse range of sellers also helps them to save money as they can search, shop around and compare prices quickly and easily.Benefits of E-BusinessCost-Effective MarketingWith an e-business, all of your marketing efforts end with one goal—to drive target traffic to your business website. With one central place to send customers—your e-business website—it allows you to use many online marketing tactics including email marketing, article marketing, social media networking and e-newsletters. Most of these online marketing efforts are very low cost or free, so an e-business allows for highly cost-effective marketing strategies.Flexible Business HoursE-business breaks down the time barriers that location-based businesses encounter, according to eCommerce Education. Because the Internet is available 24 hours a day, seven days a week, your business never closes. An e-business can literally be making money while you are fast asleep.Eliminates Geographic BoundariesAn e-business also allows you to broaden your reach. An online business can reach customers in the four corners of the Earth. As long as someone has an Internet connection, you may be able to reach and sell your product or service to these visitors to your business website. Reduces Transaction CostRunning an online business reduces the cost per transaction because it takes less manpower to complete an online transaction. Once you get your website up and running, the customer places the order online, which removes the need for a salesperson. The customer payment goes through your online payment processing software or system and again eliminating the need for a store clerk. Someone has to download the order and ship it, which is probably you, but an e-business transaction has less burden of cost on the business, making each transaction more cost effective than a brick-and-mortar business.Low Overhead CostsRunning an e-business cut back or out most of the costs involved in running a physical location. E-businesses have less expensive phone, rent and utility bills than businesses with physical locations. Some e-businesses do not require any additional space and can be run out of your home, which you are already paying rent for or your mortgage payment. Even housing inventory may not be an issue because you may be able to establish a drop-shipping situation, where your wholesaler ships orders for you on behalf of your business.Challenges of E-BusinessThe rapidly changing business environment has led several companies to adopt e-commerce. E-Business brings about a lot of changes in the way firms work. It also throws up challenges that they have to meet in order to reap the benefits of e-commerce. The various challenges to businesses include technological challenges, legal and regulatory challenges, behavioral and educational challenges, and other miscellaneous challenges. Various issues pertaining to the implementation of new technology include security issues, choice of Internet payment instrument and its inter-operability, inter-operability of technology and technological application, comparative buying capabilities, richness and depth of information available over the Internet, lack of reliable network infrastructure, lack of e-commerce standards, deployment of public key infrastructure to enable identity authentication, technical integration of new technology with existing applications, and high cost of bandwidth. Challenges associated with legal and regulatory framework include the difficulty in regulating and enforcing standards, due to lack of consistent rules and policies; customs and taxation uncertainties; and government intervention.Changes in attitudes of consumers result in behavioral challenges to businesses. These challenges include lack of trust of customers and their fear of intrusion of privacy which makes them reluctant to involve in e-transactions. In addition, the rampant frauds taking place over the Internet and lack of awareness of customers about the availability of services poses a challenge to businesses. Miscellaneous challenges such as channel conflict, the problem of attracting and retaining a critical mass of customers, and the need to improve the order fulfillment process, are the other aspects that have become a cause of worry to businesses.What are the similarities similarities and differences between eCommerce & eBusiness. Write few important revenue models of eBusiness.E -business and e-commerce are terms that are sometimes used interchangeably, and sometimes they're used to differentiate one vendor's product from another. But the terms are different, and that difference matters to today's companies.?In both cases, the e stands for "electronic networks" and describes the application of electronic network technology - including Internet and electronic data interchange (EDI) - to improve and change business processes.?E-commerce covers outward-facing processes that touch customers, suppliers and external partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw materials and supplies for production and procurement of indirect operating-expense items, such as office supplies. It involves new business models and the potential to gain new revenue or lose some existing revenue to new competitors.?It's ambitious but relatively easy to implement because it involves only three types of integration: vertical integration of front-end Web site applications to existing transaction systems; cross-business integration of a company with Web sites of customers, suppliers or intermediaries such as Web-based marketplaces; and integration of technology with modestly redesigned processes for order handling, purchasing or customer service.?E-business includes e-commerce but also covers internal processes such as production, inventory management, product development, risk management, finance, knowledge management and human resources. E-business strategy is more complex, more focused on internal processes, and aimed at cost savings and improvements in efficiency, productivity and cost savings.?An e-business strategy is also more difficult to execute, with four directions of integration: vertically, between Web front- and back-end systems; laterally, between a company and its customers, business partners, suppliers or intermediaries; horizontally, among e-commerce, enterprise resource planning (ERP), customer relationship management (CRM), knowledge management and supply-chain management systems; and downward through the enterprise, for integration of new technologies with radically redesigned business processes. But e-business has a higher payoff in the form of more efficient processes, lower costs and potentially greater profits.?E-commerce and e-business both address these processes, as well as a technology infrastructure of databases, application servers, security tools, systems management and legacy systems. And both involve the creation of new value chains between a company and its customers and suppliers, as well as within the company itself.?All companies should have an e-commerce strategy. (Governments should have an e-public service strategy.) Electronic networks in general and the Internet in particular are too important for firms to ignore if they want to interact with customers, suppliers or distribution partners.?But some companies need to move beyond e-commerce and form e-business strategies - especially large companies that already have links to EDI networks or have completed major ERP implementations. These companies have already reaped some of the biggest benefits from e-commerce strategies. They're also likely to experience organizational pain as conflicts develop among their ERP, EDI, supply-chain management and e-commerce strategies. And last, they have enough experience and knowledge in electronic-network technologies - and in process redesign and integration - that they have a chance of being successful in an e-business strategy.?Still, the coordination and organizational obstacles to developing an e-business strategy are formidable. It involves major and potentially disruptive organizational change. The risks of failure and the consequences from limited success are higher in an e-business strategy than in an e-commerce strategy. Being a leader in e-business can contribute to long-term success, but the stresses and strains of business transformation can cause near-term damage.?Or Alternative answerComparison ChartBASIS FOR COMPARISONE-COMMERCEE-BUSINESSMeaningTrading of merchandise, over the internet is known as E-commerce.Running business using the internet is known as E-business.What is it?SubsetSupersetIs it limited to monetary transactions?YesNoWhat they carry out?Commercial transactionsBusiness transactionsApproachExtrovertedAmbivertedRequiresWebsiteWebsite, CRM, ERP, etc.Which network is used?InternetInternet, Intranet and Extranet.Also , Can referEcommerceEBusinessEcommerceinvolvescommercialtransactions done over internet.Ebusinessisconductofbusiness processes on theinternet.Ecommerce is subset of Ebusiness.Ebusiness is superset of Ecommerce.Ecommerce is use of electronic transmission medium that caters for buying and selling of products and services.In addition, Ebusiness also includes the exchange of information directly related to buying and selling of products.Thus, Those activities which essentially involve monetary transactions are termed as “e-commerce”.In addition it includes activities like procurement of raw materials or goods, customer education, looking for suppliers etc.Ecommerce usually requires the use of just aWebsite.Ebusiness involves the use of CRM’s, ERP’s that connect different business processes.Ecommerce covers outward facing processes that touch customers, suppliers and external partners.E-business covers internal processes such as production, inventory management, product development, risk management, financeetc.Ecommerce just involves Buying and selling of products and services.Ebusiness includes all kinds of pre-sale and post-sale efforts.Ecommerceisnarrowerconceptand restricted to buying and selling.It is a broader concept that involves market surveying, supply chain and logistic management and using Data mining.It is more appropriate in B2Ccontext.It is used in the context of B2Btransactions.Ecommerce involves the mandatory useofinternet.Ebusiness can involve the use of internet, intranet orextranet.Example-Buyingofpendrivefrom is consideredEcommerce.Example- Using of Internet by Dell, Amazon for maintain business processes like Online customer support, email marketing, supply chainmanagement.Key Differences Between e-commerce and e-businessThe following are the major differences between e-commerce and e-business:Buying and Selling of goods and services through the internet is known as e-commerce. Unlike e-business, which is an electronic presence of a business, by which all?the business activities are conducted through the internet.e-commerce is a major component of e-business.e-commerce includes transactions which are related to money, but e-business, includes monetary as well as allied activities.e-commerce has an extroverted approach that covers customers, suppliers, distributors, etc. On the other hand, e-business has an ambiverted approach?that covers internal as well as external processes.e-commerce requires a website that can represent the business. Conversely, e-business requires a website, Customer Relationship Management and?Enterprise Resource Planning for running business over the internet.e-commerce uses the internet to connect with the rest of the world. In contrast to e-business, internet, intranet and extranet are used for connecting with?the parties .Similarities :A Service-oriented WebsiteBoth e-commerce and e-business owners maintain service-oriented websites and work to cultivate an online presence. But while the primary goal of e-commerce websites is to sell a product or service, the primary goal of an e-business website is usually to provide customers with information about a product or service to inform them and help them to make better purchasing decisions.Encouraging Customer InteractionAn e-business encourages customer or visitor interaction through the use of online feedback