Chapter 8: The Web-Enabled Chapter 8: The Web-Enabled EnterpriseEnterprise

Oz (5Oz (5thth edition) edition)

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Uniqueness of Web-Enabled Uniqueness of Web-Enabled CommerceCommerce

The Web provides a universal standardThe Web provides a universal standard Enables seamless integration of information Enables seamless integration of information

exchangesexchanges Within the businessWithin the business Between business and Between business and

customers/supplierscustomers/suppliers Unbundling of products and product infoUnbundling of products and product info Reductions in search costs for both buyer Reductions in search costs for both buyer

and sellerand seller Information asymmetry for buyersInformation asymmetry for buyers Richness and reachRichness and reach New business models (discussed later)New business models (discussed later)

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Web TechnologiesWeb Technologies(all but the last are available for (all but the last are available for

free)free) HTTPHTTP HTML and XMLHTML and XML File transfer protocol (FTP)File transfer protocol (FTP) RSSRSS BlogsBlogs PodcastingPodcasting Instant messagingInstant messaging CookiesCookies Proprietary technologiesProprietary technologies

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HTTP, HTML, and XMLHTTP, HTML, and XML Hypertext Transfer Protocol (HTTP)Hypertext Transfer Protocol (HTTP) is the protocol used is the protocol used

to transfer and download Web information. HTTPS is to transfer and download Web information. HTTPS is HTTP with encryption.HTTP with encryption. Uniform Resource Locator (URL) is a literal address Uniform Resource Locator (URL) is a literal address

given to a Web server that corresponds to the IP given to a Web server that corresponds to the IP addressaddress

http://www.winthrop.edu/dacus/resources/howdo.htm Hypertext Markup Language (HTML)Hypertext Markup Language (HTML) is the language for is the language for

creating Web pages viewable with a Web browser. HTML creating Web pages viewable with a Web browser. HTML determines the look and structure of Web pages.determines the look and structure of Web pages.

Extensible Markup Language (XML)Extensible Markup Language (XML) is used to convey is used to convey meaning or content to data.meaning or content to data. HTMLHTML

<font size =<font size =““22””>Oz enterprises, Ltd.</font>>Oz enterprises, Ltd.</font> <b>610-555-1234</b><b>610-555-1234</b>

XMLXML <company name>Oz Enterprises, Ltd</company <company name>Oz Enterprises, Ltd</company

name>name> <telephone>610-555-1234</telephone><telephone>610-555-1234</telephone> 44

FTP, RSS, and BlogsFTP, RSS, and Blogs FTP (file transfer protocol)FTP (file transfer protocol) is a common way of transmitting is a common way of transmitting

files from one computer to another. You use this when you files from one computer to another. You use this when you download files are attach files to an email.download files are attach files to an email.

RSS (rich site summary)RSS (rich site summary) is a family of XML file formats. An is a family of XML file formats. An RSS service is installed on a site to enable users to check RSS service is installed on a site to enable users to check updates to the site. Users can also instruct a Web site with updates to the site. Users can also instruct a Web site with RSS to automatically send new information (often used on RSS to automatically send new information (often used on news Websites).news Websites).

A blog (contraction of “Web log”)A blog (contraction of “Web log”) is a Web page that invites is a Web page that invites visitors to post opinions and images on a particular topic. visitors to post opinions and images on a particular topic. Blogs usually have links to sites of interest. Blogs usually have links to sites of interest. Trackback featureTrackback feature Commercial implications of blogsCommercial implications of blogs

AdvertisingAdvertising Market researchMarket research

Sample blog sitesSample blog sites www.commonsenseblog.org www.diabetesblognetwork.com

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Podcasting and Instant Podcasting and Instant MessagingMessaging

Podcasting is like blogging but enables users to post Podcasting is like blogging but enables users to post sound on a Web site so that people can download it.sound on a Web site so that people can download it. Users can subscribe to a podcast site that uses RSS Users can subscribe to a podcast site that uses RSS

and be notified of new audio files and be notified of new audio files Files are usually in an MP3 format.Files are usually in an MP3 format. Business usesBusiness uses

Time shifted broadcast of tv/radio programs (Time shifted broadcast of tv/radio programs (www.abc.com) )

Deliver lessons to remote studentsDeliver lessons to remote students New musicians (New musicians (garageband.com); has RSS); has RSS

