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Chapter 12
Electronic
Commerce
Systems
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Objectives for Chapter 12 Topologies that are employed to achieve connectivity across the
Internet
Protocols and understand the specific purposes served by several
Internet protocols
Business benefits associated with Internet commerce and be
aware of several Internet business models
Risks associated with intranet and Internet electronic commerce
Issues of security, assurance, and trust pertaining to electronic
commerce
Electronic commerce implications for the accounting profession
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What is E-Commerce?
Electronic Commerce is the electronicprocessing and transmission of data.
Possible applications include:
± the buying and selling of goods and services,
± the delivery of digital products,
± the transfer of funds (electronic funds transfer
(EFT), ± the trading of stocks, and
± direct consumer marketing.
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This chapter deals with three aspects
of electronic commerce:
Intranets within a corporation that utilizes
distributed data processing,
EDI business-to-business transactionprocessing, and
Internet business-to-business (B2B) and
business-to-consumer (B2C).
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Intranet
There's one ma jor distinction between an
intranet and the Internet:
The Internet is an open, public space, while anintranet is designed to be a private space.
An intranet may be accessible from the
Internet, but as a rule it's protected by a
password and accessible only to employees or
other authorized users.
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Intranet Risks
Intercepting network messages ± sniffing: interception of user IDs, passwords, confidential e-
mails, and financial data files
Accessing corporate databases ± connections to central databases increase the risk that data will
be accessible by employees Privileged employees
± override privileges may allow unauthorized access to mission-critical data
Reluctance to prosecute ± fear of negative publicity leads to such reluctance but
encourages criminal behavior
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What is Electronic Data
Interchange?
The exchange of business transaction
information:
±
between companies ± in a standard format (ANSI X.12 or EDIFACT)
± via a computerized information system
In pure EDI systems, human involvements is
not necessary to approve transactions.
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Communications Links
Companies may have internal EDI
translation/communication software and
hardware.
OR
They may subscribe to VANs to perform this
function without having to invest in personnel,
software, and hardware.
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EDI System
Purchases
System
EDI
TranslationSoftware
EDI
TranslationSoftware
Communications
Software
Communications
Software
OtherMailbox
Other
Mailbox
Company
As mailbox
Company
Bs mailbox
Sales Order
System
Application
Software
Application
Software
Direct Connection
VAN
Company A Company B
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Advantages of EDI
Reduction or elimination of data entry
Reduction of errors
Reduction of paper
Reduction of paper processing and postage
Reduction of inventories (via JIT systems)
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EDI (Electronic Data Interchange)
Electronic data interchange (EDI) is the structured
transmission of data between organizations by
electronic means. It is used to transfer electronic
documents or business data from one computersystem to another computer system, i.e. from one
trading partner to another trading partner without
human intervention.
It is more than mere e-mail; for instance,
organizations might replace bills of lading and even
cheques with appropriate EDI messages.
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A business engaged in electronic
commerce is exposed to many specificnew risks: Hardware failures
Software errors
Unauthorized access
Transactions lost in transit
Transactions never processed
Transactions altered or rearranged to change theirfinancial effects
Other fraudulent activities
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Internet Technologies Packet switching
± messages are divided into small packets
± each packet of the message takes a different routes
Virtual private network (VPN) ± a private network within a public network
Extranets ± a password controlled network for private users
WorldWideWeb ± an Internet facility that links users locally and around the world
Internet addresses ± e-mail address
± URL address
± IP address
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Packet Switching
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Packet Switching
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Packet Switching
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Packet Switching
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Virtual Private Network (VPN)
A virtual private network (VPN) is a computer
network that uses a public telecommunication
infrastructure such as the Internet to provide
remote offices or individual users with secure
access to their organization's network. It aims
to avoid an expensive system of owned or
leased lines that can be used by only oneorganization.
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Virtual Private Network (VPN)
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Difference Between Intranet and
Extranet
An intranet is an information portal designed specifically forthe internal communications of small, medium or largebusinesses, enterprises, governments, industries or financialinstitutions of any size or complexity. Intranets can be custom-
designed to fit the exact needs of businesses no matter wherethey are situated. Users of intranets consists mainly of:
Members of the executive team.Accounting and order billing.Managers and directors.
Sales people and support staff.Customer service, help desk, etc..