forms, surveys and polls. Many e-businesses also have their own online forums, allowing users to further their interaction both with the company and with one another. E-commerce websites also encourage interaction, but the opportunities for interaction that they provide are usually centered around the products and services that they sell in the form of product reviews and product ratings.Establishment of Partner RelationshipsBoth simple e-commerce websites and full-service e-businesses encourage and foster relationships between service and vendor partners. This type of interaction between businesses is often necessary to allow companies to provide their customers with additions, accessories or add-ons to the products and services that they market and sell.Similar Business ModelsSince e-commerce is a subset of e-business, it makes sense that both websites that provide e-business services, including e-commerce, and websites that focus only on the buying and selling expert of e-commerce should have similar business models. Both are focused on the idea of selling products and services and providing customer service, support and information if necessary. A straight e-commerce site, however, focuses only on buying and selling, providing the minimal amount of information to the consumer.REVENUE Models Selling products online can be a profitable business. As e-commerce has developed, many options have emerged for creating revenue online. An e-commerce revenue model is a plan for generating revenue for an online business. While e-commerce revenue models share many similarities with brick-and-mortar businesses, they also enable you to reach customers around the globe and offer more diverse methods of generating sales. These models can be helpful in determining how to structure your e-commerce business.Five Common Revenue ModelsWhile there are many ways to earn money online, you may want to consider these five common e-commerce revenue models when planning your business.Affiliate marketing enables you to earn revenue by marketing or offering another product for sale on your site. For example, you may reference a book you read and recommend your customers get a copy for themselves. You could also set up an affiliate account and place a direct link to the book on the Amazon site, which will pay you a percentage of the sale. If you decide to participate in affiliate marketing, you'll need to research which companies might provide you with a financial incentive for promoting their sites on your page.When you're just starting out, the money you earn from affiliate marketing may be just a small, supplemental amount. However, as traffic to your site increases, you may enjoy more substantial income.Online advertising is a very popular revenue model for e-commerce businesses. In this method, companies or organizations buy advertising space on your site, provide a designed add or written message and then pay you for promoting their messages. Media sites, such as magazines, newspapers and television channels typically use online advertising.Two common types of online advertising include pay-per-click and pay-per-view, which determine how much advertisers will pay for their advertisements. While some sites charge a set fee for placing an ad, most pay a set fee for each person who clicks on a link or views a page related to the advertiser. As traffic to your site grows, and more people click on an advertiser's link or view a related page, you'll earn more advertising revenue.Transaction fees are the charges a company pays for using their service. If you've ever sold anything on eBay, you know there's a set price for posting a product for sale. Each time a transaction happens, you pay a small fee to eBay for marketing your product. Whether you charge a small fee for a company to list a transaction or for someone to view a video, transaction fees can be a sizable if the traffic to the website is substantial.Subscription based services allow customers to access a library of information or entertainment, join a community or receive an on-going service for a set fee. Dating sites are common subscription models where members pay a set fee to interact with other members. Additionally, services like Netflix and Amazon Prime offer member-specific benefits for those who pay a monthly fee. For example, members may get free movies and books or discounts on other proDefine an organization & an extended organization?Organisation DefinitonA social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open systems--they affect and are affected by their environment.Extended OrganisationExtended enterprise is the concept that a company does not operate in isolation because its success is dependent upon a network of partner relationships.It is a loosely coupled, self- organizing network of firms that combine their economic output to provide products and services offerings to the market.Firms in the extended enterprise may operate independently, for example, through market mechanisms, or cooperatively through agreements and contracts.3 important Factor of Extended Organization:The incorporated organizational entity, which is incorporated and has a CEO, and directly employs individuals.The extension of the organization that includes not just the W-2 employees of the incorporated organization but also includes all of the co-commercial partners whose participation is critical to the incorporated entity.The community of commerce, which includes not only the incorporated organization and its co-commercial partners but also includes the customers that interact with partners.Draw generic ERP diagram to illustrate organization and extended organization concept.Write the functions of ERP for theory part. Successful organizations existed prior to ERP came in vogue. Write an essay on ‘Why necessity of ERP is felt in organizations now’?Advantages of ERP/Necessity of ERPComplete visibility into all the important processes, across various departments of an organization.Automatic and coherent workflow from one department/function to another.A unified and single reporting system to analyze the statistics/status etc. in real-time, across all functions/departments.Individual departments having to buy and maintain their own software systems is no longer necessary.Certain ERP vendors can extend their ERP systems to provide Business Intelligence functionalities, that can give overall insights on business processes and identify potential areas of problems/improvements.Advanced e-commerce integration is possible with ERP systems – most of them can handle web-based order tracking/ processing.There are various modules in an ERP system like Finance/Accounts, Human Resource Management, Manufacturing, Marketing/Sales, Supply Chain/Warehouse Management, CRM, Project Management, etc.Since a Database system is implemented on the backend to store all the information required by the ERP system, it enables centralized storage/back-up of all enterprise data.ERP systems are more secure as centralized security policies can be applied to them. All the transactions happening via the ERP systems can be tracked.ERP systems provide better company-wide visibility and hence enable better/faster collaboration across all the departments.It is possible to integrate other systems (like bar-code reader, for example) to the ERP system through an API (Application Programing Interface).ERP systems make it easier for order tracking, inventory tracking, revenue tracking, sales forecasting and related activities.ERP systems are especially helpful for managing globally dispersed enterprise companies, better. Implementing Successful Change ManagementChange management is a systematic approach to dealing with change both from the perspective of an organization and the individual.It is the application of a structured process and set of tools for leading the “people side” of change to achieve a desired outcome.When change management is done well, people feel engaged in the change process and work collectively towards a common objective, realizing benefits and delivering results.It is the process, tools and techniques to manage the people-side of change to achieve the required business outcome.It incorporates the organizational tools that can be utilized to help individuals make successful personal transitions resulting in the adoption and realization of change.When you introduce a change to the organization, you are ultimately going to be impacting one or more of the following four parts of how the organization operates:ProcessesSystemsOrganization structureJob roles.: Important parameters for successful implementation of change management.Establish a sense of urgencyMake objectives real and relevantHelp others see the need for change and the importance of acting immediatelyIdentify crises, potential crises or major opportunities.Pull together the guiding team (a ‘powerful, guiding coalition’)Assemble a group with enough power and the right skills to lead the change effortEncourage the group to work together as a team.Create a visionDevelop the vision with the team to help direct the change effortDevelop strategies for achieving that visionCommunicate the visionUse every mechanism and involve as many people as possible to communicate the new vision and strategies for understanding and buy-inCommunicate the essentials, simply, to appeal and respond to people’s needsTeach new behaviors by the example of the guiding team.Empower others to actRemove obstacles/barriers to changeChange systems or structures that seriously undermine the visionEncourage risk taking and non-traditional ideas, activities and actionsRecognize and reward progress and achievementsPlan and create short term winsSet aims that are easy to achieve for visible performance improvementsCreate those improvements in bite sized chunksFinish current stages before starting new onesDon’t let upFoster and encourage determination and persistenceConsolidate improvements and produce still more changeUse increased credibility to change systems, structures and policies that don't fit the visionHighlight achieved and future milestones.Make change stick (Institutionalize new approaches)Weave change into the cultureArticulate the connections between the new behaviors and corporate successDevelop the means to ensure leadership development and successionReinforce the value of successful change.Describe “Why is e-business important in current connected world”.Global reachReduced costConvenienceHigher productivity and efficiencyCompany’s brand buildingProvide better customer support.Make information more easily available to customers.Ability to do business 24 hours.Low start-up costs.Your physical presence could be in any location.Cost-Effective MarketingMarketing efforts are very low cost or free, so the model allows for highly cost-effective marketing strategies.Flexible Business HoursBecause the Internet is available 24 hours a day, seven days a week, your business never closes.Eliminates Geographic BoundariesAn e-business also allows you to broaden your reach. An online business can reach customers in the four corners of the Earth.Reduces Transaction CostRunning an online business reduces the cost per transaction because it takes less manpower to complete an online transactionLow Overhead CostsRunning an e-business cut back or out most of the costs involved in running a physical location. E-businesses have less expensive phone, rent and utility bills than businesses with physical locations.Or Alternative answer Electronic Business, also known as "e-Business" or "e-Business", is defined as the utilisation of information and communication technologies (ICT) in support of all the activities of business. Commerce constitutes the exchange of products and services between businesses, groups and individuals and hence can be seen as one of the essential activities of any business. Hence, electronic commerce or e-Commerce focuses on the use of ICT to enable the external activities and relationships of the business with individuals, groups and other businesses.Electronic business methods enable companies to link their internal and external data processing systems more efficiently