Online Chapter 11

Online Chapter 11 Infrastructure for ECommerce

Learning Objectives 

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Discuss the major steps in developing an EC application. Describe the major EC applications and list their major functionalities. List the major EC application development options along with their benefits and limitations. 2

Learning Objectives (cont.) 1. 2.

3.

Describe various EC application outsourcing options. Discuss the major components of an electronic catalog and EC application suite. Describe various methods for connecting an EC application to back-end systems and databases. 3

Learning Objectives (cont.) 1.

2.

Describe the criteria used in selecting an outsourcing vendor and package. Discuss the value and technical foundation of Web services in EC applications.

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Learning Objectives (cont.) 1.

2.

Understand the value and uses of EC application log files. Discuss the importance and difficulties EC application maintenance.

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Tracking United Parcel Service Shipments The Problem Since 1907 United Parcel Service (UPS) has been in the package distribution business It is the world’s largest package distribution company, transporting over 3 billion parcels and documents each year in over 200 countries. 6

Tracking United Parcel Service Shipments (cont.) UPS provides the means for customers to track their shipments to determine the status and whereabouts of a particular package In the past, this was done primarily over the telephone Customers would call UPS with the tracking number of their shipment 7

Tracking United Parcel Service Shipments (cont.) An operator would look up the status of the shipment in the UPS database and relay the information to the customer Servicing these calls cost an estimated $2 per call

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Tracking United Parcel Service Shipments (cont.) The Solution UPS created a Web site (ups.com) that enabled customers to: track their shipments online determine the cost and transit time for delivery of a package schedule a package for pickup locate the nearest drop-off facility 9

Tracking United Parcel Service Shipments (cont.) These online facilities are accessed from the UPS homepage The customer clicks the “Tracking” tab at the top of the homepage This takes the customer to an online form where the customer simply enters the tracking number and then hits the “Track” button The customer receives precise information about the location of the designated shipment 10

Tracking United Parcel Service Shipments (cont.) The front end of the UPS Web site is simple, but the back-end processing used to handle a tracking request is more complicated Requests are handed off to one of a handful of Web servers This server passes the request to the appropriate application serve

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Tracking United Parcel Service Shipments (cont.) The application server passes the request to an IBM AS/400 computer attached to the UPS tracking database (the largest transaction database in the world—20 terabytes of data The mainframe performs the database search for the status information Then it is passed back up the line through the various servers to the customer’s browser

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Tracking United Parcel Service Shipments (cont.) The Results The UPS site services over 4 million online tracking requests per day It keeps UPS competitive with other shipping companies that also offer online tracking services and customer information (FedEx)

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Tracking United Parcel Service Shipments (cont.) UPS now offers customers the option of tracking their packages through wireless devices (cell phones, PDAs, and Web-enabled pagers Web pages have been modified to support the particular wireless device being used Specialized servers are used to deliver the pages over the wireless communication networks 14

Tracking United Parcel Service Shipments (cont.) UPS (ec.ups.com) offers a set of ecommerce solutions and a technology infrastructure that enables other companies to incorporate UPS’ online: order entry Shipping tracking capabilities

Example: Amazon.com 15

Tracking United Parcel Service Shipments (cont.) The company also offers ecommerce tools and services for managing an enterprises’ overall supply chain

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Tracking United Parcel Service Shipments (cont.) What we can learn … There is more to an EC Web site than meets the eye Behind the scenes of virtually every e-commerce site, a number of hardware and software components are supporting these applications

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The Development Process Several options are available for developing an EC site The components making up a Web site come from a small number of vendors or from several different vendors Small storefronts with a few key components can be developed with HTML, Java, or another programming language 18

The Development Process (cont.) Application service provider (ASP): A company that provides business applications to users for a small monthly fee The cost of developing an EC site can run in the thousands of dollars 19

The Development Process (cont.) To ensure success, a systematic development process is needed to create, implement, and maintain a site A project team is also needed to manage the development process and the relationships with outside vendors and business partners The development process includes four steps

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The Development Process (cont.) Step 1: Creating an EC architecture EC architecture: A plan for organizing the underlying infrastructure and applications of a site