Instant messaging (IM) is a service that offers users the Instant messaging (IM) is a service that offers users the ability to determine whether other persons using the ability to determine whether other persons using the service are online. Users can do this in groups (chat service are online. Users can do this in groups (chat rooms) or with one person. Some applications permit rooms) or with one person. Some applications permit video conferencing and FTP.video conferencing and FTP. AOL Instant Messenger, MSN MessengerAOL Instant Messenger, MSN Messenger Used in business for customers to chat with sales repUsed in business for customers to chat with sales rep

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CookiesCookies

CookiesCookies Small files a Web site places on a visitor's hard Small files a Web site places on a visitor's hard

drive so the site can retrieve information laterdrive so the site can retrieve information later Cookie contains a unique identifier and data Cookie contains a unique identifier and data

collected from prior visitscollected from prior visits Use of cookiesUse of cookies

Convenience for usersConvenience for users Some cookies are used by third parties Some cookies are used by third parties

contracted by a business Web site (e.g., contracted by a business Web site (e.g., DoubleClick)DoubleClick)

Clickstream trackingClickstream tracking Spyware includes cookies and other Spyware includes cookies and other

techniques that are installed on your techniques that are installed on your computer unbeknownst to you that transmit computer unbeknownst to you that transmit information about you while you are online.information about you while you are online.

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Proprietary TechnologiesProprietary Technologies Many of the technologies mentioned earlier Many of the technologies mentioned earlier

are widely used and available for no charge.are widely used and available for no charge. Proprietary technologies are intellectual Proprietary technologies are intellectual

property and not free of charge. property and not free of charge. Local search engines (e.g., Google for the Local search engines (e.g., Google for the

WU Web site)WU Web site) Shopping cart applicationsShopping cart applications Wish list creationWish list creation Tools to analyze Web site visitor behaviorTools to analyze Web site visitor behavior

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IntranetsIntranets

An intranet is a computer network within an An intranet is a computer network within an organization that uses Internet technologies organization that uses Internet technologies for r members of the organization onlyfor r members of the organization only

If a company has an existing network, than If a company has an existing network, than establishing an intranet is very inexpensive. establishing an intranet is very inexpensive. All that is required is the server software and All that is required is the server software and browsers for clients.browsers for clients.

Most of the technologies mentioned earlier Most of the technologies mentioned earlier are all available at no charge are all available at no charge

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Information Most Frequently Information Most Frequently Found in Corporate IntranetsFound in Corporate Intranets

Customer databasesCustomer databases Corporate policies and procedures (Winthrop)Corporate policies and procedures (Winthrop) Corporate phone directoriesCorporate phone directories Human resource forms (Winthrop)Human resource forms (Winthrop) Training programs Training programs Product catalogs and manuals (Winthrop)Product catalogs and manuals (Winthrop) Data warehouse and decision support accessData warehouse and decision support access Internal purchase orders (Winthrop)Internal purchase orders (Winthrop) Travel reservationsTravel reservations Knowledge management databasesKnowledge management databases

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Functional Applications of the Intranet Idea

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ExtranetsExtranets

An extranet is similar to an intranet but it An extranet is similar to an intranet but it enables the firm’s business partners (e.g., enables the firm’s business partners (e.g., suppliers or customers) to access the firm’s suppliers or customers) to access the firm’s intranetintranet

Once an organization links its network to the Once an organization links its network to the Internet theoretically anyone can access the Internet theoretically anyone can access the firm’s network. With respect to an extranet, firm’s network. With respect to an extranet, firms want to restrict access to business firms want to restrict access to business partners. A virtual private network provides the partners. A virtual private network provides the security mechanism for accomplishing this. A security mechanism for accomplishing this. A VPN uses a combination of public and private VPN uses a combination of public and private lines to build a secure extranet. The link lines to build a secure extranet. The link between the firm’s network and the Internet is between the firm’s network and the Internet is often called a “tunnel.” A VPN provides a often called a “tunnel.” A VPN provides a secure tunnel.secure tunnel.