and flexibly, to work more closely with suppliers and partners, and to better satisfy the needs and expectations of their customers.In practice, e-business is more than just e-commerce. While e-business refers to more strategic focus with an emphasis on the functions that occur using electronic capabilities, e-commerce is a subset of an overall e-business strategy. E-commerce seeks to add revenue streams using the World Wide Web or the internet to build and enhance relationships with clients and partners and to improve efficiency using the empty vessel strategy. Often, e-commerce involves the application of knowledge management systems.E-business involves business processes spanning the entire value chain: electronic purchasing and supply chain management, processing orders electronically, handling customer service, and cooperating with business partners. Special technical standards for e-business facilitate the exchange of data between companies. E-business software solutions allow the integration of intra and inter firm business processes. E-business can be conducted using the web, the internet, intranets, extranets, or some combination of these.Activities using e-Business tools include:Trading of goods or services online, such as e-Procurement, primarily through the web-sites;Electronic retailing (e-Tailing);Use of the internet, intranets or extranets to conduct research and manage business activities;Web-site marketing;Online communications, such as e-mail; andOnline training for staff (e-Learning).E-Business tools include:Mobile phones;Personal digital assistants (PDA);Electronic Data Interchange;File transfer;Facsimile;Video conferencing, internet, intranets and extranets.Advantages:The benefits of implementing e-Business tools is not so much in the use of technology, but in the streamlining of business processes and the ease in finding new markets. Some of the advantages and disadvantages include:Quicker and easier communications.Strengthened marketing capabilities and reach.Increased hours of operation (a web-site provides 24-hour seven day information to existing and potential customers).Access to broader information through research.Reducing the cost of doing business by lowering transaction costs and increasing efficient methods for payment, such as using online banking and reducing stationery and postage costs.The opportunities to adopt new business models and develop tailored customer support.What are different revenue models?Five Common Revenue ModelsWhile there are many ways to earn money online, you may want to consider these five common e-commerce revenue models when planning your business.Affiliate marketing -It enables you to earn revenue by marketing or offering another product for sale on your site. For example, you may reference a book you read and recommend your customers get a copy for themselves. You could also set up an affiliate account and place a direct link to the book on the Amazon site, which will pay you a percentage of the sale. If you decide to participate in affiliate marketing, you'll need to research which companies might provide you with a financial incentive for promoting their sites on your page.When you're just starting out, the money you earn from affiliate marketing may be just a small, supplemental amount. However, as traffic to your site increases, you may enjoy more substantial income.Online advertising –It is a very popular revenue model for e-commerce businesses. In this method, companies or organizations buy advertising space on your site, provide a designed add or written message and then pay you for promoting their messages. Media sites, such as magazines, newspapers and television channels typically use online advertising.Two common types of online advertising include pay-per-click and pay-per-view, which determine how much advertisers will pay for their advertisements. While some sites charge a set fee for placing an ad, most pay a set fee for each person who clicks on a link or views a pagerelated to the advertiser. As traffic to your site grows, and more people click on an advertiser's link or view a related page, you'll earn more advertising revenue.Transaction fees –These are the charges a company pays for using their service. If you've ever sold anything on eBay, you know there's a set price for posting a product for sale. Each time a transaction happens, you pay a small fee to eBay for marketing your product. Whether you charge a small fee for a company to list a transaction or for someone to view a video, transaction fees can be a sizable if the traffic to the website is substantial.Subscription based services –These services allow customers to access a library of information or entertainment, join a community or receive an on-going service for a set fee. Dating sites are common subscription models where members pay a set fee to interact with other members. Additionally, services like Netflix and Amazon Prime offer member-specific benefits for those who pay a monthly fee. For example, members may get free movies and books or discounts on other products.Sales Revenue Model -Wholesalers and retailers of goods and services sell their products online. The main benefits for the customer are the convenience, time savings, fast information etc. The prices are often more competitive. In terms of online sales there are different models such as market places as common entry points for various products from multiple vendors.The shops of single companies, sometimes based on web-catalogs (combines mail, online and telephone-ordering).Revenue Model of Amazon1.Amazon sells its own productsMany of the products that you can purchase on Amazon are actually owned by Amazon itself. Just like many other stores, Amazon buys products where there's high supply and low demand, and then sells them where there's low supply and high demand in order to make aprofit. Think of them as a convenience store on a grand scale: you're basically paying them for the convenience of buying an item without having to struggle with running around trying to finda store that has it in stock, comparing prices between different stores, or getting the item back home if it's heavy or bulky.2.Amazon gets a cut from third-party salesEven when other people sell their products on Amazon, Amazon still gets some of the profit. Why is that, you ask? Well, think about it: Amazon eliminates a lot of legwork forsomeone looking to sell things. It allows them to easily organize their inventory and expose it to thousands of potential customers at once. It can even take the hassle out of setting up delivery of their merchandise and collecting payment. All of that must be worth something, right?There are two types of third-party seller accounts on Amazon -- "Professional" and "Individual"-- and the amount of money Amazon makes from each varies.?Professional -- Amazon collects a $40 per month subscription fee, but does not collect additional fees from sales on a per-item basis.?Individual -- can sell on Amazon for free, but Amazon collects a $1 selling fee from each item sold. Explain the revenue model of PayTm, Flipkart or Ola cabs?Revenue Model of PaytmAbout PayTM, Facts, Founders, Funders & FundingTotal Funding received by PayTM:?Appx 1.5 Billion USD. (as of Janurary 2016, Excluding the Credit of Working Capital Loan from ICICI Bank of 300 Cr).PayTM Founder:?Founded in 2000 by Vijay Shekhar Sharma (VSS as he is called in the circle). PayTM is owned by One97 Communications Ltd.Valuation of PayTM:?as of Jan 2016 Appx 4 Billion USD.Funds that have invested in PayTM include those of the Likes of AliBaba of China (via its Ant Financial Holdings Entity).PayTM Business Model & How does PayTM workFollowing is the total coverage of the topic on?PayTM Business Model?and?How does PayTM work,?we will include the direct and indirect revenue lines used by One97 (its parent company). ?While it is important to note while reading this is that PayTM is not your traditional E-Commerce cum Payment Gateway player, it is a full fledged Payments Bank Company (they are one of the receivers of the?Payments Bank License issued by RBI). ?The various revenue lines that they have can be broadly classified into the following sub-categories: (Web E-Commerce, App-Commerce etc)Payments & Wallet Integration & TDR (Transaction Discounting Rate)Seller ServicesPayments Bank (Yet to Launch as of the date of writing this Analysis)To Start with let’s see how?PayTM Makes Money?from sale of goods on their platform.How Does PayTM?work?(Shopping) :?PayTM (You have to search for the product in the search bar to shop for any physical product as they are focusing more on their Payments Vertical so they have changed entire landing page to payment processing)?an e-commerce portal, B2C shopping Portal, for at-the-moment, customers ordering goods for deliveries in some parts of India. ?The base model here is a?MarketPlace?: List Sellers for selling their products > Get shoppers browsing through the product categories > Dole out discounts to shoppers in the name of customer acquisition > Customer buys the desired products > Seller has to ship the product to the customer > Product once Accepted & Not returned back until the timeline for returning is over > Seller gets his agreed price of the product minus the commission charged by PayTM for generating a customer. ?Thus the crux of the Model is?“X% commission on the total sale value given to the seller for a particular product”This sale can happen via any channel as given and approved by PayTM listed below & For all the orders sold by PayTM for every seller on their platform PayTM will charge a percentage (%) cut on the total sale amount pre-tax.Sale via WebsiteSale via Mobile WebsiteSale via Mobile App (Android or iOS or others)Sale Via Affiliate networks (Bloggers, Coupon Websites, Review Websites etc)The percentage of commission that PayTM charges varies on the category of product that PayTM is able to sell. ?It ranges anywhere between 0% to 20% of the sale value (excluding taxes and discounts). ?The following image will show you how the receipts of PayTM will look like once the sale is recorded in PayTM’s books of accounts:E.g. Customers A, B & C Purchase 5 Products from PayTM which are a Book, a Stereo, A Fridge, A Mobile Phone and a Bed sheet from 3 Sellers. ?Total Payout by PayTM and Receipts look like as they do in the below table (Click to Expand):The total of Col I (4315.00 INR) is the total revenue of PayTM from sale of goods. ?This is one of the basic revenue models for PayTM. ?There are other Revenue Lines as well that PayTM has. ?These are outlined and explained in details below.Business Model of PayTM?(Company One97 as a Whole)Web Portal?(E-Commerce : Already Explained above so will not get into the depth of this model again)Listing Fee and Convenience Fee?