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Question Bank
Table of Contents
Q1. Define eCommerce and eBusiness 2
Q2. Differentiate between eCommerce and eBusiness 3
Q3. Explain eCommerce model 4
Q4. Write on evolution of eBusiness. 6
Q5. What are the challenges of eBusiness? 9
Q6. Explain how CEO can harness the power of eBusiness 10
Q7. "Technology is cause & driver of eBusiness" explain 12
Q8. eBusiness is changing the business to suit the business 13
Q9 Explain in detail the use of internet in eBusiness 16
Q10 Explain the type of business one can carry on using the internet 20
Q11 What's EDI and its benefits 21
Q12 What are challenges in implementing EDI in India? 24
Q13 Explain emerging markets in India on B2B and B2C 25
Q14 What are the future trends in eBusiness? 26
Q15 How eBusiness shape up in India in next 5 years 29
Q16 Give detail of eBusiness implementation on an organisation - case study E-Business 30
References:
Q1. Define eCommerce and eBusiness
eBusiness:
The conduct of business with the assistance of telecommunications and telecommunications-based tools.
The transformation of key business processes through the use of Internet technologies.
The key business processes referred to in the IBM definitions are the organizational processes or units. They include research and development, marketing, manufacturing and inbound and outbound logistics. The buy-side e-commerce transactions with suppliers and the sell-side e-commerce transactions with customers can also be considered to be key business processes.
The majority of Internet services are available to any business or consumer that has access to the Internet. However, many e-business applications that access sensitive company information require access to be limited to qualified individuals or partners. CRM(Customer Resource Management), ERP(Enterprise Resource Planning), SCM(Supply Chain Management), SFM(Sales Force Management) and EP(Electronic Procurement) are systems found in eBusiness.
If information is restricted to employees inside an organization, this is an intranet. If access is extended to some others, but not everyone beyond the organization, this is an extranet. Whenever you log-on to an Internet service such as that for an e-retailer or online news site, this is effectively an extranet arrangement, although the term is most often used to mean a business-to-business application.
eCommerce:
The conduct of commerce in goods and services, with the assistance of telecommunications and telecommunications-based tools.
E-commerce (electronic commerce or EC) is the buying and selling of goods and services on the Internet, especially the World Wide Web.
E-commerce can be divided into:
• E-tailing or "virtual storefronts" on Web sites with online catalogs, sometimes gathered into a "virtual mall"
• The gathering and use of demographic data through Web contacts
• Electronic Data Interchange (EDI), the business-to-business exchange of data
• e-mail and fax and their use as media for reaching prospects and established customers (for example, with newsletters)
• Business-to-business(B2B) buying and selling
• Business-to-customer(B2C) buying and selling
• Customer -to- customer(C2C) buying and selling
• The security of business transactions
Q2. Differentiate between eCommerce and eBusiness
E -business and e-commerce are terms that are sometimes used interchangeably, and sometimes they're used to differentiate one vendor's product from another. But the terms are different, and that difference matters to today's companies.
In both cases, the e stands for "electronic networks" and describes the application of electronic network technology - including Internet and electronic data interchange (EDI) - to improve and change business processes.
E-commerce covers outward-facing processes that touch customers, suppliers and external partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw materials and supplies for production and procurement of indirect operating-expense items, such as office supplies. It involves new business models and the potential to gain new revenue or lose some existing revenue to new competitors.
It's ambitious but relatively easy to implement because it involves only three types of integration: vertical integration of front-end Web site applications to existing transaction systems; cross-business integration of a company with Web sites of customers, suppliers or intermediaries such as Web-based marketplaces; and integration of technology with modestly redesigned processes for order handling, purchasing or customer service.
E-business includes e-commerce but also covers internal processes such as production, inventory management, product development, risk management, finance, knowledge management and human resources. E-business strategy is more complex, more focused on internal processes, and aimed at cost savings and improvements in efficiency, productivity and cost savings.
An e-business strategy is also more difficult to execute, with four directions of integration: vertically, between Web front- and back-end systems; laterally, between a company and its customers, business partners, suppliers or intermediaries; horizontally, among e-commerce, enterprise resource planning (ERP), customer relationship management (CRM), knowledge management and supply-chain management systems; and downward through the enterprise, for integration of new technologies with radically redesigned business processes. But e-business has a higher payoff in the form of more efficient processes, lower costs and potentially greater profits.
E-commerce and e-business both address these processes, as well as a technology infrastructure of databases, application servers, security tools, systems management and legacy systems. And both involve the creation of new value chains between a company and its customers and suppliers, as well as within the company itself.
All companies should have an e-commerce strategy. (Governments should have an e-public service strategy.) Electronic networks in general and the Internet in particular are too important for firms to ignore if they want to interact with customers, suppliers or distribution partners.
But some companies need to move beyond e-commerce and form e-business strategies - especially large companies that already have links to EDI networks or have completed major ERP implementations. These companies have already reaped some of the biggest benefits from e-commerce strategies. They're also likely to experience organizational pain as conflicts develop among their ERP, EDI, supply-chain management and e-commerce strategies. And last, they have enough experience and knowledge in electronic-network technologies - and in process redesign and integration - that they have a chance of being successful in an e-business strategy.
Still, the coordination and organizational obstacles to developing an e-business strategy are formidable. It involves major and potentially disruptive organizational change. The risks of failure and the consequences from limited success are higher in an e-business strategy than in an e-commerce strategy. Being a leader in e-business can contribute to long-term success, but the stresses and strains of business transformation can cause near-term damage.
Q3. Explain eCommerce model
A Business model is a method of doing business by which a company can generate revenue to sustain itself.
Types of business models
• Business to consumer
• Business to business
• Consumer to Consumer
• Revenue Model
B2C
The type of Ecommerce business model that most of us are familiar with is the B2C model. Examples include:
• E-shops
o It involves web marketing of a company or shop. The primary objective is to promote the goods or services of the company and to take orders and accept payment.
o It is often combined with traditional marketing channels
o Challenge is to develop strategies to increase demand
o Other objectives include cost-reduction of promotion and sales
o Revenues are from reduced cost, increased sales, and
o possibly advertising
• E-malls
o It is a collection of e-shops, under a common umbrella, for example of a well-known brand
o Might be enriched by a common, guaranteed, payment method.
o Might have a single entry point to individual e-shops
o Industry marketplace: When shops belong to a certain market segment
o They can have virtual community features (FAQ, discussion forums, closed user groups)
o Revenues are from membership fee, advertising, and transactions fees (if payments are processed by the mall provider).
