chapter 3 using information technology to engage in electronic commerce management information...
TRANSCRIPT
Chapter 3Using Information Technology to Using Information Technology to
Engage in Electronic Engage in Electronic CommerceCommerce
MANAGEMENT INFORMATION SYSTEMS 8/ERaymond McLeod, Jr. and George Schell
Copyright 2001, Prentice-Hall, Inc.
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Electronic CommerceElectronic Commerce
Electronic commerce is the use of Electronic commerce is the use of computers to facilitate the firm’s operationscomputers to facilitate the firm’s operations
– internal (finance, marketing, internal (finance, marketing, manufacturing, ...)manufacturing, ...)
– external (customers, suppliers, external (customers, suppliers, government, ...)government, ...)
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Environmental Environmental Responsibilities Responsibilities
of Functional Areasof Functional Areas
Customers
Suppliers
Stockholders
Labor Unions
Government
Financial Community
Global Community
Competitors
Finance Resources Services Manufacturing Marketing
Human Information
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Electronic Commerce Electronic Commerce BenefitsBenefits
Improved service, especially to Improved service, especially to customerscustomers
Improved relationships to suppliers and Improved relationships to suppliers and the financial communitythe financial community
Increased return on stockholder and Increased return on stockholder and owner investmentsowner investments
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Electronic Commerce Electronic Commerce ConstraintsConstraints
High costsHigh costs Security concernsSecurity concerns Immature or unavailable softwareImmature or unavailable software
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New Electronic Commerce New Electronic Commerce EraEra
Instead of specialized software, firms Instead of specialized software, firms are designing systems to use Internet are designing systems to use Internet BrowsersBrowsers
Making a common interface for Making a common interface for customers and electronic commerce customers and electronic commerce partnerspartners
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Selection of Electronic Selection of Electronic CommerceCommerce
Strategy, Methodology, and Strategy, Methodology, and TechnologyTechnology
BusinessIntelligence
CompetitiveAdvantage
Strategic Business Plan
Enabling strategy
Interorganiza- tional
Electronic data interchange
Enabling methodology
System life cycle
Business process redesign
Enabling technology
Direct connectivity
Value-added networks
The Internet
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Business Intelligence (BI)Business Intelligence (BI)
Evolved from simply gathering data Evolved from simply gathering data about competitors to data gathering about competitors to data gathering about all environmental elementsabout all environmental elements
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Data
Collect data
2 Evaluate data
Analyze data
4Storeintelligence Intelligence
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Disseminateintelligence
Intelligence
The Five Basic Intelligence Tasks
Data
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External DatabasesExternal Databases
Important commercial databases that Important commercial databases that provide information on virtually any subjectprovide information on virtually any subject– LEXIS-NEXIS, DIALOG, DOWJONES.COMLEXIS-NEXIS, DIALOG, DOWJONES.COM– Over 1,000 data service sites listed by Over 1,000 data service sites listed by
YAHOO.COMYAHOO.COM Less expensive to use database services Less expensive to use database services
than to perform researchthan to perform research
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Search EnginesSearch Engines
Special computer programs that ask users Special computer programs that ask users for a word or group of words to be found at for a word or group of words to be found at Internet sitesInternet sites
Yahoo, Excite, AltaVista, HotBot, Lycos, Yahoo, Excite, AltaVista, HotBot, Lycos, and Webcrawler are examplesand Webcrawler are examples
Government databases Government databases
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ExtranetsExtranets
Allow sharing of sensitive computer-based Allow sharing of sensitive computer-based information using Internet technologyinformation using Internet technology
Limited to trusted suppliers and large Limited to trusted suppliers and large customerscustomers
Security and privacy issuesSecurity and privacy issues– FirewallsFirewalls
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Interorganizational System Interorganizational System (IOS)(IOS)
These link two or more firms so that they These link two or more firms so that they function as a single function as a single systemsystem to accomplish a to accomplish a common goalcommon goal
Generate internal efficiency in addition to Generate internal efficiency in addition to interorganizational efficiencyinterorganizational efficiency
Provides customers with unique product Provides customers with unique product features, reduced search-related costs, and features, reduced search-related costs, and raises the customer’s switching costsraises the customer’s switching costs
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Electronic Data Electronic Data Interchange (EDI)Interchange (EDI)
