E-commerce applications

1. E-commerce applications Luisa Calcagno Course of Software Engineering 2 May 29th 2002

2. Plan of the talk • Introduction to e-commerce and e-commerce applications • Issues in developing e-commerce applications • Architecture of e-commerce applications • Bookstore example • Perspectives for e-commerce • References

3. A definition for e-commerce • A universally accepted definition does not exist • Anything that uses electronic technology in order to do business can be intended as e-business • We can look at e-commerce as to a subset of e-business concerning commerce • Commerce is intended as the activity of exchanging goods and services with some kind of payment

4. The EU definition for e-commerce • “e-commerce is based on the electronic processing and transmission of data. It encompasses many diverse activities including electronic trading of goods and services, on-line delivery of digital content, electronic fund transfer, electronic share trading, public procurement.” (EU(97)/157)

5. Origins of e-commerce applications • E-commerce applications existed long before Internet • EDI (Electronic Data Interchange) • EFT (Electronic Funds Transfer) • Internet offered the general public the opportunity to conduct businesses online

6. Taxonomy of e-commerce applications • Three main categories: • Business to consumer (B2C) • Business to business (B2B) • Consumer to consumer (C2C) • Other categories: • Business to government (B2G) • Mobile Commerce

7. B2C applications • Offer directly to the customer an interface of activity • Typical examples: • Online book store (e.g. amazon.com) • Online car purchasing (e.g. automall.com) • Booking and purchase of airline tickets (e.g. ryanair.com) • Correspond to retail sale • Growth of B2C applications thanks to Internet • A new kind of B2C applications are the Cybermalls

8. B2C applications:advantages and disadvantages • Advantages: • Allow company to extend existing services to customers • Allow company to increase its customers • Offer a wider choice and allow cheaper prices • May give to the company a worldwide visibility • Online shops are accessible 24h a day • Disadvantages: • Low order conversion rates • High risk (see Cyberphobia)

9. B2B applications • Realize transactions needed to perform financial or commercial activities by companies over the Internet • Some typical applications: • E-procurement • E-Marketplace • The turnover is much greater than that dealed with B2C applications

10. B2B applications:advantages and disadvantages • Advantages: • Help to automate communications between companies making them easier and quicker • Allow to cut prices drastically • Help in reducing mistakes • Disadvantages: • Often need legacy integration

11. C2C applications • Concern the consumers who run negotations with other consumers sometimes utilizing as intermediary a company • Examples: • Ebay • Autotrader.com

12. C2C applications:advantages and disadvantages • Advantages • Allow consumers to interact directly among them • Give to the consumers a new way of purchasing and selling services and goods • Disadvantages • Little earning capacity

13. B2G applications • Correspond to all kind of transactions between company and public administrator • Utilized mostly in the USA

14. Mobile commerce applications • Concern doing businesses by means of mobile wireless devices • Can be both B2B and B2C • Have a growing importance in the future of e-commerce applications • Will introduce completely new forms of electronic commerce • E.g. E-tickets • The development of such applications faces some of the greatest challenges in the security area to secure the trust of consumers

15. Plan of the talk • Introduction to e-commerce and e-commerce applications • Issues in developing e-commerce applications • Architecture of e-commerce applications • Bookstore example • Perspectives for e-commerce • References

16. Issues in developing e-commerce applications (1/2) • Many of the following issues: • Security • Flexibility • Scalability • Fault tolerance • Integration • Interfaces (graphical and not) • Time-to-market are common to many applications, but they are all critical in the case of e-commerce because of its nature

17. Issues in developing e-commerce applications (2/2) • A state-of-the-art application always fail if people do not utilize it • A constant attention must be payed to the users over the whole development process • A close integration with every business aspect is needed: • For an online buyer security and easy access to the informations are the primal needs • A manager will need a flexible application to adapt the business to the new trends in a faster way

18. Security Issues • Security is a crucial feature • Most transactions take place in a fully automated way • Restricted data are transmitted through a public network • Users must be sure that their money will not be lost or stolen

19. Flexibility Issues • E-commerce systems are subject to frequent structural changes because of mutations of: • Products and services provided by the firm • Commercial partnerships

20. Scalability • Capability to support a certain number of users (thousands, even millions) without compromising performances • It is important because a slow application often means to lose customers (especially in B2C) since they have very small patience

21. Fault tolerance • A less fault-tolerant application will be less available to the user • Every minute that a site is not available costs 1400$ to the company (survey on 400 major companies by Oracle) • It is easy to lose customers forever • It is necessary to redirect the users without they perceive it

22. Integration • Always needed since no application offering every commercial functionality can be realized • Critical because the commercial funcionalities are often realized by many different legacy and third-party applications • Examples: • ERP systems • Legacy systems

23. User Interfaces • Must be intuitive,easily comprehensible and of simple utilization • In the case of B2C must support profiling in order to anticipate the customer requests • They also need to be customizable

