Transcript Document
Chapter 5
Electronic Commerce, Intranets, and Extranets
Information Systems Today
Leonard Jessup and Joseph Valacich © 2003 Prentice Hall, Inc.
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© 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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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) © 2003 Prentice Hall, Inc.
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Electronic Commerce Defined
Internet and World Wide Web Capabilities Expanding market Wider customer base More products Closer relationships with customers © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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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) © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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Business-to-Business Electronic Commerce Intranet Applications Training Application Integration Enterprise Resource Planning (ERP) Customer Relationship Mangement (CRM) Sales Force Automation (SFA) Online Entry of Information Real-Time Access to Information Collaboration © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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Business-to-Business Electronic Commerce
Extranet 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 © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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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 © 2003 Prentice Hall, Inc.
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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) © 2003 Prentice Hall, Inc.
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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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Formula for Electronic Commerce Success The Rules for Web Site Success 1. Offer something unique 2. Web site must be aesthetically pleasing 3. Easy to use and fast 4. Motivate people to visit, stay, and return 5. Advertise your Web presence 6. Learn from your Web site © 2003 Prentice Hall, Inc.
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