UNIT – I

INTRODUCTION TO E‐ BUSINESS:

            E-Business involves changes in an organization business and functional processes with the application of technologies, philosophies and computing paradigms of the new digital economy. It is an internet initiative which transforms business relationships. It includes all aspects of e-commerce.

Meaning:

Electronic Business or e-business is a term which can be used for any kind of business or commercial transaction that includes sharing information across the internet. Commerce constitutes the exchange of products and services between businesses, groups and individuals and can be seen as one of the essential activities of any business. Electronic commerce focuses on the use of ICT to enable the external activities and relationships of the business with individuals, groups and other businesses or e business refers to business with help of internet i.e. doing business with the help of internet network  The term "e-business" was coined by IBM's marketing and Internet team in 1996

INTRODUCTION TO E‐COMMERCE

E-commerce (short for "electronic commerce") is trading in products or services using computer networks, such as the Internet. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection. Modern electronic commerce typically uses the World Wide Web for at least one part of the transaction's life cycle, although it may also use other technologies such as e-mail.

E‐Commerce is a latest technology related with commerce and computer. Commerce is the exchange or transformation or buying and selling of entities (goods or commodities) on a very large scale involving transportation from one place to another. [Webster] E‐ Commerce is the process of doing business online. Or we can say that E‐commerce is to conduct business by using the IT (Information technology, i.e., computer technology and electronic communication) it is the buying and selling of items or goods or services on the Web using electronic communication and digital information processing technology.EDI or Electronic Data Interchange is an early form of e‐commerce. Its high cost, use of proprietary standards etc. hampered the spread of e‐commerce.

E‐commerce is a composite of technologies process and business strategies that foster the instant exchange of information within between organization. E‐commerce strengthens relationship with buyers make it easier to attract new customer, improves customer responsiveness and open new markets on a global scale. E‐commerce is the application of various communication technologies to provide the automated exchange of business information with internal and external customer, suppliers and financial institutions.

History of E-Business

With the advent of the World Wide Web (WWW), or the "web," traditional business organizations that had relied on catalog sales had a new sales vector. Other businesses found that the web was a good place to put customer service information, such as manuals and drivers, as well as a place to help create a consistent corporate image. As the web developed, a number of Internet-based businesses developed, including companies like eBay and Amazon, and web-based information repositories like e-How.

 Early Use of the Web for Business

            Business began using websites for marketing shortly after graphical-based web design became  available in the early 1990s. Most of these websites served to provide visitors basic information about a company's products and services, and included contact information, such as phone numbers and email addresses, to assist consumers in contacting a company for services. The move from providing simple business information to soliciting business via the web occurred almost as soon as marketing departments realized that company websites were available to millions of people. Online sales began in 1994 with the ability to encrypt credit card data.

Early Online Sales

            With the advent of the Secured Socket Layer (SSL), developed by Netscape in 1994, websites developed the ability to encrypt sessions, thus making credit card transactions over the Internet more safe. With an encrypted connection between a company's server and a client computer, credit numbers could be masked so they could not be intercepted by a third party, thus making theft of card information less likely. This security led to an increased number of businesses offering products for sale via the web.

Birth of Modern Web Sales

            Developments in server technology, including the ability to build websites from product databases, resulted in creation of large Internet-only businesses like eBay and Amazon. In previous product-sales websites, each product had to be manually posted on a web page. With database-driven sites, companies could use web-page templates to display tens of thousands of products on-the-fly. As the number of available products increased, so did traffic and sales on these websites.

E‐commerce V/s Traditional Commerce

E‐commerce is an extension of traditional commerce, which is concerned with the activities of business, industry and trade including the exchange of goods, services, information and money. It has the same essential ingredients of ordinary commerce. The major difference between e‐commerce and commerce is that with e‐commerce, these exchanges of goods and services are carried out over the web instead t of the traditional physical act of going to a trader for goods and services. Now that a large number of people have access to the internet and it is a good platform for the development of e‐commerce. Successful E‐commerce strategies allow organizations distinct advantages in terms of both cost and revenues‐ the fundamentals of all business. This is because cost can be cut immensely as retail outlets are not required. Most of the cost associated with traditional high capital business is eliminated and or transformed into profit in the Internet environment.

DIFFERENCE BETWEEN E‐COMMERCE AND TRADITIONAL COMMERCE

BASIS

E‐COMMERCE

TRADITIONAL SYSTEM

Doesn’t involve data at multi

The

buyer

and

seller

create

purchase  order  on

their

system

points.

and

send  it

to

their

trading

Data goes directly from one

1

Reduce Data Error

partner. The

receiver/seller then

computer to another

re‐enter the same information on

Computer without involving

the computer, which will create

human being

data error

Time is directly ;linked to saving

Initial cost of E‐commerce is

the money. There is repetition of

2.

Reduce cost

very high as compared to paper

same work at every level and it

process but over a long period

involves a lot of wastage of time

of time, it is very effective

and if the error is arisen that will

lead to more wastage of money.

It requires re‐entry of data at each

E‐commerce data in the

level and requires lot of time. So

3.

Reduce Paper work

electronic form make it easy to

the  peak  time  is  wasted  in  re‐

share it across the organization

entering  and  printing  of  the

reports

E‐commerce

reduces

the

When the buyer order in a paper

Reduce Processing

processing

cycle   time

of

format, the data is re‐entered in to

4.

complete cycles as the data

is

the Sellers’s computer and then

cycle time

entered

the

system,

it

is

only  processing  can  take  place

simultaneously Processed

which is a time consuming process.

No  need  to  maintain  large

Need to maintain a large number

5.

Reduce labor

number

of employees, instead

of employees because one‐third of

there arises the need to manage

labor force is employed to fulfill

them more efficiently

orders from customers.

E‐Business and E‐commerce

         Internationally both the terms can be interchanged and having the same concepts, that is , doing business online. However, EB is the term which is derived from e‐commerce. However there is little difference between these two concepts. Electronic commerce is a business to business [B2B] initiative aimed at communicating business transaction documents on a real time or near real time basis between known trading partners such as suppliers, customers etc. E‐commerce might be considered as the use of the Internet as a company’s primary or exclusive portal to its customers. Amazon or e‐bay conducts all of their business online and their products and services are exclusively those which can be sold online.

On the other side e‐business refers to companies for which internet is one of several channels to customers and perhaps not even the primary one. Banks are a classic example, as are companies, which have internet storefronts. But all such entities have other primary channels to distribute their products. The main distinctions between E‐commerce and E‐Business are

	E‐Commerce	E‐Business
	Open system [statistics]	Closed System
	Not secured	Secured
	Deals more with technology	Deals with processes needed to facilitate
		e‐commerce
	Does not involve the use of EDI	Used EDI
	Always operate on Internet	Always operates on intranet
	Involves all types of commerce transaction	Involves explicitly business transactions
	Used for small and bulky transaction	Used for bulky transaction
	Focused on Business to consumer activities	Focused more on business to business activities
	e‐commerce is an extension of a traditional	e‐business is an online business only
	business model

History of E‐commerce

Most people don’t realize that e‐commerce and its underlying technology have been around for about forty years. The term e‐commerce was originally conceived top describe the process of conducting business transactions electronically using technology from the Electronic Data Interchange [EDI] and Electronic Funds Transfer [EFT].EDI is widely viewed as the beginning of E‐commerce. Large organizations have been investing in development of EDI since sixties. It has not gained reasonable acceptance until eighties. EDI is a set of standards developed in the 1960’s to exchange business information and do electronic transactions. At first there were several different EDI formats that business could use, so companies still might not be able to interact with each other. Electronic Data interchange [EDI] allowed different companies to perform electronic dealings with one another.

The internet was conceived in 1969, when the Advanced Research Projects Agency [a Department of Defense Organization] funded research of computer networking. The Internet could end up like EDI without the emergence of World Wide Web in 1990s.The web became a popular mainstream medium (perceived as the fourth mainstream medium in addition to print, radio and TC) in a speed, which had never seen before. The web users and contents were increasing at an accelerated rate. Besides the availability of technical infrastructures, the popularity of the web is largely attributed to the low cost access and simplicity of HTML authoring, which are the obstacles of EDI Development. The Internet and the Web have overcome the technical difficulty of EDI, but it has not solved the problem of slow development of E‐commerce standards/.