VPNs are also required for firms with extensive VPNs are also required for firms with extensive intranets (multi-site firms)intranets (multi-site firms)

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Extranet ApplicationsExtranet Applications

Managing the supply chainManaging the supply chain

Collaborating with other organizations in Collaborating with other organizations in the development of new products/servicesthe development of new products/services

Sharing product catalogs exclusively with Sharing product catalogs exclusively with wholesalerswholesalers

Sharing news and other information of Sharing news and other information of shared interest exclusively with business shared interest exclusively with business partners (e.g., production schedules, partners (e.g., production schedules, forecasts)forecasts)

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Types of E-CommerceTypes of E-Commerce B2B (seller and buyer are business entities)B2B (seller and buyer are business entities)

B2C (seller is business; buyer is consumer)B2C (seller is business; buyer is consumer)

Other typesOther types

C2C (seller and buyer are consumers; not C2C (seller and buyer are consumers; not covered in our outline; eBay)covered in our outline; eBay)

G2C, G2B, G2GG2C, G2B, G2G

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Main Ideas in B2B E-CommerceMain Ideas in B2B E-Commerce Buying and selling in B2BBuying and selling in B2B

Auctions support dynamic pricing (bidding)Auctions support dynamic pricing (bidding) Exchanges support dynamic and negotiated Exchanges support dynamic and negotiated

pricesprices Supporting technologies for buying/sellingSupporting technologies for buying/selling

VAN EDI and Web enabled EDI VAN EDI and Web enabled EDI Electronic funds transferElectronic funds transfer Digital signature and digital certificatesDigital signature and digital certificates

Activities other than buying and sellingActivities other than buying and selling AlliancesAlliances Sharing of supply chain informationSharing of supply chain information Sharing of product designs, logistics, Sharing of product designs, logistics,

forecastsforecasts1515

Size of the B2B MarketSize of the B2B Market

By 2004 market may reach $10 trillion; By 2004 market may reach $10 trillion; much larger than B2C marketmuch larger than B2C market

In the US 40 percent of all B2B transactions In the US 40 percent of all B2B transactions are done on-lineare done on-line

B2B commerce is about 10 times as great as B2B commerce is about 10 times as great as B2C commerceB2C commerce

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Classifying Auctions/Exchanges Classifying Auctions/Exchanges OverviewOverview

Public or privatePublic or private Auctions tend to be public; exchanges Auctions tend to be public; exchanges

tend to be privatetend to be private Number of participantsNumber of participants

Sell side one sellerSell side one seller Buy side one buyer (GE or ChoiceBuy)Buy side one buyer (GE or ChoiceBuy) Many sellers and many buyers Many sellers and many buyers

(ChemConnect)(ChemConnect) OwnershipOwnership

Industry giantIndustry giant Neutral third partyNeutral third party ConsortiumConsortium

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Sell-Side with One SellerSell-Side with One Seller

Sellers may be click-and-mortar Sellers may be click-and-mortar manufacturer or intermediariesmanufacturer or intermediaries

Use the Internet to sell through electronic Use the Internet to sell through electronic catalogscatalogs Cisco, Dell, StaplesCisco, Dell, Staples Separate pages and catalogs for major Separate pages and catalogs for major

buyersbuyers

Boeing sponsors a website for which airlines Boeing sponsors a website for which airlines can find maintenance and parts can find maintenance and parts

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Buy-Side with One BuyerBuy-Side with One Buyer

This model arises from the procurement needs This model arises from the procurement needs of firms where procurement involves the of firms where procurement involves the purchase of goods and services needed to purchase of goods and services needed to accomplish the mission of the businessaccomplish the mission of the business

In this model a buyer opens an electronic In this model a buyer opens an electronic market on its own server and invites potential market on its own server and invites potential suppliers to bid on the items the buyer needs. suppliers to bid on the items the buyer needs. The invitation is called a The invitation is called a request for quoterequest for quote (RFQ). This process is called the (RFQ). This process is called the reverse reverse auctionauction of bidding mode. of bidding mode.

GE was one of the first to do thisGE was one of the first to do this Online directories exist for suppliers that list Online directories exist for suppliers that list

open RFQs open RFQs

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Exchanges with Many Buyers and Exchanges with Many Buyers and SellersSellers

In these exchanges buyers and sellers may In these exchanges buyers and sellers may be interested in both long term contracts or be interested in both long term contracts or one-time transactions at prevailing prices.one-time transactions at prevailing prices.

