E-business Applications

Submitted by: Tanveer Khan M.Tech(CSE)

E-commerce & E-Business

E-commerce describes the process of buying, selling, transferring, or exchanging products, services, and/or information via computer networks, including the Internet. E-business refers to a broader definition of ecommerce, not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, conducting e-learning, and processing electronic transactions.

The definition for e-business

e-business is based on the electronic processing and transmission of data. It encompasses many diverse activities including electronic trading of goods and services, on-line delivery of digital content, electronic fund transfer, electronic share trading, public procurement. (EU(97)/157)

Origins of e-business applications

E-business applications existed long before Internet
EDI (Electronic Data Interchange) EFT (Electronic Funds Transfer)

Internet offered the general public the opportunity to conduct businesses online

Electronic Data Interchange (EDI)

Electronic exchange of
Business documents Business data

In a standard format (ANSI X12,EDIFACT) Established between 1968 and 1975 in the transportation industries (U.S.) Application-to-application communication without human intervention

Electronic Funds Transfer (EFT)

The banking equivalent of EDI Denotes the transfer of :
Electronic checks Customer accounts Payment informations

in automated way

Taxonomy of e-business applications

Three main categories:
Business to consumer (B2C) Business to business (B2B) Consumer to consumer (C2C)

Other categories:
Business to government (B2G) Mobile Commerce

B2C applications
Offer directly to the customer an interface of activity
Typical examples:
Online book store (e.g. amazon.com) Online car purchasing (e.g. automall.com) Booking and purchase of airline tickets (e.g. ryanair.com)

Correspond to retail sale Growth of B2C applications thanks to Internet A new kind of B2C applications are the Cybermalls

B2C applications: advantages and disadvantages

Advantages:
Allow company to extend existing services to customers Allow company to increase its customers Offer a wider choice and allow cheaper prices May give to the company a worldwide visibility Online shops are accessible 24h a day

Disadvantages:
Low order conversion rates High risk (see Cyberphobia)

B2B applications
Realize transactions needed to perform financial or commercial activities by companies over the Internet Some typical applications:
E-procurement E-Marketplace

The turnover is much greater than that dealed with B2C applications

B2B applications: advantages and disadvantages

Advantages:
Help to automate communications between companies making them easier and quicker Allow to cut prices drastically Help in reducing mistakes Disadvantages: Often need legacy integration

C2C applications
Concern the consumers who run negotations with other consumers sometimes utilizing as intermediary a company
Examples:
Ebay Autotrader.com

C2C applications: advantages and disadvantages

Advantages
Allow consumers to interact directly among them Give to the consumers a new way of purchasing and selling services and goods

Disadvantages
Little earning capacity

B2G applications
Correspond to all kind of transactions between company and public administrator Utilized mostly in the USA

Mobile commerce applications

Concern doing businesses by means of mobile wireless devices Can be both B2B and B2C Have a growing importance in the future of ecommerce applications Will introduce completely new forms of electronic commerce
E.g. E-tickets

The development of such applications faces some of the greatest challenges in the security area to secure the trust of consumers

Plan of the talk

Introduction to e-commerce and ecommerce applications Issues in developing e-commerce applications Architecture of e-commerce applications Bookstore example Perspectives for e-commerce References

Issues in developing e-commerce applications (1/2)

Many of the following issues:
Security Flexibility Scalability Fault tolerance Integration Interfaces (graphical and not) Time-to-market

are common to many applications, but they are all critical in the case of e-commerce because of its nature

Issues in developing e-commerce applications (2/2)

A state-of-the-art application always fail if people do not utilize it
A constant attention must be payed to the users over the whole development process

A close integration with every business aspect is needed:

For an online buyer security and easy access to the informations are the primal needs A manager will need a flexible application to adapt the business to the new trends in a faster way

Security Issues
Security is a crucial feature
Most transactions take place in a fully automated way Restricted data are transmitted through a public network

Users must be sure that their money will not be lost or stolen

Flexibility Issues
E-commerce systems are subject to frequent structural changes because of mutations of:
Products and services provided by the firm Commercial partnerships

Scalability
Capability to support a certain number of users (thousands, even millions) without compromising performances It is important because a slow application often means to lose customers (especially in B2C) since they have very small patience

Fault tolerance
A less fault-tolerant application will be less available to the user Every minute that a site is not available costs 1400$ to the company (survey on 400 major companies by Oracle) It is easy to lose customers forever It is necessary to redirect the users without they perceive it

