INDIAN INSTITUTE OF TECHNOLOGY ROORKEE

DEPARTMENT OF MANAGEMENT STUDIES

BM-658: E-Commerce and E-Governance
1st Semester 2020-21
End-Term Examination
Duration: 3 Hours Max. Marks: 50

Respond to any 5 questions. Question number 1 and 5 are compulsory. Each question carries 10 marks.

Q1 Short case (Compulsory)

The Balaji Group was founded in Maharashtra in 1938 and is one of the largest companies in the country
with a fabulous trajectory. It started as an automotive company and produces low-cost two-wheelers,
three-wheelers, and commercial vehicles. In the last decade, it was the third largest two- and three-
wheeler manufacturer in the world, with an annual turnover of Rs 160 billion and a presence in most of
the continents.

In the year 2000, the company faced challenges of increasing its profit by increasing both the top line and
the bottom line. This needed to extend the reach in market through better understanding with wholesalers
and retailers and also efficient and timely supplies at lower cost. The approach could only be to develop
enterprise-wide information system that would enable both vendors and channel partners to collaborate
with the company in a reliable and real-time manner. The management took a call to implement an E-
Commerce system for valuable information related to parts delivery, demand, credit levels, scheduling of
components etc.

All the new products from the company are thereafter managed by the E-Commerce system to support
market penetration initiative. The system can connect its four plants, 16 regional offices and 10
warehouses in the country. It established close relations with dealers who regularly interact with
customer. The demand, requirement and feedback of the customers are easily recorded. Further, there was
requirement to capture pre-sales data and gain deeper insights about the brand. With this in mind, the
company adopted the E-Commerce portal, and online front-end of the ERP system, that could allow all
the dealers to enter information directly regarding orders, transmit this information to the relevant
department, where the department could check the credit level of the dealer and approve the order. The
dealers at remote locations can also check orders status, find out about the order date, and also the carrier
who could deliver the order. This integration speeds up the process of demand chain.

The information related to demand fed by the dealers are mined for launching new products. The features
preferred by the customers can be noted, the region where the features are in demand, the seasonality etc.
can be identified. The company can also predict how individual feature can impact the market as they are
able to base them on reliable demand information.

The ERP system also established relation between vendors and the suppliers. Vendors can check their
own status and provide information related to deliver of their goods, in what quantities, and their
expectation of payments. They can also receive order for parts and the system can help them in inventory
shortfalls. The company uses the supplier data to manage inventory and manufacturing. This in turn helps
them to reduce cost as working capital costs were reduced with careful inventory planning.
After seven years in 2007, the company developed another system that helped them to connect the dealers
with the customers in a better fashion. The system helped to manage spare parts for its two- and three-
wheelers. Spare parts are carried by the network of dealers, which now has expanded to 600 all over the
country, and 17 distributors. Spare parts consisted of 15,000 individual units that could be demanded by
any of its dealers at any point of time. The most important thing about spare parts is that its immediate
demand from customers and if the dealer fails, the customers are really angry and it affects the image of
the company. To ensure the proper management, the company introduced a new module in the SAP
system that could eliminated manual processes in inventory management and improved customer
satisfaction.

In 2012, the company sold 2.55 million two- and three-wheelers around the world. The company planned
to recap 5 million by 2020. The management decided not only to upgrade ERP but also introduce
virtualization that would allow to manage the systems for scalability and also keep costs down. The E-
Commerce upgradation was planned very carefully, having intense conversations internally with different
departments and also with vendors and other users of similar systems. The system would impact at least
30 internal process and the management needs to ensure that the change essentially meets the business
requirement.

a. What are the key drivers for Balaji group to opt for an E-Commerce system? [Marks 5]

b. How did Balaji group plan to roll out and leverage its E-Commerce system to gain competitive
advantage? [Marks 10]

c. What are the potential scenarios and technological in E-Commerce advancements needed to enhance
the business processes? Explain with examples. [Marks 10]

Q2 Supply chain management is less about managing the physical movement of goods and more
about managing information. Discuss the implication of this statement with examples.

Q3 MakeMyTrip is a leading online travel agent and has surpassed the expectations of the travelers.
You have to investigate its existing business process and describe the potential improvements.

