Amity Campus Uttar Pradesh India 201303 ASSIGNMENTS PROGRAM: MBA IB SEMESTER-IV
Descrição do Produto
Amity Campus Uttar Pradesh India 201303
ASSIGNMENTS PROGRAM: MBA IB SEMESTER-IV Subject Name Study COUNTRY Roll Number (Reg.No.) Student Name
: e-Commerce : The Gambia : IB01122014-2016023 : Saikou Saidy Jeng
INSTRUCTIONS a) Students are required to submit all three assignment sets. ASSIGNMENT Assignment A Assignment B Assignment C
DETAILS Five Subjective Questions Three Subjective Questions + Case Study Objective or one line Questions
MARKS 10 10 10
b) Total weightage given to these assignments is 30%. OR 30 Marks c) All assignments are to be completed as typed in word/pdf.
d) All questions are required to be attempted. e) All the three assignments are to be completed by due dates and need to be submitted for evaluation by Amity University. f) The students have to attached a scan signature in the form.
Signature Date
: :
_________________________________ ________May 15th 2016_________________________
( √ ) Tick mark in front of the assignments submitted Assignment √ Assignment ‘B’ √ Assignment ‘C’ ‘A’
√
e-Commerce SECTION A: Question 1: Explain B2B E-Commerce using an example of a book distributor who stocks a large number of books, which he distributes via a large network of book sellers. Assume that the distributor has stocks of books of a large number of publishers and book
sellers order books as and when their stock is low. Distributors give 1 month's time to booksellers for payment. Distributor‘s warehouse Reminder if book not paid within one month(14)
Warehouse of Bookseller
Book Received(6) Acknowledgement order and send bill(5)
Stock goes below level one(1)
Enquiry availability(2) Distributor‘s website
Book seller
Ok‘s cheque(11)
Display various books(3)
Cheque sent after verification of seller‘s public key certificates(8)
Place order(4)
Send cheque(7) Distributor‘sbank Receipt to seller(13) Book supplied to bookseller (6)
Send cheque for clearance (9) Ok‘s clearance (10) Clearing house Credit to distributor‘s bank A/C (13) Book seller‘s bank Debit advice to bookseller‘s bank (12)
Key; Information flow (Normally electronically) Physical item flows
The above illustration about the book distribution company is an example of B2B ecommerce. In business to business (B2B) applications, the buyers, sellers, and transactions involve only organizations. In the above case, the B2B transactions were between the book distributor and a network of book sellers. Business-to-business comprises the majority of EC volume. It covers a broad spectrum of applications that enable an enterprise to form electronic relationships with its distributors, resellers, suppliers, customers, and other partners. By using B2B, the book distributor can therefore restructure its supply chain and partnerships. A company following B2B business model sells its product to an intermediate buyer who then sells the product to the final customer. As an example, the book sellers can place orders from the book distributor's website and after receiving the consignment, sell the end product (books) to final customers who come to buy the product at the buyers‘(book sellers‘) retail outlets. The following is a diagrammatical example of B2B model of e-commerce;
B2B implies that seller as well as buyer is business entity. B2B covers large number of applications which enables business to form relationships with their distributors, resellers, suppliers etc. Following are the leading items in B2B Commerce.
Electronics Shipping and Warehousing
Motor Vehicles Petrochemicals Paper Office products Food Agriculture
Armstrong has indicated that although the popular press has given the most attention to business-to-consumer (B2C) Web sites, consumer goods sales via the Web are dwarfed by B2B (business-tobusiness) e-commerce. Gartner Group, a major research firm on online commerce, estimated that B2B e-commerce would reach $3.6 trillion in 2003, compared with just $107 billion in B2C transactions. Gartner also estimated that by 2005, more than 500 000 enterprises would participate in e-commerce as buyers, sellers, or both. These firms were using B2B trading networks, auction sites, spot exchanges, online product catalogues, barter sites, and other online resources to reach new customers, serve current customers more effectively, and obtain buying efficiencies and better prices. Our book distribution company and its network of book sellers may transact business in open or private trading networks. In essence, much B2B e-commerce takes place in open trading networks—huge e-marketspaces in which buyers and sellers find each other online, share information, and complete transactions efficiently. Increasingly though,
online sellers are setting up their own private trading networks (PTNs).Whereas open trading networks such as PlasticsNet.com facilitate transactions between a wide range of online buyers and sellers, private trading networks link a particular seller with its own trading partners. Rather than simply completing transactions, PTNs give sellers greater control over product presentation and allow them to build deeper relationships with buyers and sellers by providing value-added services. The following in general are the key technologies used in B2B commerce −
Electronic Data Interchange (EDI) − EDI is an interorganizational exchange of business documents in a structured and machine processable format. Internet − Internet represents World Wide Web or network of networks connecting computers across the world. Intranet− Intranet represents a dedicated network of computers within a single organization Extranet − Extranet represents a network where outside business partners, supplier or customers can have limited access to a portion of enterprise intranet/network.. Back-End Information System Integration − Back End information systems are database management systems used to manage the business data.
The following are the architectural models in B2B commerce −
Supplier Oriented marketplace − In this type of model, a common marketplace provided by supplier is used by both individual customers as well as business users. A supplier offers e-stores for sales promotion. Buyer Oriented marketplace − In this type of model, buyer has his/her own market place or e-market. He invites suppliers to bid on product's catalogue. A Buyer company opens a bidding site. Intermediary Oriented marketplace − In this type of model, an intermediary company runs a market place where business buyers and sellers can transact with each other.
The use of B2B medium may give the book distributor and book sellers some advantages due to the following general nature B2B. B2B markets enjoy more predictability and stability. Whereas consumer sentiment ebbs and flows quickly, B2B sectors tend to evolve more gradually. After the company secure relationships with its buyers, its ability to supply them may last for at least a year or longer. In fact, B2B buyers often sign contracts with suppliers to guarantee pricing and terms. These contracts allow the firm to plan revenue budgets with accuracy. The evolution of supply chain management and a collaborative mindset in distribution channels contributes to high levels of customer loyalty. After the firm establish a
relationship with a buyer and prove its dependability as a supplier, it is typical to have an ongoing commitment. B2B buyers do not have the luxury of being as fickle as consumers. It is costly and time-consuming for company buyers to make major changes in product or service suppliers. Companies and their customers rely on consistency in product quality, service dependability and value. As long as the firm take care of its responsibilities, loyalty is a B2B strength. However, B2B commerce has some limitations, and this may have some negative outcome for our book distribution company and its network of sellers of books. Firstly, the number of potential buyers in a B2B market is much lower than in a typical consumer market. The company sells to the businesses that then sell to customers. If it makes niche products or offer specialized services to a small industry, it may only have 10 to 20 customers in a given geographic area. Even if firm‘s goods or services have broader appeal among businesses, the pool of companies is diminished because many have established supplier networks. The firm not only has to go after unattached buyers, but it needs to steal customers away to generate enough revenue to survive. B2B companies face significant marketing challenges relative to B2Consumer peers. Digital marketing is especially challenging. Whereas B2B companies rely heavily on content marketing and social media to attract online users, B2B businesses have a much
harder time. Social media is used by B2Cs to engage consumers. The way the firm interacts with B2B users online and in social media is more complex. Therefore, B2B providers must plan carefully and invest in quality staff or outside agencies to benefit from these digital tools. Question 2: Explain the system architecture of E-Commerce by looking at it as a set of layers with the physical network at the bottom layer and applications at the top layer. The sharing of business information, maintaining business relationships and conducting business transactions by using telecommunication networks is usually defined as Electronic Commerce. E-commerce is normally categorized as Business to Business (B2B), Business to Customer (B2C) and Customer to Customer (C2C). The major advantages of E-Commerce are anytime, anywhere transaction, reduction in cost of transactions, reduction in time to market products, faster interbusiness transaction and faster transfer of funds. The major disadvantages of E-commerce are poor security of transactions unless special precautions are taken, loss of privacy, lack of legislation to settle disputes and menace of hackers.
E-Commerce systems may be thought of as consisting of many layers, each layer providing a service. Each layer has a specific function and can be described separately. This gives us a logical way to discuss the architecture of e-commerce systems. We can use six layers to logically explain e-commerce systems as follows; The bottommost layer is the physical layer, which means the physical infrastructure such as cables, wires, satellites and mobile phone system. Their common property is that they provide communication infrastructure for e-commerce. This layer is the bedrock of electronic commerce because all traffic must be transmitted by one or more of the communication networks comprising the national information infrastructure (NII). The components of an NII include the TV and radio broadcast industries, cable TV, telephone networks, cellular communication systems, computer networks, and the Internet. The trend in many countries is to increase competition among the various elements of the NII to increase its overall efficiency because it is believed that an NII is critical to the creation of national wealth. The next layer is usually called the logical layer. It defines protocols, that is a set of mutually agreed rules, to communicate logically between computers connected by the physical network. The internet is a worldwide of computers which communicate using a particular protocol known asTCP/IP(Transmission Control Protocol/ Internet Protocol).