(Sellers are charged listing fee for selling on PayTM and onboarding fee for doorstep service of explaining everything related to selling online – pretty self explanatory so won’t nose dive into this either.OTA Bookings:?PayTM recently ventured into Online Travel Agency Model (OTA) where it is providing air, bus etc ticketing and hotel booking services (the model here is again commissions similar to e-commerce model highlighted above)Payments Integration:?You can now use your PayTM wallet to pay all sorts of utility bills including cable, internet, mobile, gas, electricity etc.Mobile Wallet:?Integrating its wallet across major e-commerce and e-payment enabled online sellers (replaces a traditional payment gateway with the exact same business model but lower fee and Transaction Discounting Rates (TDR) ).How does PayTM Work with Payments IntegrationsThis is pretty similar to the way a Mobile Recharge guy along the corner of the street of your house works! ?He makes sure he is present there when you need a recharge, and gets 2-4% commission on the recharges that he makes to your number. ?Same is the case here – PayTM provides an alternative to the street corner based guy who does your recharges and since the bargaining power of PayTM is higher as compared to that poor chap (because of large number of transactions) PayTM ends up getting higher commission from these vendors.PayTM does recharges and bill payments for DTH, Internet, Prepaid Phones, PostPaid Phones, Insurance Premium Payments, Loan EMI Payments, Delhi Jal Board Payments, Delhi Metro Payments and many such more. ?While Government entities may not entertain commissions to PayTM they surely hook the customer to PayTM’s wallet for other payments including this one because PayTM gives CashBack on all of these in the form of Wallet Cash which can only be redeemed against any payment made via its network and can’t be withdrawn into one’s bank account.It is important to note here that PayTM negotiates hard on the Settlement time to these vendors i.e. there is a time lag in which you pay PayTM and PayTM pays the Vendor. ?Assume Your Due date for payment of Light Bill is 1st of the Month – You pay it by that date, PayTM will release the same money to the vendor by say 8th of the Month (Your Electricity will not be disconnected because PayTM has given confirmation to the vendor that the payment has been settled) and thus PayTM in turn will make money out of the interest that it earns out of the lying deposits in the wallet.PayTM Business Model with Wallet based PaymentsPayTM integrates its Wallet at most places where other companies integrate their payment gateway infrastructures. ?It works in the exact same way as that of payment gateways i.e. by discounting the value of the transaction by 1-3% and giving the rest to the merchant.Revenue Model of FlipkartFunding received by FlipKart:?Appx 3.5 Billion USD. (as of Janurary 2016, Excluding the Credit Line from ICICI Bank of 450 Cr – Good to see?How banks make moneyoff of startups as well).FlipKart Founders:?Founded in 2008 by Sachin Bansal & Binny Bansal (Both Ex- Employees).Valuation of FlipKart?as in Jan’2016: 15 Billion USD (Larger than BigBazaar) recently Morgan Stanley downgraded FlipKart’s Value of shares held by them by 25% i.e. Downward Final Valuation of about?11.25 Billion USD.How Does FlipKart work:?Flipkart is an e-commerce portal, B2C shopping Portal, for Indian customers or at-the-moment, customers ordering the goods for delivering in India. ?The model here is : Portal > List Sellers who sell the desired portfolio products > Get customers browsing through the products > Create appealing discounts > Customer Shops for the desired products > Seller / Flipkart ships the product to customer > Product Accepted and Not returned back > Seller gets his agreed price of the product minus the commission charged by FlipKart for doing everything they do. ?Thus the core bread and butter of the Model is?“X% commission on the total sale value given to the seller”The sale can happen via multiple channels as listed below & For all the sale achieved by FlipKart for a particular seller FlipKart will charge a percentage (%) cut on the total sale amount excluding taxes.Direct via WebsiteDirect via Web-AppDirect via Mobile App (Android or iOS or others)Direct via Tele Sales (Customer calling and Placing order – Happens rarely now)Via Affiliate networks (Bloggers, Coupon Websites, Review Websites etc)Social BuyThe percentage commission varies on the type of product and the type of sale that FlipKart makes. ?It may range anywhere between 5% to 20% of the sale value (excluding taxes and discounts). ?The following is an e.g. of how the billing of FlipKart sale will be recorded in FlipKart’s financial books:Customer A, B & C Purchase 5 Products from FlipKart in a month and these products are a Book, a Stereo, A Fridge, A Mobile Phone and a Bed sheet from 3 Sellers. ?Invoice for the Month for FlipKart looks like below table (Click to Expand):The total of Col I will be the total revenue of FlipKart from that particular sale, now the numbers here are small and are taken for the ease of calculation in actuals these numbers are hefty and run into billions of dollars (Ref: Total Loss of Flipkart for FY 14-15 was about 2000 Cr). ?This is the basic bread and butter for FlipKart. ?There are other Revenue and Business Lines as well that FlipKart has. ?These are outlined and explained in details below.Business Model of FlipKart (Company as a Whole)Now as I mentioned earlier in the above section that FlipKart is not an Indian Regulated company any more, it is registered in Singapore and has many more subsidiaries to carry out related businesses to diversify and derisk its revenue model from those of the competitors. Following are the various revenue lines that FlipKart has for additional sources (allied to its core business) of revenue:Web Portal?(E-Commerce : Highlighted Above so not getting into the depth of this)Web Portal Listing Fee and Convenience Fee?(Sellers charged listing fee for selling on FlipKart and Customers charged Convenience Fee for faster Delivery)Payment Gateway?(Governed by FlipKart Digital Pvt Ltd Earlier and now owned and operated by FlipKart Payments Pvt Ltd Singapore, Website shows no more subscriptions by any one – seems on the way to shutdown for 3rd party users)Logistics?(FlipKart Logistics Pvt Ltd Singapore – To ship products of sellers)FlipKart Digital Media?(Selling Ads (to sellers and brands) and other related products like co-branding and co-advertising)Myntra?(Competing with its own online fashion category but a big boost to the overall online fashion for FlipKart)FlipKart Cash and Carry?(FlipKart’s wholesale division)FlipKart Nearby?(FlipKart’s Grocery Division – Now Shut Down, No description below)Product Launch?(Unofficial – I think they do charge people to launch a product on their MarketPlace)PhonePe –?Mobile Wallet on the Lines of PayTM and others. [Launched as of August 2016].Business Mod2016]el of FlipKart from Listing and Convenience FeeFlipKart might start charging (or may already be charging) a listing fee for the sellers to be able to sell on its platform, which eventually adds up to the total revenue of the company. ?Also the convenience fee billed to customers for gift wrapping, faster delivery add up to the total revenue of the web portal.Business Model of FlipKart Payment Gateway – PayZippyYou may also be Interested in Reading:?How does PayTM Make MoneyPayZippy is a payment gateway just like any other of the 1000’s of payment gateways out there and provides service to FlipKart and the likes of other E-Commerce players out there. ?The business model is pretty simple they charge a transaction processing amount to every transaction that goes through their payment gateway infrastructure. ?How payment gateways make money?is something that you need to read in detail. ?I will give an overview of the various modes of payments here. ?Basically transaction processing charges differ from mode to mode like it is lowest in Debit Card and Net Banking (around 0.75% to 1.00%) of the transaction amount. ?Credit Card (1.5% to 2.25%), American Express Cards (3.00% to 3.50%) – So depending on the mode that the user selected to make the payment the e-commerce company will get an amount after retaining the transaction processing charges e.g. I buy a Book for 1000 INR and pay using AMEX Cards via PayZippy the selling e-commerce portal from where I bought the same would get 965.65?(1000 * (1-3%*(1+14.5% ST))). ?And similarly for other payment modes the transaction processing fee will be retained by payment gateway.Business Model of FlipKart LogisticsEarlier EKart Logistics used to exclusively deliver FlipKart Sellers and ordered products, later on it got spun off (removed from FlipKart) as a different entity that now ships for all platforms. ? Logistics company charges sellers as other courier companies to deliver their goods to those users who have ordered the same from an E-Commerce Player. ?Charges are flat depending on within city or inter-city or size of the package.Business Model of FlipKart Digital MediaFlipKart sells three kinds of Ads as follows:Co-Branded Banner Opportunities on Home Page: ?The Slider that you see on home page of FlipKart presents opportunities to lots of sellers, brands and product launchers to present themselves to the millions of pageviews that FlipKart generated on a daily basis. ?This is for a handsome fee that FlipKart counts as the total revenue. (Picture Source?)Co-Advertised Physical Product across Publications:? The large ads that you see in newspapers and front pages of the magazines (if any) are shared with the brand that they are advertising. ?For e.g. If it’s a new phone that is being launched and FlipKart hits the newspapers with a front page ad (the cost of ad is shared with the other brand that is advertising the product).Targetted Search Results:??The moment you search for a product, FlipKart’s algorithm decides which sellers products come at the top. ?This space can be sold by FlipKart for additional revenue (I don’t know whether they are doing this as of now, but they will as news suggests)Business Model of FlipKart from MyntraFlipKart has its own Fashion Category but the sales and revenues that it achieves from Myntra is pretty high as compared to its own sales. ?The revenues of Myntra are also accounted in FlipKart’s total earnings. ? They also bought over [rather snatched away from SnapDeal].Business Model of FlipKart from WholeSale (Cash and Carry)FlipKart recently started the cash and carry arm which caters to wholesale of goods to its seller base. ?Its very similar to other cash and carry businesses (like Metro Cash and Carry) which is dedicated for Retailers, WholeSellers (Basically B2B) the revenue from this line will be exactly similar to the Web Portal Revenue that FlipKart gets from selling goods on its platform.Business Model of FlipKart from Product LaunchFlipKart’s enormous user base, daily visits and page views offer a fantastic way to launch any new product in India. E.g. Xiaomi launched all of its phones and other products exclusively in partnership with FlipKart in India. ?This gave FlipKart revenue in terms of margins on product sold for Xiaomi and the advertising revenue from launching the products on its own platform.Revenue Model of OLA CABOla Funding: Appx 1.5 Billion USD. (as of December 2015).Ola Founders?: Founded in 2010 by Bhavish Aggarwal & Ankit BhatiOla Valuation:?As of Dec’ 2015: Appx 5 Billion USDHow Does Ola Make MoneyRevenue Model of OlaWell as stated earlier, Ola has been through its own set of ups and downs, pivots and U-Turns with respect to (wrt) its Business and Revenue Model. ?When they started out – They started out as a Taxi Rental Fleet Business (They owned the Fleet). ?They had a call center which used to do bookings for customers who wanted cabs. ?Pretty similar to Meru Cabs and others (Basically Radio Taxi but unbranded and available on an 8hr 80 km kind of billing). ?But later on they pivoted into an app based cab aggregation service (similar to Uber) and the rest is history??. ?Their revenue model is pretty similar to Uber’s with couple of additions to it. ?Lets move on to it by first understanding?How does Ola WorkCustomers to Open Ola App > Ola auto detects your Location via Phone’s GPS > Shows Cabs of Various Categories (Mini, Prime, Sedan, State Transport Taxis & Ola Share etc) Nearby > Customer to Tap on a Category of Choice > Click Ride Now > Request is routed via Ola’s Servers and is prompted to the Ola Cab Driver’s Cell Phone (if he is logged into the Ola Driver App) > If the driver accepts the ride, you get confirmation message on screen with Driver Details > Driver details sent to you on message and email > Click to call the Driver and Co-ordinate > Complete the Ride > Payment Debited from your?Ola Money WalletBusiness Model of OlaThe most significant contributor to?Ola Cabs Revenue Model?will be “X% Commission from the total Fare of the Trip” e.g. Ranges from 15% to 20% depending on the city and type of vehicle. ?Here is the list of various (current and discontinued) Revenue Lines the company has.Please Note: There are 2 Apps being used simultaneously while the trips are coordinated at Ola – One is used by the Cab Booking Consumer (i.e. You) and the other is used by the Request Completing Driver called User App and Driver App respectively Hereon.Revenue Lines of OlaFleet Management via Tele Sales???