• 3rd party marketplace
o It is an emerging model - for companies wishing to leave the Web marketing end of the operations to a 3rd party (Yahoo)
o It frequently is an add-on to their other channels.
o It is a user interface to a company’s product catalogues
o It can be enhanced by special marketing features, branding, payment, logistics, ordering, and the full scale of secure transactions
o Revenues can be generated on the basis of one-off membership fee, service fees, or percentage on transaction value
• Virtual communities
o The value added is to the members (customers or partners)
o They add their information into a basic environment provided by the virtual community company
o Membership fees and advertising generate revenues
o Virtual communities can also be an important addon to other marketing operations
o It can be used to build customer loyalty and receive customer feedback
• Information brokerage and other services
o These companies add value to data available on the open networks or coming from integrated business operations
o Examples include customer profiling, business opportunities brokerage, investment advice, competitive intelligence
o Usually information and consultancy are directly paid for either through subscription or on a payper- use basis
o Some companies are experimenting with advertising schemes
B2B
A less familiar Ecommerce business model to most of us is the B2B model. Examples include:
• E-procurement
o They help with electronic procurement
o Electronic Data Interchange is the model
▪ Value added is the key
o Typical EDI applications have focused on an industry
o Opportunities exist for expanding the scope to go across multiple industries
o Create new, specialized markets
• Value-chain service provider
o They provide a specific function for the value chain
o It could be secure electronic payments, credit card processing, or logistics
o For example, banks have done this offline
o New approaches are also emerging in production/stock management where the specialized expertise required to analyze and tune production
o A fee or percentage based scheme is the basis for revenues
• Value chain integrators
o They focus on integrating multiple steps of the value chain
o They will provide several business processes within a single corporate entity
o Secure transactions, credit card processing, and server log analysis
o Revenues are obtained from consultancy fees, long term contracts, or possibly pay-asyou-go transaction fees.
• Collaboration platforms
o A company provides a sets of tools, expertise, and an information environment for collaboration between enterprises
o Focus on specific functions, such as collaborative design and engineering
o Provide technologies such as net audio/video conferencing, shared whiteboards, distributed GDSS
o One business opportunity is managing the platform and collecting membership and usage fees
o Another is charging for providing expertise
o A third is selling or licensing the specialist tools (e.g. for design, workflow, document management
Most knowledgeable observers concur that this is the segment where most of the action will be over the next few years.
C2C
Consumer-to-consumer e-commerce can be defined as individuals doing business in an online environment, typically utilizing the Internet in one way or another.
Any website where people are brought together to buy, sell, or trade. Online auctions such as Ebay are a perfect example of this business model.
Revenue model
How an eCommerce project or company will make or earn money. Major revenue models are,
• Sales: revenue from selling on their web site or providing services
• Transaction fees: commissions based on the volume of transactions made. ( fixed or incremental)
• Subscription: payment of fees usually monthly or quarterly to get some type of service
• Advertising fees: companies charge others for placing ads on their sites
• Affiliate fee: companies get paid for referring customers to other sites
• Other revenue models: game sites, licensing fees etc.
Q4. Write on evolution of eBusiness.
Since 1990, by the introduction of the World Wide Web (www) our lives have been changed, the way we communicate, the dissemination of information, the integration of the media, and the way Democracy conducts its governments has a new dimension to the human race. IT is called the IT ERA, of the Internet revolution.
In today’s rapidly evolving world, companies need to adjust their business models constantly to changes in their environment. However, they also need to do so in a controlled manner. An approach to evolving business models needs to strike a balance between capitalizing on new opportunities, and entering uncharted territories by mitigating the risks involved with such a change. The approach must be lightweight in order to quickly evaluate alternative models, but also be reliable.
Brief History:
• 1970s: innovations like electronic funds transfer (EFT)—funds routed electronically from one organization to another (limited to large corporations)
• electronic data interchange (EDI)— electronically transfer routine documents (application enlarged pool of participating companies to include manufacturers, retailers, services)
• inter-organizational system (IOS)—travel reservation systems and stock trading
• 1969 U.S. government experiment—the Internet came into being initially used by technical audience of government agencies, academic researchers, and scientists
• 1990s the Internet commercialized and users flocked to participate in the form of dot-coms, or Internet start-ups
• Innovative applications ranging from online direct sales to e-learning experiences
• Most medium- and large-sized organizations have a Web site
• Most large U.S. corporations have comprehensive portals
• 1999 the emphasis of EB shifted from B2C to B2B
• 2001 the emphasis shifted from B2B to B2E, c-commerce, e-government, e-learning, and m-commerce
The rapid evolution of e-business architectures is opening many new avenues of collaboration in the apparel and retail industries, and companies across the supply chain are leveraging new software applications that promise to facilitate large-scale trading networks at all levels.
eBusiness Evolution
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Business must change to adopt this new media, or they will be left out to stagnate and die. It is no longer the Power of the Seller, to command the sales of their goods and services, it is now shifted to the Buyer. The role of middle man traders has diminished and evolve into a relevant link in the Supply Chain, Logistics.
Significant New Product Trends are those who has value-add to the Supply Chain. Structures of the organisation reconstruct, and firms become more agile and efficient to deal with this new way of conducting business.
• Communication
With the introduction of the new media, the volume of communication has increased, and cost has been significantly reduced by the introduction of emails text messaging Web Chat and Conferencing over the Internet. Now it is VoIP that cuts down overseas communication cost to near zero.
• Roles of the companies
Information has become easily accessible by the masses, the consumer has wider choice, and can buy the same product from the hundreds, and thousands of suppliers over the Internet. Companies who want to stay relevant on the Supply Chain has to take the role of the Logistic distribution and Customer Relation Management, rather than be a mere Import-Export role. They have to add value to the merchandise, and provide a safe and secure mean of transaction. Also a strong element of trust and integrity.
• Interactivity
In the past, a firm who wants to sell its products, put up an advertisement in the prints, one that exposes to the public, like the newspaper, or magazines. Other media of advertisements are the Radio and Television, and one media which is no longer running, the Cinemas. Now, it has to be a media which provides interaction with the consumers, feedbacks, and customer-service, such as downloads of software drivers, help to solve problems pertaining to the products purchased, and catering for the after-sales warranty. There is a lot more interactivity between seller and buyer, and the communication has become 1 to 1, from 1 to many.
• Assistive technologies
The way a product is presented, and the information given on the product is enhanced and magnified by the assistive technologies of softwares such as JAVA, animated GIF, FLASH, and Slide shows. Sound and vision play important part to influence the decision of the buyer or prospects. This is used by the advertisers to customize their product for individual preferences. For example the colour of a car can be selected by the browser, and other features and add ons such as spoilers, headlights, LED flashing lights, etc can be changed to suite individual preference. The skill to use these technologies to maximise impact is crucial to the sales promotion.
