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Chapter 8: The Web-Enabled Enterprise Oz (5 th edition) 1.

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1 Chapter 8: The Web-Enabled Enterprise Oz (5 th edition) 1

2 Uniqueness of Web-Enabled Commerce The Web provides a universal standard The Web provides a universal standard Enables seamless integration of information exchanges Enables seamless integration of information exchanges Within the business Within the business Between business and customers/suppliers Between business and customers/suppliers Unbundling of products and product info Unbundling of products and product info Reductions in search costs for both buyer and seller Reductions in search costs for both buyer and seller Information asymmetry for buyers Information asymmetry for buyers Richness and reach Richness and reach New business models (discussed later) New business models (discussed later) 2

3 Web Technologies (all but the last are available for free) HTTP HTTP HTML and XML HTML and XML File transfer protocol (FTP) File transfer protocol (FTP) RSS RSS Blogs Blogs Podcasting Podcasting Instant messaging Instant messaging Cookies Cookies Proprietary technologies Proprietary technologies 3

4 HTTP, HTML, and XML Hypertext Transfer Protocol (HTTP) is the protocol used to transfer and download Web information. HTTPS is HTTP with encryption. Hypertext Transfer Protocol (HTTP) is the protocol used to transfer and download Web information. HTTPS is HTTP with encryption. Uniform Resource Locator (URL) is a literal address given to a Web server that corresponds to the IP address Uniform Resource Locator (URL) is a literal address given to a Web server that corresponds to the IP address http://www.winthrop.edu/dacus/resources/howdo.htm http://www.winthrop.edu/dacus/resources/howdo.htm http://www.winthrop.edu/dacus/resources/howdo.htm Hypertext Markup Language (HTML) is the language for creating Web pages viewable with a Web browser. HTML determines the look and structure of Web pages. Hypertext Markup Language (HTML) is the language for creating Web pages viewable with a Web browser. HTML determines the look and structure of Web pages. Extensible Markup Language (XML) is used to convey meaning or content to data. Extensible Markup Language (XML) is used to convey meaning or content to data. HTML HTML Oz enterprises, Ltd. Oz enterprises, Ltd. 610-555-1234 610-555-1234 XML XML Oz Enterprises, Ltd Oz Enterprises, Ltd 610-555-1234 610-555-1234 4

5 FTP, RSS, and Blogs FTP (file transfer protocol) is a common way of transmitting files from one computer to another. You use this when you download files are attach files to an email. FTP (file transfer protocol) is a common way of transmitting files from one computer to another. You use this when you download files are attach files to an email. RSS (rich site summary) is a family of XML file formats. An RSS service is installed on a site to enable users to check updates to the site. Users can also instruct a Web site with RSS to automatically send new information (often used on news Websites). RSS (rich site summary) is a family of XML file formats. An RSS service is installed on a site to enable users to check updates to the site. Users can also instruct a Web site with RSS to automatically send new information (often used on news Websites). A blog (contraction of Web log) is a Web page that invites visitors to post opinions and images on a particular topic. Blogs usually have links to sites of interest. A blog (contraction of Web log) is a Web page that invites visitors to post opinions and images on a particular topic. Blogs usually have links to sites of interest. Trackback feature Trackback feature Commercial implications of blogs Commercial implications of blogs Advertising Advertising Market research Market research Sample blog sites Sample blog sites www.commonsenseblog.org www.commonsenseblog.org www.commonsenseblog.org www.diabetesblognetwork.com www.diabetesblognetwork.com www.diabetesblognetwork.com 5

6 Podcasting and Instant Messaging Podcasting is like blogging but enables users to post sound on a Web site so that people can download it. Podcasting is like blogging but enables users to post sound on a Web site so that people can download it. Users can subscribe to a podcast site that uses RSS and be notified of new audio files Users can subscribe to a podcast site that uses RSS and be notified of new audio files Files are usually in an MP3 format. Files are usually in an MP3 format. Business uses Business uses Time shifted broadcast of tv/radio programs (www.abc.com) Time shifted broadcast of tv/radio programs (www.abc.com)www.abc.com Deliver lessons to remote students Deliver lessons to remote students New musicians (garageband.com); has RSS New musicians (garageband.com); has RSSgarageband.com Instant messaging (IM) is a service that offers users the ability to determine whether other persons using the service are online. Users can do this in groups (chat rooms) or with one person. Some applications permit video conferencing and FTP. Instant messaging (IM) is a service that offers users the ability to determine whether other persons using the service are online. Users can do this in groups (chat rooms) or with one person. Some applications permit video conferencing and FTP. AOL Instant Messenger, MSN Messenger AOL Instant Messenger, MSN Messenger Used in business for customers to chat with sales rep Used in business for customers to chat with sales rep 6

