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E-Business Fundamentals

E- Business can be defined as the application of computer networks for

business purpose.

In other words it is modern business method for need of organization,

merchants and consumers.

E- Business is new way of conducting, managing and executing

business transactions using computer and telecommunication networks.

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E-Business is expected to improve the productivity and

competitiveness of participating business by providing

unprecedented access to an online global marketplace with

millions of customers and thousands of products and

services.

Another goal is to provide participating companies with

new more cost and time efficient means for working with

customers suppliers and development partners.

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E-Business improve quality of goods and services. E-

Business replaces the swapping of money or goods with

the exchange of information from computer to computer.

Now traditional business is oriented to E-Business.

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Types of E-BusinessB2B

B2C

C2B

C2C

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B2B(Business to Business):

It is a term commonly used to describe the transaction of

goods or services between business.

It is a term that used in automated process between

trading partners.

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For example dell.com, this company sells computers to

several other companies via the Internet.

Thus eliminating the middle man and reducing costs by a

great deal.

There are two types of B2B.

1. Horizontal

2. Vertical

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Horizontal:

They are producers and operate different

levels.

Vertical:

Work with industries and make their money from

advertising sites or from transaction fees.

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B2C:

It describes activities of commercial organizations serving

the end consumer with products / services.

The B2C segment can be used for advertising and selling

products ranging from books or CDs to T-Shirt or even

computers.

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C2B:

In C2B consumers offer products and services to

companies and the company pay them. This type of

business is a complete reversal of traditional business.

Example princeline.com

( In the prince line model customers quote the price that

they are willing to pay for a product or service)

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C2C:

In C2C business involves the electronically facilitated

transactions between consumers through some third party.

The auction sites where sellers can place their products for

sale and buyers can bid for them.

e.g. ebay.com, auctionindia.com, amazon.com

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BENEFITS OF E-BUSINESS

1)Reduce Time to complete business transactions.

2)Reduce Overhead Cost.

3)Improved product analysis.

4)Improved Market analysis.

5)Reduce inventories.

6)Reduced cost to buyers.

7)Create new product and services.

8)Enhance human capital

9)Reach new market.

10)Better departmental interactions.

11)Reduced Errors.

12)Improved customer relation.

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Electronic business Framework:

From the business Activity already taking place, it is clear

that E-Business applications will be built on the existing

technology

Infrastructure, Literary of computers, communication

networks and communication software forming the

necessary information.

Figure shows a variety of possible e-Business applications,

including both inter-organizational and consumer oriented.

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E business Applications

Supply chain Mgmt

Video on Demand

Remote Banking

Procurement and Purchasing

Online Marketing & Advertising

Common business services infrastructure security

/ authentification/ e – Payment

The messaging & information distribution infrastructure

Multimedia content & network publishing infrastructure

Public Policy Legal & privacy Issue Technical Standards for e-documents multimedia & network Protocol

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Building Blocks in the Infrastructure

• Common Business service, for facilitating the buying and selling

process.

•Messaging and information distribution publishing, for creating a

product and a means to communicate about it.

•The information super highway is very foundation for providing the

highway system along which all e-business must travel.

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Building Blocks in the Infrastructure

The two pillars supporting all e-business applications and infrastructure.

Public Policy:- to govern such issues as universal access, privacy and information pricing

Technical Standards:- To dictate the nature of information publishing, user interface and transport in the interest of compatibility across the entire network.

Building the various highway is not enough. Transport vehicles are needed, routing issues must be addressed and of-course the transportation costs must be paid.

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E- Business Application

1. Electronic Fund Transfer.

2. Enterprise Application Integration

3. Supply Chain Management.

4. Remote Banking.

5. Video On Demand.

6. Home Shopping.

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1. Electronic Fund Transfer.

EFT systems are a major form of e payment systems in banking and retailing

industries. These systems use a variety of information technologies to capture

and process money and credit transfers between banks and businesses and their

customers.

For example ATM support banking at location throughout the world. In

addition most point of sale terminals in retail stores are networked to bank

EFT systems, this makes it possible for you to use a credit card or debit card to

instantly pay for groceries or other purchases at retail outlets.

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2. Enterprise Application Integration

EAI interconnects several e business application clusters. EAI software

enables users to model the business processes involved in the interactions

that should occur between business applications. EAI also provides

middleware that performs data conversion and coordination, application

communication & messaging services and access to the application interface

involved. Thus EAI software can integrate a variety of enterprise application

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3. Supply Chain Management.

The e-business opportunity lies in the fusing of each company’s

internal system to those of its suppliers, partners and customers. This

fusion forces companies to better integrate enterprise supply chain

processes to improve manufacturing efficiency and distribution

effectiveness.

Many companies are making supply chain management (SCM) a top

strategies objective of their e business initiatives. It is an absolute

requirement if they want to meet their e business customer value what

the customer wants, when and where it is wanted at the lowest possible

cost.

