E-Business

1. E-Business John A. Hengeveld

2. Agenda for Today • E-Business • Amazon.com • Monster.com

3. Pearlson Chapter 7

4. Definitions • Discussion: Whats the difference between: • Internet • Extranet • Intranet • E-Marketplaces

5. E-Marketplaces • E-Marketplace: special type of network that brings different companies together. • Sometimes called net-markets, they are typically built by a consortium of businesses in a market, or by an e-business interested in providing the marketplace. • Both vertical and horizontal e-marketplaces exist.

6. Basic Internet Business Models • B-to-B: targets other businesses • B-to-C: targets consumers • B-to-E (employee): companies provide service to employees of other companies. • B-to-G: companies provide services to local, state and national governments • C-to-C: Consumers interact with other consumers. • Hybrid: combines B-to-B & B-to-C models

7. Web-based business mechanisms • Auctions: Web-based auction site (e-bay). • Reverse auctions: sellers offer items to meet buyer’s requests (priceline.com). • Net markets: provides a place for buyers and sellers to meet. • Portals: combined offering of information, services and links to other sites (Yahoo!). • Bricks & clicks: storefront plus Web site. • ASPs: offer business process functionality over the web to customers that use the site for internal business processes.

8. EDI: infrastructure for e-commerce • What is it? • Give examples…

9. Advantages and Disadvantages of E-Business • Four important issues affecting e-business are: • Cost • Speed • Security • Competitiveness

10. Cost advantages of e-business • E-business systems require less human interaction so less labor and training is required. • In the case of EDI, RJR Nabisco calculates that the cost of processing a purchase was brought down from about $100/order to $1/order. • Another area of cost savings is through reductions in inventory costs.

11. Speed advantages of e-business • E-business systems also generally process transactions more quickly than human operators. Orders can be processed in real-time. • Catalogs can be maintained online, so the need to print and mail them is gone. • In the case of some information products, such as MP3 based music files, the products themselves can be downloaded from the web, lead time to nothing.

12. E-Business and Security • Security used to be a major consideration for Web-based e-business, but is less so now as e-commerce security continues to improve. • Traditional credit systems are also vulnerable to security breaches such as forging signatures or using credit card numbers taken from discarded or stolen receipts. • Security innovations using secure servers, digital signatures and encryption are now widespread.

13. E-Business and Competition • The Internet has lowered barriers to entry for new retailers. • Many e-business startups now compete with long-established firms. • Since the web is undifferentiated, web sites for both new and old companies have essentially the same appeal. • On the Web, delivery and responsiveness are key to competitiveness, not simply how the web site looks.

14. Fig. 7.5 Kalakota and Whinston’s E-commerce framework • Four key building blocks: • Common business services infrastructure • Message and information distribution • Multimedia content and network publishing • The Internet (infrastructure) • Two supporting pillars: • Public policy (“governance”) • Technical standards

15. Common Business Services Infrastructure • The common business infrastructure for electronic commerce consists of three main elements: • Security • Electronic Payments • Directory Services and Search Engines

16. Security • Authentication • Encryption • Firewalls

17. Authentication • Authentication is the security process of verifying that a user is who he or she says they are. • Passwords are the most common type of authentication. • Digital signatures are now gaining popularity for authenticating transmitted information.

18. Authentication: digital signatures • Digital signatures take the place of ordinary signatures in online transactions to prove that the sender of a message is who he or she claims to be. • When received, the digital signature is compared with a known copy of the sender’s digital signature. • Digital signatures are also sent in encrypted form to ensure they have not been forged.

19. Encryption • Encryption systems translate data into a secret code. • Encryption systems include 4 main components: • Plaintext: the unencrypted message • An encryption algorithm: that works like the locking mechanism to a safe • A key that works like the safe’s combination • Ciphertext is produced from the plaintext message by the encryption function. • Decryption is the same process in reverse (like a modulation/demodulation), but it doesn’t always use the same key or algorithm. Plaintext results from decryption.

20. Encryption Techniques • There are three important encryption techniques now in use: • Symmetric encryption in which both sender and receiver use the same key. • Asymmetric or public key encryption, which uses two separate keys, called public and private keys.

21. Symmetric Encryption • Symmetric or private key encryption, uses the same algorithm and key to both encrypt and decrypt a message. • Historically, this is the most common encryption technique. • Since the key must be distributed, however, it is vulnerable to interception. This is an important weakness of symmetric key encryption. • DES uses symmetric encryption.

22. Asymmetric or Public Key Encryption • A second popular technique is asymmetric or public key encryption (PKE). • PKE is called asymmetric since it uses two different “one way” keys: • a public key used to encrypt messages, and • a private key used to decrypt them. • PKE greatly reduces the key management problem since the private key is never distributed. • PGP (pretty good privacy) is a popular form of PKE available as shareware.

