Let us understand business transaction here as an elementary interaction between producers of goods and services and their clients. This elementary interaction includes a minimal informational exchange, allowing easy decision-making. For example, we speak of business transaction when I enter the shop and ask the sales assistant to tell me about the specifications of some unit. Theoretically, if the sales assistant successes to convince me of the good specifications of the unit, I will make a purchase (sales transaction). Though, even my visit of the shop can be regarded as a business transaction, due to the fact that I have certain demand and I can realize it in this particular shop. 
 
The art of accounting and analyzing of business transactions, representing the essence and system of constant production and consumption processes, is an important factor allowing to raise production and sales efficiency. I should say that the idea to use business transactions dawned on me thanks to the project of automation of multimodal transportations. In fact, what should lay in the basis for describing the business logics of transportation of goods to different countries (especially given the unpredictability of situation in Russia). Accounting systems, documents turnover, business rules vary in from country to country. So, the question arises: what is the best way to formalize the business processes description? The answer is: we can make it using business transactions, the simple operations including manipulations with goods as well as financial operations.
 
It gets more interesting further on. The first step was the automation of accounting systems. Then people created simple systems of trade and services automation. Further on it all grew into ERP systems. Along with ERP systems there appeared automation systems of documents turnover. It was reasonable due to the fact that each business operation should be supported by documents in accordance with the state fiscal policy, laws defending consumer rights, etc. Finally CRM systems appeared reflecting all interrelations with the clients.
 
So, we started the automation from the final point of producer-consumer interrelations. First of all, we needed to pay attention to accounting – to know the amount of taxes we have to pay, then to full calculation – to know the total income and expenditures (net profit), now we are interested to know the quantity of our potential clients as well as the quantity of our clients who prefer to deal with our competitors and the reasons.
 
Here we have come up to quantitative estimations of marketing investments. I mean that we make business transaction when we send by post an envelope with some advertising prospect to the address of our potential consumer. We have shared our advertising information with our consumer hoping that he will become our customer. As far as newspaper advertising is concerned, when place an advertisement we hope that, having read our information, the readers of this newspaper will buy our goods or services. The latter is business transaction as well, which can be registered in CRM or ERP systems (however one can fail to do that).
 
Certainly, there are lots of various ways to estimate the efficiency of such undertakings: for example, we can estimate the efficiency of advertising campaigns (% of publications), efficiency of marketing investments (% of expenditure). Here we deal with trade axiom, which I found many years ago. The principle of this axiom is as follows-the higher the payments to potential clients (meaning payment of any form, like advertising, propaganda, lotteries, discounts, bonuses, etc.) the higher the probability of buying goods or services. A deeper sense of the trade axiom lies in reducing the costs of business transactions. It is quite reasonable, as the lower the cost of business transaction, the higher the probability of its realization.
 
Now we are coming up to the most interesting things. It is clear that the better we know the structure and the quantity of our business transactions from the very initial point, the more precisely are able to plan our expenditures (cost of business transactions) on realization of our goods and services. Everyone pays for transactions – both producers and consumers. However, the cost of business transactions is limited by the buying capacity of consumers. For example, we can cover the cost of a hundred of business transactions trying to sell limousines, but our consumers can hardly allow buying some of them. Here you may raise the question: if we cover more business transactions than our consumers can afford, does this money disappear? The answer is NO! Thus we pay for services of our competitors, who produce other goods and services. From the global point of view, in the system of production and consumption all capitals spent on all business transactions get distributed among all business transactions according to the present demand.
 
Here the logic is simple too. Along with advertising we usually face its opposite side-anti propaganda. Advertising, supposed to help you sell some goods, can play a trick with you – your potential client convinced by your advertising material that he actually needs some goods, enters a neighboring shop of your competitor and makes a purchase. You have to admit that, having made certain mistakes, you have covered the cost of business transactions of your competitor. So, it is important to organize your accounting so that it would allow estimating the cost of elementary business transaction, from the estimation of cost of demand up to the realization of goods and services to the final consumer.
 
Obviously, as soon as a client buys your goods or services, the cost of business transactions between you and your clients gets reduced. So, the client gains if he visits your shop further on. He will gain from buying your goods and services further on simply because he will not have to waste time searching and analyzing other offers. Besides, constant discounts, bonuses, and other advantages you offer your regular customers also reduce the cost of business transactions both for you and your client. Thus, automation of accounting and management based on the notion of business transaction represents a flexible and unified solution from the point of view of optimization of expenditures on business transactions.
 