• Convergence of media
eMarketing uses various media to promote the product. Some interactive, and some are one-way communication such as the print media. However, these various media such as sound, vision and face-to-face demonstrations, exhibitions, television ads, etc. are converged into a single channel of market communication. The Yellow Pages advertisement ought to lead the reader to the company's website, or channel of communication through emails, fax, telephone or physical showroom address. Similarly the advertisement on the Web has also to lead to one direction where the potential buyer knows how to buy the product and where to view it.
• Attractive benefits
In the jungle, there are many plants, trees, grass and undergrowth, all struggling to get a place for the Sun. Same way, an advertisement has to appeal to the audience and they are only interested in their benefits. They don't care about too much technical terms, or features, unless they see them as benefiting to their:
o Health and Wellness
o Social Status
o Safety and Security
o Family cohesion and unity
o Vision and faith
o Financial cost savings
o Relationship with spouse, friends and neighbours
• Business Intelligence
As we know, the introduction of the www brings both good and bad, opportunities and threats. Customers and competitors, and the business has to lower the threats by having Business intelligence, verifying potential buyers and sellers of their genuineness and integrity. Most importantly identifying SCAMs, phishing, Threats of Software attacks, Denial of Service, email bombing, and spyware. The business also has to do their own search and BI, to minimize risks.
Q5. What are the challenges of eBusiness?
In today’s business climate, e-Business can have an impact on every facet of the organization, including processes, applications, staffing, infrastructure, relationships, sales, and sales channels. Not only is e-business transforming companies and industries, it’s doing so at an accelerating rate. Business cycles that use to be measured in years are now measured in days.
As part of this transformation, enterprise borders are starting to disappear. e-business is all about providing open access to infrastructure services, data, and applications. Partners, suppliers, customers and, in some cases, even your competition will be able to peer 3into your corporate nervous system.
Customer expectations are rising mercilessly in terms of the speed and reliability they expect from your e-Business applications. Studies show that Web customers will wait only eight seconds for a page view, even if they are on a slow connection that you have no control over.
Technological
• Lack of universally accepted standards for quality, security, and reliability
• Telecommunication bandwidth is insufficient (mostly for m-commerce)
• Software development tools are still evolving.
• Difficulties in integrating the internet and EC software applications and databases.
• Special web servers are needed in addition to the network servers (added cost)
• Internet accessibility is still expensive and/ or inconvenient
• Order of fulfillment of large-scale B2C requires special automated warehouses
• Increasing innovations and new technologies
• Rapid technological obsolescence
• Rapid decline in technology cost versus performance ratio
Non-technological
• Security and privacy concerns deter some customer from buying
• Lack of trust in EC and in unknown sellers hinder buying
• Many legal and public policy issues, including taxations, remain unresolved
• National and international government regulations sometimes get in the way
• Difficulty in measuring some benefits in EC. (e.g. advertising,) lack of matured measurement methodology
• Some customers like to touch and feel the product
• Adamant to change from physical to virtual store
• Lack of trust in paperless, faceless transactions
• Insufficient number (critical mass) of sellers and buyers (some cases) needed to make profit
• Increasing number of fraud on the net
• Difficulty to obtain venture capital due to the dot-com disaster
Societal
• Changing nature of workforce
• Government deregulation- more competition
• Shrinking government subsidies
• Increased importance of ethical and legal issues
• Increased social responsibility of organizations
• Rapid political changes
Business as usual no more enough (price reduction & closure of unprofitable facilities)
Need for new innovations (critical response activities)
• Customization
• Creating new products
Providing superb costumers services
Q6. Explain how CEO can harness the power of eBusiness
In today’s business climate, e-Business can have an impact on every facet of the organization, including processes, applications, staffing, infrastructure, relationships, sales, and sales channels. Not only is e-business transforming companies and industries, it’s doing so at an accelerating rate. Business cycles that use to be measured in years are now measured in days.
As part of this transformation, enterprise borders are starting to disappear. e-business is all about providing open access to infrastructure services, data, and applications. Partners, suppliers, customers and, in some cases, even your competition will be able to peer 3into your corporate nervous system.
Customer expectations are rising mercilessly in terms of the speed and reliability they expect from your e-Business applications. Studies show that Web customers will wait only eight seconds for a page view, even if they are on a slow connection that you have no control over.
Following points will help the CEO in harnessing the power of ebusiness:
• Strategic systems: provides org. with strategic adv.
• Increase their market share
• Better negotiation with their suppliers
• Prevent competitors from entering their territory
e.g. FedEx tracking system
• Continuous improvement efforts & BPR: continuous efforts to improve productivity, quality and customer services. E.g. Dell ERP and Intel’s customer tracking.
• Customer relationship management: e.g. personalization, sales-force automation
• Business alliances: org. enter collaborate for mutual benefit aided mostly by e-commerce.
• Electronic markets
• Reduction in cycle time & time to market: e.g. use of extranet
• Empowerment of employees: the ability to take decision on costumers (decentralization)
• Supply chain improvement:
o Reduce supply chain delays
o Reduce inventories
o Eliminate inefficiencies
• Mass customization: production of large customized items ( in an efficient way)
• Intra-business: from sales force to inventory control
• Knowledge management: the process creating or capturing knowledge, storing and protecting it, updating, maintaining and using it.
An organization can turn digital to gain competitive adv by using EC:
Brick & mortar against digital
|Brick & mortar |Digital |
|Selling in physical stores |Selling online |
|Selling tangible goods |Selling digital goods |
|Internal inventory/production planning |Online collaborative inventory forecasting |
|Paper catalogs |Smart e-catalogs |
|Physical marketplace |Electronic market-space |
|Physical & limited auctions |Online auctions everywhere, anytime |
|Broker-based service transactions |Electronic Info-mediaries, value added services |
|Paper-based billing |Electronic billings |
|Paper-based tendering |Pull production |
|Push production |Mass customization |
|Mass production (standard) |Affiliate, viral marketing |
|Physical based commission marketing |Explosive viral marketing |
|Word-of-mouth slow advertisement |Hub-based supply chain |
|Linear supply chain |Less capital needed |
|Large amount of capital needed |Small fixed cost |
|Cost>value |Cost=value |
Internet tools for marketers
• Distribution: a company can distribute through the internet
• A company can use the internet to build and maintain a customer relationship
• Money collection part of a transaction can be done online
• Leads can be generated by through short trial periods, before long-term signing
• Advertising
• Avenue for collecting direct response.
Benefits of e-marketing
• If and when properly and effectively implemented, the ROI from e-marketing will far exceed that of traditional marketing.
• It is at the forefront of reengineering or redefining the way businesses interact with their customers.
• Most of the benefit can be derived from the
o REACH: truly global reach and cost reduction
o Scope: wide range of products and services
o Interactivity: two way communication path
o Immediacy: provide an opportunity for immediate impact
o targeting: savvy marketers can easily have access to the niche markets they need for targeted marketing
o Adaptivity: real time analysis of customer responses leading to minimal advertising spend wastage.