The worldwide acceptance of this standard has led to the emergence of internet as the essential infrastructure of e-commerce. Organizations found it attractive to use the same protocol namely, TCP/IP. A major merit of doing this is the availability of many services such as email, file transfer protocol and browsing on the internet to be adopted inexpensively within a firm. This is called intranet. However, since the internet allows any one to use it, it is suspect to misuse. Precautions such as firewalls are therefore need for its use. Organizations may also agree to a private networking amongst themselves. Such an arrangement is called extranet. This though may be expensive and thus methods to ensure secure communication on the internet between cooperation firms called virtual private network (VPN) have been designed. The nest higher level is called the network services layer. This provides services on the internet system. The internet is similar to a railway system which is an essential infrastructure for transporting passengers. The physical layer in a railway system consists of railway tracts, engines and carriers. The logical layer is the signaling system which specifies rules to be followed by engine drivers, guards and station masters for orderly use of tracts by trains. The services layer in a railway system provides reservations for passengers. Similarly, the network services layer provide services for which can be carried out conveniently using the internet mechanism. The most important of this service
is the World Wide Web. Other services for e-commerce are email, browsers and search engines. Fundamentally, e-commerce requires exchange of messages and documents such as purchase orders, delivery notes, etc between participants, and internet is the cheapest way of doing this. Languages are required to compose messages which can be interpreted by computers. Hypertext Markup Language (HTML) and Extensible Markup Language (XML) provide this. As mentioned earlier, the internet can be misused. Thus, there is need to send messages which are coded using a secret code. It is also necessary to have an equivalent of signing in the electronic medium also. Those requirements are met by the messaging layer. This layer consists of software for sending and receiving messages. Its purpose is to deliver a message from a server to a client. For example, it could move an HTML file from a Web server to a client running Netscape. Messages can be unformatted (e.g., email) or formatted (e.g., a purchase order). Electronic data interchange (EDI), e-mail, and hypertext text transfer protocol (HTTP) are examples of messaging software. The next layer is called the middleman layer or services, and they are essentially services provided to e-commerce participants to make their dealings easier. Such services include secure payments using credit cards, imitating cash payments. An authority to
certify public keys of individuals and businesses are needed to authenticate digital signatures. Here value added services provide secure electronic transactions among participants of e-commerce. Hosting services provide among other facilities web presence for organizations and electronic catalogues and directories to participants. The principal purpose of this layer is to support common business processes. Nearly every business is concerned with collecting payment for the goods and services it sells. Thus, the layer supports secure transmission of credit card numbers by providing encryption and electronic funds transfer. Furthermore, the layer should include facilities for encryption and authentication. All these services provided by the layers discussed above are essential to support the last and highest layer of e-commerce architecture. This is called the application layer. Consider the case of a book seller with an on-line catalog. The application is a book catalog; encryption is used to protect a customer's credit card number; the application is written in HTML; HTTP is the messaging protocol; and the Internet physically transports messages between the book seller and customer. Common to the application layer are Business to Business, Business to Consumer and Consumer to Consumer e-commerce. These and other types of application layer are briefly outlined below;
• Collaborative commerce (c-commerce). In this type of EC, business partners collaborate electronically. Such collaboration frequently occurs between and among business partners along the supply chain. • Business-to-consumers (B2C). In this case the sellers are organizations, the buyers are individuals. • Consumers to businesses (C2B). In this case consumers make known a particular need for a product or service, and organizations compete to provide the product or service to consumers. (An example would be Priceline.com, where the customer names the price and suppliers try to fulfill it.) • Consumer-to-consumer (C2C). In this case an individual sells products (or services) to other individuals. • Intrabusiness (intraorganizational) commerce. In this case an organization uses EC internally to improve its operations. A special case of this is known as B2E(business to its employees) EC. • Government-to-citizens (G2C) and to others. In this case the government provides services to its citizens via EC technologies. Governments can do business with other governments (G2G) as well as with businesses (G2B). • Mobile commerce (m-commerce). When e-commerce is done in a wireless environment, such as using cell phones to access the Internet, we call it m-commerce. Each of the above types of EC may have several business models. For example, in
B2B one can sell from catalogs or in auctions. Buying can be done in several modelssuch as reverse auctions, group purchasing, or negotiations. Question 3: What do you understand by EDI? The early signs of EDI date all the way back to the early 1960s when a few large companies had their major suppliers dial-in and download orders from their computers. Each company had its own format, so suppliers had to program differently for each trading partner. EDI stands for Electronic Data Exchange. EDI is an electronic way of transferring business documents in an organization internally, between its various departments or externally with suppliers, customers, or any subsidiaries. In EDI, paper documents are replaced with electronic documents such as word documents, spreadsheets, etc. EDI describes the electronic exchange of standard business documents between firms. A structured, standardized data format is used to exchange common business documents (e.g., invoices and shipping orders) between trading partners. In contrast to the free form of e-mail messages, EDI supports the exchange of repetitive, routine business transactions. Standards mean that routine electronic transactions can be concise and
precise. Firms following the same standard can electronically share data. Some major sets of EDI standards include;
The UN-recommended UN/EDIFACT is the only international standard and is predominant outside of North America. The US standard ANSI ASC X12 (X12) is predominant in North America. GS1 EDI set of standards developed the GS1 predominant in global supply chain The TRADACOMS standard developed by the ANA (Article Number Association now known as GS1 UK) is predominant in the UK retail industry. The ODETTE standard used within the European automotive industry The VDA standard used within the European automotive industry mainly in Germany The HL7 a semantic interoperability standard used for healthcare administrative data.
Many of these standards first appeared in the early to mid 1980s. The standards prescribe the formats, character sets, and data elements used in the exchange of business documents and forms. The complete X12 Document List includes all major business documents, including purchase orders and invoices. All EDI Standards include:
Elements, which are the smallest component in an EDI Standard Segments, which are groups of elements Transaction sets (also called messages), which are groups of segments
The EDI standard prescribes mandatory and optional information for a particular document and gives the rules for the structure of the document. The standards are like building codes. Just as two kitchens can be built "to code" but look completely different, two EDI documents can follow the same standard and contain different sets of information. For example, a food company may indicate a product's expiration date while a clothing manufacturer would choose to send color and size information. The following are the few important documents used in EDI used by business firms: Invoices Purchase orders Shipping Requests Acknowledgements Business Correspondence letters Financial information letter
The following are the steps followed in an EDI system; 1. A program generates a file that contains the processed document. 2. The document is converted into an agreed standard format. 3. The file containing the document is sent electronically on the network. 4. The trading partner receives the file. 5. An acknowledgement document is generated and sent to the originating organization. Before EDI, many standard messages between partners were generated by computer, printed, and mailed to the other party that then manually entered the data into its computer. EDI was developed to integrate information across larger parts of an organization‘s value chain from design to maintenance so that manufacturers could share information with designers, maintenance and other partners and stakeholders. Before the widespread uptake and commercial use of the Internet, the EDI system was very expensive to run mainly because of the high cost of the private networks. Thus, uptake was limited largely to cash-rich multinational corporations using their financial strength to pressure and persuade (with subsidies) smaller suppliers to implement EDI systems, often at a very high cost.
The two key aspects of EDI that distinguish it from other forms of electronic communication, such as electronic mail, are: 1. The information transmitted is directly used by the recipient computer without the need for human intervention is rarely mentioned but often assumed that EDI refers to interchange between businesses. It involves two or more organization or parts of organization communicating business information with each other in a common agreed format. 2. The repeated keying of identical information in the traditional paper-based business. Communication creates a number of problems that can be significantly reduced through the usage of EDI. These problems include: ¬ • Increased time • Low accuracy • High labor charges • Increased uncertainty. Organizations that send or receive documents between each other are referred to as "trading partners" in EDI terminology. The trading partners agree on the specific information to be transmitted and how it should be used. This is done in human readable
specifications (also called Message Implementation Guidelines). While the standards are analogous to building codes, the specifications are analogous to blue prints. (The specification may also be called a "mapping," but the term mapping is typically reserved for specific machine-readable instructions given to the translation software.) Larger trading "hubs" have existing Message Implementation Guidelines which mirror their business processes for processing EDI and they are usually unwilling to modify their EDI business practices to meet the needs of their trading partners. Often in a large company these EDI guidelines will be written to be generic enough to be used by different branches or divisions and therefore will contain information not needed for a particular business document exchange. For other large companies, they may create separate EDI guidelines for each branch/division. EDI translation software provides the interface between internal systems and the EDI format sent/received. For an "inbound" document the EDI solution will receive the file (either via a Value Added Network or directly using protocols such as FTP or AS2), take the received EDI file (commonly referred to as a "mailbag"), validate that the trading partner who is sending the file is a valid trading partner, that the structure of the file meets the EDI standards, and that the individual fields of information conform to the agreed upon standards. Typically the translator will either create a file of either fixed length, variable length or XML tagged format or "print" the received EDI document (for non-integrated EDI environments). The next step is to convert/transform the file that the
translator creates into a format that can be imported into a company's back-end business systems or ERP. This can be accomplished by using a custom program, an integrated proprietary "mapper" or an integrated standard based graphical "mapper" using a standard data transformation language such as XSLT. The final step is to import the transformed file (or database) into the company's back-end system. For an "outbound" document the process for integrated EDI is to export a file (or read a database) from a company's information systems and transform the file to the appropriate format for the translator. The translation software will then "validate" the EDI file sent to ensure that it meets the standard agreed upon by the trading partners, convert the file into "EDI" format (adding the appropriate identifiers and control structures) and send the file to the trading partner (using the appropriate communications protocol). Another critical component of any EDI translation software is a complete "audit" of all the steps to move business documents between trading partners. The audit ensures that any transaction (which in reality is a business document) can be tracked to ensure that they are not lost. In case of a retailer sending a Purchase Order to a supplier, if the Purchase Order is "lost" anywhere in the business process, the effect is devastating to both businesses. To the supplier, they do not fulfil the order as they have not received it thereby losing business and damaging the business relationship with their retail client.
For the retailer, they have a stock outage and the effect is lost sales, reduced customer service and ultimately lowers profits. In EDI terminology "inbound" and "outbound" refer to the direction of transmission of an EDI document in relation to a particular system, not the direction of merchandise, money or other things represented by the document. For example, an EDI document that tells a warehouse to perform an outbound shipment is an inbound document in relation to the warehouse computer system. It is an outbound document in relation to the manufacturer or dealer that transmitted the document. The technical infrastructure for implementing EDI has to involve components such as i. Hardware meaning computer, modem and telephone line, the data which is stored in the company travel through the modem to an external computer or network. ii. Software for communications, mail boxing of EDI transactions, mapping and translation. iii. VAN, ASYNC, BISYNC and internet communications which various partners might require. iv. Data backups and redundant power for reliability.
There are four tasks that are required to create and deliver an EDI message and these are mapping, extraction, translation and communication. Three of them are performed by software utilities called Extraction software, translation software, and communication software.
EDI Architecture (above diagram) .The following is the description of how Electronic transmission works from a buyer to the supplier, through a simple example of an individual making an order to a fellow trading partner. The initial stage a buyer prepares an order in his or her purchasing system and has it approved then EDI order is translated into an EDI document format called an 850 purchase order. The EDI 850 purchase order is then securely transmitted to the supplier either via the internet or through a VAN (Value Added Network). Supplier‘s EDI system then processes the order, data security and control are preserved throughout the transmission process using passwords, user identification and encryption. Both the buyer‘s and supplier‘s EDI applications edit and check the documents for accuracy. Let us discuss how EDI actually works using an example of ABC on how vendor generates an electronic purchase order in five steps as follows: a. Preparation of electronic documents: The first step in any arrangement of Electronic Data Interchange is the assembly and organization of data by ABC‘s internal application systems.
Instead of printing out purchase orders, ABC‘s system forms an electronic file of purchase orders. b. Outbound translation : An electronic file is then been translated into a standard format. The result is a data file that contains a series of structured transactions related to the purchase orders. ABC‘s EDI translation software will produce a separate file for each manufacturer. c. Communication : ABC‘s computer spontaneously makes a connection with its Value Added Network, and transmits all the files that have been prepared. Each file is processed by the VAN and is routed to the appropriate electronic mailbox for each manufacturer. Several manufacturers do not subscribe to the ABC‘s VAN, so files are automatically routed to the appropriate network service. d. Inbound translation : The manufacturers reclaim the files from their electronic mailboxes at their convenience, and reverse the process that ABC went through, translating the file from the standard format into the specific format required by the manufacturer‘s application software. e. Processing electronic documents: Each manufacturer will process the purchase orders received in their internal application systems. There are two ways of connecting to EDI: Direct connection EDI and Indirect connection EDI. Direct connection EDI requires each business to operate its own on site EDI translator
computer. Then the EDI translator computers are connected directly to each other using modems and dial-up telephone lines or dedicated leased lines. Indirect connection EDI is when VAN (Value-added network) services are used, Value-added network is a company that provides communications equipment, software, and skills needed to receive, store and forward electronic messages that contain EDI translator sets. To use the services of a VAN, a company must install EDI translator software that is compatible with the VAN. According to Hill and Ferguson reveal VAN solves problems that might occur in direct communication, VAN provides following services relating to EDI. Mail boxing permits one trading partner to send transaction sets to the other‘s mailbox for storage. When the other trading partner is ready, it will retrieve the transaction sets. This solves the problem of finding a time when both partners can communicate. Trading partners which cannot afford the expenses of leased line and dual-up connections required to support direct and VANaided EDI. Companies have another alternative to switch on Internet and been able to do business with large customers that demand EDI capabilities from suppliers. Lankford and Johnson stated ― since June 1996, Harbinger has shipped software that can sort through a corporation‘s outgoing electronic data interchange files to determine the ones the user actually wants to send over the internet instead of through a value-added network ‖. The software, called Trusted Link Guardian, then wraps the internet-destined EDI file in an encrypted electronic mail envelope and dispatched it.
