Foundations of Electronic Commerce

Part 1 Overview of Ecommerce

What is meant by Technointensification? Businesses are –Increasing their use of technology –Relying more often and extensively on 3 rd parties for IT resources –Executing processes more rapidly and efficiently –Providing availability

E-Business Evolutionary Stages From Lowest to Highest Level of Evolution: Information only Allows contact with organization and scripting Connected to Web-server database with active Web pages Involves extranets with partners, and practices individualized marketing, utilizes knowledge-based tools

How is E-Business Changing Traditional Business? One-to-one marketing Customization of site and product New forms of E-Service Low margins and brand differentiations

How is E-Business Changing Business Processes? Increased pre-and post- sale care of customers Flatter organizational structures Development and use of customer profiles Increased reliance on cooperation software Faster product-to-market strategies

What are the new B2B Enablers? E-Catalogs Inventory Management and Joint Provisioning Database Marketing –Allows for timely, geographic, customer focus. Continuous Auditing: Webtrust, Systrust

Where can we find data mining and data warehousing in use? Credit card companies for approvals Supermarkets for inventory management E-Tailers for suggestions for complimentary product purchases Mobile Commerce Advertisements for routing of consumer’s activities. –Buy petrol around the corner and get 15% off

What is Profiling? Profiling: evaluating complex data trends to create stereotypes for marketing or pricing strategies –Amazon’s jaboom.com –Land’s End’s virtual model

What is continuous reporting? Continuous reporting is the real-time disclosure of transaction data. It is possible because of: Evolution of user interfaces connected to the Internet and corporate databases. Statutory protection of stockholders from misleading financial disclosures motivate many businesses to disclose non-financial rather than financial measures on their web sites.

Which business processes are most affected by E-Business? Six business processes significantly affected by E-Business are: Marketing and Advertising Production and Logistics E-Care (Customer Services) Finance Human Resources Research and Development

How are Marketing and Advertising changed? More one-to-one marketing strategies –Mining and Profiling, targeted banners, personalized sites, suggestion models, m-Commerce promotions Emphasizing –Brand –Variable pricing –Affiliation agreements –New bundling –Customizing Web presences –Customizing products, –Adding information value to the product/service

How are Production and Logistics changed? Internetworking provides efficiency opportunities in: Production, Storage, Distribution, Acquisition Supply Chain Management has utilized: –Electronic catalogs –Product tracking –Web-managed distribution of cargo –Supplier-managed inventory –Distributed and shared manufacturing processes –Shared inventory management

How has Customer Care changed? Customer relationship management (CRM) software has focused on: –Sales force –Marketing –Call- center needs By collecting, mining, and reporting data back to the managers. Acquiring a new customer is 8 times more expensive, on average, than keeping a customer.

How has Finance changed? Finance uses legacy and ERP systems for: – Accountants understand business processes; develop, collect and analyze measurements for them, and advise management. – New metrics are needed because of the increased speed and volume of business transactions between new partners and increased legal complexities. – Heading towards paperless, continuous risk assessments, testing, and reporting that is integrated with external partners in Extranets.

How has Human Resources changed? Become much more self-service –Administrative activities –Career management –Value of employment (compensation, benefits) –Payroll –Employee services –Health management Application Service Providers (ASPs) used extensively.

How has Research and Development (R&D) changed? Groupware for distance work Large, powerful databases Telemetering and sensing Visualization software Powerful supercomputers Knowledge management systems for greater sharing of information

Business-to-Business (B2B) Commerce B2B Defined: –until product(s), or derivative(s) thereof, is(are) delivered to the consumer.

Advertising Individual targeting Customization Web Advertising Virtual communities Marketing Purchasing and Supply Chain Focus Market Formation and Structure Purchasing B2B B2C Customer party lines Figure 3-1 B2B and B2C electronization focus B2B has larger volume of transactions, but lower margin per transaction.

Newest Features of B2B Markets Customized middleware to smooth interfaces between trading partners Peer-to-Peer computing allow for shared markets without a centralized market or exchange Use of Intelligent agents –Price comparison agents, buying and selling agents, fraud detection agents

Implications for the Accounting Profession Expertise is needed to understand –The B2B markets –The new business models –The new business strategies –The reliability, integrity and security issues of the entire set of internetworks:

Part 2 Electronic Commerce Architecture

Internet Topology Network Access Points End Users

Web / Commerce Servers Web ClientsBack-End Systems Relational Database Transaction-Based ERP System Third Party Systems Commerce Server Software Web Server Software

WEB Servers Core Capabilities –Facilitate the delivery of __________________ –Data Analysis Site Management –Link Checking –Application Construction

WEB Servers Site Development –Sample Programs Product Examples –Apache HTTP Server –Microsoft Internet Information Server –Netscape Enterprise Server

Commerce Server Software Back-End Integration Tools =

Web / Commerce Servers Web Clients Commerce Server Software Web Server Software HTTP TCP/IP HTML Web Pages

Commerce Server Software Storefront Implementation Tools Product Administration Purchase Order Generation Pricing Technology Product Comparisons

Commerce Server Software Commerce Server Management Tools Change of Product Listings Change Processing Replication Clustering

Web / Commerce Servers Web Clients Replication & Clustered Servers Router

Commerce Server Software Commerce Server Management Tools Site Usage –Number of Users Remote Administration Site management should not take place on the same computer as the live site. –Site Modification

Rules of eBusiness Technology is no longer an afterthought in forming business strategy, but the actual cause and driver Streamlining company structure and controlling information flow is more important than moving and manufacturing physical products An inability to overthrow the dominant, outdated business designs often leads to business failure The goal of new business designs is to create flexible outsourcing alliances

Rules of eBusiness (cont) eCommerce is enabling companies to listen to their customers and become either the “cheapest”, “the most familiar” or “the best”. Don’t use technology just to create the product. Use it to innovate, entertain and enhance the entire shopping experience. The business design of the future increasingly uses reconfigurable eBusiness community models to best meet customer’s needs The tough task for management is to align business strategies, processes and applications fast, right and all at once.