• Other benefits include,
o Access to unlimited information to customers without human intervention
o personalization
o Enables transaction between firms and customers that will typically require human intervention
Benefits of Extranets
• Enhanced communication: enables improve internal communications, improved business partnership channels, effective marketing, sales, and customer support, facilitated collaborative activities support
• Productivity enhancements: enables just-in-time information delivery, reduction of information overload, productive collaboration between work groups, and training on demand.
• Business enhancements: enables faster time to market, potential for simultaneous engineering and collaboration, lower design and production cost, improved client relationships and creation of new business opportunities
• Cost reduction: results in fewer errors, improved comparison shopping, reduced travel and meeting time and cost, reduced administrative and operational cost, and elimination of paper-publishing cost
• Information delivery: enables low-cost publishing, leveraging of legacy systems, standard delivery systems, ease of maintenance and implementation, and elimination of paper-based publishing and mailing costs.
• Ready access to information, ease of use, freedom of choice, moderate setup cost, simplified workflow, lower training cost, and better group dynamics.
Q7. "Technology is cause & driver of eBusiness" explain
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Q8. eBusiness is changing the business to suit the business
E-business describes the use of electronic means and platform to conduct a company's business. The advent of the Internet has greatly increased the ability of companies to conduct their business faster, more accurately over a wide range of time and space, at reduced cost, and with the ability to customise and personalise customer offerings. Countless companies have set up website to inform and promote their products and services. They have created intranets to facilitate employees communicating with one another to facilitate downloading and uploading information to and from the company's computers. Companies have also set up extranets with major suppliers and distributors to facilitate information exchange,orders,transactions and payments. Bill Gates of Microsoft claims that Microsoft is almost entirely run electronically, there is hardly any paper flowing through the company because every thing is on the computer screen.
The new business environment
• Highly competitive (due to economic, societal, legal and technological factors)
• Quick and sometimes unpredictable change
• The need for more production, faster and with fewer resources
• Huber (2003) “new business environment created due to accelerated advances in science”
• This advances creates scientific knowledge
• This scientific knowledge feeds on itself resulting in more and more technology
• Rapid growth in technology results in a large variety of more complex systems.
• As a result the business environment is characterized by
o A more turbulent environment ( more business problems and opportunity)
o Stronger competition
o Frequent decision making by organizations
o Large scope for decisions considerations (market, competition, political and global)
o More information/knowledge needed for decisions
Pressure on businesses
• Market and economic
o Strong competition
o Global economy
o Regional trade agreement
o Extremely low labour cost in some regions
o Frequent and significant changes in markets
o Increase power of consumers
• Societal
o Changing nature of workforce
o Government deregulation- more competition
o Shrinking government subsidies
o Increased importance of ethical and legal issues
o Increased social responsibility of organizations
o Rapid political changes
• Technological
o Increasing innovations and new technologies
o Rapid technological obsolescence
o Rapid decline in technology cost versus performance ratio
• Need for new innovations (critical response activities)
o Customization
o Creating new products
o Providing superb costumers services
• E-commerce facilitate most of these responses
There are various types of marketplaces
• B2C
o Electronic storefronts: single company’s Web site where product/services are sold (electronic store)
▪ A storefront has various mechanism for conducting sale
• Electronic catalogs (presentation of product information in an electronic form)
• A search engine ( a program that can access a database of Internet resources, search for specific information/keywords, and report the result)
• An electronic shopping cart: order processing technology that allow shoppers to accumulate items they wish to buy while they continue to shop)
• E-auction facilities
• A payment gateway etc.
o Electronic malls: an online shopping center where many stores are located
• B2B
o Private E-Marketplace: owned by a single company
▪ Sell-side E-Marketplace: a private e-market in which a company sells either standard or customized to qualified companies
▪ Buy-side: a private e-market in which a company buys from invited suppliers
o Public E-Marketplace: e-market usually owned by am independent 3rd party with many buyers and many sellers (exchanges)
o Consortia: usually owned by a small group of major sellers or buyers usually in the same industry
• Electronic auctions (e-auctions): auctions conducted online.
o Dynamic pricing: change in price due to demand and supply relationships at any given time.
▪ Dynamic pricing has several forms (bargaining and negotiations)
▪ There are 4 major forms of dynamic pricing depending on how many buyers or sellers there are,
• One buyer, one seller
• One seller, many potential buyers
• One buyer, many potential sellers
• Many buyers, many sellers
Benefits of e-marketing
• If and when properly and effectively implemented, the ROI from e-marketing will far exceed that of traditional marketing.
• It is at the forefront of reengineering or redefining the way businesses interact with their customers.
• Most of the benefit can be derived from the
o REACH: truly global reach and cost reduction
o Scope: wide range of products and services
o Interactivity: two way communication path
o Immediacy: provide an opportunity for immediate impact
o targeting: savvy marketers can easily have access to the niche markets they need for targeted marketing
o Adaptivity: real time analysis of customer responses leading to minimal advertising spend wastage.
• Other benefits include,
o Access to unlimited information to customers without human intervention
o personalization
o Enables transaction between firms and customers that will typically require human intervention
E-Commerce is more specific than e-business, it means that in addition to providing information to visitors about the company, its history, policies, products and job opportunities, the company or site offers to transact or facilitate the selling of products and services online. Most company sites are still just providing information, not doing e-commerce. , CDNow, e-Toys, e-steel and e-plastics net are samples of e-commerce sites.
E-commerce has given rise in turn to e-purchasing and e-marketing. E-purchasing means companies decide to purchase goods, services and information from various online suppliers. Smart e-purchasing has already saved companies millions of dollars. E-marketing describes company efforts to inform, communicate, promote and sell its products and services over the internet. The e term is also used in terms such as - e-finance, e-learning, and e- service. But as some one observed the e will eventually be dropped when most business practice is online.
Q9 Explain in detail the use of internet in eBusiness
Ans:
The internet provides a global network infrastructure that is shifting business models, strategies and processes.
The world is becoming more and more interconnected. The number of companies that operate on a multinational scale is constantly rising because they need new market places.
More than 500 million people worldwide are using the internet on a regular basis, with email and search engines as the most popular services. Information is power. People are able to influence, direct, convince, educate and manipulate others through one single tool: The distribution of information. Email and discussion forums allow people to share their thoughts, ideas and experiences with other people from all corners of the world. Within a relatively short period of time the Internet and its communication channels will be part of our daily lives.
The Internet has a wide variety of uses. It provides an excellent means for disseminating information and communicating with other people in all regions of the world. While the greatest use of the Internet has been sharing information, other sources of use are rapidly developing.
