COMP 3241COMP 3241E-commerce TechnologiesE-commerce Technologies

Richard HensonRichard Henson

University of WorcesterUniversity of Worcester

SeptemberSeptember 20132013

Week 1: On-line Trading Processes Week 1: On-line Trading Processes and underpinning Technologiesand underpinning Technologies

Objectives:Objectives: Clarify concepts of e-business and e-commerceClarify concepts of e-business and e-commerce Explain the basic processes required for a business Explain the basic processes required for a business

transaction to take placetransaction to take place Translate a business transaction into its on-line Translate a business transaction into its on-line

equivalent processesequivalent processes Identify the technologies required to service each Identify the technologies required to service each

business process on-linebusiness process on-line Produce a web page to sell a product onlineProduce a web page to sell a product online

E-commerce and E-businessE-commerce and E-business Much misunderstanding…Much misunderstanding…

E-commerce much more straightforwardE-commerce much more straightforward using digital technologies to sell products onlineusing digital technologies to sell products online

E-business is about going way beyond this; E-business is about going way beyond this; using digital technologies for (e.g.):using digital technologies for (e.g.): putting business information selectively on the webputting business information selectively on the web engaging selectively with information systems of engaging selectively with information systems of

partner organisationspartner organisations e-marketinge-marketing managing customer relationships onlinemanaging customer relationships online

Focussing on E-commerce…Focussing on E-commerce… E-business is fascinating…E-business is fascinating…

main growth area for already successful on-line main growth area for already successful on-line businessesbusinesses

However, many businesses still struggling However, many businesses still struggling with the first stage - trading onlinewith the first stage - trading online means developing an e-commerce website…means developing an e-commerce website… to create an illusion of a face-face equivalent to create an illusion of a face-face equivalent

transaction VIA COMPUTER SCREEN!!! transaction VIA COMPUTER SCREEN!!!

Breaking Down a Breaking Down a Business Transaction Business Transaction

In a nutshell:In a nutshell:1.1. Buyer selects goods or serviceBuyer selects goods or service2.2. Buyer and seller agree a priceBuyer and seller agree a price3.3. Buyer makes payment/pledges Buyer makes payment/pledges

to payto pay4.4. Buyer gets goods/serviceBuyer gets goods/service

Business Transactions – whyBusiness Transactions – whyuse technology?use technology?

Historically, the transaction was agreed…Historically, the transaction was agreed…face to faceface to facevia third party via third party

» buyer/seller unable to/didn’t want to meetbuyer/seller unable to/didn’t want to meet

Technology makes something easierTechnology makes something easierfirst intervention: telephonefirst intervention: telephoneadvantage: “face-face” transactions possible advantage: “face-face” transactions possible

over any distance, payment still by postover any distance, payment still by post

Fast Forward Buying/Selling…Fast Forward Buying/Selling…The Digital RevolutionThe Digital Revolution

1970s/80s: Mail order/telephone became popular 1970s/80s: Mail order/telephone became popular alternatives to face-facealternatives to face-face Electronic banking started (EFT)Electronic banking started (EFT)

By late 1990s, Internet & www combined with By late 1990s, Internet & www combined with electronic banking opened up a new means of electronic banking opened up a new means of buying/selling communicationbuying/selling communication soon became known as e-commercesoon became known as e-commerce The name has stuck…The name has stuck…

Objective of Objective of E-commerceE-commerce

Provide a virtual equivalent of the face-face Provide a virtual equivalent of the face-face interactioninteraction modelled on face-face transactionsmodelled on face-face transactions

Need to replicate business processes of a Need to replicate business processes of a manual transaction including:manual transaction including: effective behind-the-screens processing effective behind-the-screens processing effective on-line data input-output through effective on-line data input-output through

interactive screens – designed to be appropriate interactive screens – designed to be appropriate for all usersfor all users

rapid-response on-line database support rapid-response on-line database support

Pre E-commercePre E-commercecomputerizedcomputerized

business processesbusiness processes B2C didn’t exist!B2C didn’t exist! B2B communications mostly paper-basedB2B communications mostly paper-based

electronic Information systems for INTERNAL use electronic Information systems for INTERNAL use onlyonly

electronic -> paper and vice versa for electronic -> paper and vice versa for communications between businessescommunications between businesses

