Chapter One:

An Overview to E-commerce
1.1 Introduction of E-Commerce

Recently most commercial transactions still take place through conventional channels, rising
numbers of consumers and businesses are using the Internet for electronic commerce. Projections
show that by 2006, total e-commerce spending by consumers and businesses could surpass $5
trillion (e-marketer, 2004 and 2003).

Today, networking and the Internet are nearly synonymous with doing business. Firms’
relationships with customers, employees, suppliers, and logistic partners are becoming digital
relationships. As a supplier, you cannot do business with national and international retailers
unless you adopt their well-defined digital technologies. As a consumer, you will increasingly
interact with sellers in a digital environment. As an employer, you’ll be interacting more
electronically with your employees and giving them new digital tools to accomplish their work.

So much business is now enabled by or based upon digital networks that we use the terms
electronic business and electronic commerce frequently throughout this text. Electronic business,
or e-business, designates the use of Internet and digital technology to execute all of the activities
in the enterprise. E-business includes activities for the internal management of the firm and for
coordination with suppliers and other business partners. It also includes electronic commerce, or
e-commerce. E-commerce is the part of e-business that deals with the buying and selling of
goods and services electronically with computerized business transactions using the Internet,
networks, and other digital technologies. It also encompasses activities supporting those market
transactions, such as advertising, marketing, customer support, delivery, and payment.

To sum up E-commerce is the use of the Internet and the Web to transact business. Digitally
enabled transactions include all transactions mediated by digital technology. For the most part,
this means transactions that occur over the Internet and the Web. Commercial transactions
involve the exchange of value (e.g., money) across organizational or individual boundaries in
return for products and services. Exchange of value is important for understanding the limits of
e-commerce. Without an exchange of value, no commerce occurs.

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1.2. Origin Of E-Commerce
E-commerce applications began in the early 1970s with such innovations as electronic transfer of
funds. However, the applications were limited to large corporations and a few daring small
businesses. Then came electronic data interchange (EDI), which added other kinds of transaction
processing and extended participation to all industries.

The early years of e-commerce were a period of explosive growth and extraordinary innovation,
beginning in 1995 with the first widespread use of the Web to advertise products. This period of
explosive growth was capped in March 2000 when stock market valuations for dot.com
companies reached their peak and thereafter began to collapse.

The field of e-commerce is broad. There are many applications of EC, such as home banking,
shopping in electronic malls, buying stocks, finding a job, conducting an auction, collaborating
electronically with business partners around the globe, and providing customer service. The
implementation of various EC applications depends on four major support categories, shown as
supporting pillars: people, public policy, and marketing/advertising and supply chain
logistics. The EC management within each organization coordinates the applications,
infrastructure, and pillars.

The phenomenon of e-commerce is so broad that a multidisciplinary perspective is required.

There are two primary approaches to e-commerce: technical and behavioral.

Technical Approaches- Computer scientists are interested in e-commerce as an exemplary

application of Internet technology. They are concerned with the development of computer
hardware, software, and telecommunications systems, as well as standards, encryption, and
database design and operation. Management scientists are primarily interested in building
mathematical models of business processes and optimizing these processes. They are interested
in e-commerce as an opportunity to study how business firms can exploit the Internet to achieve
more efficient business operations.

Behavioral Approaches- In the behavioral area, information systems researchers are primarily
interested in e-commerce because of its implications for firm and industry value chains, industry
structure, and corporate strategy. The information systems discipline spans the technical and
behavioral approaches. For instance, technical groups within the information systems specialty
also focus on data mining, search engine design, and artificial intelligence. Economists have

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focused on consumer behavior at Web sites, pricing of digital goods, and on the unique features
of digital electronic markets.

1.3. Definition of e-commerce

Electronic commerce (e-commerce) is often thought simply to refer to buying and selling using
the Internet; people immediately think of consumer retail purchases from companies such as
Amazon. But e-commerce involves much more than electronically mediated financial
transactions between organizations and customers. E-commerce should be considered as all
electronically mediated transactions between an organization and any third party it deals with.
By this definition, non-financial transactions such as customer requests for further information
would also be considered to be part of e-commerce.
The UK government also used a broad definition when explaining the scope of e-commerce to
industry:
E-commerce is the exchange of information across electronic networks, at any stage in the
supply chain, whether within an organization, between businesses, between businesses and
consumers, or between the public and private sector, whether paid or unpaid.(Cabinet Office,
1999
These definitions show that electronic commerce is not solely restricted to the actual buying and
selling of products, but also includes pre-sale and post-sale activities across the supply chain. E-
commerce is facilitated by a range of digital technologies that enable electronic communications.
These technologies include Internet communications through web sites and e-mail as well as
other digital media such as wireless or mobile and media for delivering digital television such as
cable and satellite.
1.4. E-Business Vs E-commerce
E-commerce: is more specific than e-business. E-business involves the use electronic platforms-
intranets, extranets and Internet to conduct a company’s business. Internet and other technologies
now help companies carry on their business faster, more accurately and over a range of time and
space. They have created intranets to help employees communicate with each other and access
information found in the company’s computers. They have set up extranets with major suppliers
and distributers to assist information exchange, orders, transactions and payments. Companies
such as Cisco, Microsoft and Oracle run almost entirely as e-business, in which memos, invoices,
engineering drawings, sales and marketing information –virtually everything-happens over the
Internet instead of on paper.

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E-business: includes all electronic–based information exchanges within or between companies
and customers. In contrast e-commerce involves buying and selling processes supported by
electronic means, primarily the Internet. E-markets are market-spaces rather than physical
marketplaces. Sellers use e-markets to offer their products and services online. Buyers use them
to search for information, identify what they want, and place orders using credit or other means
of electronic payment. Is the online transaction of business, featuring linked computer systems of
the vendor, host, and buyer? Electronic transactions involve the transfer of ownership or rights to
use a good or service.

Figure 1.1- the difference between e-business system and e-commerce

1.5. Unique Features of E-Commerce

E-commerce has seven unique characteristics that distinguish from the traditional business
transaction. These are ubiquity, global reach, universal standards, richness, information density
and personalization/customization. Each unique characteristic are discussed below from business
significance and e-commerce technology dimension.

