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Electronic Commerce (E-Commerce)
 • Commerce refers to all the activities the purchase
   and sales of goods or services.
      – Marketing, sales, payment, fulfillment, customer service


 • Electronic commerce is doing commerce with the
   use of computers, networks and commerce-enabled
   software (more than just online shopping)




 3/9/01                       EMTM 553                             1
Brief History
• 1970s: Electronic Funds Transfer (EFT)
     – Used by the banking industry to exchange account information
       over secured networks
• Late 1970s and early 1980s: Electronic Data Interchange
  (EDI) for e-commerce within companies
     – Used by businesses to transmit data from one business to
       another
• 1990s: the World Wide Web on the Internet provides easy-
  to-use technology for information publishing and
  dissemination
     – Cheaper to do business (economies of scale)
     – Enable diverse business activities (economies of scope)

3/9/01                          EMTM 553                              2
E-commerce applications
•   Supply chain management
•   Video on demand
•   Remote banking
•   Procurement and purchasing
•   Online marketing and advertisement
•   Home shopping
•   Auctions



3/9/01                  EMTM 553         3
Ecommerce infrastructure
• Information superhighway infrastructure
     – Internet, LAN, WAN, routers, etc.
     – telecom, cable TV, wireless, etc.
• Messaging and information distribution
  infrastructure
     – HTML, XML, e-mail, HTTP, etc.
• Common business infrastructure
     – Security, authentication, electronic
       payment, directories, catalogs, etc.



3/9/01                       EMTM 553         4
The Main Elements of E-
               commerce
• Consumer shopping on the Web, called B2C
  (business to consumer)
• Transactions conducted between businesses on
  the Web, call B2B (business to business)
• Transactions and business processes that support
  selling and purchasing activities on the Web
     – Supplier, inventory, distribution, payment management
     – Financial management, purchasing products and
       information



3/9/01                      EMTM 553                           5
Advantages of Electronic Commerce

• Increased sales
     – Reach narrow market segments in geographically
       dispersed locations
     – Create virtual communities
• Decreased costs
     – Handling of sales inquiries
     – Providing price quotes
     – Determining product availability
• Being in the space


3/9/01                       EMTM 553                   6
Disadvantages of Electronic Commerce

• Loss of ability to inspect products from remote
  locations
• Rapid developing pace of underlying technologies
• Difficult to calculate return on investment
• Cultural and legal impediments




3/9/01                 EMTM 553                      7
The process of e-commerce
1. Attract customers
     –   Advertising, marketing
2. Interact with customers
     –   Catalog, negotiation
3. Handle and manage orders
     –   Order capture
     –   Payment
     –   Transaction
     –   Fulfillment (physical good, service good, digital good)
4. React to customer inquiries
     –   Customer service
     –   Order tracking


3/9/01                            EMTM 553                         8
Web-based E-commerce Architecture

Tier 1      Tier 2      Tier 3        Tier N



                                                 DMS


 Client
           Web Server   Application   Database
                         Server        Server



  3/9/01                 EMTM 553                  9
E-commerce Technologies
•   Internet                     •     Access security
•   Mobile technologies          •     Cryptographic security
•   Web architecture             •     Watermarking
•   Component programming        •     Payment systems
•   Data exchange
•   Multimedia
•   Search engines
•   Data mining
•   Intelligent agents




3/9/01                      EMTM 553                            10
Infrastructure for E-commerce
• The Internet
     – system of interconnected networks that spans the globe
     – routers, TCP/IP, firewalls, network
       infrastructure, network protocols
• The World Wide Web (WWW)
     – part of the Internet and allows users to share
       information with an easy-to-use interface
     – Web browsers, web servers, HTTP, HTML
• Web architecture
     – Client/server model
     – N-tier architecture; e.g., web servers, application
       servers, database servers, scalability

3/9/01                        EMTM 553                       11
E-Commerce Software
• Content Transport
     – pull, push, web-caching, MIME
• Server Components
     – CGI, server-side scripting
• Programming Clients
• Sessions and Cookies
• Object Technology
     – CORBA, COM, Java Beans/RMI
• Technology of Fulfillment of Digital Goods
     – Secure and fail-safe delivery, rights management
3/9/01                       EMTM 553                     12
System Design Issues
• Good architectural properties
     –   Functional separation
     –   Performance (load balancing, web caching)
     –   Secure
     –   Reliable
     –   Available
     –   Scalable