ExamplesExamples ChemConnect Alibaba.com Converge.com (spot market for electric, Converge.com (spot market for electric,

networking and computer components)networking and computer components)

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Classifying Exchanges/Auctions Classifying Exchanges/Auctions (cont) Ownership of Exchanges(cont) Ownership of Exchanges

Industry giantIndustry giant IBM established an exchange for selling IBM established an exchange for selling

patents (delphion.com)patents (delphion.com) Neutral entrepreneurNeutral entrepreneur

ChemConnect.comChemConnect.com The consortia or co-opThe consortia or co-op

Covisint (automobile)Covisint (automobile) Orbitz (airlines)Orbitz (airlines)

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Services Provided by Services Provided by Intermediaries in an Intermediaries in an Auction/ExchangeAuction/Exchange

Services for buyersServices for buyers Automate buying, contract management, Automate buying, contract management,

purchase orders, requisitions, business purchase orders, requisitions, business rules enforcement, and paymentrules enforcement, and payment

Services for sellersServices for sellers Catalog creation and content Catalog creation and content

management, order management, management, order management, invoicing, and settlementinvoicing, and settlement

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Other B2B E-commerce Practices:Other B2B E-commerce Practices:Alliances and Sharing InformationAlliances and Sharing Information AlliancesAlliances

Online business alliances of airlines such as Online business alliances of airlines such as Orbitz (www.orbitz.com) and Star Alliance Orbitz (www.orbitz.com) and Star Alliance

Covisint is an alliance of major automobile Covisint is an alliance of major automobile makersmakers

In real estate (MLS)In real estate (MLS) Sharing of information (collaborative Sharing of information (collaborative

commerce)commerce) Extranet ideaExtranet idea Sharing of supply chain informationSharing of supply chain information Joint designJoint design

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Technologies that Support B2BTechnologies that Support B2B

VAN and Web-enabled EDIVAN and Web-enabled EDI

Electronic funds transfer (EFT)Electronic funds transfer (EFT)

Digital signatures and certificatesDigital signatures and certificates Ways to authenticate online messages similar to Ways to authenticate online messages similar to

physical signatures on paper.physical signatures on paper.

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Major Benefits of B2B to BusinessMajor Benefits of B2B to Business

Reduction of paper and administrative costsReduction of paper and administrative costs Reduces cycle time (time compression)Reduces cycle time (time compression) Reduces search costs and time for buyers Reduces search costs and time for buyers

and sellersand sellers Reduces inventory levels and costsReduces inventory levels and costs Reduction in errors and/or improved quality Reduction in errors and/or improved quality

of serviceof service Enables JIT and production flexibilityEnables JIT and production flexibility Expands the marketplaceExpands the marketplace

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An Overview of B2C E-commerce An Overview of B2C E-commerce PracticesPractices

Growth of B2C (see graph in textbook); over Growth of B2C (see graph in textbook); over 50% of US is online50% of US is online

E-tail revenues doubled from 2002 to 2005E-tail revenues doubled from 2002 to 2005 Types of e-retailers (e-tailers)Types of e-retailers (e-tailers)

Pure-play versus bricks-and-mortarPure-play versus bricks-and-mortar Clicks-and-bricksClicks-and-bricks Catalogue retailersCatalogue retailers

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E-tailingE-tailing Fulfillment concept (picking, packing, and Fulfillment concept (picking, packing, and

shippingshipping Advantages to the sellerAdvantages to the seller

Lower inventory by routing orders Lower inventory by routing orders directly to manufacturerdirectly to manufacturer

Lower labor costs (no registers)Lower labor costs (no registers) Lower building costsLower building costs

Advantages to the buyerAdvantages to the buyer Convenience and time savingsConvenience and time savings Search mechanisms and comparison Search mechanisms and comparison

shoppingshopping Selection and product reviewsSelection and product reviews

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E-tailing PracticesE-tailing Practices Consumer profiling and one-to-one Consumer profiling and one-to-one

marketing; both concepts relate to knowing marketing; both concepts relate to knowing the consumer better so that the business the consumer better so that the business can serve consumers more effectively at can serve consumers more effectively at lower cost to the businesslower cost to the business Cookies, clickstream trackingCookies, clickstream tracking Buying and selling information from third Buying and selling information from third

partiesparties Affiliate programsAffiliate programs

Location of the link versus target of linkLocation of the link versus target of link Compensation schemesCompensation schemes

