12CHAPTER - Pearson Educationwps.prenhall.com/wps/media/objects/260/267260/Turban-Ch12.pdf · Learning objectives 12CHAPTER Content Tracking United Parcel Service Shipments 12.1 The

Learning objectives

1212CH

AP

TE

R

ContentTracking United Parcel Service Shipments12.1 The Development Process12.2 The Major EC Applications and Their

Functionalities12.3 Development Options for EC Applications12.4 Criteria for Selecting a Development

Approach12.5 Third-Party EC Components and Suites12.6 Connecting to Databases and Other

Enterprise Systems12.7 Vendor and Software Selection12.8 Usage Analysis and Site ManagementManagerial IssuesSummaryReal-World Case:

Whirlpool’s Trading Portal

Upon completion of this chapter, you will beable to:◗ Discuss the major steps in developing an EC

application.

◗ Describe the major EC applications and listtheir major functionalities.

◗ List the major EC application developmentoptions along with their benefits andlimitations.

◗ Describe various E application outsourcingoptions.

◗ Discuss the major components of an electroniccatalog and EC application suite.

◗ Describe various methods for connecting anEC application to back-end systems anddatabases.

◗ Describe the criteria used in selecting anoutsourcing vendor and package.

◗ Understand the value and uses of ECapplication log files.

◗ Discuss the importance and difficulties of ECapplication maintenance.

BUILDING E-COMMERCEAPPLICATIONS & INFRASTRUCTURE1

1Contributions to this chapter were made by Mohamed Khalifa ofCity University of Hong Kong and by Joseph Walls of theUniversity of Michigan, Ann Arbor.

The SolutionIn an effort to reduce transaction costs and to effi-ciently service more customers, UPS created a Web site(ups.com) that enabled customers to track their ship-ments online, to determine the cost and transit time fordelivery of a package, to schedule a package for pickup,and to locate the nearest drop-off facility. These onlinefacilities are accessed from the UPS Web site homepage.For example, if a customer wants to track a shipment,they click the “Track” icon at the top of the homepage.This takes the customer to an online form where thecustomer simply enters the tracking number, hits the“Track” button, and receives precise information aboutthe location of the designated shipment.

Although the front end of the UPS Web site issimple enough, the back-end processing used to handlea tracking request is a little more complicated. When a

request first reaches the UPS site, it is handed off toone of a handful of Web servers. The particular serverthat is selected depends on a variety of factors such asthe current load on the various machines. Next, theselected server passes the request to the appropriateapplication server. In this case, the application is atracking. From there, the application server passes therequest to an IBM AS/400 computer, which is attachedto the UPS tracking database. This database is one ofthe largest transaction databases in the world, contain-ing over 20 terabytes of data. The mainframe actuallyperforms the database search for the status informationassociated with the tracking number. Once the informa-tion is found, it is passed back up the line through thevarious servers to the customer’s browser. Exhibit 12.1provides a schematic of the whole operation.

The ResultsToday, the UPS site services over 4 million onlinetracking requests per day. It has kept UPS competitivewith other shipping companies (notably, FedEx), that also offer online tracking services and customerinformation. Recently, the UPS site has begun to offer customers the option of tracking their packagesthrough wireless devices (cell phones, PDAs, and Web-enabled pagers). In these cases, the Web pageshave been modified to support the particular wirelessdevice being used. In the same vein, specialized servers

are used to deliver the pages over the wireless commu-nication networks.

In addition to their own site, UPS offers a set of e-commerce solutions and a technology infrastructure thatenables other companies to incorporate UPS’ online orderentry, shipping, and tracking capabilities (ec.ups.com). Forinstance, Amazon.com utilizes UPS’ online tools to providecustomers with the online means to track packagesshipped by UPS. UPS also offers e-commerce tools andservices for managing an enterprises’ overall supply chain.Source: ups.com, 2001, 2002.

The ProblemUnited Parcel Service (UPS) has been in the package distribution business since 1907. It is the world’s largest packagedistribution company, transporting over 13 billion parcels and documents each year. For some time, UPS has providedthe means for customers to track their shipments to determine the status and whereabouts of a particular package. Inthe past, this was done primarily over the telephone. Customers would call UPS with the tracking number of their ship-ment. An operator would look up the status of the shipment in the UPS database and relay the information to the cus-tomer. Servicing these calls over the phone was an expensive proposition (estimated at $2 per call).

TRACKING UNITED PARCEL SERVICE SHIPMENTS

What We Can Learn . . .There is more to an EC Web site than meets the eye. Forexample, on the surface, the UPS Web site appears to berelatively simple. However, behind the scenes a numberof hardware and software components are supportingthese applications. The same is true of virtually every e-commerce site.

This chapter describes the process for developing EC applications. The discussion covers the general steps in the process and considers a number of different alternatives for implementing e-commerceapplications.

http://www.ups.com

Chapter Twelve: Building E-Commerce Applications & Infrastructure 12-3

12.1 THE DEVELOPMENT PROCESSSeveral options are available for developing an EC site. In some cases, the compo-nents making up a Web site come from a small number of vendors. In otherinstances, they come from several different vendors. Small storefronts with a fewkey components can be developed with HTML, Java, or another programminglanguage. They can also be quickly implemented with commercial packages orleased from an application service provider (ASP), a company that provides busi-ness applications to users for a small monthly fee. Some packages are available for afree trial period ranging from 30 to 90 days. Building medium to large applicationsrequires extensive integration with existing information systems such as corporatedatabases, intranets, enterprise resource planning (ERP), and other applicationprograms. Larger applications can be outsourced or developed in-house. They canalso be implemented with a commercial package or customized by hand.

Although the cost of developing an EC site of any size has dropped consider-ably over the past few years (Carmichael 2001), the cost can still run in the thou-sands of dollars, even for a small site. To ensure at least a modicum of success, asystematic development process is needed to create, implement, and maintain asite. A project team is also needed to manage the development process, as well as

AS/400

16-TerabyteDatabase

New YorkRouter

AtlantaRouter

Internet

DNSRoundRobin

NetscapeEnterprise

Servers(Sun Microsystems)

WebApplication

Servers

EXHIBIT 12.1 Architecture of the UPS Web Site

application serviceprovider (ASP)A company that pro-vides business applica-tions to users for asmall monthly fee.

Source: UPS Communication Group, Atlanta, GA.

12-4 Part 6: Strategy and Implementation

the relationships with outside vendors and business partners. The developmentprocess should include the steps detailed in the following sections.

STEP 1: CREATING AN EC ARCHITECTUREAn EC architecture is a plan for organizing the underlying infrastructure andapplications of a site. The plan includes the business goals and vision for the site;the information and data required to fulfill the goals and vision; the applicationmodules that will deliver and manage the information and data; the specific hard-ware and software on which the application modules will run, as well as the secu-rity, scalability, and reliability required by the applications; and the humanresources and procedures for implementing the architecture.

Various IT tools and methodologies can be used to support the creation of anapplication architecture (e.g., see Kendall and Kendall 1999). As the creation of anarchitecture is an iterative process, collaborative methodologies such as JointApplication Development ( JAD) are especially useful in identifying and modify-ing system requirements.

STEP 2: SELECTING A DEVELOPMENT OPTIONEC applications can either be developed in-house, outsourced to another party, orsome combination of both. If the application is built in-house, it can be builtentirely from scratch or commercial products can be used and modified to meetspecific needs. If the application is outsourced, the application can be run entirelyby an ASP, run on a third-party marketplace (e.g., an auction site, exchange, oronline mall), or run on another company’s Web site. Even if the application is out-sourced, a company will still need to participate in the architectural design. At theend of this step, an application is built (or purchased) and ready to be installed.