Q4 What are the principal payment systems for e-commerce?

a. Name and describe the principal electronic payment systems used on the internet.
b. Describe the types of payment systems used in mobile commerce.
 Q5 E-Governance Case Study (Compulsory) (10 marks)

Application

FRIENDS (Fast, Reliable, Instant, Efficient Network for Disbursement of Services) centres offer a one-
stop, front-end, IT-enabled payment counter facility to citizens to make all kinds of government payments
in the state of Kerala in South India. The centres are a project of the Kerala State IT Mission, an executive
agency of the State's Department of Information Technology. The software for the centres was developed
with ASP, Windows 2000 and SQL RDBMS. One important feature is a provision for adding more
modules and a queue management system. Client/server architecture, consisting of a network of one
powerful server (Windows 2000 Server/ MS SQL Server 7.0 - Pentium III 850 MHz or above) and 10 to
20 normal PCs (Windows 98/Me - Celeron 600 MHz or above), is used in each centre.

Application Description

FRIENDS seeks to extend the benefits of fully-fledged computerisation of individual departments to

citizens, even before the whole back-end computerisation is completed. The counters are equipped to
handle around 1,000 types of payment bills (in various combinations) originating out of various public
sector departments/agencies . The payments that citizens can make at the counters include utility
payments for electricity and water, revenue taxes, license fees, motor vehicle taxes, university fees, etc.

Firewalls safeguard the data from manipulation and other misappropriations. Print outs of transaction
details in a particular counter are done on the printer attached to each terminal, on pre-printed stationery.
Printing of a receipt for the citizen is done simultaneously with saving of the transaction on the hard disk.
The application has provisions for adding more modules and for rolling back incorrect entries without
affecting the database even at the user level. The centres are not networked with the participating
departments/agencies and therefore the printouts of all payments made are taken and physically handed
over to these organisations for processing.

Application Purpose

As in all Indian states, Kerala has a number of different government and public sector organisations
collecting taxes, utility bills, and other fees and payments. Individual citizens have historically been
expected to pay at the office of the department or the agency concerned. This means that every citizen has
to personally visit at least seven offices and stand in queues waiting their turn to pay the taxes and other
payments due to government. Some efforts were earlier made to facilitate payments through the banking
network. However, given the fact that many banks and government departments/agencies were not
computerised, this effort only led to delayed collections and reconciliation problems. Moreover, only 2 to
5 percent of the population used this facility. It was against this background that the FRIENDS project
was conceived, enabling citizens to visit a single location to pay all bills without the requirement for back
office computerisation in the involved departments/agencies.

Stakeholders

The major stakeholders include the State Government, the citizens, the employees of FRIENDS,
participating public agencies/departments and Kudumbasree units ( self-help groups of women from
below the poverty line who have undertaken some of the auxiliary data entry and related work for the
centres) . Government was able to provide better service to the citizens and also demonstrate the benefits
of ICTs in governance. Citizens now get better services at lower direct and indirect costs. Employees
were deployed from participating departments with a common designation of 'Service Officer'. The
participating departments have felt threatened on account of the loss of power and authority that
FRIENDS represents by separating them from direct dealings with citizens and payments.

Impact: Costs and Benefits

There are indirect costs and indirect benefits of the project including the aspect of opportunity costs, but it
is very difficult to gain evidence on these. Some of the major direct costs and benefits, both financial and
otherwise, are provided below, mostly based on a study by the author. The FRIENDS centre in
Trivandrum (the state capital) required some US$80,000-worth of capital investment (including
software). This was the pilot centre, and has 20 counters. Centres in other locations, which have an
average of 10 counters, have required an average investment of US$48,000.

The average monthly recurrent expenditure incurred by each centre comes to US$1,340, which includes
hardware maintenance charges and payments on account of rent, electricity, etc. These costs are borne
centrally by the Department of IT. The salaries of the Service Officers are an additional recurrent cost,
covered by those government departments that collect payments at the centres. FRIENDS centres can also
be used for payments to BSNL (a Government of India-owned telecommunications company). BSNL
does not provide staff at the centres; instead, it provides a transaction payment of roughly 12 cents per
BSNL-related transaction, giving an average monthly income for each centre of US$250.

It has been calculated that, w ith FRIENDS, citizens need to spend an average of only 35% of the cost
involved in making separate payments at department counters. By saving on travel costs, costs of using
agents, and related costs, citizens using FRIENDS centres therefore make an average monthly saving of
about US$1 per citizen. Moreover, on average, citizens save about 42 minutes of their time every month.
On average, each centre deals with around 400 citizen transactions per day.

