Introduction to E-Commerce PDF

  MARTIN KÜTZ INTRODUCTION TO E-COMMERCE COMBINING BUSINESS AND INFORMATION TECHNOLOGY 2 Introduction to E-Commerce: Combining Business and Information Technology 1st edition © 2016 Martin Kütz & bookboon.com ISBN 978-87-403-1520-2 Peer review by Prof. Dr....

  MARTIN KÜTZ INTRODUCTION TO E-COMMERCE COMBINING BUSINESS AND INFORMATION TECHNOLOGY 2 Introduction to E-Commerce: Combining Business and Information Technology 1st edition © 2016 Martin Kütz & bookboon.com ISBN 978-87-403-1520-2 Peer review by Prof. Dr. Michael Brusch, Fachbereich 6, Hochschule Anhalt and Prof. Dr. Corinna V. Lang, Fachbereich 2, Hochschule Anhalt 3  INTRODUCTION TO E-COMMERCE Contents CONTENTS Table of abbreviations 7 1 Basics and definitions 15 1.1 The term “E-Commerce” 16 1.2 Business models related to E-Commerce 24 1.3 Technical and economic challenges 34 1.4 Exercises 35 2 Frameworks and architectures 37 2.1 Actors and stakeholders 37 2.2 Fundamental sales process 39 2.3 Technological elements 44 2.4 Exercises 360° 61 thinking. 360° thinking. 360° thinking. Discover the truth at www.deloitte.ca/careers Dis © Deloitte & Touche LLP and affiliated entities. Discover the truth at www.deloitte.ca/careers © Deloitte & Touche LLP and affiliated entities. Deloitte & Touche LLP and affiliated entities. Discover the truth at www.deloitte.ca/careers 4 INTRODUCTION TO E-COMMERCE Contents 3 B2C business 62 3.1 The process model and its variants 62 3.2 The pricing challenge 77 3.3 The fulfilment challenge 79 3.4 The payment challenge 80 3.5 B2C-business and CRM 80 3.6 B2C software systems 81 3.7 Exercises 85 4 B2B business 86 4.1 The process model and its variants 86 4.2 B2B software systems 98 4.3 Exercises 106 5 Impact of E-Commerce 108 5.1 Ethics, morale & technology 109 5.2 Ethical aspects of ICT 110 5.3 Overall impacts of E-Commerce 112 5.4 Specific impacts of E-Commerce 118 5.5 Exercises 128 6 Security & compliance management 130 6.1 Foundations of risk management 130 6.2 Compliance Management 136 6.3 Information security management (ISM) 137 6.4 Technology 141 6.5 Legal aspects of E-Commerce 149 6.6 Exercises 152 7 Electronic payment 154 7.1 Business and money 154 7.2 The payment challenge 156 7.3 Payment procedures 158 7.4 Receivables management 165 7.5 Cyber money 166 7.6 Exercises 170 5 INTRODUCTION TO E-COMMERCE Contents 8 Performance management 171 8.1 Foundations of performance analysis 172 8.2 ICT performance management 178 8.3 Web analytics 187 8.4 Exercises 194 9 Advices for Exercises 195 9.1 Basics and definitions 195 9.2 Frameworks and architectures 197 9.3 B2C business 198 9.4 B2B business 199 9.5 Impact of E-Commerce 200 9.6 Security and compliance management 202 9.7 Electronic payment 204 9.8 Performance management 205 References 207 6 INTRODUCTION TO E-COMMERCE Table of abbreviations TABLE OF ABBREVIATIONS 3GPP 3rd Generation Partnership Project AES Advanced Encryption Standard AI Application Identifier ANSI American National Standards Institute API Application Programming Interface APICS American Production and Inventory Control Society ASP Application Service Providing ATM Automated Teller Machine B2B Business to Business B2C Business to Customer/Consumer BGB Bürgerliches Gesetzbuch (German Civil Law) BIC Bank Identifier Code BME Bundesverband Materialwirtschaft, Einkauf und Logistik (Association Materials Management, Purchasing and Logistics) BMP Windows Bitmap BOB Box of Bits BPR Business Process Re-engineering BSI Bundesamt für Sicherheit in der Informationsverarbeitung (German Federal Office for Information Security) C2C Customer to Customer C2G Citizen to Government CA Certification Authority CAx Computer Aided “x” CDA Content Delivery Application CDMA Code Division Multiple Access CERN Conseil Européen pour la Recherche Nucléaire 7 INTRODUCTION TO E-COMMERCE Table of abbreviations CLV Customer Lifetime Value CMA Content Management Application CMS Content Management System C.O.D. Cash on Delivery CORBA Common Object Request Broker Architecture CPA Cost per Action CPC Cost per Click CPS Certification Practice Standard CPx Cost per “x” CRL Certification Revocation List CRM Customer Relationship Management CRV Customer Referral Value CSMA/CD Carrier Sense Multiple Access/Collision Detection CSP Cloud Service Provider cXML commerce XML DENIC DE Network Information Centre (DE =.de: top level domain) DES Data Encryption Standard DoD Department od Defence DTD Document Type Definition EAI Enterprise Architecture Integration EAN European Article Number EDGE Enhanced Data Rate for GSM Evolution EDI Electronic Data Interchange EE Enterprise Edition EFF Electronic Frontier Foundation e.g. exempli gratia 8 INTRODUCTION TO E-COMMERCE Table of abbreviations EHI EuroHandelsInstitut (EuroTradeInstitute) EMOTA European E-Commerce and Mail Order Trade Association ERP Enterprise Resource Planning etc. et cetera ETSI European Telecommunications Standards Institute eWoM electronic World of Mouth FAQ Frequently Asked Questions FDDI Fiber Distributed Data Interface FTP File Transfer Protocol G2B Government to Business G2C Government to Citizen G2E Government to Employees G2G Government to Government GIF Graphics Interchange Format GPRS General Packet Radio Service GRC Governance, Risk and Compliance GSM Global System for Mobile Communications GTIN Global Trade Item Number HSCSD High Speed Circuit Switched Data HSDPA High Speed Downlink Packet Access HTML Hypertext Markup Language HTTP Hypertext Transfer Protocol IaaS Infrastructure as a Service IANA Internet Assigned Numbers Authority IBM International Business Machines ICANN Internet Corporation for Assigned Names and Numbers 9 INTRODUCTION TO E-COMMERCE Table of abbreviations ICC Integrated Circuit Card ICT Information and Communication Technology IDC International Data Corporation IDEA International Data Encryption Algorithm i.e. id est IEC International Electrotechnical Commission IEEE Institute of Electrical and Electrotechnical Engineers IETF Internet Engineering Task Force IIS (Microsoft) Internet Information Services IMAP Internet Message Access Protocol IMT International Mobile Telecommunications IP Internet Protocol IPng Internet Protocol next generation ISBN International Standard Book Number ISM Information Security Management ISO International Standards Organization ISSN International Standard Series Number IT Information Technology ITIL IT Infrastructure Library JDBC Java Database Connectivity JNI Java Native Interface JVM Java Virtual Machine KPI Key Performance Indicator LDAP Lightweight Directory Access Protocol MAB Multi-Author Blog MD Message Digest 10 INTRODUCTION TO E-COMMERCE Table of abbreviations MPM Manufacturing Process Management MRO Maintenance, Repair, Operations MRP Material Requirements Planning NGO Non-Governmental Organization NIST National Institute of Standards and Technology OCI Open Catalogue Interface ODBC Open Database Connectivity OECD Organization for Economic Co-operation and Development OMG Object Management Group ORB Object Request Broker OSI Open Systems Interconnection P3P Platform for Privacy Preferences PaaS Platform as a Service PCI Payment Card Industry PDA Personal Digital Assistant PDF Portable Document Format PDM Product Data Management PKCS Public Key Cryptography Standard PKI Public Key Infrastructure PLM Product Lifecycle Management PMBOK Project Management Body of Knowledge POP3 Post Office Protocol Version 3 POS Point of Sale PPM Product and Portfolio Management RA Registration Authority RFC Request for Comment 11  INTRODUCTION TO E-COMMERCE Table of abbreviations RFID Radio Frequency Identification RFM Recency, Frequency, Monetary RFx Request for “x” ROI Return on Investment RSA Rivest, Shamir and Adleman RSS Rich Site Summary SaaS Software as a Service SAP Systeme, Anwendungen und Produkte (Systems, Applications and Products) = name of a big German software firm SCC Supply Chain Council TMP PRODUCTION NY026057B 4 12/13/2013 6x4 SCM Supply Chain Management PSTANKIE ACCCTR00 gl/rv/rv/baf SCOR Supply Chain Operations Reference Bookboon Ad Creative SCRM Social Media CRM All rights reserved. © 2013 Accenture. Bring your talent and passion to a global organization at the forefront of business, technology and innovation. Discover how great you can be. Visit accenture.com/bookboon 12 INTRODUCTION TO E-COMMERCE Table of abbreviations SE Software Engineering SE Standard Edition SEO Search Engine Optimization SET Secure Electronic Transaction SHA Secure Hash Algorithm SIIA Software & Information Industry Association SIM Subscriber Identity Module SLA Service Level Agreement SMS Short Message Service SMTP Simple Mail Transfer Protocol SNS Social Networking Site SOAP Simple Object Access Protocol SQL Structured Query Language SRM Supplier Relationship Management SSO Single Sign On StGB Strafgesetzbuch (German Criminal Law) TCP Transmission Control Protocol TKG Telekommunikationsgesetz (German Telecommunication Act) TMG Telemediengesetz (German Tele Media Act) TÜV Technischer Überwachungsverein (Technical Control Association) UCS Universal Coded Character Set UDI Universal Document Identifier UMTS Universal Mobile Telephone System UPS Uninterruptable