STEP 3: INSTALLING, TESTING, AND DEPLOYING ECAPPLICATIONSOnce an option has been selected, the next step involves getting the application upand running on the selected hardware and network environment. As the UPStracking application at the beginning of the chapter demonstrated, one of the stepsin installing an application is connecting it to back-end databases, to other appli-cations, and often to other Web sites. For example, if a prospective customer ordersa product from a site, it would be helpful if the site could determine if the productwas in stock. In order to do this, the ordering system would need to be connectedto the inventory system.

During this step, the modules that have been installed need to be tested. Aseries of tests are required: unit testing (testing the modules one at a time), inte-gration testing (testing the combination of modules acting in concert), usabilitytesting (testing the quality of the user’s experience when interacting with the site),and acceptance testing (determining whether the site meets the original businessobjectives and vision). Once the applications making up an EC site pass all of thetests, they can be deployed to the end users.

EC architectureA plan for organizingthe underlying infra-structure and applica-tions of a site.

unit testingTesting applicationsoftware modules one at a time.

integration testingTesting the combinationof application modulesacting in concert.

usability testingTesting the quality ofthe user’s experiencewhen interacting with aWeb site.

acceptance testingDetermining whether a Web site meets theoriginal businessobjectives and vision.


STEP 4: OPERATION AND MAINTENANCEIt usually takes as much time, effort, and money to operate and maintain a site asit does to build and install it in the first place. To enjoy continued usage, a siteneeds to be continually updated. For example, at a B2C site, new products need tobe added to the catalog, prices need to be changed, and new promotions need to berun. These changes and updates need to undergo the same testing procedures usedduring the installation process. Additionally, usage patterns and performance needto be studied to determine which parts of the underlying applications need to bemodified or eliminated from the site.

◗ List the major steps in developing an EC application.◗ Define the various types of testing used during the EC devel-

opment process.

12.2 THE MAJOR EC APPLICATIONS AND THEIRFUNCTIONALITIES

When the Web was first getting started, there were few guidelines for developingan EC site. Today, there are numerous examples of all types of sites, includingB2C, B2B, exchanges, and the like. Sites of a particular type generally have thesame underlying applications and provide similar sorts of functionality. This sim-plifies the task of creating the underlying application architecture for a particulartype of site. The discussion that follows describes the major characteristics andfunctionalities of some of the better-known EC applications.

B2C STOREFRONTSAn electronic storefront must support the same steps and tasks that a physicalstore must support. In particular, an electronic storefront (a seller’s Web site wherepurchases can be made) needs to offer buyers the ability to:

◗ Discover, search for, evaluate, and compare products for purchase using e-catalogs

◗ Select products to purchase and negotiate or determine their total price◗ Place an order for desired products using a shopping cart◗ Pay for the ordered products, usually through some form of credit◗ Confirm an order, ensuring that the desired product is available◗ Track orders once they are shipped

On the other hand, the merchant needs to:

◗ Provide access to a current catalog of product offerings, allowing prospectivebuyers to analyze and evaluate the offerings

◗ Provide an electronic shopping cart where buyers can assemble their purchases


◗ Verify a customer’s credit and approve the customer’s purchase◗ Process orders (back-end services)◗ Arrange for product delivery◗ Track shipments to ensure that they are delivered◗ Provide the means for buyers and visitors to register at the site, to make com-

ments, or to request additional information◗ Answer customers’ questions or pass queries and requests to a Web-based call

center◗ Analyze purchases in order to customize buyers’ experiences◗ Provide Web-based post-sale support◗ Create the capability for cross-sell and up-sell◗ Provide language translation if needed◗ Measure and analyze the traffic at the site in order to modify and maintain the

various applications

In order to provide these capabilities, an electronic storefront must contain at leastthree interrelated subsystems (DeWire 1998):

1. A merchant system or storefront that provides the merchant’s catalog withproducts, prices, and promotions. A shopping cart is usually included.

2. A transaction system for processing orders, payments, and other aspects of thetransaction.

3. A payment gateway that routes payments through existing financial systemsprimarily for the purpose of credit card authorization and settlement.

SUPPLIER SELL-SIDE B2B SITESA sell-side B2B site is similar to a B2C storefront, enabling one business to pur-chase goods and services from another. However, a B2B site also has additionalfeatures, including:

◗ Personalized catalogs and Web pages for all major buyers◗ A B2B payment gate◗ Electronic contract negotiation features◗ Product configuration by customers (e.g., Cisco or Dell)◗ Affiliate program capabilities◗ Business alerts (e.g., special sales)

E-PROCUREMENTAn e-procurement site is an online intermediary that offers businesses access tohundreds of parts and services provided by suppliers. There are several variationsof e-procurement systems, each with their own specialized capabilities.


Aggregating CatalogsIn large organizations, multiple buyers are involved in making purchases from alarge number of suppliers. One way to reduce costs and other inefficiencies in thepurchase process is to aggregate the items from approved suppliers into a singleonline catalog. Some of the specialized requirements for this type of site include:

◗ Search engine for locating items with particular characteristics◗ Comparison engine for alternative vendors◗ Ordering mechanism◗ Budget and authorization feature◗ Usage comparisons (among various departments)◗ Payment mechanism (e.g., use of a purchasing card)

Reverse AuctionsIn a reverse auction, buyers list the items they wish to purchase and sellers bid toprovide those items at the lowest price. Sites of this sort provide:

◗ Catalog of items to be tendered and their content management◗ Search engine (if there are many items)◗ Personalized pages for potential large bidders◗ Reverse auction mechanisms, sometimes in real time◗ Facility to help prepare, issue, manage, and respond to a buyer’s request for

quotes (RFQs)◗ Ability to bid dynamically◗ Automatic vendor approval and workflow (e.g., SmartMatch’s supplier identi-

fication technology)◗ Electronic collaboration with trading partners◗ Standardization of RFQ writing◗ Site map◗ Mechanism for selecting suppliers◗ Automatic matching of suppliers with RFQs◗ Automatic business process workflow◗ Ability for bidders to use m-commerce for bidding◗ Automated language translation

EXCHANGESAn exchange is an e-marketplace tying many buyers to many suppliers. In additionto combining the functionalities of buy-side, e-procurement, and auction sites,they also have a number of other capabilities:

◗ Collaboration services (including multichannel)◗ Community services◗ Web-automated workflow


◗ Integrated business process solutions◗ Central coordination of global logistics for members, including warehousing

and shipping services◗ Integration services (systems/process integration into e-marketplace, trading

partners, and service providers)◗ Data mining, customized analysis and reporting, real-time transactions, trend

and customer behavior tracking◗ Transaction flow managers◗ Negotiation mechanisms◗ Language translation◗ Comprehensive links to related resources

These lists of major characteristics and functionalities can be used by applica-tion developers as outlines or checklists from which to develop plans for specificEC applications.

◗ List the major subsystems of an electronic storefront.◗ Describe some of the major functions required by an aggregat-

ing catalog.◗ Describe some of the major functions needed to build a

reverse auction.◗ List some of the functional requirements of an online exchange.

12.3 DEVELOPMENT OPTIONS FOR EC APPLICATIONSThere are three basic options for developing an EC Web site: (1) develop the sitein-house either from scratch or with off-the-shelf components, (2) use a packagedapplication designed for a particular type of EC site, or (3) lease the applicationfrom a third party. Each of these approaches has its benefits and limitations.

IN-HOUSE DEVELOPMENT: INSOURCINGAlthough in-house development—insourcing—can be time-consuming andcostly, it may lead to EC applications that better fit an organization’s strategy andvision and differentiate it from the competition. Rarely is a site built from scratch.Instead, the required applications are often constructed from standard components(e.g., Web servers such as Apache or Microsoft’s IIS) using Web scripting lan-guages such as PHP, Microsoft’s Active Server Pages (ASP), JavaServer Pages( JSP), or ColdFusion. These scripting languages make it easier to integrate appli-cation functionality with back-end databases and other back-office systems (e.g.,order entry).