Mostly large companies with well-built information systems can easily use EDI technology and benefit from it compared to small and medium companies. In the adoption of EDI companies faces many problems in the using of the system, ever since it involves Information Technology firms were force to have an IT expert first before the implementing of the technology for it to run successful. The technology infrastructure is the major obstacle as well, companies needs to have strong hardware and software to support the system. Small, Medium and large organizations are in need of EDI, especially firms, which deal with suppliers. EDI saves a company money by providing an alternative to or replacing information flows that require a great deal of human interaction and materials such as paper documents, meetings, faxes. Even when paper documents are maintained in parallel with EDI exchange, e.g. printed shipping manifests, electronic exchange and the use of data from that exchange reduces the handling costs of sorting, distribution, organizing and searching paper documents. It allows a company to take advantage of the benefits of storing and manipulating data electronically without the cost of manual entry. Key reasons for implementing EDI included ―meet a customer requirement‖, ―improve customer service‖, and ―gain competitive advantage‖. Millen reported the significant
benefits of EDI to ―make the firm more competitive and aid in achieving strategic goals‖, ―provide more timely information‖, and ―reduce information processing costs‖. From the benefits of EDI, it shows how important for a firm to engage in EDI. The most common advantage of EDI includes Reduced labor costs of mailing and data entry, Timeliness of information, Higher quality information, Better communication improved business processes, Standardization, Removes uncertainty, Reduce inventories. Mackay and Rosier illustrate that one of the principal objectives of using was to ―achieve efficiency in communicating the needs of the manufacturers‘ production lines to the suppliers of component parts‖. Logistic management uses EDI to simplify their activities, Calza and Passaro stated ―EDI allows the speeding-up of order management and bill/invoice issue through an interactive connection network between the supply chain members‖, not only logistic management even automotive industry according to Mackay and Rosier ―the Australian automotive industry has attempted to improve its international competitiveness through the adoption of information technologies such as EDI‖. EDI support many sectors in an organization in different ways as the positive result of the software the companies‘ activities such supply chain is been speeding up and in lower cost than before, companies save time, improve customers and suppliers relation
encourages businesses efficient and effectiveness which outcome productivity lead to an increase of competitive global market. There are a few barriers to adopting electronic data interchange. One of the most significant barriers is the accompanying business process change. Existing business processes built around paper handling may not be suited for EDI and would require changes to accommodate automated processing of business documents. For example, a business may receive the bulk of their goods by 1 or 2 day shipping and all of their invoices by mail. The existing process may therefore assume that goods are typically received before the invoice. With EDI, the invoice will typically be sent when the goods ship and will therefore require a process that handles large numbers of invoices whose corresponding goods have not yet been received. Another significant barrier is the cost in time and money in the initial set-up. The preliminary expenses and time that arise from the implementation, customization and training can be costly. It is important to select the correct level of integration to match the business requirement. For a business with relatively few transactions with EDI-based partners, it may make sense for businesses to implement inexpensive "rip and read" solutions, where the EDI format is printed out in human-readable form and people, rather than computers, respond to the transaction. Another alternative is outsourced EDI solutions provided by EDI "Service Bureaus". For other businesses, the implementation
of an integrated EDI solution may be necessary as increases in trading volumes brought on by EDI force them to re-implement their order processing business processes. The key hindrance to a successful implementation of EDI is the perception many businesses have of the nature of EDI. Many view EDI from the technical perspective that EDI is a data format; it would be more accurate to take the business view that EDI is a system for exchanging business documents with external entities, and integrating the data from those documents into the company's internal systems. Successful implementations of EDI take into account the effect externally generated information will have on their internal systems and validate the business information received. For example, allowing a supplier to update a retailer's Accounts Payable system without appropriate checks and balances would put the company at significant risk. Businesses new to the implementation of EDI must understand the underlying business process and apply proper judgment. Is EDI used in B2C or B2B E-Commerce? As we said earlier, EDI stands for Electronic Data Interchange. It is a standard electronic format used for purchase orders, invoices etc. When such electronic forms are received they can be interpreted correctly by recipient‘s computer program and used. EDI is used in B2B e-Commerce. In other words, there is a perfect marriage between EDI and B2B e-
commerce. EDI is a crucial part of business to business commerce. When computers exchange data using EDI, the data is transmitted in EDI Standard format so that it is recognizable by other systems using the same EDI Standard format. Companies who use EDI have their own translator software package to convert the data from the EDI Standard format to their computer system's format. Companies that exchange EDI data are called trading partners. With EDI, a lot of large enterprises and their suppliers have made significant investments over the years and the technology still does what it‘s supposed to do. Namely, that is handle large, recurring orders in a supply chain where products are predefined and known. That allows organizations to transact with each other based on tightly defined standards that specify how business documents (invoices, purchase orders, ship confirmations) will be transferred to each other and keep the flow of supplies moving steadily in the supply chain. We can now clearly see that EDI deals with different organizations conducting business between and among themselves. This is the domain of B2B ecommerce. B2B commerce tends to deal with ordering scenarios that may not be known, or where products and order management processes may be very complex. Integrations can also be more flexible, since the standards (like XML originally and now API‘s) allow for more leeway in the way information that is passed to other systems. Mobile commerce capability is also a
key reason to have a B2B platform as more and more customers expect to be able to create ad hoc orders with their mobile devices. Even if a firm‘s orders come through EDI, there will be some percentage (maybe a substantial percentage) that doesn‘t. That‘s where a B2B commerce platform would come in. So, for most enterprises with existing EDI investments, the question is not whether they will implement B2B commerce, it‘s when they will implement it. Given the rise of B2B commerce on the web, mobile device ordering, and more and more ad hoc ordering processes, many organizations will find themselves (happily) with both. Why is EDI important in E-Commerce? EDI continues to prove its major business value by lowering costs, improving speed, accuracy and business efficiency. The greatest EDI benefits often come at the strategic business level. According to a research study from Forrester, EDI continues to prove its worth as an electronic message data format. This research states that ―the annual volume of global EDI transactions exceeds 20 billion per year and is still growing.‖1 For buyers that handle numerous transactions, using EDI can result in millions of dollars of annual savings due to early payment discounts. From a financial perspective alone, there are impressive
benefits from implementing EDI. Exchanging documents electronically improves transaction speed and visibility while decreasing the amount of money you spend on manual processes. But cost savings is far from the only benefit of using EDI. But let‘s start with cost savings anyway:
Expenses associated with paper, printing, reproduction, storage, filing, postage and document retrieval are all reduced or eliminated when you switch to EDI transactions, lowering your transaction costs by at least 35% A major electronics manufacturer calculates the cost of processing an order manually at $38 compared to just $1.35 for an order processed using EDI Errors due to illegible faxes, lost orders or incorrectly taken phone orders are eliminated, saving your staff valuable time from handling data disputes
The major benefits of EDI are often stated as speed and accuracy:
EDI can speed up your business cycles by 61%. Exchange transactions in minutes instead of the days or weeks of wait time from the postal service Improves data quality, delivering at least a 30—40% reduction in transactions with errors—eliminating errors from illegible handwriting, lost faxes/mail and keying and re-keying errors
Using EDI can reduce the order-to-cash cycle time by more than 20%, improving business partner transactions and relationships
However, the increase in business efficiency is also a major factor:
Automating paper-based tasks allows your staff to concentrate on higher-value tasks and provides them with the tools to be more productive Quick processing of accurate business documents leads to less re-working of orders, fewer stock outs and fewer cancelled orders Automating the exchange of data between applications across a supply chain can ensure that business-critical data is sent on time and can be tracked in real time. Sellers benefit from improved cash flow and reduced order-to-cash cycles Shortening the order processing and delivery times means that organizations can reduce their inventory levels
In many cases, the greatest EDI benefits come at the strategic business level:
Enables real-time visibility into transaction status. This in turn enables faster decision-making and improved responsiveness to changing customer and market demands, and allows businesses to adopt a demand-driven business model rather than a supply-driven one Shortens the lead times for product enhancements and new product delivery
Streamlines the company‘s ability to enter new territories and markets. EDI provides a common business language that facilitates business partner onboarding anywhere in the world Promotes corporate social responsibility and sustainability by replacing paper-based processes with electronic alternatives. This will both save you money and reduce your CO2 emissions
In summary, the following advantages demonstrate the importance of an EDI system in E-Commerce; Reduction in data entry errors - Chances of errors are much less while using a computer for data entry. Shorter processing life cycle - Orders can be processed as soon as they are entered into the system. It reduces the processing time of the transfer documents. Electronic form of data - It is quite easy to transfer or share the data, as it is present in electronic format. Reduction in paperwork - As a lot of paper documents are replaced with electronic documents, there is a huge reduction in paperwork. Cost Effective - As time is saved and orders are processed very effectively, EDI proves to be highly cost effective.
Standard means of communication - EDI enforces standards on the content of data and its format which leads to clearer communication. Question 4:Why is security important in E-Commerce? E-commerce security is the protection of e-commerce assets from unauthorized access, use, alteration, or destruction. The importance and dimensions of e-commerce security can be listed thus; 1. 2.
Integrity: prevention against unauthorized data modification Non-repudiation: prevention against any one party from reneging on an agreement after the fact
3.
Authenticity: authentication of data source
4.
Confidentiality: protection against unauthorized data disclosure
5.
Privacy: provision of data control and disclosure
6.
Availability: prevention against data delays or removal
Security is an eternal concern for organizations as they face the dual problem of protecting stored data and transported messages. Organizations have always had sensitive data to which they want to limit access to a few authorized people. Historically, such data have been stored in restricted areas (e.g., a vault) or encoded. These methods of restricting access and encoding are still appropriate. However, Electronic commerce poses additional security problems, and hence the importance of security in this type of business activity. First, the intent of the Internet is to give people remote access to information. The system is inherently open, and traditional approaches of restricting access by the use of physical barriers are less viable, though organizations still need to restrict physical access to their servers. Second, because electronic commerce is based on computers and networks, these same technologies can be used to attack security systems. Hackers can use computers to intercept network traffic and scan it for confidential information. They can use computers to run repeated attacks on a system to breach its security (e.g., trying all words in the dictionary for an account's password).