The level of satisfaction could be gauged from the fact that 97.4 % of users prefer FRIENDS to
department counters according to surveys undertaken. The increased participation of women customers is
also a positive contribution. Moreover, the project in itself was able to convince 80.1% of the user-
citizens of the possibilities of ICTs in providing better citizen services. It has also demonstrated that, with
appropriate training, skill upgradation and technology, existing government employees can deliver better
services.

Evaluation: Failure or Success?

The project can be considered largely successful, verging on a total success, considering the direct and
indirect benefits and win-win situation provided to both government and citizens. The front-end
first approach has been proven as a way forward for e-government. Of course, t he real solution to the
problem of multifarious government entities lies in undertaking major administrative reforms. To that
extent, FRIENDS can at best be seen only as a solution to the symptom and not to the real problem.

Enablers/Critical Success Factors

1. Front-end first approach . The completion of back-end computerisation in government

departments of developing countries takes a lot of time on account of fund paucity and procedural
hassles. Even if the process were completed, each department, due to socio-political reasons,
would essentially end up as stand-alone projects delivering their services in an ICT-enabled
mode. This would mean that citizens would continue to run from one agency to the other to
 complete their transactions. FRIENDS had two major advantages over back-end computerisation.
One, the benefits of an ICT-enabled system were offered to citizens at a much earlier date rather
than waiting for completion of back-end computerisation. Two, it ensured the irreversible (due to
public response) integration of service delivery through one single window.
2. Immediate and high visibility with wider public participation . Conventional wisdom suggests
that business process re-engineering precede ICT implementation in any organisation. Even more
than in business organisations, process re-engineering in a democratic government is time-
consuming and cumbersome on account of the democratic institutions and interest groups
involved in the process. While the importance of administrative reforms cannot be questioned, it
is important to also have a reform strategy delivering quick, high-visibility gains to all sections of
society. FRIENDS has managed to accomplish this. It is felt that a sufficiently successful project
of this nature would ensure credibility for the use of ICTs in government and will also provide the
pull factor for the long-term use of ICTs in government.
3. The human factor . The contribution of the human factor to the success of FRIENDS project has
been enormous. Though technology was a key enabler, it is ownership of the project by the
Service Officers that has critically helped. A combination of appropriate training with emphasis
on behavioural aspects, skill upgradation, technology and good ambience created the appropriate
motivation for these officers to deliver better services.

Constraints/Challenges

1. Departmental compartmentalisation . The governmental structures are such that each department
undertakes a specific task (usually vertical in nature) and delivers only part of a process that an
individual citizen needs (usually horizontal in nature and cutting across departments). This
administrative convenience has created strict compartmentalisation of departments with
employees and heads of departments interested only in the affairs of the department without
usually having the larger picture in mind. As an integrated front-end project with one single
interface, FRIENDS was opposed by the participating departments on account of the fear that
they would loose their existing authority and power. This was particularly evident in Kerala,
which is ruled by a coalition government, with different political parties in charge of different
departments.
2. Procedures and processes . Though the State Government has a consolidated fund for operation
of its activities, separate budgeted heads are operationalised for each department. Money remitted
by the citizens at any counter could pertain to a combination of departments/agencies. Though for
all practical purposes, the collection at FRIENDS is equivalent to remittance to Government,
individual departments insist that their share reach them at least by the next day. There is stiff
resistance from all quarters to changing and rationalising these procedures. Moreover, the rules
and procedures framed under each department caused major constraints in the implementation of
the project.
3. Updating details in departmental registers . FRIENDS centres are not networked with the
participating departments and therefore printouts in specific formats are taken and physically
handed over to these departments. Due to clerical errors, some of which were initially deliberate
by the employees of participating departments, transaction details entered in the FRIENDS
centres are at times not documented in the department registers, leading to the disconnection of
service (e.g. electricity or water) in spite of the citizens making payments. This led, on a few
occasions in the early stages of the project, to the threat of terminating the FRIENDS project.
This was finally controlled by an order from the Government (with top political leadership
involved) stating that a receipt from a FRIENDS counter would be equivalent to a receipt from
the participating department/agency.
1. How to build a front-end user interface before completing the whole back-end computerisation
process.
2. Why human factor is critical for the real success of any e-government project?
3. How to focus on immediate benefits and high visibility with broad citizen benefit .

Q6 What is SMART Governance? What are interactions in e-Governance between stake holders?
Q7 What are dis-advantages of E-Governance? How to over-come challenges related to E-
Governance?