A. Ubiquity

In traditional commerce, a marketplace is a physical place you visit in order to transact. For
example, television and radio typically motivate the consumer to go some-place to make a
purchase. E-commerce, in contrast, is characterized by its ubiquity: it is available just about
everywhere, at all times. It liberates the market from being restricted to a physical space and

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makes it possible to shop from your desktop, at home, at work, or even from your car, using
mobile commerce. The result is called a market-space—a marketplace extended beyond
traditional boundaries and removed from a temporal and geographic location. From a consumer
point of view, ubiquity reduces transaction costs—the costs of participating in a market. To
transact, it is no longer necessary that you spend time and money traveling to a market. At a
broader level, the ubiquity of e-commerce lowers the cognitive energy required to transact in a
market-space. Cognitive energy refers to the mental effort required to complete a task. Humans
generally seek to reduce cognitive energy outlays. When given a choice, humans will choose the
path requiring the least effort—the most convenient path.

B. Global Reach

E-commerce technology permits commercial transactions to cross cultural and national

boundaries far more conveniently and cost-effectively than is true in traditional commerce. As a
result, the potential market size for e-commerce merchants is roughly equal to the size of the
world’s online population (over 1 billion in 2005, and growing rapidly, according to the
Computer Industry Almanac) (Computer Industry Almanac, Inc., 2006). The total number of
users or customers an e-commerce business can obtain is a measure of its reach (Evans and
Wurster, 1997).

In contrast, most traditional commerce is local or regional—it involves local merchants or

national merchants with local outlets. Television and radio stations, and newspapers, for
instance, are primarily local and regional institutions with limited but powerful national networks
that can attract a national audience. In contrast to e-commerce technology, these older commerce
technologies do not easily cross national boundaries to a global audience.

C. Universal Standards

One strikingly unusual feature of e-commerce technologies is that the technical standards of the
Internet, and therefore the technical standards for conducting e-commerce, are universal
standards—they are shared by all nations around the world. In contrast, most traditional
commerce technologies differ from one nation to the next. For instance, television and radio
standards differ around the world, as does cell telephone technology. The universal technical
standards of the Internetand e-commerce greatly lower market entry costs—the cost merchants
must pay just to bring their goods to market. At the same time, for consumers, universal-

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standards reduce search costs—the effort required to find suitable products. And by creating a
single, one-world market space, where prices and product descriptions can be inexpensively
displayed for all to see, price discovery becomes simpler,faster, and more accurate (Bakos,
1997; Kambil, 1997). And users of the Internet,both businesses and individuals, experience
network externalize—benefits that arise because everyone uses the same technology. With e-
commerce technologies,it is possible for the first time in history to easily find many of the
suppliers,prices, and delivery terms of a specific product anywhere in the world, and to view
them in a coherent, comparative environment. Although this is not necessarily realistic today for
all or many products, it is a potential that will be exploited in the Future.

D. Richness

Information richness refers to the complexity and content of a message (Evansand Wurster,
1999). Traditional markets, national sales forces, and small retail-stores have great richness: they
are able to provide personal, face-to-face service using aural and visual cues when making a sale.
The richness of traditional markets makes them a powerful selling or commercial environment.
Prior to the development of the Web, there was a trade-off between richness and reach: the larger
the audience reached, the less rich the message .

E. Interactivity

Unlike any of the commercial technologies of the twentieth century, with the possible exception
of the telephone, e-commerce technologies allow for interactivity,meaning they enable two-way
communication between merchant and consumer.Television, for instance, cannot ask viewers
any questions or enter into conversations with them, and it cannot request that customer
information be entered into a form.

In contrast, all of these activities are possible on an e-commerce Web site.Interactivity allows an
online merchant to engage a consumer in ways similar to aface-to-face experience, but on a
much more massive, global scale.

F. Information Density

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The Internet and the Web vastly increase information density—the total amount and quality of
information available to all market participants, consumers, and merchants alike. E-commerce
technologies reduce information collection, storage,processing, and communication costs. At the
same time, these technologies increase greatly the currency, accuracy, and timeliness of
information—making information more useful and important than ever. As a result, information
becomes more plentiful, less expensive, and of higher quality.

A number of business consequences result from the growth in information density. In e-

commerce markets, prices and costs become more transparent. Price transparency refers to the
ease with which consumers can find out the variety of prices in a market; cost transparency refers
to the ability of consumers to discover the actual costs merchants pay for products (Sinha, 2000).
But there are advantages for merchants as well. Online merchants can discover much more about
consumers; this allows merchants to segment the market into groups willing to pay different
prices and permits them to engage in price discrimination—selling the same goods, or nearly the
same goods, to different targeted groups at different prices. For instance, an online merchant can
discover a consumer’s avid interest in expensive exotic vacations, and then pitch expensive
exotic vacation plans to that consumer at a premium price,knowing this person is willing to pay
extra for such a vacation. At the same time, the online merchant can pitch the same vacation plan
at a lower price to more price-sensitive consumers (Shapiro and Varian, 1999). Merchants also
have enhanced abilities to differentiate their products in terms of cost, brand, and quality.

G. Personalization/Customization

E-commerce technologies permit personalization: merchants can target their marketing messages
to specific individuals by adjusting the message to a person’s name, interests, and past purchases.
The technology also permits customization—changing the delivered product or service based on
a user’s preferences or prior behavior. Given the interactive nature of e-commerce technology,
much information about the consumer can be gathered in the marketplace at the moment of
purchase.With the increase in information density, a great deal of information about the
consumer’s past purchases and behavior can be stored and used by online merchants.The result is
a level of personalization and customization unthinkable with existing commerce technologies.
For instance, you may be able to shape what you see on television by selecting a channel, but
you cannot change the contents of the channel you have chosen. In contrast, the online version of

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the Wall Street Journal allows you to select the type of news stories you want to see first, and
gives you the opportunity to be alerted when certain events happen.

