COMPUTER PROJECT

ON

E-COMMERCE

2009

A PROJECT ON E-COMMERCE SUBMITTED AS A PRACTICAL

FULFILLMENT OF B.COM IIIrd YEAR

Name-Gunjan Shukla Roll No.19641Department of Commerce

Department of Commerce Faculty of Commerce & Management Studies

Mahatma Gandhi Kashi VidyapithVaranasi – 221002

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Acknowledgement

I wish to put on record my heartfelt thanks to my dexterous Head Dr.Ashok

Kumar Mishra and Mr. Amit Singh was always a source of inspiration during the course

of project. I wish to reveal through these lines my deepest sense of gratitude and

admiration for his relentless efforts, constructive counsel, and critical appreciation, where

not a single a word could escape his scrutiny.

I take the opportunity to express my profound gratitude to all my teachers past

and present.

Last I am very thankful to all my friends & all those who have supported me

in preparing this project.

Gunjan Shukla

B.Com IIIrd Year

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E-Commerce

We are in the midst of electronic revolution, the impact of which on the economy

is much more profound than that caused by the Industrial revolution. This modern day

revolution, at the global level, has manifested itself in the form of many innovations and

breakthroughs and giant leaps in internetworking technology. With these new

opportunities, people can now transcend the barriers of time and distance with the

internet’s speed.

With the inception of the web, organizations and individuals are more and more

making use of it to create new business ventures. The WWW is not only a definitive

source of information, but an astounding business opportunity as well. Millions of us are

venturing out onto the web for buying and selling goods and services. Thus ushered in,

the era of ‘E- commerce’ has established a significant synergy between the use of digital

information and computerized business. The web has indeed proved to be a boon to

business, drawing its power from the flow of easy and instantaneous transactions,

worldwide. Online business is thriving and more and more corporate companies are

joining the fray of electronic transactions. Electronic commerce (e-commerce) has

become a buzzword for businesses over the past few years, with increased awareness

about the use of computer and communications technologies in simplifying business

procedures and increase efficiency. Combining the range of processes, such as electronic

data interchange (EDI), electronic mail (E-mail), World Wide Web (WWW), and Internet

applications. E-commerce provides ways to exchange information between individuals,

companies and countries and, most important of all, between computers. More simply

put, e-commerce is the movement of business onto the world wide web. This movement

has been broken up into two main sectors consisting of business-to-business (B2B) and

business–to consumer (B2C). E-commerce refers to marketing, selling and business

over the internet. The available e-commerce information on the internet is huge and still

growing.

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Electronic commerce is doing business online. It is about using the power of digital

information to understand the needs and preferences of each customer and each partner to

customize products and services for them, and then to deliver the products and services as

quickly as possible. Personalized, automated services offer businesses the potential to

increase revenues, lower costs, and establish and strengthen customer and partner

relationships. To achieve these benefits, many companies today engage in electronic

commerce for direct marketing, selling, and customer service; online banking and billing;

secure distribution of information; value chain trading; and corporate purchasing.

Although the benefits of electronic commerce systems are enticing, developing,

deploying, and managing these systems is not always easy. In addition to adopting new

technology, many companies will need to re-engineer their business processes to

maximize the benefits of electronic commerce. An electronic commerce strategy should

help deliver a technology platform, a portal for online services, and a professional

expertise that companies can leverage to adopt new ways of doing business. Platforms are

the foundation of any computer system. An e-commerce platform should be the

foundation of technologies and products that enable and support electronic commerce.

With it, businesses can develop low-cost, high-value commerce systems that are easy to

grow as business grows. An e-commerce platform’s breadth should also be unmatched,

ranging from operating systems to application servers, to an application infrastructure and

development tools, and to a development system.

Portals are the crossroads of the Internet, where consumers gather and where businesses

can connect with them. Companies normally provide customers with a wide range of

choices for professional implementation services and tightly integrated software for

commerce solutions. Independent software vendors (ISVs) have created specialized

commerce software components that extend the platform.

This guide details introductory strategies and priorities for electronic commerce, which

sets the stage for the rest of the book. It also describes how the platform, portal, and

partners are critical to solving business problems in the four most common areas of

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electronic commerce: direct marketing, selling, and service; value chain integration;

corporate purchasing; and financial and information services.

Introduction

Electronic commerce, commonly known as e-commerce or eCommerce,

consists of the buying and selling of products or services over electronic systems such as

the Internet and other computer networks. The amount of trade conducted electronically

has grown extraordinarily since the spread of the Internet. A wide variety of commerce is

conducted in this way, spurring and drawing on innovations in electronic funds transfer,

supply chain management, Internet marketing, online transaction processing, electronic

data interchange (EDI), inventory management systems, and automated data collection

systems. Modern electronic commerce typically uses the World Wide Web at least at

some point in the transaction's lifecycle, although it can encompass a wider range of

technologies such as e-mail as well.

A large percentage of electronic commerce is conducted entirely electronically for virtual

items such as access to premium content on a website, but most electronic commerce

involves the transportation of physical items in some way. Online retailers are sometimes

known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers

have electronic commerce presence on the World Wide Web.

Electronic commerce that is conducted between businesses is referred to as business-to-

business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or

limited to specific, pre-qualified participants (private electronic market). Electronic

commerce that is conducted between businesses and consumers, on the other hand, is

referred to as business-to-consumer or B2C. This is the type of electronic commerce

conducted by companies such as Amazon.com.

Electronic commerce is generally considered to be the sales aspect of e-business. It also

consists of the exchange of data to facilitate the financing and payment aspects of the

business transactions.

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Historical Background of E-Commerce

Early development

The meaning of electronic commerce has changed over the last 30 years. Originally,

electronic commerce meant the facilitation of commercial transactions electronically,

using technology such as Electronic Data Interchange (EDI) and Electronic Funds

Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to

send commercial documents like purchase orders or invoices electronically. The growth

and acceptance of credit cards, automated teller machines (ATM) and telephone banking

in the 1980s were also forms of electronic commerce. Another form of e-commerce was

the airline reservation system typified by Sabre in the USA and Travicom in the UK.

Online shopping was invented in the UK in 1979 by Michael Aldrich and during the

1980s it was used extensively particularly by auto manufacturers such as Ford,Peugeot-

Talbot, General Motors and Nissan. From the 1990s onwards, electronic commerce

would additionally include enterprise resource planning systems (ERP), data mining and

data warehousing.

Perhaps it is introduced from the Telephone Exchange Office, or maybe not. The earliest

example of many-to-many electronic commerce in physical goods was the Boston

Computer Exchange, a marketplace for used computers launched in 1982. The first online

information marketplace, including online consulting, was likely the American

Information Exchange, another pre-Internet online system introduced in 1991.

Although the Internet became popular worldwide in 1994, it took about five years to

introduce security protocols and DSL allowing continual connection to the Internet. And

by the end of 2000, a lot of European and American business companies offered their

services through the World Wide Web. Since then people began to associate a word

"ecommerce" with the ability of purchasing various goods through the Internet using

secure protocols and electronic payment services.

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Traditional Versus E-Business

Traditional or brick and mortar businesses were product centric, with companies

competing on the basis of product differentiation and innovation. But in the e business

era, companies focus on customers and adopt a customer centric approach. In the

traditional business, companies manufactured products and customers purchased them.

But now customers are a part of product design and they dictate terms to manufacturers

with regard to the features of products. Proctor & Gamble has created the "P&G

Advisors" program to collaborate with customers in developing new products.

Customers try new products and provide feedback, allowing P&G to refine products and

marketing plans. Before using the Internet, P&G spent $25,000 to test each product

concept and took two months to complete a test. Now, P&G can do the same test at a cost

of $2,500 and obtain results in two weeks. P&G is also using the Internet to take these

new products to market. For example, when launching its Physique range of hair care

products, P&G invited consumers to register on its Physique.com website to sample the

new products. Within 12 weeks, more than five million consumers visited the site.

Information is essential for conducting e business. Thus information capture, storage and

dissemination are important activities in organizations that have adopted e-business. The

volume of data that is collected and analyzed is substantial in ebusiness. Although data

was available, even before the Internet age, organizations could not analyze and cleanse

the data to get meaningful information. But now modern technology has made real time

information processing possible. This has improved the productivity and efficiency of

organizations and enabled them to offer high quality customer service.

Traditional business operations are confined to limited geographic locations, but in the

case of e business, operations can take place across the globe due to the ubiquitous nature

of the Internet. In addition, automation has made e business processes and operations

more efficient than those of traditional businesses. Transactions that were earlier time

consuming are now performed within minutes because customers can interact with the

organization through the fax, telephone, e mail or web.

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Business applications

Some common applications related to electronic commerce are the following:

Email

Enterprise content management

Instant messaging

Newsgroups

Online shopping and order tracking

Online banking

Online office suites

Domestic and international payment systems

Shopping cart software

Teleconferencing

Electronic tickets

Issues in Implementing Electronic Commerce

Although it is simple to describe their benefits, it is not nearly as easy to develop and

deploy commerce systems. Companies can face significant implementation issues:

Cost

Value

Security

Leveraging existing systems

Interoperability

Cost

Electronic commerce requires significant investments in new technologies that can touch

many of a company’s core business processes. As with all major business systems,

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electronic commerce systems require significant investments in hardware, software,

staffing, and training. Businesses need comprehensive solutions with greater ease-of-use

to help foster cost-effective deployment.

Value

Businesses want to know that their investments in electronic commerce systems will

produce a return. Business objectives such as lead generation, business-process

automation, and cost reduction must be met. Systems used to reach these goals need to be

flexible enough to change when the business changes.

Security

The Internet provides universal access, but companies must protect their assets against

accidental or malicious misuse. System security, however, must not create prohibitive

complexity or reduce flexibility. Customer information also needs to be protected from

internal and external misuse. Privacy systems should safeguard the personal information

critical to building sites that satisfy customer and business needs.

Leveraging Existing Systems

Most companies already use information technology (IT) to conduct business in non-

Internet environments, such as marketing, order management, billing, inventory,

distribution, and customer service. The Internet represents an alternative and

complementary way to do business, but it is imperative that electronic commerce systems

integrate existing systems in a manner that avoids duplicating functionality and maintains

usability, performance, and reliability.