XML, as a Meta Markup Language, provides a development tool for defining format of data interchange in a wide variety of business communities. Web services offer a flexible and effective architecture for the implementation. There is no doubt that XML and the web services will shape the course of E‐commerce in the years to come.

The next important phase in the History of E‐commerce was the development of Mosaic Web browser in 1992.The Web Browser was soon given the form of a browser which could be downloaded and was named as Netscape.

The next important milestone in e‐commerce was the development of Napster. Napster was an online application used to share music files for free. Many consumers used the site and were dictating what they wanted from the Industry. Napster allowed people to download music from the Internet for free.

The development and adaptation of DSL and Red hat Linux respectively, again benefited the process of online business transaction. The year 2000, saw a major merge between AOL and Time Warner which marked another important step towards the development of E‐commerce.

The World wide popularity of Internet has resulted in the stable development and overwhelming acceptance of E‐Commerce. E‐Commerce provides with a rich online transaction experience. Business to Business is the largest E‐Commerce in the present time. Peer to Peer and Consumer to Consumer are two important types of E‐Commerce.

Importance, features and benefits of E‐commerce:

Importance of E‐commerce

         Through, E‐commerce, operating efficiency of the business firm will definitely improve and which in turn strengthen the value and service given to customers and provide a competitive edge over competitors. These improvements may result in more effective performance. The direct benefit accrue to an organization on practicing e‐commerce are better quality, greater customer satisfaction, better decision making, low cost, high speed and real time interaction. More specifically e‐commerce enables executing of information relating to the transaction between two or more using interconnected networks.

From the business perspective with less time spent during each transaction, more transaction can be achieved on the same day. As for the consumer, they will save up more time during their transaction. Because of this, E‐commerce steps in and replaced the traditional commerce method where a single transaction can cost both parties a lot of valuable time.

E‐commerce is the most cost effective compared to traditional commerce method. This is due to the fact where through e‐commerce, the cost for the middleperson to sell their products can be saved and diverted top another aspect of their business. For e‐commerce, the total overheads needed to run the business is significantly much less compared to the traditional commerce method. The reason due to that is where most of the cost can be reduced in E‐ commerce.

To both the consumers and business, connectivity plays an important part as it is the key factor determining the whole business. From the business point of view, E‐commerce provides better connectivity for its potential customer as their respective website can be accessed virtually from anywhere through the Internet. This way, more potential customers can get in touch with the company’s business and thus, eliminating the limits of geographical location. From the customer’s standpoint, E‐commerce is much more convenient as they can browse through a whole directories of catalogues without any hassle, compare prices between products, buying from another country and on top of that, they can do it while at home or at work, without any necessity to move a single inch from their chair. Besides that for both consumers and business, commerce proves to be more convenient as online trading has less red tape compared to traditional commerce method. Ecommerce itself gives a boost to the global market. In short, if without any major obstacles, E‐commerce will certainly continue to mature in the global; market and eventually, it will become an essential business plan for a company in order to survive and stay competitive in the ever changing market.

E‐commerce business have numerous advantages over off line retail locations and catalog operators consumers browsing online stores can easily search to find exactly what they are looking for while shopping and can easily comparison shop with just a few clicks of the mouse. Even the smallest online retail sites can sell products and turn a profit with a very simple online presence. Web tracking technology allows e‐commerce sites to closely track customer preferences and deliver highly individualized marketing to their entire customer base. Some of the benefits of e‐commerce are

Ø  Expanded geographical reach

Ø  Expanded customer base

Ø  Increase visibility through Search engine Marketing

Ø  Provide customers valuable information about your business

Ø  Available 24/7/365 – Never close

Ø  Build customer Loyalty

Ø  Reduction of Marketing and Advertising costs

Ø  Collection of customer Data

Impacts, Challenges and Limitations of E‐commerce Impacts of E‐commerce

The introduction of e‐commerce has impacted on the traditional means of online exchanges. It is creating a new market place and opportunities for the reorganization of economic processes, in a more efficient way.

 The open structure of the Internet and the low cost of using it permit the interconnection of new and existing information and communication technologies. It offers businesses and consumers an innovative and powerful information system and another form of communication. This changes the way they search and consumer products, with these products increasingly customized, distributed and exchanged differently. The advent of e‐ commerce has seen a dramatic impact on the traditional ways of doing business.

It has brought producers and consumers closer together and eradicated many of the costs previously encountered. It is evident that the supply industry will benefit from e‐commerce which includes those producing computers, networking equipment and the software necessary. It is also evident that a negative impact will be targeted at direct substitutes, such as retail travel agencies, retailers of software and “bricks and mortar: music stores. However, these impacts will be small compared to the developments imaginable.

Challenges of E‐commerce

As far as e‐commerce is concerned it is still in an infancy stage in India. The environment exist today is not much suitable for the fast growth of e‐commerce. There are various problems and challenges, which should be resolved immediately to achieve a fast growth in this area.

One of the important challenges faced by this sector is the lack of adequate infrastructure for IT technology and Internet. The penetration of personal computers in India is as low as 3.5 per thousand of population compared to over 6 per thousand in China and 500 per thousand in USA.

Another important reason for not developing e‐commerce is the high tariff rate charged by Internet Service Providers [ISPs] Speed and connectivity is also poor.

Another problem faced is that e‐commerce sites are one of the favorite targets of hackers. If you think that your site is not relevant enough to catch their attention, you are wrong, and this way of thinking will help you to prepare to face related risks. And the most serious drawback is the absence of effective cyber law at the moment. E‐commerce is governed by the UNCITRAI model code, but this is not binding on any country. It is expected that all WTO member countries will soon enact laws to govern e‐commerce. Towards this end, India has passed her Information Technology Act in May 2000.However, this Act simply considers the commercial and criminal side of law and fails to consider other multidimensional aspects of e‐commerce,

Another cause for the slow growth of e‐commerce is the privacy and security issues. Measures like digital signatures, Digital certificates, and fire walls can be adopted to secure safety and protection over the message passed on internet. Payment related problems also continue to block the e‐commerce activities. Electronic cash, credit cards etc. are some of the popular payment method used for e‐commerce transactions. But unfortunately penetration of e‐cash and credit cards not only low, but Indian consumers are suspicious about the threat of fraud played by unscrupulous hackers. In order to minimize this problem experts suggest the use of digital certificate along with credit card to secure their payment activities.

Limitations of E‐commerce

Electronic commerce is also characterized by some technological and inherent limitations which have restricted the number of people using this revolutionary system. One important disadvantage of e‐commerce is that the Internet has still not touched the lives of a great number of people, either due to lack of knowledge or trust. A large number of people do not use the Internet for any kind of financial transaction.

Another limitation of e‐commerce is that it is not suitable for perishable commodities like food items. People prefer to ship in the conventional way than to use e‐commerce for purchasing food products. So e‐commerce is not suitable for such business sectors. The time period required for delivering physical products can also be quite significant in case of e‐commerce. A lot of phone calls and e‐mails may be required till you get your desired products. However returning a product and getting a refund can be more troublesome and time consuming than purchasing, in case if you are not satisfied with a particular product. Some of the other limitations are:‐

9        Credit card security is a serious issue if vulnerable

9        Costs involved with bandwidth and other computer and server costs

9        Extensive database and technical knowledge and experience required

9        Customer apprehension about online Credit Card orders

9        Constantly changing technology may leave slow business behind

9        Some customers need instant gratification, and shipment times interrupt that

9        Search utilities far surpasses the speed used to find products through catalogs

Encourages competition between small and large online retailers

BUSINESS MODELS OF E-COMMERCE

E‐Commerce is a much wider subject than selling online. It is of the view that e‐commerce covers any form of transaction where technology has played a part. There are also many different types of e‐commerce, with differing relationships existing with each. Some of the important models of e‐commerce are as follows:‐

1. Business to Business [B2B]

B2B (business – to‐ business) is the major and valuable model of e‐commerce.B2B (business – to‐ business) e‐commerce is conducted between two separate businesses and has been in effect for many years. E‐commerce plays an important role in enhancing and transforming relationships between and among business. B2B (business – to‐ business) is also known as e‐biz, is the exchange of products, services, or information between businesses rather than between businesses and consumers. Although early interest centered on the growth of retailing on the Internet (sometimes called e‐tailing), forecasts are that B2B revenue will far exceed business to consumers [B2C] revenue in the near future. B2B (business – to‐ business) is a kind of e‐ commerce, which refers to a company selling or buying from other companies. One company communicates with other companies through electronic Medias. Some of these transactions include sending and receiving orders, invoice and shopping orders. It was an attractive alternative to the current process of printing, mailing various business documents.