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The Development Process (cont.) The plan includes: Business goals and vision for the site Information and data required to fulfill the goals and vision Application modules that will deliver and manage the information and data Specific hardware and software on which the application modules will run Human resources and procedures 22 for implementing the architecture

The Development Process (cont.) Step 2: Selecting a development option EC applications can be: developed in-house outsourced to another party some combination of both

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The Development Process (cont.) An application built in-house can be built entirely from scratch or commercial products can be used and modified to meet specific needs An outsourced application can be run: entirely by an ASP on a third-party marketplace on another company’s Web site 24

The Development Process (cont.) A company needs to participate in the architectural design At the end of this step, an application is built (or purchased) and ready to be installed

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The Development Process (cont.) Step 3: Installing, testing, and deploying EC applications Connecting the application to backend databases, to other applications, and to other Web sites A series of tests is required

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The Development Process (cont.) Unit testing: Testing application software modules one at a time Integration testing: Testing the combination of application modules acting in concert Usability testing: Testing the quality of the user’s experience when interacting with a Web site Acceptance testing: Determining whether a Web site meets the original business objectives and vision

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The Development Process (cont.) Step 4: Operation and maintenance A site is continually updated new products need to be added to the catalog prices need to be changed new promotions need to be run

These changes and updates undergo the same testing procedures used during the installation process 28

The Development Process (cont.) Usage patterns and performance need to be studied to determine which parts of the underlying applications should be modified or eliminated from the site

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Major EC Applications and Their Functionalities (cont.) Three interrelated subsystems of an electronic storefront: – A shopping cart is usually – A transaction system for processing orders, payments, and other aspects of the transaction – A payment gateway that routes payments through existing financial systems primarily for the purpose of credit card authorization and settlement 30

Major EC Applications and Their Functionalities (cont.) Supplier sell-side B2B sites enable one business to purchase goods and services from another and include: Personalized catalogs and Web pages for all major buyers A B2B payment gate Electronic contract negotiation features Product configuration by customers (e.g., Cisco or Dell) Affiliate program capabilities Business alerts (e.g., special sales) 31

Major EC Applications and Their Functionalities (cont.) E-procurement Aggregating catalogs Search engine for locating items with particular characteristics Comparison engine for alternative vendors Ordering mechanism Budget and authorization feature Usage comparisons (among various departments) Payment mechanism (e.g., use of a purchasing card) 32

Major EC Applications and Their Functionalities (cont.) Reverse auctions buyers list the items they wish to purchase and sellers bid to provide those items at the lowest price Sites provide: Catalog Search engine Personalized pages for bidders Reverse auction mechanisms Facilities to deal with request for quotes (RFQs)

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Major EC Applications and Their Functionalities (cont.) Reverse auction sites provide s (cont.): Ability to bid dynamically Automatic vendor approval and workflow Electronic collaboration with trading partners Standardization of RFQ writing Site map Mechanism for selecting suppliers 34

Major EC Applications and Their Functionalities (cont.) Reverse auction sites provide s (cont.): Automatic matching of suppliers with RFQs Automatic business process workflow Ability for bidders to use m-commerce for bidding Automated language translation

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Major EC Applications and Their Functionalities (cont.) Exchanges are e-marketplaces that tie many buyers to many suppliers combining the functionalities of buy-side, e-procurement, and auction sites

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Major EC Applications and Their Functionalities (cont.) Capabilities of exchanges also include: Collaboration services Community services Web-automated workflow Integrated business process solutions Central coordination of global logistics

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Major EC Applications and Their Functionalities (cont.) Capabilities of exchanges also include: Data mining, customized analysis and reporting, real-time transactions, trend and customer behavior tracking Transaction flow managers Negotiation mechanisms Language translation Comprehensive links to related

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Development Options for EC Applications Insourcing: In-house development of applications Can be time-consuming and costly May lead to EC applications that better fit an organization’s strategy and vision Requires specialized IT resources

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Development Options for EC Applications (cont.) Buy the applications: turnkey approach involves: Buying a commercial package Installing it Starting it up