(Discontinued)Percentage Commission from Trips being served through its platform (Trip Based Commissions)Ola Money WalletOla Cafe (Food Delivery)?(Discontinued)Ola Store (HyperLocal Grocery Delivery)?(Discontinued)Corporate Tie Ups / Event Tie UpsVehicle On-Boarding FeeIn-Cab AdvertisementsFleet Leasing (To Drivers)Car TypePeak Time ChargesTrip Based CommissionsCustomers use Ola User App to book chauffeur driven cabs because either they don’t own a car or they do not want to use their own car for any reason. ? When ever consumers click on ride now the screen lights up with Trip Request at the nearest possible driver logged into the Driver App via Ola Algorithm and if the driver rejects the request, it is instantaneously passed on to the next driver in the queue. ?Which so ever driver accepts the request is presented with the location and details of the customer to be picked up. ?Once the driver reaches the destination (after dropping off the customer) he has to mandatorily click on “End Trip” flashing on his device’s screen. ?Once this is done, the customers payment is done?via Ola Money Wallet (Pre-paid) or via Cash to the Driver.P.S. The Customer can either click on Ride Now or Ride Later (pre-schedule cabs as per desired date and time).The Trip fare is a combination of:Travel Time (In Minutes) : Ola?charges per Minute of Travel Time after an initial free X minutesDistance Cost : Ola charges Per KM of Travel after an initial fixed fare Distance (varies as per the type of cab)Waiting Time : In case you made the driver wait, additional waiting time charges are levied to youService Tax on the total trip fareThe Trip fare once charged to your ola money wallet is credited into the driver’s account under the head of the trip number given to you in your bill copy if paid via cash then equivalent amount of cash is deducted while making payment to driver for the conducted trips.Ola deducts the Service Tax charged to consumer first, then its commission percentage, then applicable income tax on the balance amount and remits the rest of the amount to the drivers bank account at regular intervals (3-7 Days ).Assuming Travel Cost Per Minute : 5 INR (Travel time 40 mins)Assuming Travel Cost Per KM : 15 INRAssuming Service Tax : 14.5%Assuming Total Travel : 30 KM, (First 5 KM @ 100 INR)Total Fare : 100+ 40*5 (Assumption 1) + 25*15 (Assumption 5 & 2) = 100+200+375 + = 675 + 14.5% of 675 (ST) = 675 + 98 = 773 INROla’s Commission :?675 * 20% = 135 INR + 98 (ST – Payable to Govt)Driver’s Payout : 773 – 135 – 98 = 540 INR Less 10% TDS (As per Income Tax Act) = 486 INRThis is the primary revenue line and the most simplistic answer to?How does Ola Make Money.Ola Money WalletOla Money wallet is a virtual wallet kind of a service which can make payments at multiple vendor touch points including its own services of cab booking payments. ?(Yes you guessed it right, it’s somewhat similar to PayTM Wallet or FreeCharge Wallet etc).This will make payment via TDR (Transaction Discounting Rate) to those Merchants who will opt to accept payments via Ola Money Wallet.Ola Money also contributes to?How does Ola Make Money?For a Better Understanding on how Payment Gateways or Wallets Work, Please refer to the below links:Corporate Tie Ups / Event Tie UpsHow does Ola Make Money?from Corporate Tie Ups is a question that often is asked by Newbies to the startup world or atleast those who don’t understand what on earth is Ola doing by hiring corporate sales managers when majority of its business is done from the app.Well Ola Sales Managers actually meet admin heads of organizations and convince them to use Ola Cabs for their corporate in city travel requirements, No the admins don’t use the Ola App to book these rides, its done in a more traditional way of calling or doing it via an API via a dashboard.Rates are slashed down because of the larger demand from these corporates but the volumes ensure sufficient cash flow to Ola from this business activity.Vehicle On-Boarding FeeOla May charge a slight fixed fee for the driver to become a part of Ola’s aggregation model.In-Cab?AdvertisementsCommuters may be offered Pamphlets or Live Streaming Ads from various advertisers.Fleet Leasing?(To Drivers)Ola announced that it would buy cars and lease it out to drivers for a better loyalty of drivers towards the brand to ward off those drivers who used to be on both (Uber and Ola’s) network. ?This may work like a fixed daily / weekly fee to run the vehicle and the trip revenue going to the driver or a mix of fixed fee + trip based commissions.How does Ola Make Money from Car TypeOla?defines the type of Cars that it will call its Sedans, Compact Cars, SUVs etc. ?The Fixed Per KM charges, Driver Waiting time and Per KM Travel charges along with initial charges vary with the type of car chosen at the time of booking. ?At the time of writing this article the car types are?Mini, Sedan, Prime, Share.How does Ola Make Money from Peak Time Charges?At certain times when demand for Cabs outruns that of the supply of the cabs in the nearby locations, Ola may push the per km and other rate slabs per type of cab higher so as to generate more revenue. ?The rest of the calculations work in the exact same way as Trip Based Commissions (First Revenue Line Description).The fare and other things go up in multiples like 1 to 4-5 anything. Explain the information Systems architecture of a typical organization. (Kindly rectify this answer)Business Architecture is defined with adaptable business processes which are the heart of Business. ETVX is applied to detail out these business processes for detailing out their functionality as well as integration with other business processes. ETVX stands for Entry, Tasks, Validations and Exit. Entry defines the trigger point or entry point for the process. Tasks list out the steps to be performed by the computer. They essentially will map to program instructions that will be executed by the computer. Validations are the checks applied in order to ascertain that tasks are not violating and leading process to invalid state. Exit indicates closure/completion of the process. As pre-requisite to ETVX, one needs to list out all the data stores that will be read or updated by the process. In order to understand how a Business process is detailed through ETVX, let us study the example of salary processing function. Salary processing will contain data related to:?Employee records?Their designations and salary structures including basic, allowances, perquisites, awards, deductions?Employee bank account details?Leave Accruals?Allowances List?Deductions List?Perquisites List?Awards List?Pay History?Employee termination details?Bank Code list?Tax scales list?ReportsEntry - ?Date reaching end of month ?Employee resigning from organizationTask -?Get salary structure of employee?Compute basic, allowances, perks etc.?Calculate any pro-rata salary components if applicable for the month?Apply deductions?Calculate TDSIn case employee has left the organization?In addition to basic salary and allowances, encash leaves as per organization's policy?Apply deductions and calculate TDS?Compute full and final settlementValidation - ?Ensure salary calculation is done as per the structure defined for each employee?Check if defined rules have been considered. For e.g. in case a Salesman has made sales greater than Rs. 10L for the month, then he gets 5% commission.?Rules may differ for permanent and contract to hire employees.Exit -?Generate paysilp of the employees?Credit salary to employee's savings bank account?Credit employee's PF account, gratuity, superannuation etc.?Email payslip to employees and update in all systemsOrganizations have implemented standard ERP product. Since all the business processes are standard, describe the following:Why do they differ in their implementation successes rate?Why is their profitability different even though they use same ERP product?Doing it in the first place.Even before implementation the company is dilemma whether they really require it or not. Often large ERP implementation projects fail before they even start. Companies unhappy with their current system become convinced their reporting, integration, or efficiency problems lie in the software they are using. Convinced the grass is greener on the other side of the fence, they embark on a large, risky, and expensive ERP replacement project, when a simple tune-up of their current system, or a small add-on application, such as a better reporting system or employee portal, would address the problem at a fraction of the cost. Even a reimplementation of the same software is usually less costly than switching to another software vendor.No clear destination.To be clear with the expectations. Once an organization makes the decision to implement a new ERP system, the first step is to have a clear definition of success. Often, lack of consensus on the problems being solved, the outcome desired, or the specific financial justification of the project, leads to challenges later controlling the scope and maintaining executive sponsorship. Having a clear destination means defining the important business processes, financial benefits, and deadlines up front and making certain stakeholders agree how to address them. Without a strong definition of success, the end point becomes a moving target.A good plan or just a plan?A detailed plan is very necessary for successful implementation. All projects of this size start with some kind of plan. However, more times than not, the plan are not realistic, detailed, or specific enough. Companies build a high-level plan with broad assumptions or underestimate the amount of business change involved. Despite how obvious this sounds, it remains the most common mistake companies make. To be a good plan, it needs to identify all the requirements and the people who are going to work on them. It needs to be at a level of detail where a knowledgeable person can visualize the work, usually in work blocks of a few days. It needs to have a logical sequence of tasks, like leaving time in the schedule to fix bugs found in test cycles. Until you have a good plan, you really do not know when the project will end or how much it will cost.Part-time project management.A person experienced in project management makes lot of difference. There is some debate whether project management is a skill all good managers should have or whether the field will eventually develop into its own professional discipline, just like there are registered engineers, nurses, and lawyers. Putting that debate aside, it is clear software projects of this size need their own dedicated, experienced project managers. Asking the executive sponsor or the business owner to also manage the project as a part-time adjunct to their main role means neither job will be done well. Not just a scorekeeper, the project manager needs to be an active leader pushing for accountability, transparency, and decisiveness.Under-estimating resources required.Most common blunder to happen is with resources projected. Having a solid understanding of the internal and external resources needed to complete the project is critical. For internal resources, understanding the time commitment needed from business users, typically in the Finance, Accounting, or Human Resources departments, is one of the most commonly underestimated areas. During critical phases of the project, it is often necessary to backfill the majority of transactional employees by bringing in temporary resources. This frees up the users of the new system so they have time for implementation and training. For external resources, having an agreement up-front with your consultants and contractors about the specific duration, skills, and quantity of resources needed is critical.Over-reliance on the consultants.Too much dependability on consultant can make the team more redundant. Most ERP implementation projects involve consultants, for the expertise, best-practices, and additional resources they bring. While their outside experience is definitely helpful for a project, there is a risk that the company can become over-reliant on the consultants. The company needs to maintain control over the key business decisions, hold the consultants