OBVIOUSLY wasteful on resources…OBVIOUSLY wasteful on resources…

Activities involved in Activities involved in B2B e-commerce (1)B2B e-commerce (1)

The business develops, builds, nurtures a The business develops, builds, nurtures a good working relationship with its suppliers. good working relationship with its suppliers. This will initially be This will initially be face-faceface-face, not online, not online

Trusted Trusted suppliers provide secure access to suppliers provide secure access to parts of their information systems/Intranets to parts of their information systems/Intranets to all for checking for product availability, etc.all for checking for product availability, etc.

Supplier Business

Activities involved in B2B Activities involved in B2B e-commerce (2)e-commerce (2)

In return, the business provides In return, the business provides secure secure accessaccess to parts of its information to parts of its information systems/Intranet to systems/Intranet to trusted supplierstrusted suppliers

Suppliers can send e-invoicesSuppliers can send e-invoices The business can make e-payments…The business can make e-payments…

business supplier

B2C E-commerce B2C E-commerce (selling direct to the consumer)(selling direct to the consumer) Business markets products via website and Business markets products via website and

the Internetthe Internet Business communicates information relating Business communicates information relating

to ordering and payment electronically directly to ordering and payment electronically directly to the customer via secure Internet lineto the customer via secure Internet line

E-Business - seller Consumer - buyer

Secure Internet link

Requirements for web-based on-Requirements for web-based on-line Transactions line Transactions

(B2B and B2C)(B2B and B2C) Web-compliant IT processes that emulate Web-compliant IT processes that emulate

the four basic processes of buying…the four basic processes of buying…1.1. buyer finds goods/service on web pages within buyer finds goods/service on web pages within

vendor’s website; compares with other vendorsvendor’s website; compares with other vendors

2.2. buyer makes selections with assistance of a buyer makes selections with assistance of a shopping cart and support softwareshopping cart and support software

3.3. buyer selects an electronic method of paymentbuyer selects an electronic method of payment

4.4. once payment has been authorised, the product once payment has been authorised, the product or service is suppliedor service is supplied

The challenge of The challenge of online tradingonline trading

Degree of challenge will depend on the size of the Degree of challenge will depend on the size of the business and current level of IT use…business and current level of IT use…

Large companies will certainly have a sophisticated Large companies will certainly have a sophisticated IT setupIT setup

““Others” tend to be known as SMEsOthers” tend to be known as SMEs SME = Small & Medium Sized EnterpriseSME = Small & Medium Sized Enterprise

Level of IT use by an SME depends on the type of Level of IT use by an SME depends on the type of business and “enterprise” of their management) As business and “enterprise” of their management) As compared to:compared to: a large company (>250 employees)a large company (>250 employees) A microbusiness (<5 employees)A microbusiness (<5 employees)

Issues for SMEs wishing to Issues for SMEs wishing to trade on-linetrade on-line

HUGE range of take up of ITHUGE range of take up of IT many businesses were computerised in the 80s and many businesses were computerised in the 80s and

early 90s – but that’s as far as they went…early 90s – but that’s as far as they went…» unless updated, system not compatible with the wwwunless updated, system not compatible with the www» only larger and more enterprising businesses used e-commerce only larger and more enterprising businesses used e-commerce

before the web was available…before the web was available… some may even now still be paper-based!some may even now still be paper-based!

Where to start with an e-commerce system?Where to start with an e-commerce system? Of particular interest if creating one for an independent study…Of particular interest if creating one for an independent study… First stop….SYSTEMS ANALYSISFirst stop….SYSTEMS ANALYSIS

» need to systematically establish and agree what the existing processes are!!!need to systematically establish and agree what the existing processes are!!!