Buying a commercial package requires much less time and money than in-house development 40

Development Options for EC Applications (cont.) Major advantages of the turnkey approach: Many different types of off-the-shelf software are available It saves time and money (compared to inhouse development) It requires fewer personnel The company knows what it is getting before it invests in the product The company is not the first and only user 41

Development Options for EC Applications (cont.) Major disadvantages of the turnkey approach: Software may not meet the company’s needs Software may be difficult or impossible to modify The company may experience loss of control over improvements and new versions Off-the-shelf applications can be difficult to integrate with existing systems Vendors may drop a product or go out of 42 business

Development Options for EC Applications (cont.) Leasing an application package can result in substantial cost and time savings Advantageous for: Small to medium enterprises (SMEs) Large company wants to experiment with a package

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Development Options for EC Applications (cont.) How leasing can be accomplished –

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Lease the application from an outsourcer and then install it on the company’s premises Lease the application from an ASP that hosts the application at its data center 44

Development Options for EC Applications (cont.) Other development options E-marketplaces, exchanges, auctions, or reverse auctions Joint ventures and consortia Internet malls ISPs Telecommunication companies 45

Criteria for Selecting a Development Approach Flexibility Information requirements User friendliness Hardware and software resources Installation Maintenance services Vendor quality and track record 46

Criteria for Selecting a Development Approach (cont.)

Estimating costs Personnel Technological evolution Scaling Scalability: How big a system can grow in various dimensions to provide more service; measured by total number of users, number of simultaneous users, or transaction volume

Sizing

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Criteria for Selecting a Development Approach (cont.)

Performance Latency: The time required to complete an operation such as downloading a Web page Throughput: The number of operations completed in a given period of time; indicates the number of users that a system can handle 48

Criteria for Selecting a Development Approach (cont.)

Reliability Security

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Third-Party EC Components and Suites Electronic catalog: The virtual-world equivalent of a traditional product catalog; contains product descriptions and photos, along with information about various promotions, discounts, payment methods, and methods of delivery Merchant server software: Electronic catalogs 50

Third-Party EC Components and Suites (cont.)

Merchant server software features:

Templates or wizards for creating a storefront and catalog pages Electronic shopping carts Web-based order forms for making secure purchases A database for maintaining product descriptions, pricing, and customer orders Integration with third-party software for calculating taxes and shipping costs and for handling distribution and fulfillment 51

Third-Party EC Components and Suites (cont.)

EC suites offer builders and users greater: Flexibility Specialization Customization Integration in supporting complete front- and back-office functionality 52

Third-Party EC Components and Suites (cont.)

EC suite functionality is distributed across a number of servers and databases instead of relying on a single server and database, as is done in merchant server systems

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Third-Party EC Components and Suites (cont.)

Microsoft’s Commerce Server is a comprehensive framework for building tailored EC solutions including: Product Catalog System Targeting System Profiling System Business Processing Pipelines System Business Analytics System

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Third-Party EC Components and Suites (cont.)

IBM’s WebSphere Commerce Suite is designed to support B2C, B2B, or private exchange business models providing: Order management Collaborative filters Portal capabilities Localization support E-coupons Additional bundled products

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Third-Party EC Components and Suites (cont.)

Oracle’s EC products Oracle Oracle Oracle Oracle Oracle Oracle

iStore Marketing iPayment Quoting iSupport Configurator 56

Connecting to Databases and Other Enterprise Systems (cont.) Multitiered application architecture: EC architecture consisting of four tiers: Web browsers, Web servers, application servers, and database servers Separation of functions makes it easier to change any tier (or layer) without impacting the other layers An application server can be designed to interface or communicate with a wide variety of databases and database management systems 57

Connecting to Databases and Other Enterprise Systems (cont.) Several technologies can be used to integrate an EC application with a back-end database EC applications also require integration with a variety of other systems—ERP, CRM, SCM, EDI, data warehouses, and other important internal systems—both inside and outside the company

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Connecting to Databases and Other Enterprise Systems (cont.) Enterprise application integration (EAI): Class of software that integrates large systems

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Rise of Web Services Most EC sites require the integration of software applications written in different programming languages and residing on different computer hardware distributed across the Internet 60

Rise of Web Services (cont.)

