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

Lecture Overview e-Business Systems e-Commerce 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

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

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

Cross-Functional Enterprise Applications (continued) Figure on next slide is an excellent illustration of the concept of enterprise application architecture 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

Cross-Functional Enterprise Applications (continued) Enterprise Application Architecture

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.

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

Enterprise Application Integration (continued)

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

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

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

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

Transaction Processing Systems (continued)

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

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

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

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

Introduction to e-Commerce (continued) E-commerce systems rely on the resources of the Internet, intranets, extranets, and other computer networks. Electronic commerce can 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

The Scope of e-Commerce Companies involved in e-commerce as either buyers or sellers rely on Internet-based technologies and e-commerce applications 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)

The Scope of e-Commerce(continued) Business-to-Consumer (B2C) – in this form of e- commerce, businesses must develop attractive electronic marketplaces 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

The Scope of e-Commerce(continued) Business-to-Business (B2B) – this category 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.

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

Electronic Commerce Technologies

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

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

Essential e-Commerce Processes(continued)

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

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

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

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

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

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

Web Payment Processes

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 and Pay-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

Electronic Payment Processes - Secure Electronic Payments Secure electronic payments – when you 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)

Electronic Payment Processes - Secure Electronic Payments (cont-d) Secure Socket Layer (SSL) – automatically encrypts data passing between your web browser and a merchant’s server. Digital Wallet – you add 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) – software encrypts a digital envelope of digital certificates specifying the payment details for each transaction. SET is expected to become the dominant standard for secure electronic payments on the Internet.

References James A. O'Brien. Management Information Systems: Managing Information Technology 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.