Insourcing is a challenging task that requires specialized IT resources. For thisreason, most organizations usually rely on packaged applications or completelyoutsource the development and maintenance of their EC sites.

insourcingIn-house developmentof applications.


BUY THE APPLICATIONS: TURNKEY APPROACHA number of commercial packages provide the standard features required by ECapplications. A turnkey approach involves buying a commercial package, installingit, and starting it up. Buying a commercial package requires much less time andmoney than in-house development. When selecting a particular package, thepackage should not only satisfy current needs, it must also be flexible enough tohandle future ones. Otherwise the package may quickly become obsolete.Additionally, because one package can rarely meet all of an organization’s require-ments, it is sometimes necessary to acquire multiple packages. In this case, thepackages need to be integrated with each other and with other software and data.

This option has several major advantages:

◗ Many different types of off-the-shelf software are available.◗ It saves time and money (compared to in-house development).◗ It requires fewer personnel.◗ The company knows what it is getting before it invests in the product.◗ The company is not the first and only user.

This option also has some major disadvantages:

◗ Software may not exactly meet the company’s needs.◗ Software may be difficult or impossible to modify or it may require huge

process changes.◗ The company may experience loss of control over improvements and new

versions.◗ Off-the-shelf applications can be difficult to integrate with existing systems.◗ Vendors may drop a product or go out of business.

The buy option is especially attractive if the software vendor allows for modi-fications. However, the option may not be attractive in cases of high obsolescencerates or high software cost. In such cases, one should consider leasing.

LEASINGLeasing an application package can result in substantial cost and time savings. Inthose cases where extensive maintenance is required or where the cost of buying isvery high, leasing is very advantageous, especially for small to medium enterprises(SMEs). Leasing is also advantageous when a company wants to experiment witha package before making a heavy up-front investment, protect its own internal net-works, quickly establish a presence in the market, or rely on experts to establish asite over which they can later assume control.

Leasing can be done in one of two ways. The first way is to lease the appli-cation from an outsourcer and install it on the company’s premises. The ven-dor can help with the installation and frequently will offer to contract theoperation and maintenance of the system. Many conventional applications areleased this way.


The second way is to lease the application from an ASP that hosts the appli-cation at its data center (Kern and Kreijger 2001). The applications are thenaccessed via the Internet through a standard Web browser interface. In such anarrangement, applications can be scaled, upgrades and maintenance can be cen-tralized, physical security over the applications and servers can be guaranteed, andthe necessary critical mass of human resources can be efficiently utilized. Leasingfrom ASPs not only saves various expenses (e.g., labor costs) in the initial develop-ment stage, it also helps reduce the software maintenance, upgrading, and usertraining costs in the long run.

Leasing from ASPs does have its disadvantages. Many companies are con-cerned with the adequacy of protection offered by the ASP against hackers, theftof confidential information, and virus attacks. More importantly, with the demiseof many dot-com companies, a large number of ASPs have gone out of business(Koch 2000). Before an ASP is used, it is imperative that a prospective customersinvestigate the ASP’s financial viability.

A detailed list of the benefits and risks associated with ASPs is provided inExhibit 12.2. Information about the general state of the ASP marketspace can beobtained from the ASP Industry Consortium (aspconsortium.org).

EXHIBIT 12.2 Benefits and Risks of Using an ASPType Benefits Potential RisksBusiness Reduces the need to attract and retain Loss of control and high level of

skilled IT professionals dependence on ASPEnables company to concentrate on Inability of ASP to deliver quality

strategic use of IT of service; lack of skills and Enables small and medium-sized experience

companies to use Tier 1 applications (e.g., ERP, SCM, and CRM)

Application scalability enables rapid growth of companies

Technical Fast and easy application deployment Level of customization and legacy Higher degree of application application integration offered

standardization by ASP is insufficientAccess to wide range of applications Low reliability and speed of delivery Application maintenance simplified due to bandwidth limitations

and performed by ASP Low capability of ASP to deal Simplified user support and training with security and confidentiality

issues

Economic Low total cost of ownership Pricing changes by ASP Low up-front investments in hardware unpredictable for application

and software updates and servicesImproved cost control as result of

predictable subscription costs

Source: Kern and Kreijger, “An Exploration of the ASP Outsourcing Option,” Proceedings, HICSS 31 Hawaii,1997 © 2001 IEEE.

http://www.aspconsortium.org


OTHER DEVELOPMENT OPTIONSIn addition to ASPs, several other leasing and hosting options are available fordeveloping and maintaining an EC site. These include:

◗ E-marketplaces, exchanges, auctions, or reverse auctions. With this option,a company plugs itself into an existing EC Web site. For example, a companycan place its catalogs in Yahoo!’s marketplace and rely on Yahoo!’s store toattract buyers. (See the Online Tutorial “Building an Application with Yahoo!Store.”) In this instance, a company pays Yahoo! a monthly fee for the catalogspace. In other cases, fees are charged for each transaction or for a percentageof the sales revenues. In most of these cases, templates are provided for plug-ging into the site.

◗ Joint ventures and consortia. Several different partnership arrangementsmay facilitate EC application development. In some cases, companies canteam up with a company or a consortium that already has an application inplace or they can join with a series of partners to create a new application andsite (e.g., Covisint).

◗ Internet malls. The Web has several thousand Internet malls. Like a real-world mall, an Internet mall consists of a single entry displaying a collection ofelectronic storefronts. In contrast to earlier cybermalls, today’s malls have acommon look and feel. A well-run mall offers cross-selling from one store toanother and provides a common payment structure by which buyers can use asingle credit card purchase to buy products from multiple stores. Theoretically,a mall has wider marketing reach than a stand-alone site and, as a conse-quence, generates more traffic. The downside is that income must be sharedwith the mall owner.

◗ ISPs. In addition to providing Internet access to companies and individualusers, a large number of ISPs offer hosting services for EC. For the most part,ISPs are focused on operating a secure transaction environment and not onstore content. This means that merchants using the services of an ISP must stilldesign their own pages. Of course, this task can be outsourced to a third party.

◗ Telecommunication companies. Increasingly, the large telecommunicationscompanies are expanding their hosting services to include the full range of ECsolutions. MCI, for example, offers Web Commerce for a fee of $500 permonth. Web Commerce runs on Open Market and Microsoft CommerceServer technologies. Similarly, AT&T provides a number of EC services,including the AT&T eCommerce Suite for $695 per month.

◗ Software houses. Many software companies, such as IBM and Ariba, offer arange of outsourcing services for developing, operating, and maintaining ECapplications.

◗ Define insourcing.◗ List some of the pros and cons of using packaged EC applications.◗ Describe the major forms of application leasing.◗ List some of the alternative leasing and hosting options.


12.4 CRITERIA FOR SELECTING A DEVELOPMENTAPPROACH

If a company decides to buy or lease an EC application, the following selection cri-teria need to be considered.

◗ Flexibility. Commercial packages need to be modified or adapted to the spe-cific requirements of an application. Therefore, it is important to evaluate theextent to which a package can be adapted and the willingness of the vendor toperform or support the adaptation.

◗ Information requirements. The selected package should satisfy the informa-tion requirements of the EC application. Information collection, storage, andretrieval capabilities and the database structure should be carefully examined.

◗ User friendliness. User friendliness is especially important for B2C, G2C, andsome B2B sites. In these cases, if an application is hard for the average visitoror customer to use, then it will have an immediate impact on the bottom line.