23. Secure servers • Secure servers protect the privacy of the data they send and receive through encryption. • Secure sockets layer is a standard for secure interactions use on the Web. SSL, uses a combination of private key encryption (using a one-time session key) and digital signatures to enhance the security of transmission.

24. Firewalls • Firewalls block intruders from entering a website or possibly blocking access to the outside by employees in a company. • For example, a hacker, an intruder trying to attack a corporate website might encounter a firewall making it more difficult to get access to the servers. • Likewise, an employee trying to get outside the corporate intranet might be block from doing so by a firewall.

25. Electronic Payments • Includes: credit cards, electronic checks, EFT, smart cards, and e-cash. • Common types of e-payments systems are: • Virtual terminals (“online equivalent to credit card swipe machine”) • Transaction processors (www.itransact.com) • Internet checking services (www.redicheck.com) • Electronic funds transfer • Digital Cash(www.digicash.com)

26. Directory and Search Engines • Directory services: keep track of who and what (servers, databases) is where on the Internet. • DNS is the most important of these • Search engines: keeps track of information (files) on the world wide web (WWW).

27. Messaging and Information Distribution Infrastructure • Second building block of supporting framework for e-commerce. Used for moving messages over the Internet. • E-mail (including listserv) • Newsgroups • Pt-to-pt file transfers (FTP) • Groupware (Instant Messenger, CU-SeeMe, NetMeeting)

28. Multimedia Content • Third building block of supporting framework for e-commerce. Includes standards for various multimedia file types. Examples of materials transported in this way include: • Video • Audio • Text/Electronic documents • Graphics & Photos • Realtime/Non-realtime applications (prioritization)

29. Internet Infrastructure • Fourth building block of supporting framework for e-commerce. Includes data communications circuits over which information travels. Includes: • Packet-switched networking (telephony is circuit-switched) • Packets contain overhead information including addressing • They are also routed, like mail • All of this flows across Internet backbones • Newer Internet access technologies include wireless access, cable access and DSL.

30. Public Policy • Public policy is one of two supporting pillars for e-commerce. Public policy issues include: • Public policy issues include: universal access, privacy, information pricing, information access. • Privacy issues include what information is private and/or who should have the right to use/sell information about Internet users: • Requesting personal information on visiting a web site • Creating customer profiles • Leaving electronic footprints when visiting a web site

31. Technical Standards • Standardization is the second supporting pillars for e-commerce. Standards are critical for electronic interaction. TCP/IP is the standard “protocol suite” used by the Internet. • TCP is a “connection-oriented” protocol which establishes a connection between a client and a server • IP is a “connectionless” protocol responsible for the addressing and routing of the packets to their destination • An ongoing process exists for creating Internet standards. Members of the Internet Engineering Taskforce (IETF) first send out requests for comment (RFCs) which form the basis of new Internet standards.

32. Other Uses of the Internet: • The growth of the Internet and especially the Web have sparked a wide variety of popular applications including those in the following areas: • Interpersonal Communication • News Media • Reference • Services • Entertainment • Education

33. E-Learning • Assess the following quote:…. “If learning can be embedded within business processes executed by workers, then organizations can make major changes in their business strategy and their organization strategy.”

34. Okay.. Amazon.com • Compare walmart, amazon and barnes and noble websites.. What are strengths and weaknesses? • In the case, what is Amazon’s current strategy?Will Amazon ever achieve profitability? • What strategy should Amazon.com adopt? • What are the risks/issues with current and proposed strategy? • What are the keys to e-business success for Amazon.com?

35. Okay.. Monster.com • Compare hotjobs, flipdog and monster.com websites.. What are strengths and weaknesses? • In the case, what is Monster.com (TMP’s) current strategy? • What strategy should Monster.com (TMP) adopt? • What are the risks/issues with current and proposed strategy? • What are the keys to e-business success for Monster.com?

36. SWOT/TOWS • Okay, so you have strengths, weaknesses, opportunities and threats… SO WHAT?? • Translate these abstract ideas into strategic options and agenda for action. • Start by listing the SWOT items • Look for options in the following chart

37. List of SWOT elements • Strengths: • S1: Raw mindpower • S2: Good Looks • S3: Access to airplane tickets • Weaknesses: • W1: Poor social skills • W2: Bad breath • Opportunities: • O1: Growth in market for dentistry • O2: Growth in the market for male models • O3: The redhead down the street • Threats: • T1: The body builder who lives with redhead down the street • T2: Eroding stock market

38. SWOT for strategic option development Strengths Weaknesses S1,O1: Enter career in dentistry S1,O2: Become agent S1-2,O3: Forget career - love S2,O1: Become tooth model S2:O2: Start Victors Rumor S3, O1: Traveling dentist W1-2,O1: Dental SW W1,O2: Become talent lawyer W1,O3: Cirano? W2:O2: Become model W2: O3: Invest in breath mints <Acquire or partner> Threat Opportunity ST Strategies: Usually premptive strategies of some sort WT Strategies: Usually divest strategies