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4. Remote Banking

RB is one of the most important modern banking services enabling

the customers to make payments from any place in the world and at any

time via a PC or mobile phone. Telephone banking or mobile banking is the

most convenient and simple methods of receiving information on the status

of the account and transactions on the account may be performed by

telephone. The remote banking is also known as the Internet Banking.

It allows you to access your credit account via the Internet from

your phone or computer. It is free and gives you access to your account 24

hour a day.

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5. Video on Demand

VOD is an interactive multimedia system that works like cable television,

the difference being that the customer can select a movie from a large video

database. VOD systems allow users to select and watch video and clip

content over a network as part of an interactive television system.

E.g.: Interactive TV guides, Interactive telephone yellow pages.

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Overview of

Electronic Commerce

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Definitions

Business-to-business (B2B)

◦ Businesses make online transactions purchases with

other business

Business-to-consumer (B2C)

◦ Online transactions between businesses and

consumers

Business-to-employee (B2E)

◦ Information and services made available to

employees online

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Electronic Commerce Terms

E-businessEC defined from these perspectives

◦Communications◦Business process◦Service◦Online◦Collaborations◦Community

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Electronic Commerce Terms (cont.)Pure vs. Partial EC: based on the degree of

digitization of◦Product◦Process◦Delivery agent

Traditional commerce: all dimensions are physical

Pure EC: all dimensions are digitalPartial EC: all other possibilities include a mix of

digital and physical dimensions

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Electronic Commerce Terms (cont.)

Internet vs. Non-Internet EC◦VANs◦LANs◦Click and Mortar

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Figure 1-1The Dimensions of Electronic Commerce

Source: Choi et al. (1997), p. 18.

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◦A method of doing business by which a company can generate revenue to sustain itself. Examples:

◦Name your price◦Find the best price◦Dynamic brokering◦Affiliate marketing

Business Models

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Business Models (cont.)

◦Group purchasing◦Electronic tendering systems◦Online auctions◦Customization and personalization◦Electronic marketplaces and exchanges

◦Supply chain improvers◦Collaborative commerce

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Business Models (cont.)

Orbis Corporation

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Business Models (cont.)

Orbis Corporation

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A market is a network of interactions and relationships where

information, products, services, and payments are exchanged.

◦ It handles all the necessary transactions

◦ It is a place where shoppers and sellers meet electronically

◦ Sellers and buyers negotiate, submit bids, agree on an

order, and finish the execution on- or off-line

Electronic Markets

(E-marketplaces or E-market spaces)

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Transactions in Electronic Markets

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Electronic Exchanges

Electronic exchanges provide dynamic pricing by

matching real-time supply and demand

◦ Live auctions

◦ Stock exchanges

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◦Inter organizational information system (IOS) involves information flow among two or more organizations

◦Major objective is efficient routine transaction processing, such as transmitting orders, bills, and payments using EDI or extranets

◦Scope: Unified system encompassing two or several business partners

◦Typical IOS includes a company, its suppliers, and and/or customers

Inter organization Information Systems

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Figure 1-3 A Framework for Electronic Commerce

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MarketingComputer sciencesConsumer behavior

and psychologyFinanceEconomics

Management information systems

Accounting and auditing

ManagementBusiness law and

ethicsOthers

Electronic Commerce is Interdisciplinary

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The Driving Forces ofElectronic Commerce

The New World of Business◦Business pressures◦Organizational responses◦The role of Information Technology (including

electronic commerce)

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Major Business Pressures

Market andeconomic

pressures

Strong competitionGlobal economyRegional trade agreements (e.g. NAFTA)Extremely low labor cost in some countriesFrequent and significant changes in marketsIncreased power of consumers

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Major Business Pressures (cont.)

Societal and environmental pressures

Changing nature of workforceGovernment deregulation of banking and other servicesShrinking government subsidiesIncreased importance of ethical and legal issuesIncreased social responsibility of organizationsRapid political changes

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Major Business Pressures (cont.)

Technological pressures

Rapid technological obsolescenceIncrease innovations and new technologiesInformation overloadRapid decline in technology cost vs. performance ratio

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Organizational Responses

Strategic systemsContinuous improvement effortsBusiness process reengineering

(BPR)Business AlliancesElectronic commerce

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Reducing cycle time and time to market

Empowerment of employees and collaborative

work

Supply chain improvements

Mass customization

Change management

IT Support and EC

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The Benefits of EC

Benefits to Organizations

◦Expands the marketplace to national and

international markets

◦Decreases the cost of creating,

processing, distributing, storing and

retrieving paper-based information

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Benefits of EC (cont.)

Benefits to Organizations (cont.)

◦ Allows reduced inventories and overhead by facilitating pull-type

supply chain management

◦ The pull-type processing allows for customization of products and

services which provides competitive advantage to its implementers

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Benefits of EC (cont.)