Interoperability

When systems from two or more businesses are able to exchange documents without

manual intervention, businesses achieve cost reduction, improved performance, and more

dynamic value chains. Failing to address any of these issues can spell failure for a

system’s implementation effort. Therefore, the company’s commerce strategy should be

designed to address all of these issues to help customers achieve the benefits of electronic

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commerce.

The company’s vision for electronic commerce should also be to help businesses

establish stronger relationships with customers and industry partners. For example, a

successful strategy for delivering this vision is described by three workflow elements

(platform, portal, and industry partners), each backed by comprehensive technology,

product, and service offerings. From self-service portals to transaction processing, a

successful workflow strategy can be the underlying engine delivering state-based,

processed-focused control services for e-business applications. Human labor is

expensive, and workflow technology allows e-businesses to supplement, and in some

cases eliminate, reliance on human supervision and intervention.

The Shift to E-Business

There is no free lunch, though, and along with the benefits of doing business in the

new economy comes a new kind of customer, one with different expectations and

standards by which companies are judged. Web sites must offer a consistently positive

customer experience to win over consumers. Inspiring loyalty is the biggest challenge to

e-businesses, and e-consumers are a tough group to win. Thus, the attraction of moving

an established, traditional business to the Internet (or of starting a new, pure-play Internet

business) involves a variety of factors:

1. 24 / 7 operation. Round- the- clock operation is an expensive proposition in the

‘brick and mortar’ world, while it is natural in the ‘click –and-conquer’ world.

2. Global reach. The net being inherently global, reaching global customers is

relatively easy on the net compared to the world of bricks.

3. Cost of acquiring, serving and retaining customers. It is relatively cheaper to

acquire new customers over the net; thanks to 24/7 operation and its global reach.

Through innovative tools of ‘push’ technology, it is also possible to retain

customers loyalty with minimum investments.

4. An extended enterprise is easy to build. In today’s world every enterprise is the

part of the ‘connected economy’; as such, you need to extend your enterprise all

the way to your suppliers and business partners like distributors, retailers and

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ultimately your end customers. Internet provides an effective (often less

expensive) way to extend your enterprise beyond the narrow confines of your own

organization. Tools like enterprise resource planning (ERP), supply chain

management (SCM) and customer relationship management (CRM), can easily be

deployed over the net, permitting amazing efficiency in time needed to market,

customer loyalty, on-time delivery and eventually profitability.

5. Disintermediation. Using the net, one can directly approach the customers and

suppliers, cutting down the number of levels and in the process, cutting down the

costs.

6. Improve customer service to your clients. It results in higher satisfaction and

more sales.

7. Power to provide the ‘best of both the worlds’. It enhances traditional business

along with Internet tools.

Disadvantages

Some business processes may never lend themselves to electronic commerce. For

example, perishable foods and high-cost items (such as jwellery, antiques, and the like)

may be impossible to inspect adequately from the remote locations, regardless of any

technologies that might be devised in the future. Most of the disadvantages of electronic

commerce today, however, stem from the newness and rapidly developing pace of the

underlying technologies. These disadvantages will disappear as e-commerce matures and

becomes more available to and accepted by the general population. Many products and

services require a critical mass of potential buyers who are well equipped and willing to

buy through the internet.

Businesses often calculate the return- on-investment before committing to any

new technology. This has been difficult to do with e-commerce, since the costs and

benefits have been hard to quantify. Costs, which are the functions of technology, can

change dramatically even during short lived e-commerce implementation projects,

because the underlying technologies are changing rapidly. Many firms have had trouble

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in recruiting and retaining employees with technological, design, and business process

skills needed to create an effective e-commerce atmosphere. Another problem facing

firms that want to do business on the Internet is the difficulty of integrating existing

databases and transaction-processing software designed for transforming traditional

commerce into a software that enables e-commerce.

In addition to technology and software issues, many businesses face cultural and

legal obstacles in conducting e-commerce. Some consumers are still some what fearful of

sending their credit card numbers over the internet. Other consumers are simply resistant

to change and are uncomfortable viewing merchandise on the computer screen rather than

an in person. The legal environment in which e-commerce is conducted is full of unclear

and conflicting laws. In many cases, government regulators have not kept up with the

trends in technologies.

Security - there are still some people who don’t think it is save to buy on-line

therefore as their isn’t a high-street shop will loss their custom.

you may not receive what you believe you have purchased.

Things such as viruses could mean losing the site or affecting your customers

computers while on your website.

E-commerce Opportunities for Industries

Following are the some of the areas where e-commerce is witnessing rapid growth

in the global markets. Indian software and services companies need to tap into some of

these vertical segments to gain the maximum advantage in the e-commerce solution

sectors.

1. Financial Services. Forrester Research, a leading US based market research

agency has predicted that, by 2002, a large number of users will use the internet

for financial guidance.

2. Stock trading. Online stock trading is nowadays one of the most demanding e-

commerce utilities. The ability to offer market access at a competitive price is a

key advantage of online stock broking companies and this is slowly happening in

India too.

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3. Banking. Internet banking is not growing as fast as online stock trading. However

some banks like ICICI and HDFC are making inroads into these areas.

4. Legal and Professional Services. Opportunities also exist for Indian companies

in legal and other professional services. There is significant legal and regulatory

implementing as Internet business or of migrating from a traditional off-line

business. In terms of opportunities for Indian legal service providers, the

requirement for professional, legal and regulatory advice is expected to increase

as the number of e-commerce users increases.

5. Tours and Travels. The travel industry has readily adapted to e-commerce.

There has been a growing emphasis on the search for alternative distribution

channels within the sector, particularly with the railways and the airlines, as they

seek to reduce costs. These sectors have adapted well because of their online

reservation systems.

6. Health Care. Health care represents one of the biggest expenditures of

governments worldwide. Internet has the potential to enhance communications,

streamline processes and create new business opportunities, by providing high

quality administrative services and integrating information systems.

Rise of E-Commerce

E business has evolved rapidly within a short span of time. It was virtually nonexistent

until 1995, but by the beginning of the new millennium, $1 trillion worth of ebusiness

transactions (including 13213 and 132C) took place.

The success of this electronic form of business is dependent on customer trust and the

availability of suitable technology. Organizations use e business for a number of reasons.

Some of these reasons are discussed below:

Transaction management: It is possible to completely integrate customers and

suppliers using e business, thus bringing down the transaction costs of purchasing. E

business also does away with the problems associated with time and distance.

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Business efficiency: E Business appeals to companies because of its ability to achieve

efficiencies in production and distribution. Efficiency can be increased in the entire value

chain, right from the procurement of goods to customer service.

Reshaping customer relationship: The collection of data through the Internet helps

organizations provide better customer service. It also helps in targeting right customers

for their products and services.

Reaching new markets and segments: The Internet makes it possible for companies to

explore new markets by providing global reach. Foreign markets can be explored without

a physical presence in the market. Moreover, time differences do not pose a hinderance to

the study of those markets.

According to studies, e business can benefit organizations in several ways: increase

revenues by about 10 20%, reduce costs by 20 45% and reduce working capital

requirements upto 60%. For example, Dell Computers has been able to increase its

revenues by 20% and profits by 85% by doing business online.

PricewaterhouseCoopers has identified four distinct phases of e business. The first phase

is marked by the implementation of a website that will enable the concerned organization

to buy and sell online. The second phase involves putting supply chain management

processes online by linking suppliers with the enterprise, using extranets and intranets. In

the third phase, the organization forms alliances (content, marketing and commerce) with

other online players indicating the adoption of e business as a commercial too. This alters

the way in which the organization operates. In the fourth and final stage, there is a

convergence that will lead to innovative products and services. Some of the key

characteristics of e business are:

Customer is king: Customers have more choices since they can collect information on a

range of competing products.

Entry barriers are low: Entry barriers are low since the online model can be easily

replicated by competitors at a lower cost. Although, conducting business online is

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relatively easy, digitizing the entire value chain and reaping the benefits of doing so is a

difficult task.

E business leads to disinterinediation: In e business, middlemen are replaced by

infornediaries. Infornediaries offer information on products and services on behalf of the

manufacturers. They link manufacturers and customers.

Economies of scale: Since the fixed cost incurred on servicing customers comes down

with the increase in the number of customers, organizations have to look for ways to

attract more customers to their website. When the number of transactions increases,

organizations can obtain economies of scale.

In the early stages of e business, an organization must have to gain first mover advantage

and adopt a sustainable and flexible e business strategy.

Classifications of Indian Web Sites

Indian web sites can be divided into four categories: Consumer-to-consumer (C2C),

consumer-to-business (C2B), business-to-business (B2B), and business-to-consumer

(B2C) as shown in table below:

CLASSIFICATION OF INDIAN WEB SITES

Category Functional area Examples Prospects

C2C Portals enabling

consumers to buy

and sell from each

other through, say,

an auction.

Baazee.com,

Bidorbuy.com

A small segment;

right now, these

portals will face

logistical hurdles

and people’s

resistance to online

shopping to the

initial years .

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C2B Sites where

consumers set

prices and

companies bid to

offer products and

services.

Razorfinish.com The smallest

section of the net

business all over

the world. It is just

to emerge in India.

B2B Portals linking

different businesses

or different parts of

a business.

Commodityindia.com,

Indiaconstruction.com

Clickforsteel.com

This segment has

the largest volume

of business- both in

India and abroad. It

will be the

mainstay of the

internet business in

the future.

B2C Portal selling

products or services

directly to

consumers

Rediff.com

Jaldi.com

Indiatimes.com

Zipahead.com

Indiabulls.com,

Fabmart.com

The segment with

maximum number

of website, it is the

worst affected by

the financial

crunch.

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E-business Model Based on the Relationship of Transaction parties

E-business Model Based on the Relationship of Transaction Types

Government

Business

Consumer

Business

Consumer

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Info – Mediary Model:

An organizer of virtual community is called an information intermediary or info-mediary,

who helps customers to collect, manage, and maximize the value of information about

consumers. Date about consumers and their buying habits are extremely valuable

especially when that information is carefully analyzed and used to target marketing

campaigns. Some firms are able to function as info-mediaries by collecting and selling

information to other businesses.