7 Cookies Cookies Cookies Small files a Web site places on a visitor's hard drive so the site can retrieve information later Small files a Web site places on a visitor's hard drive so the site can retrieve information later Cookie contains a unique identifier and data collected from prior visits Cookie contains a unique identifier and data collected from prior visits Use of cookies Use of cookies Convenience for users Convenience for users Some cookies are used by third parties contracted by a business Web site (e.g., DoubleClick) Some cookies are used by third parties contracted by a business Web site (e.g., DoubleClick) Clickstream tracking Clickstream tracking Spyware includes cookies and other techniques that are installed on your computer unbeknownst to you that transmit information about you while you are online. Spyware includes cookies and other techniques that are installed on your computer unbeknownst to you that transmit information about you while you are online. 7

8 Proprietary Technologies Many of the technologies mentioned earlier are widely used and available for no charge. Many of the technologies mentioned earlier are widely used and available for no charge. Proprietary technologies are intellectual property and not free of charge. Proprietary technologies are intellectual property and not free of charge. Local search engines (e.g., Google for the WU Web site) Local search engines (e.g., Google for the WU Web site) Shopping cart applications Shopping cart applications Wish list creation Wish list creation Tools to analyze Web site visitor behavior Tools to analyze Web site visitor behavior 8

9 Intranets An intranet is a computer network within an organization that uses Internet technologies for r members of the organization only An intranet is a computer network within an organization that uses Internet technologies for r members of the organization only If a company has an existing network, than establishing an intranet is very inexpensive. All that is required is the server software and browsers for clients. If a company has an existing network, than establishing an intranet is very inexpensive. All that is required is the server software and browsers for clients. Most of the technologies mentioned earlier are all available at no charge Most of the technologies mentioned earlier are all available at no charge 9

10 Information Most Frequently Found in Corporate Intranets Customer databases Customer databases Corporate policies and procedures (Winthrop) Corporate policies and procedures (Winthrop) Corporate phone directories Corporate phone directories Human resource forms (Winthrop) Human resource forms (Winthrop) Training programs Training programs Product catalogs and manuals (Winthrop) Product catalogs and manuals (Winthrop) Data warehouse and decision support access Data warehouse and decision support access Internal purchase orders (Winthrop) Internal purchase orders (Winthrop) Travel reservations Travel reservations Knowledge management databases Knowledge management databases 10

11 Functional Applications of the Intranet Idea 11

12 Extranets An extranet is similar to an intranet but it enables the firms business partners (e.g., suppliers or customers) to access the firms intranet An extranet is similar to an intranet but it enables the firms business partners (e.g., suppliers or customers) to access the firms intranet Once an organization links its network to the Internet theoretically anyone can access the firms network. With respect to an extranet, firms want to restrict access to business partners. A virtual private network provides the security mechanism for accomplishing this. A VPN uses a combination of public and private lines to build a secure extranet. The link between the firms network and the Internet is often called a tunnel. A VPN provides a secure tunnel. Once an organization links its network to the Internet theoretically anyone can access the firms network. With respect to an extranet, firms want to restrict access to business partners. A virtual private network provides the security mechanism for accomplishing this. A VPN uses a combination of public and private lines to build a secure extranet. The link between the firms network and the Internet is often called a tunnel. A VPN provides a secure tunnel. VPNs are also required for firms with extensive intranets (multi-site firms) VPNs are also required for firms with extensive intranets (multi-site firms) 12