◗ Hardware and software resources. The computer type and the operating sys-tem required by the package must be compatible with the existing platform.The CPU and storage requirements are also important considerations.

◗ Installation. The installation effort required to implement the package shouldalso be taken into account. Some packages are complex, and their installationrequires extensive consultation. The installation process can also take a con-siderable amount of time.

◗ Maintenance services. Because EC application requirements are constantlychanging, continuous maintenance is required. It is important to consider howoften the package needs to be upgraded and whether the vendor providesassistance for its maintenance.

◗ Vendor quality and track record. It is less risky to acquire an EC packagefrom a vendor that has a good reputation and track record than from one witha less-than-stellar or unknown reputation. The quality of the vendor can beindicated by their related experience in the particular application, their salesand financial records, as well as their responsiveness to clients’ requests.Vendor support may include online help, customer relationship management(CRM) programs, as well as partner relationship management (PRM) tools.To minimize risk, minor applications should be leased first.

◗ Estimating costs. The costs of EC projects are usually difficult to assess andoften underestimated. In addition to the obvious costs associated with ECdevelopment, it is also important to factor in the costs of installation, integra-tion, customization, and maintenance.

◗ Personnel. Staffing requirements should be planned for in advance to ensure thatthe organization has the appropriate human resources for systems development(in the case of in-house development), implementation, operation, and mainte-nance. Currently, it is difficult to recruit and retain IT personnel with appropriateknowledge and experience in EC application development. Special expertise canbe acquired from external consultants, but usually at a very high cost.


◗ Technological evolution. Planning ahead for technological evolution facili-tates the upgrade of EC applications and enables the organization to adoptinnovations more quickly than the competition. It is therefore very importantto allow for flexibility in the application design so that the chosen options donot impose major limitations on future choices. Given the rapid pace of ITevolution, it is sometimes preferable to develop EC applications incrementallyin order to take advantage of the latest developments in the technology.

◗ Scaling. System scalability refers to how big a system can grow in variousdimensions to provide more service. Scalability can be measured in severalways, including the total number of users, the number of simultaneous users,and the transaction volume. These dimensions are not independent, as scalingup the size of the system in one dimension can affect the other dimensions.The growth of scale is facilitated or constrained by the system architecture.

◗ Sizing. The required size and performance of an application are also difficult topredict, as the growth of the user population of certain EC applications is hardto anticipate. Overloading the application decreases performance. For regularIT applications, deterioration in performance may affect productivity and usersatisfaction; for EC applications, it could result in a major loss of business.

◗ Performance. System performance is a critical factor for business success, par-ticularly if the system is used for EC. In addition to convenience, good per-formance also brings customers and competitive advantages. Performance ismeasured by two main metrics: latency and throughput. Latency measuresthe time required to complete an operation such as downloading a Web page.It is an indicator of the users’ experience with the system. Throughput mea-sures the number of operations completed in a given period of time. It indi-cates the capacity or number of users that a system can handle. Throughputand latency are interrelated. An increase in either measure will lead to anincrease in the other.

◗ Reliability. Reliability is an essential requirement for a successful system.System failures and downtime may lead to public embarrassment. When anEC application fails, business is interrupted and the company loses customers.System reliability can be enhanced through redundancy (i.e., back-up systems).

◗ Security. Security is one of the most important factors for the adoption anddiffusion of EC. Data and information flow in EC, as well as stored data,may include private and/or proprietary information. Thus, a selected packagemust meet strict security requirements. Systems, communication, and datasecurity must be addressed early in the design of EC applications and notafter their implementation. In addition to technological solutions such asfirewalls and encryption, physical and procedural security measures must alsobe enforced.

◗ List some of the major criteria to consider when decidingwhether to buy or lease an EC application.

◗ Define latency.◗ Define throughput.

scalabilityHow big a system cangrow in various dimen-sions to provide moreservice; measured bytotal number of users,number of simultaneoususers, or transactionvolume.

latencyThe time required tocomplete an operationsuch as downloading aWeb page.

throughputThe number of opera-tions completed in agiven period of time;indicates the number of users that a systemcan handle.

Internet

WebServer

WebBrowser Database

CatalogOrder

MerchantServer

StoreHTML Pages

Third-PartyApplications

FinancialNetwork


EXHIBIT 12.3 Merchant Server Architecture

12.5 THIRD-PARTY EC COMPONENTS AND SUITESIf a company opts to purchase its EC applications from a third-party vendor, twobasic categories of software are available—electronic catalogs and EC suites.

ELECTRONIC CATALOGSElectronic catalogs are the virtual version of traditional product catalogs. Like itspaper counterpart, an electronic catalog contains written descriptions and photosof products, along with information about various promotions, discounts, paymentmethods, and methods of delivery. Electronic catalogs, also known as merchantserver software, include features that make it simple and relatively inexpensive(usually less than $10,000) to set up a catalog operation that has a straightforwardpricing and product configuration.

This type of software commonly includes the following features:

◗ Templates or wizards for creating a storefront and catalog pages with picturesdescribing products for sale

◗ Electronic shopping carts that enable consumers to gather items of interestuntil they are ready for checkout

◗ Web-based order forms for making secure purchases (either through SSLencryption or the SET protocol)

◗ A database for maintaining product descriptions, pricing, and customer orders◗ Integration with third-party software for calculating taxes and shipping costs

and for handling distribution and fulfillment

Exhibit 12.3 outlines the major components in an electronic catalog or merchantserver system. As shown in the figure, a single server is used to handle product pre-

electronic catalogThe virtual-world equiva-lent of a traditionalproduct catalog; con-tains product descrip-tions and photos, alongwith information aboutvarious promotions, dis-counts, payment meth-ods, and methods ofdelivery.

merchant serversoftwareElectronic catalogs.


Internet

WebServer

WebBrowser

PaymentDatabase

OrderDatabase

CustomerDatabase

CatalogDatabase

OrderCapture,

Completion

CatalogApplication

FulfillmentSystems

FinancialNetwork

CustomerManagement,Registration,

Profiles,Service

PaymentProcessing

(SET &Purchase

Order)

EXHIBIT 12.4 Components of an EC Suite

sentation, order processing, and payment processing (Treese and Stewart 1998).Likewise, in such systems a single database is used to store the catalog (i.e., prod-uct descriptions) and handle the details of customer orders. The pages of the elec-tronic catalog are created dynamically from the product descriptions contained inthe catalog database. For those merchants with only a few products for sale, thereis no need to store the product descriptions in a database. Instead, the pages of theWeb catalog can be created ahead of time.

EC SUITESEC suites offer builders and users greater flexibility, specialization, customiza-tion, and integration in supporting complete front- and back-office functionality.In an EC suite, the functionality is distributed across a number of servers anddatabases instead of relying on a single server and database, as is done in electroniccatalog and merchant server systems. The elements displayed in Exhibit 12.4 are indicative of the components contained in an EC suite, the processes sup-ported by an EC suite, and the back-end databases and operational systems uti-lized by the processes.

Over the past few years, the EC suite marketspace has experienced a substantialamount of consolidation. Among the products that remain are InterWorld’s Com-merce Suite (interworld.com) and IBM’s WebSphere Commerce Suite (ibm.com).

Source: Interworld.com.

http://www.interworld.com

http://www.ibm.com


InterWorld’s Commerce SuiteInterWorld’s Commerce Suite is in its fifth release. The suite can be used todevelop, deploy, and maintain a variety of EC applications, including B2C, B2B,and exchanges of all sorts. The suite has a “process-oriented” architecture. Thesuite supports four major business processes:

◗ Channel marketing. Interactive catalog modules support extensive personali-zation facilities, including personalized product presentations; dynamic prod-uct pricing and personalized discounts and coupons; up-selling and cross-selling, pointing customers to alternative, complementary, or substituteproducts; product comparisons, alternatives, and recommendations based onbuyer characteristics or past purchases; and buyer assistance for making prod-uct selections.

