E-Business Fundamentals E- Business can be defined as the application of computer networks for business purpose. In other words it is modern business method for need of organization, merchants and consumers. E- Business is new way of conducting, managing and executing business transactions using computer and telecommunication networks. 1 Sheetal Chhabra

E-Business is expected to improve the productivity and competitiveness of participating business by providing unprecedented access to an online global marketplace with millions of customers and thousands of products and services. Another goal is to provide participating companies with new more cost and time efficient means for working with customers suppliers and development partners. 2Sheetal Chhabra

E-Business improve quality of goods and services. E- Business replaces the swapping of money or goods with the exchange of information from computer to computer. Now traditional business is oriented to E-Business. 3Sheetal Chhabra

Types of E- Business B2BB2CC2BC2C 4Sheetal Chhabra

B2B(Business to Business): It is a term commonly used to describe the transaction of goods or services between business. It is a term that used in automated process between trading partners. 5Sheetal Chhabra

For example dell.com, this company sells computers to several other companies via the Internet. Thus eliminating the middle man and reducing costs by a great deal. There are two types of B2B. 1. Horizontal 2. Vertical 6Sheetal Chhabra

Horizontal: They are producers and operate different levels. Vertical: Work with industries and make their money from advertising sites or from transaction fees. 7Sheetal Chhabra

B2C: It describes activities of commercial organizations serving the end consumer with products / services. The B2C segment can be used for advertising and selling products ranging from books or CDs to T-Shirt or even computers. 8Sheetal Chhabra

C2B: In C2B consumers offer products and services to companies and the company pay them. This type of business is a complete reversal of traditional business. Example princeline.com ( In the prince line model customers quote the price that they are willing to pay for a product or service) 9Sheetal Chhabra

C2C: In C2C business involves the electronically facilitated transactions between consumers through some third party. The auction sites where sellers can place their products for sale and buyers can bid for them. e.g. ebay.com, auctionindia.com, amazon.com 10Sheetal Chhabra

BENEFITS OF E-BUSINESS 1)Reduce Time to complete business transactions. 2)Reduce Overhead Cost. 3)Improved product analysis. 4)Improved Market analysis. 5)Reduce inventories. 6)Reduced cost to buyers. 7)Create new product and services. 8)Enhance human capital 9)Reach new market. 10)Better departmental interactions. 11)Reduced Errors. 12)Improved customer relation. 11Sheetal Chhabra

Electronic business Framework: From the business Activity already taking place, it is clear that E-Business applications will be built on the existing technology Infrastructure, Literary of computers, communication networks and communication software forming the necessary information. Figure shows a variety of possible e-Business applications, including both inter-organizational and consumer oriented. 12Sheetal Chhabra

E business Applications Supply chain Mgmt Video on Demand Remote Banking Procurement and Purchasing Online Marketing & Advertising Common business services infrastructure security / authentification/ e – Payment The messaging & information distribution infrastructure Multimedia content & network publishing infrastructure Public Policy Legal & privacy IssueTechnical Standards for e-documents multimedia & network Protocol 13Sheetal Chhabra

Building Blocks in the Infrastructure Common Business service, for facilitating the buying and selling process. Messaging and information distribution publishing, for creating a product and a means to communicate about it. The information super highway is very foundation for providing the highway system along which all e-business must travel. 14Sheetal Chhabra

Building Blocks in the Infrastructure The two pillars supporting all e-business applications and infrastructure. Public Policy:- to govern such issues as universal access, privacy and information pricing Technical Standards:- To dictate the nature of information publishing, user interface and transport in the interest of compatibility across the entire network. Building the various highway is not enough. Transport vehicles are needed, routing issues must be addressed and of-course the transportation costs must be paid. 15Sheetal Chhabra

E- Business Application 1. Electronic Fund Transfer. 2. Enterprise Application Integration 3. Supply Chain Management. 4. Remote Banking. 5. Video On Demand. 6. Home Shopping. 16Sheetal Chhabra