1.6. Comparison of Traditional Commerce and E-Commerce

In e-commerce there may be no physical store, and in most cases the buyer and seller do not see
each other. The Web and telecommunications technologies play a major role, in e-commerce.
Although the goals and objectives of both e-commerce and traditional commerce are the same—
selling products and services to generate profits—they do it quite differently. Traditional
commerce presents product information by using magazines, flyers. On the other hand, e-
commerce presents by using web sites and online catalogs. Traditional commerce communicates
by regular mail, phone yet e-commerce by e-mail. Traditional commerce checks product
availability by phone, fax and letter. However, e-commerce checks by e-mail, web sites, and
internal networks. Traditional commerce generates orders and invoices by printed forms but e-
commerce by e-mail, and web sites. Traditional commerce gets product acknowledgments by
phone and fax. On the other hand, e-commerce gets by e-mail, web sites, and EDI. It is
important to notice that currently many companies operate with a mix of traditional and e-
commerce. Just about all medium and large organizations have some kind of e-commerce
presence. The followings are some examples, Toys-R-Us, Wal-Mart Stores, GoldPC, and Vatan
Computer.

1.7. Advantages and disadvantage of E-Commerce

1.7.1. Advantages of E-Commerce
Some advantages that can be achieved from e-commerce include:

1. Being able to conduct business 24 x 7 x 365: E-commerce systems can operate all day
every day. Your physical storefront does not need to be open in order for customers and
suppliers to be doing business with you electronically.
2. Access the global market place: The Internet spans the world, and it is possible to do
business with any business or person who is connected to the Internet. Simple local
businesses such as specialist record stores are able to market and sell their offerings
internationally using e-commerce. This global opportunity is assisted by the fact that, unlike
traditional communications methods, users are not charged according to the distance over
which they are communicating.

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3. Speed: Electronic communications allow messages to traverse the world almost
instantaneously. There is no need to wait weeks for a catalogue to arrive by post: that
communications delay is not a part of the Internet / e-commerce world.
4. Market space: The market in which web-based businesses operate is the global market. It
may not be evident to them, but many businesses are already facing international competition
from web-enabled businesses.
5. Opportunity to reduce costs: The Internet makes it very easy to 'shop around' for products
and services that may be cheaper or more effective than we might otherwise settle for. It is
sometimes possible to, through some online research, identify original manufacturers for
some goods - thereby bypassing wholesalers and achieving a cheaper price.
6. Computer platform-independent: 'Many, if not most, computers have the ability to
communicate via the Internet independent of operating systems and hardware. Customers are
not limited by existing hardware systems' (Gascoyne&Ozcubukcu, 1997:87).
7. Efficient applications development environment: - 'In many respects, applications can be
more efficiently developed and distributed because the can be built without regard to the
customer's or the business partner's technology platform. Application updates do not have to
be manually installed on computers. Rather, Internet-related technologies provide this
capability inherently through automatic deployment of software updates'
(Gascoyne&Ozcubukcu, 1997:87).
8. Allowing customer self-service and 'customer outsourcing': People can interact with
businesses at any hour of the day that it is convenient to them, and because these interactions
are initiated by customers, the customers also provide a lot of the data for the transaction that
may otherwise need to be entered by business staff. This means that some of the work and
costs are effectively shifted to customers; this is referred to as 'customer outsourcing'.
9. Stepping beyond borders to a global view: Using aspects of e-commerce technology can
mean your business can source and use products and services provided by other businesses in
other countries. This seems obvious enough to say, but people do not always consider the
implications of e-commerce. For example, in many ways it can be easier and cheaper to host
and operate some e-commerce activities outside Australia.

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 1.7.2. Disadvantages and limitations of E-commerce

Some disadvantages and constraints of e-commerce include the following.

1. Time for delivery of physical products: It is possible to visit a local music store and walk
out with a compact disc or a bookstore and leave with a book. E-commerce is often used to
buy goods that are not available locally from businesses all over the world, meaning that
physical goods need to be delivered, which takes time and costs money. In some cases there
are ways around this, for example, with electronic files of the music or books being accessed
across the Internet, but then these are not physical goods.
2. Physical product, supplier & delivery uncertainty: When you walk out of a shop with an
item, it's yours. You have it; you know what it is, where it is and how it looks. In some
respects e-commerce purchases are made on trust. This is because, firstly, not having had
physical access to the product, a purchase is made on an expectation of what that product is
and its condition. Secondly, because supplying businesses can be conducted across the world,
it can be uncertain whether or not they are legitimate businesses and are not just going to take
your money. It's pretty hard to knock on their door to complain or seek legal recourse!
Thirdly, even if the item is sent, it is easy to start wondering whether or not it will ever
arrive.
3. Perishable goods: Forget about ordering a single gelato ice cream from a shop in Rome!
Though specialized or refrigerated transport can be used, goods bought and sold via the
Internet tend to be durable and non-perishable: they need to survive the trip from the supplier
to the purchasing business or consumer. This shifts the bias for perishable and/or non-durable
goods back towards traditional supply chain arrangements, or towards relatively more local
e-commerce-based purchases, sales and distribution. In contrast, durable goods can be traded
from almost anyone to almost anyone else, sparking competition for lower prices. In some
cases this leads to disintermediation in which intermediary people and businesses are
bypassed by consumers and by other businesses that are seeking to purchase more directly
from manufacturers.
4. Limited and selected sensory information: The Internet is an effective conduit for visual
and auditory information: seeing pictures, hearing sounds and reading text. However it does
not allow full scope for our senses: we can see pictures of the flowers, but not smell their
fragrance; we can see pictures of a hammer, but not feel its weight or balance. Further, when