Existing technologies make the integration a difficult task for the following reasons: Platform-specific objects Dynamic environment Security barriers

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Rise of Web Services (cont.)

The role of XML Web service: A software system identified by a URI (uniform resource indicator), whose public interfaces and bindings are defined and described using XML Because XML messages are text based, they can be sent over the Web using standard Web communication protocols enhanced interoperability easily passes through firewalls 62

Rise of Web Services (cont.)

Key technologies in Web Services Simple Object Access Protocol (SOAP): Protocol or message framework for exchanging XML data across the Internet

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Rise of Web Services (cont.)

Web Services Description Language (WSDL): An XML document that defines the programmatic interface —operations, methods, and parameters— for Web services

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Rise of Web Services (cont.)

Universal Description, Discovery, and Integration (UDDI): An XML framework for businesses to publish and find Web services online

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Rise of Web Services (cont.)

A Web Service example—an airline Web site that provides consumers with the opportunity to purchase tickets online The airline relies on car rental and hotel partners to provide Web service access to their systems allowing customers to rent cars and reserve hotel rooms by logging on to the airline site saving time and money 66

Rise of Web Services (cont.)

Web Services platforms Microsoft.NET IBM’s WebSphere

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Rise of Web Services (cont.)

Web Services in the mainstream A survey of corporate IT buyers conducted in 2002 found that close to 80% of the respondents expected to be deploying Web services by the end of 2003 Among these buyers, the total spending for Web services will reach an estimated $3 billion during that same time period 68

Rise of Web Services (cont.)

Most of these services will be deployed on existing hardware and will provide interfaces to existing applications Some popular sites on the Web are turning to Web services as a way of providing access to their internal systems Google Amazon.com

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Rise of Web Services (cont.)

Google’s Web services provide a range of possibilities including: Issuing regularly scheduled search requests to monitor the Web for new information on a subject Performing market research by analyzing differences in the amount of information available on different subjects over time Searching via non-HTML interfaces, such as the command line, pagers, or visualization applications 70

Rise of Web Services (cont.)

Amazon.com associates can use Amazon.com’s Web services to: Dynamically retrieve prices Generate lists of products Display search results Produce recommendation lists Add items to the Amazon.com shopping cart directly on their Web sites 71

Advantages and Hurdles Advantages of Web Services Rely on universal, open, text-based standards that simplify the problems posed by interoperability and lower the IT costs of collaboration Enable software running on different platforms to communicate Promote modular programming, which enables reuse by multiple organizations

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Advantages and Hurdles (cont.) Advantages of Web Services (cont.) Are easy and inexpensive to implement because they operate on the existing Internet infrastructure Can be implemented incrementally, rather than all at once

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Advantages and Hurdles (cont.) Barriers inhibiting widespread adoption of Web Services: The standards underlying Web services are still being defined One area where the Web services standards are not well-defined is security Higher-level standards for encoding data are still required, especially in B2B applications 74

Vendor and Software Selection Few organizations, especially SMEs, have the time, financial resources, or technical expertise required to develop today’s complex e-business systems A major aspect of developing an EC application revolves around the selection and management of vendors and their software

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Vendor and Software Selection (cont.) Step 1: Identify potential vendors from: Software catalogs Lists provided by hardware vendors Technical and trade journals Consultants experienced in the application area Peers in other companies Web searches

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Vendor and Software Selection (cont.) Step 2: Determine the evaluation criteria including: Characteristics of the vendor Functional requirements of the system Technical requirements the software must satisfy Amount and quality of documentation provided Vendor support of the package

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Vendor and Software Selection (cont.) Request for proposal (RFP): Notice sent to potential vendors inviting them to submit a proposal describing their software package and how it would meet the company’s needs

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Vendor and Software Selection (cont.) Step 3: Evaluate vendors and packages Determine gaps between the company’s needs and the capabilities of the vendors and their application packages Vendors and packages are given an overall score by assigning an importance weight to each of the criteria, ranking the vendors on each of the weighted criteria and then multiplying the ranks by the associated 79

