E-commerce applications Luisa Calcagno Course of Software Engineering 2 May 29th 2002

Plan of the talk Introduction to e-commerce and e-commerce applications Issues in developing e-commerce applications Architecture of e-commerce applications Bookstore example Perspectives for e-commerce References

A definition for e-commerce A universally accepted definition does not exist Anything that uses electronic technology in order to do business can be intended as e-business We can look at e-commerce as to a subset of e-business concerning commerce Commerce is intended as the activity of exchanging goods and services with some kind of payment A volte si usa (impropriamente) e-business per indicare e-commerce

The EU definition for e-commerce “e-commerce is based on the electronic processing and transmission of data. It encompasses many diverse activities including electronic trading of goods and services, on-line delivery of digital content, electronic fund transfer, electronic share trading, public procurement.” (EU(97)/157) On-line delivery of digital content: consegna on-line di prodotti digitali (es. un libro in formato .pdf, un video mpeg etc.) Electronic fund transfer: operazioni bancarie (trasferimento soldi) Electronic share trading: operazioni di borsa (acquisto di quote, azioni, etc)

Origins of e-commerce applications E-commerce applications existed long before Internet EDI (Electronic Data Interchange) EFT (Electronic Funds Transfer) Internet offered the general public the opportunity to conduct businesses online EDI e EFT erano fatte soprattutto per le aziende Internet permette a tutti di condurre affari elettronicamente

Taxonomy of e-commerce applications Three main categories: Business to consumer (B2C) Business to business (B2B) Consumer to consumer (C2C) Other categories: Business to government (B2G) Mobile Commerce

B2C applications Offer directly to the customer an interface of activity Typical examples: Online book store (e.g. amazon.com) Online car purchasing (e.g. automall.com) Booking and purchase of airline tickets (e.g. ryanair.com) Correspond to retail sale Growth of B2C applications thanks to Internet A new kind of B2C applications are the Cybermalls Retail sale = vendita al dettaglio( caratterizzato dall’acquisto diretto di prodotti o servizi dell’attività da parte del consumatore) Automalll.com un sito che consente ai propri utenti discegliersi comodamente da casa il colore dell’ automobile,gli accessori dell’automobile,i pezzi di ricambio Cybermalls = centri commerciali virtuali

B2C applications: advantages and disadvantages Allow company to extend existing services to customers Allow company to increase its customers Offer a wider choice and allow cheaper prices May give to the company a worldwide visibility Online shops are accessible 24h a day Disadvantages: Low order conversion rates High risk (see Cyberphobia)

B2B applications Realize transactions needed to perform financial or commercial activities by companies over the Internet Some typical applications: E-procurement E-Marketplace The turnover is much greater than that dealed with B2C applications Turnover = volume di affari

B2B applications: advantages and disadvantages Help to automate communications between companies making them easier and quicker Allow to cut prices drastically Help in reducing mistakes Disadvantages: Often need legacy integration Prezzi ridotti non solo per la riduzione della manodopera ,ma anche se uno aveva la rete privata tipo edi il passaggio a internet ha dimiuito le spese di manutenzione della rete .

C2C applications Concern the consumers who run negotations with other consumers sometimes utilizing as intermediary a company Examples: Ebay Autotrader.com Le società intermediarie devono trovare altri flussi di entrate non tradizionali che possono essere una piccola tassa sul servizio o una pubblicità o combinazioni di entrambe le cose

C2C applications: advantages and disadvantages Allow consumers to interact directly among them Give to the consumers a new way of purchasing and selling services and goods Disadvantages Little earning capacity

B2G applications Correspond to all kind of transactions between company and public administrator Utilized mostly in the USA Le richieste di fornitura vengono pubblicizzate su internet e le imprese possono rispondere per via elettronica

Mobile commerce applications Concern doing businesses by means of mobile wireless devices Can be both B2B and B2C Have a growing importance in the future of e-commerce applications Will introduce completely new forms of electronic commerce E.g. E-tickets The development of such applications faces some of the greatest challenges in the security area to secure the trust of consumers

Plan of the talk Introduction to e-commerce and e-commerce applications Issues in developing e-commerce applications Architecture of e-commerce applications Bookstore example Perspectives for e-commerce References

Issues in developing e-commerce applications (1/2) Many of the following issues: Security Flexibility Scalability Fault tolerance Integration Interfaces (graphical and not) Time-to-market are common to many applications, but they are all critical in the case of e-commerce because of its nature