accountable, and have an explicit plan to transfer the knowledge from the consultants to the internal employees when the project is winding down.Customization.This aspect makes it or breaks it for an ERP tool. Most companies these days understand that customizing their ERP system adds risk, time, and cost to the project. In fact, customizations, along with interfaces and data conversion, are the main areas of technical risk in ERP implementations. Perhaps more surprising is that in a recent survey, less than 20% of respondents implemented their ERP system with little or no customization. Despite the risk and expense of customizations, most companies find it enormously difficult to control the project scope by turning down customizations. Customizations always start out small, but incrementally grow to become the technical challenges that derail these projects. Few ERP implementations have zero customizations, but take a very firm line on justifying even the smallest ones and manage them tightly.On the job training.Experience makes a lot of difference. The typical lifespan an ERP system within an organization is 10 to 12 years. With that in mind, most employees in a company have been through one or two ERP implementations in their career. Just as you would not be comfortable with a surgeon as their first or second patient, the leaders of your ERP project, both internal and external, need to have experience implementing your specific chosen system several times. This is one of the major benefits to working closely with an outside consultant or directly with the software vendor.Insufficient testing.It should be treated as rectifying stage. When schedules get tight, reducing the number and depth of test cycles is one of the first areas that often get cut. The purpose of testing in an ERP project is not to see if the software works. The purpose is to see if the system meets your business needs and produces the output you need. Reducing testing may not leave defects undiscovered, but it certainly increases the risk the ERP system will be missing important functions or not be well accepted by end users.Not enough user training.The management shouldn’t hurry to start using the tool without adequate training to users. Today’s modern ERP systems are being used by more and more personnel within a company. Beyond the Finance and Accounting departments, modern systems also cover procurement, supply chain functions, compliance, customer relationships, sales, and much more. If the system includes human resources or expense reporting, then essentially all employees use the system. Training hundreds or thousands of users, to the right depth, at just the right time, is no easy task. Leaving training to a small phase at the end of the project makes it very difficult for users to get the training they need to understand the system and have a positive first impression at the rollout.If ERP systems are the nervous system of a company, then doing an ERP implementation is like brain surgery: only to be attempted if there is a really good reason and not to soon be repeated. Unfortunately, ERP implementation projects often fall victim to some of the same problems of any large, complex project. However, there are some repeatable problems that good planning early in a project can work to avoid.Write pros & cons of eBusinessSame as Q. No. 3 What are the security risk associated with eBusiness? Challenges of E-BusinessThe rapidly changing business environment has led several companies to adopt e-commerce. E-Business brings about a lot of changes in the way firms work. It also throws up challenges that they have to meet in order to reap the benefits of e-commerce. The various challenges to businesses include technological challenges, legal and regulatory challenges, behavioral and educational challenges, and other miscellaneous challenges. Various issues pertaining to the implementation of new technology include security issues, choice of Internet payment instrument and its inter-operability, inter-operability of technology and technological application, comparative buying capabilities, richness and depth of information available over the Internet, lack of reliable network infrastructure, lack of e-commerce standards, deployment of public key infrastructure to enable identity authentication, technical integration of new technology with existing applications, and high cost of bandwidth. Challenges associated with legal and regulatory framework include the difficulty in regulating and enforcing standards, due to lack of consistent rules and policies; customs and taxation uncertainties; and government intervention.Changes in attitudes of consumers result in behavioral challenges to businesses. These challenges include lack of trust of customers and their fear of intrusion of privacy which makes them reluctant to involve in e-transactions. In addition, the rampant frauds taking place over the Internet and lack of awareness of customers about the availability of services poses a challenge to businesses. Miscellaneous challenges such as channel conflict, the problem of attracting and retaining a critical mass of customers, and the need to improve the order fulfillment process, are the other aspects that have become a cause of worry to businesses.Describe 4 stage approach to manage transition as part of change managementWe have discussed Advertisement, subscription, Transaction, Product/Service, affiliate based revenue models. Please suggest a new revenue model for eBusiness organizationNeed to write….Critical Success factors for an ERP implementationOne of the most common fallacies with ERP implementations is that organizations are prepared for the undertaking. Organizations need to not only recognize and understand the success drivers, but also to take action on related preparatory recommendations that support them.?Success is defined as getting what you want with the ERP implementation, on time, on budget and with a satisfactory Return on Investment (ROI).?The key success factors are:?1. Project Startup2. Management Commitment3. Project Scope4. Project Team5. Change Management, Communication and Training6. Customizations/Modifications7. Budget8. Project Closure?1. Project Startup?Perform the due diligence of getting the project on the right track by preparing all the necessary information and communicating it to the appropriate personnel.?Recommendations:?? Prepare/review the business strategy.? Prepare/review the IT strategy.? Prepare/review the ERP strategy.? Prepare/review the project scope (included in more detail below).? Prepare the organization for process changes and the new system by applying the proper change management strategies and techniques.?2. Management Commitment?An ERP implementation is going to impact how a company operates by updating business processes and changing system transactions. IT should not be the only area responsible for the project. Senior managers and mid-level managers should be involved in the project from its inception to its completion. This gives the project the proper visibility across the organization and shows the staff in general the importance of the project.?Recommendations:?? Involve management in project sponsorship, a steering committee, issue escalation and issue resolution. This involvement will help to maintain management support and keep them informed about the project.?3. Project Scope?The core ERP system will most likely not satisfy all the needs of the organization. Develop the ERP strategy and understand the components of the ERP, and how it will fit with other systems and tools. Define your project scope from a position of knowledge, fully detailing what the project is going to include.?Recommendations:?? Understand the business requirements and plan how they are going to be satisfied.? The ERP will satisfy some of your business requirements. Put together a plan as to how other business requirements such as data management, business intelligence, social media, etc. will be met.? Document items that are not in scope.?4. Project Team?The core project team should be composed of full-time personnel, including a project manager and others representing the core areas of the business. If a consulting integrator is used, the core project team needs to have a good and cohesive working relationship with the consultants. Also, identify a set of resources from the various areas of the business to provide subject matter expertise.?Recommendations:?? Use proven implementation methodologies and tools for the project.? Empower the implementation team to make decisions.? The core project team should be in the same location to aid in communication.? Create a competency center for post go-live support needs.? Identify subject matter experts (SMEs) from pertinent areas across the organization.? Project team to have a good working relationship with the consultants.?5. Change Management, Communication and Training?The ERP project will not only result in changes in systems, but also process and organizational changes. A change management team will be necessary for the organization to deal with the impact. The size of the team will vary depending on the size of the project and amount of changes. Training falls under change management, and the most common method is to “train the trainers.” Normally the software vendors or the consulting integrators will train the trainers, who are employees in the organization. This approach is most helpful, because the organization will end up with the trained professionals on its staff.?Recommendations:?? Create communication mechanisms such as a website, newsletters, road shows, lunch and learns, etc.? Develop good communication between the project team and the organization as a whole.? Key users should be involved with the project and its progress, as this will aid in acceptance of the changes.? Create a business case that shows the changes to processes and system functionality, and also the benefits brought about with the changes. Share the business case with the pertinent individuals within the organization.? Hire a third party to perform an organization readiness assessment.? Be prepared to train during the project and after the post go-live date.?6. Customizations/Modifications?Most ERPs are built with embedded best practices. An organization must keep a tight control on the customizations, as they may diminish the application of the best practices. These modifications may result in an increase in scope and budget as well.?Recommendations:?? Study other ERP implementations in the industry and see what customizations were required.? Perform a gap analysis and prioritize the gaps (High=Required, Medium=Workaround Exist, Low=Nice to Have).? Set clear expectations on the company’s position regarding customizations.? Create a process by which a business case must be created for every customization.? Be prepared to maintain these modifications as the software vendor releases new versions of the software.?7. Budget?Organizations must create a realistic budget to include all costs for the implementation, such as software, hardware and staff resources. Most organizations expect a timely Return on Investment (ROI) from an ERP project. Some companies reduce the project budget in an attempt to improve on the ROI. The areas most commonly reduced are change management, training and project management.?Recommendations:?? Create a good estimate of your implementation costs and keep tight control of the costs.? Do not cut costs in change management, training and project management. Instead, consider rapid implementation methods and tools. Some of the consulting implementers offer these methods and tools.?8. Project Closure?Having good project closure is just as important as the project start up. Personnel need to have clear lines of communication as to when the new system is going live and when the legacy system is being decommissioned. This also applies to the introduction of new business processes.?Recommendations:?? Communicate clearly when the new system is going live and when the old system is being decommissioned.? Communicate when new business processes will go into effect and old processes