13 Extranet Applications Managing the supply chain Managing the supply chain Collaborating with other organizations in the development of new products/services Collaborating with other organizations in the development of new products/services Sharing product catalogs exclusively with wholesalers Sharing product catalogs exclusively with wholesalers Sharing news and other information of shared interest exclusively with business partners (e.g., production schedules, forecasts) Sharing news and other information of shared interest exclusively with business partners (e.g., production schedules, forecasts) 13

14 Types of E-Commerce B2B (seller and buyer are business entities) B2B (seller and buyer are business entities) B2C (seller is business; buyer is consumer) B2C (seller is business; buyer is consumer) Other types Other types C2C (seller and buyer are consumers; not covered in our outline; eBay) C2C (seller and buyer are consumers; not covered in our outline; eBay) G2C, G2B, G2G G2C, G2B, G2G 14

15 Main Ideas in B2B E-Commerce Buying and selling in B2B Buying and selling in B2B Auctions support dynamic pricing (bidding) Auctions support dynamic pricing (bidding) Exchanges support dynamic and negotiated prices Exchanges support dynamic and negotiated prices Supporting technologies for buying/selling Supporting technologies for buying/selling VAN EDI and Web enabled EDI VAN EDI and Web enabled EDI Electronic funds transfer Electronic funds transfer Digital signature and digital certificates Digital signature and digital certificates Activities other than buying and selling Activities other than buying and selling Alliances Alliances Sharing of supply chain information Sharing of supply chain information Sharing of product designs, logistics, forecasts Sharing of product designs, logistics, forecasts 15

16 Size of the B2B Market By 2004 market may reach $10 trillion; much larger than B2C market By 2004 market may reach $10 trillion; much larger than B2C market In the US 40 percent of all B2B transactions are done on-line In the US 40 percent of all B2B transactions are done on-line B2B commerce is about 10 times as great as B2C commerce B2B commerce is about 10 times as great as B2C commerce 16

17 Classifying Auctions/Exchanges Overview Public or private Public or private Auctions tend to be public; exchanges tend to be private Auctions tend to be public; exchanges tend to be private Number of participants Number of participants Sell side one seller Sell side one seller Buy side one buyer (GE or ChoiceBuy) Buy side one buyer (GE or ChoiceBuy) Many sellers and many buyers (ChemConnect) Many sellers and many buyers (ChemConnect) Ownership Ownership Industry giant Industry giant Neutral third party Neutral third party Consortium Consortium 17

18 Sell-Side with One Seller Sellers may be click-and-mortar manufacturer or intermediaries Sellers may be click-and-mortar manufacturer or intermediaries Use the Internet to sell through electronic catalogs Use the Internet to sell through electronic catalogs Cisco, Dell, Staples Cisco, Dell, Staples Separate pages and catalogs for major buyers Separate pages and catalogs for major buyers Boeing sponsors a website for which airlines can find maintenance and parts Boeing sponsors a website for which airlines can find maintenance and parts 18

19 Buy-Side with One Buyer This model arises from the procurement needs of firms where procurement involves the purchase of goods and services needed to accomplish the mission of the business This model arises from the procurement needs of firms where procurement involves the purchase of goods and services needed to accomplish the mission of the business In this model a buyer opens an electronic market on its own server and invites potential suppliers to bid on the items the buyer needs. The invitation is called a request for quote (RFQ). This process is called the reverse auction of bidding mode. In this model a buyer opens an electronic market on its own server and invites potential suppliers to bid on the items the buyer needs. The invitation is called a request for quote (RFQ). This process is called the reverse auction of bidding mode. GE was one of the first to do this GE was one of the first to do this Online directories exist for suppliers that list open RFQs Online directories exist for suppliers that list open RFQs 19

20 Exchanges with Many Buyers and Sellers In these exchanges buyers and sellers may be interested in both long term contracts or one- time transactions at prevailing prices. In these exchanges buyers and sellers may be interested in both long term contracts or one- time transactions at prevailing prices. Examples Examples ChemConnect ChemConnect ChemConnect Alibaba.com Alibaba.com Alibaba.com Converge.com (spot market for electric, networking and computer components) Converge.com (spot market for electric, networking and computer components) Converge.com 20

