Upload
riley-warren
View
216
Download
0
Tags:
Embed Size (px)
Citation preview
1
CS5038 The Electronic Society1. Overview of Electronic Commerce
• Background• Definitions • Perspectives • Variations
• Business Models • Pressures on businesses• Responses of businesses • The Networked Business
• Benefits • Problems
Also look at 2. Retailing (next) and then 3. Customers
2
General Business Terminology
• Transactions : Exchange of goods, services, information, money.
• Supply Chain: entire system (directly) concerned with getting products and services from a supplier to a customer.
• Business process: tasks undertaken by business in producing goods and services
• Broker: middleman who helps facilitate transaction
• Tendering: process of bidding to provide a good or service.
3
Firms and Profits
• Most firms basically try to maximize profits (in some overall sense)
• Revenue = inflow of money or other capital
• Cost = outflow of money or capital
• Profit = revenue – cost
• Two basic ways to increase profits.
• Various strategies to achieve this.
4
Specialization
``One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head: to make the head requires two or three distinct operations: to put it on is a particular business, to whiten the pins is another ... and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which in some manufactories are all performed by distinct hands, though in others the same man will sometime perform two or three of them.”
Adam Smith An Inquiry into the Nature and Causes of the Wealth of Nations, 1776.
5
Transaction Costs
• Firms have internal and external trans. costs
•This picture is taken from http://en.wikipedia.org/wiki/File:Market-Hierarchy-Model.png , Creative Commons License, Source/Author: Achim Grochowski.
6
The Value of Information
• Information can have a value• Know-how, intellectual property, …• Customer data• …
• Broker often makes money by using information that it would be difficult or expensive for others to get.
• Asymmetric information: Sometimes different participants in a market have different amounts of information about each other. • Car dealer vs. customer • Insurance company vs. customer (buyer has more)
7
E-Commerce Definitions
E-commerce : Any kind of transaction done, partly, or completely, over a (computer and telecommunications) network
The term `E-commerce’ also refers to the processes used by participants in such transactions.
8
Intrabusiness (organisational) e-Commerce
Internal to organisation, intranet: e.g.
•Between business units
•From businees to employees
•Between employees
9
Interorganisational Information System (IOS)
Used to share information between organisations. Used for collaborative commerce.
•Often used to improve efficiency of supply-chain
•E.g. when vendor of some product starts to run low in stock IOS can share that information back to the suppplier, who can then ship more stock.
•Electronic Data Interchange (EDI) standards
10
E-commerce Types
Business-to-business (B2B): online transactions (e.g. purchases) with other businesses.
Business-to-consumer (B2C): online transactions between businesses and consumers.
Business-to-employee (B2E): information and services made available to employees online (subset of intrabusiness).
Consumer-to-consumer (C2C): online transactions between consumers
11
E-commerce Types
Consumer-to-Business (C2B): consumers seek sellers or sell services to organisations.
• Price comparison websites
• Sites for freelancers: http://www.elance.com/ , http://www.guru.com/ , http://www.peopleperhour.com/
• Affiliate schemes: say, a link from a consumer’s web-page to an online retailer, and the consumer gets rewarded either per-click or per-sale.
12
E-commerce Types
Peer-to-Peer (P2P) – direct transactions without middlemen. E.g. consumers exchange games, DivX videos, MP3 music
Government-to-Citizens (G2C) – government provides services and information to citizens
Example: http://dvlaregistrations.direct.gov.uk/
13
E-commerce Types
Exchange: a system to host buyers and sellers. Often has: dynamic pricing, matching of services.
• Examples: •http://www.adpdsi.co.uk/uk/
Exchange-to-Exchange (E2E) – system to connect exchanges
If complicated supply chain, probably need to interact, build-systems to deal with multiple exchanges.