Community Model:

E-communities (or electronic communities) are formed when groups of people meet

online to fulfill certain needs, which include personal interests, relationship,

entertainment and transactions. Of course, e-communities are not confined to just

individuals but businesses as well. E-communities cater to groups of people who come

on-line to serve their common interest and needs, exchange information, share interest,

trade goods and services, entertain and seek help.

Value Chain Model:

Value chain moves businesses away from discrete streams of data about the product

being made to one unified pool of information – one that even extends outside the

company to suppliers and customers. The goal is to develop full and seamless interaction

among all members of the chain., resulting in lower inventories, higher customer

satisfaction and shorter time to market.

Brokerage Model – Its Characteristics

The characteristics of brokerage model are as follow:

The price- discovery mechanism is its key-principle.

It is a meeting point for sellers and buyers.

Auctions and exchange are the modes of transactions.

It is a Free Market”.

It consists of Global Network of Buyers &Sellers.

It is Virtual Marketspace enabled by the Internet.

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It encompasses all types of organization now.

Aggregator Model

Classic wholesales and retailers of goods and services are increasingly referred to as “e-

tailers.” Sales can be made on list prices or through auction. In some cases, the goods and

services are unique to the web and not have a traditional “brick- and mortar” storefront.

Following are some of the aggregator models:

1. Virtual merchant.

2. Catalog merchant

3. Surf-and turf.

4. Bit vendor

5. Subscription model.

The Aggregator Model

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BUYERS

Aggregator

SELLERS

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Government regulations

In the United States, some electronic commerce activities are regulated by the Federal

Trade Commission (FTC). These activities include the use of commercial e-mails, online

advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national

standards for direct marketing over e-mail. The Federal Trade Commission Act regulates

all forms of advertising, including online advertising, and states that advertising must be

truthful and non-deceptive.[4] Using its authority under Section 5 of the FTC Act, which

prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce

the promises in corporate privacy statements, including promises about the security of

consumers’ personal information.[5] As result, any corporate privacy policy related to e-

commerce activity may be subject to enforcement by the FTC.

Forms

Contemporary electronic commerce involves everything from ordering "digital" content

for immediate online consumption, to ordering conventional goods and services, to

"meta" services to facilitate other types of electronic commerce.

On the consumer level, electronic commerce is mostly conducted on the World Wide

Web. An individual can go online to purchase anything from books or groceries, to

expensive items like real estate. Another example would be online banking, i.e. online

bill payments, buying stocks, transferring funds from one account to another, and

initiating wire payment to another country. All of these activities can be done with a few

strokes of the keyboard.

On the institutional level, big corporations and financial institutions use the internet to

exchange financial data to facilitate domestic and international business. Data integrity

and security are very hot and pressing issues for electronic commerce today.

 

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Five Business Models of E-Commerce

Five different ways websites can generate revenue.

"There's no such thing as a free lunch!" While this simple economic aphorism seems to

have been forgotten in the world of cyberspace, it holds true as much today as it ever has.

First lets establish the fact that no site is free - every web site costs money. The web site

is stored on a computer, uses web server software, accesses telecommunication resources,

and must be maintained. Someone must pay for the computers, software,

telecommunication charges, and time. The omnipresent cost either comes from your

pocket or some benevolent benefactor.

The cost and potential revenue constitutes a business model. Therefore, even the "free"

sites have a business model. Every site in the entire world wide web has a business

model. There are different business models underlying each website.

In actuality, five distinct eCommerce business models form the basic structure for the

wide variety of websites today. The five categories are called vanity, billboard,

advertising, subscriptions, and storefront sites. While not all drive revenue directly, they

all incur costs.

Vanity: Many web sites are started as vanity sites. These sites are often created by

individuals as an outlet of self expression, to share a hobby, promote a cause, or find

others with similar interests. These sites are created with no intentions of deriving

revenue and no illusions of grandeur. It could be as simple as a one page family site or a

complex forum on a specific topic. The costs are borne either by the individual or by

some altruistic enterprise such as universities, libraries, communities, associations, and

even businesses. Nevertheless, the costs are real of these "free" sites.

Billboard: Billboard sites (also called brochure or information sites) are designed to

derive economic benefit through indirect means from either referred sales, reduced cost,

or both. Revenue comes from creating awareness of its products or services via the web,

with the actual purchase transaction occurring off-line. Just like a billboard on a highway,

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success is measured on viewership as net citizens "surf" by and are influenced to

purchase product. Most corporate sites today put up these electronic brochures to provide

information about their products, employment information, or public information.

Economic benefit is created through the indirect purchase of goods or services from

existing physical outlets and cost savings through the elimination of infrastructure or

inefficiency. Finally, some businesses feel this is the best way to avoid channel conflict'a

potential pricing disparity between different supply chains.

Advertising: Network television, radio, and many periodicals follow the advertising

model. All programming and content is funded by advertising dollars, with consumer

viewership measuring value. Agencies conduct sophisticated surveys to measure the

value and establish the pricing. For eCommerce, advertising can be in the form of

banners, sponsorships, ezine ads, and other promotion methods.

Subscriptions: In other media, the subscription models are well established'accepted by

subscribers and nurtured by publishers. On the web, subscriptions are not yet widely

accepted by consumers. Of those that are accepted, the subscription model caters to sites

targeted to particular niches of individuals who have specific needs. These sites are often

specialized with expert content and timely information. The subscriptions fund the

development and maintenance of the site.

Subscriptions can be paid on a weekly, monthly, or annual basis. Payment through a

credit card account is a common payment scheme for subscription sites because of the

ability to periodically process the purchase transaction electronically.

Storefront: To some people, a products-offered site is narrowly defined as a "true"

eCommerce site. A website that offers products for sale is the electronic version of a

catalog. These virtual storefronts are built to describe the offering with pictures and

words, offer promotions, provide a "shopping cart," and complete the purchase

transaction. Once the product is purchased, the cyber enterprise arranges for product

fulfillment including shipping and handling. The fulfillment is sometimes completed by

the website enterprise or directly from the manufacturer in a drop shipping arrangement.

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Some manufacturers are now passing up the intermediary wholesalers and retailers by

offering their products directly to consumers. This collapsing of the supply chain is called

disintermediation.

Although the vast majority of these sites offer tangible products, they can work for

service products too. The primary characteristic of these types of sites is the ability to

make a one time purchase with no future obligations.

While it is impossible to predict the future in this fast moving media, it is obvious that all

five business models will remain viable for the near term. Each model will continue to

mature both in its acceptance and sophistication. Consumers will increasingly look to the

web for physical commerce alternatives because of the limitlessness of the media both in

terms of geography and shopping hours. For net entrepreneurs, each model should be

examined carefully to understand which model provides the maximum benefit. With the

understanding of the business models, financial projections can be easily created and

business plans finalized. With the business plan in hand, you will realize even in

cyberspace, there is no such thing as a free lunch.

Ecommerce Beats Retailers In Customer Satisfaction  

E-consultancy reports that a recent study conducted by the UK National Customer

Satisfaction Index scored retailers, e-commerce reported a stunning score of 82 points for

Q4 2008 (out of 100). Why is this news so interesting? Because the average retailer

customer satisfaction score is 74.8.

Amazon and Play.com helped e-commerce separate itself from the rest by posting 85 and

87 satisfaction scores. Amazon would be ranked high on this list, but really surprised to

see Play.com achieve such a high customer satisfaction level. I haven’t personally played

around with their site too much, but hopefully this will give them some much deserved

attention in the conversion-world for their great work.

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Here’s the breakdown of the top customer satisfaction retailers by category:

Global Ecommerce: New Trends Involved in Ecommerce Business

Internet use has grown and spread during the last decade. With the fame and widespread

usage of Internet this new trend in e-commerce business is spreading like wild fire and

has a pivotal role in global economy. Businesses these days are rising in all realms.

Ecommerce has changed the way people do business. These days, ecommerce business is

at its boom. From big corporations to cottage industries, businesses are online, opening

up their products and services to new groups of people worldwide.

These days, the use of other media trade, such as the telephone, television, fax, and

electronic payment, has been also grown. These play also an important role in the boom

in ecommerce business because ecommerce has been an integral part of the global

economy. The WTO has begun to consider how it fits into the multilateral trade

framework, and what rules or regulations should apply.

With the emergence of ecommerce business during the last decades, a number of

ecommerce business solution providers have been also grown. No one can imagine a

successful ecommerce business without the assistance of a reliable ecommerce business

solution provider. Ecommerce service provider performs many useful jobs for your

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business, such as doing market research, getting traffic for your ecommerce storefront

and online ordering system.

Today, ecommerce is the latest mantra in increasing your sales. This is because

instead of selling your goods and services through a local store, you can sell online and

gain a greater customer base. Apart from providing shipping services, you will need an

online ecommerce merchant account to accept credit card payments to make your venture

a success.

These days, even a restaurant is running under ecommerce system. Ecommerce

solution provider performs many jobs for the Restaurant, such as, they put online

restaurant menu, online restaurant ordering systems, and bed and breakfast booking

system. There are many ways to get your products and services online, from a simple

brochure site to a high-end database driven site.

In this way, we see that ecommerce has changed the people to do the business in a

different way. Every thing in this world has been being globalize and of course business

is no exception. Global ecommerce business has been new trends in ecommerce business

and plays a pivotal role in global economy. Also the role of ecommerce business solution

providers cannot be ignored because you cannot imagine successful and fruitful

ecommerce business without their assistance.

Types of E-commerce Technologies:

The global economy may have faltered in 2002, but advances in e-commerce

technology continue to transform personal communication and global business at an

astounding pace. Although these advances promise to bring a substantial percentage of

the world’s population online in the next five years, they also present significant

challenges to industry and policymakers alike. According to NUA Internet Surveys

(http://www.nua.ie/surveys/), over 620 million people worldwide are linked to the

Internet. Experts predict that global Internet usage will nearly triple between 2003 and

2006, making e-commerce an ever more significant factor in the global economy.

Estimates suggest that by 2009, some 47 percent of all business-to-business (B2B)

commerce will be conducted online.