Power Supply URI Unified Resource Identifier URL Uniform Resource Locator 13 INTRODUCTION TO E-COMMERCE Table of abbreviations USA United States of America VIP Vertical Information Portal W3C World Wide Web Consortium WCC Web Content Controlling WCPM Web Content Performance Management WLAN Wireless Local Area Network WPM Web Performance Management WSDL Web Services Description Language WUC Web User Controlling WUPM Web User Performance Management WWW World Wide Web XHTML Extended HTML XML Extended Markup Language XMPP Extensible Messaging and Presence Protocol 14 INTRODUCTION TO E-COMMERCE Basics and definitions 1 BASICS AND DEFINITIONS Learning objectives In this chapter you will learn, how the term “E-Commerce” has been defined, how the Internet has enabled this type of business, what are typical categories of making business digitally, what are the advantages as well as the disadvantages of digital business, which technical and economical challenges have to be mastered when doing business electronically. Recommended pre-reading Mohapatra 2013, chapter 1. Turban et al 2015, chapter 1. Unlock your potential eLibrary solutions from bookboon is the key eLibrary Interested in how we can help you? email [email protected] 15 INTRODUCTION TO E-COMMERCE Basics and definitions 1.1 THE TERM “E-COMMERCE” 1.1.1 THE WIKIPEDIA CONTENT Of course, we looked up the term “E-Commerce” and other related terms in the popular encyclopaedia Wikipedia. The outcome of our research as of October 25, 2015, is documented in the subsequent lines. E-Commerce “Electronic commerce, commonly written as E-Commerce, is the trading in products or services using computer networks, such as the Internet. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web for at least one part of the transaction’s life cycle, although it may also use other technologies such as E-Mail. E-Commerce businesses may employ some or all of the following: Online shopping websites for retail sales direct to consumers, Providing or participating in online marketplaces, which process third-party business- to-consumer or consumer-to-consumer sales, Business-to-business buying and selling, Gathering and using demographic data through Web contacts and social media, Business-to-business electronic data interchange, Marketing to prospective and established customers by E-Mail or fax (for example, with newsletters), Engaging in pretail for launching new products and services. Pretail (also referred to as pre-retail, or pre-commerce) is a sub-category of E-Commerce and online retail for introducing new products, services, and brands to market by pre- launching online, sometimes as reservations in limited quantity before release, realization, or commercial availability. Pretail includes pre-sale commerce, pre-order retailers, incubation marketplaces, and crowdfunding communities.” (Wikipedia 2015) 16 INTRODUCTION TO E-COMMERCE Basics and definitions E-Business “Electronic business, or E-Business, is the application of information and communication technologies (ICT) in support of all the activities of business. Commerce constitutes the exchange of products and services between businesses, groups and individuals and can be seen as one of the essential activities of any business. Electronic commerce focuses on the use of ICT to enable the external activities and relationships of the business with individuals, groups and other businesses or E-Business refers to business with help of Internet i.e. doing business with the help of Internet network. The term was coined by IBM’s marketing and Internet team in 1996.” (Wikipedia 2015) Comparing E-Commerce and E-Business we come to the subsequent conclusion: E-Business is a more general term than E-Commerce. However, in this book we will only use the term “E-Commerce“, because every business transaction finally is involved in selling or buying of products or services. And the term “E-Commerce” obviously is more widespread than the term “E-Business”. Digital economy “Digital economy refers to an economy that is (substantially) based on computing technologies. The digital economy is also sometimes called the Internet Economy, the New Economy, or Web Economy. Increasingly, the “digital economy” is intertwined with the traditional economy making a clear delineation harder.” (Wikipedia 2015) We will not use the term “digital economy” further on in this book, because business is business be it traditional or digital. And boundaries are moving every day due to technical development. However, we will repeatedly use the term “digital” or “digitalized” to indicate that subjects or activities are based on ICT. 1.1.2 PRELIMINARY DEFINITION Some authors write extremely enthusiastically like this: E-Commerce enables the comprehensive digital execution of business processes between suppliers and their customers via global public and private networks. 17  INTRODUCTION TO E-COMMERCE Basics and definitions However, this definition rises some questions: What does “comprehensive” mean? Does it mean the total process? Is everything digitalized? What about transportation and delivery of real goods? Obviously here are some limits for digitalization, though sooner or later 3-D-printing may change a lot… Why should businesses be run electronically? Is enablement a value in itself? Or do we digitalize businesses because we can reduce costs, accelerate processes and increase profit? This definition, though given in many E-Commerce books, is too much marketing- minded and not helpful to understand the advantages (and disadvantages) of “digitalized” business reasonably. MIM_170x115-AF.pdf 1 30/11/16 12:23 AFTER GRADUATION, MIM STUDENTS CHARLES WORK IN A VARIETY OF SECTORS FINANCIAL SERVICES NICK TECHNOLOGY MARIA CONSULTING C M Y MATTHEW SARAH CM MANUFACTURING RETAIL MY CY CMY MASTER IN MANAGEMENT K STUDY IN THE CENTER OF MADRID AND TAKE ADVANTAGE OF THE UNIQUE OPPORTUNITIES THAT THE CAPITAL OF SPAIN OFFERS Length: 1O MONTHS PROPEL YOUR EDUCATION BY EARNING A DOUBLE DEGREE THAT BEST SUITS YOUR PROFESSIONAL GOALS Av. Experience: 1 YEAR STUDY A SEMESTER ABROAD AND BECOME A GLOBAL CITIZEN WITH THE BEYOND BORDERS EXPERIENCE Language: ENGLISH / SPANISH Format: FULL-TIME Intakes: SEPT / FEB 5 Specializations International 55 Nationalities Personalize your program Faculty Profile in class www.ie.edu/master-management [email protected] Follow us on IE MIM Experience 18 INTRODUCTION TO E-COMMERCE Basics and definitions 1.1.3 FINAL DEFINITION To come to a final definition of E-Commerce let us start with some constituent attributes of E-Commerce: Digitalization of business: оо This means a comprehensive usage of ICT (Information & Communication Technology) not only within a business organization (as it has been done during the last decades by traditional (internal) information systems), but now through a more and more seamless linking and cooperation of information and communication systems of all involved business partners. оо The comprehensive usage of ICT has been enabled by some technologies and technical standards, which have been accepted globally (see chapter 2 of this book). Focus on business processes: оо We support business processes, of course, as we did it for the last decades, but now the total processes, running through several organizations and crossing their boundaries, are supported. оо We automate business processes not longer only within organizations, as it was “the” traditional objective of ICT, but now the automation is related to the total process, running through all involved organizations, and not only to the sub-process within the own organization. оо We increase the speed of business processes. Additional potentials can be realized with the coupling of processes between different organizations. оо We increase the economic efficiency of business processes, again through coupling of business processes at the boundaries of the business partners. Usage of a global network: оо Internet plays a dominant role and has become a universal technical infrastructure. Thus it builds a global virtual place where every organization and person being interested in making business can come together without geographical and time restrictions. оо Global networks allow the exchange of information without any restrictions in time and independently from any geographical distances. оо We “know” (means: assume) that the Internet is always up and running (7·24h). 19 INTRODUCTION TO E-COMMERCE Basics and definitions New potentials and opportunities for cooperation: оо More or less independent persons and/or organizations work together. оо Business actors can come together whenever they want it or whenever there is a need. These considerations lead to our final definition (Turban et al 2015, p. 7): E-Commerce is the exchange of goods and services between (usually) independent organizations and/or persons supported by a comprehensive usage of powerful ICT systems and a globally standardized network infrastructure. For this purpose the business partners have to couple their business processes and their ICT systems. These systems have to work together temporarily and seamlessly and have to share, exchange and process data during the whole business process and across the boundaries of the cooperating organizations. Data security and data privacy as well as the compliance with laws and other policies and procedures have, of course, to be guaranteed. 