14
Electronic Commerce Process Terms
EC defined from these perspectives:Communications
E-delivery: Goods, services, information, paymentsBusiness process
Automate business transactions and workflowService
Cut service costs, improve quality and speedOnline
Buying, selling and other services on internetCollaborations
Inter- and intraorganisationalCommunity
Gather to learn, transact, communicate
15
Variations
Pure vs. Partial EC: based on the degree of digitisation ofProductProcess Delivery agent
Traditional commerce: all dimensions are physical
Pure EC: all dimensions are digital
Partial EC: all other possibilities include a mix of digital and physical dimensions
16
Dimensions of E-Commerce
Prentice Hall, 2002
17
Variations (2)
Internet vs. Non-Internet EC:
VANs – value added network (hosted service that acts as intermediary between business partners)
LANs – local area network
Vending Machine
Click and Mortar
18
Business Models
Name your price – priceline.comFind the best price – hotwire.comDynamic brokering – getthere.comAffiliate marketing – amazon.comElectronic tendering systems – gxs.comOnline auctions – ebay.comCustomization and personalization – dell.comElectronic marketplaces and exchanges – e-steel.comSupply chain improvers Collaborative commerce
Where is the company positioned in the value chain?
A method of doing business by which a company can generate revenue to sustain itself.
19
Rappa’s Business Models
Brokerage – exchange, trading community, aggregatorAdvertising – portals, sponsorship bannersInfomediary
Recommender - users provide recommendations on products, e.g. http://www.epinions.com
Registration - session tracking of users, allows greater targeting of advertising, e.g. http://www.nytimes.com
Merchant - retailManufacturer – eliminate middlemanAffiliate – online referrals for commissionCommunity – voluntary contributors, regular visitorsSubscription – high value content
Many companies changed to subscription models in last two yearsUtility – pay by byte
http://www.digitalenterprise.org/models/models.html
20
Example: ORBIS Corp.
Prentice Hall, 2002
TRANSFORM
21
Major Business Pressures
Market / Economy
Strong competitionGlobal economyRegional trade agreements (NAFTA)Low labor cost in some countriesFrequent changes in marketsIncreased power of consumers
Technology
Rapid technological obsolescenceIncrease innovations and new technologiesInformation overloadRapid decline in technology cost vs. performance ratio
Society / Environment
Changing nature of workforce(De)regulation of servicesShrinking subsidiesEthical and legal issuesSocial responsibility of E-bus.Rapid political changes
22
Organizational ResponsesStrategic systems (e.g. FedEx tracking system) – strategic advantage
Continuous improvement efforts Customer Relationship Management (CRM) – maximum value proposition to customer – online help,
product information, tools Total Quality Management (TQM) - ongoing refinements in response to continuous feedback
Business process reengineering (BPR) - major innovations
Business Alliances Virtual Corporation: legal and taxation status allows multiple businesses to work together under one
umbrella. Often temporary. Keiretsu - Long term alliance of manufacturers, suppliers and finance corporations
Cooperation in E-markets – purchasing consortia
IT SupportVarious possible benefits:
•Reducing cycle time (=business process time) and time to market
•Improved opportunities for collaborative work
•Improvements to supply-chain: speed and efficiency
•Mass customization
23
24
Technology: IntranetIntranet
(Internal) corporate network LAN (Local Area Network)
WAN (Wide …)
Uses Internet technology Open, flexible connectivity
Limited to authorised employees Secure behind firewall
• Much on the following slides on Portals and Intranet Architecture come from a lecture by Paul Chan: http://www.icua.us/student/aec/3aec71.ppt
25
Architecture of an Intranet
26
Technology: ExtranetExtranet:
Links intranets in different locations, from approved partners, vendors, suppliers, etc.
Uses Internet technology
Security required – Virtual Private Network (VPN) Information travels through encrypted tunnels
between Intranets
27
The Networked Business: Internet, Intranet, Extranet
28
Enterprise (Corporate) Portals
Corporate (enterprise) portal—a gateway for entering a corporate Web site, enabling communication, collaboration, and access to company informationProvide single-point access to specific enterprise
information and applications available on: Internet Intranets Extranets
Companies may have separate portals for outsiders and for insiders
29
Corporate Portal as a Gateway to Information
30
Corporate Portal Framework
31
Interoperability & Protocols
• Need technological protocols to facilitate e-commerce. • Currently include:
• TCP/IP: The Internet Protocol Suite. The standard computer networking protocol stack for exchanging packets of data across an unreliable network.
