Transcript powerpoint notes, chapter 8

Internet and E-commerce
•Dr. David Lewis
Chapter 8:
Electronic Commerce
and Interorganizational
Systems
Electronic Commerce

Definition(s)
–
Using IT for business-to-business transactions and for
business-end customer retailing
–
Any electronic transaction with client
companies and end customers
–
Anything electronic that "tightens" your company's
relationship with potential and existing customers &
suppliers
Interorganizational Systems (IOS)

Definition
–
Business-to-business electronic commerce
applications, typically linking customers with suppliers
but may also link competitors
–
Classic example: SABRE reservation system of
American Airlines
–
Most common form: Electronic data interchange
Electronic Data Interchange (EDI)

Definition
–
A set of standards and hardware and software
technology that permit computers in separate
organizations to transfer documents electronically
–
Typical documents exchanged include:
– purchase orders
– invoices
– shipping notices
– price listings
Potential Benefits of EDI

Faster speed of doing business

Reduction in required working capital

Cost savings

Improved customer/supplier relationships

Enables international trade
EDI Standards

In U.S.


ANSI X.12 (American National Standards Institute)
In Europe (and to some extent U.S.)

EDIFACT

Other national standards

Trend: convergence of standards
Electronic Commerce via the Web

Definition
–

The use of the Internet to conduct commerce with
customers, including other businesses or the endconsumers
Benefits include 5 benefits for EDI plus:
–
–
–
–
Cheaper distribution of digitized products/documents
New customer support capabilities
New marketing channel
New sales channel

Al Gore's Vision:
The Information Superhighway
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linking homes, businesses, government for
information, education, buyer/seller transactions.
–
with high speed transmission of
multimedia (text, audio, images, video)
...all streaming seamlessly into everyone's home
–
without "haves" and "have-nots"

Bill Gates' Vision
(Microsoft CEO)
1995 bestseller; now a Penguin paperback "upgrade"
–
Telephone lines & television cables "generalized
into" a single, digital utility
–
Easy-to-use information appliances:
lap desks, TV set-top boxes, wallet PCs, Ebooks…
–
Easy-to-use navigation systems:
to query, filter, hyperlink, spatially navigate, under a
Domain Names on the Internet


Network Solutions Inc. (Virginia) has the task
of registering Internet domain names
Three-character suffix specifies type of
organization
.com
.gov
.org

.edu
.mil
.net
Two-character suffix specifies country of origin
(outside of U.S.)
Constraints to EC on the Web:
The Potholes

Security

Traffic Overload

Censorship Difficulties

Measurement Tools
Security

Internet not designed to be public utility

Two issues:


How to control access
How to ensure that security of a given
communication is not violated
Security

#1: How to control access
 Primary method: "Firewalls"
A device that sits between the Internet and an
organization’s internal network in order to block intrusions
from external unauthorized users

#2: Ensure secure communication
 Primary method: Encryption
Today based on enciphering key that is the product of two
prime numbers.
This key is factored into these two prime numbers via an
algorithm, and then one is used to encipher (code) a
message, the other to decipher it
Traffic Overload

Evidenced by:
 slow response time
 occasional blackouts
 lack of capacity/bandwidth
Censorship Difficulties

Web site “blocking” from within businesses
“Acceptable Use” policies
 Monitoring of usage


U.S. legislative attempt:

Communications Decency Act ruled
unconstitutional: violates free speech and due
process rights
Does the global nature of the Internet allow for
“censorship” on a national basis ?
Measurement Tools
How does an organization measure the utility
of an external Web site application?

Usage tracking using “cookies”
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Hits and return visitors
Web movements
Visitor registration & comments (e-mail)
Types of Web Applications
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External Web site
–
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Extranets
–
–
–
–

Fully accessible to the global Internet user
Internet-based applications for key trading partners
Allows access to systems “inside” the firewall
Some are EDI application replacements
Others are totally new applications, exploiting the
multimedia capabilities of the Web
Intranets
Examples of External Web Applications

Manufacturing - 3M

Retailing - Amazon.com

Distributor network - Fruit-of-the-Loom

E-Communities - GeoCities.com
Web Strategies



Existing firms (3M, Fruit-of-the-Loom)
New Web-based businesses (Amazon,
GeoCities)
Unproven pioneers
Emerging Role: Webmaster



Developer of Web sites
– combination of programmer & creative
artist
Responsible for Web server operations and
security
May be responsible for monitoring
“acceptable use” by employees
The Future of EC


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Major changes in retailing, including
possible disintermediation (e.g., eliminate
wholesalers)
Ubiquitous information highway that
handles telephone, television, e-mail, Web,
etc.
Major societal impacts