Lecture 7. E-Business and E-Commerce

1. Lecture 7. E-Business and E-Commerce Informatics in Logistics Management Lecturer: Prof. Anatoly Sachenko

2. Lecture Overview • e-Business Systems • Introduction to e-Business Systems • Cross-Functional Enterprise Applications • Enterprise Application Integration • Transaction Processing Systems • Enterprise Collaboration Systems • e-Commerce • Introduction to e-Commerce • The Scope of e-Commerce • Electronic Commerce Technologies • Essential e-Commerce Processes • Electronic Payment Processes • Web Payment Processes • Electronic Payment Processes - Secure Electronic Payments

3. Introduction to e-Business Systems • E-business is the use of the Internet and other networks and information technologies to support electronic commerce, enterprise communications and collaboration, and Web-enabled business processes, both within a networked and information technologies • E-business includes e-commerce • It involves the buying and selling and marketing and servicing of products, services, and information over the Internet and other networks

4. Cross-Functional Enterprise Applications • Many companies are using IT to develop integrated cross-functional enterprise systems that cross the boundaries of traditional business functions in order to reengineer and improve vital business processes all across the enterprise • Example of such business processes are presented below

5. Cross-Functional Enterprise Applications (continued) • Figure on next slide is an excellent illustration of the concept of enterprise applicationarchitecture • It illustrates the interrelationships of the major cross-functional enterprise applications that many companies have or are installing today • This architecture spotlights the roles that e-business systems play in supporting the customers • Focused on accomplishing fundamental business processes in concert with the company’s customer, supplier, partner, & employee stakeholders

6. Cross-Functional Enterprise Applications (continued) • Enterprise Application Architecture

7. Cross-Functional Enterprise Applications (continued) • Enterprise resource planning(ERP) concentrates on the efficiency of a firm’s internal production.. Distribution. And financial processes. • Customer relationship management (CRM) focuses on acquiring and retaining profitable customers via marketing. Sales. And service processes. • Partner relationship (PRM) aims at acquiring and retaining partners who can enhance the selling and distribution of a firm’s products and services. • Supply chain management (SCM) focuses on developing the most efficient and effective sourcing and procurement processes with suppliers for the products and services needed by a business. • Knowledge management (KM) applications focus on providing a firm’s employees with tools that support group collaboration and decision support.

8. Enterprise Application Integration How does a business interconnect some of the cross functional enterprise systems? • Enterprise application integration (EAI) software is being used by many companies to connect their major e-business applications (next slide). • EAI software enables users to model the business processes involved in the interactions that should occur between business applications • EAI also provides middleware that • Performs data conversion & coordination • Provides application communication & messaging services • Provides access to the application interfaces

9. Enterprise Application Integration (continued)

10. Enterprise Application Integration (continued) • Business value • Integrates front-office and back-office applications to allow for quicker, more effective response to business events and customer demands • Improves customer and suppler experience with the business because of its responsiveness

11. Transaction Processing Systems • Cross-functional information systems that process data resulting from the occurrence of business transactions • Transactions – events that occur as part of doing business • Sales • Purchases • Deposits • Withdrawals • Refunds • Payments

12. Transaction Processing Systems (continued) • Online transaction processing systems (OLTP) • Play a strategic role in electronic commerce • Real-time systems that capture and process transactions immediately • OLTP systems add value to product or service through superior customer service

13. Transaction Processing Systems (continued) • Transaction Processing Cycle (see next slide) • Data entry • The capture of business data • Transaction processing • Two basic ways • Batch processing where transaction data are accumulated & processed periodically • Real-time processing where data are processed immediately after a transaction occurs

14. Transaction Processing Systems (continued)

15. Transaction Processing Systems (continued) • Database maintenance • Corporate databases are updated to reflect the day-to-day business transactions • Document and report generation • A variety of documents and reports are produced • Inquiry processing • Inquiries and responses concerning the results of transaction processing activity • Examples of queries include: • Checking on the status of a sales order • Checking on the balance in an account • Checking on the amount of stock in inventory