1.1.4 E-COMMERCE WITH THE “5-C-MODEL” Another approach to define and explain, what E-Commerce is, comes from the so-called 5-C-model (Zwass 2014). It defines E-Commerce by five activity domains whose denominations start with the letter “C”: Commerce In the electronic marketplaces there is a matching of customers and suppliers, an establishing of the transaction terms, and the facilitation of exchange transactions. With the broad move to the Web-enabled enterprise systems with relatively uniform capabilities as compared to the legacy systems, a universal supply-chain linkage has been created. Collaboration The Web is a vast nexus, or network, of relationships among firms and individuals. More or less formal collaborations are created or emerge on the Web to bring together individuals engaged in knowledge work in a manner that limits the constraints of space, time, national boundaries, and organizational affiliation. 20 INTRODUCTION TO E-COMMERCE Basics and definitions Communication As an interactive medium, the Web has given rise to a multiplicity of media products. This universal medium has become a forum for self-expression (as in blogs) and self-presentation (as, for an example, in Polyvore: www.polyvore.com). The rapidly growing M-Commerce (see below) enables connectivity in context, with location-sensitive products and advertising. In the communications domain, the Web also serves as a distribution channel for digital products. Connection Common software development platforms, many of them in the open-source domain, enable a wide spectrum of firms to avail themselves of the benefits of the already developed software, which is, moreover, compatible with that of their trading and collaborating partners. The Internet, as a network of networks that is easy to join and out of which it is relatively easy to carve out virtual private networks, is the universal telecommunications network, now widely expanding in the mobile domain.. 21 INTRODUCTION TO E-COMMERCE Basics and definitions Computation Internet infrastructure enables large-scale sharing of computational and storage resources, thus leading to the implementation of the decades-old idea of utility computing. 1.1.5 ADDITIONAL TERMS M-Commerce (Mobile Commerce) M-Commerce (Mohapatra 2013, pp. 81–82) is commonly understood as the usage of mobile devices for business purposes, especially mobile phones and PDA’s (Personal Digital Assistants). Main features of M-Commerce are: Location independence of (mobile) customers, High availability of services through well established mobile phone networks, Increasing computing power of mobile devices, Interactivity of mobile devices (voice and data transfer), Security (when using mobile phone networks), Localization of customers through cell structure, Accessibility of customers, Potential of personalized services/offers. E-Procurement (Electronic Procurement) In general, E-Procurement (Chakravarty 2014, p. 115) is the automation of an organization’s procurement processes using Web-based applications. It enables widely dispersed customers and suppliers to interact and execute purchase transactions. Each step in the procurement process is captured electronically, and all transaction data is routed automatically, reducing time and cost of procurement. Properly deployed, E-Procurement can deliver tremendous value to enterprises in different ways. In a narrower sense E-Procurement is seen as the ordering of MRO goods (MRO = Maintenance/Repair/Operations) on the basis of Web-based application systems directly by the demand carrier to reduce process costs in the area of so-called C-articles (C-articles represent a small portion of the total financial procurement volume, but cause a significant portion of the procurement costs). 22 INTRODUCTION TO E-COMMERCE Basics and definitions Every sales process at the same time is a procurement process or a buying process – from the point of view of the (potential) customer. Sales processes are driven by the supplier. Procurement processes are driven by the customer. However the exchange of goods or services has to be managed. Thus we will consider E-Procurement as a specific view onto E-Commerce. E-Government (Electronic Government) The big encyclopaedia Wikipedia says (search as of October 26, 2015) (Xu 2014, pp. 102–105): “E-Government (short for electronic government, also known as e-gov, Internet government, digital government, online government, or connected government) consists of the digital interactions between citizens and their government (C2G), between governments and government agencies (G2G), between government and citizens (G2C), between government and employees (G2E), and between government and businesses/commerce (G2B). This digital interaction includes all levels of government (city, state/province, national, and international), governance, information and communication technology (ICT), and business process re-engineering (BPR).” E-Administration (Electronic Administration) “E-administration refers to those mechanisms which convert the paper processes in a traditional office into electronic processes, with the goal to create a paperless office. Its objective is to get total transparency and accountability within any organization.” (Wikipedia 2015) E-Democracy (Electronic Democracy) “E-Democracy incorporates 21st-century information and communications technology to promote democracy. That means a form of government in which all adult citizens are presumed to be eligible to participate equally in the proposal, development, and creation of laws.” (Wikipedia 2015) 1.1.6 ROLE OF INTERNET In the early years, E-Commerce was considered to be an aid to the business. In the meantime it has become more or less a business enabler (Mohapatra 2013, pp. 10–12). 23 INTRODUCTION TO E-COMMERCE Basics and definitions Between 1998 and 2000, a substantial number of businesses in the United States and Western Europe developed rudimentary websites. In the dot-com era, E-Commerce came to include activities more precisely termed ‘‘Web commerce’’ – the purchase of goods and services over the World Wide Web, usually with secure connections with E-Shopping carts and with electronic payment services such as credit card payment authorizations. The emergence of E-Commerce also significantly lowered barriers to entry in the selling of many types of goods; many small home-based proprietors are able to use the Internet to sell goods. Established suppliers had to close their shops and to change their business model to an E-Commerce model to stay profitable and in the business (e.g. travel agencies). Often, small suppliers use online auction sites such as eBay or sell via large corporate websites, to ensure that they are seen and visited by potential customers. 1.2 BUSINESS MODELS RELATED TO E-COMMERCE 1.2.1 INTERNET BASED BUSINESS In this chapter we list some typical business activities, which are based on the Internet. E-Commerce actors cooperate with those firms and use them as specific service providers. AXA Global Graduate Program Find out more and apply 24 INTRODUCTION TO E-COMMERCE Basics and definitions Access provider The access provider ensures (technical) access to the Internet. We should have in mind, that somebody has to pay the access provider so that we can get access to the Internet. Who pays? We or somebody else? In many (most?) areas of the world it is a totally privatized business, though sometimes in the political arena the access to the Internet is declared as a modern human right. Obviously there is a similarity to telephone network(s). However, it (normally) works in this privatized form. Traditional business models, which are somehow similar to the business of an access provider, are operators of a technical infrastructure, e.g. telephone networks, car highways, or railways. Search engine Search engines are the most used software in the Internet. They are the starting step for many Internet-based activities, not only but, of course, also if somebody is looking for a business opportunity. Again we must ask: Who pays? The one, who wants to find something or someone? Or the one, who wants to be found? A traditional and similar business model is given by the so-called “yellow pages”, where firms are listed and grouped according to branches and locations. Online shop An online shop is a website, where you can buy products or services, e.g. books or office supplies. Traditional and similar business models are direct mail selling (no shop facility, offering of goods via a printed catalogue, ordering by letters or telephone calls) and factory outlets (producer has own shop facility, does not sell his products via merchants). Content provider Content providers offer content, a completely digital good, e.g. information, news, documents, music. A specific variant of a content provider is the information broker, who is a trader of information. Again the following question has to be put: Who pays? The one, who wants to have access to an information? The one, who wants to provide an information? Traditional business models in this area are newspaper publishers, magazine publishers, radio and television broadcasting services or publishing companies. 