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Chapter 6

Value Added Services on the Internet

Throughout this course we have been learning about the protocols of the Internet which

facilitate services on the internet. We refer to value added services in this chapter to referto those high level services which run on top of these basic protocols and services. While

there can never be a complete inventory of such services on such a dynamic and creative

an infrastructure as the Internet, this chapter outlines some of the more common value

added services available today on the Internet.

6.1 eLearning

eLearning has many definitions. Most broadly it covers any form of technology enhanced

learning mechanism. This can range from blended learning environments where

electronic and traditional face-to-face classroom learning are combined ineffective ways

to completely non-face-to-face distant based education deliverywhere the learner has no

physical interaction with any other participant in thelearning process.

eLearning can be categorized along several axes: the underlying pedagogical

assumptions, the content model employed, and the size, distribution and level of network

access of the learners.


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6. VALUE ADDED SERVICES ON THE INTERNET

6.1.1 Pedagogical Assumptions

Based on the underlying pedagogical assumptions, we can categorize eLearning into

those that view it:

- as a way of enhancing traditional face-to-face teaching by transferring some of

the content and interaction designed for classroom situations to electronic means

- as a whole new model of learning in which some of the traditional pedagogical

assumptions must be questioned; typically these systems will attempt to apply some

known educational psychology models (e.g. constructive alignment) to a non-face-to-face

situation

- in a more pragmatic way as a combination of the above in order to achieve the

best possible result; this would range from utilizing appropriate electronic means to

enhance an essentially classroom environment to employing appropriate face-to-face

situations in a fundamentally online distant mode course

6.1.2 Content Model Used

Another way of classifying eLearning is by the content model used. By this we mean

both the way content is provided and interaction is facilitated.

In a system which is fundamentally an extension to a traditional classroom model

content which is designed with the underlying assumption of face-to-face interaction is

put online. This would include traditional teacher supplied notes and assignments. In

addition, submission of assignments thus set would typically be via email to the teacher.

In a distance mode system in which physical interaction is expensive or not

possible, the reliance on mostly (or even solely) electronic means tends to demand the

redesign of content and interaction sooner than later. Content in this mode necessarily

needs to be more engaging and hence more attractive and interactive. Since the majority

of (if not the only) the interaction is possible through electronic means, and a much richer

virtual learning environment infrastructure is usually employed.

Even in distant mode course delivery a balance between providing rich interactive

content (which is very expensive to produce), and face-to-face teacher notes is often

struck. This could for instance be of the form of pre-recorded face-to-face teaching audio

or video together with a synchronized set of presentation slides.


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6.1 eLearning

6.1.3 Other Classifications

While there could be many other ways to classify eLearning systems, we look at three

other factors by which this can be done, namely, the size of the class, the geographical

spread of the learners, and internet accessibility.

The size of the class has implications especially with respect to the level of

interaction possible. In large class situations providing feedback and grading of

assignments would need to be automated or minimal. For small class situations on the

other hand electronic means could provide a very flexible medium on which an even

greater level of interaction could be provided by a teacher in his or her own time.The geographical spread of the student population has bearings on the eLearning

model adopted especially if a policy of equal access is in force. If most of the learners are

from neighboring areas to the provider, more possibilities for physical interaction provide

more flexibility in the delivery modes. On the other hand, for a geographically spread

learner group, more reliance on non-traditional (electronic) means would need to be

made.

Internet access has major implications for the eLearning model adopted (figure

6.1). In situations where such access to the home is near universal the scope for flexible

learning is optimized providing for instance an ideal environment for part time learners.

Where access is more of a luxury than part of the infrastructure, other types of delivery

channels including CD-based, Audio or Video Cassette based and TV and radio

broadcast based need to be employed.

6.1.4 Current Status and Trends

eLearning is a technology in evolution. As such many of the standards required andmodels which are desirable are still being tested out empirically.


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Figure 6.1: An eLearning website

Rich Content

While many eLearning courses still consist of uploaded text, word processed documents

and presentation slides, the move is to recognize the importance of using richer content

able to provide more authentic learning environments. These include animations, audio,

video and interactive content.

Learning Objects

Many eLearning courses still are created in a way which makes them virtually impossible

to be used again in a different context. Their content can only be used in their entirety.

The move to breaking down courses into lessons and finally to learning objects

consisting of assets are gaining momentum and are envisaged and will eventually make

the creation of content more cost effective. The Sharable Content Object Reference

Model (SCORM) standard is one of the earliest attempts at standardizing this process.


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MERLOT - Online Learning Object Repository:

http://taste.merlot.org/community/disc_communities.htm

eLearning White Papers:

http://www.epic.co.uk/content/resources/white_papers_index.htm

The UK Higher Education Academy eLearning Resources:

http://www.heacademy.ac.uk/

6.2 eCommerce

eCommerce and eBusiness are sometimes interchangeably used terms which refers to one

of two broad definitions. The narrow end definition is the activity of buying and selling

products and services on the web (figure 6.2). The broad definition is using internet

technologies to perform any business process. This latter definition includes all business

activities of an organization including selling goods and services, collecting payments,

ordering materials and supplies, hiring personnel, shipping finished goods to customers,

identifying new and loyal customers, managing the manufacturing process, quality

control and testing, paying bills, and planning.