Some B2B applications are the following:‐

1. Supplier Management

Electronic applications in this area helps to speed up business partnerships through the reduction of purchase order processing costs and cycle times, and by maximizing the number of purchase order processing with fewer people.

2. Inventory Management

Electronic applications make the order‐ship bill cycle shorter. Businesses can easily keep track of their documents to make sure that they were received. Such a system improves auditing capabilities, and helps reduce inventory levels, improve inventory turns, and eliminate out‐ of‐ stock occurrences.

3. Distribution Management

Electronic based applications make the transmission of shipping documents much easier and faster. Shipping documents include bill of lading, purchase orders, advance ship notices, and manifest claims. E‐commerce also enables more efficient resource management by certifying that documents contain more accurate data.

4. Channel Management

E‐commerce allows for speedier distribution of information regarding changes in operational conditions to trading partners. Technical, product and pricing information can be posted with much ease on electronic bulletin boards.

5. Payment Management

An electronic payment system allows for a more efficient payment management system by minimizing clerical errors, increasing the speed of computing invoices, and reducing transaction fees and costs.

Many organizations are implementing electronic commerce in numerous ways and receiving tangible benefits but as electronic commerce matures and develops, these ways are likely to change based on the accelerating adoption rate. There are three specific implementation models of B2B E‐commerce:‐

•         Transaction based‐ a single company establishes a common transactional method for conducting business with its major customers or key suppliers. This offering is common across all business units within the company and includes common tools, techniques, and infrastructure.

•         Process based‐ two companies establish a common business process to conduct business efficiently between the two firms. The two firms establish and share this common practice jointly, both within their firm and outside their organization with this predetermined trading partner.

•         Strategic relationship based – Two or more companies establishing a strategic relationship partnership based on all major interactions between the organizations. This includes transactions, processes, and any other collaboration between the organizations. From a technology perspective this includes linking the CRM, ERP and SCM systems of the two organizations. This way each organization can actually monitor sales activity, production schedules, inventory management, and technical service exchanges.

2. Business – to Consumer [B2C]

Business – to Consumer [B2C] e‐commerce consists of the sale of products or services from a business to the general public. Products can be anything from clothing to flowers and the products can also be intangible products such as online banking, stock trading, and airline reservations. Sellers that use B2C business model can increase their benefits by eliminating the middlemen. This is called disintermediation because businesses sell products directly to consumers without using traditional retail channels. Business – to Consumer [B2C] is basically a concept of online marketing and distributing of products and services over the internet. It is a natural progression for many retailers or marketer who sells directly to the consumer. The general idea is, if you could reach more customers, service them better, make more sales while spending less to do it that would the formula of success for implementing a B2C e‐commerce infrastructure.

A business firm can also establish relations with customers through electronic medias. For this, the company has to design a web site and place it on the internet. On the web site, the company can publish all details about the product and services and that benefits customers to place orders for these goods from the web site.

To maintain customers always with company’s web site, the company must update the information on the web regularly. Consumers always demand greater convenience and lower prices. Electronic commerce provides consumers with convenient shopping methods.

Business – to Consumer [B2C] e‐commerce provides many benefits to the business. Some of them are:‐

•         Lower Marketing costs

•         Lower order processing cost

•         Better customer service

•         Lower customer support cost

•         Wider markets

3. Business – to –Government [B2G] e‐commerce

B2G refers to the supply of goods and services for online government procurement. This is a huge market which mainly covers everything from office supplies to military equipment.B2G websites offer lower costs and greater choice to the administration, and make government tendered offers more accessible to companies.B2G is a derivative of B2B marketing and often referred to as a market definition of public sector marketing which encompasses marketing products and services to various government levels including‐federal, state and local‐ through integrated marketing communications techniques using as strategic public relations, branding, , advertising, and web based communications.

A website offering Business – to –Government services could provide businesses with the following.

•         A single place to locate applications and tax forms for one or more levels of government (city, state or local)

•         To provide the ability to send in filled out forms and payments

•         To update corporate information

•         To request answers to specific questions

Business – to –Government decreases the cost of transactions with reference to licenses, selling publication of government documents, tax returns and general dealings with businesses and the public. It has increased information flow.

4. Business‐ to‐ employee [B2E]

Business‐ to‐ employee [B2E] uses an intrabusiness network which allows companies to provide products and/ or services to their employees. It is the use of intranet technologies to handle activities that take place within a business. An intranet is an internal network that used Internet technologies.

Business‐ to‐ employee [B2E] is different from other type since it is not a revenue form of business. Otherwise, it increases profits by reducing expenses within a company. Instead of having to look everything up manually they can collaborate with each other and exchange data and other information.

Many companies have found that B2E technologies have dramatically reduced the administrative burdens with the human resources department. Admittedly, maintaining employee information has little to do with commerce, but this term has grown to encapsulate this activity into the B2E definition. Examples of B2E applications include

1.      Online insurance policy management

2.      Corporate announcement dissemination

3.      Online supply requests

4.      Special employee offers

5.      Employee benefits reporting

6.      401(k) Management

5. Consumer - to - Consumer (C2C)

Website following C2C business model helps consumer to sell their assets like residential property, cars, motorcycles etc. or rent a room by publishing their information on the website. Website may or may not charge the consumer for its services. Another consumer may opt to buy the product of the first customer by viewing the post/advertisement on the website.

6. Consumer - to - Business (C2B)

In this model, a consumer approaches website showing multiple business organizations for a particular service. Consumer places an estimate of amount he/she wants to spend for a particular service. For example, comparison of interest rates of personal loan/ car loan provided by various banks via website. Business organization who fulfills the consumer's requirement within specified budget approaches the customer and provides its services.

Advantages to Organizations

·         Using E-Commerce, organization can expand their market to national and international markets with minimum capital investment. An organization can easily locate more customers, best suppliers and suitable business partners across the globe.

·         E-Commerce helps organization to reduce the cost to create process, distribute, retrieve and manage the paper based information by digitizing the information.

·         E-commerce improves the brand image of the company.

·         E-commerce helps organization to provide better customer services.

·         E-Commerce helps to simplify the business processes and make them faster and efficient.

·         E-Commerce reduces paper work a lot.

·         E-Commerce increased the productivity of the organization. It supports "pull" type supply management. In "pull" type supply management, a business process starts when a request comes from a customer and it uses just-in-time manufacturing way.

Advantages to Customers

·         24x7 support. Customer can do transactions for the product or enquiry about any product/services provided by a company any time, any where from any location. Here 24x7 refers to 24 hours of each seven days of a week.

·         E-Commerce application provides user more options and quicker delivery of products.

·         E-Commerce application provides user more options to compare and select the cheaper and better option.

·         A customer can put review comments about a product and can see what others are buying or see the review comments of other customers before making a final buy.

·         E-Commerce provides option of virtual auctions.

·         Readily available information. A customer can see the relevant detailed information within seconds rather than waiting for days or weeks.

·         E-Commerce increases competition among the organizations and as result organizations provides substantial discounts to customers.

Advantages to Society

·         Customers need not to travel to shop a product thus less traffic on road and low air pollution.

·         E-Commerce helps reducing cost of products so less affluent people can also afford the products.