◗ Order management. Order management modules support the capture of theinformation required to place an order (order entry). They also finalize thedetails of the order, including the payment, shipping, inventory, and taxation(order processing). The modules also support billing and account manage-ment, including definition of preferences such as billing addresses, ship-toaddresses, credit card information, credit limits, and credit card verification(payment).

◗ Account management. Account management modules enable online cus-tomer self-service. Buyers can use the modules to check an order or quote sta-tus, update their address book, and manager their profile information. Thesemodules can also be used to manage backorders, cancellations, and returns in acomplete, personalized self-service environment.

◗ Customer service. Customer service functions offer customers the ability toverify, edit, and change their profiles; review their orders; and review their pay-ment history. They also enable customer service representatives to track cus-tomer comments and buying history in order to respond to customer requests.

IBM’s WebSphere Commerce SuiteIBM’s WebSphere Commerce suite is a comprehensive EC development platformdesigned to support B2C, B2B, or private exchange business models. The suiteprovides the following functions:

◗ Order management that optimizes movement of products through the supplychain

◗ Collaborative filters that enable an enterprise to better understand customers’buying patterns and preferences

◗ Portal capabilities that provide customers with personalized access to multiplecommerce and noncommerce site applications

◗ Localization support that enables customized price, tax, and shipping calcula-tions in the currency format and language dictated by the shopper’s locale

◗ E-coupons that can be used by customers during online shopping◗ Additional bundled products including WebSphere Catalog Manager and

WebSphere Payment Manager

Browse data source,make transactions

WebServer

ApplicationServer

DatabaseServers

Gateway anddocument delivery

Netscape API

CGI

Microsoft API

Brokers requestbetween clientand database

Data repository

Web Browser


EXHIBIT 12.5 Example of Multitiered Application Architecture Connected to Database

IBM’s suite is built on open industry standards such as Java, JavaServer Pages,Enterprise JavaBeans (EJB), and XML. These standards make it easier to inte-grate with existing back-office transaction systems and databases.

◗ List the major features of an electronic catalog.◗ Describe the basic business processes supported by

InterWorld’s Commerce suite.◗ Describe the functions supported by IBM’s WebSphere

Commerce suite.

12.6 CONNECTING TO DATABASES AND OTHERENTERPRISE SYSTEMS

Like the UPS system described at the beginning of the chapter, virtually every ECapplication requires database access. For example, when you order a product online,the product description, inventory count, and order information are likely to beretrieved from and stored in one or more databases (see Exhibit 12.5). There are avariety of ways to connect an EC application to a back-end database. Today, mostof these connections are accomplished via a multitiered application architecturelike the one depicted in Exhibit 12.5. In this architecture there are four tiers:

1. A Web browser where data and information are presented to and data are col-lected from the end user.

2. A Web server that delivers Web pages, collects the data sent by the end user,and passes data to and from the application server.

3. An application server that executes business rules (e.g., user authorization), for-mulates database queries based on the data passed by the Web server, sends thequeries to the back-end database, manipulates and formats the data resultingfrom the database query, and sends the formatted response to the Web server.

4. A database server where the data are stored and managed and databaserequests are processed.

multitiered applicationarchitectureEC architecture consist-ing of four tiers: Webbrowsers, Web servers,application servers, anddatabase servers.


This separation of functions makes it easier to change any tier (or layer) withoutimpacting the other layers. Thus, an application server can be designed to interfaceor communicate with a wide variety of databases and database management sys-tems (e.g., Oracle, MS SQL Server, DB2).

In some cases, the data being accessed are stored in an existing (legacy) database(e.g., inventory or order databases). In these cases, it is better to tie the applicationserver directly to the legacy database rather than duplicating the data in a databaseestablished solely for the EC application. This approach ensures that the data areup-to-date, that they are consistent across the applications accessing the data, that aminimum of storage space is used, and that there is only one database to create andmaintain rather than two.

Several technologies can be used to integrate an EC application with a back-end database. All of the commercial electronic catalogs and EC suites have built-inintegration capabilities. If a company wants to build its own database interface,a couple of options are available. First, all of the Web scripting languages (e.g.,PHP, JSP, and ASP) have commands that simplify the process. More specifically,these scripting languages enable a programmer to build Web pages that can issuequeries to a back-end (relational) database and process the database’s response tothe query. Second, a number of specialized application servers are available thatsimplify the task of integrating an EC application with one or more back-enddatabases. Among these specialized servers, BEA Inc. WebLogic Server is themarket leader.

In addition to connecting to back-end databases, most EC applications alsorequire integration with a variety of other systems—ERP, CRM, SCM, EDI, datawarehouses, and other important internal systems—both inside and outside thecompany. Again, electronic catalogs and EC suites usually have built-in modulesfor integration with these systems. The integration can also be handled with a classof software called enterprise application integration (EAI). These products focuson the integration of large systems. Vitria Technology (vitria.com), TIBCO(tibco.com), and webMethods (webmethods.com) are examples of companies thathave offerings in the EAI arena.

◗ Describe the basic elements of a multitiered applicationarchitecture.

◗ List the ways in which an EC application can be connected toback-end databases and other transaction processing systems.

12.7 VENDOR AND SOFTWARE SELECTIONFew organizations, especially SMEs, have the time, financial resources, or techni-cal expertise required to develop today’s complex e-business systems. This meansthat most EC applications are built with hardware, software, hosting services, anddevelopment expertise provided by outside vendors. Thus, a major aspect of devel-oping an EC application revolves around the selection and management of thesevendors and their software offerings. Martin et al. (2000) identified six steps inselecting a software vendor and a package.

enterprise applicationintegration (EAI) Class of software thatintegrates large systems.

http://www.tibco.com

http://www.webmethods.com

http://www.vitria.com


STEP 1: IDENTIFY POTENTIAL VENDORSPotential application vendors can be identified from software catalogs, lists pro-vided by hardware vendors, technical and trade journals, consultants experiencedin the application area, peers in other companies, and Web searches.

These sources often yield so many vendors and packages that one must usesome preliminary evaluation criteria to eliminate all but a few of the most promis-ing ones from further consideration. For example, one can eliminate vendors thatare too small or that have no track record or a questionable reputation. Also, pack-ages may be eliminated if they do not have the required features or will not workwith available hardware, operating system, communications network, or databasemanagement software.

STEP 2: DETERMINE THE EVALUATION CRITERIAThe most difficult and crucial task in evaluating a vendor and a packaged system isto determine a weighted set of detailed criteria for choosing the best vendor andpackage. Some areas in which detailed criteria should be developed are character-istics of the vendor, functional requirements of the system, technical requirementsthe software must satisfy, amount and quality of documentation provided, andvendor support of the package.

These criteria should be documented in a request for proposal (RFP), whichis sent to potential vendors inviting them to submit a proposal describing theirsoftware package and how it would meet the company’s needs. The RFP providesthe vendors with information about the objectives and requirements of the system,the environment in which the system will be used, the general criteria that will beused to evaluate the proposals, and the conditions for submitting proposals. It mayalso request a list of current users of the package who may be contacted, describe indetail the form of response that is desired, and require that the package be demon-strated at the company’s facilities using specified inputs and data files.