21 Classifying Exchanges/Auctions (cont) Ownership of Exchanges Industry giant Industry giant IBM established an exchange for selling patents (delphion.com) IBM established an exchange for selling patents (delphion.com) Neutral entrepreneur Neutral entrepreneur ChemConnect.com ChemConnect.com The consortia or co-op The consortia or co-op Covisint (automobile) Covisint (automobile) Orbitz (airlines) Orbitz (airlines) 21

22 Services Provided by Intermediaries in an Auction/Exchange Services for buyers Services for buyers Automate buying, contract management, purchase orders, requisitions, business rules enforcement, and payment Automate buying, contract management, purchase orders, requisitions, business rules enforcement, and payment Services for sellers Services for sellers Catalog creation and content management, order management, invoicing, and settlement Catalog creation and content management, order management, invoicing, and settlement 22

23 Other B2B E-commerce Practices: Alliances and Sharing Information Alliances Alliances Online business alliances of airlines such as Orbitz (www.orbitz.com) and Star Alliance Online business alliances of airlines such as Orbitz (www.orbitz.com) and Star Alliancewww.orbitz.com Covisint is an alliance of major automobile makers Covisint is an alliance of major automobile makers In real estate (MLS) In real estate (MLS) Sharing of information (collaborative commerce) Sharing of information (collaborative commerce) Extranet idea Extranet idea Sharing of supply chain information Sharing of supply chain information Joint design Joint design 23

24 Technologies that Support B2B VAN and Web-enabled EDI VAN and Web-enabled EDI Electronic funds transfer (EFT) Electronic funds transfer (EFT) Digital signatures and certificates Digital signatures and certificates Ways to authenticate online messages similar to physical signatures on paper. Ways to authenticate online messages similar to physical signatures on paper. 24

25 Major Benefits of B2B to Business Reduction of paper and administrative costs Reduction of paper and administrative costs Reduces cycle time (time compression) Reduces cycle time (time compression) Reduces search costs and time for buyers and sellers Reduces search costs and time for buyers and sellers Reduces inventory levels and costs Reduces inventory levels and costs Reduction in errors and/or improved quality of service Reduction in errors and/or improved quality of service Enables JIT and production flexibility Enables JIT and production flexibility Expands the marketplace Expands the marketplace 25

26 An Overview of B2C E-commerce Practices Growth of B2C (see graph in textbook); over 50% of US is online Growth of B2C (see graph in textbook); over 50% of US is online E-tail revenues doubled from 2002 to 2005 E-tail revenues doubled from 2002 to 2005 Types of e-retailers (e-tailers) Types of e-retailers (e-tailers) Pure-play versus bricks-and-mortar Pure-play versus bricks-and-mortar Clicks-and-bricks Clicks-and-bricks Catalogue retailers Catalogue retailers 26

27 E-tailing Fulfillment concept (picking, packing, and shipping Fulfillment concept (picking, packing, and shipping Advantages to the seller Advantages to the seller Lower inventory by routing orders directly to manufacturer Lower inventory by routing orders directly to manufacturer Lower labor costs (no registers) Lower labor costs (no registers) Lower building costs Lower building costs Advantages to the buyer Advantages to the buyer Convenience and time savings Convenience and time savings Search mechanisms and comparison shopping Search mechanisms and comparison shopping Selection and product reviews Selection and product reviews 27

28 E-tailing Practices Consumer profiling and one-to-one marketing; both concepts relate to knowing the consumer better so that the business can serve consumers more effectively at lower cost to the business Consumer profiling and one-to-one marketing; both concepts relate to knowing the consumer better so that the business can serve consumers more effectively at lower cost to the business Cookies, clickstream tracking Cookies, clickstream tracking Buying and selling information from third parties Buying and selling information from third parties Affiliate programs Affiliate programs Location of the link versus target of link Location of the link versus target of link Compensation schemes Compensation schemes Cooperation among competitors Cooperation among competitors Amazon example Amazon example Conversion rates Conversion rates Pure-play beats clicks and bricks companies Pure-play beats clicks and bricks companies Mass-customization Mass-customization Reverse auctions (Priceline.com) Reverse auctions (Priceline.com)Priceline.com 28