·         E-Commerce has enabled access to services and products to rural areas as well which are otherwise not available to them.

·         E-Commerce helps government to deliver public services like health care, education, social services at reduced cost and in improved way.

·         E-Commerce Categories

1. Electronic Markets

            Present a range of offerings available in a market segment so that the purchaser can compare the prices of the offerings and make a purchase decision. Example: Airline Booking System

2. Electronic Data Interchange (EDI)

 It provides a standardized system Coding trade transactions Communicated from one computer to another without the need for printed orders and invoices & delays & errors in paper handling It is used by organizations that a make a large no. of regular transactions Example: EDI is used in the large market chains for transactions with their suppliers

3. Internet Commerce

• It is use to advertise & make sales of wide range of goods & services.

• This application is for both business to business & business to consumer transactions.

E-COMMERCE IN INDIA:

India is at the cusp of a digital revolution. Internet has become an integral part of the growing urban Indian population. Various factors have been driving this trend, such as:

• Declining broadband subscription prices
• Launch of 3G services leading to an ever-increasing number of “netizens”
• Urban India’s changing lifestyle
• Convenience of online shopping
• Changes in the supporting ecosystem

Methodology

In 2012, we conducted a research study on the Indian e-Commerce sector, elucidating a detailed market perspective. The report focused on the following key e-Commerce segments along with elaborating on the ecosystem, investment scenario and operational challenges:

• Travel
• Retail
• Classifieds

We conducted comprehensive interviews which provided a firsthand perspective on opportunities and challenges in store for various stakeholders.

Executive summary

Although the trend of e-Commerce has been making rounds in India for 15 years, the appropriate ecosystem has now started to fall in place. The e-Commerce market in India has enjoyed phenomenal growth of almost 50% in the last five years.

Key factors driving the growth story of e-Commerce in India include:

• Considerable rise in the number of internet users
• Growing acceptability of online payments
• Proliferation of internet-enabled devices
• Favorable demographics

The number of users making online transactions in India is expected to grow from 11 million in 2011 to 38 million in 2015.Venture capitalists (VC) and private equity players have demonstrated their faith in the growth of e-Commerce in the country. This is amply substantiated by the significant increase in the total investments (US$305 million in 2011 against US$55 million in 2010).

E‐Commerce Strategy

Companies with an E‐business strategy are more open. The entire organization focuses on the market and has greater visibility, more efficient collaboration and stronger relationships. Opening up a business, however, requires an extended ERP Solution which integrates the front office with the back‐office system. Customer Relationship Management [CRM] and Supply Chain Collaboration [SCC] compliment back‐office relationship. SCC streamlines the flow of information and self service capabilities through automation and interaction. Such solution allows customers, partners and employees to access system functions and information via the Internet. They use the critical business and financial information in your ERP solution to promote profitable new ways to work with customers and vendors.

The various elements required to implement a successful e‐commerce strategy are:‐

•         Make sure to have a Market –

•         Use a clicks and mortar strategy if possible‐ it combines offline resources, such as store brands, channels with an online e‐commerce presence

•         Integrate the shopping experience Integrate information, personal details and purchase history

•         Plan about the content, pricing, stock management, fulfillment, support, payment, returns, support and security.

•         Develop an easy‐to use purchase process

•         Consider localization issues

•         Consider customer relationship management and personalization

•         Use the right software

•         Always employ the right team in place

•         Use enough marketing campaign

MANAGING E‐BUSINESS INFRASTRUCTURE

The Internet

Internet is the world’s largest computer network. The internet is a network or more precisely “Inter‐network” of hundreds of connecting networks made up of different types of computers all over the world that can share messages and information with one another. Internet is a global network of computers. The Internet has revolutionized the computer and communications world like nothing before. Anybody can access the Internet and can use the resources available on the Internet.

The Internet is a worldwide, publicly accessible series of interconnected computer networks that transmit data by packet switching using the standard Internet Protocol (IP) It is a “network of networks” that consists of millions of smaller domestic, academic, business, and government networks, which together carry various information and services, such as electronic mail, online chat, file transfer, and the interlinked web pages and other resources of the World Wide Web [WWW]

The different purposes of Internet are as follows:

1.      Sending and receiving E‐mails ( It is an instantaneous way of sending and receiving messages, called electronic mail0 round the world at minimal price

2.      Finding information on any topic or can be used as an educational tool.

3.      Helps in participating in discussion on wide range of topics

4.      Used to send data in the form of files from one computer to other with the facility called FTP [File Transfer Protocol]

5.      It is used for research purpose.

6.      Internet provides a great learning experience

World Wide Web

                         Www or World Wide Web is used for people around the world and it would easily link to other pieces of information, so that only the most important data would quickly found by a user.

Www is a global web in which millions of users are communicating with each other with the help of computers. It is a wide‐area hypermedia information retrieval initiative aiming to give universal access to a large universe of documents. It is an Internet based computer network that allows users on one computer to access information stored on another through the world wide network.

Working of the WWW

The WWW works on a Client‐server approach. Whenever the user wants to retrieve a webpage, the www works as follows:

1.      A user enters the URL of the webpage in the address bar of the web browser.

2.      The web browser requests the Domain Name Server for the IP address corresponding to www.yahoo.com

3.      After receiving the IP address, the browser sends the request for the webpage to the Internet using HTTP protocol which specific the way the browser and Web Server communicates. The Internet Routers send the request to the intended web server

4.      Then the web server receives the request using HTTP protocol. It then examines the hard disk or memory and if the requested file is found it returns it back to the web browser and closes the Http connection.

5.      The Web browser then interprets the file and displays the contents of the webpage in the browser window.

INTERNET APPLICATIONS:

Internet Address:

            It is a systematic way to identify people, computers and internet resources. The term “address” is used loosely. Address can mean many different things from an electronic mail address to a URL.

IP address:

An IP address is an identifier for a particular machine on a particular network; it is part of a scheme to identify computers on the Internet. An IP address consists of IP numbers and Internet addresses.  It also consists of four sections separated by periods.  Each section contains a number ranging from 0 to 255

Domain name:

            It is the way to identify and locate computers connected to Internet. It is a unique name. It always contains two or more components separated by periods called “ dots”. The last portion is the top-level domain name describing the type of organization holding the name.

Web browser:

            Web browser is a piece of software that acts as an interface between the user and inner working of internet.

¨          Contacts a web server and sends a request for information

¨          Receives the information and then displays it on the user’s computer.

            A browser can be graphical showing the user graphics photograph or text based. It allows the user to view images on their computer. Browser include software program that are needed to display images, hear sounds to run animation sequences.

Web browsing:

            Internet browsing or “net surfing” is the process of visiting different web sites on the internet hosted by various companies, organizations, educational institutions, magazines, individuals etc.

Searching the web:

            Surfing was a typical approach for finding information on the web. Surfing is browsing without tools. There are two main approaches

1) Web indexes            2) Search engines

Web indexes: 

            A web index is designed to assist users in locating information on the worldwide web. Web indexed are also referred to as catalog or directories. A web index collects and organizes resources available in the WWW.

Search engines:

            A web search engine is an interactive tool to help people locate information available in www. Web search engines are actually databases that contain references to thousands of resources.

Meta search engines:

            A web meat-searcher is a tool that helps user’s located information available via the www. It provides a single interface that enables search engines, indexes & database. It’s differing from other search engines & indexes.

Internet chat:

            Internet chat means communicate with people from all over the world, in real time. There are many ways to chat with others. Also sue client software to access one of the networks that host internet relay chat (IRC).

Internet Rely Chat (IRC):

            IRC is a multi-user system that allows many people to communicate across the internet in real time. Channels are the virtual locations on IRC networks where users meet to talk to one another. Channels have different modes. In IRC you need to run a client program on your computer while connected to the internet. Access IRC by connecting to a specific server and this automatically gives you access to the entire network.

Some of the most frequently used commands are

¨          help – To help the list of all commands

¨          list – To view all available channels

¨          join channel – To join a channel

¨          quit -  To quit from the IRC server.