16. Enterprise Collaboration Systems • Cross-functional e-business systems that enhance communication, coordination, & collaboration • Communicate – share info with each other • Coordinate – coordinate individual work efforts & use of resources with each other. • Collaborate – work together cooperatively on joint projects and assignments • Tools for Enterprise Collaboration (next slide) • Electronic communication • E-mail and Voice mail and Fax • Web publishing and Bulletin boards • Paging and Internet (IP) phone

18. Enterprise Collaboration Systems (continued) • Electronic conferencing • Data & voice conferencing • Videoconferencing • Chat systems • Discussion forums • Electronic meeting systems • Synchronous. Team members can meet at the same time and place in a “decision room” setting • Collaborative work management • Calendaring & scheduling • Task & project management • Workflow systems • Knowledge management

19. Introduction to e-Commerce • Few concepts have revolutionized business more profoundly than e-commerce • E-commerce is the online process of developing, marketing, selling, delivering, servicing, and paying for products & services transacted on internetworked, global marketplaces of customers, with the support of a worldwide network of business partners

20. Introduction to e-Commerce (continued) • E-commerce systems rely on the resources of the Internet, intranets, extranets, and other computer networks. Electronic commercecan include: • Interactive marketing, ordering, payment, and customer support processes at e-commerce sites on the World Wide Web • Extranet access of inventory databases by customers and suppliers • Intranet access of customer relationship management systems by sales and customer service reps • Customer collaboration in product development via Internet newsgroups and e-mail exchanges

21. The Scope of e-Commerce • Companies involved in e-commerce as either buyers or sellers rely on Internet-based technologies and e-commerceapplications and services to accomplish marketing, discovery, transaction processing, and product and customer service processes. • Three Basic Categories • Business-to-Consumer (B2C) • Business-to-Business (B2B) • Consumer-to-Consumer (C2C)

22. The Scope of e-Commerce(continued) • Business-to-Consumer(B2C) – in this form of e- commerce, businesses must develop attractive electronicmarketplaces to entice and sell products and services to customers. Companies may offer • e-commerce websites that provide virtual storefronts and multimedia catalogues. • Interactive order processing • Secure electronic payment systems • Online customer support

23. The Scope of e-Commerce(continued) • Business-to-Business (B2B)–thiscategory of electronic commerce involves both electronic business marketplaces and direct market links between businesses. Companies may offer: • Secure Internet or extranet e-commerce websites for their business customers/suppliers. • Electronic data interchange (EDI) via the Internet or extranets for computer-to-computer exchange of e-commerce documents with their larger business customers and suppliers. • B2B e-commerce portals that provide auction and exchange markets for businesses.

24. The Scope of e-Commerce(continued) • Consumer-to-Consumer (C2C) e-Commerce – successes of online auctions like e-Bay, allow consumers (and businesses) to buy and sell with each other in an auction process at an auction website. • Online consumer or business auctions are an important e-commerce alternative for B2C or B2B e-commerce. • Electronic personal advertising of products or services to buy or sell by consumers at electronic newspaper sites, consumer e-commerce portals, or personal websites is an important form of C2C e-commerce. • Electronic Commerce Technologies - next slide illustrates an e-commerce architecture developed by Sun Microsystems

25. Electronic Commerce Technologies

26. Scope of e-Commerce (continued) • Electronic commerce technologies (continued) • Trading and business partners rely on the Internet and extranets to exchange information and accomplish secure transactions • Company employees depend on a variety of Internet and intranet resources to communicate and collaborate • IS professionals and end users can use a variety of software tools to develop and manage the content and operations of the websites and other e-commerce resources

27. Essential e-Commerce Processes • Nine key components of an e-commerce process architecture (see next slide) • Access control and security • Profiling and personalizing • Search management • Content management • Catalog management • Payment • Workflow management • Event notification • Collaboration and training