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E-Commerce Technology

With the preceding in mind, the dynamic nature of the new economy, and

particularly the Internet, calls for decision makers to develop policies that stimulate

growth and advance consumer interests. But, in order to create the foundation for the

rapid growth of e-commerce, enterprises must adopt the effective e-commerce

technology policies that embrace the following four crucial principles:

Strong intellectual property protection: Innovation drives e-commerce technology, and

rewarding creativity fosters innovation. Thus, strong copyright, patent, and other forms of

intellectual property protection are key to invigorating the information economy.

Online trust: security and privacy: Without consumer confidence in the safety,

security, and privacy of information in cyberspace, there will be no e-commerce and no

growth. Protecting information and communications on the Internet is an absolute

prerequisite to the continued success of the Internet and the information economy.

Free and open international trade: Closed markets and discriminatory treatment will

stifle e-business. The Internet is a global medium, and the rules of the information

economy must reflect that fact. Only in an open, free market will the Internet’s potential

be realized. Investing in an e-commerce technology infrastructure: Supporting the

physical infrastructure necessary to deliver digital content (primarily through

telecommunications deregulation and government efforts to reduce the digital divide) is

vital to spurring technological growth.

Protecting the Security of Information

The first and best line of defense against unwarranted intrusions into personal privacy

is for individuals to employ e-commerce technology to protect themselves. Industry-

developed and supplied encryption technologies and firewalls, for example, provide

individuals with substantial tools to guard against unwarranted intrusions.

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Encryption is technology, in either hardware or software form, which scrambles e-mail,

database information, and other computer data to keep them private. Using a

sophisticated mathematical formula, modern encryption technology makes it possible to

protect sensitive information with an electronic lock that bars thieves, hackers, and

industrial spies.

A firewall is essentially a filter that controls access from the Internet into a

computer network, blocking the entry of communications or files that are unauthorized or

potentially harmful. By controlling Internet “traffic” in a network, firewalls protect

individuals and organizations against unwanted intrusions, without slowing down the

efficiency of the computer or network’s operations. They also limit intrusions to one part

of a network from causing damage to other parts, thereby helping to prevent large-scale

system shutdowns brought on by cyber attacks. Not surprisingly, then, firewalls have

become a key component of computer systems today, and their architecture comprises

some of the most state-of-the-art e-commerce technology available in today’s

marketplace.

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But, computer security, or cyber security, is more than encryption, and it requires more

than a onetime fix. It is an ongoing process requiring the adoption of strong security

policies, the deployment of proven cyber security software and appliances-such as

antivirus, firewalls, intrusion detection, public key infrastructure (PKI), and vulnerability

management, as well as encryption-and, in the case of larger organizations, the existence

of trained security professionals. These professionals, in turn, must be continually

retrained in order to ensure that they are able to address and combat the evolving nature

of cyber threats.

Strong security tools alone, however, cannot protect users against threats in each and

every instance. Dedicated hackers and criminals will always seek new ways of

circumventing even the most effective security technologies. That is why it is critical that

strong laws be put in place to deter such activities. In particular, where needed, laws

should make it illegal to defeat, hack, or interfere with computer security measures, and

penalties for these crimes should be substantial.

As is the case with copyright laws, however, strong words in a statute are not enough.

Effective ant hacking and computer security laws must:

Provide deterrent civil and criminal penalties

Be backed by vigorous enforcement by governments (including through adequate

funding of such enforcement).

Allow private parties to pursue fast and inexpensive remedies when their cyber

security has been illegally breached

Although the government should create a strong legal framework against cyber crime, it

should not intervene in the marketplace and pick e-commerce technology “winners” by

prescribing arbitrary standards in the security field. Such intervention would do little

more than freeze technological development and limit consumer choice. Instead, the

development and deployment of security tools should be determined by technological

advances, marketplace forces, and individual needs, and should be free of regulation.

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Pursuing New Trade Agreements that Respect E-Commerce

As trade moves increasingly from the import and export of tangible goods to Internet-

based commerce, it is vital to ensure that traditional free-trade principles apply equally in

the realm of electronic commerce. Nations that have sought to rid themselves of

burdensome trade barriers must ensure they do not stifle e-commerce with those same

barriers. Because trade liberalization is crucial to the worldwide growth of the software

industry, the following agreements and negotiations are very important:

1. The pursuit of a new round of multilateral trade negotiations under the auspices of the

WTO

2. The conclusion of regional free trade agreements, such as the Free Trade Area of the

Americas(FTAA)

3. New, bilateral trade agreements, including the U.S.-Singapore Free Trade Area (FTA)

Thus, the preceding bilateral and multilateral talks provide opportunities to further

strengthen international trade law, provide a predictable business environment for e-

commerce, and develop a progrowth e-commerce agenda.

Keeping E-Commerce Barrier-Free

Any new trade negotiations should focus on barring new measures whose effect

would be to restrict or inhibit the growth of global e-commerce. Countries should also

ensure that they apply current WTO standards to online transactions. Specifically,

countries should:

Sign the Information Technology Agreement (ITA) and eliminate e-commerce

technology tariffs.

Make the 1998 Moratorium on Customs Duties on Electronic Commerce

permanent and binding.

Refrain from trade classifications that penalize software and other products

acquired through downloading from a computer network, compared to those

purchased in tangible form.

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Affirm that current WTO obligations and commitments, namely the General

Agreement on Tariffs and Trade (GATT; trade in goods), General Agreement on

Trade in Services (GATS; trade in services), and TRIPs (intellectual property)

rules are technology-neutral and apply to e-commerce. Countries should refrain

from enacting trade-related measures that could impede, actually or potentially,

international e-commerce. Such rules should be enacted only where a legitimate

policy objective necessitates doing so and where the least trade-restrictive

measure is chosen.

Support a NAFTA-type approach to e-commerce services issues in future trade

negotiations. NAFTA’s services obligations apply to all services, including new

services that have developed since the conclusion of NAFTA (this approach is

sometimes referred to as “top-down”). Because it is impossible to anticipate what

specific e-commerce services will develop over time, any “bottom-up” approach,

as embodied in the current GATS, almost certainly will be out-of-date from its

inception. There is a need to set the stage for an agreement that is more flexible

with respect to future e-commerce and computer industry developments.

Adopt a horizontal work program in the WTO for all e-commerce issues. This is

necessary in order to ensure that WTO rules and disciplines reflect the horizontal

(cross-disciplinary) nature of e-commerce

B2B - Business to Business

B2B is the selling between companies, wholesale rather than retail. But it means more

than that. Efficient use of capital demands small inventories, which entails anticipating

demand, and so maintaining detailed information flows between all parties involved in

today's complex manufacturing processes. B2B involves widening the circle of suppliers

(for safety and competition), and of centralizing control (for records and discounts).

B2B ecommerce is an important part of any online business. Leaving aside the simple

transfer of funds — covered here — many businesses need some combination of:

Creditworthiness assessment.

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Guarantee of quality and delivery of goods (escrow services).

Safeguards against fraud.

Fast collection of funds, with ability to vary the collection period.

Reporting: approval of sale, invoicing, delivery, payment.

Procedures to handle disputes.

Information of all types — corporate, technical, identity-building — has to be

interchanged across the scattered divisions of large companies, and new ideas

fostered, assessed and disseminated. Speed is vital, as are improved

communication, collaboration, and customer understanding. All these

requirements can be handled by IT, and software has been developed to meet the

challenge — customer relationship management, enterprise resource planning,

online auction, supply chain management, etc. Little of it is off-the-shelf, but is

devised as systems to be extended and built round individual company

requirements.

Principles of E-Commerce

E business can significantly benefit the functional processes of an organization and

enhance their profits; therefore more and more businesses are adopting online sales and

marketing. For example, Encyclopedia Britannica has sold more encyclopedias online

than through its door to door method of marketing. There are several principles of e

business which an organization must follow to reap the full benefits of its online

initiatives.

Know Your Customer

At the core of e business is the ability to capture and use information to

understand customer needs and preferences. It is impossible to build a good relationship

with customers in the absence of customer information. Information on customers helps

organizations determine the products and services they should produce and the

distribution channels they should use. Knowledge of customers is not confined to the

sales process alone. It includes information regarding customers after sales preferences as

well. Thus information on customers includes the following:

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Customer profiles and preferences. The combination of products and services to

be offered to customers The best method for providing customer support

The marketing efforts suitable for different customer segments

The new products and services that should be developed.

Organizations must systematically capture and use customer information. The

first step in this process involves collecting information on them. This information can be

obtained directly from the customer, or by using the transaction data that has been

captured and stored, or by collecting information from third parties like data syndicates,

credit bureaus, etc. The type of data that needs to be collected varies from industry to

industry, depending on the products or services that they offer. Generally, data on

customers includes demographic information, purchasing history, and the industry in

which the customer is operating (if the customer is a business customer). The data

collected must be analyzed to derive meaningful results.

Earlier, the collection and storage of customer information was not possible for

most organizations. Now, emerging e business technologies have made it possible for

them to effectively collect and manage customer data. E business technologies not only

help in the collection and management of data, they also enable the updating of customer

information. Changes in customer preference or buying behavior can be assessed using

these e business technologies. Without thorough customer knowledge, it would be

impossible to offer personalized services to customers, providing value addition in

products and services and ensuring 100% customer satisfaction.

Develop a Customer Profile

Developing a customer profile is another important step. A customer profile

should include the basic factors that were mentioned earlier and also an analysis of the

customer life cycle. This profile should give the organization insights into: The

product/service feature that is most valued by the customer Customer spending in the past

and the likely future spending. Effective segmentation and predictive modeling

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Segment Customers on the basis of Effective Criteria

An analysis of the customer life cycle will reveal the similarities and differences

in different customer segments. The important aspect here is focusing on the most

significant similarities or differences and the relevant customer segment. E business

technologies enable timely and effective customer segmentation. They also help

organizations correlate information on different customers. Prior to the use of these

technologies, companies were unable to capture and use huge volumes of data. Hence,

they used to segment customers on the basis of geography, income group, etc. But now

companies are able to segment customers on the basis of on complex factors like channel

preference, profitability, buying patterns, etc. For example, IBM has identified twelve

different customer segments. Initially, it segmented customers in the following

categories: government, education, mid size and large companies. Now, the large

companies segment is divided into global and large companies. The government segment

is divided into three segments; federal, state and local. The education segment is split into

K 12 and higher education. This type of segmentation helps the company effectively

handle the demands of different customer groups.