Chatting on web:

            There are hundreds of sites devoted to chat and many sites offer chat areas as an additional feature. Web based charts are usually more colorful than the IRC. On some sites include images, sounds with messages. The service is free but you should register before you can start chatting.

Define net surfing/ web browsing.

Web browsers are mainly used to access pages of the www.  By clicking hypertext links on a page it is possible to jump from one Internet site to another.  Hypertext links are usually highlighted or different colored text, images or icons.

 If the mouse pointer changes its shape to that of a hand then it is a hypertext link.  This jumping from one site to another using the hypertext links is called “net surfing” or “web browsing”

What do you mean by E-mail?

E-mail is an electronic message sent from one computer to another. Each computer reads the e-mail address and routes it to another computer until it eventually reaches its destination. With the use of Multipurpose Internet Mail Extension (MIME) you can send formatted documents, photos, and video files as attachments. It is also possible to interrupt an e-mail on its way, read it and then send it as it were untouched.

How to use the E-mail.

E-mail is everywhere. Once you start looking you will discover that most individuals  and businesses have an electronic address together with the more ‘old fashioned’ telephone and fax numbers. An electronic mail message might be just  a line of text asking a friend a favour or it can be a large business proposal. E-mail is also delivered much faster than the conventional mail .It is much more convenient and economical to send a message or document by e-mail. With an internet account, we can send e-mail from within many applications such as word processing programs and web browsers.

How e-mail works?

¨       Once you have addressed and sent the e-mail, it gets encoded by a modem and it sent down the phone line as an analog signal.

¨        The email message arrives at your service provider’s server.

¨       It recognizes the e-mail address as valid, the mail will be sent.

¨        The mail is sent via the internet.

¨       It will be receives by the recipients provider and is sent to the providers mail server, where it will delivered to the recipients mail box and it will remain there until the recipient next connects to the internet

¨       . Finally the recipients modem and computer decode the data and user can read your e-mail messages.

E-mail name & addresses:

      Email allows information to be sent between computers and people on the internet mostly used resource.

      E-mail address identifies a person and the computer for purpose of exchanging electronic mail message.

      It will be structure in following form

            username@host.subdomain.second-level-domain.first-level-domain

Advantages

ª      Save time and money, global communication is easy and fast.

ª      24 hours access per day, we can work at home.

Disadvantages

ª      It has created an information overload

ª      The very existence of electronic communication has perpetuated the myth that it will lead to better communication, but it is the individual using the technology that makes the communications better or worse.

ª       It can become a distraction and can prevent from doing any productive work.

The Internet Standards

At the technical and developmental level, the Internet is made possible through creation, testing and implementation of Internet Standards. These standards are developed by the Internet Engineering Steering Group, with appeal to the Internet Architecture Board, and promulgated by the Internet Society as international standards. The RFC Editor is responsible for preparing and

organizing the standards in their final form. The standards may be found at numerous sites distributed throughout the world, such as the Internet Engineering Task Force.

An Internet Standard [STD] is a normative specification of a technology or methodology applicable to the Internet. Internet Standards are created and published by the Internet Engineering Task Force [IETF].An internet Standard is a special Request for Comments [RFC] or set of RFCs. The definitive list of Internet Standards is maintained in Internet Standards document STD

1: Internet Official Protocol Standards.

WEB SERVER

      All computers that are connected to the Internet and contain documents that their owners have made publicly available through their Internet connections are called Web servers. A server is any computer used to provide (or ―serve‖) files or make programs available to other computers connected to it through a network (such as a LAN or a WAN). The software that the server computer uses to make these files and programs available to the other computers is sometimes called server software. Sometimes this server software is included as part of the operating system that is running on the server computer.

INTERNET PROTOCOLS / ARCHITECTURES

A communication protocol allows different kinds of computers using different operating systems to communicate with one another. It is highly essential because Internet is not made up of computer system. Instead there are great diversities found in the computers used on the internet. The user connected on any network on the Internet can communicate with others or software located on any other network connected to the internet using common set of protocols. An internet protocol is a set of standards or rules for exchanging information between computer systems in a network. The most commonly used protocols are:‐

1.  Transmission control Protocol/Internet Protocol [TCP/IP]

It is actually a collection of protocols that govern the way data travel from one computer to another across networks. A user connected on any network on the Internet can communicate with people or software located on any other network connected to the internet using this common set of protocols. On the internet, the protocol that permits two internet connected computers to establish a reliable connection is called TCP/IP.

2. File Transfer Protocol [FTP]

FTP is the protocol or set of rules, which enables files to be transferred from one computer to another computer.FTP works on the client/server principle. A client program enables the user to interact with a server in order to access information and services on the server computer. Files that can be transferred are stored on server computers. A client can access these files only through a client application program. This program helps a client computer to locate the required file to be transferred and starts the process of transfer.

3. Hyper Text Transfer Protocol [HTTP]

HTTP is an internet standard or set of rules that allows the exchange of information on the World Wide Web. Hyper text is a method of preparing and publishing text, ideally suited to the computer, in which users can select their own text. To prepare hyper text, the whole material should be divided into small segments such as single pages of text. These small segments are called nodes. Then hyper links are embedded in the text. When the user clicks on a hyper link, the hyper text software displays a different node. The process of navigating among the nodes linked in this way is called browsing. A collection of nodes that are interconnected by hyper links is called a web. A Hyper text is prepared using Hyper Text Markup Language [HTML].The html codes are used to create links.

Http is also based on the client/server principle. It allows the client computer to contact with server computer and make a request. The server accepts the connection requested by the

client and sends back a response. An Http request identifies the information or text that the client is needed and it tells the server to supply the text.

4. Telnet

Telnet is an Internet protocol or set of rules that enables internet users to connect to another computer linked to the internet. This process is also called as remote login. The user’s computer is referred to as the local computer and the computer being connected to is referred to as remote or host computer. Once access is established between local and host computer, local computer can give commands do that they are executed in the host computer.

5. Gopher

Gopher is a protocol linked to the internet to search , retrieve and display documents from remote sites on the internet, It is a menu based program that helps the user to find files, programs, definitions and other topics that the user specifies. Gopher protocol allows the user to free from the troubles of specifying the details of host, directory and file names. Instead, the user can browse through menus and press Enter when he finds some interesting topic. Gopher is interacting with a large number of independently owned computers around the world.

6. Wais

Wais stands for Wide Area Information Service. WAIS is a internet search tool and describes as a protocol for computer to computer information retrieval. It is a program that permits the user to search information worldwide based on a service of key words. WAIS has the capability of simultaneously searching in more than one database.

VALUE CHAIN IN ELECTRONIC COMMERCE:

Creating added value in e-commerce

In e-commerce and distance selling, the order is the main activity unit. From order entry through to the delivery of the goods to their recipients, the different stages of processing orders are intricately intertwined to guarantee customer satisfaction.

BSL is with you every step of the way, providing complete, high-quality solutions which meet our customers’ needs and guide them towards success.

Value chain model-Business application of e-commerce  page no: 54 to 58

UNIT II

An intranet is a private network accessible only to an organization's staff.  Generally a wide range of information and services from the organization's internal IT systems are available that would not be available to the public from the Internet. A company-wide intranet can constitute an important focal point of internal communication and collaboration, and provide a single starting point to access internal and external resources. In its simplest form an intranet is established with the technologies for local area networks (LANs) and wide area networks An intranet is an internal, secured business environment, which uses HTML and TCIP protocols like the Internet, but operates on a LAN [Local Area Network]. If the LAN Provides access to the Internet, the Intranet resides behind a firewall, with no gateway to, or from the Internet. If a gateway exists, it is not an intranet, but an extranet.

An intranet is a private computer network that uses Internet protocols and network connectivity to insecurely share part of organizations information or operations with its employees. Growth of Internal networks based on Internet technologies known as the Intranet is out spacing the growth of the global internet itself. An Intranet is a company‐ specific network that uses software programs based on the Internet TCP/IP Protocol and common Internet user interfaces such as the web browser. Intranet is the application of Internet technologies within an organization private LAN or WAN Network.

