E-Business, E-Commerce

Transcription

1 ACS-1803 Introduction to Information Systems Instructor: Kerry Augustine E-Business, E-Commerce Lecture Outline 10 ACS-1803 Introduction to Information Systems

2 E-Business Vs E-Commerce Cattails 2

3 Learning Objectives Explain the differences between extranets and intranets as well as show how organizations utilize these environments Describe electronic commerce and how it has evolved Describe the strategies that companies are adopting to compete in cyberspace Describe the stages of business-to-consumer electronic commerce and the key drivers for the emergence of mobile commerce Understand the keys to successful electronic commerce applications Understand general ebusiness security fundamentals 3

4 Network Computing Spectrum - Intranet/ Extranet/ Internet 4

5 Team Network Computing Spectrum Intracompany Intercompany Global Network LAN Intranet Extranet Internet (WWW) 5

6 Internet and the World Wide Web Capabilities The Internet Changed Everything Intranet internal, private network using Web technologies to facilitate transmission of proprietary information within the organization Extranet two or more firms using the Internet to do business together Internet and World Wide Web created an entirely new communications capability for the emergence of Electronic Business (ebusiness) The Internet opened up access to markets by lowering barriers to entry. 6

7 Network Computing Spectrum 7

8 Network Computing Spectrum Team Intracompany LAN Intranet 8

9 Intranet Architecture 9

10 Intranet Applications Collaboration Training Intranet Hub Online Entry of Information Application Integration Real-time Access To Information 10

11 Intranet Applications Training Provides online access to a host of training functions including course catalogs, registration, content (video, slides, other materials) and evaluation Provides significant increases in productivity and standardization, and cost reductions (e.g. travel costs) Application Integration Allows for integration and consolidation of information from disparate systems into a single point of access Increases employee productivity and output quality Real-time Access to Information Allows employees access to real-time system information. This reduces customer service needs by giving all authorized and interested parties direct system access 11

12 Intranet Applications Online Entry of Information Allows for direct online input to streamline routine business processes (e.g. expense reporting) Provides for significant cost reductions from reducing administrative support and shifting maintenance functions back to the employee (i.e. sick leave applications) Collaboration Allows employees to communicate business activities across geographic and departmental boundaries Allows for shorter development cycle times Allows employees to stay abreast of current projects, corporate, and market conditions 12

13 Network Computing Spectrum Team Intracompany Intercompany LAN Intranet Extranet 13

14 Extranets Extranets Extranets are secure network architectures that provide customers, suppliers, and employees with access to internal systems. Extranets enable two or more firms to use the Internet to do business together. They are an excellent use of B2B to allow companies to achieve a positive return on their tech investments. Extranet Benefits Improves timeliness and accuracy of communications, thereby reducing errors and misunderstandings Uses Electronic Data Interchange (EDI) as the standard protocol for allowing disparate computing platforms to communicate without additional investments in the application systems. Easy to use, requires little training Used to automate transactions, reducing cost and cycle time 14

15 Electronic Data Interchange (EDI) Electronic Data Interchange The transmission of electronic business forms between business partners (e.g. purchase order) Typically used by large organizations via VAN very expensive The internet (VPN) has opened this technology to smaller firms Utilizes universal standard transmission protocols to communicate and transmit data between different systems. How it works EDI transactions are supported by two types of network methods: 1. VAN (Value Added Network) 2. VPN (Virtual Private Network) 15

16 Value Added Network (VAN) VAN (Value Added Network) providers are private network operators that provide guaranteed delivery.the VAN is responsible for routing, storing and delivering EDI messages. They also provide delivery reports.vans may be operated by various entities: telecom companies; industry group consortia; a large company interacting with its suppliers/vendors. 16

17 Value Added Network (VAN) 17

18 Virtual Private Network (VPN) Virtual Private Network (VPN) is a secure network technique to protect extranet communications over an IP network Uses a technique called tunneling to encapsulate, encrypt, and transmit data over the Internet Requires server authentication (verify user with password) to allow operation May be managed as a fully integrated, end-to-end dedicated private network. Similar to a VAN utilizes the IP network backbone and is a more cost-effective option for SME s. 18