3/9/01                        EMTM 553               13
Creating and Managing Content
•   What the customer see
•   Static vs. dynamic content
•   Different faces for different users
•   Tools for creating content
•   Multimedia presentation
•   Integration with other media
•   Data interchange
•   HTML, XML (Extensible Markup Language)


3/9/01                 EMTM 553              14
Cryptography
• Keeping secrets
     –   Privacy: interceptor cannot use information
     –   Authentication: sender’s identity cannot be forged
     –   Integrity: data cannot be altered
     –   Non-repudiation: sender cannot deny sending
•   How to evaluate cryptography
•   Secret key (symmetric) cryptography; e.g., DES
•   Public key (asymmetric) cryptosystems; e.g, RSA
•   Digital signatures, digital certificates
•   Key management; e.g., PKI
3/9/01                        EMTM 553                        15
Security
•   Concerns about security
•   Client security issues
•   Server security issues
•   Security policy, risk assessment
•   Authentication methods
     – Something you know: passwords
     – Something you have: smart card
     – Something you are: biometrics
• Firewalls, proxy servers, intrusion detection
• Denial of service (DOS) attacks, viruses, worms

3/9/01                     EMTM 553                 16
Payment Systems
• Role of payment
• Cash
     – properties: wide
       accept, convenient, anonymity, untraceability, no buyer
       transaction cost
• Online credit card payment, Smart Cards
     – Secure protocols: SSL, SET
• Internet payment systems
     – Electronic cash, digital wallets
• Micro-payments
• Wireless devices
3/9/01                        EMTM 553                           17
Transactions Processing
•   Transactions and e-commerce
•   Overview of transaction processing
•   Transaction processing in e-commerce
•   Keeping business records, audit, backup
•   High-availability systems
•   Replication and scaling
•   Implementation



3/9/01                   EMTM 553             18
Other System Components
• Taxes
• Shipping and handling
• Search engines
• Data mining
• Intelligent agents
• Inventory management, enterprise resource
  planning (ERP)
• Customer relation management (CRM)


3/9/01               EMTM 553                 19
Course Outline
•   Overview of e-commerce
•   The Internet and the WWW
•   E-commerce software building blocks and tools
•   Scalability, high-performance servers, web caching
•   Basic cryptography
•   Security, watermarking, firewalls
•   Payment systems
•   Current and future directions