Cybersecurity is one of the most important ecommerce features. Without the proper protocols, ecommerce companies put themselves and their customers at risk for payment fraud. Outside of financial consequences, data breaches harm an ecommerce firm's reputation. Loyal customers are reluctant to continue deal with companies that put their information at risk in the past. The security services are provided to ensure basic E-commerce requirements. Security services provide a way for safe, authentic, and reliable communications between two or more parties. Security not only includes that the information stays within the communicating parties but also it can be verified and noted as authentic. Signing of contracts, registration of mail, disclosures, anonymity, and authorization schemes of the real world must be able to be replicated and done in the electronic world. What are the security issues to be taken into account while designing a security system for E-Commerce? E-commerce is defined as the buying and selling of products or services over electronic systems such as the Internet and to a lesser extent, other computer networks. It is
generally regarded as the sales and commercial function of eBusiness. A wide variety of commerce is conducted via eCommerce, including electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. The massive increase in the uptake of eCommerce has led to a new generation of associated security threats, but any eCommerce system must meet four integral requirements: a) privacy – information exchanged must be kept from unauthorized parties b) integrity – the exchanged information must not be altered or tampered with c) authentication – both sender and recipient must prove their identities to each other and d) non-repudiation – proof is required that the exchanged information was indeed received (Holcombe, 2007). These basic maxims of eCommerce are fundamental to the conduct of secure business online. Further to the fundamental maxims of eCommerce above, eCommerce providers must also protect against a number of different external security threats, most notably
Denial of Service (DoS). These are where an attempt is made to make a computer resource unavailable to its intended users though a variety of mechanisms. The financial services sector still bears the brunt of e-crime, accounting for 72% of all attacks. But the sector that experienced the greatest increase in the number of attacks was eCommerce. Attacks in this sector have risen by 15% from 2006 to 2007 (Symantec, 2007). 2. Privacy Privacy has become a major concern for consumers with the rise of identity theft and impersonation, and any concern for consumers must be treated as a major concern for eCommerce providers. According to Consumer Reports Money Adviser (Perrotta, 2008), the US Attorney General has announced multiple indictments relating to a massive international security breach involving nine major retailers and more than 40 million credit- and debit-card numbers. US attorneys think that this may be the largest hacking and identity-theft case ever prosecuted by the justice department. Both EU and US legislation at both the federal and state levels mandates certain organizations to inform customers about information uses and disclosures. Such disclosures are typically accomplished through privacy policies, both online and offline (Vail et al., 2008). In a study by Lauer and Deng (2008), a model is presented linking privacy policy, through trustworthiness, to online trust, and then to customers‘ loyalty and their
willingness to provide truthful information. The model was tested using a sample of 269 responses. The findings suggested that consumers‘ trust in a company is closely linked with the perception of the company‘s respect for customer privacy (Lauer and Deng, 2007). Trust in turn is linked to increased customer loyalty that can be manifested through increased purchases, openness to trying new products, and willingness to participate in programs that use additional personal information. Privacy now forms an integral part of any e-commerce strategy and investment in privacy protection has been shown to increase consumer‘s spend, trustworthiness and loyalty. The converse of this can be shown to be true when things go wrong. In March 2008, the Irish online jobs board, jobs.ie, was compromised by criminals and users‘ personal data (in the form of CV‘s) were taken (Ryan, 2008). Looking at the real-time responses of users to this event on the popular Irish forum, Boards.ie, we can see that privacy is of major concern to users and in the event of their privacy being compromised users become very agitated and there is an overall negative effect on trust in e-commerce. User comments in the forum included: ―I‘m well p*ssed off about them keeping my CV on the sly‖; ―I am just angry that this could have happened and to so many people‖; ―Mine was taken too. How do I terminate my acc with jobs.ie‖; ―Grr, so annoyed, feel I should report it to the Gardai now‖ (Boards.ie, 2008). 3. Integrity, Authentication & Non-Repudiation
In any e-commence system the factors of data integrity, customer & client authentication and non-repudiation are critical to the success of any online business. Data integrity is the assurance that data transmitted is consistent and correct, that is, it has not been tampered or altered in any way during transmission. Authentication is a means by which both parties in an online transaction can be confident that they are who they say they are and non-repudiation is the idea that no party can dispute that an actual event online took place. Proof of data integrity is typically the easiest of these factors to successfully accomplish. A data hash or checksum, such as MD5 or CRC, is usually sufficient to establish that the likelihood of data being undetectably changed is extremely low (Schlaeger and Pernul, 2005). Notwithstanding these security measures, it is still possible to compromise data in transit through techniques such as phishing or man-in- the-middle attacks (Desmedt, 2005). These flaws have led to the need for the development of strong verification and security measurements such as digital signatures and public key infrastructures (PKI). One of the key developments in e-commerce security and one which has led to the widespread growth of e-commerce is the introduction of digital signatures as a means of verification of data integrity and authentication. In 1995, Utah became the first jurisdiction in the world to enact an electronic signature law. An electronic signature may be defined as ―any letters, characters, or symbols manifested by electronic or similar means and executed or adopted by a party with the intent to authenticate a writing‖
(Blythe, 2006). In order for a digital signature to attain the same legal status as an ink-onpaper signature, asymmetric key cryptology must have been employed in its production (Blythe, 2006). Such a system employs double keys; one key is used to encrypt the message by the sender, and a different, albeit mathematically related, key is used by the recipient to decrypt the message (Antoniou et al., 2008). This is a very good system for electronic transactions, since two stranger-parties, perhaps living far apart, can confirm each other‘s identity and thereby reduce the likelihood of fraud in the transaction. Nonrepudiation techniques prevent the sender of a message from subsequently denying that they sent the message. Digital Signatures using public-key cryptography and hash functions are the generally accepted means of providing non-repudiation of communications 4. Technical Attacks Technical attacks are one of the most challenging types of security compromise an ecommerce provider must face. Perpetrators of technical attacks, and in particular Denialof-Service attacks, typically target sites or services hosted on high-profile web servers such as banks, credit card payment gateways, large online retailers and popular social networking sites. Denial of Service Attacks
Denial of Service (DoS) attacks consist of overwhelming a server, a network or a website in order to paralyze its normal activity (Lejeune, 2002). Defending against DoS attacks is one of the most challenging security problems on the Internet today. A major difficulty in thwarting these attacks is to trace the source of the attack, as they often use incorrect or spoofed IP source addresses to disguise the true origin of the attack (Kim and Kim, 2006). The United States Computer Emergency Readiness Team defines symptoms of denial-ofservice attacks to include (McDowell, 2007): • Unusually slow network performance • Unavailability of a particular web site • Inability to access any web site • Dramatic increase in the number of spam emails received DoS attacks can be executed in a number of different ways including: ICMP Flood (Smurf Attack) – where perpetrators will send large numbers of IP packets with the source address faked to appear to be the address of the victim. The network‘s
bandwidth is quickly used up, preventing legitimate packets from getting through to their destination Teardrop Attack – A Teardrop attack involves sending mangled IP fragments with overlapping, over-sized, payloads to the target machine. A bug in the TCP/IP fragmentation re-assembly code of various operating systems causes the fragments to be improperly handled, crashing them as a result of this. Phlashing – Also known as a Permanent denial-of-service (PDoS) is an attack that damages a system so badly that it requires replacement or reinstallation of hardware. Perpetrators exploit security flaws in the remote management interfaces of the victim‘s hardware, be it routers, printers, or other networking hardware. These flaws leave the door open for an attacker to remotely ‗update‘ the device firmware to a modified, corrupt or defective firmware image, therefore bricking the device and making it permanently unusable for its original purpose. Distributed Denial-of-Service Attacks Distributed Denial of Service (DDoS) attacks are one of the greatest security fear for IT managers. In a matter of minutes, thousands of vulnerable computers can flood the victim website by choking legitimate traffic (Tariq et al., 2006). A distributed denial of service attack (DDoS) occurs when multiple compromised systems flood the bandwidth or
resources of a targeted system, usually one or more web servers. The most famous DDoS attacks occurred in February 2000 where websites including Yahoo, Buy.com, eBay, Amazon and CNN were attacked and left unreachable for several hours each (Todd, 2000). Brute Force Attacks – A brute force attack is a method of defeating a cryptographic scheme by trying a large number of possibilities; for example, a large number of the possible keys in a key space in order to decrypt a message. Brute Force Attacks, although perceived to be low-tech in nature are not a thing of the past. In May 2007 the internet infrastructure in Estonia was crippled by multiple sustained brute force attacks against government and commercial institutions in the country (Sausner, 2008). The attacks followed the relocation of a Soviet World War II memorial in Tallinn in late April made news around the world. 5. Non-Technical Attacks Phishing Attacks Phishing is the criminally fraudulent process of attempting to acquire sensitive information such as usernames, passwords and credit card details, by masquerading as a trustworthy entity in an electronic communication. Phishing scams generally are carried out by emailing the victim with a ‗fraudulent‘ email from what purports to be a legitimate
organization requesting sensitive information. When the victim follows the link embedded within the email they are brought to an elaborate and sophisticated duplicate of the legitimate organizations website. Phishing attacks generally target bank customers, online auction sites (such as eBay), online retailers (such as amazon) and services providers (such as PayPal). According to community banker (Swann, 2008), in more recent times cybercriminals have got more sophisticated in the timing of their attacks with them posing as charities in times of natural disaster. Social Engineering Social engineering is the art of manipulating people into performing actions or divulging confidential information. Social engineering techniques include pretexting (where the fraudster creates an invented scenario to get the victim to divulge information), Interactive voice recording (IVR) or phone phishing (where the fraudster gets the victim to divulge sensitive information over the phone) and baiting with Trojans horses (where the fraudster ‗baits‘ the victim to load malware unto a system). Social engineering has become a serious threat to e-commerce security since it is difficult to detect and to combat as it involves ‗human‘ factors which cannot be patched akin to hardware or software, albeit staff training and education can somewhat thwart the attack (Hasle et al., 2005).
From a broader perspective, the different security issues that are taken into account while designing a security system for e-Commerce are given below: • As internet connects several networks one has to be sure that unauthorized persons do not gain access to the company‘s confidential information. Both hardware and software solutions are needed to ensure this. • The communication between companies should be protected from snoopers. • When a company receives a message, it must be sure from whom it has come. In electronic communication system there should be digital signature so that the receiver knows that it has come from an authorized business. It should also ensure that the authentication of digital signature must be maintainable in a court of law in case of disputes. In conclusion the e-commerce industry faces a challenging future in terms of the security risks it must avert. With increasing technical knowledge, and its widespread availability on the internet, criminals are becoming more and more sophisticated in the deceptions and attacks they can perform. Novel attack strategies and vulnerabilities only really become known once a perpetrator has uncovered and exploited them. In saying this, there are multiple security strategies which any e-commerce provider can instigate to reduce the risk of attack and compromise significantly. Awareness of the risks and the implementation of multi-layered security protocols, detailed and open privacy policies
and strong authentication and encryption measures will go a long way to assure the consumer and insure the risk of compromise is kept minimal. In summary, we end this discourse by saying that since in e-Commerce the transaction and communication takes place between two entities using PSTN, security issue is important. The different security issues that are taken into account , while designing a security system for e-Commerce are given below: • As internet connects several networks one has to be sure that unauthorized persons do not gain access to the company‘s confidential information. Both hardware and software solutions are needed to ensure this. • The communication between companies should be protected from snoopers. • When a company receives a message, it must be sure from whom it has come. In electronic communication system there should be digital signature so that the receiver knows that it has come from an authorized business. It should also ensure that the authentication of digital signature must be maintainable in a court of law in case of disputes Today many in-place and emerging solutions are providing for a safe Internet world. Some of the more interesting ones rely on cryptographic keys and personalized smart
card type technologies. They provide for user authentication and privacy protection. Here are a few systems.