Issues in developing e-commerce applications (2/2) A state-of-the-art application always fail if people do not utilize it A constant attention must be payed to the users over the whole development process A close integration with every business aspect is needed: For an online buyer security and easy access to the informations are the primal needs A manager will need a flexible application to adapt the business to the new trends in a faster way

Security Issues Security is a crucial feature Most transactions take place in a fully automated way Restricted data are transmitted through a public network Users must be sure that their money will not be lost or stolen

Flexibility Issues E-commerce systems are subject to frequent structural changes because of mutations of: Products and services provided by the firm Commercial partnerships

Scalability Capability to support a certain number of users (thousands, even millions) without compromising performances It is important because a slow application often means to lose customers (especially in B2C) since they have very small patience

Fault tolerance A less fault-tolerant application will be less available to the user Every minute that a site is not available costs 1400$ to the company (survey on 400 major companies by Oracle) It is easy to lose customers forever It is necessary to redirect the users without they perceive it

Integration Always needed since no application offering every commercial functionality can be realized Critical because the commercial funcionalities are often realized by many different legacy and third-party applications Examples: ERP systems Legacy systems

User Interfaces Must be intuitive,easily comprehensible and of simple utilization In the case of B2C must support profiling in order to anticipate the customer requests They also need to be customizable Bisogna tenere conto del fatto che chi usa le interfacce non è un esperto di informatica

Multi-channel interfaces Application interfaces must support several kinds of connections: Web browsers Web TV Cellular phones (via WAP) PDA

Time-to-market Has greater importance than elsewhere Emphasis on COTS and reuse

Plan of the talk Introduction to e-commerce and e-commerce applications Issues in developing e-commerce applications Architecture of e-commerce applications Bookstore example Perspectives for e-commerce References

Two-tier Architecture (client server) Data reside on a server Business logic and user interfaces reside on clients Drawbacks : Clients sustain the main load and consequently result to be monolithic and heavyweight Excessive overhead Simple but unsuitable for e-commerce applications

Three-tier architecture Separates the business logic of the application from user interfaces and from data access Middle tier can be furtherly divided In this case we call it multi-tier architecture: Easier to modify one component Lower cost to deploy and maintain Middle-tier risiede la business logic

Three-tier architecture

Application server Software that runs on the middle tier of a three-tier environment In multi-tier environments it is often a distributed and complex software Commercial implementations exist: Microsoft Commerce Server 2000 Sun iPlanet IBM WebSphere Application Server

Application Server-based e-commerce platform architecture ERP Presentation Layer Business Logic Layer Data & Legacy Access Layer Legacy systems Transactions Security Session Resource Pooling Load balancing Database Horizontal Services Application Server Client tier Server tier Data tier

Example: iPlanet architecture EJB permette di realizzare i servizi necessari e la logica di applicazione in maniera distribuita Microsoft Commerce Server nel Business Logic usa COM+

Plan of the talk Introduction to e-commerce and e-commerce applications Issues in developing e-commerce applications Architecture of e-commerce applications Bookstore example Perspectives for e-commerce References

Domain Model

Use Case Model

Plan of the talk Introduction to e-commerce and e-commerce applications Issues in developing e-commerce applications Architecture of e-commerce applications Bookstore example Perspectives for e-commerce References

Future Perspectives (1/2) “Electronic commerce is going to reduce a lot of overhead in the economy” “It will allow a purchase order to go from being about a $75 cost to about $10” “if you had to pick who's the big winner in all of this, you'd definitely have to pick consumers” “It lets you go out to the Internet and look at products and services of every kind, that never would have been available through traditional distribution channels” (Bill Gates at the White House Conference on the New Economy, April 2000)

Future Perspectives (2/2) In spite of Bill’s words, people still lack trust in e-commerce However, in Europe there is a strong tendency towards the acceptance of Mobile Commerce EITO (European Information Technology Observatory) 2002 highlights the growing importance of Mobile Commerce (see next page)

Trends in Mobile Commerce for the EU Markets: entertainment Dati su applicazioni di divertimento (la più grossa fetta di mercato)

Trends in Mobile Commerce for the EU Markets: banking and finance Servizi bancari forniti in Mobile (dati fino al 2002, previsioni fino al 2006)

Worldwide TLC markets by region

Plan of the talk Introduction to e-commerce and e-commerce applications Issues in developing e-commerce applications Architecture of e-commerce applications Bookstore example References

