E-business Unit 3 MBA II Sem (1)

8/10/2019 E-business Unit 3 MBA II Sem (1)

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e-Business B2B

The

Business of the Future

Information Collection for MBA II Sem e-BusinessSRTMU By Dr.Dhande


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Introduction to E-Commerce

E-Commerce is a generic term used for a rangeof technologies available which transfer dataelectronically: fax, e-mail, voice mail, electronic catalogs, electronic

funds transfer (EFT),electronic data interchange (EDI),electronic forms

two main types: business to consumer (B2C) andbusiness to business (B2B)

B2B EDI, used by 95% of the Fortune 1,000 companies,is the most common form of e-commerce today


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Advantages of E-Commerce

Shorten Procurement cycles through the use of on-line catalogues, ordering and payment

Cut costs on materials through competitive bidding

Gain access to world wide markets at a fraction oftraditional costs

Ensure product, marketing information and prices arealways up to date

Allow small and medium size businesses to competewith large businesses over a common platform


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Risks in E-Commerce

Can cause disintermediation which is the process ofcutting out the middleman by bypassing traditionalretail channels (retail stores and mail-order houses)and selling directly to the customer

Lack of insurance available to cover losses due tohackers destroying files, stealing inventory, tradesecrets or injecting viruses into the systems

Requires firms to rethink their business models andways of interacting with customers

Traditional audit trails change or disappear, makingerror correction, disaster recovery, and applicationtesting more difficult


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Business to Business E-CommerceMost EDI was done over private networks but

there is a big push to establish commonstandards to use it over the Internet:

Open Trading Protocol(OTP)-intended tostandardize a variety of payment-related activities,

including purchase agreements, receipts forpurchases, and payments

Open Buying on the Internet (OBI)-standardcreated by the Internet Purchasing Roundtable to

ensure that all the different e-commerce systems cantalk to each other

These standards work in a similar fashion to theANSI X12, which you already learned about.


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Business to Business E-CommerceExample:

The automotive industry is investing in a new venture,the Automotive Network Exchange (ANX). ANX is amanaged virtual private network (VPN) that runs overthe Internet and links manufacturers and suppliersworldwide. This will electronically link thosesuppliers who still communicate to manufacturers bytraditional means (phone,fax, e-mail). The networkwill electronically route product shipment schedules,CAD files for product designs, POs, payments andother business information.

NOTE:VPNs provide secure data transfer over the

net--think of them like a tunnel for data


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The Great Plains e.Order demo that you just did is agreat example of B2B over the web. It is done in aclient-server environmentwith a Great PlainsC/S+ back end (sometimes called back office) and a

front end developed in Microsoft tools. Front endissimply the term used to describe what you, the user,see. It is the GUI, the web browser screen you viewand/or interact with. Back endis the term used to

describe what is happening with the data that the userdoesnt see. Typically, that data may be in anapplication program or a relational database such asOracle, DB2, SQL server, Sybase SQL server.


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Just in case you never got a good understanding ofwhy client/server (C/S) is such a big deal, here is anexample. A customer calls to change their number.Without C/S the accounts receivable clerk would have

to access the entire A/R master file from the fileserver just to change one record. Since this is probablythousands/millions of records and takes up lots ofbandwith on the network, it makes the system

crawl!!!! With C/S, the server selects out just the onerecord and then sends only the one record to the A/Rclerk to be changed. By distributing processing in thisway the system is SIGNIFICANTLY faster!!!


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Business to Business E-CommerceAt some point you are going to wonder how the back

end and the front end communicate. They often cantsince many companies still have back ends that werenot created to interface with (display) over the web.The answer is Middleware. Middleware is simply the

glue or layer of software that allows the front ends(often in Java, HTML, XML, CGI scripts, ASP pages)to interact with the back end. Just like you need atranslator when someone who is speaking Spanish istalking to someone who is speaking French, you oftenneed middleware for your front end to communicatewith your back end.


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Business to Consumer E-Commerce

Its a little different with B2C: The consumer moves through the internet to the

merchants website.

(i.e. Jay Crew, Amazon.com)

Decides to purchase a product. He is connected to an

online transaction server. All the information in this serveris encrypted.

After placing an order, the information moves through aprivate gateway to a Processing Network.

The Processing Network is where the issuing and acquiring

banks complete or deny the transaction. THIS ALL TAKES PLACE IN NO MORE THAN 5-7

SECONDS!


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Business to Consumer E-Commerce


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E-Commerce Implementation Issues

There are several ways to acquire a web presence andobviously the amount of money you want to spendand the in-house talent you have fordeveloping/maintaining the site are crucial inmaking the decision whether to

Buy, Lease or Build an E-Commerce System


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Buy, Lease or Build?

Option 1:

Buy a ready-made system that closely matchesyour specifications.