STEP 3: EVALUATE VENDORS AND PACKAGESThe collective responses to an RFP generate massive volumes of information thatmust be evaluated to determine the gaps between the company’s needs (as speci-fied by the requirements) and the capabilities of the vendors and their applicationpackages. Often, the vendors and packages are given an overall score by assigningan importance weight to each of the criteria, ranking the vendors on each of theweighted criteria (say 1 to 10), and then multiplying the ranks by the associatedweights. A short list of potential suppliers can be chosen from those vendors andpackages with the highest overall scores.

STEP 4: CHOOSE THE VENDOR AND PACKAGEOnce a short list has been prepared, negotiations can begin with vendors to deter-mine how their packages might be modified to remove any discrepancies with thecompany’s desired EC application. Thus, one of the most important factors in thedecision is the additional development effort that may be required to tailor the sys-tem to the company’s needs or to integrate it into the company’s environment.

request for proposal(RFP) Notice sent to potentialvendors inviting themto submit a proposaldescribing their soft-ware package and how itwould meet the com-pany’s needs.


service level agree-ment (SLA) A formal agreementregarding the division ofwork between a com-pany and its vendors.

access logA record kept by a Webserver that shows whena user accesses theserver; kept in a com-mon log file format,each line of this textfile details an individualaccess.

Additionally, the opinions of the users who will work with the system and the ITpersonnel who will have to support the system have to be considered.

STEP 5: NEGOTIATE A CONTRACTThe contract with the software vendor is very important. Not only does it specifythe price of the software, but it also determines the type and amount of support tobe provided by the vendor. The contract will be the only recourse if the system orthe vendor does not perform as specified. Furthermore, if the vendor is modifyingthe software to tailor it to the company’s needs, the contract must include detailedspecifications (essentially the requirements) of the modifications. Also, the con-tract should describe in detail the acceptance tests the software package must pass.

Contracts are legal documents, and they can be quite tricky. Experienced con-tract negotiators and legal assistance may be needed. Many organizations havesoftware purchasing specialists who assist in negotiations and write or approve thecontract. They should be involved in the selection process from the start. If anRFP is used, these purchasing specialists may be very helpful in determining itsform and in providing boilerplate sections of the RFP.

STEP 6: ESTABLISH A SERVICE LEVEL AGREEMENTService level agreements (SLAs) are formal agreements regarding the division ofwork between a company and its vendors. Such divisions are based on a set ofagreed-upon milestones, quality checks, “what-if ” situations, how checks will bemade, and what is to be done in case of disputes. If the vendor is to meet its objec-tives of installing EC applications, it must develop and deliver support services tomeet these objectives. An effective approach to managing SLAs must achieve bothfacilitation and coordination. SLAs do this by (1) defining the partners’ responsi-bilities, (2) providing a framework for designing support services, and (3) allowingthe company to retain as much control as possible over their own systems.

◗ List the major steps in selecting an EC application vendorand package.

◗ Describe a request for proposal (RFP).◗ Describe a service level agreement (SLA).

12.8 USAGE ANALYSIS AND SITE MANAGEMENTTo improve EC Web sites, it is advisable to monitor what customers are doing(usage analysis). Both B2C and B2B Web sites require a thorough understandingof the usage patterns of their sites—the who, what, where, when, and how.

LOG FILESEvery time a user accesses a Web server, the server logs the transaction in a specialaccess log file. Access logs are text files. Each line of the file details an individualaccess. Regardless of the type of Web server, access logs use a common log file for-


mat. This makes them easy to analyze and compare. Because log files can becomequite voluminous, it is hard to analyze the accesses by hand. For this reason, mostWeb server vendors provide “free” software for analyzing access log files.Commercial products that provide more sophisticated log analyses are also avail-able (e.g., WebTrends).

Access logs provide a variety of statistics that can be used for analyzing andimproving marketing and advertizing strategies. Among the more valuable statis-tics are:

◗ Pageviews by time slot. Pageviews allow frequent review of the number of siteaccesses. Group pageviews by “time bucket” (time slot) also enables the com-pany to ascertain the time slots, such as morning, afternoon, or evening, dur-ing which customers visit the site.

◗ Pageviews by customers’ logging-in status. This information helps deter-mine whether requiring customers to log in is worthwhile or not. For instance,if the number of pageviews of customers who log in is substantially greaterthan those who do not, the company may find the login requirement effectiveand worthwhile.

◗ Pageviews by referrers. Some customers are drawn or referred to the site byclicking on banners or links on other Web sites. Knowing the source of suchreferrers is useful for assessing the effectiveness of the location of banners, andcustomers’ interest can also be determined from the nature of the Web sitewith those banners.

◗ Pageviews by visitor’s hardware platform, operating system, browser,and/or browser version. These types of pageviews allow the company toobtain information on the hardware platform (e.g., Macs or PCs) and browsertype (e.g., Internet Explorer or Netscape) used by the viewer.

◗ Pageviews by visitor’s host. This type of pageview provides information onthe customers’ host site. Knowing where customers are coming from can enablethe company to target potential customers via popular hosts, such as AOL.

Some of the marketing and business questions to which these statistics can beapplied are listed in Exhibit 12.6 (on p. 12-22).

E-COMMERCE MANAGEMENT TOOLSManaging the performance of a Web site is a time-consuming and tedious admin-istrative task. Several vendors offer suites of products or individual packages thatcan assist with the management process. A detailed list of vendors is provided byHower (2002).

One of the more prominent vendors of IT and Web management tools isBMC Corp. (bmc.com). BMC offers the following products:

◗ Patrol for e-business management. This package includes Patrol for InternetServices for measuring Web response time, Patrol for Firewalls for firewalladministration, and Patrol for Microsoft or Netscape application servers.

◗ MainView for e-business management. This package includes MainViewfor WebSphere for managing mainframe-based EC applications, MainView

http://www.bmc.com


EXHIBIT 12.6 Areas of Usage Analysis and Sample Business Questions for Online Stores

Area of Analysis Business QuestionsOverall Store Performance ◗ What is the sales value for a specific period of time, say, 1 week?

◗ What is the number of customer visits for the day?◗ What is the store conversion rate of the week?◗ What is the sales value index for the week?

Advertising ◗ Which banner ads are pulling in the most traffic?◗ How many sales are driven by each banner ad?◗ What products do shoppers select from a particular banner?◗ What is the conversion rate for each banner ad?

External Referrals (from others to your site) ◗ Which portal sites are pulling in the most traffic?◗ Which are generating the most sales?◗ How many sales are generated by each referral site/search engine?◗ What products do shoppers from a particular portal site purchase?

Shopper Segmentation ◗ How many visitors are from a specific domain?◗ What is the distribution of first-time vs. repeat shoppers?◗ What characterizes shoppers of a particular set of products?◗ What characterizes shoppers who abandon shopping baskets?

Product Grouping ◗ How much do cross-sells/up-sells contribute to gross revenue?◗ What are the best performing cross-sell pairs? Worst?◗ What is the overall conversion rate for cross-sells/up-sells?

Promotions and Recommendations ◗ How much do promotions contribute to gross revenue?◗ Which promotions are generating the most sales?◗ What is the overall conversion rate for promotions?◗ What is the overall conversion rate for recommendations?◗ At what levels in site hierarchy are the best promotions located?

Shopping Metaphor ◗ What generates the most sales value: searching or browsing?◗ How much does searching contribute to gross revenue?◗ What is the conversion rate for searching?

Design Features ◗ What are the features of links customers most frequently click?◗ What are the features of links customers most frequently buy from?◗ What parts of pages do customers most frequently buy from?◗ Do products sell better in the upper-left corner?

Product Assortment ◗ What are the top sellers for the week?◗ What is the conversion rate for a particular department?◗ How is a product purchased: purchase frequency and quantity?◗ What characterizes the products that end up being abandoned?◗ How much of the sales of each product are driven by searching?


for Network Management for monitoring mainframe network connections,and MainView for Systems Management for systems administration.

