ELECTRONIC BUSINESS, INTRANETS & EXTRANETS

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ELECTRONIC COMMERCE

The online exchange of goods, services, and money among firms, and between firms and their customers

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TYPES OF ELECTRONIC COMMERCE

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REVENUE PARADIGMS

Sales

- Cost of goods sold

Gross margin

- Expenses

Net income

• How do we make a buck?

• Margin * Volume

(SP – cost) * Volume

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BUSINESS ADVANTAGES OF B2B INCLUDE:

Sales

- Cost of goods sold

Gross margin

- Expenses

Net income

Managing inventory more efficiently Adjusting more quickly to customer demand Getting products to market faster Obtaining lower prices on supplies

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BUSINESS ADVANTAGES OF B2C INCLUDE:

Access to a wider selection of products and servicesAccess to products at lower costsConvenience for transactions or for obtaining information

Sales

- Cost of goods sold

Gross margin

- Expenses

Net income

Ebake.com

• How do we make a buck?

• Margin * Volume

(SP – cost) * Volume

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INTERNET &WORLD WIDE WEB CAPABILITIES

World Wide WebWorld Wide Web

CollaborationCollaboration Interactive Communication

Interactive Communication

IntegrationIntegrationTransactionSupport

TransactionSupport

MassCustomization

MassCustomization

InformationDissemination

InformationDissemination

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IMPACT OF THE WEB: DISINTERMEDIATION

Manufactureror

Service Provider

Manufactureror

Service Provider

Intermediary(Middleman)

Intermediary(Middleman)

Customer(Consumer

or Business)

Customer(Consumer

or Business)

Disintermediation• Removal of the intermediary (middleman) in a sale.• Companies can sell directly to customers (retail or

wholesale) without assistance using the Internet

6%

6%Are there any downsides to

disintermediation for a manufacturer or primary creator of services?

If yes , what are the disadvantages?

If no, why don’t all “manufacturers disintermediate their distribution channel?

ELECTRONIC COMMERCE BUSINESS STRATEGIES

Business Strategies come in one of the following three types. All require a sound business model to be successful

chapters Amazon

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KEY INGREDIENTS OF A BUSINESS MODEL

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CLICK-ONLY STRATEGY

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STAGES OF BUSINESS-TO-CONSUMER TRANSACTIONS

(e.g. Electronic Brochure)

(e.g. displaying a bank balance)

(e.g. buying a book)

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MOBILE COMMERCE

Mobile commerce (m-commerce) relies on the use of wireless devices, such as personal digital assistants, cell phones, and smart phones, to place orders and conduct business

Issues confronting m-commerce User-friendliness of the wireless device Network speed Security Quality of life

Working 24//7

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M-COMMERCE AND THE KEY DRIVERS FOR GROWTH

Driver One: Interest in the Internet

Any electronic transaction or information interaction conducted using a wireless, mobile device, and mobile networks, that leads to transfer of real or perceived value in exchange for information, service, or goods

Driver Two: Deployment of High Speed Networks

Driver Three: Growth in Mobile Devices

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HOW M-COMMERCE DIFFERS FROM GENERAL EB

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INTRANETS

Intranets• An internal, private network using Web technologies to

securely transmit information within the organization.• This private internal Web limits viewing access to authorized

users within the organization

Intranets• An internal, private network using Web technologies to

securely transmit information within the organization.• This private internal Web limits viewing access to authorized

users within the organization

Intranet Benefits• Improved information access to authorized user• Improved timeliness and accuracy of information• Global reach allowing employees access from anywhere• Cross-platform integration• Low cost deployment• Positive return on investment

Intranet Benefits• Improved information access to authorized user• Improved timeliness and accuracy of information• Global reach allowing employees access from anywhere• Cross-platform integration• Low cost deployment• Positive return on investment

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INTRANET APPLICATIONS

Intranet HubIntranet Hub

Online Entry ofInformation

Online Entry ofInformation

Application Integration

Application Integration

TrainingTrainingCollaborationCollaboration

Real-time AccessTo Information

Real-time AccessTo Information

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EXTRANETS – BUSINESS TO BUSINESS ECOMMERCE

• Extranets enable two or more firms to use the Internet to do business together

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ELECTRONIC DATA INTERCHANGE (EDI)

Electronic Data Interchange• The transmission of electronic business forms between

business partners (e.g. purchase order)• Typically used by large organizations…very expensive• The internet has opened this technology to smaller firms

Electronic Data Interchange• The transmission of electronic business forms between

business partners (e.g. purchase order)• Typically used by large organizations…very expensive• The internet has opened this technology to smaller firms

How it works• EDI transactions are system generated by the sender and then

transmitted to the receiver by a VAN• VAN (Value Added Network) providers are private network

operators that provide guaranteed delivery

How it works• EDI transactions are system generated by the sender and then

transmitted to the receiver by a VAN• VAN (Value Added Network) providers are private network

operators that provide guaranteed delivery

Standards• Document types and formats are universally standardized• Two standards exist: ANSI X.12 and UN/EDIFACT

Standards• Document types and formats are universally standardized• Two standards exist: ANSI X.12 and UN/EDIFACT

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ELECTRONIC DATA INTERCHANGE (EDI) EXAMPLE

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EXTRANETS

Extranets• secure networks that provide customers, suppliers, and

employees with access to internal systems• replaced EDI for smaller firms

Extranet Benefits• timeliness &accuracy of communications, reducing errors &

misunderstandings• Allows central management of documents allowing single

updates• Uses standard web protocols• Easy to use, requires little training • Used to automate transactions, reducing cost and cycle time

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Virtual private network (VPN): a secure connection between two points across the Internet

Tunneling: the process by which VPNs transfer information by encapsulating traffic in IP packets over the Internet

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EXTRANET APPLICATIONS

ExchangesExchanges

Distribution Portals

Distribution Portals CollaborationCollaboration

Real-TimeInfo Access

Real-TimeInfo Access

ProcurementPortals

ProcurementPortals

Enterprise Portals

Enterprise Portals

Supply ChainManagement

Supply ChainManagement

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EXTRANET APPLICATIONS: EXCHANGES AND PORTALS

e.g. SciQuest.com e.g. Premier.Dell.com e.g. Ford Supplier Portal)

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NEW TECHNOLOGIES FOR B2B ELECTRONIC COMMERCE

XML - Extensible Markup Language

EBRL - Extensible Business Reporting Language

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NEW TECHNOLOGIES FOR B2B ELECTRONIC COMMERCE

RFID - Radio Frequency Identification• Used for tagging and tracking physical items• RFID system uses a transceiver and antenna to transfer

information to a processing device from an RFID tag

RFID Benefits• RFID is more powerful than bar-code technology because it

does not require visual line-of-sight reading• RFID tags can be placed anywhere (e.g. clothes, pets, cars,

parts, store items, etc.)

RFID Issues• Deployment is growing rapidly but it is still expensive• There is no clear set of data standards• Global radio frequencies differ between countries

RFID LIBRARY EXAMPLE