19 Extranet Applications Procurement Portals Supply Chain Management Exchanges Real-Time Info Access Distribution Portals Enterprise Portals Collaboration 19

20 Extranet Applications Supply Chain Management Used to exchange supply and manufacturing information between customers and suppliers The extranet contains features allowing participants to purchase online, check supplier inventory, transfer design specifications, and other business related tasks Real-time Access to Information Allowing business partners and customers access to realtime system information This reduces customer service needs by giving all authorized and interested parties direct system access 20

21 Extranet Applications Collaboration Allows companies to respond proactively to marketplace changes by working directly with suppliers and customers Allows for shorter development cycle times Allows for reorganization of the purchasing function turning buyers into supplier relationship managers Enterprise Portals These are access points (front doors) combined from multiple extranets where business partners access secure, proprietary company information This provides a single point of access for information that comes from a variety of disparate systems Benefits include faster access for business partners, reduced maintenance cost by reduction in total extranets 21

22 ebusiness/ ecommerce - B2C, B2B, B2E, C2C 22

23 Electronic Business Defined Electronic Business is using electronic information to improve performance, create value and enable new relationships between business and customers Electronic Commerce is the marketing, selling and buying of products and services on the Internet Internet Commerce is the online exchange of information and services utilizing network technologies Web Commerce 23

24 Types of Electronic Commerce 24

25 Stages of E-Commerce Maturity Web sites that globally disseminate only static information about the company and its products available 24/7. (e.g. Electronic Brochure) Web sites that are integrated with corporate databases to extract and display the appropriate information for a customer request. (e.g. displaying a bank balance) Web sites that allow customers to enter orders and make payments directly online (e.g. buying a book) 25

26 E-Commerce Impact to Competiveness Enables new products and services Encourages substitute products Lowers barrier to entry Changes balance of power of customers and suppliers Transforms some industries Creates new opportunities for creating new markets, building brands, and large customer bases 26

27 ebusiness/ ecommerce - Strategy and Competitiveness 27

28 Traditional vs Strategy Support Process Example AVIS RENTA CAR Using handheld technology combined with a reengineered business process to create a competitive advantage 28

29 Impact of the Web: Disintermediation Disintermediation Removal of the intermediary (middleman) in a sale. Companies can sell directly to customers (retail or wholesale) without assistance using the Internet Manufacturer or Service Provider Intermediary (Middleman) Sell Direct = Disintermediation Customer (Consumer or Business) Example Airlines selling directly to flyers without a travel agent or customer service representative 29

30 ecommerce Business Strategies Business Strategies come in one of the following three types. All require a sound business model to be successful (see next) 30

31 Brick-and-Mortar & Click-and-Mortar Strategies Brick-and-Mortar Operate a firm solely in traditional physical markets Approach business activities traditionally by operating physical locations (e.g. stores, offices, manufacturing plants) Click-and-Mortar Operate a firm in physical locations and has added an EC component to their business Requires maximization of business opportunities in both the physical and virtual environments This strategy requires a significant investment in systems and space 31

32 Click-Only Strategy Business transactions are only conducted virtually Can require significant expertise and investment in technology and systems staff There are many different revenue models 32

33 " The Virtual Enterprise Uber, the world s largest taxi company, owns no vehicles. Facebook, the world s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. Airbnb, the world s largest accommodation provider, owns no real estate. 33

34 ebusiness/ ecommerce - Establishing a Web Presence 34

35 Front & Back-End Systems Front-End System Back-End System 35

36 Front-End Systems Front- end (client) systems are those processes with which a user interfaces, and over which a customer can exert some control. For an ebusiness, front-end systems are the Web site processes that customers use to view information and purchase products and services. 36

37 Back-End Systems Back-end (server) systems are those processes that are not directly accessed by customers. Back-end systems include the business s TPS and MIS systems that handle the accounting and budgeting, manufacturing, marketing, inventory management, distribution, order-tracking, and customer support processes. 37