◗ Service assurance center for e-business. This package includes a combina-tion of methodology, products, and services designed to optimize the perfor-mance and availability of business applications.

◗ List some of the statistics provided by an access log.◗ Describe some of the uses of an access log.

1. What is our business perspective? When onethinks of the Web, one immediately thinks ofthe technology. But some of the most successfulsites on the Web rely on basic technologies—freeware Web servers, simple Web page design,and few bells and whistles. What makes thesesites successful is not the technology, but theirowners’ understanding of how to meet theneeds of their online customers.

2. Do we have a systematic development plan?The cost of developing and maintaining even asmall EC site can be substantial. To ensure suc-cess, development and maintenance issues needto be approached systematically, just like anyother IT development project. Within thisplan, the specification of the EC architecture iscrucial. If the architecture is wrong, the entireproject is at risk.

3. Insource or outsource? Many large-scale enter-prises are capable of running their own ECWeb sites. However, EC Web sites may involvecomplex integration, security, and performanceissues. For those companies venturing into theEC arena, a key issue is whether the site should

be built in-house (insourced), thus providingmore direct control, or outsourced to a moreexperienced provider. Outsourcing services,which allow companies to start small and evolveto full-featured functions, are available throughmany ASPs, ISPs, telecommunication compa-nies, Internet malls, and software vendors thatoffer merchant server and EC applications.

4. How should we choose a vendor/software?Because most EC applications are built fromeither packaged applications and componentsor outsourced to a third party, the success of theEC applications rests on choosing the bestvendor and package. Like any other part of thedevelopment process, a detailed list of selectioncriteria are needed for the selection process.

5. Have we analyzed the data? All EC sites pro-vide the means to gather data about systemusage. These data should be analyzed fre-quently to modify and redesign an existing siteto better meet the needs of current andprospective customers and users. This analysiscan also be used to personalize the experienceof these same users.

MANAGERIAL ISSUESSome managerial issues related to this chapter are as follows.


SUMMARYIn this chapter, you learned about the following EC issues as they relate to the learning objectives.

1. The major steps in developing an EC appli-cation. Because of their cost and complexity,EC sites need to be developed in a systematicfashion. The development of an EC site shouldproceed in steps. First, the EC architecture isdefined. Next, a decision is made whether tobuild, buy, or outsource the development.Third, the system is installed, tested, anddeployed. Finally, the system goes into mainte-nance mode, with continual changes beingmade to ensure the system’s continuing success.

2. The major EC applications and their majorfunctionalities. Every type of EC applicationhas a long list of functional requirements.Fortunately, most of these requirements can bemet by packaged applications. Online store-fronts can be developed with the aid of elec-tronic catalog or merchant server software.Similarly, B2C, B2B, and exchange applica-tions of all sorts can be constructed from moreadvanced EC suites.

3. The major EC application developmentoptions along with their benefits and limita-tions. EC sites and applications are rarely builtfrom scratch. Instead, enterprises either buy apackaged EC suite and customize it to suittheir needs or they outsource the developmentto a third party. The selection of one optionover another should be based on a systematiccomparison of a detailed list of requirementsthat examines flexibility, information needs,user friendliness, hardware and softwareresources, and so on.

4. EC application outsourcing options. If anenterprise elects to outsource the developmentand maintenance of its EC site and applica-tions, a number of alternatives are available.EC applications can be hosted by ASPs, ISPs,or by a telecommunication company. An enter-prise can rely on an existing e-marketplace orexchange. An online storefront can be hostedby an Internet mall. Or, an enterprise couldenter into a joint development agreement with

a venture partner or a consortium. Again, thechoice depends on the functional requirementsof the EC site or application.

5. The major components of an electronic cata-log and EC application suite. An online store-front has the same requirements as a brick-and-mortar storefront. Simple sites can be builtfrom packaged electronic catalog or merchantserver software. More complex online store-fronts and other types EC sites (e.g., B2B,exchanges, etc.) can be built from comprehen-sive EC suites such as InterWorld’s CommerceSuite or IBM’s WebSphere Commerce Suite.

6. Methods for connecting an EC application toback-end systems and databases. Virtuallyevery EC application requires access to back-end relational databases and other transactionsystems (e.g., ERP, SCM, CRM, etc.). Inte-gration can be accomplished in a variety ofways, including using integration modules sup-plied with electronic catalog or EC suite pack-ages, customizing the integration with a Webscripting language (e.g. PHP, ASP, or JSP),employing specialized application servers, oremploying a full-blown EAI tool.

7. Criteria used in selecting an outsourcing ven-dor and package. A systematic process shouldbe used in selecting a third-party tool or out-sourcing service. Among the key steps in mak-ing the selection are: (1) identifying potentialvendors and packages, (2) detailing the evalua-tion criteria, (3) using the criteria to produce ashort list of possible vendors, (4) choosing a can-didate from the short list, (5) negotiating thedeal and modifications needed to meet overallapplication needs, and (6) establishing a SLA todefine who is responsible for specific aspects ofthe development and maintenance and the qual-ity metrics for the services to be rendered.

8. The value and uses of EC application logfiles. Most EC applications produce log files ofdetailed system usage. The data in these files

can be analyzed with an eye toward modifyingthe application’s content and flow. In this way,the application can be better aligned with theenterprise’s marketing and advertising strate-gies. In the same vein, the application can beadjusted to meet users’ needs.

9. The importance and difficulties of EC appli-cation maintenance. Maintenance of an ongoingapplication requires as much, if not more, timeand effort than the original development andinstallation. Several vendors offer tools to assistwith the process.


KEY TERMSAcceptance testing, p. 12-4Access log, p. 12-20Application service

provider (ASP), p. 12-3EC architecture, p. 12-4Electronic catalog, p. 12-14Enterprise application

integration (EAI), p. 12-18

Insourcing, p. 12-8Integration testing, p. 12-4Latency, p. 12-13Merchant server

software, p. 12-14Multitiered application

architecture, p. 12-17Request for proposal

(RFP), p. 12-19

Scalability, p. 12-13Service level

agreement (SLA), p. 12-20

Throughput, p. 12-13Unit testing, p. 12-4Usability testing, p. 12-4

DISCUSSION QUESTIONS1. Discuss the advantages of leasing an applica-

tion over purchasing one.2. A large company with a number of products

wants to start selling on the Web. Should it usea merchant server or an EC application suite?Assuming it elects to use an EC applicationsuite, how would you determine whether thecompany should outsource the site or run itthemselves?

3. A large chemical manufacturing company isinterested in starting an online exchange. Whatare some of the ways it could achieve this goal?

4. A firm decides to make its EC Web site moredynamic by tying its application to a back-enddatabase. What are some of the ways in whichthe firm could accomplish this task?

5. An enterprise wants to modify its EC site sothat it conforms more closely with its overallbusiness strategies. What sorts of online dataare available for this purpose? What types ofbusiness strategy questions can be addressed bythese data?

6. In what ways do you think a Web site’s log filesviolate your privacy?

7. You have decided to use a third-party applica-tion to develop and deploy a sell-side B2B site.Create a checklist for determining which third-party EC application products will best meetyour application requirements.


INTERNET EXERCISES1. Access the Choice Mall Web site (choicemall.com).

Visit some of the online stores in the mall. Whatare the functionalities of the mall? What aresome of the benefits of the online mall to theparticipating vendors? To shoppers? Do youthink a shopper is better off using an online mallor using a search engine such as AltaVista tolocate a store providing a product of interest? Inwhat ways could Choice Mall improve thechances that buyers will make return visits?

2. Visit a large online storefront of your choice.What functions does it provide to shoppers? Inwhat ways does it make shopping easy? In whatways does it make shopping more enjoyable?What support services does it provide?