Consists of direct computer-to-computer Consists of direct computer-to-computer transmissions among multiple firms of data in a transmissions among multiple firms of data in a machine-readable, structured formatmachine-readable, structured format
Typical linkagesTypical linkages– Supply sideSupply side– Customer sideCustomer side– Transaction setTransaction set
Vendor stock replenishment (VSR)Vendor stock replenishment (VSR) Electronic Funds Transfer (EFT)Electronic Funds Transfer (EFT)
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Electronic Data Electronic Data Interchange (EDI)Interchange (EDI)
Adheres to Standard Adheres to Standard FormatsFormats
Suppliers The Firm
Request for a price quotePrice quote
Purchase order
Acknowledge P.O. receiptInvoice
ANSI ASC X12 - North America EDIFACT - International
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Selected EDI Transaction Selected EDI Transaction Sets and Sample Invoice Sets and Sample Invoice
DataData104 Air Shipment Information 130 Student Educational Record (Transcript)152 Statistical Government Information 300 (Booking Request) (Ocean)311 Canadian Customs Information 810 Invoice
NameAddress InformationMarking, Packaging, LoadingIndustry CodeQuantityCurrency
Tax InformationPricing InformationItem Physical DetailsTerms of Sale / Deferred Terms of SaleCarrier DetailProduct / Item DescriptionInvoice Shipment SummaryTransaction Totals
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Mapping Software Translates Mapping Software Translates Data to and from Standard Data to and from Standard
FormatsFormats
Sending firm’scomputer
Application software
Mappingsoftware
Standard EDI format
Receiving firm’scomputer
Application software
Mappingsoftware
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Degree of EDI Degree of EDI ImplementationImplementation
Level-one usersLevel-one users– One or two transmission sets sent to limited trading One or two transmission sets sent to limited trading
partnerspartners Level-two usersLevel-two users
– Many transaction sets transmitted to large number of Many transaction sets transmitted to large number of trading partnerstrading partners
Level-three usersLevel-three users– Many transaction sets transmitted to large number of Many transaction sets transmitted to large number of
trading partners and firm’s computer applications are trading partners and firm’s computer applications are tailored to EDI approachtailored to EDI approach
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Adoption InfluencesAdoption Influences
Competitive pressure, Competitive pressure, this is reactivethis is reactive Exercised power, Exercised power, this is proactivethis is proactive Internal need, Internal need, this is proactivethis is proactive Top management support, Top management support, this is both this is both
proactive and reactiveproactive and reactive
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Internal and Internal and Environmental Influences Environmental Influences
on EDI Adoptionon EDI AdoptionEnvironmental Influences
PressureExercised Power
Internal Influences
InternalNeed
TopManagement
Support
Competitors TradingPartners
EDI3-20
EDI BenefitsEDI Benefits DirectDirect
– Reduced errorsReduced errors– Reduced costsReduced costs– Increased operational efficiencyIncreased operational efficiency
IndirectIndirect– Increased ability to competeIncreased ability to compete– Improved relationships with trading partnersImproved relationships with trading partners– Improved customer serviceImproved customer service
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EDI Direct and Indirect EDI Direct and Indirect BenefitsBenefitsIndirect Benefits
Direct Benefits
ReducedErrors
IncreasedOperationalEfficiency
Reduced Costs
Competitors Trade Partners
Customers
Increased Abilityto Compete
Improved Service
ImprovedRelationships
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A Challenge to EDIA Challenge to EDI
Extensible markup language (XML)Extensible markup language (XML)– Extension of HTMLExtension of HTML– Provides file formatting structure and means for Provides file formatting structure and means for
describing data describing data – Allows Web pages to perform many EDI Allows Web pages to perform many EDI
functionsfunctions
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Electronic Commerce Electronic Commerce TechnologyTechnology
Direct ConnectivityDirect Connectivity– Uses dial-up or private lines to connectUses dial-up or private lines to connect
Value-Added Networks (VANs)Value-Added Networks (VANs)– Circuit provided by vendorCircuit provided by vendor
– Vendor provides additional servicesVendor provides additional services The InternetThe Internet
– Global communications networkGlobal communications network3-24
Internet EvolutionInternet Evolution Derived from the Advanced Research
Projects Agency network (ARPANET) Designed to let computer-to-computer
communications continue even during military attacks
ARPANET joined with Computer Science Network (CSNET) and National Science Foundation Network (NSFNET) to form today’s Internet
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Internet Evolution [cont.)Internet Evolution [cont.) During the 1970’s various other networks
were connected This led to the 1980’s Internet concept which
means each network can seamlessly interconnect with other networks
Businesses began using the new Internet with workstations and local area networks
The Internet has become a network of networks
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Internet Evolution (cont.)Internet Evolution (cont.)