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 we pick up and inspect something, we choose what we look at and how we look at it. This is
not the case on the Internet. If we were looking at buying a car on the Internet, we would see
the pictures the seller had chosen for us to see but not the things we might look for if we were
able to see it in person. And, taking into account our other senses, we can't test the car to hear
the sound of the engine as it changes gears or sense the smell and feel of the leather seats.
There are many ways in which the Internet does not convey the richness of experiences of the
world. This lack of sensory information means that people are often much more comfortable
buying via the Internet generic goods - things that they have seen or experienced before and
about which there is little ambiguity, rather than unique or complex things.
5. Returning goods: Returning goods online can be an area of difficulty. The uncertainties
surrounding the initial payment and delivery of goods can be exacerbated in this process.
Will the goods get back to their source? Who pays for the return postage? Will the refund be
paid? Will I be left with nothing? How long will it take? Contrast this with the offline
experience of returning goods to a shop.
6. Privacy, security, payment, identity, and contract: Many issues arise - privacy of
information, security of that information and payment details, whether or not payment details
(eg credit card details) will be misused, identity theft, contract, and, whether we have one or
not, what laws and legal jurisdiction apply.
7. Defined services & the unexpected: E-commerce is an effective means for managing the
transaction of known and established services, that is, things that are everyday. It is not
suitable for dealing with the new or unexpected. For example, a transport company used to
dealing with simple packages being asked if it can transport a hippopotamus, or a customer
asking for a book order to be wrapped in blue and white polka dot paper with a bow. Such
requests need human intervention to investigate and resolve.
8. Personal service: Although some human interaction can be facilitated via the web, e-
commerce cannot provide the richness of interaction provided by personal service. For most
businesses, e-commerce methods provide the equivalent of an information-rich counter
attendant rather than a salesperson. This also means that feedback about how people react to
product and service offerings also tends to be more granular or perhaps lost using e-
commerce approaches. If your only feedback is that people are (or are not) buying your
products or services online, this is inadequate for evaluating how to change or improve your
e-commerce strategies and/or product and service offerings.

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9. Size and number of transactions: E-commerce is most often conducted using credit card
facilities for payments, and as a result very small and very large transactions tend not to be
conducted online. The size of transactions is also impacted by the economics of transporting
physical goods. For example, any benefits or conveniences of buying a box of pens online
from a US-based business tend to be eclipsed by the cost of having to pay for them to be
delivered to you in Australia.

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 Chapter Two
Technology in E-procurement
2.1. Origins of the Internet and New Uses for the Internet

The first recorded description of the social interactions that could be enabled through networking
was a series of memos written by J.C.R. Licklider of MIT in August 1962 discussing his
“Galactic Network” concept. He envisioned a globally interconnected set of computers through
which everyone could quickly access data and programs from any site. In spirit, the concept was
very much like the Internet of today.

The Internet has shown extraordinary growth patterns when compared to other electronic
technologies of the past. It took radio 38 years to achieve a 30% share of U.S. households. It took
television 17 years to achieve a 30% share. Since the invention of a graphical user interface for
the World Wide Web in 1993, it took only 10 years for the Internet/Web to achieve a 53% share
of U.S. households.
The Internet today is a widespread information infrastructure, the initial prototype of what is
often called the National (or Global or Galactic) Information Infrastructure. Its history is
complex and involves many aspects - technological, organizational, and community. And its
influence reaches not only to the technical fields of computer communications but throughout
society as we move toward increasing use of online tools to accomplish electronic commerce,
information acquisition, and community operations.
2.2. The Internet, Intranets, Extranets and the World Wide Web
2.2.1. The Internet
Internetis a worldwide network of computer networks built on common standards. We can also
defined internet as "A collection of interconnected networks using the Internet Protocol which
allows them tofunction as a single, large virtual network."Created in the late 1960s to connect a
small number of mainframe computers and their users, the Internet has since grown into the
world’s largest network, connecting over 500 million computers worldwide. The Internet links
businesses, educational institutions, government agencies, and individuals together, and provides
users with services such as e-mail, document transfer, newsgroups, shopping, research, instant
messaging, music, videos, and news.One of the key advantages of an intranet is the broad
availability and use of software applications unique to the needs of a corporation

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The Internet is the most well-known and largest implementation of client/server computing and
internetworking, linking hundreds of thousands of individual networks all over the world, which
in turn service over 600 million individual PCs or host computers. The word Internet derives
from the word internetworking or the linking of separate networks, each of which retains its own
identity, into an interconnected network. In the United States, about 160 million people access
the Internet at home or work. The World Wide Web is the most popular service provided by the
Internet, providing user’s access to over 500 billion Web pages containing text, graphics, audio,
video, and other objects.
Technically, the Internet is a global information system defined by three characteristics:
 A network composed of computers and other devices that are logically linked together by
a unique address space based on the Internet Protocol
 A network where network devices (computers, routers, hubs, and other equipment) are
able to support communications using TCP/IP or other compatible protocols
 A network that provides high-level services layered on a communication and network
infrastructure.
The incredible success of the Internet as the world’s most extensive, public communication
system that rivals the global telephone system in reach and range results from a number of design
factors.
2.2.2. Intranets
Organizations can use Internet networking standards and Web technology to create private
networks called intranets. Intranet is an internal organizational network that provides access to
data across the enterprise. It uses the existing company network infrastructure along with Internet
connectivity standards and software developed for the World Wide Web. Intranets can create
networked applications that can run on many different kinds of computers throughout the
organization, including mobile handheld computers and wireless remote access devices.
 Whereas the Web is available to anyone, an intranet is private and is protected from
public visits by firewalls—security systems with specialized software to prevent outsiders
from entering private networks. Intranet software technology is the same as that of the
World Wide Web. Intranets use HTML to program Web pages and to establish dynamic,
point-and-click hypertext links to other pages. The Web browser and Web server
software used for intranets are the same as those on the Web. A simple intranet can be

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 created by linking a client computer with a Web browser to a computer with Web server
software using a TCP/IP network with software to keep unwanted visitors out.
An intranet is protected by security measures such as passwords,encryption, and firewalls, and
thus can be accessed by authorized users through the Internet. A company’s intranet can also be
accessed through the intranets of customers, suppliers, and other business partners via extranet
links. Just think of an intranet as a private version of the Internet.

2.2.3. Extranets
An extranet is a collaborative network that uses internet technology to link businesses with their
suppliers, customers or other businesses that share common goals. Extranets are usually linked to
business intranets where information is either accessible through a password system or through
links that are established collaboratively.
A firm can create an extranet to allow authorized vendors and customers to have limited access
to its internal intranet. For example, authorized buyers could link to a portion of a company’s
intranet from the public Internet to obtain information about the costs and features of the
company’s products. The company can use firewalls to ensure that access to its internal data is
limited and remains secure; firewalls can also authenticate users, making sure that only
authorized users can access the site.
Both intranets and extranets reduce transaction and agency costs by providing additional
connectivity for coordinating disparate business processes within the firm and for linking
electronically to customers and suppliers. Private industrial networks are based on extranets
because they are so useful for linking organizations with suppliers, customers, or business
partners. Extranets often are employed for collaborating with other companies for supply chain
management, product design and development, and training efforts. Extranets uses TCP/IP
protocol network (like the internet) to link intranet in different location or specific protocols.