38 Establishing an ecommerce Web Site Dedicated Server - business sets up own server to serve ebusiness web pages - connect to Internet through a dedicated line - install proper software for managing server and creating Web pages - expert staff required - offers most control 38

39 Web Hosting Services Hosting company offers space on its server for the hosting of Web sites - may provide software tools for flexible page development - majority of businesses do not maintain their own Web server; they use host services; 39

40 Showing Your ebusiness to Customer - Storefront: can have your own business on one separate web page OR - Cybermall hosts pages of many businesses and users browse them all - user who enter one mall store may also visit yours out of curiosity 40

41 Outsourcing ebusiness Operations Using a web hosting service provides an ebusiness with several advantages. A web hosting service has a staff available 24 hours a day with the technical knowledge to keep the servers and network connections running. A web hosting company can provide a level of redundancy that an ebusiness may not be able to provide for itself, including redundant hard drives on the servers, backup power from generators, and redundant connections to the internet. 41

42 Outsourcing ebusiness Operations One disadvantage of outsourcing Web site operations is lack of control. One solution to this lack of control is for an ebusiness to provide its own servers and software and simply colocate its servers at the Web hosting company facilities. 42

43 ecommerce Payment Systems Payment cards = general term for plastic cards Credit card most common for EC, has spending limit, pay off portion/all of the balance Debit card transfers sales amount from client account to merchant account Charge card spending limits set by card, entire amounts charged to card, payment due at end of billing period Advantages and disadvantages Some payment cards provide fraud protection Some limit cardholder s liability to $50 in case of fraud Many payment cards accepted worldwide Easy electronic checkout no special hardware needed Merchants charged per-transaction fee and monthly processing fees 43

44 Payment Acceptance and Processing To accept credit cards: Open merchant account: get bank approval, apply, sign contract, pay setup fee Purchase credit card processing software (also called credit card gateway) CyberCash and CyberSource provide software that accepts credit card numbers and transfers them to/from credit card system Integrate credit card processing software into transaction system Steps followed by payment card transaction: Merchant authenticates card Merchant checks issuer/clearinghouse to ensure available funds, holds amount on credit line Settlement occurs, funds transfer between banks, funds into merchant account 44

45 ebusiness/ ecommerce - General ebusiness Security 45

46 General ebusiness Security Businesses must protect against the unknown. New methods of attacking networks and Web sites and new network security holes are being constantly discovered or invented. An ebusiness cannot expect to achieve perfect security for its network and Web site 46

47 General ebusiness Security cont d How is the data protected once it is delivered to the ebusiness? How are credit card transactions authenticated and authorized? The biggest potential security problem in an ebusiness is of human, rather than electronic, origin. The weakest link in any security system is the people using it. 47

48 Network and Web Site Security An entire glossary of words and phrases identifies network and web security risks, such as hacker, cracker, Trojan horse, and more. As part of planning a startup ebusiness s security, management should become familiar with network and web server security risk terminology 48

49 Hacker vs. Cracker Hacker: A person who delights in having an intimate understanding of the internal working of a system, computers and computer networks in particular. The term is often misused in a pejorative context, where cracker would be the correct term Cracker: someone whose purpose is to circumvent or break security measures. Many use their powers for evil, however, as we are all too painfully aware Definitions taken from: Perrin, Chad (2009). Hacker Vs. Cracker. 49

50 Denial of Service Attacks A type of attack designed to disable a web site by flooding it with useless traffic or activity. Distributed denial of service attack uses multiple computers to attack in a coordinated fashion. Risk is primarily centered around downtime or lack of web site availability. Defenses exist for these attacks. 50

51 Credit Card Fraud & Data Theft ebusiness is at risk from credit card fraud from stolen data. Secure your own data. Verify the identity of your customers and the validity of the incoming credit card data. Identity theft by a criminal masquerading as someone else, is a too common problem. 51

52 Spyware, Spam, and Cookies *MC Spyware Any software that covertly gathers information about a user through an Internet connection without the user s knowledge Problems: uses memory resources, uses bandwidth, and can cause system instability Prevention: Firewalls and Anti-spyware software Spam Electronic junk mail or junk newsgroup postings usually for purpose of advertising some product and/or service Problems: nuisance, wastes time deleting, uses storage Prevention: Spam Blocker software Cookies A message passed to a browser from a Web server. Used by legitimate programs to store state and user information Problems: can be used to track user activities Prevention: browser settings, firewall 52