The Intranet environment is completely owned by the enterprise and is generally not accessible from the Internet at large. An Intranet incorporates a working, interactive custom environment to serve the business model, with familiar internet‐like functionality and navigation. An intranet can be as basic or comprehensive as need dictates.

• Workforce productivity: Intranets can help users to locate and view information faster and use applications relevant to their roles and responsibilities. With the help of a web browser interface, users can access data held in any database the organization wants to make available, anytime and — subject to security provisions — from anywhere within the company workstations, increasing the employees ability to perform their jobs faster, more accurately, and with confidence that they have the right information. It also helps to improve the services provided to the users.
• Time: Intranets allow organizations to distribute information to employees on an as-needed basis; Employees may link to relevant information at their convenience, rather than being distracted indiscriminately by email.
• Communication: Intranets can serve as powerful tools for communication within an organization, vertically strategic initiatives that have a global reach throughout the organization. The type of information that can easily be conveyed is the purpose of the initiative and what the initiative is aiming to achieve, who is driving the initiative, results achieved to date, and who to speak to for more information. By providing this information on the intranet, staff  have the opportunity to keep up-to-date with the strategic focus of the organization. Some examples of communication would be chat, email, and/or blogs. A great real-world example of where an intranet helped a company communicate is when Nestle had a number of food processing plants in Scandinavia. Their central support system had to deal with a number of queries every day. When Nestle decided to invest in an intranet, they quickly realized the savings. McGovern says the savings from the reduction in query calls was substantially greater than the investment in the intranet.
• Web publishing allows cumbersome corporate knowledge to be maintained and easily accessed throughout the company using hypermedia and Web technologies. Examples include: employee manuals, benefits documents, company policies, business standards, news feeds, and even training, can be accessed using common Internet standards (Acrobat files, Flash files, CGI applications). Because each business unit can update the online copy of a document, the most recent version is usually available to employees using the intranet.
• Business operations and management: Intranets are also being used as a platform for developing and deploying applications to support business operations and decisions across the internetworked enterprise.
• Cost-effective: Users can view information and data via web-browser rather than maintaining physical documents such as procedure manuals, internal phone list and requisition forms. This can potentially save the business money on printing, duplicating documents, and the environment as well as document maintenance overhead. For example, the HRM company PeopleSoft "derived significant cost savings by shifting HR processes to the intranet".McGovern goes on to say the manual cost of enrolling in benefits was found to be USD109.48 per enrollment. "Shifting this process to the intranet reduced the cost per enrollment to $21.79; a saving of 80 percent". Another company that saved money on expense reports was Cisco. "In 1996, Cisco processed 54,000 reports and the amount of dollars processed was USD19 million".
• Enhance collaboration: Information is easily accessible by all authorised users, which enables teamwork.
• Cross-platform capability: Standards-compliant web browsers are available for Windows, Mac, and UNIX.
• Built for one audience: Many companies dictate computer specifications which, in turn, may allow Intranet developers to write applications that only have to work on one browser (no cross-browser compatibility issues). Being able to specifically address your "viewer" is a great advantage. Since Intranets are user-specific (requiring database/network authentication prior to access), you know exactly who you are interfacing with and can personalize your Intranet based on role (job title, department) or individual ("Congratulations Jane, on your 3rd year with our company!").
• Promote common corporate culture: Every user has the ability to view the same information within the Intranet.
• Immediate updates: When dealing with the public in any capacity, laws, specifications, and parameters can change. Intranets make it possible to provide your audience with "live" changes so they are kept up-to-date, which can limit a company's liability.
• Supports a distributed computing architecture: The intranet can also be linked to a company’s management information system, for example a time keeping system.

Characteristics of Intranet

An intranet is built from the same concepts and technologies used for the Internet, such as client-server computing and the Internet Protocol Suite (TCP/IP). Any of the well known Internet protocols may be found in an intranet, such as HTTP (web services), SMTP (e-mail), and FTP (file transfer). Internet technologies are often deployed to provide modern interfaces to legacy information systems hosting corporate data. An intranet can be understood as a private analog of the Internet, or as a private extension of the Internet confined to an organization.

The first intranet websites and home pages began to appear in organizations in 1990-1991. Although not officially noted, the term intranet first became common-place among early adopters, such as universities and technology corporations, in 1992.

Intranets are also contrasted with extranets. While intranets are generally restricted to employees of the organization, extranets may also be accessed by customers, suppliers, or other approved parties. Extranets extend a private network onto the Internet with special provisions for access, authorization, and authentication (AAA protocol).

Intranets may provide a gateway to the Internet by means of a network gateway with a firewall, shielding the intranet from unauthorized external access. The gateway often also implements user authentication, encryption of messages, and often virtual private network (VPN) connectivity for off-site employees to access company information, computing resources and internal communications.

Uses of Intranet

Increasingly, intranets are being used to deliver tools and applications, e.g., collaboration

(to facilitate working in groups and teleconferencing) or sophisticated corporate directories, sales and customer relationship management tools, project management etc., to advance productivity.

Intranets are also being used as corporate culture-change platforms. For example, large numbers of employees discussing key issues in an intranet forum application could lead to new ideas in management, productivity, quality, and other corporate issues.

In large intranets, website traffic is often similar to public website traffic and can be better understood by using web metrics software to track overall activity. User surveys also improve intranet website effectiveness. Larger businesses allow users within their intranet to access public internet through firewall servers. They have the ability to screen messages coming and going keeping security intact.

Intranet user-experience, editorial, and technology team’s work together to produce in-house sites. Most commonly, intranets are managed by the communications, HR or CIO departments of large organizations, or some combination of these.

Because of the scope and variety of content and the number of system interfaces, intranets of many organizations are much more complex than their respective public websites. Intranets and their use are growing rapidly.

Benefits of Intranet

Workforce productivity: Intranets can also help users to locate and view information faster and use applications relevant to their roles and responsibilities. With the help of a web browser interface, users can access data held in any database the organization wants to make available, anytime and - subject to security provisions - from anywhere within the company workstations, increasing employees' ability to perform their jobs faster, more accurately, and with confidence that they have the right information. It also helps to improve the services provided to the users.

Time: Intranets allow organizations to distribute information to employees on an as needed basis; Employees may link to relevant information at their convenience, rather than being distracted indiscriminately by electronic mail.

Communication: Intranets can serve as powerful tools for communication within an organization, vertically and horizontally. From a communications standpoint, intranets are useful to communicate strategic initiatives that have a global reach throughout the organization. The type of information that can easily be conveyed is the purpose of the initiative and what the initiative is aiming to achieve, who is driving the initiative, results achieved to date, and who to speak to for more information.

By providing this information on the intranet, staff has the opportunity to keep up-to-date with the strategic focus of the organization. Some examples of communication would be chat, email, and or blogs.

Web publishing allows cumbersome corporate knowledge to be maintained and easily accessed throughout the company using hypermedia and Web technologies. Examples include: employee manuals, benefits documents, company policies, business standards, newsfeeds, and even training, can be accessed using common Internet standards (Acrobat files, Flash files, CGI applications). Because each business unit can update the online copy of a document, the most recent version is always available to employees using the intranet.

Business operations and management: Intranets are also being used as a platform for developing and deploying applications to support business operations and decisions across the internet worked enterprise.

Cost-effective: Users can view information and data via web-browser rather than maintaining physical documents such as procedure manuals, internal phone list and requisition forms. This can potentially save the business money on printing, duplicating documents, and the environment as well as document maintenance overhead.

Promote common corporate culture: Every user is viewing the same information within the Intranet.

Enhance Collaboration: With information easily accessible by all authorized users, teamwork is enabled.

Cross-platform Capability: Standards-compliant web browsers are available for Windows, Mac, and UNIX.

Built for One Audience: Many companies dictate computer specifications. Which, in turn, may allow Intranet developers to write applications that only have to work on one browser (no cross-browser compatibility issues)?

Knowledge of your Audience: Being able to specifically address your "viewer" is a great advantage. Since Intranets are user specific (requiring database/network authentication prior to access), you know exactly who you are interfacing with. So, you can personalize your Intranet based on role Gob title, department) or individual.