29 Digital Products and Services Digital products include products like software, photographs, music, movies, or text that can be delivered over the Internet Digital products include products like software, photographs, music, movies, or text that can be delivered over the Internet regards.com (greeting cards) and photodisc.com (photographs) regards.com (greeting cards) and photodisc.com (photographs) Why are these products special? Why are these products special? Digital services Digital services Application service providers (renting software) Application service providers (renting software) Renting storage space (rackspace.com) Renting storage space (rackspace.com) Online banking (direct.com) Online banking (direct.com) 29

30 Pure-play Business Models Virtual storefront: Sells goods or services online (Amazon.com) Virtual storefront: Sells goods or services online (Amazon.com)Amazon.com Information broker: Provides information on products or services (Edmunds.com) Information broker: Provides information on products or services (Edmunds.com)Edmunds.com Transaction broker: Provides online transaction facility (eTrade.com, Expedia.com) Transaction broker: Provides online transaction facility (eTrade.com, Expedia.com)eTrade.comExpedia.comeTrade.comExpedia.com Online marketplace: Provides a trading platform for individuals and firms (eBay.com, alibaba.com) Online marketplace: Provides a trading platform for individuals and firms (eBay.com, alibaba.com)eBay.comalibaba.comeBay.comalibaba.com 30

31 More Pure-play Business Models Content provider: Creates revenue by providing content (WSJ.com, TheStreet.com, mp3.com) Content provider: Creates revenue by providing content (WSJ.com, TheStreet.com, mp3.com)WSJ.comTheStreet.commp3.comWSJ.comTheStreet.commp3.com Online service provider: Provides online services, including search service. (Google.com, Xdrive.com) Online service provider: Provides online services, including search service. (Google.com, Xdrive.com)Google.com Xdrive.comGoogle.com Xdrive.com Virtual community: Provides an online community to focused groups (Friendster.com, iVillage.com) Virtual community: Provides an online community to focused groups (Friendster.com, iVillage.com)Friendster.comiVillage.comFriendster.comiVillage.com Portal: Provides initial point of entry to Web, specialized content, services (Yahoo.com, MSN.com) Portal: Provides initial point of entry to Web, specialized content, services (Yahoo.com, MSN.com)Yahoo.com MSN.comYahoo.com MSN.com 31

32 M-Commerce M-commerce concerns the ability of mobile devices to reach the Internet and the ability of merchants to locate a mobile device. M-commerce concerns the ability of mobile devices to reach the Internet and the ability of merchants to locate a mobile device. Mobile devices must have GPS capability Mobile devices must have GPS capability Competitive position of US relative to Japan/Korea Competitive position of US relative to Japan/Korea Consumer services Consumer services Information based services – instant messaging, email, search for information Information based services – instant messaging, email, search for information Transaction based services – purchase stocks, concert tickets, music, or search for price Transaction based services – purchase stocks, concert tickets, music, or search for price Location based services –anticipate what you want based on your location or data profile (beam coupons for nearby restaurants) Location based services –anticipate what you want based on your location or data profile (beam coupons for nearby restaurants) Business services Business services 32

33 Practices (rules) that Attract and Retain Customers (both B2B and B2C) Use of affiliate programs to target the right customer (links with related sites) Use of affiliate programs to target the right customer (links with related sites) Use cookies and CRM software to analyze customer behavior Use cookies and CRM software to analyze customer behavior Use CRM software to develop customer profiles and personalize shopping Use CRM software to develop customer profiles and personalize shopping Shorten the business cycle; fill orders quickly Shorten the business cycle; fill orders quickly Empower customers to help themselves; see text for examples Empower customers to help themselves; see text for examples Be proactive; capture the customers email address and use it to bring the customer back; de-commoditize Be proactive; capture the customers email address and use it to bring the customer back; de-commoditize E-commerce is every commerce E-commerce is every commerce 33

34 Ethical and Societal Issues Online annoyances Online annoyances Spamming Spamming Advertisers viewpoint Advertisers viewpoint Consumers viewpoint Consumers viewpoint Pop-up windows Pop-up windows Adware and spyware Adware and spyware Phishing Phishing 34


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