In 1989, Tim Berners-Lee of CERN came In 1989, Tim Berners-Lee of CERN came up with the hypertext conceptup with the hypertext concept
World-Wide Web is really the application World-Wide Web is really the application of hypertext documents and other materialsof hypertext documents and other materials
Hypertext is conceptually a ‘speed dial’ Hypertext is conceptually a ‘speed dial’ feature in that a user points to and presses feature in that a user points to and presses the hypertext link and the system the hypertext link and the system automatically goes to that locationautomatically goes to that location
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Key Web TerminologyKey Web Terminology WebsiteWebsite Hypertext linkHypertext link Web pageWeb page Home pageHome page Universal resource locator (URL)Universal resource locator (URL)
– Protocol Protocol – Domain nameDomain name– PathPath
BrowserBrowser FTP (File Transfer Protocol)FTP (File Transfer Protocol)
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Parts of a URLParts of a URL
http://aisvm1.ais.com/abra7883/index.html
hypertext transmission protocol
domain name path (directory and file name on the web server)
hypertext markup language
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Internet Client/Server Internet Client/Server Information Retrieval Information Retrieval
SystemsSystems GopherGopher
Wide Area Information Servers (WAIS)Wide Area Information Servers (WAIS)
USENETUSENET
Each of these predates the WWW and represents a major step forward in Internet Use 3-30
Terminal Emulator PC or Macintosh Unix X11 NextStep
Addressing schema, Protocols, Format negotiation
FTP
News
Gopher
WAIS
HTTPGateway isHTTP serverplus otherapplication.
Database, infosystem, etc.
Internet Client/Server Architecture
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Internet SecurityInternet Security
Any resources linked to data Any resources linked to data communications have riskcommunications have risk
Security by physically separating the Web Security by physically separating the Web site from the firm’s computer resourcessite from the firm’s computer resources
Security by using passwords that allow Security by using passwords that allow access to computing resourcesaccess to computing resources
‘‘Firewalls’ using routers, intermediary Firewalls’ using routers, intermediary computers or application-level methodscomputers or application-level methods
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An Application-Level FirewallAn Application-Level Firewall
ExternalExternalServicesServices
Border RouterBorder Router
IP ChokeIP ChokeProtocol FilterProtocol Filter
Internal/ExternalInternal/ExternalService GatewayService Gateway
Internal RouterInternal Router
RouterRouter
Isolation MechanismIsolation Mechanism
Internet ConnectivityInternet ConnectivitySupplier’s NetworkSupplier’s Network
InternetInternet
Internal Network
Incoming packets from the Internet passIncoming packets from the Internet passthrough the connectivity supplier’s networkthrough the connectivity supplier’s networkto a router and to the organizationto a router and to the organization
The packet goes to a router box that duplicatesThe packet goes to a router box that duplicatesthe function of the external routerthe function of the external router
Rather than routing the packet directly to its destination, theRather than routing the packet directly to its destination, therouter redirects traffic through an external services host and router redirects traffic through an external services host and an IP “choke” hostan IP “choke” host
The external services host runs desired apps such as E-mail The external services host runs desired apps such as E-mail interfaceinterface
The IP choke performs actual protocol filteringThe IP choke performs actual protocol filtering
Traffic is sent through a gateway to a separate router box Traffic is sent through a gateway to a separate router box on the internal network, configured according to internal on the internal network, configured according to internal security policysecurity policy
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IntranetIntranet
Internet technology used for internal Internet technology used for internal communications and applicationscommunications and applications
Used for many business applications Used for many business applications requiring communicationrequiring communication
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Business Applications Business Applications for the Internetfor the Internet
Marketing researchMarketing research Competitive intelligenceCompetitive intelligence Retailing applicationsRetailing applications The future impact of the Internet on The future impact of the Internet on
business is enhanced as the National business is enhanced as the National Information Infrastructure programs Information Infrastructure programs become establishedbecome established
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Successful Internet UseSuccessful Internet Use
Make sure your Web Make sure your Web site is robustsite is robust
Make sure your Make sure your browser and database browser and database structure are both structure are both flexible and intuitiveflexible and intuitive
Update oftenUpdate often Look beyond Look beyond
customerscustomers
Target content to Target content to specific users’ needsspecific users’ needs
Make the interface Make the interface intuitiveintuitive
Be in the right Web Be in the right Web locationlocation
Create a sense of Create a sense of communitycommunity
Get help if you need it Get help if you need it 3-36
SummarySummary
E-Commerce begins with business E-Commerce begins with business intelligenceintelligence
Primary and secondary data comprise Primary and secondary data comprise business intelligencebusiness intelligence
Reasons for IOSReasons for IOS– Comparative efficiencyComparative efficiency– Bargaining powerBargaining power
Three levels of EDIThree levels of EDI3-37
Summary [cont.]Summary [cont.]
Internet Internet – Network of networksNetwork of networks– Security concernsSecurity concerns– FirewallsFirewalls
IntranetsIntranets National information infrastructureNational information infrastructure
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