E-Commerce Infrastructure: Providing ways to access Credit Card information, and transaction control. E-Commerce Specialized Components, Wallets: Provide safekeeping of customer transactions. E-Commerce Specialized Components, Merchant Servers: Payments and inquiries E-Commerce Specialized Components: Bank Server: Provides for access to all security clearances, registrations, payments, etc. E-Commerce Specialized Components, Certification Servers: Registration and certifications. Smart Card Systems: By one expert is probably best solution for security and personalization of the Internet. Smart Card systems provide a good protection scheme as it takes the security issues away from the Internet/PC domain and puts it into the person‘s real world wallet.
Question 5: What types of electronic payment systems are required in E-Commerce? Electronic payment systems and e-commerce are highly linked given that on-line consumers must pay for products and services. Clearly, payment is an integral part of the mercantile process and prompt payment is crucial. If the claims and debits of the various participants (consumers, companies and banks) are not balanced because of payment delay, then the entire business chain is disrupted. Hence an important aspect of ecommerce is prompt and secure payment, clearing, and settlement of credit or debit claims. Broadly speaking, the different types of electronic payment systems required in eCommerce are: cash payments, credit card payments and cheque payments. Looking at this in another way, some of the payment systems used in e-commerce are; Credit Card Digital wallet Debit Card Smart Card Electronic Fund Transfer Emoney
Ecash Mobile Payment Why are there different types of payment systems? The fundamental reason why there are different types of e-commerce payment systems is because of the nature of e-commerce itself. Electronic payment system is conducted in different e-commerce categories such as Business-to-Business (B2B), Business-toConsumer (B2C), Consumer-to-Business (C2B) and Consumer-to-Consumer (C2C). Each of which has special characteristics that depend on the value of order. Danial, (2002) classified electronic payment systems as follows: Micro Payment (less than $ 10) that is mainly conducted in C2C and B2C e-commerce. Consumer Payment that has a value between $ 10 and $ 500. It is conducted mainly in B2C transactions. Business Payment that has the value more than $ 500. It is conducted mainly in B2B ecommerce.
B2B transactions account about 95% of e-commerce transactions, while others account about 5% (Turban et al, 2004). P2P, which is related to the C2C category transactions, is relatively small due to its stiff usability. Further, Cavarretta and de Silva (1995), identify three classes of typical electronic transactions: Tiny value transactions: below $1. Medium value transactions: between $ 1 and $ 1,000 Large value transactions: above $ 1,000. Systems that can support tiny value transactions have to trade-off between conveniences of transactions (the major part of a cost in an extremely cheap transaction) vs. the security or durability of transactions. On the other side of the amount range, large value transactions will require highly secure protocols whose implementations are costly: be on-line and/or carry traceability information. Explain the necessary characteristics of each type of payment system and give an example each of where it is used. Cash payment is used for small transactions and mostly used for C2C e- Commerce Credit card is used for middle size transactions and mostly used for B2C e-Commerce
Cheque payment system is used for voluminous transactions and mostly used for B2B eCommerce The characteristics of e-Cash or electronic cash payments are: • e-Cash must have monetary value • e-Cash must be interoperable i.e., exchangeable for other e-cash, paper-cash, goods and services • It must be storable and retrievable The characteristics of credit card transactions are: • The credit card number entered by the customer should be encrypted • The merchant should not have the knowledge of the credit card number of the customer The characteristics of cheque payment are: • Both the parties involved in business should have public key certificates • The cheque should be cleared by a clearing house before any transaction occurs Necessary dedicated hardware device is required for signing and encrypting the order. Payment using credit card is one of most common mode of electronic payment. Credit card is a small plastic card with a unique number attached with an account. It has a magnetic strip embedded in it that is used to read the credit card via card readers. When a
customer purchases a product via credit card, the credit card issuer bank pays on behalf of the customer and the customer has a certain time period after which he/she can pay the credit card bill. It is usually in the credit card monthly payment cycle. Following are the actors in the credit card system. The card holder- Customer, The merchant - seller of product who can accept credit card payments, The card issuer bank - card holder's bank, The acquirer bank - the merchant's bank, The card brand - for example, Visa or MasterCard. Electronic cards are easy and simple to use because it only requires the buyer to email his card number to the email. The risk with this payment system is the card number can be read by hackers. Therefore only cards with encrypted information should be used. For example, when you buy a book from Amazon.com, your credit card information and purchase amount are encrypted in your browser. When this information arrives at Amazon.com, it will be transferred automatically (encrypted) to VISA, MasterCard for authorization.
A digital wallet, or e-wallet, is another type of e-commerce payment system. Much like a physical wallet, a digital wallet can store your personal information and payment. However, digital wallets are stored within your PC. Once the software is installed on your digital wallet, enter your personal information, such as your name and billing address, then connect it to your banking information so you can use it to withdraw funds from your account(s) when making on-line purchases. When you're at the check-out page of an e-commerce site, the digital wallet can automatically enter your personal and banking information into the appropriate areas. An e-wallet is software that is downloaded to a user‘s PC and in which the user stores credit card numbers and other personal information. When the user shops at a merchant who accepts the e-wallet, the user can perform one-click shopping, with the e-wallet automatically filling in the necessary information. Credit card companies like Visa and Master card offer e-wallet services, as do Yahoo!, America Online (called Quick Checkout) and Microsoft (Passport). Debit card, like credit card, is a small plastic card with a unique number mapped with the bank account number. It is required to have a bank account before getting a debit card from the bank. The major difference between a debit card and a credit card is that in case of payment through debit card, the amount gets deducted from the card's bank account immediately and there should be sufficient balance in the bank account for the transaction
to get completed; whereas in case of a credit card transaction, there is no such compulsion. Debit cards free the customer to carry cash and cheques. Even merchants accept a debit card readily. Having a restriction on the amount that can be withdrawn in a day using a debit card helps the customer to keep a check on his/her spending. Smart card is again similar to a credit card or a debit card in appearance, but it has a small microprocessor chip embedded in it. It has the capacity to store a customer‘s work-related and/or personal information. Smart cards are also used to store money and the amount gets deducted after every transaction. Smart cards can only be accessed using a PIN that every customer is assigned with. Smart cards are secure, as they store information in encrypted format and are less expensive/provide faster processing. Mondex and Visa Cash cards are examples of smart cards... Electronic Fund Transfer is a very popular electronic payment method to transfer money from one bank account to another bank account. Accounts can be in the same bank or different banks. Fund transfer can be done using ATM (Automated Teller Machine) or using a computer.
Nowadays, internet-based EFT is getting popular. In this case, a customer uses the website provided by the bank, logs in to the bank's website and registers another bank account. He/she then places a request to transfer certain amount to that account. Customer's bank transfers the amount to other account if it is in the same bank, otherwise the transfer request is forwarded to an ACH (Automated Clearing House) to transfer the amount to other account and the amount is deducted from the customer's account. Once the amount is transferred to other account, the customer is notified of the fund transfer by the bank. EFT is fast; it reduces delays associated with sending hardcopy documents, and it eliminates returned checks. It has become the only practical way to handle the large volume of financial transactions generated daily in the banking industry. EFT-based ATMs are available in shopping centers and business areas, allowing individuals to make deposit, withdrawals, and money transfers 24 hours a day. E-Money transactions refer to situation where payment is done over the network and the amount gets transferred from one financial body to another financial body without any
involvement of a middleman. E-money transactions are faster, convenient, and saves a lot of time. Online payments done via credit cards, debit cards, or smart cards are examples of emoney transactions. Another popular example is e-cash. In case of e-cash, both customer and merchant have to sign up with the bank or company issuing e-cash. Digicash of Amsterdam has developed an electronic payment system called ecash that can be used to withdraw and deposit electronic cash over the Internet. The system is designed to provide secure payment between computers using e-mail or the Internet. Ecash can be used for everyday Internet transactions, such as buying software, receiving money from parents, or paying for a pizza to be delivered. At the same time, ecash provides the privacy of cash because the payer can remain anonymous. To use ecash, you need a digital bank account and ecash client software. The client is used to withdraw ecash from your bank account, and store it on your personal computer. You can then spend the money at any location accepting ecash or send money to someone who has an ecash account. The security system is based on public-key cryptography and passwords. You need a password to access your account and electronic transactions are encrypted.
The newest e-commerce payment system is mobile payment, wherein a consumer uses her cell phone to make purchases. Instead of using cash or credit cards to buy something, the user simply sends a payment request via text message. If the vendor has the mobile billing capability, the consumer's mobile account or credit card is charged for the purchase. To set up a mobile payment system, download a software package from your cell phone company's website, then link your credit card or mobile billing information to that software. SECTIONB: Question 6: What three forces lead to the WWW’s emergence as the single most dynamic force in information technology? A lot of people use both "Internet" and "World Wide Web" to mean the same thing. This isn't exactly right. The Internet is the "big" term- it includes all of the services available on the Internet, including email, newsgroups, instant messaging, chatting, ftp, online games, and the web. The Web is the part of the Internet that has web pages. Anything that uses HTTP - HyperText Transfer Protocol- is part of the web. You see this most often at the beginning of web page addresses, like http://www.yahoo.com.