References (1/4) Introduction to e-commerce and the development of e-commerce applications: Professional Java E-Commerce, M.Kerzner et al., Wrox Press, 2001 EU definition for e-commerce: “A European Initiative in Electronic Commerce – Communication to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions” (COM(97)/157)

References (2/4) Electronic Data Interchange: Intodruction to EDI, vv.aa. ,DevEdge online Cyberphobia and trends in e-commerce: http://www.webmergers.com Application Servers: Introduction to iPlanet Application Server Architecture, Robert Schulteis, Sun Microsystems, 2002 http://www.sun.com/developers/evangcentral

References (3/4) Platforms for e-commerce: Building Applications in the Net Economy, Netscape Communications Corporation White paper, 1997 Architectures for e-commerce: Architetture, tecnologie e modelli funzionali nell’e-commerce, Castrogiovanni, Magliano, Sciarappa, Notiziario tecnico Telecom Italia, December 2001 Statement of Bill Gates The White House Conference on the New Economy April 5, 2000

References (4/4) E-procurement and e-marketplaces: E-procurement white paper, Digital Union 2001 (http://www.digitalunion.com) European Information Technology Observatory (EITO): http://www.eito.com The Bookstore example: UML for E-Commerce, Doug Rosenberg http://www.iconixsw.com

The End

Electronic Data Interchange (EDI) Electronic exchange of Business documents Business data In a standard format (ANSI X12,EDIFACT) Established between 1968 and 1975 in the transportation industries (U.S.) Application-to-application communication without human intervention

Electronic Funds Transfer (EFT) The banking equivalent of EDI Denotes the transfer of : Electronic checks Customer accounts Payment informations in automated way

Order conversion rates Defined as: # of orders / # of contacts By month or year, four-month periods, etc. Measure the capability of a certain B2C application to convert an user into a buyer A survey carried out in August 2000 showed that order conversion rates in USA were of 1.9% (Boston Consulting Group and Shop.org) 1.9% è un dato irrisorio Si riferisce al secondo quadrimestre del 2000

E-procurement applications (1/3) Automate enterprise purchasing processes, i.e. perform all of the activities related to generating an order on the buyer’s side Purchased goods can be : Direct goods (critical items in the supply chain) Indirect goods (MRO –Maintenance Repair and Operations - such as office items)

E-procurement applications (2/3) Automating procurement of indirect goods can dramatically reduce costs since: Lessens maverick buying Reduces supplier response time

E-procurement applications(3/3) 4. Purchase order is electronically placed 3. Order approvation compliant to company standards and procedures 2. Purchase request is performed by employees via a Web interface 5. Order is fulfilled by the supplier Indirect goods e-procurement 1. Product selection from available catalogues 6. Product delivery 8. Payment request electronically forwarded 7. Product receipt

E-marketplace An environment that brings buyers and sellers together in a virtual space for e-commerce, enabling them to reach new customers and reduce transaction costs E-marketplaces are becoming more fashionable

Cybermalls Include more virtual shops Appear as web portals with links to single e-shops grouped by different product categories (e.g. music or books) Advantages for smaller businesses: Reduced initial investment Easily traceability through the mall’s brand

Presentation Layer Its purpose is to provide a user interface to the end user of the application Controls the look-and-feel of the application and responds to user events Serves actually as the front-end of the application

Business Logic Layer The heart of the application itself Contains the business rules and /or processes Its components link between presentation and data/legacy layers

Data & Legacy access Layer Its purpose is to give to the business logic components access to backend data sources such as: Databases ERP systems Other custom systems

Horizontal services Services provided by the application server by means of an underlying technology (CORBA, EJB, COM,etc.) Typical services: Transactions Security Session Management Resource pooling Load balancing and fail over

Session Management Mantains the correlation among requests generated by the same user Usando HTTP non si può tenere traccia dello stato di una certa operazione Per questo motivo c’è bisogno di un servizio di session management Esempio: per tenere traccia del contenuto del carrello

Resource Pooling Caching the instances of used resources (e.g. database connections) improves performances Connessione al database è un’operazione lunga il caching di una connessione velocizza l’applicazione

Load Balancing and Fail Over Make possible to distribute incoming requests Handle clients reconnection in the case of system crash

Cyberphobia and the .com crash “Cyberphobia” is the market’s irrational fear of the Internet due to the several bankruptcies occured in the past years B2C represent 75% of bankruptcies Internet shutdowns 2000 2001 2002 Jan-Apr 6 220 66 Source:Webmergers.com