will be disabled.? Prepare to transfer system support functions from the project structure to the on-going system support structure.? Audit processes and system transactions to make sure they are working as planned.?Summary?Organizations exploring an ERP implementation must take into account these key success factors and recommendations to achieve greater success with their ERP implementations. These drivers are common areas that most system implementation projects need to address.?Describe the importance of PM & PTsA good performance management system works towards the improvement of the overall organizational performance by managing the performances of teams and individuals for ensuring the achievement of the overall organizational ambitions and goals.?An effective performance management system can play a very crucial role in managing the performance in an organization by:Ensuring that the employees understand the importance of their contributions to the organizational goals and objectives.Ensuring each employee understands what is expected from them and equally ascertaining whether the employees possess the required skills and support for fulfilling such expectations.Ensuring proper aligning or linking of objectives and facilitating effective communication throughout the organization.Facilitating a cordial and a harmonious relationship between an individual employee and the line manager based on trust and empowerment.Performance management practices can have a positive influence on the job satisfaction and employee loyalty by:Regularly providing open and transparent job feedbacks to the employees.Establishing a clear linkage between performance and compensationProviding ample learning and development opportunities by representing the employees in leadership development programmes, etc.Evaluating performance and distributing incentives and rewards on a fair and equated basis.Establishing clear performance objectives by facilitating an open communication and a joint dialogue.Recognizing and rewarding good performance in an organization.Providing maximum opportunities for career growth.An effectively implemented performance management system can benefit the organization, managers and employees in several ways as depicted in the table given below:Organization’s BenefitsImproved organizational performance, employee retention and loyalty, improved productivity, overcoming the barriers to communication, clear accountabilities, and cost advantages.Manager’s BenefitsSaves time and reduces conflicts, ensures efficiency and consistency in performance.Employee’s BenefitsClarifies expectations of the employees, self assessment opportunities clarifies the job accountabilities and contributes to improved performance, clearly defines career paths and promotes job satisfaction.Clearly defined goals, regular assessments of individual performance and the company wide requirements can be helpful in defining the corporate competencies and the major skill gaps which may in turn serve as a useful input for designing the training and development plans for the employees. A sound performance management system can serve two crucial objectives:Evaluation ObjectivesBy evaluating the readiness of the employees for taking up higher responsibilities.By providing a feedback to the employees on their current competencies and the need for improvement.By linking the performance with scope of promotions, incentives, rewards and career development.Developmental ObjectivesThe developmental objective is fulfilled by defining the training requirements of the employees based on the results of the reviews and diagnosis of the individual and organizational competencies. Coaching and counseling helps in winning the confidence of the employees and in improving their performance, besides strengthening the relationship between the superior and the subordinate.In a nutshell, performance management serves as an important tool for realizing organizational goals by implementing competitive HRM strategies. It helps in aligning and integrating the objectives with the KPI’s in an organization both vertically and horizontally across all job categories and the levels and thus helps in driving all the activities right from the bottom level towards one single goal.Or alternative SolutionThe Importance of Performance Management in BusinessYour employees are an integral and indispensable part of running your business smoothly and efficiently. That's why, keeping in mind the crucial role of your employees, a recent trend known as Performance Management has come into practice. Using performance management, you can ensure that your employees not only fulfill their responsibilities, but do so to the best of their abilities and up to your expectations.Performance management allows you to tap the full potential of your staff. In short, it can be described as a comprehensive process starting from monitoring and developing the desired traits to rating their progress and rewarding them for their achievements.Involve Employees in the Planning StageThe mere making of plans alone will not help you to run your business successfully. You must also focus on the appropriate ways to get business tasks done. One way of doing this efficiently is to involve your employees in the planning process. This will not only boost their morale and confidence, but also help you avoid any communication gaps in the process.Additionally, it will also help in providing them with a clear picture of what you expect from them and what they need to accomplish.Monitoring the Progress of Your EmployeesJust as revision of business plans is sometimes necessary for the success of your business, measuring the performance of every employee is also important. This ensures that tasks are efficiently completed on time and on or under budget. It also points out to you any shortcomings of either your staff or business plans, and helps you to take the appropriate corrective actions.Ensuring All Around Development of EmployeesPerformance management gives you the tools to instill the desired qualities in your employees in order to get the job done. Development is not limited to only individuals in your workplace, but also addresses the performance of the team as a whole. All around employee development not only ensures the personal and professional growth of your employees, but also the expansion and improvement of your business.Evaluation of Individual Performance Evaluating and rating the performance of your employees on an individual basis is essential. This gives them a clear picture of where they presently stand, areas that they need to work on and what they are good at. This way, they can focus more on their weaknesses and work to strengthen those areas.You should make it company policy to issue performance reviews while providing your employees with the feedback that they need to perform better at their jobs. Remember - just as it is important to point out your employees' weaknesses and shortcomings, it is also essential to commend them on their strengths.Rewarding Your EmployeesRewarding and appreciating your employees' efforts ensures that their level of their performance and consequently the performance of your business is not compromised. It ensures optimum productivity, performance and maximum profitability.Rewarding your staff for a job well done not only enhance their performance but also serves as a tool to keep them motivated. Therefore, performance management is an effective system that allows you to achieve the financial goals of your small business.B. Importance of Performance Target (PT)SETTING EFFECTIVE KPIs. Setting goals and a strategy for your business is important. However you then need to measure how the business is performing in order to understand if the firm is moving forward and is on track to achieve its goals. As such it is necessary to set Key Performance Indicators (KPIs). However many business owners and managers find this difficult to do and see the establishment of KPIs as a pen-pushing exercise and don’t dedicate time to do this.KPIs however, form a vital element of the business’s sales strategy, both for individuals and for the team itself. In order to create a shared vision, commitment and firm-wide motivation, it is vital that the KPIs are discussed with and agreed by each member of the team from the outset. KPIs should cover:KPIs Team targets (i.e. convert 75% of all leads during the first quarter of 2015)Individual targets (i.e. 80% of chargeable time billed each month in 2015)Key tasks The nature and specific tasks of your KPIs will depend very much on variations including the market sector and geographical area in which you operate. However, managers must ensure that they follow the SMART principal – that is, ensuring that objectives are Specific, Measurable, Attainable, Realistic and Timely.Depending on your business, it can be useful to adopt a traffic light approach for each client account, so areas of strength and weakness can be easily and quickly identified. This data can be fed into charts which can also be very useful when preparing KPIs, giving specific objectives and demonstrating how the results have a direct impact on the overall sales and business objectives.Once set, KPIs should then be reviewed on a regular basis, both with the team as a whole and with individual team members. Any variance in performance can then be identified and flagged appropriately, with remedial actions put in place before any aspect of the traffic light chart turns to amber. Bear in mind that KPIs should always be dynamic. For example, even if a KPI target hasn’t been met, the individual or team performance may still be on course to achieve the overall sales objective, and the KPI target may need to be lowered. Similarly, if a target has been met, then it may need to be increased at intervals, to maintain drive and motivation. Goal SettingGoal setting is an effective tool for progressive organizations, because it provides a sense of direction and purpose. Employees benefit greatly from understanding what is expected of them and how they can measure this success (or lack thereof). A clear concept of achievement leads to independent personal development, and goal setting can improve the organization's performance. Challenging goals tend to result in higher performance than easy or no goals.Goal setting means establishing what a person or an organization wants to achieve. In setting these objectives, managers must ensure the goals are both understandable and achievable to meet performance targets. The SMART model is a good framework to keep in mind when generating goals and objectives. It aims to design goals that are specific, measurable, achievable, realistic, and time-targeted (SMART).We have discussed the impact of GST on ERP systems. Please explain the process to implement is successfully for your organizationAn ERP Implementation of GST in IndiaThe Government of India is committed to introduce GST by April 2017. (Most probably otherwise it will be by July 2017,Not sure yet )or any other decided date by the government based on The circumstances & situation, Tax payers need to be GST compliant to be able to test system changes in time. Depending on the operating geographies, size and sector, the changes would be substantial and may require proactive planning with a time-bound action plan. Now it is quite cleared that GST is going to become a law from the date of declaration by the governmentGST would bring in significant change in doing business in India. Advocacy for best practices, gearing up for changes in processes, training teams and developing IT systems for being GST compliant are the key areas to be assessed.In order to prepare for the implementation of GST, companies need to understand GST policy development and its implications for scenario planning and transition road map preparation.Most of the business people in india In keeping with the federal structure of India, it is proposed that GST will be levied concurrently by the Centre (CGST) and the states (SGST). It is expected that the base and other essential design features would be common between CGST and SGST across SGSTs