1 chapter 5 electronic commerce, intranets, and extranets information systems today leonard jessup...
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Chapter 5
Electronic Commerce, Intranets, and Extranets
Information Systems TodayLeonard Jessup and Joseph Valacich
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Chapter 5 Objectives
Understand e-commerce and how it evolved
Understand e-commerce strategies Understand the difference between
intranets and extranets Understand consumer-focused and
business-focused e-commerce Understand key e-commerce applications
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Electronic Commerce Defined
E-Commerce – online exchange of goods, services, and money between firms, and between firms and their customers– More than just buying and selling:
• Pre-sale events and marketing• After-sale customer service
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Electronic Commerce Defined
E-Commerce– Business-to-Consumer (B2C)– Business-to-Business (B2B)– Business-to-Employee (B2E)– Consumer-to-Consumer (C2C)
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Electronic Commerce Defined
Internet and World Wide Web Capabilities– Expanding market– Wider customer base– More products– Closer relationships with customers
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Electronic Commerce Defined Internet and World Wide Web
Capabilities– Real-time access to information
• Web site linked to corporate database• Example: Alaska Air
– Mass customization• Tailoring products to a customers needs• Example: Lands’ End
– Interactive communication• Improving firm’s image through responsiveness• Example: E*Trade
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Electronic Commerce Defined Internet and World Wide Web
Capabilities– Collaboration– Reduced transaction costs– Enhanced operational efficiency– Disintermediation
• Cutting out the “middleman”• Reaching customers directly
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Electronic Commerce Defined
Electronic Commerce Business Strategies– Brick-and-mortar
• Traditional, physical companies
– Click-only (“virtual”) companies • Online only
• Example: eBay
– Click-and-mortar (or “Brick & Click”)• Both physical and virtual
– Challenge: increased IS complexity
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Business-to-Business Electronic Commerce
Electronic Data Interchange– Definition – EDI refers to the transmission of business
documents between organizations via networks
– “EDI is the forefather of B2B”– Estimated $500 billion worth of goods per year– EDI: usually over value-added networks (VANs)
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Business-to-Business Electronic Commerce
Electronic Data Interchange– Advantages
• Wide variety of business documents
• Streamlines business processes
• Reduced document handling
• Shortens time of business transaction
• Reduces errors
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Business-to-Business Electronic Commerce
Electronic Data Interchange– Disadvantages
• Costly to implement
• Costly to maintain
• Requires skilled technicians
• Often too costly for small or medium-sized companies
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Business-to-Business Electronic Commerce
The Internet Changed Everything– B2B now available to companies of all sizes– Intranet – internal, private network using Web
technologies to facilitate transmission of proprietary information within the organization
– Extranet – two or more firms using the Internet to do business together
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Business-to-Business Electronic Commerce
Intranet System Architecture– Firewalls – hardware devices with special software
that prevent unauthorized access– An intranet server is placed behind the firewall– Packets are never routed outside the firewall, but
remain within the organizations network
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Business-to-Business Electronic Commerce
Intranet Applications– Training– Application Integration
• Enterprise Resource Planning (ERP)• Customer Relationship Management (CRM)• Sales Force Automation (SFA)
– Online Entry of Information– Real-Time Access to Information– Collaboration
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Business-to-Business Electronic Commerce
Extranet System Architecture– Extranet
• Connects two or more business partners • Like an intranet• Same software, hardware, and networking• Additional component:
– Virtual Private Network (VPN)– Secure transmission of proprietary info
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Business-to-Business Electronic CommerceExtranet System Architecture
– Virtual Private Network (VPN)• Tunneling
– A technology that encapsulates, encrypts, and transmits data over the Internet
– A secure “tunnel” is created over the VPN connecting the two intranets
• Authentication– Confirms the identity of the remote user who is attempting to
access information from the Web server
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Business-to-Business Electronic Commerce
Extranet Applications– Supply Chain Management
• Example: Dell Computers
– Real-Time Access to Information • Example: CSX railroad
– Collaboration• Example: Caterpillar
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Business-to-Business Electronic Commerce
Enterprise Portals– Enterprise portals
• Extranets for business partners• Access points (or front doors) by which a business partner
accesses secured, proprietary information from an organization
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Business-to-Business Electronic Commerce
Enterprise Portals– Distribution portals
• Automate the business processes in selling products to multiple buyers
– Procurement portals• Automate the business processes that occur before, during, and
after sales have been transacted
– Trading Exchanges• Electronic marketplaces run by 3rd-party vendors
• Revenues are from commissions on transactions
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Business-to-Consumer Electronic Commerce
B2C– Internet – fastest acceptance of any
communications technology– Retail transactions between a company and
end consumers– Electronic retailing (e-tailing)
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Business-to-Consumer Electronic Commerce
Stages of B2C E-Commerce– E-Information
• Disseminate information globally
• Example: Ferrari
– E-Integration• Consumer-driven access to information
• Example: Allstate and Burlington Northern Santa Fe
– E-Transaction• Interactive communication and transaction support
• Example: eBay and Priceline.com
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