Electronic Commerce

Foundations of Electronic Commerce (EC) Interorganizational Information System (IOS) Benefits and limitations of EC Future of EC

Electronic Commerce Electronic commerce (EC) is an emerging concept that describes the buying and selling of products, services and information via computer networks, including the Internet.

Interorganizational Information System An interorganizational information system (IOS) involves information flow among two or more organizations. Its major objective is efficient transaction processing, such as transmitting orders, bills, and payments using electronic data interchange (EDI).

IOS and Electronic Markets Drivers of IOS Types of IOS Electronic Markets (EM)

Drivers of IOS Reducing costs Improving the quality of information Compressing cycle time Eliminating paper Making the trading process easy for users

Types of IOS Electronic data interchange (EDI) Electronic funds transfer (EFT) Integrated messaging Shared databases

Benefits and Limitations of Electronic Commerce Organizations Consumers Society Limitations Technical Nontechnical

EC: Benefits to Organizations Decreasing information costs Reduced inventories Reduced cycle time Supports BPR Lowers telecommunication costs

EC: Benefits to Consumers More choice Less expensive products Quick delivery 24-hour availability Quick access to information Customized product at competitive prices Virtual auctions Interact with other EC customers

Limitations Technical Lack of security Insufficient telecommunication bandwidth Software tools still evolving Integration of internet and EC software Special Web servers Interoperability of software and hardware

Limitations Nontechnical Accessibility Legal issues Government regulations Difficult to measure benefits EC still evolving Customers resist change

Limitations Nontechnical Insufficient support services Perception that EC is expensive and insecure EC has not obtained a critical mass of sellers and customers EC - breakdown of human relationships

Business to Consumer Applications Advertising, online publishing and push technology Cyber banking, personal finance and stock trading Job market, auctions, bids and bartering Travel and real estate Electronic retailing and malls

Push Technology Push technology is an approach designed to deliver only the information users want or need.

Advertising, Online Publishing and Push technology Own Web site Other organization’s Web site Electronic publisher’s Web site EC vendors’ pages (Netscape or Yahoo) Information kiosks Electronic malls and metamalls News groups

Personal Finance Bill paying Tracking bank accounts Portfolio management Investment tracking Quotes Budget organization Tax computations Retirement planning

The Job Market Job seekers Job offers Recruiting firms

Auctions Auctioning cars to dealers Live online auctions Art auctions Airlines

Business to Business Applications Electronic Data Interchange (EDI) Intranet commerce

Electronic Data Interchange (EDI) EDI can be defined as the electronic movement of specially formatted standard business documents, such as orders, bills, and confirmations sent between business partners.

Electronic Data Interchange (EDI) Business transactions messages Data formatting standards EDI translators Private lines versus the Internet

Intranet Commerce Efficient transaction entry Common transaction processing Consistent internal controls

Intranet Examples Credit Lyonnais Harris Industry Canada Intel Fujitsu

Intranet Examples Post AG Sun Microsystems Sparbanken Sverige AB The Social Security Administration

The Customers Customers and their behavior Electronic commerce agents Market research Customer service Electronic commerce agents Bargain finder Firefly and open sesame Resume robot Good stuff cheap Negotiating agents

Customer Service: Life Cycle Approach Phase 1: Requirements Phase 2: Acquisition Phase 3: Ownership Phase 4: Retirement

Support and Implementation Electronic commerce infrastructure Electronic payments Support services Legal and security issues Implementation issues

Electronic Commerce Infrastructure Networks Web servers Web server supporting tools Web page design Transactional activities

Encryption Encryption is the conversion of information into a form readable only with a decryption key.

Electronic Payments Obstacles Limitations of traditional payment instruments Public key, private key Digital signature Electronic certificates

Electronic Payments Secure electronic transaction protocol Electronic cash Electronic credit cards Electronic checks Electronic payment cards Electronic funds transfer

Electronic Payments Obstacles Lack of security Handling micropayments Inconvenience Incompatibility

Limitations of Traditional Payment Instruments Delay due to verification and authorization Risk of loss or theft Processing cost for micropayments too high Less convenient Cash payment necessitates meeting between buyer and seller

Limitations of Traditional Payment Instruments Security risk Not everyone accepts credit cards Some buyers do not have credit cards

Support Services Examples ConnectUS The Global Business Alliance Incorporated CommerceNet BioMedNet World Insurance Network

Support Services Examples The Financial Services Technology Consortium and Smart Card Forum Joint Transmission Services Information Network

Legal and Security Issues Buyer protection Fair credit billing act Sellers protection Legal aspects of EFT

Implementation Issues Domain name Web tracking Taxes and fees Copyright Manipulating securities on the Internet Security

Managerial Issues Managing resistance to change Integration of electronic commerce into the business environment Lack of qualified personnel and outsourcing Alliances Implementation plan Privacy

Managerial Issues Justifying electronic commerce by conducting cost-benefit analysis The human element Impact of EC organizational structure people marketing procedures profitability

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