The World Wide Web is a distributed system of interlinked hypermedia resources, based on URI, HTTP and hypertext document formats like HTML. The persisting success of the web has pushed web-based applications into the limelight. Browsers are becoming the most used local applications for computers, providing access to a myriad of different applications via the web. Even in the mobile area, web applications designed for mobile usage successfully challenge native mobile apps. According to Karl Salnoske of IBM, (May 21, 1998), the three forces that led to the WWW‘s emergence as the single most dynamic force in information technology are as follows; 1. Increasingly powerful and inexpensive scalable systems and applications; Scalability is the capability of a system, network, or process to handle a growing amount of work, or its potential to be enlarged in order to accommodate that growth. For example, it can refer to the capability of a system to increase its total output under an increased load when resources (typically hardware) are added. An analogous meaning is implied when the word is used in an economic context, where scalability of a company
implies that the underlying business model offers the potential for economic growth within the company. There is a huge number of different applications available in the web. We can distinguish two separate types of web applications -- web sites and web services. Web sites are webbased applications that are designed for humans and browser-based access. By contrast, web services are web-based interfaces for machine-to-machine communication. The WWW, due to its dynamism, has the capacity to meet the main scalability challenge of web applications and architectures to gracefully handle growth. This includes growth of request numbers, traffic and data stored. In general, increasing load is a deliberate objective that testifies increasing usage of the application. From an architectural point of view, the WWW thus need so-called load scalability. That is the ability to adapt its resources to varying loads. A scalable web architecture has also be designed in a way that allows easy modification and upgrade/downgrade of components. 2. Growing availability of telecommunications In today‘s world of digitized information, connectivity through a telecommunications network has made for a dynamic WWW. Much of the world‘s business is carried out over
networks that connect people and companies. Intranets are networks that connect people within a company to each other and to the company network. Extranets connect a company with its suppliers and distributors. And the Internet, a vast public web of computer networks, connects users of all types all around the world to each other and to an amazingly large information repository. The Internet makes up one big information highway that can dispatch bits at incredible speeds from one location to another. 3. The spread of digital information. Digital information refers to a system that is based on digital technologies, including digital communication networks (the Internet, intranets, extranets, and private VANs), computers, software, and other related information technologies. The speard of has led to popularity of the WWW. It created digital networking and communication infrastructures which provide a global platform over which people and organizations interact, communicate, collaborate, and search for information. This platform includes the following characteristics: A vast array of digitizable products—databases, news and information, books, magazines, TV and radio programming, movies, electronic games, musical CDs, and software—that are delivered over a digital infrastructure anytime, anywhere in the world.
o Consumers and firms conducting financial transactions digitally through digital currencies or financial tokens, carried via networked computers and mobile devices. o Microprocessors and networking capabilities embedded in physical goods such as home appliances and automobiles. Digital information has led to the creation of digital economy. The term digital economy refers to the convergence of computing and communication technologies on the Internet and other networks and the resulting flow of information and technology that is stimulating e-commerce and vast organizational changes. This convergence enables all types of information (data, audio, video, etc.) to be stored, processed, and transmitted over networks to many destinations worldwide. In addition, we may also argue that Web browsers based on the ‗point and click‘ principal which is so popular in today‘s software, are freely available over the Internet and allow access to all the Web has to offer. The first of these browsers to be developed was Mosaic, of which 2.5 million copies were downloaded during its first year of release (Taylor, 1994) and of which 20,000 copies continue to be downloaded every month. It is not only the order that the Web has brought to the Internet that has made it so popular. A great deal of its attraction stems from its excellent user- friendly front-end. Web pages can contain graphics, photographs, sound and even video clips in addition to
plain text - they truly are multi-media documents. In his book devoted to the Web, Winder (1995) states that there are at least 5 million Web pages in existence today, with more and more being added all the time. The Web is believed to be growing at twice the rate of the Internet as a whole. Web traffic increased by 300,000% in the year 1994. The Internet and, more particularly, the WWW are attracting businesses in their thousands, with the following appearing to be the main application areas: Publicity, Marketing and Advertising The WWW appears to be an ideal medium for businesses attempting to promote themselves and their wares. Setting up a site on the WWW, and thus gaining instant access to millions of people all over the globe, can be achieved at a small fraction of the cost using more conventional methods (Watson, 1994). Direct On-line Selling It is already possible to visit ‗virtual malls‘ full of ‗virtual shops‘, browse through catalogues and examine various products in vast detail, all courtesy of the Web. This has all been made possible by the multi-media capabilities that the Web provides (Minio, 1994).
Research and Development Companies, especially those involved in research and development, can use the Internet as an additional resource for collecting information. Tetzeli (1994) explains how it is possible to post a query on a bulletin board or join a discussion group and receive advice on how to solve the problem. Alternatively, there are millions of Web pages, some of which contain access to searchable databases of information relating to particular subjects. Communication The use of low-cost electronic mail (e-mail) is the Internet service used most extensively by businesses (Rosen, 1994). Kehoe (1994) illustrates the strength of e-mail with the example of ‗Digital Equipment‘ which has over 31,000 computers linked up to the Internet and exchanges about 1.7 million e-mail messages each month with people external to the company. Collaboration When links are formed between companies, it can be easy for them to communicate through the Internet. One example of this is the collaboration between IBM and Bellcore who use Internet links to share a workstation (Tetzeli, 1994).
Although the WWW has only existed for the last two years, there are already over 20,000 business corporations with Web sites (Yahoo!, 1995), the figure having doubled in the last three months alone. There has been continued speculation, from a wide range of sources, that the Internet and more specifically the WWW will be the business tool of the future and that companies which do not expand in this direction will be left by the side of the information superhighway. From the above explanation, we can contend that the growth of the Internet and the WWW is happening so rapidly that businesses are literally caught up in a whirlwind of change. This explosive worldwide growth in Internet and WWW usage forms the heart of the so called new economy. The Internet and WWW together has been the revolutionary technology of the new millennium, empowering consumers and businesses alike with blessings of connectivity. For nearly every new economy innovation to emerge during the past decade, the Internet and WWW have played a starring—or at the very least a strong supporting—role. The WWW enables consumers and companies to access and share unprecedented amounts of information with just a few mouse clicks.
Question 7: Why is it so important to align the electronic commerce strategy with the overall business strategy? With the advent of the Internet and plenty of web development technologies around the world, e-business is the new mantra of businesses in today‘s world. The Internet has in many ways facilitated the development of businesses worldwide that can reach out to a wider consumer base and advertises their products more effectively and efficiently. Corporate communications, interface designs, cutting edge applications are also found on the Internet. E cmmerce has been added as the latest domain in business and has become a must-have in the highly competitive technology driven open market. E commerce Strategy can be summarized as the strategies governing E commerce through calculated information dissemination. Information dissemination has been widely regarded as the forte of e-commerce, which uses information technology in a most efficient manner. An E commerce strategy is essential to any organisation conducting business over the Internet. It defines both the short-term and long-term e-business goals and involves careful and skilled planning.
In common with any other business activity, ecommerce needs to be guided by corporation strategy. The implementation of e-commerce is the process by which an organization seeks to achieve its e-commerce objectives. Typically, the organization has a range of strategic options, which support the achievement of its objectives, such as reducing costs, increasing prices, streamlining operations, and so on. The key feature of corporation strategy is that it offers a clear statement of the basis for differentiation from competitors. Optimizing value chains by e-commerce will bring positive impact on implementation of firm strategy. Companies that optimize their value chains by ecommerce will achieve their stategic objectives easily. E-commerce strategy should be aligned with and be part of the overall business strategy(the overall long term direction of the business) for a number of reasons, including the ones explained below; SCM performance E-commerce does not just mean trading and shopping on the Internet. It means business efficiency in all supply chains. Some of large companies have implemented their Internet platform for Supply Chain Efficiency in the past years, and others of them will follow in the next few years. L.Y. Shen and Jana Hawley pointed out that ecommerce and
SCM are complementary in nature and need to be studied together. SCM is inherently information intensive, so e-commerce and SCM have an integral part to play in creating and facilitating new forms of SCM . Nothing appears to have had the same effect on SCM as E-commerce, which resulted in changing the focus of SCM from engineering efficient manufacturing processes to the coordination of activities in the supply chain network through knowledge management. In other words, E-commerce technically made the SCM viable and facilitated SCM use in different industries. There are many ways in which innovative information flows could be used within supply chains. Human resources It is important to have the right people in place to take on the significant changes demanded by e-commerce. Because of the fast change e-commerce related technology is going through, more is expected of employees than before, and today‘s expectations won‘t be the same tomorrow. In this evolving economy, workers are constantly asked to update and expand their own skills sets, much as companies are shifting business processes to meet market demands. Cross-functional training and empowering employees are techniques that can be used to improve employee skills sets. Boomer reports that76% of IT professionals feel that e-business facilitates cross-functional work teams, which has a significant impact on employees‘ workloads and the company culture. Cross functionality also provides many employees exposure to new issues.