25 INTRODUCTION TO E-COMMERCE Basics and definitions Portal A portal is a website, which provides a set of services to the user so that he/she sometimes thinks that he/she is using a single but very complex software system. Portals are often used in big organizations to control the access of employees to the different ICT systems; each employee gets a specific menu of “his”/“her” applications. Also content providers use portals, though in the narrow sense that they only deliver content and no application systems. Online marketplace/electronic mall An online marketplace is a website, where suppliers and potential customers can come together like on a real marketplace in a small town. An E-Mall is a set of online shops, which can be found on one website. Examples of traditional and similar business models are shopping centers, omnibus orders (One person is customer of the shop and buys for a group of people), marketplaces and buying associations. Virtual community A virtual community is a platform for communication and exchange of experience. It is similar to a virtual club or association. We always should ask: Who is the owner? Who is the person or organization behind the platform? Who pays? The members or the visitors? The community operator? Information broker An information broker collects, aggregates and provides information, e.g. information with respect to products, prices, availabilities or market data, economical data, technical information. Here we have to ask: Can we trust the information? Is it neutral or just a product placement? Who pays? The visitor? Some providers? Financed through advertisements? Traditional and similar business models are magazines running tests of computers, cars, consumer goods, restaurants. Transaction broker A transaction broker is a person or an organization to execute sales transactions. Sometimes those brokers are used to hide the real customer to the supplier. A transaction broker is an agent who is an expert in a specific area and can take over parts of a business. A similar traditional business model is the free salesman. 26 INTRODUCTION TO E-COMMERCE Basics and definitions Online service provider/cloud service provider (CSP) An online service provider provides services, which can be run electronically, e.g. application software services or ICT infrastructure services like storage or backup services. If this organization uses so-called cloud technologies it is called a cloud service provider (ten Hompel et al 2015; Marks & Lozano 2010). The questions, which we have to put, are: Who pays? The service user? If not, who is the customer? This list describes a great variety of Internet-based business models. However, it will not be a complete compilation because with new and innovative technologies new business ideas will come up and lead to new and additional offerings. 1.2.2 ADVANTAGES AND DISADVANTAGES E-Commerce has a lot of advantages. But as we know it from every area of our life, there is “no free lunch”. Of course, E-Commerce has some disadvantages (see tables 1 and 2). The Wake the only emission we want to leave behind.QYURGGF'PIKPGU/GFKWOURGGF'PIKPGU6WTDQEJCTIGTU2TQRGNNGTU2TQRWNUKQP2CEMCIGU2TKOG5GTX 6JGFGUKIPQHGEQHTKGPFN[OCTKPGRQYGTCPFRTQRWNUKQPUQNWVKQPUKUETWEKCNHQT/#0&KGUGN6WTDQ 2QYGTEQORGVGPEKGUCTGQHHGTGFYKVJVJGYQTNFoUNCTIGUVGPIKPGRTQITCOOGsJCXKPIQWVRWVUURCPPKPI HTQOVQM9RGTGPIKPG)GVWRHTQPV (KPFQWVOQTGCVYYYOCPFKGUGNVWTDQEQO 27 INTRODUCTION TO E-COMMERCE Basics and definitions Advantages …for the customer …for the provider Flexible shopping hours (7∙24h) Better customer service can be offered No waiting queues (if net is available and Fast communication with customer software appropriately designed) New customer potential through Shopping at home (we don’t have to global visibility leave our apartment, refuel our car or No (traditional) intermediaries, who buy a subway ticket, look for a parking take away margins place, etc.) Individual needs can be covered (if customization is offered) Global offers, more competition, pressure on prices Table 1: Advantages of E-Commerce Disadvantages …for the customer … for the provider Security risks: Higher logistics cost (goods have to оо Data theft (e.g. stealing account or be sent to the customer’s location) credit card numbers) Anonymity of customers (how to оо Identity theft (acting under our name make targeted advertisements?) or user identity) оо Abuse (e.g. third person orders goods with our identity, gets them delivered and we have to pay for it) Crime: оо Bogus firm (firm does not really exist) оо Fraud (e.g. order is confirmed, invoice has to be paid, but goods are never delivered) Uncertain legal status (if something goes wrong, can we accuse the provider?) Table 2: Disadvantages of E-Commerce 1.2.3 BUSINESS NET TYPES A more abstract categorization of digital businesses has been given 2001 by Tapscott (Meier & Stormer 2008, pp. 34–46). He discussed the following business net types: 28 INTRODUCTION TO E-COMMERCE Basics and definitions Business Web Agora Objective: To run a marketplace for goods and values. Attributes: Market information available, negotiation processes established, dynamic pricing through negotiations between market participants. Role of the customer: Market participant. Benefits: Negotiable products and services. Examples: eBay, auctions.yahoo. Business Web Aggregator Objective: To run a digital super market. Attributes: Presentation of a great variety of products, fixed prices and no negotiation between supplier and customer, simple fulfilment from the customer’s point of view. Role of the customer: Customer. Benefits: Convenient selection and fulfilment from the customer’s point of view. Examples: etrade, amazon. Business Web Integrator Objective: To establish an optimized value creation chain. Attributes: Systematic supplier selection, process optimization for the total value chain, product integration along the value chain. Role of the customer: Value driver. Benefits: Creation and delivery of customer-specific products. Examples: Cisco, Dell. Business Web Alliance Objective: To establish a self-organizing value creation space. Attributes: Innovation in products and processes, trust building between different actors, abstinence of hierarchical supervision. Role of the customer: Contributor. Benefits: Creative and collaborative solutions. Examples: Linux, music.download. Business Web distributor Objective: Exchange of information, goods and services. Attributes: Net optimization, unlimited usage, logistics processes. Role of the customer: Recipient. Benefits: In-time delivery. Examples: UPS, AT&T, Telekom. 29 INTRODUCTION TO E-COMMERCE Basics and definitions 1.2.4 WEB 2.0 Web 2.0 (Chen & Vargo 2014) describes World Wide Web sites that emphasize user- generated content, usability, and interoperability. Although Web 2.0 suggests a new version of the World Wide Web, it does not refer to an update of any technical specification, but rather to cumulative changes in the way Web pages are made and used. Characteristic application types of Web 2.0 are Blogs: A blog (a truncation of the expression weblog) is a discussion or informational site published on the World Wide Web and consisting of discrete entries (“posts”) typically displayed in reverse chronological order (the most recent post appears first). We normally see “multi-author blogs” (MABs) with posts written by large numbers of authors and professionally edited. MABs from newspapers, other media outlets, universities, think tanks, advocacy groups and similar institutions account for an increasing quantity of blog traffic. The rise of Twitter and other “micro-blogging” systems helps integrate MABs and single-author blogs into societal news streams. 30 INTRODUCTION TO E-COMMERCE Basics and definitions Social networking services: A social networking service (also social networking site or SNS) is a platform to build social networks or social relations among people who share similar interests, activities, backgrounds or real-life connections. A SNS consists of a representation of each user (often a profile), his or her social links, and a variety of additional services such as career services. SNS’s are Web-based services that allow individuals to create a public profile, create a list of users with whom to share connections, and view and cross the connections within the system. Most SNS’s provide means for users to interact over the Internet, such as E-Mail and instant messaging. SNS’s incorporate new information and communication tools such as mobile connectivity, photo/video/sharing and blogging. Online communities: An online community is a virtual community whose members interact with each other primarily via the Internet. Those who wish to be a part of an online community usually have to become a member via a specific site and necessarily need an Internet connection. An online community can act as an information system where members can post, comment on discussions, give advice or collaborate. Commonly, people communicate through SNS’s, chat rooms, forums, E-Mail lists and discussion boards. People may also join online communities through video games, blogs and virtual worlds. Forums/Bulletin boards: An Internet forum, or message board, is an online discussion site where people can hold conversations in the form of posted messages. They differ from chat rooms in that messages are often longer than one line of text, and are at least temporarily archived. Also, depending on the access level of a user or the forum set-up, a posted message might need to be approved by a moderator before it becomes visible. Content aggregators: An aggregator is a website or computer software that aggregates a specific type of information from multiple online sources. If business wants to benefit from Web 2.0 then it has to proceed in a specific way which in many aspects differs from the traditional Web based business. The differences and conformities between the Web 1.0 (“old”) and the Web 2.0 world (“new”) are listed in table 3. 