for individual states. Both CGST and SGST would be levied on the basis of the destination principle. Thus, exports would be zero-rated, and imports would attract tax in the same manner as domestic goods and services. Inter-state supplies within India would attract an Integrated GST (aggregate of CGST and the SGST of the Destination State).GST has all the ingredients to be great. Making it practical and convenient, by removing this one MAJOR lacuna, will go a long way in its ‘welcome embracement’ rather than ‘resisted embracement’. Being technology led, it also has all the ingredients to spiral upwards the trust deficit, rather than spiral downwards. If all of us, as responsible citizens of India, rally together to help make it Great, we will all live together in a Greater and Grander IndiaIt seems that after coming of GST law, lots of time of a person is going to be devoted on furnishing/correcting details/returns under GST Law and do follow up, with supplier, for non-matching of input tax credit and also being followed up by his recipients/buyers.The corporate landscape for GST is rapidly evolving with the proposed amendments and is expected to impact the Tax Structure, Tax Incidence, Tax Computation, Utilization and Reporting leading to a complete overhaul of the current indirect tax system The problem is not the ‘management of a manifest risk’ – the problem is the side-effects of cash flow, improper accounting, and reduced ability for people to trade with new suppliers and new customers – since there is uncertainty about the business outcome.Now the questions arises is how businesses will plan to its for successful implantation in exiting ERP or move forwards towards another ERP, But it is certain that Organization must implements this with proper plan and guide line .... GST System Changes Blueprint into three parts. The first part is GST Scope Identification. Organization has to assess their own scope of supplies. There are 5 types of supplies to determine -standard rated,zero-rated,exempted,out of scope andDeemed supply.Similarly organization needs to identify the purchases and expenses of which 7 types of classification can be determined -Purchase with GST,Purchase from non GST registrants,purchase of disallowed expenses or blocked input tax,importation of goods,out of scope purchase,exempt purchase andzero rated purchase.Please take note that importation of services subject to reverse charge mechanism. Generally monetary transactions will not subject to GST. I add Employee Benefits as part of GST scope because it does have impact on goods for employee with consideration will trigger the GST. Please do not forget about the staff claim that involves GST Input Tax on purchases, local accommodation, medical expenses and others.Lastly are the Capital Goods. Fixed Assets can now claim for GST Input Tax except for few which to be used other than direct business prospective, However, organization has to determine whether it will subject to any capital goods adjustment on its fixed assets.The second part is the GST System Changes components:-Master setup,Tax invoice and supply chain format,GST Accounting,Integration between business systems and accounting system,GST Summary report, GST purchase and supply listing,GST Audit File.As the organization uses the business systems, it shall know about the strength and limitation of their business systems. This part is to document about what changes to be made to the current systems to make it GST compliant. Certain key users in the organization have deeper and wide knowledge about their systems because they used for years. System consultants may have less experience than those senior end users. This part is to address whether the current systems able to support continuous system changes for GST compliant. It is up to software vendor to commit that it can be done or not.The third part is system specification. It comprises ofComponent attributes,Internal controls andSystem workflow adoption.The component attributes are the items whether the business and accounting systems can perform basic or advance GST functions. Basic function is necessary for handling GST Operation and advance features require for input tax recoverable ratio and handling of TX-RE. This will apply to any business systems as not all organizations use accounting system to generate tax invoice and supply chain documents. For example, organizations with e-commerce portal need to modify the process logic for GST calculation.The internal controls address the data capture, process, output and storage. The permission control on data security ensures that only authorized users can use the system and the process logic shall enable the systems to rectify its errors if a transaction is going wrong. It gives the correct type of data output in correct format. It shall address on how to backup the business systems and accounting systems and a restoration in case of disaster recovery.Even though it has only a few months towards April 1, 2017, it is still necessary to prepare GST System Changes Blueprint for the efforts and clarity about what to change in the business and accounting systems. It may not surprise that many challenges in the system configuration and customization will surface during the course of GST System Changes Implementation.A. All GST compliance requirements in the existing systemNo. Application of the GST patch is just a part of an elaborate and complex procedure. In addition to its deployment, the GST implementation process would consist of:Fine tuning of the business processes involving indirect taxesRestructuring of pricing and tax configurations in line with the GST requirementsChanges to the chart of accounts and account determinationModification to custom developments, forms, reports and interfacesModifications to the master data, mainly materials, vendors, customers and pricing conditionsMigration of the open sales/purchase transactionsRevaluation of stock and available tax credits in line with the GST lawInterface with GST Network (GSTN) for filing returns.B. A detailed GST impact analysis is conducted by organisations from an ERP perspective. The following are the guidelines for the impact analysis:1. Business scenario coverage:Ascertain the existing business scenarios to be impacted by GSTIdentify any relevant business scenarios not mapped in ERPValidate the adequacy of the ERP organization structure for mapping of the relevant business scenarios2. Verify if the localization version of the ERP system is updated3. Ensure correctness and completeness of master data (such as vendor, customer service tax registration numbers, VAT registration numbers, etc.)4. Analyse the impact on various reports which are submitted to the tax authorities.5. Adaptability: The ERP system needs to be checked for the appropriate version and upgraded if required. The necessary upgrade notes may need to be implemented to make the system GST compliant.6. Business process refinement: All tax-related inward and outward processes will be required to be reviewed, and as applicable, aligned as per GST requirements. Business processes, such as interstate stock transfers, subcontracting, etc., will need to be closely evaluated; taxes may be levied on such transactions as part of GST. In addition to this, the process for tax utilisation at the month-end will be required to be set up as per new policies. 7. Tax configuration and computation: Tax calculation procedures are likely to require a major change to accommodate the new taxation requirements. The appropriate consideration will be required so that it fulfils the requirement of monthly tax returns. While making the configuration changes, due consideration must be given so that the system is not only GST ready, but also scalable and adaptable to future changes in the Indian financial environment.8. Document numbering: Unique sequential numbering for outgoing GST invoices numbering may be specified, these need to be configured as per the directives by tax authorities.9. Master data amendments: Various master data, such as chart of accounts, material master, vendor master, customer masters, price masters, etc., need to be updated as per the new taxation requirements. The vendor and customer GST registration numbers will be mandatory for availing or passing the credits, and reporting purpose.10. Reporting and printing requirements: The appropriate reports will need to be developed based on regulatory requirements. The necessary changes may also be required in the existing forms, such as contracts, purchase orders, quotations, invoices, etc., to reflect the correct taxes.11.Impact on interfaces: The impact on any interfaces with third party tools, if any, should be analysed on a case-to-case basis.12.Tax credit migration: The tax credits from existing deductible taxes, such as excise, service tax, Value Added Tax (VAT). etc., will need to be updated or distributed to the appropriate account as per the directives of the new tax system.13.Closure/reversal of partially open transactions: Partially open transactions, such as goods received but invoice not booked, or goods issued for sales but not received by the customer, etc. need to be closed or reversed and migrated to the new tax system.14.Migration of open transactions: Open transactions, such as contracts, purchase orders, and sales orders, need to be migrated to the new tax system.reconcilation of books of accounts, GR/IR Accounts, posting of all CWIP accounts15.Managing exceptional transactional requirements: Apart from the target solution for GST, temporary provisions may be required in the system to handle scenarios, such as returns of goods sold or purchased before GST and returned after GST implementation, stock in transit during cutover activities, etc. In addition to above mentioned road map I wish to bring it to the higher level and become a GST System Changes Blueprint. It shall prepare during assessment and project planning stages. It can help to estimate the efforts and potential challenges to co-ordinate multiple software vendors to work together for system integration Software vendors may not know all the requirements despite of they are the owner or experienced agents on the software. Please take note that organizations took many years to develop their business and accounting software to the current state. The statutory needs to switch the current software into GST compliant in less than 180 days. Many business logics and changes not documented properly for years may not know the exact configuration in the systems. This increases the difficulty to modify the current systems for GST System Changes. The software may develop from many consultants and some were no longer working with the same software vendor. Highly customized software will face the challenges to understand the custmomized components that built previously by the sytem consultants.Therefore organization shall take a step ahead to determine about what its wants for GST Operation by developing a GST System Changes Blueprint. It shall determine whether the existing processes can be maintained or new processes shall be developed to overcome the system challenges.GST System Changes Blueprint shall form part of the GST Implementation Blueprint. It is a document that summarizes the assessment on business and system domains for GST compliance. It identifies the number of business systems involved in the organization that need to adopt system changes. Please take note that GST may impact many business systems than we can think about it. It is not only affecting accounting system but all systems that feed data into accounting system. For example, a Customer Relationship Management that processes Sales Quotation and Sales Order need to modify for the scope of GST and Procurement System that handles purchase requisition and purchase order need to display GST information. If those supply chain documents require matching with Tax Invoice and Purchase Tax Invoice, then the entire system flow for matching fields may need to re-design due to the changes in process logic and calculation sequence. ................
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