Some users limit the scope of eCommerce to the former and refer to the latter as

eBusiness while others do exactly the opposite. In this course we will use the terms

eCommerce and eBusiness interchangeably to mean the same, broader (second)

definition above. Using this definition eBusiness is not limited to for-profit companies

only, but rather also could refer to activities of non-profit organizations.

eCommerce may also be classified in two common ways: the first by the type of

participants (businesses, consumers or governments) is the more common way; but a

second classifies it by the types of activities covered (make sales, provide services, buy

materials, hire people etc.).

Classification by Participants

Under this classification, a company which sells goods to individuals is called business to

consumer (B2C) eCommerce. Similarly a business selling goods or services to another

company or non-profit organization is said to be involved in Business to business (B2B)


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6.2 eCommerce

eCommerce. Companies also have business dealings with government agencies and this

kind of eCommerce is known as business togovernment (B2G) while consumers dealing

with consumers in an online auction for example are said to be involved in consumer to

consumer (C2C) eCommerce.

It is not too difficult to extend this terminology to cover areas such as G2C to

refer to so called citizen services of a government (one aspect of eGovernment) and G2G

to refer to dealings between various government agencies (another aspect of

eGovernment).

Classification by Activities

This scheme is organized around what the business activities are designed to accomplish.

The way a company sets about its business is called its business model. While this would

defer from industry to industry and company to company, they all must necessarily

generate revenues and pay the associated costs concerned.

The early days of eCommerce (in the mid-1990s) saw many new companies

forming only for online eCommerce without proper business models. The lead to the

bubble burst of 2000 where many companies which were highly over-valued based on

the false hopes of online commerce failed. Since then, companies have been much more

careful to use the web as a medium for improving the business processes for which they

already had a solid business model.

In this classification, companies which find ways of enhancing their sales,

expanding their customer base, and streamlining the delivery of goods and services are

said to involve eCommerce in revenue model processes. Those which employed internet

based systems to improve their purchasing, hiring, receiving, and manufacturing

processes are said to involve eCommerce in their operational modelprocesses.

The main expected benefit of eCommerce is to finally contribute to increased

revenue while helping in reducing operational costs. This way, eCommerce is able to

reduce the transaction costs involved in doing business in order to enable a company to

create a competitive advantage over another in its domain.


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6.2.1 Revenue Models for eCommerce

The first and most obvious way in which companies try to gain a competitive advantage

over its competitors is by building a sustainable revenue model around the web. There are

several ways in which revenue can be generated on the web.

Online Catalog

Companies have been using mail order catalogs as a way to reduce costs for a long time.

After the advent of the telephone, the more progressive companies started accepting

telephone orders from customers. In much the same way, with the advent of the

commercial internet, companies have started enhancing or completely replacing their

mail order catalogs with much more flexible online catalogs.

Figure 6.2: An eCommerce Website

Companies which have no real physical stores and do business only through the

web are referred to as dot com companies. Probably the most famous of these is

Amazon.com the largest (virtual) bookstore in the world.


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6.2 eCommerce

Advertising and Subscription

Just as some newspapers in large cities pay for themselves through advertising revenueand so can be distributed free of charge, so one revenue model on the web is to use it

purely as a channel for advertising. This model did not work or scale very well at the

beginning when rival companies just expected consumers to happen to visit their site as

opposed to anothers.

Online advertising however has evolved to employ very sophisticated methods in

order to become a justifiable alternative to newspaper, radio or television. One such

strategy is to deliver advertisements dynamically depending on whatever is already

known about a customer from various sources. This is referred to as targeted marketingand is a highly sought after service to exploit.

Successful websites, web portals, web directories, information gateways and

search engines are often more successful in attracting larger numbers of potential

customers and therefore market themselves as the best places for advertisers. For

example, Google uses a creative way of using targeted advertising by returning paid-for

links relevant to a given web search at the top or side of the list of resulting web links.

Charging for subscription is another way to generate revenue especially in areas

where advertisements are felt to be intrusive and detrimental to a neutral view of the

material presented. Radio and TV channels such as the BBC were able to avoid

advertisements by using a subscription model for their services. Similarly many scholarly

works require subscription rather than rely on advertising to fund their operations.

In practice however many businesses employ a hybrid approach combining

advertisement and subscription in creative ways. The Yahoo! web directory/portal for

instance provides many services including email and games free of charge based on

advertising revenue but also offers enhanced services based on subscription.

Another popular subscription-based revenue model is to charge occasional

visitors a premium for individual content or services but offer same at lower rates to

subscribers. In addition to this free samples or free access to limited resources themselves

act as advertising to attract business from satisfied visitors to the website concerned. Yet

variant of the advertisement based revenue model is to offer classified advertisements at a

cost to advertisers and provide access to such advertisements completely free of charge to

potential customers.