1. Electronic Fund Transfer. 1. Electronic Fund Transfer. EFT systems are a major form of e payment systems in banking and retailing industries. These systems use a variety of information technologies to capture and process money and credit transfers between banks and businesses and their customers. For example ATM support banking at location throughout the world. In addition most point of sale terminals in retail stores are networked to bank EFT systems, this makes it possible for you to use a credit card or debit card to instantly pay for groceries or other purchases at retail outlets. 17Sheetal Chhabra

2. Enterprise Application Integration 2. Enterprise Application Integration EAI interconnects several e business application clusters. 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 and coordination, application communication & messaging services and access to the application interface involved. Thus EAI software can integrate a variety of enterprise application 18Sheetal Chhabra

3. Supply Chain Management. 3. Supply Chain Management. The e-business opportunity lies in the fusing of each company’s internal system to those of its suppliers, partners and customers. This fusion forces companies to better integrate enterprise supply chain processes to improve manufacturing efficiency and distribution effectiveness. Many companies are making supply chain management (SCM) a top strategies objective of their e business initiatives. It is an absolute requirement if they want to meet their e business customer value what the customer wants, when and where it is wanted at the lowest possible cost. 19Sheetal Chhabra

4. Remote Banking 4. Remote Banking RB is one of the most important modern banking services enabling the customers to make payments from any place in the world and at any time via a PC or mobile phone. Telephone banking or mobile banking is the most convenient and simple methods of receiving information on the status of the account and transactions on the account may be performed by telephone. The remote banking is also known as the Internet Banking. It allows you to access your credit account via the Internet from your phone or computer. It is free and gives you access to your account 24 hour a day. 20Sheetal Chhabra

5. Video on Demand 5. Video on Demand VOD is an interactive multimedia system that works like cable television, the difference being that the customer can select a movie from a large video database. VOD systems allow users to select and watch video and clip content over a network as part of an interactive television system. E.g.: Interactive TV guides, Interactive telephone yellow pages. 21Sheetal Chhabra

Overview of Electronic Commerce 22Sheetal Chhabra

Definitions Business-to-business (B2B) ◦Businesses make online transactions purchases with other business Business-to-consumer (B2C) ◦Online transactions between businesses and consumers Business-to-employee (B2E) ◦Information and services made available to employees online 23Sheetal Chhabra

Electronic Commerce Terms E-business EC defined from these perspectives ◦Communications ◦Business process ◦Service ◦Online ◦Collaborations ◦Community 24Sheetal Chhabra

Electronic Commerce Terms (cont.) Pure vs. Partial EC: based on the degree of digitization of ◦Product ◦Process ◦Delivery agent Traditional commerce: all dimensions are physical Pure EC: all dimensions are digital Partial EC: all other possibilities include a mix of digital and physical dimensions 25Sheetal Chhabra

Electronic Commerce Terms (cont.) Internet vs. Non-Internet EC ◦VANs ◦LANs ◦Click and Mortar 26Sheetal Chhabra

Figure 1-1 The Dimensions of Electronic Commerce Source: Choi et al. (1997), p Sheetal Chhabra

◦A method of doing business by which a company can generate revenue to sustain itself.  Examples: ◦ Name your price ◦ Find the best price ◦ Dynamic brokering ◦ Affiliate marketing Business Models 28Sheetal Chhabra

Business Models (cont.) ◦Group purchasing ◦Electronic tendering systems ◦Online auctions ◦Customization and personalization ◦Electronic marketplaces and exchanges ◦Supply chain improvers ◦Collaborative commerce 29Sheetal Chhabra

Business Models (cont.) Orbis Corporation 30Sheetal Chhabra

Business Models (cont.) Orbis Corporation 31Sheetal Chhabra

A market is a network of interactions and relationships where information, products, services, and payments are exchanged. ◦ It handles all the necessary transactions ◦ It is a place where shoppers and sellers meet electronically ◦ Sellers and buyers negotiate, submit bids, agree on an order, and finish the execution on- or off-line Electronic Markets (E-marketplaces or E-market spaces) 32Sheetal Chhabra