Extranet Benefits
• timeliness and accuracy of communications, reducing errorsandmisunderstandings
• Allows central management of documents allowing single updates
• Uses standard web protocols
• Easy to use, requires little training
• Used to automate transactions, reducing cost and cycle time
• Increased partner interaction, and improvedprocesses.
Table 2.1.Overview: Internet, Intranet, and Extranet
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 Typical users Types of access Information
Internet Any individual with dial- Unlimited, public; no General, public and
up access or LAN restrictions advertisement
Intranet Authorized employees only Private and restricted Specific, corporate and
proprietary
Extranet Authorized groups from Network type shared in authorized
collaborating companies collaborating groups

2.2.4. The World Wide Web

The World Wide Web (the Web) is the most popular service that runs on the
Internetinfrastructure. The Web is the “killer application” that made the Internet commercially
interesting and extraordinarily popular. It is a system with universally accepted standards for
storing, retrieving, formatting, and displaying information using client/server architecture. Web
pages are formatted using hypertext with embedded links that connect documents to one another
and that also link pages to other objects such as sound, video, or animation files. When you click
a graphic and a video clip plays, you have clicked a hyperlink.
The Web was invented in the period from 1989 to 1991 by Dr. Tim Berners-Lee and his
associates at the European Particle Physics Laboratory, better known as CERN. Information
shared on the Web remained text-based until 1993.

As mentioned the Web was developed in the early 1990s and hence is of much more recent
vintage than the Internet. The Web provides easy access to over 8 billion Web pages created in a
language called HTML (HyperText Markup Language). These HTML pages contain information
—including text, graphics, animations, and other objects—made available for public use. You
can find an exceptionally wide range of information on Web pages, ranging from the entire
catalog of Sears Roebuck, to the entire collection of public records from the Securities and
Exchange Commission, to the card catalog of your local library, to millions of music tracks
(some of them legal), and videos.

The Internet prior to the Web was primarily used for text communications, file transfers, and
remote computing. The Web introduced far more powerful and commercially interesting,
colorful multimedia capabilities of direct relevance to commerce. In essence, the Web added
color, voice, and video to the Internet, creating a communications infrastructure and information

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storage system that rivals television, radio, magazines, and even libraries. There is no precise
measurement of the number of Web pages in existence, in part because today’s search engines
index only a portion of the known universe of Web pages, and also because the size of the Web
universe is unknown. Google, the Web’s most popular and perhaps most comprehensive Web
search engine, currently indexes over 8 billion pages. There are also an estimated 600 billion
Web pages in the so-called “deep Web” that are not indexed by ordinary search engines such as
Google. Nevertheless, it would be accurate to say that Web content has grown exponentially
since 1993.
The WWW is an application of Internet
 The World-Wide Web (WWW) is a service, an application of Internet.
 It is based on the Internet infrastructure.
 So the WWW is newer than the Internet.
2.3. Internet Protocols
The Internet protocols are the world’s most popular open-system (nonproprietary) protocol suite
because they can be used to communicate across any set of interconnected networks and are
equally well suited for LAN and WAN communications. The Internet protocols consist of a suite
of communication protocols, of which the two best known are the Transmission Control Protocol
(TCP) and the Internet Protocol (IP). The Internet protocol suite not only includes lower-layer
protocols (such as TCP and IP), but it also specifies common applications such as electronic
mail, terminal emulation, and file transfer.
Internet protocols were first developed in the mid-1970s, when the Defense Advanced Research
Projects Agency (DARPA) became interested in establishing a packet-switched network that
would facilitate communication between dissimilar computer systems at research institutions.
With the goal of heterogeneous connectivity in mind, DARPA funded research by Stanford
University and Bolt, Beranek, and Newman (BBN). The result of this development effort was the
Internet protocol suite, completed in the late 1970s.
TCP/IP later was included with Berkeley Software Distribution (BSD) UNIX and has since
become the foundation on which the Internet and the World Wide Web (WWW) are based.
Documentation of the Internet protocols (including new or revised protocols) and policies are
specified in technical reports called Request For Comments (RFCs), which are published and
then reviewed and analyzed by the Internet community.

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Purpose of the Internet Protocol
 The IP protocol defines the basic unit of data transfer (IP datagram)
 IP software performs the routing function
 IP includes a set of rules that embody the idea of unreliable packet delivery:
 How hosts and routers should process packets
 How and when error messages should be generated
 The conditions under which packets can be discarded.

A TCP/IP internet provides three sets of services as shown in the following figure

Figure 2.1.three sets of services of internet

2.4. Web Page Request and Delivery Protocols

A web page (or webpage) is a web document that is suitable for the World Wide Web and the
web browser.A web browser displays a web page on a monitor or mobile device. The web page
is what displays, but the term also refers to a computer file, usually written in HTML or
comparable markup language, whose main distinction is to provide hypertext that will navigate
to other web pages via links.
Web page - A Web page is a simple text file that contains not only text, but also a set of HTML
tags that describe how the text should be formatted when a browser displays it on the screen. The
tags are simple instructions that tell the Web browser how the page should look when it is
displayed. The tags tell the browser to do things like change the font size or color, or arrange
things in columns. The Web browser interprets these tags to decide how to format the text onto
the screen.

Web browser - A Web browser, like Netscape Navigator or Microsoft Internet Explorer, is a
computer program (also known as a software application, or simply an application) that does two

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things: A Web browser knows how to go to a Web server on the Internet and request a page, so
that the browser can pull the page through the network and into your machine. A Web browser
knows how to interpret the set of HTML tags within the page in order to display the page on
your screen as the page's creator intended it to be viewed.
HTTP is a simple request delivery system. The standard procedure to get a page in a Web
browser starts with a request from the browser to the Web server for that page. The server
delivers that page in the response and the transaction ends. Many Web pages contain references
to other files. For example, if there is a picture in the page, that image is not embedded in the
HTML creating the page. Instead, the HTML of the Web page contains a reference to another
file that contains the picture. On encountering the reference, the browser has to send another
request to the server for that new file. Each request returns one file. The process of interpreting
an HTML document into a viewable page may require many requests to the server to retrieve all
the files that make up that page.