Customer segmentation helps companies target their advertising and sales

promotion at specific customers. The Internet has also made collaborative segmentation

possible. This type of segmentation allows customers to choose from a flexible menu of

offerings, configure them to suit their preferences and select the segment that they fit in.

This is in contrast to the traditional segmentation process in which firms determine what

offerings should be made to which segment. Collaborative segmentation is more accurate

and efficient because it enables customers who know their actual needs to participate

actively in the segmentation process. The customers of GM and Dell can configure

products according to their convenience and place an order for them. Customers do not

have to wait for the company to prepare a model, show it to them, seek suggestions,

incorporate the suggested changes, seek their approval again, and then make the final

delivery. Therefore, collaborative segmentation saves time for customers as well as

companies.

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Avoid the 'Silo' Effect

Although a huge amount of information is available in organizations, it is difficult to use

the information since it is scattered across different files, in different formats and at

different locations. This is referred to as 'Silo Effect.' E business technologies help

organizations integrate these islands of information and overcome silo effect. The silo

effect occurs when an organization's customer and prospect information is spread across

different business units, divisions, departments, and product lines. A few years back,

CompUSA suffered from the 'Silo Effect.' The customer service agents were not able to

access full information about the customers as it was scattered across the departments.

When a customer called, they had to spend considerable time locating the required

information. After deploying Siebel call center software, it was able to help customer

service agents resolve problems quickly. This software ensures that service persons have

access to all information about customers, thus helping them provide quality service. Use

of this software has reduced costs and improved customer service.

Predictive Modeling and Customer Profitability

Few organizations undertake in depth customer analysis to estimate the purchasing power

and spending patterns of their existing customers. Strategies for retaining customers and

attracting new ones are based on customer analysis. On the basis of existing information

on customer behavior, organizations correlate customer attributes and build models for

the future. Predictive modeling can be used by companies to identify customers who are

likely to discontinue business with the company. It can also be used to identify the cause

for customer dissatisfaction and take appropriate steps to retain the customer.

Use Multiple Channels to Interact with Customers

The emergence of new communication channels (such as the Internet and mobile

devices) is having a significant impact on the way in which organizations interact with

their customers. The number of organizations, that use the Internet to do business or

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communicate with customers, has increased significantly in the last few years. The

increase in communication channels has given rise to some problems. One of these

problems is the synchronization of the customer interaction that takes place at different

times and through different channels. Customers do not always confine themselves to a

particular channel; they use the channel that is most convenient for a given situation. The

implementation of effective e business architecture will help organizations overcome

channel conflict. It will also help organizations track orders in real time.

An effective multi channel strategy can help organizations improve the sales efficiency

and help reach out to more customers. Studies have revealed that no single channel can

service more than 50% of the total market volume. This suggests that the use of more

than one channel is essential for reaching customers. Secondly, the use of multi channel

can bring about channel synergies. The benefits of using a combination of channels are

more than those that can be gained from using a single channel.

The multi channel strategy has been especially effective in Internet brokerage. A study

conducted by McKinsey revealed that Charles Schwab is one of the most successful

online brokerage firms. According to the study, the success of Charles Schwab can be

attributed to its multi channel strategy. Charles Schwab services customers through the

Internet, telephone and call centers. McKinsey also found that there was a high

correlation between high value customers and the multi channel strategy. This suggested

that some high value customers gave importance to the availability of multiple channels.

All organizations, irrespective of type, size or scale of operations, require a multichannel

strategy. Such a strategy can be effective only if the different channels are synchronized

to allow customers seamless interaction with the organization, irrespective of the channel

they use. Identify Customer Channel Preference

Customers use only a few channels consistently when they are given a choice. So

organizations should analyze the channel usage of their high value customers. To make

the use of multiple channels economically viable, incentives should be given to

customers for the use of the most cost effective channel. Organizations can also provide

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customers self service channels through the web or through telephones, using IVR

technology.

Offering self service capabilities will enhance customer satisfaction and productivity.

Honeywell has implemented a web based self service system that contains answers to

about 50,000 queries. These are stored in a common database so that they are available to

customers. The system not only offers self services, it also improves productivity of field

personnel. If customers are unable to find a solution using the company's knowledge

base, they can forward their queries through the company's website to the concerned

person.

Organizations must ensure that they are communicating with customers using the

customers' most preferred channel. For example, some customers may respond well to e

mails but not to telemarketing. By using appropriate e marketing software, the

effectiveness of each marketing channel for each customer segment can be determined.

Synchronize Channels so that Customers have Continuous Seamless Integration

Regardless of the channel used by a customer for interaction, every interaction should be

tracked and recorded. An e business system will maintain a universal queue that will

support queries from various channels. All queries pass through a single channel and the

queries are prioritized based on standard rules that govern the routing of queries.

Organizations should be equipped with powerful online tools for coordinating multi

channel interactions.

Understand the Cost Structure of Each Channel

Channel optimization is important irrespective of the function for which the channel is

used. Channel optimization involves balancing the cost of the channel against factors like

value to the customers, customer preferences and profit potential. Though transaction

costs are low on the web, it may not be the right medium for all transactions.

Optimize the Channel Strategy

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A cost benefit analysis can be conducted to find out returns that the multi channel

strategy is yielding. The web, e mail and call centers are some of the cost effective

channels available. But cost is not the sole criterion driving the multi channel strategy.

Migrating to a web based channel does not mean that other channels should be

abandoned. For example, at IBM, mundane queries are answered through call centers

while complicated queries are handled by the sales force.

Personalize the Customer Experience

Prior to mass communication and mass marketing, business was restricted to local

markets. The degree of personalization was also high, with one to one interaction

between merchants and customers. But with the growth in business, one to one

interactions disappeared. The e business technologies now available help revive oneto

one relationships between the enterprise and customers. Such interactions help

organizations build personal relationships with customers. These relationships enable

organizations to offer a high level of customer service. E business technologies allow

organizations to continuously update information on customers and prospects and

customize their offering for each customer segment. For example, Yahoo! and Excite

enable users to customize their web page. By customizing the web page, users can have

all their preferred features on the web page.

Individualize Content

Customizing content to suit specific customer preferences is a basic principle of

personalization. The information made available to the customer through the Internet

should be driven by the company's knowledge of the customer's needs and preferences.

This is why it is so important to gather information on the customer. Amazon.com

recommends books to customers using the registration information provided by them.

The site uses collaborative filtering to make a list of recommendations. This technique

uses the purchase data of a customer to determine the customer's preference for a specific

category of books. Using this technique, Amazon.com is able to offer books that might

interest a particular customer.

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Enable Customers to Customize the Environment

The medium and channel of customer interaction determines the extent to which the

customer environment can be customized. The dynamic nature of the Internet makes the

environment highly custornizable. For example, users can create personalized web pages

in a web site. In the 13213 business environment, the exchange environment can be

customized to suit the requirements of specific trading partners, For example,

bliquid.com, an auction site for construction equipment, uses Siebel's eAction software to

cater to the needs of a particular market. It uses specialized software that allows

customers to carry out one to one negotiations. The software also provides real time

information on finance and shipping costs.

Personalize Interaction through all Channels

Regardless of the channel of interaction, organizations should use e business technology

to personalize customer contact. Marriott (A US based Hospitality Company) uses e

business software to maintain detailed customer profiles. When it comes across a repeat

customer, it makes an individualized itinerary for that person. Personalized service is also

offered when the guest arrives at the hotel. Such personalized service is offered to

business customers. This ability to extend personalized service not only saves the

customer9s time but also enhances customer loyalty and satisfaction.

Optimize the Value of Every Customer

Optimizing value for a customer operates at two levels macro and micro level, At the

macro level, it involves the strategic use of resources to extend maximum value to

customers. And at the micro level, it involves the maximization of the value of individual

customer interactions.

Micro Level Optimize every Level of Customer Interaction

Every interaction with customers or prospective customers creates an opportunity to add

value. Value can be generated for the customer by offering the most suitable product or

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service; and value can be generated for the organization in terms of increase in revenue

and enhanced customer loyalty. Customer interaction with the organization should be

designed to achieve the following: Basics of E Business

To make customers happy by providing excellent customer service

To create opportunities to generate revenues cross selling, up selling and reselling

To capture useful customer information

Murphy Brewery, an Irish beer manufacturer, implemented an e business solution to

optimize customer interaction. An internal survey carried out by the company revealed

that customer service should be improved. The company had multiple channels of

interaction and no single person was responsible for handling specific orders, queries, etc.

As a result, most of the customer queries remained unanswered. To address this,problem,

the company implemented an e business solution through a dedicated call center. This

call center streamlined the process of handling customer requests and queries.

Organizations seldom optimize customer value. This means that organizations are not

able to make customers spend to their maximum potential on any product/service. This

happens because organizations do not have complete information on the customer.

Therefore, businesses are not able to fully exploit cross selling, up selling and re selling

opportunities. Obtaining comprehensive customer information is essential for even non

profit organizations. For example, American Heart Association (AHA) is facing problems

matching heart donors with volunteers. AHA is making an effort to solve the issue by

building a consolidated information system of donors and volunteers.

To gain a greater share of the customers' wallet, organizations can offer them a wider

choice of products. Sharp Image's online auction initiative uses Siebel's e auction

software to use customer bidding information for cross selling. Use of this technology

brought about an increase in revenue and the sale of excess goods.

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E-Commerce Infrastructure

The principles discussed will be of little use if there is a lack of adequate E-Commerce

infrastructure to capture, organize, analyze and manipulate data. In the absence of

adequate meaningful data, organization will not be able to identify their customers' needs

and use multiple channels optimally. The guidelines for building a well designed

architecture are discussed below.

Centralized Data Storage

Centralized storage of customer and product information is required to develop sound

strategies. Though it seems simple, not many organizations have managed to build such a

data repository. Consolidated customer information can be of great use to organizations.

It will give them a comprehensive view of customers that will enable them to create

customer experience. E-Commerce systems allow organizations to create a centralized

repository that can be accessed by employees of different functional departments,

working at different locations.