Following are the ways in which the World Wide Web can be used by businesses:
Reach a worldwide audience The Internet is a worldwide network allowing you to reach people even very expensive advertising could not.
Provide product information Give customers direct access to information about your products. Some people prefer to learn about products on their own. The Internet has an unsurpassed ability to make information about your company's products or services available to potential customers. It also provides the information when the customer wants it (now).
Save on literature costs Providing the information online reduces the need to print and mail product literature, thereby resulting in significant cost reductions.
Augment/replace phone banks Often people staffing phone banks are serving merely as interfaces to computer databases. In an age of graphical, networked computing, this function is less necessary. Simple graphical interfaces can be designed to allow customers to find the information they want quickly and inexpensively.
Provide easy access to customer service representatives Human interaction cannot be totally replaced by even the best graphical interface. When customers have a question, or would like to speak with a person, provide a list of contacts and phone numbers or allow them to send e-mail directly to a customer service representative, requesting that they be contacted.
Level your customer service load How many customers are turned away unsatisfied when your customer service lines are busy? How often do you have slack times when customer support personnel are not handling calls but still cost your business money? E-mail provides "asynchronous communication" that can help level the load. Customers with problems that do not require immediate attention can send an e-mail message through your Web site which can be handled when support people are not busy. Telephone-tag is eliminated for your customers, and you.
Inexpensively create/augment your corporate image It is easy and inexpensive to define your image on the Internet, whether you are a one-person-company or a large corporation. If your company information changes rapidly due to market forces, there is no easier way to change your image than electronically.
Recruit new employees Many companies (now nearly all), provide current information about job openings and attract talented people from places they could not reach otherwise.
Provide useful information to attract customers Ski shops often have a board listing local snow conditions. Search sites like " yahoo " and " Lycos " provide useful search services for the Web. Providing useful information to potential customers is a good way to get them to come to your site and return again and again (a property now called "stickiness").
Provide your service on-line Many products and services can be delivered over the Internet. Online services will become an even brighter option for many businesses. Since the transaction is electronic, billing and inventory control can be automated, increasing accuracy and reducing your accounting and product storage costs.
Give customers access to searchable information Computers on the Internet allow companies to post information in the form of static Web pages. But, with some of the latest software (or some clever programming) , these computers can also help your customers find the information you are providing quickly. Federal Express created an award winning Web site that allows customers to track their packages. In doing this, Fed- Ex is providing a useful customer service while also promoting their product (service).
Help customers understand why they need you Another thing computers do well is provide artificial intelligence, expertise, or analysis. The Internet allows you to deliver custom software applications and extend your expertise virtually. Suppose you manufacture thermopane windows. A spreadsheet application could allow potential customers to determine how much money they would save in energy costs if they installed your windows. A financial services company could allow potential customers to analyze their investments in light of a financial service the company offers.
Let customers try a sample of your product or service Many new Web tools are becoming available that will allow consumers to try out a sample of what you have to offer before they buy. Gain a competitive advantage by offering a "test drive" of your product or service.
Eliminate the middleman Middlemen exist in some industries where there are barriers to direct contact between producers and consumers. The Internet is a vehicle for removing these barriers. This lowers prices for consumers and increases profits for producers.
On-line commerce This has been much touted in the popular press. Some products and services are well suited for sales on-line. Rapid growth in this area will occur as secure credit card transactions become (are now) standardized. Efficiency of shipping and delivery methods for hard goods is important for typically impatient internet shoppers.
Consider an Intranet Use the same Internet technology within your company to help workers communicate better and work more productively. Many companies are finding an Intranet to be a much more cost effective solution to their network information needs than proprietary software.
From notes given by Prof. Column Issue indicate the use of internet in eBusiness.
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The Internet can be used by your business to:
▪ Research and purchase goods and services online
▪ Collect customer and competitive intelligence
▪ Increase market awareness of your business
▪ Provide introductory information and contact coordinates
▪ Sell online
The Internet and related technologies can change the way you develop and conduct your business processes, making them more time and cost efficient. They can diversify your marketing channels, and ultimately help you increase your business revenue.
The Internet levels the playing field for small businesses. That is, it allows small business operators to compete on equal footing with larger businesses in the same industry.
Through the Internet, your small business can distribute information online to a global audience, immediately, with little out of pocket expense. This means you all reach more clients or customers in a shorter period of time.
It gives you the ability to interact with your clients and customers in new ways, putting power in the hands of the buyer, giving your clients or customers more choice than they have ever had before.
And finally, the Internet gives you, the seller, the ability to readily assess your online business practices and modify them on the fly to ensure they meet the needs of your clients/customers.
In short, you can use the Internet to:
▪ Collect vital information for your business about your customers and your competitors. The Internet is a valuable research tool and, as a readily accessible information medium, its ability to allow you to remain competitive in your industry should not be underestimated.
▪ Increase awareness about your company. Even if you are not considering selling online, having a website that promotes your business, provides contact information, and outlines your unique value proposition -– that is, the unique collection of benefits attributed to your product or service which create value for your customers or clients -- will simply increase your reach and value in the marketplace, and make it easier for your potential clients/customers to find you.
▪ Streamline communications and improve customer service. Email communications, website FAQs and auto-responders are examples of simple and cost effective electronic techniques that can help to improve communications between you and your clients/customers.
▪ Improve productivity and reduce costs. Simply by streamlining communications using Internet technologies, you can improve your business productivity. And, out of pocket costs can be reduced further by implementing a readily updatable website in place of short shelf life printed material to relay pertinent information to your customer base.
▪ Sell your products online. For those considering making the leap to e–commerce, selling online can lower your upfront set-up costs and operational costs, increase your reach to a global marketplace, and allow you to be open 24/7. Further, it can allow you to automate your order processing and order tracking capabilities, develop cheaper online catalogues and update your product lists on the fly.
Q10 Explain the type of business one can carry on using the internet
Ans: From notes given by Prof.
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Note: Some more explanation from internet.
B2B - it is that business activity in which 2 firm or business units make electronic transaction in which 1 can be a producer firm and other are raw material supplier firm.
B2C - in B2C commerce, 1 party is the firm and other party is a customer. on the one hand, customer can seek info. , can place an order, get some items on the Internet and can also make the payment. on the other hand, a firm can make a survey to know, who buying what and can also know satisfaction level of customer. a firm can also make delivery of goods like air and train tickets etc.
C2C - under C to C commerce, both the parties involved are customers. it is required for buying and selling of those goods for which there is no established markets are available.
