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Chapter 7: Electronic Commerce and Interorganizational Systems

Chapter 7: Electronic Commerce and Interorganizational Systems. Electronic Commerce. Definition(s) Using IT for business-to-business transactions and for business-end customer retailing Any electronic transaction with client companies and end customers

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Chapter 7: Electronic Commerce and Interorganizational Systems

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  1. Chapter 7:Electronic Commerce and Interorganizational Systems

  2. Electronic Commerce • Definition(s) • Using IT for business-to-business transactions and for business-end customer retailing • Any electronic transaction with clientcompanies and end customers • Anything electronic that "tightens" your company's relationship with potential and existing customers & suppliers

  3. Interorganizational Systems (IOS) • Definition • Business-to-business electronic commerce applications, typically linking customers with suppliers but may also link competitors • Classic example: SABRE reservation system of American Airlines • Most common form: Electronic data interchange

  4. Electronic Data Interchange (EDI) • Definition • A set of standards and hardware and software technology that permit computers in separate organizations to transfer documents electronically • Typical documents exchanged include: • purchase orders • invoices • shipping notices • price listings

  5. Potential Benefits of EDI • Faster speed of doing business • Reduction in required working capital • Cost savings • Improved customer/supplier relationships • Enables international trade

  6. EDI Standards • In U.S. • ANSI X.12 (American National Standards Institute) • In Europe (and to some extent U.S.) • EDIFACT • Other national standards • Trend: convergence of standards

  7. Electronic Commerce via the Web • Definition • The use of the Internet to conduct commerce with customers, including other businesses or the end-consumers • Benefits include 5 benefits for EDI plus: • Cheaper distribution of digitized products/documents • New customer support capabilities • New marketing channel • New sales channel

  8. Al Gore's Vision: The Information Superhighway • linking homes, businesses, government forinformation, education, buyer/seller transactions. • with high speed transmission ofmultimedia (text, audio, images, video)...all streaming seamlessly into everyone's home • without "haves" and "have-nots"

  9. Bill Gates' Vision (Microsoft CEO) 1995 bestseller; now a Penguin paperback "upgrade" • Telephone lines & television cables "generalized into" a single, digital utility • Easy-to-use information appliances: lap desks, TV set-top boxes, wallet PCs, E-books… • Easy-to-use navigation systems:to query, filter, hyperlink, spatially navigate, under a smart agent

  10. Domain Names on the Internet • Network Solutions Inc. (Virginia) has the task of registering Internet domain names • Three-character suffix specifies type of organization .com .edu .gov .mil .org .net • Two-character suffix specifies country of origin (outside of U.S.)

  11. Constraints to EC on the Web: The Potholes • Security • Traffic Overload • Censorship Difficulties • Measurement Tools

  12. Security • Internet not designed to be public utility • Two issues: • How to control access • How to ensure that security of a given communication is not violated

  13. Security • #1: How to control access • Primary method: "Firewalls"A device that sits between the Internet and an organization’s internal network in order to block intrusions from external unauthorized users • #2: Ensure secure communication • Primary method: Encryption Today based on enciphering key that is the product of two prime numbers. This key is factored into these two prime numbers via an algorithm, and then one is used to encipher (code) a message, the other to decipher it

  14. Traffic Overload • Evidenced by: • slow response time • occasional blackouts • lack of capacity/bandwidth

  15. Censorship Difficulties • Web site “blocking” from within businesses • “Acceptable Use” policies • Monitoring of usage • U.S. legislative attempt: • Communications Decency Act ruled unconstitutional: violates free speech and due process rights Does the global nature of the Internet allow for “censorship” on a national basis ?

  16. Measurement Tools How does an organization measure the utility of an external Web site application? • Usage tracking using “cookies” • Hits and return visitors • Web movements • Visitor registration & comments (e-mail)

  17. Types of Web Applications • External Web site • Fully accessible to the global Internet user • Extranets • Internet-based applications for key trading partners • Allows access to systems “inside” the firewall • Some are EDI application replacements • Others are totally new applications, exploiting the multimedia capabilities of the Web • Intranets

  18. Examples of External Web Applications • Manufacturing - 3M • Retailing - Amazon.com • Distributor network - Fruit-of-the-Loom • E-Communities - GeoCities.com

  19. Web Strategies • Existing firms (3M, Fruit-of-the-Loom) • New Web-based businesses (Amazon, GeoCities) • Unproven pioneers

  20. Emerging Role: Webmaster • Developer of Web sites • combination of programmer & creative artist • Responsible for Web server operations and security • May be responsible for monitoring “acceptable use” by employees

  21. The Future of EC • Major changes in retailing, including possible disintermediation (e.g., eliminate wholesalers) • Ubiquitous information highway that handles telephone, television, e-mail, Web, etc. • Major societal impacts

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