• HTTP: web-browser makes requests, possibly for resources (web-pages etc.), and web-server responds.
• SSL (and TLS): cryptographic protocols for sending encrypted messages over internet.
• HTTPS: a secure version of HTTP. Basically, HTTP combined with SSL.
32
Interoperability & Protocols
• XML: Extensible Markup Language. Standard, machine-readable data format. Basis for other technologies including RSS, SOAP, … and modern versions of Office, OpenOffice, iWork.
• SOAP: Simple Object Access Protocol. Standard for exchanging structured information (e.g. XML) across network.
• JavaScript: a programming language (not Java).
• AJAX: Asynchronous JavaScript and XML. Group of technologies used for interactive web applications. Execution on both the client and server sides. • HTML and CSS for presentation of static components. JavaScript executes on client for
dynamic components and interactivity. HTTP or HTTPS used to send to or request data (possibly XML) from server, or for server to execute some program (possibly JavaScript).
•
33
Benefits of E-Commerce
To Organizations
Expands the marketplace
Decreases the cost (less paper)
Pull-type supply chain management
Customisation = competitive advantage
Less time between outlay of capital and receipt of products and services
Supports BPR efforts
To Society
Work at home less traveling less traffic and pollution
Lower prices benefit less affluent people
Third world and rural areas access products otherwise unavailable
Public services at a reduced cost and improved quality
To Consumers
Open 24 hours a day
More choices
Better prices
Quick delivery
Product information in seconds
Interact with other consumers
Facilitates competition
34
Problems With E-Commerce (A)
Technical Problems Insufficient telecommunication bandwidth Difficult to integrate Internet EC software with some existing
applications and databases Additional cost of infrastructure Software development tools are still evolving Standards (security, reliability, communication) are still evolving Interoperability problems.
Cost Problems Developing EC in house can be expensive and may result in delays.
Difficult to justify - intangible benefits are difficult to quantify.
E.g. customer relationship management (CRM).
Non-technical problems can be more serious…
35
Problems With E-Commerce (B)Other limiting factors
Switch from physical to virtual store may be difficult, expensive Lack of touch and feel online Channel conflict Unresolved legal issues Rapidly evolving and changing EC Lack of support services Insufficiently large number of sellers and buyers Expensive and/or inconvenient accessibility to the Internet.
Security, Privacy and Trust B2C - Hard to convince customers that online transactions are
secure Customers do not trust:
Unknown sellers, Paperless transactions, Electronic money
Legal Issues: TaxIn USA, one driving force behind early e-store success
was lower taxBecause of a tax loophole, sales tax (VAT) was
not charged on e-commerce salesAutomatically gave price advantage to e-
commerce sites!
Legal Issues: Intl E-CommerceIn theory, e-commerce means sites can sell globally
In practice, difficult because of different tax rules, regulations, customs, etcMore common to set up subsidiaries in different
countries, as Amazon has done
Lack of global legal/regulatory framework hinders ecommerce
38
Social Problems With E-CommerceWhat if,
• Information aggregated by companies about consumers is used to the advantage of companies, but not the consumers
• There is not fair competition
• It enables cartels to form
• Prices for consumers go up
• The company claims to be operating in a different jurisdiction, and does not submit to regulation or law
• Avoids tax (even whilst professing not to be `doing evil’)http://en.wikipedia.org/wiki/Double_Irish_Arrangement
• Does not re-invest in country in which revenue is generated
?
39
Summary• Definitions – B2C, B2B, B2E• Perspectives – communications, business process,
services• Variations – Pure v. partial• Business Models and Rappa’s models• Pressures on businesses – market, technology, society• Responses of businesses – BPR, alliances, IT support• The Networked Business - Internet, Intranet, Extranet• Benefits – organisations, consumers, society• Problems – technical and non-technical