Standardized set of features Save money and time if it fits business needs

May become obsolete as more featuresbecome necessary later in development

Extra to automate payments, tax andshipping (although easy to install plug-insinto system of the above)


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Option 2:

Lease space in a network-based e-commercesolution

Inexpensive Include many common features

Fast because the business is administeredthrough the Internet

Dont need to install software just pick alook, configure some settings, and inputproduct information

May not support the features or look you

want to convey


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Option 3: Build the system from scratch Exact Solution

Requires expertise, time and a sizeable

budget Can build features and functions to be

unique and competitive in the market space

Any programming language can be used to

create a commerce program Design databases from scratch and integrate

tax, shipping and payment processingmodules into the main application

Will need Professional Systems Developer(s)


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Exploring the Options Further

Option 1:Buy the system

Intershop 3.0iCat ProIBM Net.Commerce

Option 2:Lease Space

Intershop PagesiCat CommerceYahoo Store

Option 3:Build the system

Allaire ColdFusionMicrosoft Site Server

Commerce EditionPandesic 3.0


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E-Commerce Implementation Issues

Other Issues to consider are:

Digital Certificates

Establishing Payment Systems

Security

What about the AICPAs WebTrust??? Ask me in class!


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Digital Certificate

Password-protected, encrypted data file that has beendigitally signed by the Certificate Authority

Data file consists of a public and private key pair (a pairof numbers that have no association with any identity)

Two types: Public-used by individuals/businesses

Private-generated by a business entity to control access toinformation sites and ensure secure communication

Includes Name of Subscriber, e-mail address, public keyof subscriber, validity period for certificate, name ofissuing CA, certificate serial number


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Certificate Authority (CA)

A Trusted Third Party

Reviews information submitted by companyrequesting a certificate, ensure that it was properlyregistered and proper paperwork has been filed to

operate as a company Issues the certificates in ascending levels of

assurance (i.e. Classes 1,2,3, where Class 3 offers mostassurance)

Provides services for the digital certificate

Only a few Internet-wide CAs, including:VeriSign (www.verisign.com)

Thawte (www.thawte.com)


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Establishing a Payment System

When using Credit Card Payment over theWeb you need to select a Merchant AccountProvider (MAP) Determine Company Needs

Real-Time or Manual Processing Is software compatible with MAP

Understand Merchant Account Costs

Internet Discount Rate-fixed percentage taken from

every online transaction (usually 2-3%) whicheveris higher

Transaction Fee-MAP fixed charge per transaction(usually 25-70 cents)


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Establishing a Payment System

Choose a Secure Electronic Payment System Provides consumer with 2 levels of security

ensures safe credit card information during authorizationand following the completion of the transaction

enables consumer to appeal credit card charge if damagedor defective products

MAP must support system

Most use Secure Electronic Transaction (SET)standard, which contains extra security measures

and antifraud technologies Examples: CyberCash, DigiCash,

Verifone,CyberSource, OpenMarket


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Online Information Security

Security Sockets Layer (SSL)- encryption technologythat scrambles a message so that only the recipientcan unscramble it

URLs that begin with https:// are using SSL

A company needs to do the following to enable SSLtechnology:

determine what kind of browser visitors/partnersare using (some browsers are not SSL savvy, such as

older versions of AOL) have a digital certificate to install and configure the

SSL on the server


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Top 10 E-Commerce Businesses

Rank Site

Projected

Number of

Purchasers

(thousands)

Purchase

Rate

(percentage)

Purchaser

Time spent

on Site

(hh:mm)

Non-

Purchaser

time spent on

Site (hh:mm)

1 amazon.com 789 7.1 0:53 0:12

2 buy.com 314 12.1 0:59 0:11

3 barnesandnoble.com 289 7.5 0:49 0:06

4 ticketmaster.com 269 12.6 0:33 0:08

5 planetrx.com 256 15.5 0:38 0:07

6 mothernature.com 241 12.6 0:32 0:06

7 drugstore.com 191 17.6 0:32 0:06

8 gatew ay.com 167 7.4 0:42 0:10

9 cdnow .com 95 1.8 1:22 0:20

10 smarterkids.com 93 5.4 0:30 0:03

11 chipshot.com 80 21 0:12 1:00

12 hallmark.com 80 13.1 0:31 0:05

13 egghead.com 73 4.5 0:34 0:08

14 yahoo.com 67 0.2 2:20 2:41

15 officemax.com 65 6.3 0:21 0:10

16 etoys.com 57 5.2 1:10 0:10

17 jcrew .com 52 4.7 0:41 0:04

18 spree.com 52 2.4 1:32 0:17

19 compaq.com 51 4.2 0:22 0:16

20 tow errecords.com 43 4.2 1:11 0:07

Top 20 E-Tailers of June 1999

Source: PC Data Online


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E-Commerce Information Sites

E-Commerce Times

ZDNet E-Business

CommerceNet

Electronic Commerce Guide

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