31 INTRODUCTION TO E-COMMERCE Basics and definitions Area Old (Web 1.0) New (Web 2.0) Business philosophy IT enabled relationship IT enabled relationship marketing marketing Technology base Web 1.0 technology Web 2.0 technology/ (static pages, file system, Social technology (user- communication via E-Mail generated content, usability, separated from website) interoperability) Digital part of business Transaction based: one-to-one Interaction based: dynamic, processes interaction many-to-many interaction Interaction place Defined channels: E-Mail, phone Dynamic customer-driven touch- calls, websites, stores, etc. points realized in social media Segmentation of users Traditional demographics Dynamic, flexible and and participants temporary segmentation if at all Broadcast message flow Push-based, inside-out Pull-based, outside-in Control Firms and established Social customers organizations Design/analysis scope Internal focus: one (part of an) Value chain through total organization organization or group of organizations Data store 360° customer transaction data All interactions or conversations across all touch points; user contributed contents Data analysis Subject-oriented analysis Network analysis Metrics Transaction based: Interaction based: Customer life-time value (CLV), Customer referral value share of market, RFM analysis (CRV), share of voice, size and measures (RFM = Recency, engagement of communities, Frequency, Monetary) sentiment Viral marketing Not possible Can easily develop a viral (information is spread marketing campaign like a virus) Crowd sourcing Not possible Integral part of SCRM strategy (SCRM = social media CRM) Customer loyalty Static, repeated patronage Dynamic, eWoM (electronic Word of Mouth), advocacy Table 3: Comparison of Web 1.0 and Web 2.0 32 INTRODUCTION TO E-COMMERCE Basics and definitions In the Web-2.0-world the traditional goods-dominant logic is replaced by a service-dominant logic. Its premises are: Service is the fundamental basis of exchange. Indirect exchange masks the fundamental basis of exchange. Operant resources are the fundamental source of competitive advantage. Goods are a distribution mechanism for service provision. All economies are service economies. The customer is always a co-creator of value. The enterprise cannot value, but only offers value propositions. A service-centred view is inherently customer-oriented and relational. All social and economic actors are resource integrators. Value is always uniquely defined by the beneficiary. 33 INTRODUCTION TO E-COMMERCE Basics and definitions If an enterprise wants to be successful in the Web-2.0-world it has to move from a goods focus to a service focus. How can this be managed? The following rules may help: Do not produce goods but assist customers in their own value-creation processes. Value is not created and sold but value is co-created with customers and other value-creation partners. Do not consider customers as isolated entities, but in the context of their own networks. Resources are not primarily tangible such as natural resources but usually intangible such as knowledge and skills. Shift from thinking of customers as targets to thinking of customers as resources. Shift from making efficiency primary to increasing efficiency through effectiveness. Obviously there is a strong focus on the customer and customer satisfaction as it should be in every business. But what is really new? Is there finally a significant difference between traditional business, Web 1.0 business and Web 2.0 business? We are not sure. 1.3 TECHNICAL AND ECONOMIC CHALLENGES 1.3.1 TECHNICAL CHALLENGES ICT systems have to work properly not only within the boundaries of the own organization but also in combination with ICT systems of other organizations. Interfaces between the involved systems have to be defined and documented properly. But: How heterogeneous are the involved ICT systems allowed to be? Is our IT infrastructure fit for E-Commerce? How do we have to change or extend our application systems for E-Commerce? In the digital business ICT systems are mission critical assets. How do we have to protect an ICT system so that it is not possible to destroy it, damage it or manipulate it? Are our ICT systems secure? Are unauthorized persons able to get access to our systems? Are payment procedures secure enough? Can we protect the personal data of involved people, especially customer data? Finally we have to realize, that E-Commerce depends on people. Are the people of our IT organization qualified enough? Can we provide the necessary and significantly high technical support? 34 INTRODUCTION TO E-COMMERCE Basics and definitions 1.3.2 ECONOMIC CHALLENGES E-Commerce is not only a matter of technology. It is primarily, because it is commerce, a matter of management and organization. The following questions have to be answered: Are our business processes standardized enough – at least harmonized among the participants? Who is allowed to participate? Are all participants trustworthy? Who makes the decision which person or organization is allowed to participate? How much E-Commerce do we need to keep competitive? How do we have to change our business model? What is going to happen after opening a new (electronic) sales channel? Will traditional sales channels suffer from it? How can we measure the success of our E-Commerce activities? Will costs be compensated through revenues? Will we make profit? How do we have to develop our relationship with customers, suppliers and other business partners to be able to realize the advantages of E-Commerce for our organization and avoid the disadvantages? How do we have to develop and change our business relationships? How do we have to redesign our business processes? How do the roles of our employees change? Are our employees qualified for these new roles? 1.4 EXERCISES 1.4.1 QUESTIONS FOR YOUR SELF-STUDY Q1.01: Where do you use the opportunities of E-Commerce actually in your daily life? Q1.02: Which companies do you know which are doing E-Commerce? Q1.03: C  onsider the Internet-based businesses, which we have listed above. Are they really new business categories? Q1.04: Find additional advantages and disadvantages of digital businesses. Q1.05: C  onsider the above-mentioned technical and economic challenges of E-Commerce. Try to find answers to the various questions, which we have listed. Q1.06: What is E-Commerce? How does it differentiate from traditional business models? Q1.07: What are different business models available for E-Commerce? Q1.08: How can customers benefit from E-Commerce? 35 INTRODUCTION TO E-COMMERCE Basics and definitions 1.4.2 PREPARATION FOR FINAL EXAMINATION T1.01: We have discussed about E-Commerce, E-Business and E-Procurement. Is there any relationship between these three terms? What is the difference between E-Commerce and E-Business? What is the difference between E-Commerce and E-Procurement? T1.02: E-Commerce is so successful, because we have the Internet. Do you agree to that statement? Why? What would happen, if tomorrow morning the Internet had been shut down? What would happen, if tomorrow we would only have traditional telephone lines? T1.03: Please define the term “M-Commerce”. T1.04 E-Commerce has advantages as well as disadvantages. Give one example for the customer’s perspective. Give one example for the supplier’s perspective. 1.4.3 HOMEWORK Apply the E-Commerce elements to the administration of your university. Who are the customers? What is delivered? What are the potentials? What are the advantages or disadvantages? Which parts have already been digitalized? What would you recommend to the top management of the university to do next? 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Visit us at www.skf.com/knowledge 36 INTRODUCTION TO E-COMMERCE Frameworks and architectures 2 FRAMEWORKS AND ARCHITECTURES Learning objectives In this chapter you will learn, what are the main actors and stakeholders in the area of E-Commerce, how the fundamental sales process and his 7+1 process steps work, what are the technological elements, which are characteristic for E-Commerce and have enabled the big success of E-Commerce. Recommended pre-reading Mohapatra 2013, chapter 2. 