Benefits to Organizations (cont.)

◦Reduces the time between the outlay of capital and the

receipt of products and services

◦Supports business processes reengineering (BPR) efforts

◦Lowers telecommunications cost - the Internet is much

cheaper than value added networks (VANs)

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Benefits of EC (cont.)

Benefits to consumers

◦ Enables consumers to shop or do other transactions

24 hours a day, all year round from almost any

location

◦ Provides consumers with more choices

◦ Provides consumers with less expensive products and

services by allowing them to shop in many places and

conduct quick comparisons

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Benefits of EC (cont.)

Benefits to consumers (cont.)

◦Allows quick delivery of products and services (in

some cases) especially with digitized products

◦Consumers can receive relevant and detailed

information in seconds, rather than in days or weeks

◦Makes it possible to participate in virtual auctions

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Benefits of EC (cont.)

Benefits to consumers (cont.)

◦Allows consumers to interact with other consumers

n electronic communities and exchange ideas as

well as compare experiences

◦Facilitates competition, which results in substantial

discounts

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Benefits of EC (cont.)

Benefits to society

◦ Enables more individuals to work at home, and to do less

traveling for shopping, resulting in less traffic on the roads,

and lower air pollution

◦ Allows some merchandise to be sold at lower prices benefiting

less affluent people

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Benefits of EC (cont.)

Benefits to society (cont.)

◦ Enables people in Third World countries and rural areas to enjoy

products and services which otherwise are not available to them

◦ Facilitates delivery of public services at a reduced cost, increases

effectiveness, and/or improves quality

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The Limitations of EC

Technical limitations of electronic commerce

◦Lack of sufficient system’s security, reliability, standards, and

communication protocols

◦ Insufficient telecommunication bandwidth

◦The software development tools are still evolving and changing

rapidly

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The Limitations of EC (cont.)

Technical Limitations of EC (cont.)◦Difficulties in integrating the Internet and

electronic commerce software with some existing applications and databases

◦The need for special Web servers and other infrastructures, in addition to the network servers (additional cost)

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The Limitations of EC (cont.)

Technical Limitations of EC (cont.)◦Possible problems of interoperability,

meaning that some EC software does not fit with some hardware, or is incompatible with some operating systems or other components

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Non-Technical Limitations

Cost and justification ◦The cost of developing an EC in house can be very

high, and mistakes due to lack of experience may result in delays.

◦There are many opportunities for outsourcing, but where and how to do it is not a simple issue

◦In order to justify the system, one needs to deal with some intangible benefits which are difficult to quantify.

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Security and Privacy ◦These issues are especially important in the

B2C area, but security concerns are not so serious from a technical standpoint

◦Privacy measures are constantly improving too ◦The EC industry has a very long and difficult

task of convincing customers that online transactions and privacy are, in fact, very secure

Non-Technical Limitations (cont.)

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Non-Technical Limitations (cont.)

Lack of trust and user resistance ◦Customers do not trust:

Unknown faceless sellers Paperless transactions Electronic money

◦Switching from a physical to a virtual store may be difficult

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◦Other limiting factors are: Lack of touch and feel online Many unresolved legal issues Rapidly evolving and changing EC Lack of support services Insufficiently large enough number of sellers and

buyers Breakdown of human relationships Expensive and/or inconvenient accessibility to the

Internet

Non-Technical Limitations (cont.)

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Putting It All Together

Major concern of today’s companies—how to transform themselves to take part in digital economy

Example:Toys, Inc.◦Uses intranet for internal communications,

collaboration, dissemination of information◦Networked to e-marketspaces and large corporations◦Corporate portal for communication and

collaboration with business partners

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Figure 1-7

Putting It All Together

Prentice Hall, 2002 60

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Is it real?How to evaluate the magnitude of the

business pressures.What should be my company’s strategy

towards EC?

Managerial Issues

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Managerial Issues (cont.)

Why is the B2B area so attractive?What is the best way to learn about

EC?What ethical issues exist?How can failures be avoided?

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Figure 1-8

Plan of the Book

Prentice Hall, 2002 63

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EC Demonstration ICICI Bank

◦ Account Statement ◦ EFT◦ Bill Payment ◦ E-cheque

State BankLIC India

◦ Premium payment ◦ Online status checking and reminder (on phone)

Reliance Infocom ◦ Current charges ◦ Bill detail and payment

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EC Demonstration

IIT Student Registration System Student

Registration detail Course registration Dues payment

Faculty Programme Coordinator Course Coordinator Grade Upload Attendance sheet

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Figure 1-1The Dimensions of Electronic Commerce

Source: Choi et al. (1997), p. 18.

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Electronic Commerce Terms (cont.)

Internet vs. Non-Internet EC◦VANs◦LANs◦Click and Mortar

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Figure 1-3 A Framework for Electronic Commerce

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