Transactions in Electronic Markets 33Sheetal Chhabra

Electronic Exchanges Electronic exchanges provide dynamic pricing by matching real-time supply and demand ◦Live auctions ◦Stock exchanges 34Sheetal Chhabra

◦Inter organizational information system (IOS) involves information flow among two or more organizations ◦Major objective is efficient routine transaction processing, such as transmitting orders, bills, and payments using EDI or extranets ◦Scope: Unified system encompassing two or several business partners ◦Typical IOS includes a company, its suppliers, and and/or customers Inter organization Information Systems 35Sheetal Chhabra

Figure 1-3 A Framework for Electronic Commerce 36Sheetal Chhabra

Marketing Computer sciences Consumer behavior and psychology Finance Economics Management information systems Accounting and auditing Management Business law and ethics Others Electronic Commerce is Interdisciplinary 37Sheetal Chhabra

The Driving Forces of Electronic Commerce The New World of Business ◦Business pressures ◦Organizational responses ◦The role of Information Technology (including electronic commerce) 38Sheetal Chhabra

Major Business Pressures Market and economic pressures Strong competition Global economy Regional trade agreements (e.g. NAFTA) Extremely low labor cost in some countries Frequent and significant changes in markets Increased power of consumers 39Sheetal Chhabra

Major Business Pressures (cont.) Societal and environmental pressures Changing nature of workforce Government deregulation of banking and other services Shrinking government subsidies Increased importance of ethical and legal issues Increased social responsibility of organizations Rapid political changes 40Sheetal Chhabra

Major Business Pressures (cont.) Technological pressures Rapid technological obsolescence Increase innovations and new technologies Information overload Rapid decline in technology cost vs. performance ratio 41Sheetal Chhabra

Organizational Responses Strategic systems Continuous improvement efforts Business process reengineering (BPR) Business Alliances Electronic commerce 42Sheetal Chhabra

Reducing cycle time and time to market Empowerment of employees and collaborative work Supply chain improvements Mass customization Change management IT Support and EC 43Sheetal Chhabra

The Benefits of EC Benefits to Organizations ◦Expands the marketplace to national and international markets ◦Decreases the cost of creating, processing, distributing, storing and retrieving paper-based information 44Sheetal Chhabra

Benefits of EC (cont.) Benefits to Organizations (cont.) ◦ Allows reduced inventories and overhead by facilitating pull-type supply chain management ◦ The pull-type processing allows for customization of products and services which provides competitive advantage to its implementers 45Sheetal Chhabra

Benefits of EC (cont.) Benefits to Organizations (cont.) ◦ Reduces the time between the outlay of capital and the receipt of products and services ◦ Supports business processes reengineering (BPR) efforts ◦ Lowers telecommunications cost - the Internet is much cheaper than value added networks (VANs) 46Sheetal Chhabra

Benefits of EC (cont.) Benefits to consumers ◦Enables consumers to shop or do other transactions 24 hours a day, all year round from almost any location ◦Provides consumers with more choices ◦Provides consumers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons 47Sheetal Chhabra

Benefits of EC (cont.) Benefits to consumers (cont.) ◦ Allows quick delivery of products and services (in some cases) especially with digitized products ◦ Consumers can receive relevant and detailed information in seconds, rather than in days or weeks ◦ Makes it possible to participate in virtual auctions 48Sheetal Chhabra

Benefits of EC (cont.) Benefits to consumers (cont.) ◦ Allows consumers to interact with other consumers n electronic communities and exchange ideas as well as compare experiences ◦ Facilitates competition, which results in substantial discounts 49Sheetal Chhabra

Benefits of EC (cont.) Benefits to society ◦ Enables more individuals to work at home, and to do less traveling for shopping, resulting in less traffic on the roads, and lower air pollution ◦ Allows some merchandise to be sold at lower prices benefiting less affluent people 50Sheetal Chhabra