2.1 ACTORS AND STAKEHOLDERS E-Commerce is driven by different groups of actors and stakeholders. First we have persons, abbreviated by “C”, where “C” stands for (potential) consumers or citizens, according to the specific context, which is to be considered. Secondly we have business organizations, abbreviated by “B”, where “B” stands for producers and suppliers, trade organisations or merchants, banks, insurance companies or other financial service providers, logistics & transportation firms or forwarding agencies and last but not least several intermediaries (making business with and on the Internet; see chapter 1 of this book). Thirdly we have governmental authorities, abbreviated by “G” or “A”, where “A” stands for administration and “G” stands for Government. This category includes local authorities, e.g. on town level or on county level, national authorities, e.g. on state level or on federation level (United states of…), and international authorities like European Union, United Nations, etc. We also see political parties, lobby organizations, press and media, non-governmental organizations (NGO’s) like Greenpeace, Red Cross or Olympic committee, churches and other religious organizations, sports and other associations. There is no specific abbreviation for this group of stakeholders. 37 INTRODUCTION TO E-COMMERCE Frameworks and architectures According to the specific nature of the interacting partners we talk about “X2Y business” where X and Y belong to the above-mentioned categories. We only talk about X2Y business if there is an interchange of goods or services and money. The supplier provides goods or services, the customer, be it a consumer or another business, has to forward an appropriate amount of money to the supplier. This is done on the base of a contract (be it a written or an oral contract). There are typically mentioned relationships (see figure 1): C2C: “Consumer to Consumer”, considered as a part of B2C business here, B2C: “Business to Consumer” (see chapter 3 of this book), B2B: “Business to Business” (see chapter 4 of this book), G2C: “Government to Citizen”, part of E-Government (not considered in this book), G2B: “Government to Business”, part of E-Government (not considered in this book), G2G: “Government to Government”, part of E-Government (not considered in this book). If you are interested in E-Government, see Rodríguez-Bolívar 2014 and Boughzala et al 2015. Figure 1: Business Relationships (B = Business; C = Customer/Citizen; G = Government) 38 INTRODUCTION TO E-COMMERCE Frameworks and architectures However this is a somehow artificial pattern. Doing business can be mainly considered via two questions: Who is the initiator or driver of the business transaction? If it is the supplier, then this is under the focus of E-Commerce. If it is the customer, then this is under the focus of E-Procurement. What is the nature of the transaction? If it is a temporary/one time transaction, then this will be considered under the term “B2C business”. If it is a permanent/an ongoing cooperation, then this will be considered under the term “B2B business”. 2.2 FUNDAMENTAL SALES PROCESS As we are discussing E-Commerce we have to know in detail what is going on in E-Commerce transactions. Thus we have to consider the basic or fundamental sales process. This process describes the general pattern of making business in delivering goods or providing services and getting payments for this. Here we can differentiate as we generally and due to Porter’s value chain do it in process management between the primary or kernel process and a secondary or supporting process (Baan 2014, p. 113). 39 INTRODUCTION TO E-COMMERCE Frameworks and architectures 1.2.1 PRIMARY PROCESS Figure 2: The primary process In general we will denominate the provider of goods or services as the supplier and the receiver of goods or services as the customer. Sometimes third parties are involved, e.g. shipping agents, which are denominated specifically. The steps and sub-steps of the primary process, including the responsible party (see figure 2), are: Information step: оо Search for products and services: by the customer, оо Search for potential suppliers: by the customer, оо Search for potential customers: by the supplier, оо Communicate an offering: by the supplier, оо Communicate a need: by the customer, Initiation step: оо Get into contact: either by the customer or by the supplier, оо Request for delivery or service: by the customer, оо Offer for delivery or service: by the supplier, оо Assess supplier: by the customer, оо Assess customer: by the supplier, 40 INTRODUCTION TO E-COMMERCE Frameworks and architectures Contract conclusion step: оо Negotiate offer: by supplier and customer, оо Negotiate contract: by supplier and customer, оо Place order: by the customer, оо Confirm order: by the supplier, Delivery/fulfilment step: оо Proceeding for physical goods: -- Pack goods: by the supplier, -- Load goods: by the supplier, -- Ship goods: by the shipping agent, -- Unload goods: by the shipping agent, -- Unpack goods: by the customer or the shipping agent or a specific service provider, -- Assemble complex equipment at the customer’s site: by the shipping agent or a specific service provider, -- Accept delivery: by the customer, -- Approve contract fulfilment to authorize billing: by the customer, оо Proceeding for physical services: -- Build and maintain service fulfilment capability: by the supplier, -- Come together physically because customer must be an active part in service delivery: by the supplier and the customer, -- Define service levels: by the supplier, possibly after a negotiation with the customer, -- Add service level agreement to contract: by the supplier, -- Accept service fulfilment: by the customer, -- Approve contract fulfilment to authorize billing: by the customer, оо Proceeding for digital goods: -- Send goods to the customer via the net or provide for download: by the supplier, -- Protect goods against unauthorized access (see chapter 6 of this book): by the supplier, -- Accept delivery or confirm successful download: by the customer, -- Approve contract fulfilment to authorize billing: by the customer, 41 INTRODUCTION TO E-COMMERCE Frameworks and architectures оо Proceeding for digital services: -- Provide service via the net: by the supplier, -- Define service levels: by the supplier, possibly after a negotiation with the customer, -- Add service level agreement to contract: by the supplier, -- Initiate service provision: by the customer, -- Accept service fulfilment: by the customer, -- Approve contract fulfilment to authorize billing: by the customer, оо Proceeding for information: -- Like digital goods, Billing/invoicing step: оо Generate invoice: by the supplier, оо Generate attachments to invoice (e.g. protocol of service fulfilment, protocol of final customer’s approval, certificates, etc.): by the supplier, оо Forward invoice to customer (via the Web or via postal services): by the supplier, (Note: This step is sometimes conducted by the customer – totally or partially.) 42 INTRODUCTION TO E-COMMERCE Frameworks and architectures Payment step: оо Get money from the customer (see chapter 7 of this book): by the supplier or a financial services provider, Service/support step: оо Provide additional information for the customer (e.g. user manual, technical documentation, etc.): by the supplier, оо Conduct customer support (e.g. recommendation for usage, FAQ, etc.): by the supplier, оо Manage complaints: by the supplier, оо Repair: by the supplier or a specific service provider, оо Manage returns (if repair is necessary, a wrong product has been delivered or customer wants to “roll back” the business): by the supplier in cooperation with the customer, оо Conduct maintenance (may be part of the product or may be a separate service offered by the supplier): by the supplier or a specific service provider. 