Immediate Updates: When dealing with the public in any capacity, laws/specifications/ parameters can change. With an Intranet and providing your audience with "live" changes, they are never out of date, which can limit a company's liability.

Supports a distributed computing architecture: The intranet can also be linked to a company's management information system, for example a time keeping system.

Planning and creation of Intranet

Most organizations devote considerable resources into the planning and implementation of their intranet as it is of strategic importance to the organization's success. Some of the planning would include topics such as:

1.      The purpose and goals of the intranet.

2.      Persons or departments responsible for implementation and management.

3.      Functional plans, information architecture, page layouts, design.

4.      Implementation schedules and phase-out of existing systems.

5.      Defining and implementing security of the intranet.

6.      How to ensure it is within legal boundaries and other constraints.

7.      Level of interactivity (e.g. wikis, on-line forms) desired.

8.      Is the input of new data and updating of existing data to be centrally controlled or devolved?

9.      These are in addition to the hardware and software decisions (like content management systems), participation issues (like good taste, harassment, confidentiality), and features to be supported.

The actual implementation would include steps such as

1.      Securing senior management support and funding.

2.      Business requirements analysis.

3.      User involvement ,to identify users' information needs.

4.      Installation of web server and user access network.

5.      Installing required user applications on computers.

6.      Creation of document framework for the content to be hosted.

7.      User involvement in testing and promoting use of intranet.

8.      Ongoing measurement and evaluation, including through benchmarking against other intranets.

Useful components of an intranet structure might include:

1.      Key personnel committed to maintaining the Intranet and keeping content current.

2.      Social networking' is useful as a feedback forum for users to indicate what they want and what they do not like.

Business Applications for an Intranet

Organizations everywhere are attempting to implement new, more efficient information technology solutions to common business needs. One of the key enabling technologies is an intranet: web-based applications running on the LAN to collect and display company information. This is one of the most versatile, cost-effective ways to support many business needs. Here are some examples of business applications that can be supported by an intranet (in conjunction with other server-side software such as a database):

Information Management:

§  Strategic Decision Support

§  Enterprise resource management

§  On-Line Analytical Protocol (OLAP) for data analysis

§  Financial data reporting system

§  Time & leave system

§  Procurement and supply system

§  Travel system

§  Employee skills management, teaming

§  Balanced Scorecard data collection and reporting

§  Knowledge management, metadata development

§  Y2K status database

§  Performance-based promotion decision support

Marketing:

§  Promotional presentations (multimedia)

§  Customer support

§  Customer surveys

Workflow:

§  Distributed development teamwork (detachments, partners)

§  Process control

§  Project scheduling and task tracking

§  Calendars for people and meeting rooms

§  Process monitoring and data collection

§  Productivity monitoring

§  Activity-Based Costing

§  Business Process Improvement support

§  Signature authentication, approvals and tracking

Communications enhancement:

§  Secure communications

§  Security testing and monitoring

§  Registration form

§  Internet telephone

§  Video and teleconferencing

§  Anonymous channel ("rumor mill")

§  Threaded discussions

§  Chat server

§  Push technology

§  Groupware, e.g. NetMeeting

§  Web email

Document Management:

§  News

§  CAD viewer & server

§  File servers

§  Forms server

§  Document management, library

§  Research support using Intelligent Agents and profiles

§  Search tools

§  Server statistics & reports

Training:

§  Online training

§  Online testing and certification

§  Collaborative training

EXTRRANET

INTRODUCTION AND DEFINITION OF EXTRANETS

During its initial days, EC was supported by private networks, mostly value-added networks (VAN), using the EDI protocol. This arrangement was expensive but very secure and effective. Then came the Internet, replacing the expensive VAN with the free Internet. However, this was an unsecure environment. Combining the benefits of these two approaches creates the concept of the extranet. This tutorial covers the essentials of the extranet with two related topics: EDI and XML. 

DEFINITION

An extranet is a private network that uses Internet technology and the public telecommunication system to securely share part of a business’s information or operations with their suppliers, vendors, partners, customers, or other businesses. An extranet can be viewed as part of a company’s intranet that is extended to users outside the company. It has also been described as a “state of mind” in which the Internet is perceived as a way to do business with other companies as well as to sell products to individual customers. However, extranets are usually used in B2B trading. An extranet is like a demilitarized zone (DMZ) in that it provides access to needed services in a company for its channel partners, without granting access to the organization’s entire network.

The vast majority of B2B transactions are supported by EDI, XML, and extranets. Here we describe their transition to the Web platform. 

THE WIKIPEDIA COVERAGE

Wikipedia has a major entry at en.wikipedia.org/wiki/Extranet that is very comprehensive. The relevant content of the site as of April 2011 was: (1) Relationship to an intranet, (2) enterprise applications, (3) advantages and benefits, (4) disadvantages and limitations.

T11.2 CONCEPTS AND BENEFITS OF EXTRANETS

Extranets are fairly simple and easy to use. They have several benefits and are based on the concept of adding security to the Internet. 

THE USAGE OF THE EXTRANET

Companies can use an extranet to:

o    Exchange large volumes of data using an electronic data interchange (EDI). o    Share product catalogs exclusively with wholesalers or those “in the trade.” o    Collaborate with other companies on joint development efforts. o    Jointly develop and use training programs with other companies. o    Provide or access services offered by one company to a group of other companies, such as an online banking application managed by one company on behalf of affiliated banks. o    Share news of common interest exclusively with partner companies.

An extranet uses the TCP/IP protocol to link intranets that are in different locations (as shown in Exhibit T11.1). Extranet transmissions are usually conducted over the Internet, which offers little privacy or transmission security. Therefore, it is necessary to add security features. The tunnels of secured data flows, using cryptography and authorization algorithms, that provide secure transport of private communications over the Internet are known as virtual private networks (VPN) (see en.wikipedia.org/wiki/Virtual_private_network).

 THE USAGE OF THE EXTRANET

Extranets provide secured connectivity between a corporation's intranet and the intranets of its business partners, materials suppliers, financial services, government, and customers. Access to an extranet is usually limited by agreements of the collaborating parties, is strictly controlled, and is available only to authorized personnel using a secure password and log-in. The protected environment of an extranet allows partners to collaborate and share information and to perform these activities securely, effectively, and efficiently.

Because an extranet allows connectivity between businesses through the Internet, it is an open and flexible platform suitable for B2B. To increase security, many companies replicate the portions of their databases that they are willing to share with their business partners and separate them physically from their regular intranets. However, even separated data need to be secured. (See Chapter 9 for more on EC network security.) Extranets usually do that by operating between two firewalls, in what we described in Chapter 9 as a DMZ. 

THE BENEFITS OF EXTRANETS

The benefits of extranets fall into five categories:

1. Enhanced communications. The extranet enables improved internal communications; improved business partnership channels; effective marketing, sales, and customer support; and facilitates support for collaborative activities.
2. Productivity enhancements. The extranet enables just-in-time information delivery, reduction of information overload, collaboration between workgroups, and training on demand.
3. Business enhancements. The extranet enables faster time-to-market, the potential for simultaneous engineering and collaboration, lower design and production costs, improved client relationships, and creation of new business opportunities.
4. Cost and error reductions. The extranet results in fewer errors, improved comparison shopping, reduced travel and meeting time and cost, reduced administrative and operational costs, and elimination of paper publishing costs.
5. Information delivery. The extranet enables low-cost publishing, leveraging of legacy systems, standard delivery systems, ease of maintenance and implementation, and elimination of paper-based publishing and mailing costs.

Additional advantages of extranets include real-time access to information, ease of use, freedom of choice, moderate setup costs, simplified workflows, lower training costs, flexibility, improved ability to build customer loyalty, and better group dynamics. For a list of additional benefits see All Business (2009). Disadvantages include difficulty in justifying the investment (measuring benefits and costs), high user expectations, and drain on resources. Finally, Chow (2004) and Hassan-Ali (2010) describe success factors of using extranets in e-supply chains and other EC settings.

The extranet can exchange very large volumes of data using EDI.

