1. Chapter 5 Electronic Commerce, Intranets, and Extranets
Robert Riordan, Carleton University

2. Learning Objectives
Describe electronic commerce and how it has evolved
Describe the strategies that companies are adopting to compete in cyberspace
Explain the differences between extranets and intranets as well as show how organizations utilize these environments

3. Learning Objectives
4. Describe the stages of business-to-consumer electronic commerce and the key drivers for the emergence of mobile commerce
5. Understand the keys to successful electronic commerce applications

4. Network Computing Spectrum
Intra- company
Inter- company
Global Network
Team
LAN
Intranet
Extranet
Internet (WWW)

5. Types of Electronic Commerce

6. Types of Electronic Commerce

7. Internet and the World Wide Web Capabilities
Information
Dissemination
Transaction
Support
Integration
World Wide Web
Collaboration
Interactive
Communication
Mass
Customization

8. Internet and the World Wide Web Capabilities
Information Dissemination
A relatively economical mechanism to disseminate information globally to compete in new markets 24/7
Example: Electronic company brochures
Integration
Web technologies allow Websites to integrate with corporate database to provide real-time information
Example: checking bank balances

9. Intranets
Intranets
An internal, private network using Web technologies to securely transmit information within the organization.
This private internal Web limits viewing access to authorized users within the organization
Intranet Benefits
Improved information access to authorized user
Improved timeliness and accuracy of information
Global reach allowing employees access from anywhere
Cross-platform integration
Low cost deployment
Positive return on investment

10. Intranet Architecture
Intranet System Architecture
Firewalls – hardware devices with special software that prevent unauthorized access
An intranet server is placed behind the firewall
Packets are never routed outside the firewall, but remain within the organizations network

11. Intranet Architecture

12. Intranet Applications
Collaboration
Training
Intranet Hub
Online Entry of
Information
Application
Integration
Real-time Access
To Information

13. Intranet Applications
Training
Provides online access to a host of training functions including course catalogs, registration, content (video, slides, other materials) and evaluation
Provides significant increases in productivity and standardization, and cost reductions (e.g. travel costs)
Application Integration
Allows for integration and consolidation of information from disparate systems into a single point of access
Increases employee productivity and output quality
Real-time Access to Information
Allows employees access to real-time system information.
This reduces customer service needs by giving all authorized and interested parties direct system access

14. Intranet Applications
Online Entry of Information
Allows for direct online input to streamline routine business processes (e.g. expense reporting)
Provides for significant cost reductions from reducing administrative support and shifting maintenance functions back to the employee (i.e. sick leave applications)
Collaboration
Allows employees to communicate business activities across geographic and departmental boundaries
Allows for shorter development cycle times
Allows employees to stay abreast of current projects, corporate, and market conditions

15. Types of Electronic Commerce

16. Internet and the World Wide Web Capabilities
Information Dissemination
A relatively economical mechanism to disseminate information globally to compete in new markets 24/7
Example: Electronic company brochures
Integration
Web technologies allow Websites to integrate with corporate database to provide real-time information
Example: checking bank balances
Mass Customization
The ability to tailor products and services to meet a customers particular needs
Example: Configuring a PC online

17. Electronic Data Interchange (EDI)
The transmission of electronic business forms between business partners (e.g. purchase order)
Typically used by large organizations…very expensive
The internet has opened this technology to smaller firms
How it works
EDI transactions are system generated by the sender and then transmitted to the receiver by a VAN
VAN (Value Added Network) providers are private network operators that provide guaranteed delivery
Standards
Document types and formats are universally standardized
Two standards exist: ANSI X.12 and UN/EDIFACT

18. Electronic Data Interchange (EDI) Example

19. Business-to-Business Electronic Commerce
Electronic Data Interchange
Advantages
Wide variety of business documents
Streamlines business processes
Reduced document handling, reduces paperwork
Shortens time of business transaction (from day to second)
Reduces errors

20. Business-to-Business Electronic Commerce
Electronic Data Interchange
Disadvantages
Costly to implement
Costly to maintain
Requires skilled technicians
EDI can cost up to $100,000 and monthly telecommunications charges associated with VANs can be several thousand dollars per month
Often too costly for small or medium-sized companies

21. Business-to-Business Electronic Commerce
The Internet Changed Everything
B2B now available to companies of all sizes
Intranet – internal, private network using Web technologies to facilitate transmission of proprietary information within the organization
Extranet – two or more firms using the Internet to do business together

22. Internet and the World Wide Web Capabilities
Interactive Communication
Build customer loyalty by providing immediate feedback to/and from the customer demonstrating responsiveness
Example: Customer support through and chat
Collaboration
A mechanism allowing users to interact, share, and store information and tools for specific purposes
Example: Product R&D site with tools, storage, etc.
Transaction Support
Provides way for buyers and sellers to conduct business online without human assistance
Example: Buy a book online

