II Information Systems Technology Ross Malaga 7 "Part II Using Information Systems" Copyright © 2005 Prentice Hall, Inc. 7-1 USING INFORMATION SYSTEMS FOR ELECTRONIC BUSINESS

Copyright © 2005 Prentice Hall, Inc. 7-2 LEARNING GOALS Describe the nature of e-business. Describe the e-business value chain and disintermediation. Describe the basic e-business models. Describe the major online marketing methods. Discuss the technologies behind e-business, including the factors that drive Web site success, electronic payment mechanisms, and encryption. Discuss the major issues that are created by and affect e- business.

Copyright © 2005 Prentice Hall, Inc. 7-3 E-Business at the Bead Bar Meredith – Wants to investigate using the Internet to sell Bead Bar products. Suzanne – Concerned about security and wants an alternative to using credit cards over the Internet. Leda – Worried about franchisees using the Internet to purchase directly from suppliers and also about viewing the Bead Bar as a competitor. Mitch – Wants to sell bead jewelry on eBay. Julia – Wants to be able to do electronic bill paying, but is worried about the tax implications of e-business.

Copyright © 2005 Prentice Hall, Inc. 7-4 E-Business at the Bead Bar (continued) Miriam – Wants to use the Internet for advertising. Rachel – Wants to use the Internet to connect directly with bead makers. Jim – Wants to know if the Internet can help with HR.

Copyright © 2005 Prentice Hall, Inc. 7-5 What is E-Business? Conduct of commercial transactions with the help of telecommunications systems Early forms of E-Business –Electronic data interchange (EDI) Transfer of commonly used business documents in electronic form using a standard format –Electronic funds transfer (EFT) Sending money through electronic networks directly from one bank account to another E-Business took off in the 1990s with the rise in popularity of the Internet and WWW.

Copyright © 2005 Prentice Hall, Inc. 7-6 E-Business Benefits The ability to tap into global marketplace Business is open 24/7 Increased transaction and search speed Convenience The ability to offer customized products easily Improved customer service Consumers can become sellers

Copyright © 2005 Prentice Hall, Inc. 7-7 E-Business Drawbacks Security Privacy Return on investment (ROI) Changing consumers’ habits of touch and feel Inability to reach consumers who do not have Internet access

Copyright © 2005 Prentice Hall, Inc. 7-8 E-Business Technologies TCP/IP Java Firewalls Electronic Payments, Online Billing E-Business Issues Copyright Privacy Security Intellectual Property Taxation Trust Jurisdiction E-Business models B2B B2C C2C E-Business Triangle

Copyright © 2005 Prentice Hall, Inc. 7-9 Components of E-Business

Copyright © 2005 Prentice Hall, Inc E-Business Value Chain Value chain – the steps required to get a good or service to a consumer E-Business can radically change a value chain –Disintermediation – elimination of intermediaries

Copyright © 2005 Prentice Hall, Inc. 7-11

Copyright © 2005 Prentice Hall, Inc E-Business Models Business-to-Consumer – B2C –Business sells product directly to the consumer. Business-to-Business – B2B –Businesses sell to other businesses. Consumer-to-Consumer – C2C –Consumers sell directly to other consumers.

Copyright © 2005 Prentice Hall, Inc B2C Models Subscription –Consumers pay to have regular access to site. –Consumersreports.comConsumersreports.com Online storefront –Web site acts as intermediary between manufacturer and consumer. –Amazon.comAmazon.com

Copyright © 2005 Prentice Hall, Inc B2C Models (continued) Bricks-and-clicks –Combines a traditional retail outlet with an online storefront CircuitCity.com Advertising –Sell advertising space on web site to other companies Sports.yahoo.com

Copyright © 2005 Prentice Hall, Inc B2C Models (continued) Internet presence –Use web presence to provide information about products and services Exxon.com Intermediary –New types of intermediaries connect buyers and sellers E-Trade.com

Copyright © 2005 Prentice Hall, Inc B2B Models B2B is much larger than B2C –Size estimates range from $543 Billion to $6.8 Trillion –Increase 50% per year Information exchanges –Exchange business documents over the Internet –EDI via the Internet Direct sellers –Direct sales model, direct to other businesses Dell Premier pages Cisco New intermediaries –Virtual hubs match buyers and sellers E-Hospitality

Copyright © 2005 Prentice Hall, Inc C2C Models Online garage sales Online auctions –Allows consumers to buy and sell goods with other consumers –EBay.comEBay.com C2C services –Sell expertise directly to other customers –Keen.comKeen.com Online communities –Allow people with similar interests to come together –Chat rooms –Discussion boards

Copyright © 2005 Prentice Hall, Inc E-Government Business Models Government-to-citizen (G2C) –Provide government services to citizens over the Internet Vehicle registration renewal Online voting Government-to-business (G2B) –Helps government and business work together more efficiently –Reduces paperwork and costs for business and government

Copyright © 2005 Prentice Hall, Inc Online Marketing Market the online business to the world –Banner ads –Viral marketing –Permission marketing

Copyright © 2005 Prentice Hall, Inc E-Business Technology Information technology (IT) puts the e in e-business Web site functionality –Speed of loading Web pages –Good search feature so users can find what they are looking for quickly –Properly used graphics –Simple checkout functions to close the sale

Copyright © 2005 Prentice Hall, Inc Electronic Payments Send financial transaction information securely over the Internet Mechanisms for electronic payments –Money transfer services – Paypal.comPaypal.com –Digital wallet – Microsoft PassportMicrosoft Passport –Smart cards Online billing –Customers receive their bills and make payments online –WellsFargo.comWellsFargo.com

Copyright © 2005 Prentice Hall, Inc. 7-22

Copyright © 2005 Prentice Hall, Inc E-Business Issues E-Business raises a number of difficult legal, social, and ethical issues –Protection of intellectual property –Taxation of e-business transactions –Jurisdiction – whose laws apply when a transaction crosses many international boundaries –Trust TRUSTe

Copyright © 2005 Prentice Hall, Inc. 7-24

Copyright © 2005 Prentice Hall, Inc Security Security risks in e-business are very diverse Hackers Spoofing Denial of service attacks Distributed denial of service attacks

Copyright © 2005 Prentice Hall, Inc A SYN-ACK Attack

Copyright © 2005 Prentice Hall, Inc Bead Bar Consultant How e-business issues affect the Bead Bar –Meredith – Use the Internet to attract customers to studios and possibly to sell merchandise. –Suzanne – How to solve potential conflicts between online sales and the traditional Bead bar business model? –Leda – Use franchisees to provide online inventory as strategy to reduce channel conflict. –Mitch – How to avoid disintermediation of the Bead Bar by cruise ships? –Julia – Pay bills online but with alternative payment systems.

Copyright © 2005 Prentice Hall, Inc Bead Bar Consultant (continued) –Miriam – Reach customers via opt-in online mailings. –Rachel – Use B2B exchanges for both office supplies and services, and also for Bead Bar products. –Jim – Use the Internet for employee searches and also as a conduit to connect with service companies that handle employee benefits and services.

Copyright © 2005 Prentice Hall, Inc Learning Goals Summary In this chapter you have learned: The nature of e-business The e-business value chain and disintermediation The basic e-business models The major online marketing methods The technologies behind e-business, including the factors that drive Web site success, electronic payment mechanisms, and encryption The major issues that are created by and affect e-business