2.5. Electronic Mail Protocol

The birth of electronic mail (email) occurred in the early 1960s. The mailbox was a file in a
user's home directory that was readable only by that user. Primitive mail applications appended
new text messages to the bottom of the file, making the user had to wade through the constantly
growing file to find any particular message. This system was only capable of sending messages
to users on the same system.

The first network transfer of an electronic mail message file took place in 1971 when a computer
engineer named Ray Tomlinson sent a test message between two machines via ARPANET —
the precursor to the Internet.

Email protocols are the languages and rules that email servers and clients use to communicate
with each other and manage incoming and outgoing mail. Electronicmail isthe transmission of
messages over communications networks. The messages can be notes entered from the keyboard
or electronic files stored on disk. Companies that are fully computerized make extensive use of
e-mail because it is fast, flexible, and reliable. These protocols are strictly defined and are in use
in a variety of different email clients. In addition, each email protocol has a unique way of
managing email that is sent and received from an email account.

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Most e-mail systems include a rudimentary text editor for composing messages, but many allow
you to edit your messages using any editor you want. An email message is created using a mail
client program. This program then sends the message to a server. The server then forwards the
message to the recipient's email server, where the message is then supplied to the recipient's
email client. To enable this process, a variety of standard network protocols allow different
machines, often running different operating systems and using different email programs, to send
and receive email.

The following protocols discussed are the most commonly used in the transfer of email.

A. Mail Transport Protocols

Mail delivery from a client application to the server, and from an originating server to the
destination server, is handled by the Simple Mail Transfer Protocol (SMTP).

i. Simple Mail Transfer Protocol (SMTP)

The primary purpose of SMTP is to transfer email between mail servers. However, it is critical
for email clients as well. To send email, the client sends the message to an outgoing mail server,
which in turn contacts the destination mail server for delivery. For this reason, it is necessary to
specify an SMTP server when configuring an email client.

Under Red Hat Enterprise Linux, a user can configure an SMTP server on the local machine to
handle mail delivery. However, it is also possible to configure remote SMTP servers for
outgoing mail.

One important point to make about the SMTP protocol is that it does not require authentication.
This allows anyone on the Internet to send email to anyone else or even to large groups of
people. It is this characteristic of SMTP that makes junk email or spam possible. Modern SMTP
servers attempt to minimize this behavior by allowing only known hosts access to the SMTP
server. Those servers that do not impose such restrictions are called open relay servers.

B. Mail Access Protocols

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There are two primary protocols used by email client applications to retrieve email from mail
servers: the Post Office Protocol (POP) and the Internet Message Access Protocol (IMAP).

Unlike SMTP, both of these protocols require connecting clients to authenticate using a
username and password. By default, passwords for both protocols are passed over the network
unencrypted.

i. Post Office Protocol (POP)

The default POP server under Red Hat Enterprise Linux is /usr/sbin/ipop3d and is provided by the
IMAP package. When using a POP server, email messages are downloaded by email client
applications. By default, most POP email clients are automatically configured to delete the
message on the email server after it has been successfully transferred, however this setting
usually can be changed.

POP is fully compatible with important Internet messaging standards, such as Multipurpose
Internet Mail Extensions (MIME), which allow for email attachments.

POP works best for users who have one system on which to read email. It also works well for
users who do not have a persistent connection to the Internet or the network containing the mail
server. Unfortunately for those with slow network connections, POP requires client programs
upon authentication to download the entire content of each message. This can take a long time if
any messages have large attachments.

The most current version of the standard POP protocol is POP3. There are, however a variety of
lesser-used POP protocol variants:

 APOP— POP3 with MDS authentication. An encoded hash of the user's password is sent
from the email client to the server rather than sending an unencrypted password.
 KPOP— POP3 with Kerberos authentication.
 RPOP— POP3 with RPOP authentication. This uses a per-user ID, similar to a password,
to authenticate POP requests. However, this ID is not encrypted, so RPOP is no more
secure than standard POP.

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For added security, it is possible to use Secure Socket Layer (SSL) encryption for client
authentication and data transfer sessions. This can be enabled by using the ipop3s service or by
using the /users bin/stunnel program.

Advantages POP3
 simple protocol
 Easier to implement
 Copies all messages when connection is made.
 When not connected, still access and read downloaded mail.
Disadvantages POP3
 If mail in different format, hassle to transfer mail.
 synchronize their local inbox/server

ii. Interactive Mail Access Protocol (IMAP)

The default IMAP server under Red Hat Enterprise Linux is /usr/sbin/imapd and is provided by the
IMAP package. When using an IMAP mail server, email messages remain on the server where
users can read or delete them. IMAP also allows client applications to create, rename, or delete
mail directories on the server to organize and store email.

IMAP is particularly useful for those who access their email using multiple machines. The
protocol is also convenient for users connecting to the mail server via a slow connection, because
only the email header information is downloaded for messages until opened, saving bandwidth.
The user also has the ability to delete messages without viewing or downloading them.

For convenience, IMAP client applications are capable of caching copies of messages locally, so
the user can browse previously read messages when not directly connected to the IMAP server.
IMAP, like POP, is fully compatible with important Internet messaging standards, such as
MIME, which allow for email attachments.

Advantages IMAP
- can store message
- Can access/manage multiple mail boxes.
- New/old mail can be accessed from any pc.

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 - Client independent.
- (switch mail to client PC without affecting user mail
Disadvantages IMAP
- fewer client than POP3
- slower than POP3
- less IMAP Software than POP3
- require more effect
IMAP vs. POP3
IMAP POP3
 Access from any  Used by one client/computer
computer/anywhere.  Organizing mail into client-side
 Store mail on server folder
 Folder can be server and clients.  Send messages one way.
 Send message back and forth  Store mail on client computer

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2.6. Markup Languages and the Web
2.6.1. Markup Languages

What is a Markup Language?