Vendor and Software Selection (cont.) Step 4: Choose the vendor and package Negotiate with short list of vendors to determine how their packages might be modified to remove any discrepancies with the company’s desired EC application Opinions of the users who will work with the system and the IT personnel who will to support the system should 80

Vendor and Software Selection (cont.) Step 5: Negotiate a contract The contract specifies the price of the software and determines the type and amount of support to be provided by the vendor The contract must include detailed specifications of the modifications required The contract should describe in detail the acceptance tests the software package must pass 81

Vendor and Software Selection (cont.) Step 6: Establish a service level agreement service level agreement (SLA): A formal agreement regarding the division of work between a company and its vendors

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Usage Analysis and Site Management Access log: A record kept by a Web server that shows when a user accesses the server; kept in a common log file format, each line of this text file details an individual access

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Usage Analysis and Site Management (cont.)

Access logs provide statistics that can be used for analyzing and improving marketing and advertising strategies including pageviews by: time slot customers’ log-in status referrers visitor’s hardware platform, operating system, browser, and/or browser version visitor’s host 84

Usage Analysis and Site Management (cont.)

E-commerce management tools: Managing the performance of a Web site is a time-consuming and tedious administrative task BMC Corp. (bmc.com) is a prominent vendor of IT and Web management tools is offers: Patrol for e-business management MainView for e-business management 85

Managerial Issues 

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What is our business perspective? Do we have a systematic development plan? Insource or outsource?

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Managerial Issues (cont.) 1.

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How should Web services be deployed? How should we choose a vendor/software? Have we analyzed the data?

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Summary 

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The major steps in developing an EC application. The major EC applications and their major functionalities. The major EC application development options along with their benefits and limitations. 88

Summary (cont.) 1.

2.

3.

EC application outsourcing options. The major components of an electronic catalog and EC application suite. Methods for connecting an EC application to backend systems and databases. 89

Summary (cont.) 1. 2.

3.

4.

The rise of Web services. Criteria used in selecting an outsourcing vendor and package. The value and uses of EC application log files. The importance and difficulties of EC application maintenance. 90

Real World Case: Whirlpool’s Trading Portal Whirlpool (whirlpool.com) is a world leader in the manufacture and marketing of major home appliances Constantly improves the efficiency of its operations while still providing top-notch service to members of its sales chain 91

Whirlpool’s Trading Portal (cont.)

Relationships with its middle-tier trade partners 25% of Whirlpool’s trading partners but only 10% of its revenues Because of their size, these partners had to submit their orders by phone or fax

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Whirlpool’s Trading Portal (cont.)

Whirlpool developed a B2B tradingpartner portal that enables its middletier sellers to order online using: IBM WebSphere Application Server, Advanced Edition IBM Net.Commerce IBM HTTP Server IBM VisualAge for Java IBM Commerce Integrator with IBM MQSeries 93

Whirlpool’s Trading Portal (cont.)

The portal, called Whirlpool Web World allows middle-tier trade partners to select the goods they want to order by checking off the appropriate SKUs and indicating quantities The portal has cut the cost per order to under $5-a savings of at least 80% Whirlpool has also gained an extendable EC platform that it has leveraged for other applications 94

Whirlpool’s Trading Portal (cont.)

The first-generation portal was developed to give the company a chance to test the Web waters In the first 3 months, the amount of revenue that flowed through the portal equaled expectations for the first 12 months The investment paid for itself in 8 months 95

Whirlpool’s Trading Portal (cont.)

Whirlpool chose IBM for its second-generation portal because: IBM had worked with Whirlpool on joint product development and with Whirlpool’s ERP system design and architecture An overwhelming number of Fortune 100 companies use IBM e-business solutions.

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Whirlpool’s Trading Portal (cont.)

Whirlpool also developed its e-business platform taking advantage of Application Framework’s rapid development cycles and associated cost reductions A year later the suite of IBM tools enabled Whirlpool to get its applications to market much faster

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