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Direct Fee Model

In this model, a fee is charged for a service provided and still attracts customers sincephysical travel is avoided. This, while saving costs for the customer, it also allows cost-

cutting for companies which no longer need to maintain many physical stores which in

turn allow the company to minimize the fee. As larger numbers of customers are won, the

fee can also be further reduced.

This last concept leads to the idea of micro payments wherein the cost of a full

product or service is shared among large numbers of users by breaking it into smaller

sized components, each of which is charged only a small fee. Examples of this are where

libraries or bookstores can charge on a per page basis or movies can be charged on a per-view basis.

Fee based services are often able to offer value-addition to their non-online

versions. For example, travel agencies provide excellent information filtering services,

and are no longer only able to reserve airline tickets but also package other services such

as car rental and tours at the destination.

One of the more innovative eCommerce applications is the Online Auction. eBay

(figure 6.3) is the best known of these and has its own set of rules for bidding. It also has

created value-addition by providing ways of building trust among the community of

buyers and sellers. Many of these sites also provide automated agents which can be

instructed by the bidder to place bids in a way that he or she desires.

6.2.2 Optimizing Operational Costs and Efficiency

The other way in which to employ eCommerce in a business is to aim to reduce

operational costs and increase efficiency. This is done by internet enabling internal

operations of the company.

The use ofElectronic Fund Transfers (ETFs or wire transfers) between banks and the use

ofElectronic data interchange (EDI) by businesses to exchange transaction information

are examples of eCommerce from before the advent of the web.


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6.2 eCommerce

Figure 6.3: An online Auction Website

Reducing transaction costs is not only possible at the sellers end, but also for the

buyer. The traditional ways in which buyers typically find what they want include

visiting a store they hope may have what they want, making telephone calls and sending

faxes. In contrast, a web search for the same product will be much faster and cheaper for

the buyer. In addition, some specialized agent based services such as Price Watch even

allow automatic search for the best prices on the web for a product of interest.

From a sellers point of view, one of the most expensive aspects of a transaction

tends to be the provision of after sales support. The web allows the seller to reduce this

cost by providing Frequently Asked Questions (FAQ) lists, software wizards to help

users self-diagnose problems, email support and even online helpdesk facilities.

Using Intranets and Extranets is a powerful way in which businesses improve

their operational efficiency. AnIntranet is a web site that is accessible only to employees

of a given organization. Parts of this internal web site could be made available to

suppliers and customers of a company. When access of a (portion of an) intranet is

provided to itspartners, they are said to be part of the organizationsExtranet.

For example thepackage tracking services offered by freight companies such as

DHL, UPS and FedEx form an Extranet through which customers access parts of their

Intranet which track the various stages of the movement of their goods. Organization can


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use intranets to improve efficiencies of their internal operations and extranets to enhance

their relationships with suppliers and customers.One common mechanism used by companies to help manage their partners better

is through creatingprofiles which can be customized by the partner (usually customers).

In this way for instance, a company can set up alerts for products and services which may

be of interest to the customer concerned.

6.2.3 Issues Confronting eCommerce

Primarily among the issues needing to be dealt with in an eCommerce environment are

the two consumer issues: transaction security which includes both the reliability of the

seller and the security of the payment, and violation of privacy by which is meant the

possibility of other parties accessing personal information which is necessitated in any

transaction.

In order to address these issues an intermediary generically known as an

assurance provider needs to be part of the transaction. VeriSign is one of the best known

such trust providers.

What makes a service secure?

Many users think that services which display a lock (or padlock) on the browser window

(or more technically, use the https protocol which relies on the securesocket layer (SSL))

are secure. In reality, the only security this provides is that the information you submit to

that website is encrypted and so unlikely to be tampered with or viewed by others. The

larger picture involves trust in the website, in the merchant providing the service and the

party providing trust between parties. These aspects are covered in the next chapter.

In addition to these issues, in countries such as Sri Lanka, there are also fewer

options available for the currency of transaction. Globally, the Credit Card has becomethe dominant currency of the internet. While there are other systems such as PayPal and

electronic wallets, the primary system of trust has to be established using credit cards a

commodity which is not accessible to the masses. More recently, in Sri Lanka, several

systems such as eMoney Order have been trialed to work out their feasibility as a poor

mans currency on the web (figure 6.4).


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6.2 eCommerce

Figure 6.4: A Sri Lankan eCommerce Website

TheInternational nature and scope of eCommerce has its own issues in practice.

Two of the most common ones are the need for multilingual support and the need to

adhere to national and regional laws and taxes.

Useful URLs

eCommerce on Wikipedia:

http://en.wikipedia.org/wiki/E-commerce

Amazon.com - The Global Virtual Bookstore on the web:

http://www.amazom.com

eBay - The Online Auction:

http://www.ebay.com

Sri Lankan eCommerce Example:

http://www.kapruka.lk/

Documents

Value Added Services on the Internet_part1