Integration
Always needed since no application offering every commercial functionality can be realized Critical because the commercial funcionalities are often realized by many different legacy and third-party applications
Examples:
ERP systems Legacy systems

User Interfaces
Must be intuitive,easily comprehensible and of simple utilization In the case of B2C must support profiling in order to anticipate the customer requests They also need to be customizable

Multi-channel interfaces
Application interfaces must support several kinds of connections:
Web browsers Web TV Cellular phones (via WAP) PDA

Time-to-market
Has greater importance than elsewhere Emphasis on COTS and reuse

Plan of the talk

Introduction to e-commerce and ecommerce applications Issues in developing e-commerce applications Architecture of e-commerce applications Bookstore example Perspectives for e-commerce References

Two-tier Architecture (client server)

Data reside on a server Business logic and user interfaces reside on clients Drawbacks :
Clients sustain the main load and consequently result to be monolithic and heavyweight Excessive overhead Simple but unsuitable for e-commerce applications

Three-tier architecture
Separates the business logic of the application from user interfaces and from data access Middle tier can be furtherly divided In this case we call it multi-tier architecture:
Easier to modify one component Lower cost to deploy and maintain

Three-tier architecture

Application server
Software that runs on the middle tier of a three-tier environment In multi-tier environments it is often a distributed and complex software Commercial implementations exist:
Microsoft Commerce Server 2000 Sun iPlanet IBM WebSphere Application Server

Application Server-based e-commerce platform architecture

E-commerce platform
ERP
Presentation Layer Business Logic Layer Data & Legacy Access Layer
Resource Load Pooling balancing

Legacy systems

Transactions

Security

Session

Horizontal Services

Database

Application Server
Client tier Server tier Data tier

Example: iPlanet architecture

Plan of the talk

Introduction to e-commerce and ecommerce applications Issues in developing e-commerce applications Architecture of e-commerce applications Bookstore example Perspectives for e-commerce References

Future Perspectives (1/2)

Electronic commerce is going to reduce a lot of overhead in the economy It will allow a purchase order to go from being about a $75 cost to about $10 if you had to pick who's the big winner in all of this, you'd definitely have to pick consumers It lets you go out to the Internet and look at products and services of every kind, that never would have been available through traditional distribution channels (Bill Gates at the White House Conference on the New Economy, April 2000)

Future Perspectives (2/2)

In spite of Bills words, people still lack trust in e-commerce However, in Europe there is a strong tendency towards the acceptance of Mobile Commerce EITO (European Information Technology Observatory) 2002 highlights the growing importance of Mobile Commerce (see next page)

Order conversion rates

Defined as:
# of orders / # of contacts By month or year, four-month periods, etc.

Measure the capability of a certain B2C application to convert an user into a buyer A survey carried out in August 2000 showed that order conversion rates in USA were of 1.9% (Boston Consulting Group and Shop.org)

E-procurement applications (1/3)

Automate enterprise purchasing processes, i.e. perform all of the activities related to generating an order on the buyers side Purchased goods can be :
Direct goods (critical items in the supply chain) Indirect goods (MRO Maintenance Repair and Operations - such as office items)

E-procurement applications (2/3)

Automating procurement of indirect goods can dramatically reduce costs since:
Lessens maverick buying Reduces supplier response time

E-procurement applications(3/3)
3. Order approvation compliant to company standards and procedures 2. Purchase request is performed by employees via a Web interface 4. Purchase order is electronically placed

Indirect goods e-procurement

1. Product selection from available catalogues

5. Order is fulfilled by the supplier

6. Product delivery 8. Payment request electronically forwarded

7. Product receipt

E-marketplace
An environment that brings buyers and sellers together in a virtual space for ecommerce, enabling them to reach new customers and reduce transaction costs E-marketplaces are becoming more fashionable

Cybermalls
Include more virtual shops Appear as web portals with links to single e-shops grouped by different product categories (e.g. music or books) Advantages for smaller businesses:
Reduced initial investment Easily traceability through the malls brand

Presentation Layer
Its purpose is to provide a user interface to the end user of the application Controls the look-and-feel of the application and responds to user events Serves actually as the front-end of the application

Business Logic Layer

The heart of the application itself Contains the business rules and /or processes Its components link between presentation and data/legacy layers