3/9/01                  EMTM 553                    20

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Overview

  • 1. Electronic Commerce (E-Commerce) • Commerce refers to all the activities the purchase and sales of goods or services. – Marketing, sales, payment, fulfillment, customer service • Electronic commerce is doing commerce with the use of computers, networks and commerce-enabled software (more than just online shopping) 3/9/01 EMTM 553 1
  • 2. Brief History • 1970s: Electronic Funds Transfer (EFT) – Used by the banking industry to exchange account information over secured networks • Late 1970s and early 1980s: Electronic Data Interchange (EDI) for e-commerce within companies – Used by businesses to transmit data from one business to another • 1990s: the World Wide Web on the Internet provides easy- to-use technology for information publishing and dissemination – Cheaper to do business (economies of scale) – Enable diverse business activities (economies of scope) 3/9/01 EMTM 553 2
  • 3. E-commerce applications • Supply chain management • Video on demand • Remote banking • Procurement and purchasing • Online marketing and advertisement • Home shopping • Auctions 3/9/01 EMTM 553 3
  • 4. Ecommerce infrastructure • Information superhighway infrastructure – Internet, LAN, WAN, routers, etc. – telecom, cable TV, wireless, etc. • Messaging and information distribution infrastructure – HTML, XML, e-mail, HTTP, etc. • Common business infrastructure – Security, authentication, electronic payment, directories, catalogs, etc. 3/9/01 EMTM 553 4
  • 5. The Main Elements of E- commerce • Consumer shopping on the Web, called B2C (business to consumer) • Transactions conducted between businesses on the Web, call B2B (business to business) • Transactions and business processes that support selling and purchasing activities on the Web – Supplier, inventory, distribution, payment management – Financial management, purchasing products and information 3/9/01 EMTM 553 5
  • 6. Advantages of Electronic Commerce • Increased sales – Reach narrow market segments in geographically dispersed locations – Create virtual communities • Decreased costs – Handling of sales inquiries – Providing price quotes – Determining product availability • Being in the space 3/9/01 EMTM 553 6
  • 7. Disadvantages of Electronic Commerce • Loss of ability to inspect products from remote locations • Rapid developing pace of underlying technologies • Difficult to calculate return on investment • Cultural and legal impediments 3/9/01 EMTM 553 7
  • 8. The process of e-commerce 1. Attract customers – Advertising, marketing 2. Interact with customers – Catalog, negotiation 3. Handle and manage orders – Order capture – Payment – Transaction – Fulfillment (physical good, service good, digital good) 4. React to customer inquiries – Customer service – Order tracking 3/9/01 EMTM 553 8
  • 9. Web-based E-commerce Architecture Tier 1 Tier 2 Tier 3 Tier N DMS Client Web Server Application Database Server Server 3/9/01 EMTM 553 9
  • 10. E-commerce Technologies • Internet • Access security • Mobile technologies • Cryptographic security • Web architecture • Watermarking • Component programming • Payment systems • Data exchange • Multimedia • Search engines • Data mining • Intelligent agents 3/9/01 EMTM 553 10
  • 11. Infrastructure for E-commerce • The Internet – system of interconnected networks that spans the globe – routers, TCP/IP, firewalls, network infrastructure, network protocols • The World Wide Web (WWW) – part of the Internet and allows users to share information with an easy-to-use interface – Web browsers, web servers, HTTP, HTML • Web architecture – Client/server model – N-tier architecture; e.g., web servers, application servers, database servers, scalability 3/9/01 EMTM 553 11
  • 12. E-Commerce Software • Content Transport – pull, push, web-caching, MIME • Server Components – CGI, server-side scripting • Programming Clients • Sessions and Cookies • Object Technology – CORBA, COM, Java Beans/RMI • Technology of Fulfillment of Digital Goods – Secure and fail-safe delivery, rights management 3/9/01 EMTM 553 12
  • 13. System Design Issues • Good architectural properties – Functional separation – Performance (load balancing, web caching) – Secure – Reliable – Available – Scalable 3/9/01 EMTM 553 13
  • 14. Creating and Managing Content • What the customer see • Static vs. dynamic content • Different faces for different users • Tools for creating content • Multimedia presentation • Integration with other media • Data interchange • HTML, XML (Extensible Markup Language) 3/9/01 EMTM 553 14
  • 15. Cryptography • Keeping secrets – Privacy: interceptor cannot use information – Authentication: sender’s identity cannot be forged – Integrity: data cannot be altered – Non-repudiation: sender cannot deny sending • How to evaluate cryptography • Secret key (symmetric) cryptography; e.g., DES • Public key (asymmetric) cryptosystems; e.g, RSA • Digital signatures, digital certificates • Key management; e.g., PKI 3/9/01 EMTM 553 15
  • 16. Security • Concerns about security • Client security issues • Server security issues • Security policy, risk assessment • Authentication methods – Something you know: passwords – Something you have: smart card – Something you are: biometrics • Firewalls, proxy servers, intrusion detection • Denial of service (DOS) attacks, viruses, worms 3/9/01 EMTM 553 16
  • 17. Payment Systems • Role of payment • Cash – properties: wide accept, convenient, anonymity, untraceability, no buyer transaction cost • Online credit card payment, Smart Cards – Secure protocols: SSL, SET • Internet payment systems – Electronic cash, digital wallets • Micro-payments • Wireless devices 3/9/01 EMTM 553 17
  • 18. Transactions Processing • Transactions and e-commerce • Overview of transaction processing • Transaction processing in e-commerce • Keeping business records, audit, backup • High-availability systems • Replication and scaling • Implementation 3/9/01 EMTM 553 18
  • 19. Other System Components • Taxes • Shipping and handling • Search engines • Data mining • Intelligent agents • Inventory management, enterprise resource planning (ERP) • Customer relation management (CRM) 3/9/01 EMTM 553 19
  • 20. Course Outline • Overview of e-commerce • The Internet and the WWW • E-commerce software building blocks and tools • Scalability, high-performance servers, web caching • Basic cryptography • Security, watermarking, firewalls • Payment systems • Current and future directions 3/9/01 EMTM 553 20