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Difference Between Intranet and
Extranet
An extranet is somewhat very similar to an
intranet. Extranets are designed specifically to
give external , limited access to certain files of
your computer systems to:
Certain large or priviledged customers.
Selected industry partners.
Suppliers and subcontractors... etc.
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WorldWideWeb
World Wide Web is the part of the Internet that
allows HTML (and variations) formats to be sent and
received. HTML is a formatting language that creates
aWeb page format. To be able to access and readthese HTML pages, a Web browser is needed
(Netscape Navigator or MS Internet Explorer). Web
pages are stored on Web servers, typically dedicated
to the Web interface.
TheWeb interface requires HTTP (Hypertext Transfer
Protocol) for hyper-linking between pages.
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WorldWideWeb The World Wide Web, abbreviated as WWW
and commonly known as the Web, is a system
of interlinked hypertext documents accessed
via the Internet. With a web browser, one can view web pages
that may contain text, images, videos, and
other multimedia and navigate between them
by using hyperlinks.
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A hyperlink (or link ) is a reference to a
document that the reader can directly follow,
or that is followed automatically.
A hyperlink points to a whole document or to
a specific element within a document.
Hypertext is text with hyperlinks, and is
commonly viewed with a computer.
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Hypertext is text displayed on a computer or other
electronic device with references (hyperlinks) to
other text that the reader can immediately access,
usually by a mouse click or keypress sequence. Apartfrom running text, hypertext may contain tables,
images and other presentational devices. Hypertext
is the underlying concept defining the structure of
theWorldWideWeb, making it an easy-to-use andflexible format to share information over the
Internet.
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A web browser or Internet browser is asoftware application for retrieving, presenting,and traversing information resources on the
WorldWide Web. An information resource isidentified by a Uniform Resource Identifier(URI) and may be a web page, image, video, orother piece of content.[1] Hyperlinks present
in resources enable users to easily navigatetheir browsers to related resources.
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A web page or webpage is a document or
information resource that is suitable for the World
WideWeb and can be accessed through a web
browser and displayed on a monitor or mobiledevice.
This information is usually in HTML or XHTML format,
and may provide navigation to other webpages via
hypertext links.Web pages frequently subsumeother resources such as style sheets, scripts and
images into their final presentation.
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Web site refers to a set of connected,
hierarchical pages concerning the same topic
or entity.
Web sites may be one page or thousands of
pages. The point of entry to the site is typically
called the Web sites home page.
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Internet Addresses
The Internet utilizes three types of addresses
for communication:
E-mail addresses, Web site addresses (URLs), and
Individual computer addresses (IPs)
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E-mail Address
E-mail addresses have a user name @ domain name,without any spaces. The domain name requires atop-level domain (TLD) or suffix to the address thatindicates the type of Web page being accessed:
.com commercial .net Internet network provider
.orgnon-profit organization
.edu education and research
.gov government .mil military agency
.int international intergovernmental
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URL Address URL (Uniform Resource Locator) refers to the address thatprovides access to the Web pages
Once in a browser, a user types in the Web site URL, and thecomputer retrieves the Web site.
The URL address defines a path to a facility or file on theWeb. URLs are typed into Web browsers for access to the Web site(s). Also, URLs can be embedded into Web pages toprovide hypertext links to other pages. The general format forURLs are:
Protocol prefix, such as http://
Domain name, typically the company/individual/topic name
Subdirectory name(s), there may be many levels of subdirectories separated by /
Document name, the actual Web page (HTML format text file)
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IP Address
Each individual user has a separate and
unique IP address. Currently, IP addresses are
represented by a 32-bit data packet, which has
4 segments. Exactly how those 32 bits are
divided into segments depends upon the class
of the computer in the network (Class A is the
smallest number of nodes; Class C has thehighest number of nodes). These segments
are separated by periods.
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IP Address
An Internet Protocol address (IP address) is a numerical labelthat is assigned to any device participating in a computernetwork that uses the Internet Protocol for communicationbetween its nodes. An IP address serves two principal
functions; host or network interface identification andlocation addressing. Its role has been characterized as follows:"A name indicates what we seek. An address indicates whereit is. A route indicates how to get there.
Exam ple: 128.180.94.109 (host, location, whois)
128.180 Lehigh University
94 Business Department faculty server
109 a faculty members office computer (node)
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