In 1986 the Standard Generalized Markup Language (SGML) became an international standard
for defining descriptions of the structure and content of different types of electronic documents.
SGML, the "mother tongue" of HTML and XML, is used for describing thousands of different
document types in many fields of human activity, from transcription of ancient Sumerian tablets
to the technical documentation for steel bombers, and from patient's clinical records to musical
notations.
Markup languages are designed for the processing, definition and presentation of text.
Thelanguage specifies code for formatting, both the layout and style, within a text file. The code
used to specify the formatting is called tags. A markup language is a computer language that uses
tags to define elements within a document. Most markup languages are human readable because
the annotations are written in a way to distinguish them from the text.

There are many different markup languages. This site focuses on HTML and XML, but there are
lots of other markup languages. And there are three that you should be aware of if you are doing
web design or development: HTML, XML, and XHTML.

2.6.2. Hyper Text Markup Language (HTML)

Hyper Text Markup Language is a languagefor specifying how text and graphics appear on a
web page. When you visit a web site (e.g., www.google.com) your web browser retrieves the
HTML web page and renders it
The HTML page is actually stored on the computer that is hosting the web site and the page is
sent to your browser.
Web pages are accessible through the Internet because Web browser software on your computer
can request Web pages stored on an Internet host server using the Hypertext Transfer Protocol
(HTTP). HTTP is the communications standard used to transfer pages on the Web. For example,
when you type a Web address in your browser such as www.sec.gov, your browser sends an
HTTP request to the sec.gov server requesting the home page of sec.gov.

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HTTP is the first set of letters at the start of every Web address, followed by the domain name,
which specifies the organization’s server computer that is storing the document. Most companies
have a domain name that is the same as or closely related to their official corporate name. The
directory path and document name are two more pieces of information within the Web address
that help the browser track down the requested page. Together, the address is called a Uniform
Resource Locator (URL). When typed into a browser, a URL tells the browser software exactly
where to look for the information. http names the protocol used to display Web pages,
www.megacorp.com is the domain name, content/features is the directory path that identifies
where on the domain Web server the page is stored, and 082602.html is a document name and
the format of the document (it is an HTML page).
2.6.3. Extensible Markup Language (XML)
Extensible Markup Language is not a Web page format description languagelike HTML. Instead,
XML describes the contents of Web pages (including business documents designed for use on
the Web) by applying identifying tags or contextual the data in Web documents. For example, a
travel agency Web page with airline names and flight times would use hidden XML tags like
“airline name” and “flight time” to categorize each of the airline flight times on that page. Or
product inventory data available at a Web site could be labeled with tags like “brand,” “price,”
and “size.” By classifying data in this way, XML makes Web site information much more
searchable, easier to sort, and easier to analyze.
HTML was designed as a markup language with simple structures, strong emphasis on
formatting and weak for encoding content. It was not designed to encode structure and semantics
needed for complex applications. Because of the lack of SGML support in mainstream Web
browsers, most applications that deliver SGML information over the Web convert the SGML to
HTML. This down-translation removes much of the intelligence of the original SGML
information. That lost intelligence virtually eliminates the flexibility of information and poses a
significant barrier upon reuse, interchange and automation.
For this reason, XML (Extensible Markup Language) was developed by the XML working group
(known as the SGML Editorial Review Board) formed under the auspices of the W3C in 1996
(W3C is the World Wide Web Consortium. The W3C is dedicated (in part) to encouraging the
development of open Web standards, such as the HTML and XML document markup languages,
to promote interoperability and assist the Web in achieving its potential.) XML is a highly

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functional subset of SGML. The purpose of XML is to specify an SGML subset that works very
well for delivering SGML information over the Web. When the mainstream Web browsers
support XML, it is believed that it’s going to be very easy to publish SGML information on the
Web. It is actually misnamed because XML is not a single Markup Language. It is a meta
language that allows users to design their own markup language.

XML is a language for documents identifying structured data in a quite simple way. Structured
data includes both content (e.g., words, pictures) and some action indication (markup; tags). For
instance, content in a section heading has a different meaning from content in a footnote, which
means something different than content in a figure caption or content in a database table. XML
documents are text based. Therefore, after creating your document, you can share it with
everybody regardless of the computer or operating system s/he uses.
How does XML differ from SGML?
SGML has been the standard, vendor-independent way to maintain repositories of structured
documentation for more than a decade. It is a complex meta-language (a language designed for
talking about other languages) used to exchange documents.
However, it is not well suited to serving documents over the web (for a number of technical
reasons). Because XML comes from SGML, any fully conformant SGML system reads XML
documents. However, using and understanding XML documents does not require a system that is
capable of understanding the full generality of SGML. XML has 10% of the complexity and 90%
of the power of SGML.
How does XML differ from HTML?
XML documents use the same syntax as HTML pages (e.g., tags, attributes). Although XML and
HTML are similar in lineage and construction, they are two very different markup languages.
Importantly, XML can solve problems that HTML has.
HTML Limitations:
 HTML doesn't include the mechanisms for maintaining fine control. A web designer can't
specify the display size of a document or control the size of a browser window. Although
HTML 4.0 includes <font> tags to help a web designer manipulate font style, size, and
color, users can override these settings with their own.

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  HTML consists of a closed and predefined tag set. That is, both the tag semantics and the
tag set are fixed. For example, <h1> is always a first level heading and the tag <author>
is meaningless.
 HTML cannot display data in multiple formats. Therefore, a web designer should try
every available browser (e.g., Netscape, Internet Explorer, Mosaic, Hot Java, Mozilla and
Opera) and on every platform (e.g. web TV, PDA (personal data assistant like Palm
Pilot), PC, Mac, etc). It is impossible to know exactly which browser and platform are
being used to view web pages.
What is XML?

