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

2. 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

3. 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

4. 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

5. 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

6. Cross-Functional Enterprise Applications (continued)
Enterprise Application Architecture

7. 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.

8. 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

9. Enterprise Application Integration (continued)

10. 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

11. 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

12. 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

13. 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

14. Transaction Processing Systems (continued)

15. 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

16. 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
and Voice mail and Fax
Web publishing and Bulletin boards
Paging and Internet (IP) phone

18. 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

19. 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

20. 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 exchanges

21. 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)

22. 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

23. 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.

24. 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

25. Electronic Commerce Technologies

26. 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

27. 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

28. Essential e-Commerce Processes(continued)

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. Web Payment Processes

36. 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

37. 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)

38. 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.

39. References
James A. O'Brien. Management Information Systems: Managing Information Technology in the Business Enterprise. Sixth Edition. McGraw-Hill/Irwin, 2004, 619 p.
Kisielnicki J., Sroka H.: Systemy informacyjne biznesu. Informatyka dla zarządzania. Metody projektowania i wdrażania systemów. A.W. „Placet”, Wwarszawa 1999 r.