Electronic Commerce:An introduction

Frank DignumUtrecht University

e-mail: dignum@cs.uu.nl

Is Electronic Commerce still alive?

Yes! Just in a post-natal depression

Overview

• The course• Definition of Electronic Commerce (EC)• Framework and Context of EC• Key Issues in EC• IT for EC• Examples of EC

The course

1. Introduction2. Process modelling3. Representation and integration of data for EC4. Virtual markets and interactions5. Personalisation, searching and agents

Process modelling

a. trade proceduresb. modelling toolsc. Verification of trade procedures (basics)d. Verification applications

Representation and integration of data for e-commerce

a. XMLb. XML and XSLTc. PHPd. Data integratione. Catalogues

Virtual markets & interactions

a. Virtual markets, infrastructure and protocolls

b. Auctionsc. Negotiations d. EDI and OpenEDI

Personalisation, searching and agents

a. Searching and comparing in contextb. Personalisationc. Agents in e-commerce

Definition (?)

Electronic Commerce is:

Any form of business transaction in which theparties interact electronically rather than by physical exchanges or direct physicalcontact

Benefits of EC

supplier opportunity• global presence• improved competitiveness• mass customisation &

"customerisation"• shorten or eradicate supply

chains• substantial cost savings• novel business opportunities

customer benefit• global choice• quality of service• personalised products &

services• rapid response to needs

• substantial price reductions• new products & services

CommerceInformation exchange

Product/service/… exchange

Information exchange

• Partner/product search• negotiation, market, auction• contract• contract fulfilment (directives)• legal information• etc.

Product/service exchange

• (micro-)payment• (intangible) product• logistics of products and services• subscription mechanisms

EC affects two things

2. Structure within organisations

1. Transactions between organisations and consumers

Stages of Business Transactions

Information stage Negotiation stage Fulfillment stage Satisfaction stage

Business Transaction

Stages

Support for stages

Information stage Negotiation stage Fulfillment stage Satisfaction stage

-Trade relations

-Chambers ofcommerce

-product andcompany databases(e.g. Dun &Bradstreet)

-WWW

- EDI-translators

- Standards(e.g. EDIFACT,ANSI X.12)

-EBXML

-SET (Secureelectronic trading)

-WWW

-e-mail

Business Transaction

Trusted Third Parties

Stages

Supportfor

stages

Electronic market places• Provide matchmaking facilities• Provide standard price discovery

mechanisms• Facilitate payment and delivery

• E.g. Stock market!

EC is a part of a more general development

1. Production (efficiency) focused companya) Logistics, planning, etc.

2. Innovation focused companya) Research and marketing

3. Client focused companya) Internet, knowledge management, etc.b) Relation management

Development in BusinessFrom

operational excellence relational excellence

To

operational excellence

Products and info logistics

management staff

purchase R&D production marketingsales

directors

suppliers

customers

Relational orientedProducts and info logistics

directors

Marketingsales

production

R&D

purchasing

CRM is important

Developments in the supply chain

“The 5 Day Car”

CAR SHOWROOM

?

FINANCE HOUSE

CAR MANUFACTURER

ACCEPT ORDER

CONFIRM FINANCE

PRODUCTION PLAN

CONFIRM DELIVERY DATE

MRP/MRPII

SUPPLIERS

SEND ORDERS

PRODUCTION SCHEDULE

CONFIRM DELIVERYDATES/TIME

PARTS ARRIVE“JUST-IN-TIME”

PRODUCTION LINE

ELECTRONICWORK ORDERS

DELIVERYDETAILS

DELIVER TO SHOWROOM

“Co-operative Sales Training”Dynamic Design Team - IPR creators

certificationauthoritiesbanksproducers-suppliers

marketplace

producers-designersmarketplace

Open/light EDI

collaborativedesign

Lifecycle management

buyers-producersmarketplace

furniture buyer

Web/EDI

trust&

security

“From Forest to Chair”

‘New’ Business Modelsfrom pilots and actual business

Sing

lefu

nctio

n

Mul

tiple

func

tions

/in

tegr

ated

e-shop

e-procurement

info brokerage

collaboration platform

value chain integrator

third party marketplace

e-mallvirtual business community

Degree of innovation

Func

tiona

lin

tegr

atio

n

lower higher

value chain service provider

e-auction

trust services

Business Models - ExamplesSi

ngle

func

tion

Mul

tiple

func

tions

/in

tegr

ated

e-shop

e-procurement

info brokerage

collaboration platform

value chain integrator

3rd party marketplace

e-mall

virtual community

Degree of innovation

Func

tiona

lin

tegr

atio

n

lower higher

value chain service provider

e-auction

trust services

Industry.Net

SCS/Infomar

CitiusTradeZone

GEN/ICS

FedEx InternetshipMarshall on Internet

Amazon.com

MarshallNet/PartnerNet

Belsign

Yahoo

FleuropTravelocity

JAL

Key Issues

• Organisational problems– Electronic marketing– Added business value

• Legal problems– Trust– Compatibility of legal systems

• Technical problems– Interoperability

Commerce needs trust!

• Trusted product/company information• clear negotiation protocols• secure contracts• safe transactions (including payments)• logging of transactions

Trusted Third Parties

• System installed at Trusted parties• Provide trusted information• Procedure perspicuous and monitored• trusted payment system

Secure Electronic Transaction(SET)

• Standard developed by Visa and Mastercard• Electronic substitute for creditcards• Public key based• Has some privacy

Using SET

Alice Bob Shop

Internet

Want to buyCoat XYZ

Ok Alice,that’s $500

Send Coat XYZto Alice street;my Credit# is:

1234 5678 9100

Bank

Yes

Bob Shop knows too much about Alice!

Bank: hasAlice $500 Credit on #:

1234 5678 9100?

$ $ $

Alice Bob Shop

Internet

Bank

Order Info:$500, TransIDCoat XYZto Alice streetEncShop

Payment Info:$500, Hash(OI)My Credit# is:1234 5678 9100EncBank

$ $ $

Alice Bob Shop

Internet

Bank

Order Info:$500, TransIDCoat XYZto Alice streetEncShop

Payment Info:$500, Hash(OI)My Credit# is:1234 5678 9100EncBank

Can I have $500on Hash(OI)?

$ $ $

Exchange means translate!(Interoperability)

• Translate company/product info• translate messages• translate contract• etc.

Technologies in EC

• EDI• WWW• Multimedia• Work Flow Management• Agents• Electronic payment, smart cards, etc.• ...

Issues for CS

• Process modeling• Security and trust• Electronic market places• Knowledge management• Data mining (Customer response

management)

Process modeling

• Redesign procedures to fit customer focus• Check trustworthiness of procedures• Electronic contracts• Document management

Knowledge management• How to integrate all types of information?• How to manage the information? Who is

responsible?• Communication process more important

than production process!• Which information should be available for

whom?• Solutions through e.g. information agents

EC Applications

• Supply chain management• Home shopping• Remote banking• On-line marketing and advertising• Distant learning• Procurement and purchasing• Video on demand

Examples of EC (B-C)• Retail

– Internet bookshop

– CDNow

– Shopping malls

– Auctions

– Collective buying

Examples of EC (B-C)

• Finance

– ESI (stock market)

– Electronic banking

Publishing

Examples of EC (B-B) • Business to business support

– Maxtrad (business information)– MEMO (Mediating and Monitoring EC)– Secure contracts (ICC)– Bolero (electronic document support)

• Markets– Automotive industry (collective buying)– Retail world– Insurance private exchange of virtual products