Data & Legacy access Layer

Its purpose is to give to the business logic components access to backend data sources such as:
Databases ERP systems Other custom systems

Horizontal services
Services provided by the application server by means of an underlying technology (CORBA, EJB, COM,etc.) Typical services:
Transactions Security Session Management Resource pooling Load balancing and fail over

Session Management
Mantains the correlation among requests generated by the same user

Resource Pooling
Caching the instances of used resources (e.g. database connections) improves performances

Load Balancing and Fail Over

Make possible to distribute incoming requests Handle clients reconnection in the case of system crash

Cyberphobia and the .com crash

Cyberphobia is the markets irrational fear of the Internet due to the several bankruptcies occured in the past years B2C represent 75% of bankruptcies
Internet shutdowns

2000 Jan-Apr 6

2001 220

2002 66

Source:Webmergers.com

e-Business Models
Storefront model Auction model Portal Model Dynamic Pricing Models B2B Exchanges B2B Service Providers e-Learning
All copyrights reserved by C.C. Cheung 2003. 51

CSC1720 Introduction to Internet

Storefront Model
The storefront model combines transaction processing, security, online payment which allows merchants to sell their products to the customers on the Web. Many famous storefront model companies are Business-to-Consumer (B2C) companies.
www.more.com
Health and beauty products

www.ticketmaster.com
CSC1720 Introduction to Internet

Sell tickets
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Storefront Model
Allow companies to conduct business 24-by-7 (all-day, everyday). One of the most commonly used model is shopping cart
An order-processing technology that allows user to accumulate the shopping list and continue shopping. Supported by product catalog, merchant server and database technology. www.amazon.com www.icare.com.hk
CSC1720 Introduction to Internet All copyrights reserved by C.C. Cheung 2003. 53

Storefront Model
Another model is online shopping mall which provides a wide selection of products and services. Customers can purchase items from many stores in a single transaction.
Offer speed and add convenience www.mall.com www.shopnow.com www.e-buy.com.hk
CSC1720 Introduction to Internet All copyrights reserved by C.C. Cheung 2003. 54

Auction Model
Internet User can login to the online auction sites, either bidder or seller. Sellers post their items and wait for the buyers to bid. Auction sites get commission on every successful auction.
E.g. most profitable: www.ebay.com HK: auction.timway.com http://hk.auctions.yahoo.com/

Reverse Auction model

CSC1720 Allow buyer Introduction to Internet All copyrights reserved by C.C. to set the price, www.epurchasingagent.com Cheung 2003. 55

Portal Model
Allow visitors to find everything within the website.
Horizontal Portal
Wide-ranged of topics E.g. www.google.com, www.yahoo.com

Vertical Portal
Offer specific information on a single area of interest. E.g. www.webmd.com (medical information)
CSC1720 Introduction to Internet All copyrights reserved by C.C. Cheung 2003. 56

Dynamic Pricing Model

Name-your-price Business Model
Customers choose their price for the products or services (www.priceline.com).

Comparison Pricing Model

Customers poll some merchants and find the lowest prices (www.bottomdollar.com)

Demand-Sensitive Pricing Model

Enables customers to get better services and prices. (www.mobshop.com)

Bartering Model
CSC1720 Introduction to Internet All copyrights reserved by C.C. Exchange items (www.ubarter.com) Cheung 2003. 57

B2B Exchanges
Define as buying, selling, partnering, bartering or trading conducted between two or more business (B2B). Goldman Sachs has estimated that B2B will generate $1.5 trillion in revenues by 2004. Allow Business to buy, sell, auction, barter and distribute products and services. Examples:
www.ework.com (Exchange employee) www.itoi.com (Industry to Industry) www.biz2biz.com (Business to Business) www.icgcommerce.com, www.tradeaccess.com
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CSC1720 Introduction to Internet

B2B Service Providers

B2B service providers make the B2B transactions easier. These e-Businesses help other businesses improve their policies, procedures, services and general operations. Solutions include supply chain management, logistics, procurement. www.ariba.com www.freemarkets.com www.liveperson.com
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CSC1720 Introduction to Internet

e-Learning
e-Learning is growing rapidly as the number of Internet users increases. Universities and other training companies offer HQ distance education over the Web. www.click2learn.com www.saba.com www.online.uillinois.edu www.tools.cityu.edu.hk www.polyu.edu.hk/elearning E-books www.xlibris.com 60

The End