SMEs and Systems AnalysisSMEs and Systems Analysis By now, larger businesses have By now, larger businesses have

effective e-commerce and e-business effective e-commerce and e-business systemssystemsotherwise would be out of business…otherwise would be out of business…

Existing SMEs or new businesses…Existing SMEs or new businesses…may not be familiar with close analysis of may not be familiar with close analysis of

their business processestheir business processesmay be initially reluctant to disclose may be initially reluctant to disclose

information…information…

Discussion (in small Groups)Discussion (in small Groups)

Why are SMEs more likely to keep their Why are SMEs more likely to keep their business processes to themselves?business processes to themselves?

Issues with anIssues with anExisting System?Existing System?

Existing system will always have flawsExisting system will always have flaws In practice, systems do not always work as In practice, systems do not always work as

expected…expected…» makes sense to establish strengths/weaknesses and failures of makes sense to establish strengths/weaknesses and failures of

existing systemexisting system

Identify and accept “mistakes”, and learn from Identify and accept “mistakes”, and learn from them!them!

Make use of this information when developing the Make use of this information when developing the new system…new system…

Issues for Businesses thinking Issues for Businesses thinking of on-line tradingof on-line trading

Considerable issues and initial costs Considerable issues and initial costs involved involved why bother? Will there be a sufficient ROI?why bother? Will there be a sufficient ROI?useful to conduct a useful to conduct a risk analysis risk analysis – starting – starting

by looking at how different parts of the by looking at how different parts of the business will be affected when making business will be affected when making such a bold change…such a bold change…

Question 1: How much of existing Question 1: How much of existing information system to use?information system to use? If system is paper-based data will have If system is paper-based data will have

to be inputted but there will still be a to be inputted but there will still be a system. What is it?system. What is it?

If system has an internal If system has an internal computerised system?computerised system?

it saves time and effort if existing digital data it saves time and effort if existing digital data can be reused, butcan be reused, but

» which part(s) are/are not www compatible?which part(s) are/are not www compatible?» which part(s) are/are not secure?which part(s) are/are not secure?

What if existing system What if existing system paper-based? paper-based?

(still true for some microbusinesses)(still true for some microbusinesses) Costs involved in setting up and managing an Costs involved in setting up and managing an

all singing all dancing system will be huge!all singing all dancing system will be huge! Carry on with a paper-based system as Carry on with a paper-based system as

before, go to the first stage of on-line trading:before, go to the first stage of on-line trading: receiving orders via emailreceiving orders via email printing out such orders and processing them printing out such orders and processing them

through the existing paper-based systemthrough the existing paper-based system ask business to think about a digital information ask business to think about a digital information

system…system…

If existing system paper-If existing system paper-based? (continued…)based? (continued…)

SME still needs a web siteSME still needs a web site to display productsto display products to provide an email address for ordersto provide an email address for orders

Still need email to receive ordersStill need email to receive orders Still need web hosting and website Still need web hosting and website

managementmanagement Still need to advertise web presenceStill need to advertise web presence

What if existing system is What if existing system is computerised, but not www computerised, but not www

compatible?compatible? Three choices:Three choices:

1.1. keep the new web-based operation separate from keep the new web-based operation separate from any existing internal computerised system?any existing internal computerised system?

2.2. integrate internal information system with new integrate internal information system with new web-based operationweb-based operation

3.3. keep separate initially and integrate laterkeep separate initially and integrate later

In each case, website much more sophisticated than In each case, website much more sophisticated than simple products list & email address that may be simple products list & email address that may be acceptable to an SME that is otherwise paper-based!acceptable to an SME that is otherwise paper-based!

SME can choose to keep www SME can choose to keep www & Internal systems separate…& Internal systems separate… Web based system completely new Web based system completely new Existing computerised information system Existing computerised information system

remains as it is, separate from the Internet!remains as it is, separate from the Internet! However… the systems must communicate…However… the systems must communicate…

EITHER print out and re-key dataEITHER print out and re-key data» retrograde step?retrograde step?» labour intensive and expensive?labour intensive and expensive?