Roughly dividing the world into providers/producers and consumers/clients one can classify e-businesses into the following categories:
business-to-business (B2B)
business-to-consumer (B2C)
business-to-employee (B2E)
business-to-government (B2G)
government-to-business (G2B)
government-to-government (G2G)
government-to-citizen (G2C)
consumer-to-consumer (C2C)
consumer-to-business (C2B)
Q11 What's EDI and its benefits
Ans: Definition of EDI
Electronic Data Interchange (EDI) refers to the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents from one computer system to another, i.e. from one trading partner to another trading partner. It is more than mere E-mail; for instance, organizations might replace bills of lading and even checks with appropriate EDI messages. It also refers specifically to a family of standards, including the X12 series. However, EDI also exhibits its pre-Internet roots, and the standards tend to focus on ASCII (American Standard Code for Information Interchange)-formatted single messages rather than the whole sequence of conditions and exchanges that make up an inter-organization business process.
The National Institute of Standards and Technology in a 1996 publication defines Electronic Data Interchange as "the computer-to-computer interchange of strictly formatted messages that represent documents other than monetary instruments. EDI implies a sequence of messages between two parties, either of whom may serve as originator or recipient. The formatted data representing the documents may be transmitted from originator to recipient via telecommunications or physically transported on electronic storage media.”
OR
Electronic data interchange(EDI) is the inter-organisational exchange of business documents in structured, machine processable form.Electronic data Interchange can be used to electronically transmit documents such as purchase orders, invoices, shipping bills, receiving advices and other standard business correspondence between trading partners. EDI can also be used to transmit financial information and payments in electronic form. Payments carried out over EDI are usually referred to as Electro- nic Funds Transfer (EFT).EDI should not be viewed as simply a way of replacing paper documents and traditional methods of tran-smission such as mail, phone or in-person delivery with electronic transmission. But it should be seen not as an "end" but as a means to streamline procedures and improving efficiency and productivity.
Benefits/Advantages of using EDI over paper systems
EDI and other similar technologies save a company money by providing an alternative to, or replacing information flows that require a great deal of human interaction and materials such as paper documents, meetings, faxes, etc. Even when paper documents are maintained in parallel with EDI exchange, e.g. printed shipping manifests, electronic exchange and the use of data from that exchange reduces the handling costs of sorting, distributing, organizing, and searching paper documents. EDI and similar technologies allow a company to take advantage of the benefits of storing and manipulating data electronically without the cost of manual entry. Another advantage of EDI is reduced errors, such as shipping and billing errors, because EDI eliminates the need to rekey documents on the destination side. One very important advantage of EDI over paper documents is the speed in which the trading partner receives and incorporates the information into their system thus greatly reducing cycle times. For this reason, EDI can be an important component of just-in-time production systems.
According to the 2008 Aberdeen report "A Comparison of Supplier Enablement around the World", only 34% of purchase orders are transmitted electronically in North America. In EMEA, 36% of orders are transmitted electronically and in APAC, 41% of orders are transmitted electronically. They also report that the average paper requisition to order costs a company $37.45 in North America, $42.90 in EMEA and $23.90 in APAC. With an EDI requisition to order costs are reduced to $23.83 in North America, $34.05 in EMEA and 14.78 in APAC.
OR
1. Remove document re-keying
By removing the manual keying of key business documents such as Orders, Invoices, Acknowledgments and Despatch Notes your company can benefit significantly from:
▪ reduced labour costs
▪ elimination of human keying errors
▪ faster document processing
▪ instant document retrieval
▪ removal of reliance on the postal service.
2. Eliminate paper
Paper-based trading relationships have some inherent disadvantages when compared with their electronic trading equivalents:
▪ stationery and printer consumable costs
▪ document storage costs
▪ lost documents
▪ postage costs.
3. Reduce lead times and stockholding
Electronic trading documents can be delivered far more quickly than their paper counterparts, thus the turnaround time from order to delivery can be reduced.
By using EDI for forecasting and planning, companies are able to get forward warning of likely orders and plan their production and stock levels accordingly.
Companies receiving Advanced Shipping Notes or Acknowledgments know in advance what is actually going to be delivered and are made aware of shortages so alternate supplies can be sourced.
Integrating electronic documents means they can be processed much faster, again reducing lead times and speeding up payments.
4. Benefit Four: Increase the quality of the trading relationship
Electronic trading documents, when printed, are much easier to read than copies faxed or generated on multi-part stationery by impact printers.
Accurate documents help to ensure accurate supplies.
Batches of electronic documents are usually sequentially numbered, therefore missing documents can easily be identified - saving companies the trouble of wading through piles of paper.
5. Competitive edge
Electronic Data Interchange (EDI) makes you attractive to deal with from your customers' point of view, so in their eyes you are cheaper and more efficient to deal with than a competitor trading on paper. Your costs will be lower because you will require less manpower to process orders, deliveries or payments.
It is no accident that the leading UK retailers all rely on EDI for placing orders and receiving invoices - they know the benefits they get and the costs that can be saved.
Above 5 are not only the Benefits of EDI listed below
▪ Builds closer business partnerships
▪ Reduces/eliminates manual handling of data, errors and rework
▪ Transfers information faster and more accurately
▪ Automates routine transactions
▪ Improves productivity and business controls
▪ Reduces costs
▪ Shortens transaction processing cycles
▪ Enhances data accuracy
▪ Lowers inventory levels
▪ Contributes to better in-stock positions
▪ Lowers freight costs
▪ Provides Quick Response capability
▪ Improves cash-flow management
▪ Creates a competitive advantage
Q12 What are challenges in implementing EDI in India?
Ans:
Barriers/Challenges in implementing EDI
There are a few barriers to adopting electronic data interchange. One of the most significant barriers is the accompanying business process change. Existing business processes built around slow paper handling may not be suited for EDI and would require changes to accommodate automated processing of business documents. For example, a business may receive the bulk of their goods by 1 or 2 day shipping and all of their invoices by mail. The existing process may therefore assume that goods are typically received before the invoice. With EDI, the invoice will typically be sent when the goods ship and will therefore require a process that handles large numbers of invoices whose corresponding goods have not yet been received.
Another significant barrier is the cost in time and money in the initial set-up. The preliminary expenses and time that arise from the implementation, customization and training can be costly and therefore may discourage some businesses. The key is to determine what method of integration is right for your company which will determine the cost of implementation. For a business that only receives one P.O. per year from a client, fully integrated EDI may not make economic sense. In this case, businesses may implement inexpensive "rip and read" solutions or use outsourced EDI solutions provided by EDI "Service Bureaus". For other businesses, the implementation of an integrated EDI solution may be necessary as increases in trading volumes brought on by EDI force them to re-implement their order processing business processes.
The key hindrance to a successful implementation of EDI is the perception many businesses have of the nature of EDI. Many view EDI from the technical perspective that EDI is a data format; it would be more accurate to take the business view that EDI is a system for exchanging business documents with external entities, and integrating the data from those documents into the company's internal systems. Successful implementations of EDI take into account the effect externally generated information will have on their internal systems and validate the business information received. For example, allowing a supplier to update a retailer's Accounts Payables system without appropriate checks and balances would be a recipe for disaster. Businesses new to the implementation of EDI should take pains to avoid such pitfalls.