2.2.2 SECONDARY PROCESS The secondary process (see figure 3) can be sub-divided into Internal process control, Communication to the customer: оо Tracking & tracing: by the supplier or the shipping agent, оо Inform about order processing status: by the supplier, оо Announce delivery time: by the supplier or the shipping agent. Figure 3: The secondary process 43 INTRODUCTION TO E-COMMERCE Frameworks and architectures 2.3 TECHNOLOGICAL ELEMENTS In this chapter we will discuss subjects IT people are talking about. Technology is a major enabler of E-Commerce as we consider it here. Globally accepted technological standards have been and still are a prerequisite and a driver of global electronic business. Here we will follow a technology model with four layers (see figure 4). This model (Merz 2002, p. 36) is not satisfactory from a scientific point of view, but it gives a heuristic and pragmatic orientation. The subsequent short descriptions are mostly taken from Wikipedia. Figure 4: Technologies for E-Commerce 2.3.1 BASIC TECHNOLOGIES TCP/IP TCP/IP (Mohapatra 2013, pp. 28–35) is an abbreviation and stands for Transmission Control Protocol/Internet Protocol. This twin protocol describes the transportation of data in the Internet and was introduced in 1978 by the USA-DoD (Department of Defence) as a standard for heterogeneous networks. TCP/IP is part of the following 4-layer protocol: 44 INTRODUCTION TO E-COMMERCE Frameworks and architectures Layer 1: Local network/network access This layer corresponds to the first layer (physical layer) and the second layer (data link) of the ISO/OSI seven layer model (ISO = International Standards Organization, OSI = Open Systems Interconnection). Available technologies are: FDDI (Fiber Distributed Data Interface), which has a ring structure, provides a transmission rate up to 100 MBit/sec and is defined in the ANSI standards X3T9.5, X3.139 and X39.5 (ANSI = American National Standards Institute), Token Ring, which also has a ring structure, in which the token-possession grants the possessor permission to transmit on the medium, is an advancement of FDDI and is defined by the standard IEEE 802.5 (IEEE = Institute of Electrical and Electronics Engineers), Ethernet, which has the widest propagation now, actually is the primary technology and provides transmission rates up to 10 Gigabit/sec (Access is carried out via CSMA/CD = Carrier Sense Multiple Access/Collision Detection; technology is based on standard IEEE 802.3). This e-book is made with SETASIGN SetaPDF PDF components for PHP developers www.setasign.com 45 INTRODUCTION TO E-COMMERCE Frameworks and architectures Layer 2: Internet (IP) This is the address layer, corresponding to the third layer (network layer) in the ISO/OSI seven layer model. The layer is independent from the physical transportation medium. Within IP each destination has a unique address, globally administered by IANA (IANA = Internet Assigned Numbers Authority). IPv4 (Internet Protocol version 4) is the fourth version of the Internet Protocol (IP). It is one of the core protocols of standards-based internetworking methods in the Internet, and the first version was deployed in 1981. IPv4 is described in the IETF publication RFC 791 (September 1981; RFC = Request for Comment; IETF = Internet Engineering Task Force), replacing an earlier definition (RFC 760, January 1980). IPv4 is a connectionless protocol for use on packet-switched networks. No permanent physical link between participants of the network is necessary. It operates on a best effort delivery model, in that it does not guarantee delivery, nor does it assure proper sequencing or avoidance of duplicate delivery. IPv4 has a length of 4 Bytes respectively 32 bits. Usually each byte is presented as a decimal figure between 0 and 255: nnn.mmm.ppp.sss. The address 192.168.178.25 in binary form is 11000000.10101000.10110010.00011001 IPv6 (Internet Protocol version 6) is the most recent version of the Internet Protocol (IP), the communications protocol that provides an identification and location system for computers on networks and routes traffic across the Internet. IPv6 was developed by IETF to deal with the long-anticipated problem of IPv4 address exhaustion. IPv6 uses a 128-bit address, allowing 2128 addresses, or more than 7.9×1028 times as many as IPv4. The main advantage of IPv6 over IPv4 is its larger address space. The two protocols are not designed to be interoperable, complicating the transition from IPv4 to IPv6. However, several IPv6 transition mechanisms have been devised to permit communication between IPv4 and IPv6 hosts. 46 INTRODUCTION TO E-COMMERCE Frameworks and architectures IPv6 addresses are represented as eight groups of four hexadecimal digits (16 digits: 0, 1, 2, 3, 4, 5, 6, 7, 8, 9, A, B, C, D, E, F) with the groups being separated by colons: XX XX:XXXX:XXXX:XXXX:XXXX:XXXX:XXXX:XXXX, for example 2001:0DB8:0000:0 042:0000:8A2E:0370:7334. The number 8A2E means 8 · 163 + A(=10) · 162 + 2 · 161 + E(=14) · 160. The IETF adopted the IPng (IP next generation) model on 25 July 1994, with the formation of several IPng working groups. By 1996, a series of RFCs was released defining Internet Protocol version 6 (IPv6), starting with RFC 1883 and ending with RFC 2460. It is widely expected that the Internet will use IPv4 alongside IPv6 for the foreseeable future. Direct communication between the IPv4 and IPv6 network protocols is not possible; therefore, intermediary trans-protocol systems are needed as a communication conduit between IPv4 and IPv6 whether on a single device or among network nodes. Layer 3: Host-to-Host (TCP) TCP (Transmission Control Protocol) is a connection-oriented protocol for providing reliable data transport service between two computers (hosts) over Internet. It accepts data from a data stream, divides it into chunks, and adds a TCP header creating a TCP segment. The TCP segment is then encapsulated into an Internet Protocol (IP) datagram, and exchanged with peers. TCP is “the” transportation medium for WWW (World Wide Web). It corresponds to the fourth layer (transport layer) of the ISO/OSI seven-layer model. Layer 4: Process/Application This layer corresponds to some layers of the ISO/OSI seven layer model: session layer (5), presentation layer (6) and application layer (7). It includes several protocols, which will be discussed subsequently. HTTP (Hypertext Transfer Protocol) HTTP functions as a request-response protocol in the client-server computing model. A Web browser, for example, may be the client and an application running on a computer hosting a website may be the server. The client submits an HTTP request message to the server. The server, which provides resources such as HTML files and other content, or performs other functions on behalf of the client, returns a response message to the client. The response contains completion status information about the request and may also contain requested content in its message body. 47 INTRODUCTION TO E-COMMERCE Frameworks and architectures HTTP is a stateless protocol. A stateless protocol does not require the HTTP server to retain information or status about each user for the duration of multiple requests. However, some Web applications implement states or server side sessions using for instance HTTP cookies or hidden variables within Web forms. HTTP is documented in RFC 2616 (= HTTP/1.1). FTP (File Transfer Protocol) FTP is a standard network protocol used to transfer computer files from one host to another host over a TCP-based network, such as the Internet. FTP is built on a client- server architecture and uses separate control and data connections between the client and the server. FTP is documented in RFC 959 (1985). SMTP (Simple Mail Transfer Protocol) SMTP is an Internet standard for electronic mail transmission. First defined by RFC 821 in 1982, it was last updated in 2008 with the Extended SMTP additions by RFC 5321, which is the protocol in widespread use today. Challenge the way we run EXPERIENCE THE POWER OF FULL ENGAGEMENT… RUN FASTER. RUN LONGER.. READ MORE & PRE-ORDER TODAY RUN EASIER… WWW.GAITEYE.COM 1349906_A6_4+0.indd 1 22-08-2014 12:56:57 48 INTRODUCTION TO E-COMMERCE Frameworks and architectures Although electronic mail servers and other mail transfer agents use SMTP to send and receive mail messages, user-level client mail applications typically use SMTP only for sending messages to a mail server for relaying. For receiving messages, client applications usually use either POP3 or IMAP (POP3 = Post Office Protocol Version 3, IMAP = Internet Message Access Protocol). Although proprietary systems (such as Microsoft Exchange and IBM Notes) and webmail systems (such as Outlook.com, Gmail and Yahoo! Mail) use their own non-standard protocols to access mail box accounts on their own mail servers, all use SMTP when sending or receiving email from outside their own systems. WWW (World Wide Web) WWW is an open source information space where documents and other Web resources are identified by URLs (URL = Uniform Resource Locator), interlinked by hypertext links, and can be accessed via the Internet. It has become known simply as “the Web”. WWW is the primary tool billions of people use to interact on the Internet. The World Wide Web was invented by the English scientist Tim Berners-Lee in 1989. He wrote the first Web browser in 1990 while he was employed at CERN (CERN = Conseil Européen pour la Recherche Nucléaire) in Switzerland. Berners-Lee’s breakthrough was to marry hypertext to the Internet. In his book “Weaving The Web”, he explains that he had repeatedly suggested that a marriage between the two technologies was possible to members of both technical communities, but when no one took up his invitation, he finally assumed the project himself. In the process, he developed three essential technologies: a system of globally unique identifiers for resources on the Web and elsewhere, the universal document identifier (UDI), later known as uniform resource locator (URL) and uniform resource identifier (URI), the publishing language HyperText Markup Language (HTML), the Hypertext Transfer Protocol (HTTP). 