Update Information Dynamically

A key feature of systems architecture is the capability to dynamically update customer

information. Customer information should be updated real time, irrespective of the

channel used by customers. Such updating is essential for channel synchronization. If a

customer lodges a compliant through a company's web site and then makes a call to find

out the status of the complaint, the customer service executive should be able to instantly

answer the customer's queries on the basis of customer information stored in the system.

E-Commerce systems also enable the tracking of a channel partner's interaction with

customers. Apart from dynamic updating capabilities, there should also be a provision for

modifying the system architecture whenever there is a necessity.

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Focus on Back Office Systems

The processes that directly interact with customers and back end processes must be

efficient to enable an organization to achieve a high level of customer satisfaction. The

processes that directly interact with customers are sales, marketing, customer service, etc.

Back end processes are order fulfillment, billing etc. The online ordering system must be

linked with the fulfillment, accounting and distribution system. For example, FedEx has a

well integrated information system that enables customers to check the real time status of

their orders on the FedEx website.

Scalable Systems

As a business grows' its E-Commerce systems should also adopt and grow along with the

organization. To be able to adapt, E-Commerce systems should use scalable technology.

Scalability refers to the ability of the system to handle numerous users concurrently and

allow them to complete transactions in the minimum possible time.

Support all Applicable Platforms and Devices

A wide range of communication and information devices are in use today. Regardless of

the hardware and operating system used, E-Commerce systems should be able to

integrate with all devices. For example, mobile devices should be able to link up with a

company's centralized database. Without these capabilities, there will be customer

dissatisfaction. The use of handheld devices can be highly effective in the pharmaceutical

industry. Medical representatives can gain access to information on drug and physician

profile while traveling.

Support Global Implementation

A global E-Commerce system must support the currency and language of all the

countries in which it operates. It should also accommodate any changes in the currencies

of the country e.g. the switch from national currencies to the Euro in Europe. As

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businesses expand globally, the ability of E-Commerce systems to support multiple

currencies and languages should also increase.

Single View of the Organization to Customers

Customers should get a unified picture of the organization. Even if the organization is

using multiple channels there should be no conflict in communication. Companies in the

automobile industry often run into communication problems. Automobile manufacturers

spend a huge amount of money on building brand identity. But the brand identity is not

optimally leveraged by their distributors and dealers. If a particular model requested by a

customer is not available with the dealer, the dealer contacts another dealer via telephone.

In the meantime, the customer loses patience and leaves the showroom. To overcome this

problem, Saturn Corporation has implemented an E-Commerce system that links all its

retail outlets across the nation with each other and with customers and partners. It is

estimated that 15,000 retail team members will use the system in real time to fill

customer orders, handle customer queries, and so on. Through the Internet, customers can

communicate with dealers and the dealers can have access to updated customer profiles.

E-Banking

The Internet has initiated an electronic revolution in the global banking sector. Its

dynamic and flexible nature as well as its ubiquitous reach has helped in leveraging a

variety of banking activities. The Internet has emerged as one of the major distribution

channels of banking products and services for banks in the US and in European countries.

The use of the Internet in banking started way back in 1995. The Internet served as an

ideal platform for commercial exchange, helping banks achieve higher efficiency in

financial transactions, strengthen customer relationships, promote price discovery and

ensure wider reach. It offered banks better opportunities to expand their client base and

rationalize their business, while customers received value in the form of savings in time

and money.

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Initially, banks offered information regarding their products, services and advice through

the Internet. More recently, advances in Internet security have made it possible for banks

to play their primary role as financial intermediators and facilitators of commercial

transactions, via electronic networks especially through the Internet. However, while the

Internet has brought more convenience for customers, it has also affected the profitability

of banks because of the increase in online competition. Not many banks have been

successful in exploiting the opportunities offered by e-banking. Banks need to define

niche markets and develop an effective Internet strategy to utilize these opportunities

fully.

E-Governance

The governance enabled by information technology is called e governance. It involves

using Internet technology to deliver public services and information in a conve nient,

citizen centric and cost effective manner. The automation of services and their integration

improves cooperation and coordination among various government agencies and results

in Optimum utilization of government resources. This boosts the efficiency and

effectiveness Of public agencies thus enhancing citizen satisfaction. The government can

improve the quality of education, housing, municipal and health related services offered

to the public through e governance. Further, e governance also helps in developing an

online community, which increases public awareness and enables sharing of knowledge.

By providing online access to information and se rvices,governments can improve

transparency in the administrative system The transactions can be monitored closely and

reports can be generated from the database at any time.

E governance encourages the active participation of people in governance and seeks their

suggestions in improving administrative processes. People can help authorities to

improve development plans for various sectors like agriculture, power, Communications,

environment and services. Thus, e governance decentralizes the decision making process

and empowers people. Therefore. e governance realizes the true spirit of democracy.

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However, e governance initiatives can lead to the digital divide between people who can

access and people who cannot access online services. Governments should improve the

information infrastructure in the Country so that citizens in every nook and corner of the

country can access information relating to government services on the Internet.

Community kiosks may be set up at various locations for people who do not have access

to the Internet. People (especially in villages and suburbs) also need to be educated in the

use of the Internet to improve the quality of their lives.

Electronic Payment System

Electronic payment systems are extensions of the already existing payment systems for

settling accounts, which include credit cards, debit cards, automated teller machines,

prepaid cards, etc. In an electronic payment system, accounts are credited or debited

between banks and concerned individuals or institutions depending on the information

transmitted following a transaction.

For corporate and individuals, cheques are still the most preferred route for payment, but

in the developed countries, the monetary value of transactions made through cheques in

comparison to that of made through the electronic payment systems is very low. For

example in the US, even though less than 5% of all transactions ware done through

electronic payment systems, these transactions accounted for more than '88% of the total

value. The various payment clearance mechanisms used in the US are the Fedwire of

Federal Reserve, Clearing House Interbank Payments System (CHIPS) of New York

Clearing House and Automated Clearing House (ACH). Fedwire and CHIPS are used for

large value transactions by banks and businesses. Banks settle their end of the day

transactions through Fedwire and businesses us CHIPS for foreign exchange transactions.

ACH uses private networks for transferring funds between businesses and their suppliers.

Therefore, transactions through ACH are of high volume and low value in nature.

There are a large variety of methods, standards and protocols for payment over the

Internet. Electronic payment systems need to support web purchasing, be secured from

attacks or break ins, be cost effective for low value transactions, etc. The standards used

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are Anonymous Internet Mercantile Protocols by AT&T Bell Labs, and Secure Electronic

Transaction promoted by Master Card and Visa. The software and hardware products

used for e payment systems include Cybercash, Digicash, Mondex, NetBill, Netcheque,

etc. The electronic payment systems can be broadly categorized into three types: payment

using electronic currency, payment using electronic funds, and payment through an

intermediary. Intermediaries like credit card services and cheque clearing firms help in

adjusting accounts of both the parties involved. To settle non cash payments, information

is needed at various levels like

Payment Clearing Services: The identities of buyers, sellers and the instruction to settle

payments.

Notational Fund Transfer: The credit card numbers and bank account numbers.

Digital Currency Payment Systems: The actual value of digital currency.

The conventional payment methods include locating a seller, choosing a product, giving a

quote, striking a deal and agreeing on payment terms, validating the identity and payment

mechanisms and shipment of goods. But these functions don't exist in electronic payment

systems. Therefore, there have to be methods that ensure a secure fund transfer in e

commerce. The various intermediaries should provide security, identification

authentication and payment support for electronic transactions.

Need for electronic payment systems Though credit cards, debit cards, etc. are now

widely used and accepted by the sellers, the number of transactions by cash outnumbers

the number of transactions made through these instruments. Therefore, there is a need for

an equivalent of cash in the digital world.

Anonymity in transactions

Digital currencies can preserve the privacy of the user in a better way than the trusted

third party method because payment information is separated from the buyer

identification in digital transactions. This is possible because the bank, which issues the

digital currency, keeps track only of the serial numbers of the currency to authenticate it.

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Digital coins carry encrypted messages about the user, which will be revealed only if the

coin is double spent and through legal means.

Micro payments and the Internet

The need for reducing transaction costs especially in small value transactions is driving

the use of digital currency. As explained earlier, non cash devices requi re the verification

of buyer's identity to authenticate them. This process is an inefficient method for small

value transactions. As the cost of authorization and handling the transactions is high,

there is a need to reduce the transaction costs to increase the usage of electronic based

payment systems. Therefore, increase in the usage of noncash payment systems totally

depends on the reduction in the transaction costs. As PCS and NFT are not suitable for

small value transactions, digital currency needs to be fully developed for information

trading.

The transferability of value

Another factor that may help increase the usage of digital cash is the removal of third

party intervention. A user should be able to complete a transaction without the

intervention of the third party. Non cash payment systems usually involve one or more

than one party for transaction settlement. It is equivalent to the client server system in

which the third party functions as a server and has the authority to validate and

authenticate the transaction. On the contrary, a transferable system supports peerto peer

transactions and the role of the third party is merged with the digital currency. It is not

necessary to have transferable system for the settlement of transactions between two

parties, because the involvement of the third party delays the settlement process and

increases the cost of transactions. A transferable currency can be used for both online and

offline transaction.

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Diagrammatic description of E-Commerce and working of e-payment-

system

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Supply Chain Management

Supply chain management (SCM) is changing as companies continue to look for

ways to respond faster, improve service for customers, and maximize sales while

decreasing costs. SCM solutions must support highly configurable products, such as

computers and automobiles, global markets with local specifications, and widely

dispersed suppliers and partners. Yet most companies’ SCM solutions are linear,

sequential, and designed for controlled conditions. They rely on accurate forecasting of

demand, but are disconnected from the actual demand. Decisions are made centrally, and

changes typically take days, weeks, or even months. However, companies increasingly

need to respond to changes in hours and minutes. Supply chains in this century must be

adaptive and provide greater visibility, velocity, flexibility, and responsiveness to enable

enterprise value networks to adapt to changes in supply and demand in real time.