Increased efficiency and cost savings drive the adoption of EDI for most trading partners. But even if a company would not choose to use EDI on their own, pressures from larger trading partners (called hubs) often force smaller trading partners to use EDI. An example of this is Wal-Mart`s insistence on using EDI with all of its trading partners; any partner not willing to use EDI with Wal-Mart will not be able to do business with the company.
Q13 Explain emerging markets in India on B2B and B2C
Ans:
B2B: - Business to Business is that business activity in which 2 firm or business units make electronic transaction in which 1 can be a producer firm and other are raw material supplier firm. Commodity trading is an emerging market in India. There two major nation wide Commodity Exchanges already come in recent years eg NCDEX, MCX. And many more which are active at state level are growing to become nation level. There lot many B2B sites are coming in for example , etc. which are proving very good market place for SME.
B2C: Business to Customer is 1 party is the firm and other party is a customer. on the one hand, customer can seek info. , can place an order, get some items on the Internet and can also make the payment. on the other hand, a firm can make a survey to know, who buying what and can also know satisfaction level of customer. a firm can also make delivery of goods like air and train tickets etc. In B2C fastest growing market is of ticketing. In India you book trains online using B2C site provide by Indian Railways. They not only the ticket they deliver at your door steep. All air lines operating in India gives facility of online ticket booking. Another big industry coming in is Hotel all big chain of hotels operating in India offers facility of online room booking. Movie rental business now started growing in tier-II cites also. In movie rental business customer request for particular movie online and same movie CD/DVD are deliver to customer at nominal charges.
Automobile manufacturer makes several B2B transactions such as buying tires, glass for windscreens, and rubber hoses for its vehicles. The final transaction, a finished vehicle sold to the consumer, is a single (B2C) transaction.
(Note: I written this answer as per my Knowledge and Understanding, in exam you can write your own examples.)
Q14 What are the future trends in eBusiness?
Ans: (Note: This answer I just copied pasted from book so please read it and write in short during Exam)
Future Trends of E-Business
As the key premise of e-partnerships lies in a thriving e-business environment, the future of e-partnership development is tightly bound with, and determined by, the future of e-business. The author speculates possible development trends in e-commerce and e-business in the near future on the basis of current development patterns, which contribute directly to the viability of e-partnerships.
E-commerce and e-business practices will continue to grow. Industry analysts and renowned research groups, such as Gartner Group, have projected a strong growth in e-commerce and e-business, estimating the market will be worth US$7.3 trillion worldwide in 2004 and will continue to grow in the next few years. However, unlike some of the present examples, e-business will be more mature (rather than experimental) in nature, in terms of the scope, quality and credibility of online customer services and products. Participating in e-business will be part of every executive's job in the near future. Despite its success, the recent initial public offering (IPO) of Google's shares saw them fall below the price range set by its executives, suggesting that many investors are still very cautious about e-business in the wake of the disastrous dotcom crash in which millions of shareholders around the world were badly burned. The response to Google's IPO indicates that the public expectation for high-tech e-business ROI tends to be normal now and views e-business and e-commerce as the same as other businesses.
In terms of supply chain network integration, McCormack et al.'s study shows that most industry supply chains today have not reached the stage at which information and system integration is in place to build a supply chain network (McCormack, Johnson, & Walker, 2003). Full network integration, that is, all key business processes online and aligned within the network, will be the next step that organizations need to take to gain competitive advantage over other supply chain networks. E-supply chains or virtual supply chains will become a critical part of the future supply chain landscape. Virtual manufacturers, virtual distributors, virtual retailers and virtual service providers will dominate the virtual supply chains. E-business cybermediaries that do not need to own physical inventories or products will be a prominent force in the future supply chain. They will leverage the Internet to perform matching of products and buyers or coordinate marketing and transaction processes among network trading partners (Ross, 2003).
The collaboration of e-businesses is, and will continue to be, the key to sustained business success. An e-business strategy will be ineffective without an integrated e-partnership strategy because the ability to leverage collaborative relationships becomes essential in today's competitive e-business world. Consumer/purchaser power will dominate the e-business world and propel smaller e-businesses to bind together to provide customers with an everwidening array of products and services, real-time and rich information, and speedy and quality transactions. Moreover, collaborative e-partnerships help to streamline the product-to-market process through collaborative planning and design, improve efficiency from the channel network by reducing inventories and ultimately generate profitability.
Lee and Whang (2002) maintain that the future of e-business lies in intelligence. They believe that the next trend of e-business is intelligence at the supply chain level. Intelligence refers to the capacity for processing, accessing, controlling and managing information and knowledge. If this view holds true, the implications for future e-partnership are profound, as intelligence is crucial in the selection of e-partners, information exchange among e-partners, performance measurement of outcomes of e-partnerships and the detection problems in the e-supply chain.
In terms of e-marketplaces, it would appear that a trend has developed whereby the current highly successful mega-e-marketplaces, such as , eBay and the like, increasingly drive smaller players out of markets and limit competition, thus turning e-marketplaces into oligopolies (Murtaza, Gupta, & Carroll, 2004). However, the ubiquity of the Internet is and will continue to be a strong counter-force to the formation of oligopolies as there are actually no barriers to market entry in the cyber-world, and the Internet provides constant opportunities to engineer new types of trading partner relationships. Future e-marketplaces will require a whole range of quality services and products from e-business partnerships and alliances to deliver supreme value to customers. Thus, partnerships and deals based only on price will be obsolete in future e-marketplaces because price cannot be the sole criterion for selection of partners.
Although the concept is as old as the manufacturing process, quality management will gain momentum in e-business management. The failure of many e-businesses and the dotcom crash have on the whole been caused by poor quality customer services and support, problems with Web site security and technologies, and weaker change management (Janenko, 2003). The key principles of quality management will be the fundamental cornerstone to e-business success, including:
▪ Customer focus;
▪ Continuous improvement and measurement to achieve customer satisfaction;
▪ Acquiring customer and market knowledge;
▪ Mutual respect, mutual trust and mutual benefit of all stakeholders;
▪ Consistent and precise performance to high standards in all areas of the organization;
▪ Striving for excellence through benchmarking and so forth;
▪ Measurement of quality using data and tools;
▪ Improving quality and efficiency of decision making;
▪ Better use of resources to achieve effectiveness and efficiency;
▪ Results focus;
▪ Management by facts and processes;
▪ Effective leadership and team commitment;
▪ Team building and collaboration;
▪ Valuing employees, human and intellectual capital;
▪ Employee training/education/development;
▪ Empowerment and involvement; and
▪ Opening channels of communication.