28. Essential e-Commerce Processes(continued)

29. Essential e-Commerce Processes (continued) • Access control and security • Processes MUST establish mutual trust and secure access • Authenticating users • Authorizing access • Enforcing security features • Must protect the resources of e-commerce sites from threats • Hackers • Theft of passwords or credit card numbers • System failures

30. Essential e-Commerce Processes (continued) • Profiling and personalizing • One-to-one marketing strategy • Personalized view of the website • Based on Personal data, and website behavior and choices • Used to help authenticate your identity for account management and payment purposes • Search management • Helps customers find the specific product or service they want • SW may include a search engine component or a company may acquire a customized e-commerce search engine

31. Essential e-Commerce Processes (continued) • Content and catalog management • Content management software helps companies develop, generate, deliver, update, and archive text data and multimedia information • Frequently takes the form of multimedia catalogs of product information • Works with profiling tools to personalize the content of the website • May be expanded to include product configuration processes that support mass customization of a company’s products

32. Essential e-Commerce Processes (continued) • Workflow management • Workflow software engine • Predefined sets of business rules • Roles of stakeholders • Authorization requirements and routing alternatives • Databases used • Sequence of tasks • Workflow systems ensure that.. • Proper transactions, decisions, & work activities are performed • Correct data and documents are routed to the right employees, customers, suppliers, and other business stakeholders

33. Essential e-Commerce Processes (continued) • Event notification • Most applications are event driven • New customer’s first visit • Payment and delivery processes • Customer relationship & supply chain management activities • Notifies those concerned when an event occurs that might affect their status in a transaction • Collaboration and training • Supports the collaboration arrangements & trading services needed by customers, suppliers, & other stakeholders • May be provided by Internet-based trading services

34. Electronic Payment Processes • Processes are complex • Near anonymous nature of transactions • Security issues • Wide variety of debit and credit alternatives • Wide variety of financial institutions and intermediaries • Web payment processes • Credit cards • Purchase orders • Electronic shopping cart • An example of a secure electronic payment system with many payment alternatives is illustrated on next slide

35. Web Payment Processes

36. Electronic Payment Processes (continued) • Electronic funds transfer (EFT) • Uses a variety of IT to capture and process money and credit transfers between banks and businesses and their customers • ATMs andPay-by-phone • Web-based • PayPal & Bill Point (cash transfers) • CheckFree and PayTrust (automatic bill paying services) • Electronic bill payment • Point-of-sale terminals linked to bank EFT systems

37. Electronic Payment Processes - Secure Electronic Payments • Secure electronic payments–whenyou make an online purchase on the Internet, your credit card info is vulnerable to interception by network sniffers • SW that easily recognizes credit card number formats • Several basic security measures are being used to solve this security problem. They include: • Encrypt data passing between customer and merchant • Encrypt the data passing between the customer and the company authorizing the credit card transaction • Take sensitive information offline (cont-d)

38. Electronic Payment Processes - Secure Electronic Payments (cont-d) • Secure Socket Layer (SSL)–automaticallyencrypts data passing between your web browser and a merchant’s server. • Digital Wallet–youadd security software add-on modules to your web browser. This enables your browser to encrypt your credit card data in such a way that only the bank that authorizes credit card transactions for the merchant can see it. • Secure Electronic Transaction standard(SET) – softwareencrypts a digital envelopeof digitalcertificates specifying the payment details for each transaction. SET is expected to become the dominant standard for secure electronic payments on the Internet.

39. References • James A. O'Brien. Management Information Systems: Managing InformationTechnology in the Business Enterprise. Sixth Edition. McGraw-Hill/Irwin, 2004, 619 p. • http://www.roz6.polsl.pl/asachenko/sutaa.html • Kisielnicki J., Sroka H.: Systemy informacyjne biznesu. Informatyka dla zarządzania. Metody projektowania i wdrażania systemów. A.W. „Placet”, Wwarszawa 1999 r.