Later on informational management system based on business transactions can be extended and integrated with depot programs, accounting and documentary turnover systems, etc. At the same time, you still will be able to make an initial analysis of consumption and realization of goods and services on the basis of business transactions cost.
 
All the above-described logic refers to any kind of people’s activity and does not join specific field, goods, services or state with its political situation. I am convinced that business transactions existed even on early stages of human development. However, they did not depend on formalities, and their efficiency was low as well.
 
Certainly, it is hardly possible to make a full calculation of business transactions without computers and global networks. However, institutions allowing manipulating these notions at intuition level existed in pre-computer period as well. As an example, let me draw migration of population from one continent to another in order to produce some goods and services (migration of Italians to Brazil in order to produce coffee). Now that we live in the age of global networks, such necessity has almost gone, for the exception of some production processes bounded to a specific territory. Though, exportation of capitals and technologies from one country to another, their adaptation to local conditions allow to avoid global migration processes, in accordance with the map of business transactions cost. Globalization of the world economy also confirms the latter thesis. If we use a reduced world currency to estimate the cost of business transactions, we will quite naturally get different indexes in different countries and even sometimes in different areas of one country. However, from the point of view of global economy we are facing the process of equalization of the cost of business transactions in different regions. The introduction of the EURO currency is the best proof to this thesis.
 
Let me draw one more factor. Press, radio, TV and Internet advertising is a kind of a breaker of citizen rights. The citizen does not at all want to be forced to accept any commercial information. A citizen of a democratic country is free to set his points of interest, to determine whether he would like to buy some information or not. The main target here – information should be available at any moment, must correspond to reality and be included into analytical reviews.  In fact, all the above-mentioned factors are the essence of decision-making processes. Before the introduction of the Internet it was possible only through informational pressure. I judge from my own experience. Years before I placed press and TV advertising. Now the only thing left is the Internet. However, if I see lots of banners in the site window I get disappointed, as I am interested not in twinkling windows, but in information. As far as search systems are concerned, they success to find what I look for: they can both find the necessary information and analyze the search results (what to buy and where). Moreover, it is a great pleasure for me watching my home people getting involved into the same processes. The first source my wife and son use to find some necessary goods is the Internet (and the best way to make a purchase is to find what you want in some Internet shop), while the traditional newspapers, TV and radio have a subordinate role.
 
Personally, as a consumer, I prefer to pay only for information that I need, and not for information that they try to foist. Here we again meet business transactions and their cost. We stopped to subscribe to periodicals, and why should we proceed if via the global network we can buy anything and have business relations with people we are interested in. Thus, as a consumer of goods and services, I gain from reducing the cost of my business transactions, from the point of view of both purchasing of information and optimization of choice of producer and seller.
 
It is rather funny, but here we face reverse processes. Using such systems, producer can get a detailed picture of who, where and how seriously gets interested in his products (Just imagine, that into each newspaper we insert a small computer, which will inform us what the reader is interested in and about the percentage of readers interested in fantasy). With the development of global networks fantasy has become reality. Now we can make a precise estimation of cost of one business transaction. Now it is possible to plan the amounts of money investments into customers. In fact, it is no use launching an advertising campaign of expensive cars in poor regions, where people may get interested in these cars just for curiosity, as they simply cannot afford buying such expensive cars.
 
Though the global network has not yet become as available as “Ilyich lamp” (meaning when it can be compared with ordinary electricity), still it is developing rapidly along with technologies, and integration of global systems with local informational management systems become an important factor of effective management.  It can be proved by unification and standardization of informational exchange. XML, for example. However, whether a company successes to apply the given instruments depends entirely on its management, on the shareholders’ desire to invest money in progressive technologies, in generation of “Internet and Pepsi” (I would add the generation of people keep on the Internet).
 
Here we speak not of applying expensive computer systems, but of changing the approach to planning, business management and business transactions management, of integration of company’s activity into the global informational field. I suppose, soon the day will come when we will introduce systems of BTM (business transaction management) based on accounting, control and analysis of business transactions, from marketing undertakings up to constant servicing of favorite client.

Last modified: 11.05.2003
Translation by Elena Polyanskaya