23. Impact of the Web: Disintermediation
Removal of the intermediary (middleman) in a sale.
Companies can sell directly to customers (retail or wholesale) without assistance using the Internet
Manufacturer or
Service
Provider
Intermediary
(Middleman)
Customer
(Consumer or
Business)
Sell Direct = Disintermediation
Example
Airlines selling directly to flyers without a travel agent or customer service representative

24. Extranets – Business to Business Ecommerce
Extranets enable two or more firms to use the Internet to do business together
They are an excellent use of B2B to allow companies to achieve a positive return on their tech investments

25. Extranets
Extranets
Extranets are secure networks that provide customers, suppliers, and employees with access to internal systems
Have replaced EDI for smaller firms allowing them to participate in B2B markets directly
Extranet Benefits
Improves timeliness and accuracy of communications, thereby reducing errors and misunderstandings
Allows central management of documents allowing single updates which are then available to all interested parties
Uses standard web protocols allowing disparate computing platforms to communicate without additional investments
Easy to use, requires little training
Used to automate transactions, reducing cost and cycle time

26. Extranet System Architecture
Virtual Private Network
(VPN) is a secure network technique to protect extranet communications
Uses a technique called tunneling to encapsulate, encrypt, and transmit data over the Internet
Requires server authentication (verify user with password) to allow operation

27. Extranet Applications
Supply Chain
Management
Procurement
Portals
Real-Time
Info Access
Exchanges
Distribution
Portals
Collaboration
Enterprise
Portals

28. Extranet Applications
Supply Chain Management
Used to exchange supply and manufacturing information between customers and suppliers
The extranet contains features allowing participants to purchase online, check supplier inventory, transfer design specifications, and other business related tasks
Real-time Access to Information
Allowing business partners and customers access to real-time system information
This reduces customer service needs by giving all authorized and interested parties direct system access

29. Extranet Applications
Collaboration
Allows companies to respond proactively to marketplace changes by working directly with suppliers and customers
Allows for shorter development cycle times
Allows for reorganization of the purchasing function turning buyers into supplier relationship managers
Enterprise Portals
These are access points (front doors) combined from multiple extranets where business partners access secure, proprietary company information
This provides a single point of access for information that comes from a variety of disparate systems
Benefits include faster access for business partners, reduced maintenance cost by reduction in total extranets

30. Extranet Applications
Trading Exchanges (Electronic Marketplaces)
Allow many buyers and many sellers to come together
Offer transaction processing, industry information, best sourcing, info resources, and invoicing (e.g. SciQuest.com)
Revenues made through advertising and transaction fees
Distribution Portals
Designed to automate the business processes that occur before, during, and after a sales transaction between a supplier and multiple buyers
Portal can be customized and personalized by the buyer or seller
(e.g. Premier.Dell.com)
Procurement Portals
Designed to automate the business processes that occur before, during, and after a sales transaction between a buyer and multiple suppliers
Provides supplier tools to update products, process orders, service buyers (e.g. Ford Supplier Portal)

31. Extranet Applications: Exchanges and Portals

32. Electronic Business Defined
is using electronic information to improve performance, create value and enable
new relationships between business and customers
Electronic Commerce
is the marketing, selling and buying of products and services on the Internet
Internet Commerce
is the online exchange of information and services utilizing network technologies
Web Commerce

33. The Evolution of eBusiness1 2 3 4
'Grassroots
of e-business'
'Rise of the Internet'
'Stock market
crash'
'Synergy'
Points
– 45%
During the past decade, e-business companies have passed through four distinct periods, as is reflected in the evolution of the NASDAQ
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Year
Launch of Amazon.com
Source: NASDAQ quotes taken from Factiva.com.

34. Business Strategy Business Strategy
Improve Profitability & Reduce Costs
Reach Global Markets
Solidify Business Relationships/ Improve Customer Service
Maximize Technology Benefits
Streamline Business Processes

35. Key Ingredients of a Business Model

36. Electronic Commerce Business Strategies
Business Strategies come in one of the following three types. All require a sound business model to be successful (see next)

37. Brick-and-Mortar & Click-and-Mortar Strategies
Operate a firm solely in traditional physical markets
Approach business activities traditionally by operating physical locations (e.g. stores, offices, manufacturing plants)
Click-and-Mortar
Operate a firm in physical locations and has added an EC component to their business
Requires maximization of business opportunities in both the physical and virtual environments
This strategy requires a significant investment in systems and space

38. Click-Only Strategy Business transactions are only conducted virtually
Can require significant expertise and investment in technology and systems staff
There are many different revenue models

39. New Technologies for B2B Electronic Commerce
XML - Extensible Markup Language
Developed by the World Wide Web Consortium (W3C) to provide a global standard for documents
Used for transmission of data between computers
The Web documents contain tags, enabling definition, validation, transmission, and interpretation of data
May potentially replace all forms of EDI
EBRL - Extensible Business Reporting Language
An XML-based specification for publishing financial information making it easier for companies to share information with each other, analysts & shareholders
Includes tags such as annual and quarterly reports, general ledger information, government filings and accounting schedules

