Transcript Document

Chapter 5

Electronic Commerce, Intranets, and Extranets

Information Systems Today

Leonard Jessup and Joseph Valacich © 2003 Prentice Hall, Inc.

5-1

© 2003 Prentice Hall, Inc.

5-2

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.

5-3

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.

5-4

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.

5-5

Electronic Commerce Defined

 Internet and World Wide Web Capabilities  Expanding market  Wider customer base  More products  Closer relationships with customers © 2003 Prentice Hall, Inc.

5-6

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.

5-7

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.

5-8

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.

5-9

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.

5-10

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.

5-11

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.

5-12

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.

5-13

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.

5-14

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.

5-15

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.

5-16

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.

5-17

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.

5-18

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.

5-19

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.

5-20

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.

5-21

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

© 2003 Prentice Hall, Inc.

5-22

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.

5-23