OR develop a computerised interfaceOR develop a computerised interface» major software project?major software project?» very expensive but ultimately saves on labour costs (ROI)very expensive but ultimately saves on labour costs (ROI)

The FULL WORKS! The FULL WORKS! Integrated Int & Ext SystemsIntegrated Int & Ext Systems

Develop new www-based link to the Develop new www-based link to the InternetInternet

Provide a www-based user interface Provide a www-based user interface (Intranet)(Intranet)

Re-engineer the internal computerised Re-engineer the internal computerised system into www formatsystem into www format

If full integration worth If full integration worth the cost and effort?the cost and effort?

Disadvantages:Disadvantages: may be expensive/time consuming to implementmay be expensive/time consuming to implement Could compromise security of internal systemsCould compromise security of internal systems will be disruptive to staff in the short termwill be disruptive to staff in the short term

Advantages:Advantages: should be inexpensive to run (ROI)should be inexpensive to run (ROI) reduces/minimises unit cost per transaction (ROI)reduces/minimises unit cost per transaction (ROI)

Other Issues for SMEsOther Issues for SMEs May lack computer expertise (especially if May lack computer expertise (especially if

mostly paper-based at the moment)mostly paper-based at the moment) May be concerned about exposing their May be concerned about exposing their

information to the worldinformation to the world On-line payment systems may be perceived On-line payment systems may be perceived

as inherently not secureas inherently not secure May not think it is worth the expense!May not think it is worth the expense!

would the reduction in transaction costs be enough would the reduction in transaction costs be enough to justify their technology investment to justify their technology investment

May be also worried about… ?May be also worried about… ?

Group Exercise on SME Group Exercise on SME IssuesIssues

One plays the role of SME bossOne plays the role of SME boss Others pull out issues that may concern Others pull out issues that may concern

him/her regarding on-line tradinghim/her regarding on-line trading One person makes a note of issues One person makes a note of issues

discussed…discussed…

B2C: the consumer end of the B2C: the consumer end of the Internet revolution!Internet revolution!

SMEs could now conduct direct business-SMEs could now conduct direct business-consumer transactions (B2C e-commerce)consumer transactions (B2C e-commerce) impossible before this date because consumers impossible before this date because consumers

simply didn’t possess the technologysimply didn’t possess the technology technology that makes B2C possible had been technology that makes B2C possible had been

building for at least 10 yearsbuilding for at least 10 years Leapt into the public domain in 1995-6 (US), two Leapt into the public domain in 1995-6 (US), two

years later (UK)years later (UK) now sometimes the case that consumers have more now sometimes the case that consumers have more

technology in their homes (including small networks!) technology in their homes (including small networks!) than the small business!than the small business!

Activities EXPECTED Activities EXPECTED by B2C consumersby B2C consumers

Business produces a website, available Business produces a website, available worldwide 24/7, via the Internetworldwide 24/7, via the Internet provides information about products/servicesprovides information about products/services gives customers options to buy its productsgives customers options to buy its products collects information about its customerscollects information about its customers

Website has a built-in system that includes:Website has a built-in system that includes: On-line orderingOn-line ordering On-line payment via credit card/switch, etc.On-line payment via credit card/switch, etc. Payment in a range of currenciesPayment in a range of currencies Automatic handling of taxation issuesAutomatic handling of taxation issues

Scope of this moduleScope of this module

Seeks to integrate relevant business data Seeks to integrate relevant business data from an existing system with a web-based e-from an existing system with a web-based e-commerce systemcommerce system a MUCH more complex undertaking than using an a MUCH more complex undertaking than using an

off the shelf shopping cart with little scope for off the shelf shopping cart with little scope for integration!!!integration!!!

Security issues are not covered in depth Security issues are not covered in depth if you want this as well, try COMP3242…if you want this as well, try COMP3242…

Break & more discussion…Break & more discussion…

Practical in 15 mins…Practical in 15 mins…