Customer relationship The Internet has radically changed the notion of value as perceived by customers. Businesses have realized that today‘s consumer requires convenience in the shopping process: they require personalization, want competitive prices and expect speed in service. Each business needs to evaluate how it can deploy technology in order to tip the value equation in its favor.E-business is having an impact on customer relationships on various levels. The concept of customer sovereignty and the absolute necessity of firms satisfying customer needs is becoming a reality and it is changing marketplace behavior. Furthermore a breakdown unspecialized economic role of producers and consumers is occurring. Additionally, a system is emerging in which firms and customers increasingly interact and participate together in the design and delivery of offerings. Finally, as a consequence of both the process of interactivity and the development of ―smart‖ or information-intensive goods, successful companies treat consumers as individuals and not as parts of larger aggregates or segments. Customer relationship management, one-to-one marketing and valuing the customer as the ―new asset‖ – as opposed to the product – are becoming paramount to the organization in the growing Internet world. Customer relationships are becoming a more important factor in differentiating one business from another. In order to stay competitive, companies with e-business initiatives in every industry have begun to analyze these relationships with customers. Customer relationship
management enables an organization to adopt a comprehensive view of its customer to maximize the customer‘s relationship with the organization and the customer‘s value to the company. While e-commerce is reshaping the corporate landscape, it is also changing customer behaviors and expectations. This is specifically relevant for organizations involved e-commerce because the Internet has created an extremely demanding and information-sensitive customer. Never before have so many value alternatives been available with such a level of convenience. Organizations selling products or services online must be prepared to offer customers the best of both worlds: the ease of use of the Internet, combined with the high service levels they receive from brick-and-mortar retailers IT Many IT managers have aspired to a greater role in the strategic business decisions of their organizations – and thanks to e-business or e-commerce they are getting that wish. Due to this, IT is becoming more tightly associated with business decisions. This is different from the past, when IT was simply given a project and left on its own to deliver it. IT needs to be part of business strategy sessions, both in terms of where the Web can take accompany and delivering what customers wants. Technology managers are
expected to be more aware of the alternatives and opportunities for change and to enlighten business people about what they see evolving. Finance If managers attempt to apply this traditional approach to analyzing e-commerce projects they run into some practical difficulties. While the cash outflows associated with the project may be quantifiable, it is virtually impossible to estimate cash inflows that the project will generate. In the case of e-commerce for service provision, the future ―cash inflows‖ are estimates of the number of people that will not need to be hired because the e-commerce application will perform a traditional process more efficiently. In the case of e-business for selling and distribution, the ―cash inflows‖ may be measured in terms of the value of not falling behind competitors who are pursuing e-business initiatives. Because of these difficulties in estimating the cash inflows associated with e-business initiatives, Cohan [5]found that executives are developing new ways of measuring the payoff that leads to the decision whether or not to fund e-business initiatives. Business environment E-ecommerce is changing the business dynamic and at the same time the Internet changes the traditional landscape of the business environment from that of being a marketplace to one that is more of a marketspace. This marketspace is an information and communication-based electronic exchange environment occupied by sophisticated
computer and telecommunication technologies and digitized offerings (Berkowitz in Singh). The impact of this digitization is evident in the following changes: •The content of the transaction is different –information about the product often replaces the product itself. • The context of the transaction is different – and electronic screen replaces the face-toface transaction. • The enabling infrastructure of transactions is different – computers and communications infrastructure may replace typical physical resources especially if the offering lends itself to a digitized format. In marketspace the constraints of time, place, and geographic boundaries are completely eliminated. Function lines in company According to Rosen the creation and maintenance of an e-commerce initiative can defy traditional functional lines within an organization. The sales, support, operations and information services operations are directly affected by the e-commerce initiative. The likely effect on these operations is: •Sales: Orders can be processed directly by customers. Sales cycles shorten and the number of customer calls decrease and their nature change. Customers don‘t require
brochures, specifications and support sheets by mail since they can access this information from the company web site. •Customer support and product service: Due to online shopping, the nature of questions will change. So will the access method, since customers will be asking questions through e-mail. Customers who shop online expect to be supported online. The support department needs staffing that can provide a quick response to e-mail questions. •Operations : Traditional methods of ordering and fulfilling product orders will need to be integrated with new procedures developed to support the e-commerce. •Information technology: Critical to the success of an e-commerce initiative is the integration of e-commerce with existing computers and the identification of new processes and services. Web servers and web-enabled applications will need to be developed and supported. The IT department needs to be involved from the beginning to identify technologies and then integrate current and future systems. Online shopping and purchasing affect the workings of the sales, support, operations and IT departments. In most traditional organizations these functions work apart from each other. An effective ecommerce service strategy is the intersection of these departments. Trust
E-commerce strategy implementation requires a greater degree of trust between a business, its partners and customers than in the traditional business model. Many businesses are therefore reluctant to fully embrace e-ecommerce. They feel uncomfortable in this new environment, and are concerned that better safeguards are required to protect against emerging, unfamiliar risks. Even firms currently participating in e-commerce exhibit a fundamental lack of trust in many e-commerce processes. They worry about the confidentiality and authenticity of transactions conducted online and they have serious concerns about the fate of personal and confidential information once it enters cyberspace. Despite the tremendous growth projections for e-commerce, its full potential will only materialize if business partners truly trust e-business transactions. Trust is a fundamental component of any e-commerce strategy. Among e-ecommerce partners, trust is the product of each organization‘s history, reputation, track record and patterns of behavior. Businesses that fail to assure third parties of the integrity, security and reliability of their operations run a very real risk of failure in their e-commerce initiatives. When deciding to embark on an e-commerce initiative or strategy it is therefore important for a company to address the trust and security issues at the business strategy level. Service management
The concept of service management doesn‘t necessarily change in the e-commerce environment. Rather, the fundamentals become more crucial than ever and should be expanded to include all facets of the organization. According to Habershon (in MacMillan2000, p.6) ―service management really does underpin e-business‖. Ecommerce is forcing IT to stretch service management practices. IT enabled service management (e-ITSM) should be based on processes that ensure the business runs successfully rather than on technical issues. What is different in an e-business environment is the scope of service management. To that end comprehensive risk and problem management should be conducted across the enterprise. e-ITSM should be equipped to handle quick changes and scalability issues. Service management must be uniform across all departments accessible through a common interface. To conclude, the decision to implement an e-commerce strategy should not be undertaken lightly and the benefits that can be gained from such a venture must be investigated thoroughly before deciding to go ahead . The basic principle of information system strategy for a business is to ensure the system serves the business and not the other way around. The more successfully a firm can align its information system with its business goals, the more profitable it will be. Business people must take an active role in shaping information system to the enterprise. They cannot ignore information system issues. They cannot tolerate failure in the area as just a nuisance to work around. They must
understand what information system can do, how it works, and measure its impact on revenues and profits. For this reason, E-commerce plans must be devised as part of the corporate strategy and must take into consideration the impact e-commerce will have on processes, governance and people. It is important that companies create a single coherent plan, formalize decision-making procedures and communicate e-commerce initiatives across the organization and integrate the e-business plan with corporate strategy. When implemented properly and when aligned with the firm‘s overall business or corporate strategy, electronic commerce can significantly enhance the operations of a firm. This makes it so fundamental to align ecommerce and business strategies. The potential benefits of electronic commerce to businesses depend on the extent of this alignment and also the industry in which the firm operates. The more successfully a firm can align its ecommerce strategy with its business goals, the more profitable it will be. If electronic commerce applications are not placed in the proper business context an1d the strategy aligned with the business‘ overall business strategy, then the electronic commerce application is likely to fail. A study by the Cambridge Information Network found that over one-third of firms studied did not believe that their company successfully implemented its electronic commerce initiative. Approximately one-fourth of these firms attributed the lack of success to a failure to connect the electronic commerce effort with the goals of the business. Thus, new business models are necessary that integrate
electronic commerce initiatives with overall business goals.Business people must take an active role in shaping ecommerce to the enterprise. They cannot ignore e-commerce issues. They cannot tolerate failure in the ecommerce area as just a nuisance to work around. They must understand what ecommerce can do, how it works, and measure its impact on revenues and profits. If e-commerce is adopted and integrated in corporation strategy, firms may garner the appropriate resources so that it could create the core capabilities to compete in the virtual market. Question 8: Give examples of how the supplier’s information system can be used at every link in the value chain by the customer? An information system Is A combination of hardware, software, infrastructure and trained personnel organized to facilitate planning, control, coordination, and decision making in an organization. ―The value chain describes the full range of activities which are required to bring a product or service from conception, through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use. Considered in its general form, it takes the shape as described in Figure 1. As can be seen from this, production per se is only one of a number of value added links. Moreover, there are ranges of activities
within each link of the chain. […] In the real world, of course, value chains are much more complex than this. For one thing, there tend to be many more links in the chain. […] In addition to the manifold links in a value chain, typically intermediary producers in a particular value chain may feed into a number of different value chains.‖ (International Development Research Centre) Four links in a simple value chain
As we have indicated above, production is one of the links in value chain. Customers can use the information system of the supplier at the production link of the latter‘s value chain. An example is where the system allows customers to design their own products
and services, from a car to a shirt. This will allow the production function to developed products that are customized to the specifications of the customer. We can therefore see that customers, through the use of supplier‘s information system in value chain, have a greater choice of goods and services they can receive from companies. Information system can also be used by the customer at the marketing component of the supplier‘s value chain. Here are some examples. Price line.Com allows prospective airline travellers, tourists in need of hotel reservations etc. to visit its websites and indicate their preferred price for travel between any two cities. If an airline is willing
to issue a ticket on the customers offered price, the consumer can then travel to the mentioned destination at his terms.
Priceline.com allows buyers to set the price they are willing to pay for a specific product or service. Priceline.com will try to match the customer‘s request with a supplier willing to sell the product or service at that price. Customers, usually individuals, may have to increase their bids before they get the product or service.
In another marketing link instance, a customer specifies a need and then an intermediate company, such as Hotwire.com, matches the customer‘s need against a database, locates the lowest price, and submits it to the consumer. The potential buyer then has 60 minutes to accept or reject the offer. A variation of this method is available for insurance. For example, a consumer can submit a request for insurance to Insweb.com and receive several quotes. Many companies employ similar models to find the lowest price. For example, consumers can go to E-LOAN (eloan.com) to find the best interest rate for auto or home loans. Summing up all together, let us conclude this way: A customer may link to the firm‘s inventory data such as price, quantity, and availability, prior to entering into a sales contract. Example: A general contractor finding price availability before choosing Home Depot as a supplier. Further, the customer may be able to electronically receive design and product specifications prior to entering into a sales contract. Example: An automobile manufacturer that outsources its car seat manufacturing can ensure that a supplier‘s product will fit its design specifications.
Finally, the actual sales may be placed electronically and a promised or expected shipping date given by the supplier‘s information system to the customer. Once the order is placed, the customer may be able to check the status of the order/service placed. Example: Examining the status of an order placed (waiting for shipment, shipped, or delivered).
Question 9:Define the following terms and discuss the Infrastructure needed for an ECommerce Environment: (Nov‘09) (i) e-businesses; Electronic business (e-business) can be defined as the use of the internet to network and empower business processes, electronic commerce, organizational communication and collaboration within a company and with its customers, suppliers, and other stakeholders. E-businesses utilize the internet, intranets, extranets and other networks to support their commercial processes. E-business is the transformation of key business processes through the use of Internet technologies. An ebusiness is a company that can adapt to constant and continual change. The development of intranet and extranet is part of e-business. E-business is everything to do with backend systems in an organization. In practice, e-commerce and e-business are often used interchangeably. (ii) e-commerce; Some of the definitions of e-commerce often heard and found in publications and the media are: • electronic commerce is where business transactions take place via telecommunications networks, especially the internet.
• electronic commerce describes the buying and selling of products, services, and information via computer networks including the internet. • electronic commerce is about doing business electronically. • e-commerce is defined as the conduct of a financial transaction by electronic means. Thus we may simply define e-commerce as the buying and selling, marketing and servicing of products and services via computer networks. (iii) e-corporation; As the term suggests, a real E-corp. isn't just using the Internet to alter its approach to markets and customers; it's combining computers, the Web, and the massively complex programs known as enterprise software to change everything about how it operates. (iv) e-information; This is the electronically transmitted meaningful facts that are used to aid the buying and selling of products via a computer network like the internet. This information could be accessed from for example websites that are engaged in ecommerce or obtained from search engines like yahoo. (v) e-procurement; E-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or business-to-government purchase and sale of supplies, work, and services through the
Internet as well as other information and networking systems, such as electronic data interchange and enterprise resource planning. The e-procurement value chain consists of indent management, e-Tendering, eAuctioning, vendor management, catalogue management, Purchase Order Integration, Order Status, Ship Notice, e-invoicing, e-payment, and contract management. (vi) e-government; A simple definition of e-government is; the use of the internet to provide government services for the public. E-government is the use of Internet technology in general and e-commerce in particular to deliver information and public services to citizens, business partners and suppliers, and those working in the public sector. It is also an efficient way of conducting business transactions with citizens and businesses and within the governments themselves. E-government can make government more transparent to citizens and improve delivery of public services. E-government applications can be divided into three major categories: government-tocitizens (G2C), government-to-business (G2B), and government-to government (G2G). Government agencies are increasingly using the Internet to provide various services to citizens. An example would be electronic benefits transfer (EBT), in which government transfers Social Security, pension, and other benefits directly to recipients‘
bank accounts or to smart cards. Governments also are using the Internet to conduct business with businesses (sell to or buy from). Electronic commerce is built on top of a number of different technologies. These various technologies created a layered, integrated infrastructure that permits the development and deployment of electronic commerce applications. Each layer is founded on the layer below it and cannot function without it. The following components can be said to comprise the electronic commerce infrastructure; National information infrastructure This is the bedrock of electronic commerce because all traffic must be transmitted by one or more of the communication networks comprising the national information infrastructure (NII). The components of an NII include the TV and radio broadcast industries, cable TV, telephone networks, cellular communication systems, computer networks, and the Internet. The trend in many countries is to increase competition among the various elements of the NII to increase its overall efficiency because it is believed that an NII is critical to the creation of national wealth.