 INTRODUCTION AND DEFINITIONS OF EDI

EDI (Electronic Data Interchange)—the transfer of data between different companies using electronic networks, such as VANs or the Internet—is the backbone of EC. As more and more companies get connected to the Internet, EDI is becoming increasingly more important as an easy mechanism for companies to support buying, selling, and trading goods, services, and information. It is basically used for B2B transactions. 

DEFINITION

Electronic data interchange (EDI) is a communication standard (known as the X₁₂) that enables the electronic transfer of routine documents, such as purchasing orders, between business partners. It formats these documents according to an agreed-upon structure.

In the pre-Internet form of e-commerce, EDI was governed by rules developed by standards-issuing organizations and the United Nations. EDI set out to formalize e-commerce as a set of standardized message formats, by which businesses would exchange documents such as purchase orders and invoices with each other electronically. Until the advent of the Internet, EDI messages had to be exchanged via dedicated value-added networks (VANs). This restricted its use to large corporations that had the clout to impose EDI standardization on their supply chain partners. Now, EDI is gradually being absorbed into Web-based EDI or, depending on your point of view, superseded by XML-based equivalents. E-Commerce or Electronics Commerce is a methodology of modern business which addresses the need of business organizations, vendors and customers to reduce cost and improve the quality of goods and services while increasing the speed of delivery. E-commerce refers to paperless exchange of business information using following ways.

• Electronic Data Interchange (EDI)
• Electronic Mail (e-mail)
• Electronic Bulletin Boards
• Electronic Fund Transfer (EFT)
• Other Network-based technologies

Features

E-Commerce provides following features

• Non-Cash Payment: E-Commerce enables use of credit cards, debit cards, smart cards, electronic fund transfer via bank's website and other modes of electronics payment.
• 24x7Service availability: E-commerce automates business of enterprises and services provided by them to customers are available anytime, anywhere. Here 24x7 refers to 24 hours of each seven days of a week.
• Advertising / Marketing: E-commerce increases the reach of advertising of products and services of businesses. It helps in better marketing management of products / services.
• Improved Sales: Using E-Commerce, orders for the products can be generated anytime, anywhere without any human intervention. By this way, dependencies to buy a product reduce at large and sales increases.
• Support: E-Commerce provides various ways to provide pre sales and post sales assistance to provide better services to customers.
• Inventory Management: Using E-Commerce, inventory management of products becomes automated. Reports get generated instantly when required. Product inventory management becomes very efficient and easy to maintain.
• Communication improvement: E-Commerce provides ways for faster, efficient, reliable communication with customers and partners.

Electronic data interchange (EDI) is commonly defined as the application-to-application transfer of business documents between computers. Many businesses choose EDI as a fast, inexpensive, and safe method of sending purchase orders, invoices, shipping notices, and other frequently used business documents.

EDI is quite different from sending electronic mail messages or sharing files through a network, a modem, or a bulletin board. The straight transfer of computer files requires that the computer applications of both the sender and receiver (referred to as "trading partners") agree upon the format of the document. The sender must use an application that creates a file format identical to your computer application.

When you use EDI, it's not necessary for you and your trading partner to have identical document processing systems. When your trading partner sends a document, the EDI translation software converts the proprietary format into an agreed upon standard. When you receive the document, your EDI translation software automatically changes the standard format into the proprietary format of your document processing software.

THE ESSENTIALS OF EDI

EDI often serves as a catalyst and a stimulus to improve the business processes that flow between organizations. It reduces costs, delays, and errors inherent in a manual document-delivery system. Its major characteristics are:

• Business transaction messages. EDI is used primarily to electronically transfer repetitive business transactions. These include purchase orders, invoices, credit approvals, shipping notices, confirmations, and so on.

• Data-formatting standards. Because EDI messages are repetitive, it makes sense to use formatting (coding) standards. Standards can shorten the length of the messages and eliminate data entry errors, because data entry occurs only once. EDI deals with standard transactions, whereas e-mail is more open. EDI uses a special standard language and is secure, whereas e-mail is not. When a user enters data into the EDI system, the data are automatically converted to EDI language. If there are missing or incorrect data, the EDI converter offers assistance. EDI fosters collaborative relationships and strategic partnerships. In the United States and Canada, data are formatted according to the ANSI X.12 standard or the UCS code. An international standard developed by the United Nations is called EDIFACT (for a tutorial, see gxs.com/pdfs/Tutorial/Tutor_EDIFACT_GXS.pdf).

• EDI translators. An EDI translator automatically translates data and software organizes information into a standard EDI format.

APPLICATIONS OF TRADITIONAL EDI

Traditional EDI changed the business landscape, triggering new definitions of entire industries. It is used extensively by large corporations, sometimes in a global network, such as the one operated by General Electric Information System (which has over 100,000 corporate users). Well-known retailers such as Home Depot and Walmart would have to operate very differently without EDI, because it is an integral and essential element of their business strategies. Thousands of global manufacturers and retailers, including Procter & Gamble, Levi Strauss, Toyota, and Unilever, have used EDI to redefine relationships with their business partners through such practices as quick-response retailing and just-in-time (JIT) manufacturing. These highly visible, high-impact applications of EDI by large companies have been extremely successful. The benefits of EDI are listed next. 

BENEFITS OF EDI

o   Companies can send and receive large amounts of routine transaction information quickly around the globe.

o   Computer-to-computer data transfer reduces the number of errors.

o   Information can flow among several trading partners consistently and freely

o   Companies can access partners' databases to retrieve and store standard transactions.

o   EDI fosters true (and strategic) partnership relationships because it involves a commitment to a long-term investment and the refinement of the system over time.

o   EDI creates a complete paperless TPS (transaction processing system) environment, saving money and increasing efficiency.

o   Payment collection can be shortened by several weeks.

o   Data may be entered offline, in batch mode, without tying up ports to the mainframe.

o   When an EDI document is received, the data may be used immediately.

o   Sales information is delivered to manufacturers, shippers, and warehouses almost in real time.

EDI can save companies a considerable amount of money.

LIMITATIONS OF THE TRADITIONAL EDI

Despite the tremendous impact of traditional EDI among industry leaders, the set of adopters represents only a small fraction of potential EDI users. For example, in the United States, where several million businesses participate in commerce every day, fewer than 100,000 companies have adopted traditional EDI. Furthermore, most of these companies have had only a small number of their business partners on EDI, mainly due to its high cost and complex procedures. Therefore, in reality, not too many businesses have benefited from traditional EDI. The major factors that held back a more universal implementation of traditional EDI include the following:

o    Significant initial investment is needed, and ongoing operating costs are high.

o    Business processes must be restructured to fit EDI requirements.

o    A long startup period is needed.

o    EDI requires use of expensive private VANs.

o    EDI has a high operating cost.

o    Multiple EDI standards exist, so one company may have to use several standards in order to communicate with different business partners.

o    The system is difficult to use.

o    A converter is required to translate business transactions to EDI code.

o    The system is inflexible; it is difficult to make quick changes, such as adding business partners.

 Electronic Data Interchange (EDI) has three major components. They are,
• Trading partners
• Translation software
• Communications

Trading partners: These are business organizations that agree to exchange business information, data and documents via EDI. Small, medium and large organizations that are involved in various types of business activities are part of this group. For partners that dare to trade options that are now being made available are endless.

Translation software: This software written in some of the most popular platforms regulates most of the operations. Some of its main features include,
1. It is dual purpose software and it converts files to or from an EDI format called a ‘document’
2. A document is known as an EDI message and the definition specifies the content and sequence of the data to be included
3. In the case of outbound business information, data or documents (we will refer to as document), an internal application file format is translated into an EDI format
4. For inbound documents, the EDI format is translated into an EDI format
5. For inbound documents, the EDI format is retranslated into an internal application file format
6. It is not necessary for trading partners to use the same translation software, nor is it necessary for them to have similar hardware platforms
7. Software and hardware independence is one of the major advantages of EDI

Communications: The transmission and reception of ‘document’ between trading partners using compatible hardware and software, which best suits their requirements