49 INTRODUCTION TO E-COMMERCE Frameworks and architectures Web pages are primarily text documents formatted and annotated with Hypertext Markup Language (HTML). In addition to formatted text, Web pages may contain images, video, and software components that are rendered in the user’s Web browser as coherent pages of multimedia content. Embedded hyperlinks permit users to navigate between Web pages. Multiple Web pages with a common theme, a common domain name, or both, may be called a website. Website content can largely be provided by the publisher, or interactively where users contribute content or the content depends upon the user or their actions. Websites may be mostly informative, primarily for entertainment, or largely for commercial purposes. WWW is documented in RFC 1738 (1994) and WWW is administered by W3C (W3C = World Wide Web Consortium). Mobile Communication GSM/EDGE GSM (Global System for Mobile Communications, originally Groupe Spécial Mobile), is a standard developed by the European Telecommunications Standards Institute (ETSI) to describe protocols for second-generation (2G) digital cellular networks used by mobile phones. It is the de facto global standard for mobile communications with over 90% market share, and is available in over 219 countries and territories. In 1998 the 3rd Generation Partnership Project (3GPP) was founded. It led to the extensions: High Speed Circuit Switched Data (HSCSD): up to 115 kbit/sec, General Packet Radio Service (GPRS): up to 53,6 kbit/sec, Enhanced Data Rates for GSM Evolution (EDGE): up to 220 kbit/sec download/ up to 110 kbit/sec upload. EDGE is a digital mobile phone technology that allows improved data transmission rates as a backward-compatible extension of GSM. Through the introduction of sophisticated methods of coding and transmitting data, EDGE delivers higher bit-rates per radio channel, resulting in a threefold increase in capacity and performance compared with an ordinary GSM/GPRS connection. EDGE can be used for any packet switched application, such as an Internet connection, and thus creates the basis for M-Commerce. UMTS UMTS (Universal Mobile Telephone System) was developed in the 3rd Generation Partnership Project (3GPP). It is a mobile cellular system for networks based on the GSM standard and provides transmission rates up to 384 kbit/sec, with HSDPA up to 14,4 Mbit/sec. 50 INTRODUCTION TO E-COMMERCE Frameworks and architectures High Speed Downlink Packet Access (HSDPA) is an enhanced 3G (third-generation) mobile communications protocol in the High-Speed Packet Access (HSPA) family, also dubbed 3.5G, 3G+, or Turbo 3G, which allows networks based on Universal Mobile Telecommunications System (UMTS) to have higher data speeds and capacity. HSDPA has been introduced with 3GPP Release 5, which also accompanies an improvement on the uplink providing a new bearer of 384 kbit/s. Even higher speeds of up to 337.5 Mbit/s are possible with Release 11 of the 3GPP standards. UMTS (unlike EDGE) requires new base stations and new frequency allocations. This leads to high investment efforts with pay back periods up to 10 years. HTML (Hypertext Markup Language) HTML 5 is a markup language (Mohapatra 2013, pp. 36–38) used for structuring and presenting content on the World Wide Web. It was finalized, and published, on 28 October 2014 by the World Wide Web Consortium (W3C). This is the fifth revision of the HTML standard. The previous version, HTML 4, was standardized in 1997. Its core aims are to improve the language with support for the latest multimedia while keeping it easily readable by humans and consistently understood by computers and devices (Web browsers, parsers, etc.). DO YOU WANT TO KNOW: What your staff really want? The top issues troubling them? How to make staff assessments work for you & them, painlessly? How to retain your top staff Get your free trial FIND OUT NOW FOR FREE Because happy staff get more done 51 INTRODUCTION TO E-COMMERCE Frameworks and architectures A Web browser can read HTML files and compose them into visible or audible Web pages. The browser does not display the HTML tags, but uses them to interpret the content of the page. HTML describes the structure of a website semantically along with cues for presentation. It is not a programming language. HTML elements form the building blocks of all websites. HTML allows images and objects to be embedded and can be used to create interactive forms. It provides a means to create structured documents by denoting structural semantics for text such as headings, paragraphs, lists, links, quotes and other items. It can embed scripts written in languages such as JavaScript, which affect the behaviour of HTML Web pages. HTML documents can be delivered by the same means as any other computer file. However, they are most often delivered either by HTTP from a Web server or by E-Mail. There are a lot of specific HTML-editors available (Open Source, Freeware, Commercial software). XML (Extended Markup Language) XML is a markup language that defines a set of rules for encoding documents in a format that is both human-readable and machine-readable. It was developed by W3C; the complete standard is available at www.w3.org/TR/1998/REC-xml-19980210. The design goals of XML emphasize simplicity, generality, and usability over the Internet. It is a textual data format with strong support via Unicode for different human languages (Unicode is a computing industry standard for the consistent encoding, representation, and handling of text expressed in most of the world’s writing systems. Developed in conjunction with the Universal Coded Character Set (UCS) standard and published as The Unicode Standard, the latest version of Unicode contains a repertoire of more than 128,000 characters covering 135 modern and historic scripts, as well as multiple symbol sets.) Although the design of XML focuses on documents, it is widely used for the representation of arbitrary data structures, e.g. in Web services. The advantage of XML is that the data structure of a document is documented within the document. However, there is a “price” for this generality: The size of XML documents, compared to EDIFACT documents, is much greater. 52 INTRODUCTION TO E-COMMERCE Frameworks and architectures As of 2009, hundreds of document formats using XML syntax have been developed, including RSS (Rich Site Summary; a family of standard Web feed formats to publish frequently updated information: blog entries, news headlines, audio, video), Atom (Atom Syndication Format; used for Web feeds; or: Atom Publishing Protocol for creating and updating Web resources.), SOAP (Simple Object Access Protocol; protocol specification for exchanging structured information in the implementation of Web services in computer networks), and XHTML (Extensible HyperText Markup Language; mirrors or extends versions of HTML). XML-based formats have become the default for many office-productivity tools, including Microsoft Office (Office Open XML), OpenOffice.org and LibreOffice (OpenDocument), and Apple’s iWork. XML has also been employed as the base language for communication protocols, such as XMPP (Extensible Messaging and Presence Protocol). Applications for the Microsoft.NET framework use XML files for configuration. Apple has developed an implementation of a registry based on XML. XML database An XML database is a data persistence (a data structure that always preserves the previous version of itself when it is modified) software system that allows data to be stored in XML format. These data can then be queried, exported and serialized into the desired format. XML databases are usually associated with document-oriented databases. Two categories of XML databases are available: XML enabled data bases: These may either map XML to traditional database structures (such as a relational database), accepting XML as input and rendering XML as output, or more recently support native XML types within the traditional database. This term implies that the database processes the XML itself (as opposed to relying on middleware). Native XML data bases: The internal model of such databases depends on XML and uses XML documents as the fundamental unit of storage, which are, however, not necessarily stored in the form of text files. 2.3.2 MIDDLEWARE Middleware consists of technologies building the link between hardware and application software. The boundaries between middleware and hardware as well as between middleware and application software are changing over time due to the technological development. Middleware normally is a category of general and not application specific software. In general there is a trend to replace hardware functionality by middleware thus allowing the usage of highly standardized hardware components which can be provided at low cost. 53  INTRODUCTION TO E-COMMERCE Frameworks and architectures CORBA (Common Object Request Broker Architecture) CORBA is a standard defined by the Object Management Group (OMG) designed to facilitate the communication of (software) systems that are deployed on diverse platforms. CORBA enables collaboration between systems on different operating systems, programming languages, and computing hardware. The CORBA specification dictates there shall be an ORB