Benefits of EC (cont.) Benefits to society (cont.) ◦ Enables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to them ◦ Facilitates delivery of public services at a reduced cost, increases effectiveness, and/or improves quality 51Sheetal Chhabra

The Limitations of EC Technical limitations of electronic commerce ◦ Lack of sufficient system’s security, reliability, standards, and communication protocols ◦ Insufficient telecommunication bandwidth ◦ The software development tools are still evolving and changing rapidly 52Sheetal Chhabra

The Limitations of EC (cont.) Technical Limitations of EC (cont.) ◦Difficulties in integrating the Internet and electronic commerce software with some existing applications and databases ◦The need for special Web servers and other infrastructures, in addition to the network servers (additional cost) 53Sheetal Chhabra

The Limitations of EC (cont.) Technical Limitations of EC (cont.) ◦Possible problems of interoperability, meaning that some EC software does not fit with some hardware, or is incompatible with some operating systems or other components 54Sheetal Chhabra

Non-Technical Limitations Cost and justification ◦The cost of developing an EC in house can be very high, and mistakes due to lack of experience may result in delays. ◦There are many opportunities for outsourcing, but where and how to do it is not a simple issue ◦In order to justify the system, one needs to deal with some intangible benefits which are difficult to quantify. 55Sheetal Chhabra

Security and Privacy ◦These issues are especially important in the B2C area, but security concerns are not so serious from a technical standpoint ◦Privacy measures are constantly improving too ◦The EC industry has a very long and difficult task of convincing customers that online transactions and privacy are, in fact, very secure Non-Technical Limitations (cont.) 56Sheetal Chhabra

Non-Technical Limitations (cont.) Lack of trust and user resistance ◦Customers do not trust:  Unknown faceless sellers  Paperless transactions  Electronic money ◦Switching from a physical to a virtual store may be difficult 57Sheetal Chhabra

◦Other limiting factors are:  Lack of touch and feel online  Many unresolved legal issues  Rapidly evolving and changing EC  Lack of support services  Insufficiently large enough number of sellers and buyers  Breakdown of human relationships  Expensive and/or inconvenient accessibility to the Internet Non-Technical Limitations (cont.) 58Sheetal Chhabra

Putting It All Together Major concern of today’s companies—how to transform themselves to take part in digital economy Example:Toys, Inc. ◦Uses intranet for internal communications, collaboration, dissemination of information ◦Networked to e-marketspaces and large corporations ◦Corporate portal for communication and collaboration with business partners 59Sheetal Chhabra

Figure 1-7 Putting It All Together Prentice Hall, Sheetal Chhabra

Is it real? How to evaluate the magnitude of the business pressures. What should be my company’s strategy towards EC? Managerial Issues 61Sheetal Chhabra

Managerial Issues (cont.) Why is the B2B area so attractive? What is the best way to learn about EC? What ethical issues exist? How can failures be avoided? 62Sheetal Chhabra

Figure 1-8 Plan of the Book Prentice Hall, Sheetal Chhabra

EC Demonstration ICICI Bank ◦Account Statement ◦EFT ◦Bill Payment ◦E-cheque State Bank LIC India ◦Premium payment ◦Online status checking and reminder (on phone) Reliance Infocom ◦Current charges ◦Bill detail and payment 64Sheetal Chhabra

EC Demonstration  IIT Student Registration System Student  Registration detail  Course registration  Dues payment Faculty  Programme Coordinator  Course Coordinator  Grade Upload  Attendance sheet 65Sheetal Chhabra

Figure 1-1 The Dimensions of Electronic Commerce Source: Choi et al. (1997), p Sheetal Chhabra

Electronic Commerce Terms (cont.) Internet vs. Non-Internet EC ◦VANs ◦LANs ◦Click and Mortar 67Sheetal Chhabra

Figure 1-3 A Framework for Electronic Commerce 68Sheetal Chhabra

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