Cooperation among competitorsCooperation among competitors Amazon exampleAmazon example

Conversion ratesConversion rates Pure-play beats clicks and bricks Pure-play beats clicks and bricks

companiescompanies Mass-customizationMass-customization Reverse auctions (Priceline.com)Reverse auctions (Priceline.com)

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Digital Products and ServicesDigital Products and Services

Digital products include products like Digital products include products like software, photographs, music, movies, or software, photographs, music, movies, or text that can be delivered over the text that can be delivered over the InternetInternet regards.com (greeting cards) and regards.com (greeting cards) and

photodisc.com (photographs) photodisc.com (photographs) Why are these products special?Why are these products special?

Digital servicesDigital services Application service providers (renting Application service providers (renting

software)software) Renting storage space (rackspace.com)Renting storage space (rackspace.com) Online banking (direct.com)Online banking (direct.com)

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Pure-play Business ModelsPure-play Business Models

Virtual storefront:Virtual storefront: Sells goods or services Sells goods or services online (Amazon.com)online (Amazon.com)

Information broker:Information broker: Provides information on Provides information on products or services (Edmunds.com)products or services (Edmunds.com)

Transaction broker:Transaction broker: Provides online transaction Provides online transaction facility (eTrade.com, Expedia.com) facility (eTrade.com, Expedia.com)

Online marketplace:Online marketplace: Provides a trading platform Provides a trading platform for individuals and firms (eBay.com, for individuals and firms (eBay.com, alibaba.com)alibaba.com)

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More Pure-play Business ModelsMore Pure-play Business Models

Content provider:Content provider: Creates revenue by providing Creates revenue by providing content (WSJ.com, TheStreet.com, mp3.com)content (WSJ.com, TheStreet.com, mp3.com)

Online service provider:Online service provider: Provides online services, Provides online services, including search service. (Google.com, Xdrive.com)including search service. (Google.com, Xdrive.com)

Virtual community:Virtual community: Provides an online community Provides an online community to focused groups (Friendster.com, iVillage.com) to focused groups (Friendster.com, iVillage.com)

Portal: Portal: Provides initial point of entry to Web, Provides initial point of entry to Web, specialized content, services (Yahoo.com, specialized content, services (Yahoo.com, MSN.com)MSN.com)

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M-CommerceM-Commerce M-commerce concerns the ability of mobile M-commerce concerns the ability of mobile

devices to reach the Internet and the ability devices to reach the Internet and the ability of merchants to locate a mobile device.of merchants to locate a mobile device.

Mobile devices must have GPS capabilityMobile devices must have GPS capability Competitive position of US relative to Competitive position of US relative to

Japan/KoreaJapan/Korea Consumer servicesConsumer services

Information based services – instant Information based services – instant messaging, email, search for informationmessaging, email, search for information

Transaction based services – purchase Transaction based services – purchase stocks, concert tickets, music, or search for stocks, concert tickets, music, or search for priceprice

Location based services –anticipate what Location based services –anticipate what you want based on your location or data you want based on your location or data profile (beam coupons for nearby profile (beam coupons for nearby restaurants)restaurants)

Business servicesBusiness services 3232

Practices (rules) that Attract and Practices (rules) that Attract and Retain Customers (both B2B and Retain Customers (both B2B and

B2C)B2C) Use of affiliate programs to target the right Use of affiliate programs to target the right

customer (links with related sites)customer (links with related sites) Use cookies and CRM software to analyze Use cookies and CRM software to analyze

customer behavior customer behavior Use CRM software to develop customer Use CRM software to develop customer

profiles and personalize shoppingprofiles and personalize shopping Shorten the business cycle; fill orders Shorten the business cycle; fill orders

quicklyquickly Empower customers to help themselves; Empower customers to help themselves;

see text for examplessee text for examples Be proactive; capture the customer’s email Be proactive; capture the customer’s email

address and use it to bring the customer address and use it to bring the customer back; de-commoditizeback; de-commoditize

E-commerce is every commerceE-commerce is every commerce3333

Ethical and Societal IssuesEthical and Societal Issues

Online annoyancesOnline annoyances SpammingSpamming

Advertisers viewpointAdvertisers viewpoint Consumers viewpointConsumers viewpoint

Pop-up windowsPop-up windows Adware and spywareAdware and spyware PhishingPhishing

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