24. Multi-channel interfaces • Application interfaces must support several kinds of connections: • Web browsers • Web TV • Cellular phones (via WAP) • PDA

25. Time-to-market • Has greater importance than elsewhere • Emphasis on COTS and reuse

26. Plan of the talk • Introduction to e-commerce and e-commerce applications • Issues in developing e-commerce applications • Architecture of e-commerce applications • Bookstore example • Perspectives for e-commerce • References

27. Two-tier Architecture (client server) • Data reside on a server • Business logic and user interfaces reside on clients • Drawbacks : • Clients sustain the main load and consequently result to be monolithic and heavyweight • Excessive overhead • Simple but unsuitable for e-commerce applications

28. Three-tier architecture • Separates the business logic of the application from user interfaces and from data access • Middle tier can be furtherly divided • In this case we call it multi-tierarchitecture: • Easier to modify one component • Lower cost to deploy and maintain

29. Three-tier architecture

30. Application server • Software that runs on the middle tier of a three-tier environment • In multi-tier environments it is often a distributed and complex software • Commercial implementations exist: • Microsoft Commerce Server 2000 • Sun iPlanet • IBM WebSphere Application Server

31. Application Server-basede-commerce platform architecture E-commerce platform ERP Presentation Layer Business Logic Layer Data & Legacy Access Layer Legacy systems Transactions Security Session Resource Pooling Load balancing Database Horizontal Services Application Server Client tier Server tier Data tier

32. Example: iPlanet architecture

33. Plan of the talk • Introduction to e-commerce and e-commerce applications • Issues in developing e-commerce applications • Architecture of e-commerce applications • Bookstore example • Perspectives for e-commerce • References

34. Domain Model

35. Use Case Model

36. Plan of the talk • Introduction to e-commerce and e-commerce applications • Issues in developing e-commerce applications • Architecture of e-commerce applications • Bookstore example • Perspectives for e-commerce • References

37. Future Perspectives (1/2) • “Electronic commerce is going to reduce a lot of overhead in the economy” • “It will allow a purchase order to go from being about a $75 cost to about $10” • “if you had to pick who's the big winner in all of this, you'd definitely have to pick consumers” • “It lets you go out to the Internet and look at products and services of every kind, that never would have been available through traditional distribution channels” • (Bill Gates at the White House Conference on the New Economy, April 2000)

38. Future Perspectives (2/2) • In spite of Bill’s words, people still lack trust in e-commerce • However, in Europe there is a strong tendency towards the acceptance of Mobile Commerce • EITO (European Information Technology Observatory) 2002 highlights the growing importance of Mobile Commerce (see next page)

39. Trends in Mobile Commerce for the EU Markets: entertainment

40. Trends in Mobile Commerce for the EU Markets: banking and finance

41. Worldwide TLC markets by region

42. Plan of the talk • Introduction to e-commerce and e-commerce applications • Issues in developing e-commerce applications • Architecture of e-commerce applications • Bookstore example • References

43. References (1/4) • Introduction to e-commerce and the development of e-commerce applications: • Professional Java E-Commerce, M.Kerzner et al., Wrox Press, 2001 • EU definition for e-commerce: • “A European Initiative in Electronic Commerce – Communication to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions” (COM(97)/157)

44. References (2/4) • Electronic Data Interchange: • Intodruction to EDI, vv.aa. ,DevEdge online • Cyberphobia and trends in e-commerce: • http://www.webmergers.com • Application Servers: • Introduction to iPlanet Application Server Architecture, Robert Schulteis, Sun Microsystems, 2002 • http://www.sun.com/developers/evangcentral

45. References (3/4) • Platforms for e-commerce: • Building Applications in the Net Economy, Netscape Communications Corporation White paper, 1997 • Architectures for e-commerce: • Architetture, tecnologie e modelli funzionali nell’e-commerce, Castrogiovanni, Magliano, Sciarappa, Notiziario tecnico Telecom Italia, December 2001 • Statement of Bill Gates • The White House Conference on the New Economy April 5, 2000

46. References (4/4) • E-procurement and e-marketplaces: • E-procurement white paper, Digital Union 2001 (http://www.digitalunion.com) • European Information Technology Observatory (EITO): • http://www.eito.com • The Bookstore example: • UML for E-Commerce, Doug Rosenberg • http://www.iconixsw.com

47. The End

48. Electronic exchange of Business documents Business data In a standard format (ANSI X12,EDIFACT) Established between 1968 and 1975 in the transportation industries (U.S.) Application-to-application communication without human intervention Electronic Data Interchange (EDI)

49. Electronic Funds Transfer (EFT) • The banking equivalent of EDI • Denotes the transfer of : • Electronic checks • Customer accounts • Payment informations in automated way

50. Order conversion rates • Defined as: • # of orders / # of contacts • By month or year, four-month periods, etc. • Measure the capability of a certain B2C application to convert an user into a buyer • A survey carried out in August 2000 showed that order conversion rates in USA were of 1.9% (Boston Consulting Group and Shop.org)