3. Enter hotwired.lycos.com/webmonkey and findthe tracking tutorials. What is the differencebetween a “hit” and a “pageview”? Write a sum-mary of the three tutorials—gathering data,using databases, and using pageviews.

4. Go to the WebTrends site (webtrends.com).What types of information does its Analysis

Suite provide? How can thisinformation be used to im-prove a Web site? What typesof tracking information are not provided by this suite? (See Discussion Ques-tion 3.)

5. Visit IBM’s site (ibm.com). Find its WebSphereproduct. Read some of the recent customer suc-cess stories. What makes this software sopopular?

6. Visit the Microsoft Web site (microsoft.com).Find its Biztalk product. What kind of soft-ware is this? What role could it play in an ECapplication?

7. Go to covisint.com and also to EC Applica-tion Case 6.1 in this book (page 260). What isCovisint? Who are the partners involved inCovisint? What types of B2B functionalitydoes it provide? Based on the press releases atCovisint’s Web site, has Covisint been success-ful? Why or why not?

TEAM ASSIGNMENTS AND ROLE PLAYING1. Select a series of Web sites that cater to the

same type of buyer (e.g., several Web sites thatoffer CDs or computer hardware). Divide thesites among the teams and ask each team toprepare an analysis of the different sorts offunctions provided by the sites, along with acomparison of the strong and weak points ofeach site from the buyer’s perspective.

2. Several vendors offer products for creatingonline stores. The Web sites of these vendorsusually list those online stores using their soft-ware (customer success stories). Assign eachteam a number of vendors. Each team should

prepare reports comparing the similarities anddifferences among the vendors’ sites and evalu-ating the customers’ success stories. Do thecustomers take advantage of the functionalityprovided by the various products?

3. As a team, explore the desired capabilities ofvarious EC applications (B2B, B2C, auctions,portals G2C, etc.). Look at the capabilities ofthese applications and at their functionalities,and then compare the two. (See Section 12.3for a list of functionalities.) If the functionalitiesof the applications are not sufficient, explainwhat additional functionalities are needed.

http://www.choicemall.com

http://www.hotwired.lycos.com/webmonkey

http://www.webtrends.com

http://www.ibm.com

http://www.microsoft.com

http://www.covisint.com

Chapter Twelve: Building E-Commerce Application & Infrastructure 12-27

REFERENCESCarmichael, M. “2001 Median Prices for Full-Site Develop-

ment.” btobonline.com/webPriceIndex (May 14, 2001).DeWire, D. Thin Clients: Delivery Information over the Web.

New York: McGraw-Hill, 1998.Hower, R. “Web Site Test Tools and Site Management Tools.”

softwareqatest.com/qatweb1.html (April 20, 2002).Kendall, K. E., and J. E. Kendall. Systems Analysis and

Design, 4th ed. Upper Saddle River, NJ: Prentice Hall, 1999.

Kern, T., and J. Kreijger. “An Exploration of the ASPOutsourcing Option.” Proceedings, 34th HICSS, Maui, HI( January 2001).

Koch, C. “Boy, That Was Fast.” CIO Magazine (November 15,2000).

Martin, E. W., et al. Managing Information Technology. UpperSaddle River, NJ: Prentice Hall, 2000.

Treese, G. W., and L. C. Stewart. Designing Systems for InternetCommerce. Reading, MA: Addison-Wesley, 1998.

Whirlpool (whirlpool.com) is a world leader in themanufacture and marketing of major home appli-ances. Competing in a $75 billion annual, globalmarket, the company considers its distributors andpartners to be critical players in its continual questto maintain industry leadership. As a consequence,Whirlpool is constantly trying to improve the effi-ciency of its operations while still providing top-notch service to members of its sales chain.

Until recently, one area of concern was its rela-tionships with its middle-tier trade partners. Thesepartners represent 25 percent of Whirlpool’s tradingpartners but only 10 percent of its revenues. Becauseof their size, Whirlpool was unable to dedicate system-to-system connections with these partners. Instead,partners had to submit their orders by phone or fax.

Wanting to infuse greater efficiency into thisprocess, Whirlpool turned to EC, developing a B2Btrading-partner portal that enables its middle-tiersellers to order online. To make the portal work, thecompany needed to integrate it with its SAP R/3inventory system and Tivoli systems managementtools. Whirlpool conducted a vendor and productanalysis and decided to use IBM integration tools.

Following the guidelines of the IBM ApplicationFramework for e-business, Whirlpool built its portalwith the IBM WebSphere Application Server,Advanced Edition, IBM Net.Commerce (new part ofthe IBM WebSphere Commerce Suite family), IBMHTTP Server, IBM VisualAge for Java, and IBMCommerce Integrator with IBM MQSeries.

REAL-WORLD CASE

WHIRLPOOL’S TRADING PORTALThrough the portal, called Whirlpool Web World,

several thousand middle-tier trade partners selectthe goods they want to order by checking off theappropriate SKUs and indicating quantities. Asidefrom appliance ordering, they can also log on to the password-protected site to track the status of their orders. The portal has cut the cost per orderto under $5—a savings of at least 80 percent.Whirlpool has also gained an unexpected benefit—an extendable EC platform that it has leveraged forother applications.

Whirlpool’s B2B portal is now in its second gen-eration (as of summer 2001). The first-generationportal was developed with low-level products, givingthe company a chance to test the Web waters.However, the portal took off faster than the com-pany expected. In its first 3 months, the amount ofrevenue that flowed through the portal was whatWhirlpool had planned for the first 12 months. Theinvestment paid for itself in 8 months.

With the success of its first-generation trading-partner portal, Whirlpool was ready to migrate thesolution to a bigger, more scalable, and easier-to-manage platform. At the same time, the companywas also implementing SAP R/3 for order entry. Thus,it was important for its second-generation portal tointegrate with SAP R/3.

For its second-generation portal, Whirlpoolwanted to partner with a vendor that would bearound a while. It again checked out IBM, plus a fewothers. IBM was selected because IBM has worked

http://www.btobonline.com/webPriceIndex

http://www.softwareqatest.com/qatweb1.html

http://www.whirlpool.com

with Whirlpool on joint product development as wellas with Whirlpool’s ERP system design and architec-ture. In addition, when Whirlpool talked to financialanalysts, it found that an overwhelming number ofFortune 100 companies use IBM e-business solutions.Finally, Whirlpool saw that IBM is on the cuttingedge of industry Web standards such as Java andXML. After committing to IBM, Whirlpool also decidedto develop its e-business platform following theApplication Framework for e-business, taking advan-tage of its rapid development cycles and associatedcost reductions. In developing the first-generationportal, Whirlpool had to build certain functionalitieson its own, because the desired functionalities werenot included in the tools supplied by IBM. A year anda half later, the suite of IBM tools included thosefunctionalities, which enabled Whirlpool to get itsapplications to market much faster.

Source: IBM.com (2002).

Questions1. From Whirlpool’s point of view, what kind of a

B2B application is this: e-procurement, sell-side, collaborative commerce, or other? Justifyyour answer.

2. Why did Whirlpool decide to utilize third-partyapplications with its second-generation portal?Explain in detail.

3. Imagine you were in charge of selecting thethird-party applications to be used with the second-generation portal. What sorts of criteria would you use in making yourchoice? How did IBM’s WebSphere meet these criteria?

4. How can Whirlpool leverage this applicationwith other B2B processes?


Documents

12CHAPTER - Pearson Educationwps.prenhall.com/wps/media/objects/260/267260/Turban-Ch12.pdf · Learning objectives 12CHAPTER Content Tracking United Parcel Service Shipments 12.1 The