53 Security Threat: Viruses Viruses Programs that can attack a computer and/or a network and delete information, disable software, use up system resources, etc. Prevention Steps: AntiVirus software: Install this software which is designed to block all known viruses and offers automatic or manual updates to virus patterns to block future viruses No Disk Sharing Viruses can be transferred to clean computers by inserting disks containing infected files Delete Suspicious Messages Do not open suspicious messages Delete Only! Report Viruses If you get a virus, report it to you network administrator immediately! 53

54 Security Technology: Biometrics Biometrics A sophisticated authentication technique used to restrict access to systems, data and/or facilities Uses biological characteristics to identify individuals such as fingerprints, retinal patterns in the eye, etc. that are not easily counterfeited Has great promise in providing high security 54

55 Security Managerial Techniques Organizational Policies and Procedures Acceptable Use Policies formally document how systems should be used, for what, and penalties for non-compliance Backups and Disaster Recovery Backups taking periodic snapshots of critical systems data and storing in a safe place or system (e.g. backup tape) Disaster Recovery Plans spell out detailed procedures to be used by the organization to restore access to critical business systems (e.g. viruses or fire) Disaster Recovery executing Disaster Recovery procedures using backups to restore the system to the last backup if it was totally lost 55

56 ebusiness/ ecommerce - Web 2.0/ M-Commerce 56

57 The Evolution of the Web 1 'Grassroots of ebusiness' 2 'Rise of the Internet' 3 'Stock market crash' 4 'Synergy' Points Web 1.0 Business Web 45% Web 2.0 Social Web During the past decade, ebusiness companies have passed through four distinct periods, as is reflected in the evolution of the NASDAQ Launch of Amazon.com Source: NASDAQ quotes taken from Factiva.com Year 57

58 Web Web 2.0 Web 1.0 = display simple pages, allow non-linear navigation Web 2.0 = user-centered applications and social media technologies User-generated content and communication Highly interactive, social communities Large audiences; yet mostly unproven business models Examples: Twitter, YouTube, Instagram, Wikipedia, Tumblr 58

59 Web 2.0 Features and Services Blogs Personal Web page that typically contains a series of chronological entries by its author, and links to related Web pages Really Simple Syndication (RSS) Program that allows users to have digital content automatically sent to their computers over the Internet 59

60 Web 2.0 Features and Services Podcasting Audio presentation stored as an audio file and available for download from Web Wikis Allows user to easily add and edit content on Web page New music and video services Video-casts Digital video on demand 60

61 The Mobile Platform Most recent development in Internet infrastructure Enables access to the Internet via wireless networks or cell-phone service Mobile devices include Tablets Smartphones Ultra-lightweight laptops 61

62 Mobile Commerce in Perspective Global M-commerce spending: Mobile retail sales grew from $20.9 billion (2012) to $34.2 billion (2013) or 64% E-Bay accounts for $20 billion sales 90% of consumers trust recommendations from friends, and another 70% trust consumer opinion and brand websites Only 62% of consumers trust TV, and only about four in 10 (41%) trust search engine ads By 2019, 60 percent of the projected 9.3 billion mobile subscriptions will be for smartphones. 3G networks will cover 90 percent of the world's population, while 65 percent will be covered by 4G LTE networks. 62

63 B2B vs B2C vs MC 63

64 Transforming Web 2.0 to Web

65 65

66 The Next Wave! CONSUMERIZATION of IT Consumerization will force more IT changes over the next 10 years than any other trend. - Gartner MOBILITY 66

67 Security in the Cloud Bypasses traditional IT You put your data where!!! On demand services (OPX Vs CAPX) Location of data Impacts on data privacy legislation Foreign government search Lack of control Moves IT from service provider to contract manager (Service Level Agreements) Ability to audit Exit Strategy (How do you get your data out) 67