40. New Technologies for B2B Electronic Commerce
RFID - Radio Frequency Identification
Used for tagging and tracking physical items
RFID system uses a transceiver and antenna to transfer information to a processing device from an RFID tag
RFID Benefits
RFID is more powerful than bar-code technology because it does not require visual line-of-sight reading
RFID tags can be placed anywhere (e.g. clothes, pets, cars, parts, store items, etc.)
RFID Issues
Deployment is growing rapidly but it is still expensive
There is no clear set of data standards
Global radio frequencies differ between countries

41. Types of Electronic Commerce

42. Business-to-Consumer Electronic Commerce
B2C
Internet – fastest acceptance of any communications technology
Retail transactions between a company and end consumers
Electronic retailing (e-tailing)

43. Stages of Business-to-Consumer Transactions
Web sites that globally disseminate only static information about the company and its products available 24/7.
(e.g. Electronic Brochure)
Web sites that are integrated with corporate databases to extract and display the appropriate information for a customer request. (e.g. displaying a bank balance)
Web sites that allow customers to enter orders and make payments directly online (e.g. buying a book)

44. The Formula for Electronic Commerce Success
Rule 1: The website should offer something unique
Providing visitors with something they can find nowhere else leads to success. Hard to find goods are popular on the web
Rule 2: The website must be aesthetically pleasing
Successful firms have websites that are nice to look at. People are more likely to visit, stay at, and return to a site that looks good
Rule 3: The website must be easy to use and be fast!
Users are less likely to stay at, or return to a site, if they have trouble finding things, navigating the links, or have to wait for screens

45. The Formula for Electronic Commerce Success
Rule 4: The website must motivate people to visit/return
People use websites that provide useful information and links or free goods and services
Rule 5: You must advertise your presence on the web
Companies must draw, or pull visitors to, their website by: 1) publish address on company materials; 2) register with a search engine; advertise on other commerce sites e.g. Yahoo (very expensive)
Rule 6: You should learn from your website
A firm can track the path that a user takes though the site as well as information about date, time, etc. and use this information to improve the site

46. Types of Electronic Commerce

47. Examples of Transactions – Bus | Consumer | Gov’t47

48. Web 2.0

49. Web 2.0
The term Web 2.0 is commonly associated with web applications that facilitate interactive information sharing, interoperability, user-centered design,[1] and collaboration on the World Wide Web.
A Web 2.0 site gives its users the free choice to interact or collaborate with each other in a social media dialogue as creators (prosumer) of user-generated content in a virtual community, in contrast to websites where users (consumer) are limited to the passive viewing of content that was created for them.
Examples of Web 2.0 include social-networking sites, blogs, wikis, video-sharing sites, hosted services, web applications, mashups and folksonomies.

50. Web 2.0 Features and Services
Blogs
Personal Web page that typically contains a series of chronological entries by its author, and links to related Web pages
Really Simple Syndication (RSS)
Program that allows users to have digital content automatically sent to their computers over the Internet

51. Web 2.0 Features and Services
Podcasting
Audio presentation stored as an audio file and available for download from Web
Wikis
Allows user to easily add and edit content on Web page
New music and video services
Videocasts
Digital video on demand

52. Web 2.0 Features and Services
Internet telephony (VOIP)
Uses Voice Over Internet Protocol (VOIP) and Internet’s packet-switched network to transmit voice and other forms of audio communication over the Internet
Internet television (IPTV)
Telepresence and video conferencing

53. Web 2.0 Features and Services
Online software and Web services
Web apps, widgets, and gadgets
Digital software libraries, distributed storage
M-commerce applications
Beginning to take off

54. Integrator: site that hosts the web application
Web Mashup
Mashup: A web application that performs browser-side integration of content or services from multiple sources
Integrator: site that hosts the web application
Provider: site the provides content to the mashup
Component: a piece of active content from a provider

55. housingmaps.com Wii Finder Clockr popurls.com Yahoo vs. Google
Web Mashups
housingmaps.com
Wii Finder
Clockr
popurls.com
Yahoo vs. Google
Google Gadgets

56. All Mashed Up
What are Web mashups and what technology makes them possible?
Why would Google and others allow their software to be combined with other software?
What is the potential benefit to consumers?
If mashups ultimately make money, how will the revenues be divided?
Why would mashups be supportive of contextual advertising?

57. M-Commerce and the Key Drivers for Growth
Any electronic transaction or information interaction conducted using a wireless, mobile device, and mobile networks, that leads to transfer of real or perceived value in exchange for information, service, or goods (MobileInfo, 2004)
Driver One: Interest in the Internet
The exponential growth of consumer interest and adoption of the Internet and electronic commerce
Driver Two: Deployment of High Speed Networks
The development and deployment of 2.5G & 3G cellular networks enabling faster data transmission
Driver Three: Growth in Mobile Devices
The tremendous growth in mobile telephony and availability of powerful wireless, handheld devices

58. M-Commerce Applications

59. Issues in M-Commerce