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Management Shift

As supply chain networks extend across organizational and geographic boundaries,

companies must find ways to manage the unmanageable. The future of supply chain

management lies in the ability of the enterprise to respond instantaneously to shifts in

global supply and demand, and to major events that occur across extended supply chain

processes. The faster a supply network can adapt to these events, the more value that will

be created. For example, with Walldorf, Germany-based SAP® mySAP™ Supply Chain

Management (mySAP(tm) SCM), enterprise systems supplier SAP is delivering what it

believes is the most adaptive supply chain management solution available on the market.

In addition, SAP is developing adaptive-agent technology and repair-based optimization

that is expected to enable the next generation of adaptive solutions and services.

Supply chain management is now the key to increasing and sustaining profitability. In

fact, Stamford, Connecticut-based Gartner Group recently predicted that 91 percent of

leading companies that fail to leverage supply chain management would forfeit their

status as preferred vendors.

Customer relationship management (CRM) is about capturing customer requirements,

building life-long customer relationships and brand value, and

influencing demand through promotions. This information must be fed back into the

supply chain network to improve planning. Although this flow of information generally

does not occur now, it represents the key to customer-segmentation strategies and

effective demand management, which will lead to increasing overall profitability.

Customer feedback and trends must also drive product development to ensure that

products are designed according to customer requirements.

In addition, integration between a product life-cycle management (PLM) system and an

SCM solution reduces time-to-market for new products and ensures that engineering

changes are seamlessly integrated back into manufacturing. Last but not least, aligning a

company’s business model with operational capability requires engineering and sourcing

products differently. To support mass customization and postponement strategies,

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products tend to be designed in a modular fashion and sourced from fewer strategic

suppliers. Close collaboration with these suppliers on product design is essential to

reduce time-to-market, increase product quality, and ensure that products are designed for

supply.

With that kind of integration, a superior understanding of the customer drives everything

—CRM, product design, supply chain operations, and even the value proposition of the

entire network. In an adaptive supply chain network, SCM, CRM, and PLM must all

work together. That is the hallmark of a truly customer-centric organization—and the key

to profitability.

Competitive Advantage Making adaptive supply chains a reality means fundamental

changes in a company’s internal operations, starting with the integration of processes and

systems across organizational boundaries. Then, companies can leverage the increased

visibility within and across organizations to achieve change in their supply chain

processes, including functionality for the following.

Adaptive Planning

Today, most supply chain planning and scheduling systems rely primarily upon historical

data collected from enterprise resource planning (ERP) and legacy systems. However, as

companies aim to create virtually “inventory-less” supply chains, they require the ability

to realign demand and supply almost continuously to consider the latest demand situation

and supply status. Adaptive planning replaces batch-oriented, period planning with an

event-driven, real-time response to demand signals and changing supply situations.

Dynamic Collaboration

Traditional supply chains rely mostly upon inventory and assets, but the adaptive supply

chain network is information-based—it uses shared data for planning and execution

processes. By incorporating data garnered from collaborative processes (such as vendor-

managed inventory [VMI]; collaborative planning, forecasting, and replenishment

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[CPFR]; collaborative supply management; and collaborative transportation

management), these networks replace inventory and capacity buffers (long used to make

up for a lack of supply chain visibility) with information.

Distributed Execution

Most execution systems are ill-prepared to support the emerging virtual supply network.

Distributed execution considers the distributed nature of processes in a world of

outsourcing, in which multiple partners in the extended network might manage a single

process. Distributed execution allows the management of processes across different ERP

systems by supporting cross-system integration and collaboration.

Event-Driven Coordination

Today, even small disruptions in supply chains initiate a wave of e-mails, faxes, and

phone calls just to keep pace with the problem. Adaptive supply chain networks address

the challenge of managing the virtual enterprise through up-to-the minute monitoring and

control of business processes and the rapid, intelligent resolution of exceptions. Event-

driven coordination complements adaptive planning by trying to solve supply chain

exceptions locally to support existing, optimized plans. The result? Faster response to

market changes and instantaneous adaptation to customer needs across the enterprise and

the network.

Continuous Performance Management

Most executives would agree that consistent performance metrics are the key to steering

the behavior of individuals and reconciling conflicting goals across functional areas.

However, key performance indicators (KPIs) also play a major role in managing

collaborative processes and in providing decision makers with actionable information to

increase the quality and speed of decisions. Continuous performance management

enables closed-loop learning processes by allowing the company to measure the quality

of processes constantly, and by feeding this information back into supply chain planning.

Besides addressing the need for consistent performance metrics, companies are

increasingly complementing supply chain KPIs with balanced scorecards to get a level

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view of the state of the organization, and to align operational targets with strategic

objectives across functional silos.

Combined, these elements enable companies to implement closed-loop learning processes

across the supply network. In business, the ability to adapt to change is increasingly

important. For those who do it right, the adaptive supply chain network will be an

important competitive weapon. Those who don’t may well become the dinosaurs of their

industries

The Scope of the Internet and the Web

The renaissance of the Internet age launched an entirely new set of communication

technologies and methods. As multiple technologies evolve and interoperate, so do

complementary standards, such as those for multimedia applications. The advancement of

multimedia applications for the Web has resulted in a wave of new technologies to

enhance the Internet experience. From voice to video, the latest developments have

resulted in the requisite standards to allow for the full maturation of the technology.

Voice over IP (VoIP) has gained acceptance within the last few years, with older

standards enabling the technology. As more advanced standards mature and enhanced

capabilities and features become available, the adoption of VoIP has begun to take off.

For example, H.323 is currently the dominant standard for initiating a voice session. But,

as more multimedia services, such as unified messaging, video conferencing, instant chat,

and presence, gain acceptance in an Internet Protocol (IP) environment, more robust

standards are needed. Hence, the creation of an HTTP-based protocol—Session Initiation

Protocol (SIP).

SIP’s main functions are signaling and call control for IP-based communications. It

defines the desired service for the user, such as point-to-point calls, multipoint

conferencing, text, voice, or video. Using the protocol, SIP servers perform a routing

service that puts the caller in contact with the called party, taking into account the desired

service and user preferences. Because SIP has its foundation in HTTP, it eases the

integration of voice with other Web services.

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Enabling Multimedia E-Commerce with SIP

The emergence of SIP has opened up new doors of innovation, enabling the next

generation of e-commerce through the use of VoIP and multimedia applications. The

simplicity of SIP technology is facilitating the spread of VoIP around the world. SIP’s

straightforward approach has encouraged developers of e-commerce applications and

telecommunications providers to implement it into their customer relationship

management (CRM) systems.

Traditional voice call centers for customer support are migrating to Web support

centers where the focus is shifting from pure voice (800 numbers) to e-mail support, text

chat, voice, and video with click-to-connect service. The integration of these applications

brings a fresh dimension of communication to customer-facing Web sites. As customers

experience the benefit of multiple touch points, enterprises are compelled to integrate

these new communication methods into their CRM systems. As the enabling protocol,

SIP is well-suited to bring these capabilities to the user.

Because support for instant messaging and presence is built into the SIP, a whole new

level of customer communications can take place. Presence lets users know the

availability of other parties, and when coupled with instant messaging and conferencing,

allows for communications to happen in a spontaneous fashion. With these added

functionalities, the online consumer can experience a rich customer support environment.

Because SIP enables real-time voice and video to become viable applications on many e-

commerce Web sites, it enhances Internet call center productivity. With the click of a

mouse, a customer can talk to or be in face-to-face contact with a service representative.

This level of customer service allows an immediate personal connection with customers

—one of the most critical aspects in CRM. The adoption of e-commerce will be bolstered

further as consumers begin to rely upon this type of online customer service.

SIP-based communications can be achieved with any device, fixed or mobile, such as

laptops and Internet-ready phones In addition, because SIP supports name mapping and

redirection services, it is possible for users to initiate and receive communications and

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services from any location, and for networks to identify users regardless of location. This

adds an additional level of usability from a CRM perspective. As e-commerce spreads to

cell phones and other handheld devices, this functionality will increase in importance.

Now, let’s look at how to use the Web to reach customers. Although customer experience

includes intangible, no quantifiable aspects, it also includes a wide range of entirely

measurable Web site elements.

Using the Web to Reach Customers

The rules are the same. To succeed in e-business, just as in brick-and-mortar, you need

customers. And, keeping customers is vastly cheaper than getting new ones. High rates of

customer retention (and the referrals that accompany happy consumers) can mean the

difference between success and going back to the drawing board.

The challenges that e-businesses face, however, in earning and retaining customers are

different from those confronted by traditional business. A shopper who drives to the

bookstore is not likely to put down the book he wants and drive to another location

because of a line at the checkout stand. Someone looking for the biggest selection of CDs

cannot go to 20 stores in 6 states in half an hour to check their selection. And, once you

have received personal attention from someone at a store, helping you find exactly what

it need, it isn’t hard to decide where to go next time. The options and flexibility of doing

business online put much more control in the hands of the consumer, placing a premium

on the performance, effectiveness, and reliability of an organization’s Web site. There is

no one to apologize to Internet customers when the service goes down, or when an image

is missing, or to explain what an error message means. And, alternatives are just a click

away.

For online consumers, the user experience is the most significant factor in

customer retention. Customer experience comprises a range of issues, including ease-of-

use, dependability, speed, as well as less quantifiable aspects of a Web site. As the

Internet matures and evolves into a ubiquitous, if not preeminent, medium for business,

those companies best able to monitor their Web sites and ensure a positive, rewarding

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customer experience will have an unparalleled advantage in the race to create and retain

loyal customers.

The Often Missing Piece

A less tangible but equally vital aspect to customer loyalty in e-business is trust. For

consumers, participation in a typical Internet business model requires divulging personal

information for registration purposes, often including sending credit card numbers to the

site. Increasingly, customers are cautious when sending such information and wary about

sites that they suspect may not adequately guard the privacy of their demographic and

financial information. Web sites that have prolonged outages or frequent transaction

failures break the chain of trust with their consumers, pushing them to other providers

that instill stronger confidence and, therefore, loyalty, in their customers.

To be successful, an e-business has to be:

1. Sophisticated and fast

2. Easy and consistent

3. Extremely reliable

Without these, customers will click away, going to the sites that give consumers the

interaction with e-business that they expect and require.

Acquisition, Retention, and Referrals

Customer acquisition costs range wildly from one company to the next, but everyone

understands that once a company has acquired customers, the key to maximizing revenue

is keeping them.

