unit 2 e commerce applications

E-commerce applicationsE-commerce applications

Plan of the talkPlan 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

A definition for e-commerceA 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

The EU definition for e-commerceThe 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)

Origins of e-commerce applicationsOrigins 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

Taxonomy of e-commerce Taxonomy of e-commerce applicationsapplications

• Three main categories:– Business to consumer (B2C)– Business to business (B2B)

– Consumer to consumer (C2C)

• Other categories:– Business to government (B2G)

– Mobile Commerce

B2C applicationsB2C 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

B2C applications:B2C applications:advantages and disadvantages 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)

B2B applicationsB2B 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

B2B applications:B2B applications:advantages and disadvantagesadvantages 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

C2C applicationsC2C applications

• Concern the consumers who run negotations with other consumers sometimes utilizing as intermediary a company– Examples:

• Ebay• Autotrader.com

C2C applications:C2C applications:advantages and disadvantagesadvantages 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

B2G applicationsB2G applications

• Correspond to all kind of transactions between company and public administrator

• Utilized mostly in the USA

Mobile commerce applicationsMobile 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

Issues in developing e-commerce Issues in developing e-commerce applications (1/2)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

Issues in developing e-commerce Issues in developing e-commerce applications (2/2)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

Security IssuesSecurity 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

Flexibility IssuesFlexibility Issues

• E-commerce systems are subject to frequent structural changes because of mutations of:– Products and services provided by the firm

– Commercial partnerships

ScalabilityScalability

• 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

Fault toleranceFault 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

Integration 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

User InterfacesUser 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

Multi-channel interfacesMulti-channel interfaces

• Application interfaces must support several kinds of connections:– Web browsers

– Web TV– Cellular phones (via WAP)– PDA

Time-to-marketTime-to-market

• Has greater importance than elsewhere

• Emphasis on COTS and reuse

Two-tier Architecture (client server)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

Three-tier architectureThree-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-tier

architecture:– Easier to modify one component– Lower cost to deploy and maintain

Three-tier architectureThree-tier architecture

Application serverApplication 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

Application Server-basedApplication Server-basede-commerce platform architecturee-commerce platform architecture

Presentation

Layer

Business

Logic Layer

Data & Legacy

Access Layer

ERP

Legacy

systems

Database

Application Server

Transactions Security SessionResource

Pooling

Load

balancing

E-commerce platform

Horizontal Services

Client tier Server tier Data tier

Example: iPlanet architectureExample: iPlanet architecture

Domain ModelDomain Model

Use Case ModelUse Case Model

Future Perspectives (1/2)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)

Future Perspectives (2/2)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)

Trends in Mobile Commerce for the Trends in Mobile Commerce for the EU Markets: entertainmentEU Markets: entertainment

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

Worldwide TLC markets by regionWorldwide TLC markets by region





• Bookstore example

• References

References (1/4)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)


• 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

http://www.webmergers.com/

http://www.sun.com/developers/evangcentral

References (3/4)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


• 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

http://www.digitalunion.com/

http://www.eito.com/

http://www.iconixsw.com/

The EndThe End

Electronic Data Interchange (EDI)Electronic Data Interchange (EDI)

• 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 Funds Transfer (EFT)Electronic Funds Transfer (EFT)

• The banking equivalent of EDI

• Denotes the transfer of :– Electronic checks

– Customer accounts– Payment informations

in automated way

Order conversion ratesOrder 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)

E-procurement applications (1/3)E-procurement applications (1/3)

• Automate enterprise purchasing processes, i.e. perform all of the activities related to generating an order on the buyer’s side

• Purchased goods can be :– Direct goods (critical items in the supply

chain)– Indirect goods (MRO –Maintenance Repair

and Operations - such as office items)

E-procurement applications (2/3)E-procurement applications (2/3)

• Automating procurement of indirect goods can dramatically reduce costs since:– Lessens maverick buying

– Reduces supplier response time

E-procurement applications(3/3)E-procurement applications(3/3)

1. Product selection from available

catalogues

2. Purchase request is performed by employees

via a Web interface

3. Order approvation compliant to company

standards and procedures

4. Purchase order is electronically placed

5. Order is fulfilled by the supplier

6. Product delivery

7. Product receipt

8. Payment request

electronically forwarded

Indirect goods e-procurementIndirect goods e-procurement

E-marketplaceE-marketplace

• An environment that brings buyers and sellers together in a virtual space for e-commerce, enabling them to reach new customers and reduce transaction costs

• E-marketplaces are becoming more fashionable

CybermallsCybermalls

• Include more virtual shops

• Appear as web portals with links to single e-shops grouped by different product categories (e.g. music or books)

• Advantages for smaller businesses:– Reduced initial investment– Easily traceability through the mall’s brand

Presentation LayerPresentation Layer

• Its purpose is to provide a user interface to the end user of the application

• Controls the look-and-feel of the application and responds to user events

• Serves actually as the front-end of the application

Business Logic LayerBusiness Logic Layer

• The heart of the application itself

• Contains the business rules and /or processes

• Its components link between presentation and data/legacy layers

Data & Legacy access LayerData & Legacy access Layer

• Its purpose is to give to the business logic components access to backend data sources such as:– Databases

– ERP systems– Other custom systems

Horizontal servicesHorizontal services

• Services provided by the application server by means of an underlying technology (CORBA, EJB, COM,etc.)

• Typical services:– Transactions

– Security– Session Management– Resource pooling– Load balancing and fail over

Session ManagementSession Management

• Mantains the correlation among requests generated by the same user

Resource PoolingResource Pooling

• Caching the instances of used resources (e.g. database connections) improves performances

Load Balancing andLoad Balancing andFail OverFail Over

• Make possible to distribute incoming requests

• Handle clients reconnection in the case of system crash

Cyberphobia and the .com crashCyberphobia and the .com crash

Jan-Apr 6 220 66

2000 2001 2002

Source:Webmergers.com

•“Cyberphobia” is the market’s irrational fear of the Internet due to the several bankruptcies occured in the past years

•B2C represent 75% of bankruptcies

Internet shutdowns

unit 2 e commerce applications

Education

ecommerce applicationsissues

ecommerce applicationsplan

electronic processing

electronic technology

comc2c applications

cybermallsb2c applications

electronic trading of

subset of e