Message distribution infrastructure This consists of software for sending and receiving messages. Its purpose is to deliver a message from a server to a client. For example, it could move an HTML file from a Web server to a client running Netscape. Messages can be unformatted (e.g., e-mail) or formatted (e.g., a purchase order). Electronic data interchange (EDI), e-mail, and hypertext text transfer protocol (HTTP) are examples of messaging software. Electronic publishing infrastructure Concerned with content, the Web is a very good example of this infrastructural component. It permits organizations to publish a full range of text and multimedia. There are three key elements of the Web: • A uniform resource locator (URL), which is used to uniquely identify any server; • A network protocol; • A structured markup language, HTML. Notice that the electronic publishing layer is still concerned with some of the issues solved by TCP/IP for the Internet part of the NII layer. There is still a need to consider
addressability (i.e., a URL) and have a common language across the network (i.e., HTTP and HTML). However, these are built upon the previous layer, in the case of a URL, or at a higher level, in the case of HTML. Business services infrastructure The principal purpose of this infrastructure is to support common business processes. Nearly every business is concerned with collecting payment for the goods and services it sells. Thus, the business services layer supports secure transmission of credit card numbers by providing encryption and electronic funds transfer. Furthermore, the business services layer should include facilities for encryption and authentication. Electronic commerce applications Finally, on top of all the other layers sits an application. Consider the case of a book seller with an on-line catalog. The application is a book catalog; encryption is used to protect a customer's credit card number; the application is written in HTML; HTTP is the messaging protocol; and the Internet physically transports messages between the book seller and customer.
References ESSENTIALS OF E-COMMERCE TECHNOLOGY By V. RAJARAMAN
http://www.academia.edu/8988112/Review_of_Electronic_Data_Interchange_in_Busines s_to_Business_E-Commerce_in_a_Competitive_Global_Market
SECTION C (40 MCQs) 10.1 By Electronic Commerce we mean: a. Commerce of electronic goods b. Commerce which depends on electronics c. Commerce which is based on the use of internet d. Commerce which is based on transactions using computers connected by telecommunication network 10.2 For carrying out B2B e-Commerce the following infrastructure is essential: (i) World Wide Web (ii) Corporate network (iii) Electronic Data Interchange standards (iv) Secure Payment Services (v)Secure electronic communication link connecting businesses a. i, ii, iii b. ii, iii, iv c. ii, iii, iv, v d. i, ii, iii, iv, v
10.3 For carrying out B2C e-Commerce the following infrastructure is essential (i) World Wide Web (ii) Corporate network (iii) Electronic Data Interchange standards (iv) Secure Payment Services (v) Secure electronic communication link connecting businesses a. i, iv b. i, iii, iv c. ii, iii d. i, ii, iii, iv 10.4 For carrying out C2C e-Commerce the following infrastructure is essential (i) World Wide Web (ii) Corporate network (iii) Electronic Data Interchange standards (iv) Secure Payment Services (v)Secure electronic communication link connecting businesses a. i and ii b. ii and iv c. i
d. i and iv 10.5 Advantages of B2C commerce are (i) Business gets (i) a wide reach to customers (ii) Payment for services easy (iii)Shop can be open 24 hours a day seven days a week (iv)Privacy of transaction always maintained a. i and ii b. ii and iii c. i and iii d. iii and iv 10.6 B2C commerce a. includes services such as legal advice b. means only shopping for physical goods c. means only customers should approach customers to sell d. means only customers should approach business to buy 10.7 Advantages of B2C commerce to customers are (i)wide variety of goods can be accessed and comparative prices can be found
(ii) shopping can be done at any time (iii)privacy of transactions can be guaranteed (iv)security of transactions can be guaranteed a. i and ii b. ii and iii c. iii and iv d. i and iv 10.8 Disadvantages of e-Commerce in India are (i) internet access is not universally available (ii) Credit card payment security is not yet guaranteed (iii) Transactions are de-personalized and human contact is missing (iv) Cyberlaws are not in place a. i and ii b. ii and iii c. i, ii, iii d. i, ii, iii, iv 10.9 Electronic Data Interchange is necessary in a. B2C e-Commerce
b. C2C e-Commerce c. B2B e-Commerce d. Commerce using internet 10.10 EDI requires a. representation of common business documents in computer readable forms b. data entry operators by receivers c. special value added networks d. special hardware at co-operating Business premises 10.11 EDI standards are a. not universally available b. essential for B2B commerce c. not required for B2B commerce d. still being evolved 10.12 EDIFACT is a standard a. for representing business forms used in e-Commerce b. for e-mail transaction for e-Commerce c. for ftp in e-Commerce
d. protocol used in e-Commerce 10.13 EDIFACT standard was developed by a. American National Standard Institute V. Rajaraman/IISc. Bangalore M13/V1/July 04/3 System Analysis and Design/Electronic Commerce Multiple Choice Questions b. International Standard Institute c. European Common Market d. United Nations Economic Commission for Europe 10.14 ANSI X.12 is a standard developed by a. American National Standard Institute b. International Standard Institute c. European Common Market d. United Nations Economic Commission for Europe 10.15 In B2B e-Commerce (i) Co-operating Business should give an EDI standard to be used (ii) Programs must be developed to translate EDI forms to a form accepted by application program
(iii) Method of transmitting/receiving data should be mutually agreed (iv) It is essential to use internet a. i, ii b. i, ii, iii c. i, ii, iii, iv d. ii, iii, iv 10.16 EDI use a. requires an extranet b. requires value added network c. can be done on internet d. requires a corporate intranet 10.17 EDI over internet uses a. MIME to attach EDI forms to e-mail messages b. FTP to send business forms c. HTTP to send business forms d. SGML to send business forms 10.18 For secure EDI transmission on internet
a. MIME is used b. S/MIME is used c. PGP is used d. TCP/IP is used 10.19 EDI standard a. is not easily available b. defines several hundred transaction sets for various business forms c. is not popular d. defines only a transmission protocol 10.20 By security in e-Commerce we mean (i) Protecting an organization‘s data resource from unauthorized access (ii)Preventing disasters from happening (iii) Authenticating messages received by an organization (iv) Protecting messages sent on the internet from being read and understood by unauthorized persons/organizations a. i, ii b. ii, iii c. iii, iv
d. i, iii, iv 10.21 A firewall is a a. wall built to prevent fires from damaging a corporate intranet b. security device deployed at the boundary of a company to prevent unauthorized physical access c. security device deployed at the boundary of a corporate intranet to protect it from unauthorized access d. device to prevent all accesses from the internet to the corporate intranet 10.22 A firewall may be implemented in a. routers which connect intranet to internet b. bridges used in an intranet c. expensive modem d. user‘s application programs 10.23 Firewall as part of a router program a. filters only packets coming from internet b. filters only packets going to internet c. filters packets travelling from and to the intranet from the internet
d. ensures rapid traffic of packets for speedy e-Commerce 10.24 Filtering of packets by firewall based on a router has facilities to a. i, iii b. i, ii, iii c. i, ii, iii, iv d. ii, iii, iv 10.25 Main function of proxy application gateway firewall is a. to allow corporate users to use efficiently all internet services b. to allow intranet users to securely use specified internet services c. to allow corporate users to use all internet services d. to prevent corporate users from using internet services 10.26 Proxy application gateway (i) acts on behalf of all intranet users wanting to access interne securely (ii)monitors all accesses to internet and allows access to only specified IP addresses (iii) disallows use of certain protocols with security problems (iv) disallows all internet users from accessing intranet a. i, ii
b. i, ii, iii c. i, ii, iii, iv d. ii, iii, iv 10.27 A hardened firewall host on an intranet (i) has a proxy application gateway program running on it (ii)Allows specified internet users to access specified services in the intranet (iii) Initiates all internet activities requested by clients and monitors them (iv) prevents outsiders from accessing IP addresses within the intranet a. i, ii b. i, ii, iii c. i, ii, iii, iv d. ii, iii, iv 10.28 A hardened firewall host on an Intranet is a. a software which runs in any of the computers in the intranet b. a software which runs on a special reserved computer on the intranet c. a stripped down computer connected to the intranet d. a mainframe connected to the intranet to ensure security
10.29 By encryption of a text we mean a. compressing it b. expanding it c. scrambling it to preserve its security d. hashing it 10.30 Encryption is required to (i) protect business information from eavesdropping when it is transmitted on internet (ii)efficiently use the bandwidth available in PSTN (iii) to protect information stored in companies‘ databases from retrieval (iv) to preserve secrecy of information stored in databases if an unauthorized person retrieves it a. i and ii b. ii and iii c. iii and iv d. i and iv 10.31 Encryption can be done a. only on textual data b. only on ASCII coded data c. on any bit string
d. only on mnemonic data 10.32 By applying permutation (31254) and substitution by 5 characters away from current character (A �F , B �G etc..) the following string ABRACADABRA becomes a. FGWCAAADRBF b. RABCAAADRBF c. WFGHFFFIWGF d. None of the above 10.33 The following ciphertext was received. The plaintext was permuted using permutation (34152) and substitution. Substitute character by character +3 (A �D, etc). The plain text after decryption is: Cipher text : PDLJDLXHVQC a. MAIGAIUESNZ b. IAMAGENIUSZ c. LDPDJHPLXVZ d. IAMAGENIUSC 10.34 By symmetric key encryption we mean a. one private key is used for both encryption and decryption b. private and public key used are symmetric
c. only public keys are used for encryption d. only symmetric key is used for encryption 10.35 The acronym DES stands for a. Digital Evaluation System b. Digital Encryption Standard c. Digital Encryption System d. Double Encryption Standard 10.36 DES works by using a. permutation and substitution on 64 bit blocks of plain text b. only permutations on blocks of 128 bits c. exclusive ORing key bits with 64 bit blocks d. 4 rounds of substitution on 64 bit blocks with 56 bit keys 10.37 DES (i) is a symmetric key encryption method (ii)guarantees absolute security (iii) is implementable as hardware VLSI chip (iv) is a public key encryption method
a. i and ii b. ii and iii c. i and iii d. iii and iv 10.38 DES using 56 bit keys a. Cannot be broken in reasonable time using presently available computers b. Can be broken only if the algorithm is known using even slow computers. c. Can be broken with presently available high performance computers. d. It is impossible to break ever. 10.39 Triple DES uses a. 168 bit keys on 64-bit blocks of plain text b. Working on 64-bit blocks of plain text and 56 bit keys by applying DES algorithm for three rounds. c. Works with 144 bit blocks of plain text and applies DES algorithm once. d. Uses 128 bit blocks of plain text and 112 bit keys and apply DES algorithm thrice. 10.40T ripple DES a. Cannot be broken in reasonable time using presently available computers.
b. Can be broken only if the algorithm is known using even slow computer. c. Can be broken with presently available high performance computers. d. It is impossible to break ever.
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