It is 7 to 11 times cheaper to keep a current customer than to add a new one.

A Xerox study showed that their totally satisfied customers were 7 times more

likely to make additional Xerox purchases in the subsequent 29 months than the

merely satisfied.

Companies can increase profits by almost 100% if 6% more of their customers

were retained.

Estimates show up to 91–96% of a brand’s profits come from loyal customers.

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A study by McKinsey & Co. calculates that an 11% increase in repeat customers

translates to a 10.6% increase in company value.

Bain & Co./Mainspring research shows that online grocers must keep customers

for 29 months just to break even.

The preceding are potentially frightening data to e-business, which lives, or dies, in a

medium where jumping from one Web site to another, changing brands and loyalties, is

Benefits of the E-Commerce Market

The letter “e” lost much of its language-domineering swagger with the fall of the dot-com

economy. Technology marketers, journalists, and analysts now cringe at “e”-inspired

products and concepts. Venture capitalists hide their money-stuffed mattresses when

Silicon Valley experts drop by with business plans. Yet, electronic commerce veterans in

some of the largest companies in the United States, companies such as Ford, Cisco, Wal-

Mart, Procter and Gamble, McKesson, and Compaq, see opportunity in the midst of e-

commerce turmoil.

Increasing Interest in Interfacing Technologies

Transaction management market (TMM) technologies automate machine-to-machine

information exchange between organizations. The share of IT budget dedicated to

solutions that interface with customers, suppliers, and service providers is increasing.

This trend is evidenced by continued demand for CRM, order management, demand

forecasting, sourcing, and procurement solutions despite difficult economic conditions.

And, Web services market hype provides an almost deafening statement about the value

of interfacing technologies. Therefore, as economic conditions improve and as eXtensible

Markup Language (XML) standards begin to reduce intersystems integration costs, there

will be an increased demand for transaction management technologies.

Nevertheless, although interfacing technology demand is consistent across most industry

segments, the business conditions generating interest vary considerably. Ever-tightening

electronic relationships between consumer packaged goods (CPG) manufacturers and

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larger retailers are driven by the need to accurately track and forecast demand for billions

of fast-moving products through a low-margin, geographically dispersed network. High-

tech manufacturers continue to invest in interfacing technologies to regain some of the

control relinquished with business process outsourcing contracts. Cash-strapped

wholesalers invest in any technology, including TMM solutions, that can reduce the order

to cash cycle. Despite differing business concerns, interest in technologies that improve

interbusiness process efficiency is high.

Drivers of Change

Several important technology developments are driving change in the TMM market. First

and foremost is the emergence of the Internet as an effective, low-cost means of

transporting mission-critical business information between systems. Although the

Internet alone does not provide the network quality of service (QoS) demanded for

mission-critical data communications, software and service providers have built solutions

on top of this nearly free transport network. Data transport cost declines have

fundamentally altered the way companies interact.

The second major force of change in the TMM market is the emergence of new

technology standards, such as Java™, XML, and Web services. Overcoming

communication barriers, which come in many forms, is often expensive. Java, XML, and

other technology standards remove a number of machine-to-machine communication

barriers and reduce partner integration costs.

Falling integration costs will affect the TMM market in two ways: first, the addressable

market for TMM solutions will continue to expand as solution price points fall into

ranges acceptable to small and midsized businesses. Second, reducing the cost and

complexity involved in deploying and maintaining a TMM system will release corporate

resources to other higher-value automation efforts. Many experienced users that bought

TMM solutions to control order processing costs have since evolved their systems to

manage a demand forecasting process, complex pricing data, and Just-in-Time (JIT)

inventory strategies.

Processing Heavy Order Volumes

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TMM solutions can quickly and accurately process thousands, even millions, of

orders a week. Consumer packaged goods manufacturers, apparel manufacturers,

retailers, wholesalers, and companies in similar industries manage high order volumes for

fast-moving, made-to-stock products. In industries such as pharmaceuticals, health

products, and electronic components, where both order volumes and per-SKU prices are

high, fast and accurate order processing is essential to staying in business. Companies

facing these conditions leverage TMM technology to scale business without scaling

operational costs.

Combining on-site translation software with electronic trading network service

has proven a very effective means of managing order volume growth without scaling

order processing head count. By working with a network service provider, transaction

volume growth (and related corporate expansion) is not encumbered by technology skill

and staff development needs.

It is difficult to compare manual and automated order processing costs. The

comparison would be interesting, but is not necessary. In a high-growth, heavy order

volume industry, TMM technology is not a cost-savings option, but a business

requirement. Therefore, despite TMM’s mission-critical nature in heavy order volume

industries, many companies use innovative forecasting, direct shipment, and customer

service capabilities, as the most significant advantage to their organization’s gains from

TMM service usage today.

Managing Codependent Relationships and Complex Products

In industries with less demanding order volumes, but more complicated products

and relationships, transaction management systems are used for equally valuable but very

different business reasons. In the high-tech, automotive, and chemicals manufacturing

industries, products are complex, highly engineered, and often expensive. Companies in

these industries are highly dependent on partners to produce high-value, high-complex

products. In these industries and others, dependencies are becoming stronger and

products are becoming more complex. TMM systems support codependent relationships,

allowing companies to play an effective role in complex production processes.

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Best Practices

Today, companies are extending, or planning to extend, their TMM systems into

interesting new business automation scenarios. Several of these best-practice examples

are described next.

Speed and Competitive Advantage

Speeding business process and improving customer service to gain competitive advantage

is not cheap. A company could spend nearly $5 million annually to support its machine-

to-machine order processing system. But, business benefits and competitive distinction

greatly outweigh the costs of the system.

For example, in the food-and-beverage industry, paper and mail are slow. Money makes

money. Anything that slows down money or products costs money. Companies usually

tackle banking communications first to speed the processing of thousands of small

monthly order volumes. Most companies usually tackle logistics management challenges

next, which is followed by an incremental deployment with a supplier connectivity

solution. In addition, most companies claim to have achieved a positive ROI in less than

12 months after going live with the banking stage of their implementation.

Managing Outsourced Business Relationships

Most high-tech companies shift their business strategies as the economy begins to

slow. With cost control pressures mounting and shareholders demanding improved

returns, the companies choose to outsource production and certain support services to

contract manufacturers (CMs). To support the outsourcing strategy, the firms identify and

implement TMM technology. The solution manages the mission-critical information

flowing between a company and its new CM partners. A system could cost less than

$400,000 to deploy (including hardware, software, and services). Ongoing costs run

approximately $230,000 annually.

It is difficult to measure the value a solution provides a company, but, an outsourcing

business strategy would not be possible without the TMM solution. Because of difficult

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economic conditions and financial turmoil in the industry it services, firms have limited

visibility into future demand. Companies expect demand to increase as the economy

recovers. Their new CM relationships should allow them to react rapidly to changing

demand and avoid losing sales through lack of production capability.

Expansion Strategy Support

Companies are using TMM technology to support complex operational strategies,

the role of TMM technology will continue to expand as costs fall, as standards develop,

and as innovative best-practice use cases emerge from the fog of the current recession.

The Service Provider Advantage

Value added network (VAN) service charges have gained an onerous reputation since the

emergence of the Internet as a corporate communications tool. The idea of charging per-

transaction fees to move data across a network (which is how VAN service charges

accrue) riles free-spirited Internet enthusiasts. But the Internet’s greatest strength

(ubiquity) is also its fatal flaw.

The last thing a company wants is not ubiquitous access to its data traffic, nor are

companies interested in the lack of control inherent in a ubiquitously managed network.

Absent the addition of robust technology, the Internet is insecure, unreliable, and

unworthy of mission-critical corporate data. VAN service providers offer subscription-

based technology services that meet corporate data communication needs. VANs ensure

that data gets from point A to point B securely, reliably, and with an audit trail.

Companies pay usage-based subscription charges for access to VAN bandwidth.

Accessing network QoS functionality from a third party also helps separate business

objectives from technology plumbing. Companies interested in deepening partner

collaboration or automating more complex business processes are faced with a myriad of

business challenges. One-time partners become next-project competitors. Partners are

contracted to ship to a production plan, regardless of the status provided by a real-time

system. Processes, which vary by both company and division, need to be reviewed and

aligned. Obstacles abound in a value chain integration scenario. VAN and electronic

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trading network service providers remove the interenterprise communication obstacle,

allowing staff to focus on business, not technology problems.

Summary

In a remarkably short time, the Internet has grown from a quirky playground into a vital,

sophisticated medium for business, and as the Web evolves further, the threshold for

conducting successful business online will move increasingly higher. Online consumers

are flooding to the Internet, and they come with very high expectations and a degree of

control that they did not have with traditional brick-and-mortar companies. Businesses,

too, are rushing to join the Internet revolution, and new, viable competitors are emerging

in all industries.The enticement of doing business online must be tempered by the

understanding that when the dust settles, a significant percentage of e-businesses will

have failed. The ones that succeed will be those that are able to deliver a satisfying and

consistent customer experience online, building brand loyalty and guaranteeing high rates

of customer retention.

Although customer experience includes intangible, nonquantifiable aspects, it also

includes a wide range of entirely measurable Web site elements. It is necessary for any

organization wanting to succeed in e-business to define a broad spectrum of performance

parameters, establishing benchmarks for speed, reliability, availability, and accuracy, and

to monitor all of those parameters. Nothing works perfectly all the time, and the spoils

will go to those e-businesses that constantly and efficiently monitor their Web sites,

immediately identifying any glitches that do occur and fixing them promptly.

Moving forward, all businesses will be affected by the global move to electronic

commerce. Business operations will change, and new processes will be created.

Companies that start learning in this new environment today will be leaders in the future.

Furthermore, as future technologies are developed, the SIP will continue to play a pivotal

role in the adoption of multimedia e-commerce. SIP’s simplicity, easy integration, and

extensive interoperability ensure its longevity as the preferred multimedia platform

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Bibliography

Joseph P.T. “E-Commerce- A Managerial Perspectives” Prentice Hall of India

Pvt. Ltd, New Delhi.2002

Syed Rahman “Electronic Commerce: Opportunities and Challenges” IGI Global; illustrated edition (February 2000)

www.Businessline.com

Economic Times

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