• XML stands for ExtensibleMarkup Language;

• XML is a markup language;
• XML was designed to describe data;
• XML tags are not predefined. You must define your own tags;
• XML uses a Document Type Definition (DTD) or an XML Schema to define its syntax; and
• XML with a DTD or XML Schema is designed to be self-descriptive.
Benefits of XML
Using XML to exchange information offers many benefits, including the following:
 Its robust, logically-verifiable format is based on international standards;
 The hierarchical structure is suitable for most (but not all) types of documents;
 It is manifested as plain text files, unencumbered by licenses or restrictions;
 Uses human, not computer, language. XML is readable (and understandable, even by
novices) and no more difficult to code than HTML;
 Completely compatible with Java and 100% portable. Any application that can process
XML (on any platform) can use your information;
 Extendable. Create your own tags (or use tags created by others) that use the native
language of your domain, have the attributes you need, and make sense to you and your
users.

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2.6.4. HTML and XML Editors
A. HTML Editors
The HTML Editor is integrated with all tools in the learning environment where HTML content
is created. This includes editing discussions topics, creating custom instructions for drop box
folders and creating content topics.
The HTML Editor features two tabs:
Basic; the basic tab displays the most basic controls for common word processing tasks,
including controls to insert images, tables and quick links.
Advanced; the advanced tab displays all available controls including controls to insert course
objects such as Flash animation files and videos.The purpose of the Html Editor is to provide a
control that allows for Html editing satisfying the requirements of input for rich text layouts and
simple portal type information. The control should emulate the operations that are available
within a Rich Text control, but have information persisted and restored from an Html BODY
element.Examples of the former are case where the Rich Text control would normally be
utilized; documentation, complex descriptions where text formatting is required,
correspondences, bulletins, etc. Examples of the latter case are such items as dashboards; news
clips, announcements, company references, etc. These are defined by cases where complex
layouts are required that may include images and links.
B. XML Editors

An XML editor is a markup language editor with added functionality to facilitate the editing of
XML. This can be done using a plain text editor, with all the code visible, but XML editors have
added facilities like tag completion and menus and buttons for tasks that are common in XML
editing, based on data supplied with document type definition (DTD) or the XML tree.

There are also graphical XNL editors that hide the code in the background and present the
content to the user in a more user-friendly format, approximating the rendered version or editing
forms. This is helpful for situations where people who are not fluent in XML code need to enter
information in XML based documents such as time sheets and expenditure reports. And even if
the user is familiar with XML, use of such editors, which take care of syntax details, is often
faster and more convenient.

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2.7. Electronic Data Interchange
The broadest definition of electronic data interchange (EDI) is the exchange of information between two
difference computer systems. During the 1980s, the introduction of information technology (IT) into
companies has enabled significant change within business (e.g., change in working practices, change in
organizational structure, change to business strategies), thus bringing improved efficiency, management
control, and customer service and with them, a bottom line of greatest importance, perhaps, in the 21st
century.

Technologies such the PC, local area networks (LANs), and more widely based corporate networks have
been adopted, and within an organization, this has enabled the application (e.g., a material requirements
planning system) to be brought closer to the end user and has facilitated the sharing of information among
applications across common databases. This implementation of technology has brought with it real
business benefits to the organization.
There is, however, a further dimension to the implementation of IT, and this is the electronic exchange of
information between the applications of different organizations: electronic data interchange. The business
requirement for EDI is clear: Whatever the business, organizations must be able to trade in order to
survive. To achieve this, documents such as orders, delivery instructions, and invoices must be
interchanged and processed. Furthermore, because market conditions can change rapidly, these
communications must be fast and accurate, with administrative processes minimized to ensure that, at all
times, market opportunities are exploited and profits are maximized. In other words, the organization
needs to communicate effectively with all of its trading partners, whatever their function in the supply
chain, whatever their size, and wherever they are. EDI services allow the exchange of trading data, such
as orders and invoices, directly from one computer system to another, regardless of its make, size, or
location and without the need for manual intervention. As such, the consequential benefits to be obtained
from the use of EDI are very significant.
In the ordering process alone, the speed of moving information means that the supply chain can work
together to ensure the right stock is in the right place, to ensure that the order is delivered on time, to
ensure that the market opportunity has been captured, and to minimize working capital in the process. In
short, EDI gives competitive advantage in competitive markets.
The winners of the 21st century will be those organizations that not only implement but also
exploit IT and particularly EDI more creatively, more efficiently, and more successfully than
their competitors. They will be companies that form much closer working relationships with their
trading partners, customers and suppliers, and EDI will be a key enabler in this process.
The Fundamentals of EDI
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There are many different ways in which two businesses can communicate with one another: face to face
meetings; paper transactions; telephone conversations; the telex or the fax; and, more recently, electronic
mail. In each of these cases, an “operator” is required within each organization for the communication to
be completed — in essence, they are all forms of person-to-person communications.
In addition to personal communications, IT has allowed organizations to offer trading partners access to
their computer systems (including airline reservation systems and insurance quotation systems) by a
variety of communication methods. Whilst one “operator” becomes the computer system, it is still,in
essence, interrogated by a person at the other end; hence, we have person-tocomputer communications.
EDI takes this one step further: a dialogue between two computer applications without the need for any
personal intervention. EDI transactions are designed to be generated by a computer application, not a
person. Likewise, an EDI transaction coming into a company is not designed to be printed and read but
rather to be entered directly into a computer application.

Benefits of EDI

Most firms with EDI systems fall somewhere between partially integrated EDI systems and fully
integrated EDI systems. Firms engaged in the process of just-in-time (JIT) raw materials inventory
systems typically use fully integrated EDI systems to ensure that the supplies necessary for the production
process arrive too early, the production plants have costs associated with maintaining the inventory; if the
goods arrive too late, the production stops which costs the purchasing organization money.

The most widely recognized benefits of EDI are:

 Reduced lead time from placing the order to receiving the goods for manufacturing and retail
firms and reduced lead time in processing claims for insurance and medical professions and other
service organizations.

 reduced errors in producing manual documents and data entry,

 reduced processing costs,

 Increased inventory supply and claim processing information for customers.

 Cost and time savings, Speed, Accuracy, Security, System Integration, Just-In-Time Support.

 Reduced paper-based systems, i.e. record maintenance, space, paper, postage costs

 Improved problem resolution and customer service and

 Expanded customer/supplier base or suppliers with no EDI program lose business

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