These familiar components of quality management undoubtedly offer an essential guide for the quality operations of e-business. It is a widespread fallacy that a good quality Web site design and a high volume of hits or traffic are good indicators of quality and will lead automatically to e-business success (Janenko, 2003; Ross, 2003). Indeed, it is this misconception that turned the "dotcom boom" into "dotcom doom". The primary fundamental quality management constructs therefore still have appeal in current and future e-business management.
OR
FUTURE TRENDS
From Competitive Advantage to Necessity
As more small businesses are using the Internet to support business activities, it is no longer an option but a key to competitiveness. For small businesses that have suppliers and/or customers who have adopted e-commerce, not being able to interact using Internet technologies is a competitive disadvantage. As such, small businesses are expecting to be e-commerce ready or risk losing out in the future. As e-commerce software and services are maturing and becoming affordable, widespread adoption is expected.
From Fragments to Clusters
For a few years, e-commerce adoption has been a fragmented process, meaning individual small businesses tried to establish a Web presence or install e-commerce software onto their systems. As efforts such as application service providers, B2B marketplaces, and industry-wide platforms are maturing, small businesses are becoming part of a supply web, a member of a B2B marketplace, or are tightly integrated into a large organization's extranet. The result is that small businesses will become part of one or more e-clusters, reflecting the nature and flows of business activities.
From Paper Based to Paperless
While clichés about a paperless office have been around for over a decade, it becomes closer to such a reality when B2C, B2B, and B2G (business to government [or public establishments]) activities are increasingly popular. In some countries, submission of information such as taxation assessments is now carried out as part of an e-government setup. Small businesses are under pressure to carry out business transactions not only with other businesses, but also with government and public organizations over the Internet.
From Driven to Driving
Many small businesses in the 1990s were driven to adopt e-commerce, sometimes unwillingly. This might be due to the lack of knowledge and human resources to address related technical and business issues. As technologies are becoming more user friendly and affordable, together with readily available technical specialists, adoption of some kind of e-commerce applications and/or systems has risen dramatically. The complexity of e-commerce systems from a user's perspective is not that much different from office software. Most importantly, the e-commerce strategy should not be someone else's agenda, but the driving solution of the small firm.
Q15 How eBusiness shape up in India in next 5 years
Ans: With the help of Q13 and 2nd part of Q14 you can write answer to this question. Following martial is also helpful in writing answer
Organization in Retail will catalyze eCommerce eco-system
First and foremost, as the retail industry gets organized in India, the overall supply chain infrastructure will see a significant improvement. This will have a direct and positive impact on the online channel. Today, the online supply chain infrastructure is virtually non-existent. Distributors use adhoc means to replenish inventories and fulfill customer orders. This leads to significant “out of stock” situations, which impacts the overall online customer experience. Having a solid supply chain infrastructure in place, distributors will be able to fulfill online orders in a predictable way.
Second, organized retailers will push for standardization across manufacturers and fulfillment partners. If we look at categories such as apparel, one of the biggest reasons consumers don’t like to shop online is that they don’t know what they are getting in terms of size, quality and fit. However, as there is standardization in quality as well as the attributes, consumers will feel more confident in purchasing the products online, without needing to “touch and feel” the physical product.
Another factor that will play a significant role in building this eco system is technology automation across the value chain. For nationwide retailers to maintain a competitive cost structure, they will push the manufacturers as well as suppliers to offer sophisticated technology integration so that they can better manage the flow of merchandise across the value chain. Online retailers will directly benefit from this sophistication in technology because they will be able to fulfill customers’ orders in a predictable fashion.
Lastly, national retailers will need to pool large amount of inventory in their distribution centers to service their stores across India. Holding inventory comes with an inevitable risk of over-forecasting. In these excess inventory conditions, retailers will need outlets for clearing the merchandise to free up the capital, and to flow fresh season merchandise into the stores. Web is a great channel for the clearance strategy, and retailers will be able to offer deep discounts online to clear up the inventory before they get ready for the next buying season. In US, various online retailers such as are built around the business model of buying overstock merchandise from retailers across US, and offering deep clearance pricing to customers.
Looking beyond Supply Chain & Fulfillment
The factors discussed above will help improve the adoption of eCommerce by making the online channel much more reliable. However, the role of online channel doesn’t end here. With organization in retail, new online business models will emerge that will help facilitate online as well as offline sales. In Sears, we used to call these “Web Influenced Sales”. Over 70% of retail sales across high consideration categories in the United States are influenced by some kind of research on the internet. There are online businesses that provide comparison shopping services (e.g. ), discussions on hot deals (e.g. ), product reviews (e.g. ), Local store promotions () etc. All these services are part of the online eco-system, that provide information at consumer’s fingertips so that they don’t have to scour through 100s of printed store ads or rely on word of mouth to determine where can they purchase that new XBOX 360 console. As retail organizes in India, we will see the evolution of similar online aggregation and retail focused services that will not only help customers make informed purchase decisions, but will also put the online channel in the center stage of online and offline retail.
The confluence of above factors will set the stage for a perfect storm that will redefine the role of online channel in the minds of Indian shoppers.
Q16 Give detail of eBusiness implementation on an organisation - case study E-Business
Ans:
EDI
EDI is the process of using computers to exchange business documents between companies. Previously, fax machines or traditional mail was used to exchange documents. Mailing and faxing are still used in business, but EDI is a much quicker way to do the same thing.
EDI is used by a huge number of businesses. Over 100,000 businesses have replaced the more traditional methods with EDI. This new system has a number of benefits; cost is one of them. Computer to computer exchange is much less expensive than traditional methods of document exchange. Processing a paper-based order can cost up 70 US dollars (USD), whereas using EDI costs 1 USD or less.
EDI is used by a huge number of businesses. Over 100,000 businesses have replaced the more traditional methods with EDI. This new system has a number of benefits; cost is one of them. Computer to computer exchange is much less expensive than traditional methods of document exchange. Processing a paper-based order can cost up 70 US dollars (USD), whereas using EDI costs 1 USD or less.
As a computer processes the documents in EDI, there is also less chance of human error. Speed is another benefit. A paper purchase order can take ten days to two weeks from the time the buyer requests it to the time the shipper sends it off. Now, the same order can be processed in less than a day.
These faster transaction times help maintain efficient inventory levels. They also contribute to a better use of warehouse space, and less out-of-stock problems. This in turn leads to a reduction in freight costs, as there should be no need for last minute urgent delivery surcharges.
There are a few drawbacks to the process. EDI can only work if everyone the company has deals with is using the same method. If the changeover has not been made within some businesses, other companies dealing with them may have to use EDI as well as the more traditional methods. This can be costly and time consuming. It may involve one member of staff maintaining the mailing process while another worker sends documents electronically.
The process of using EDI for purchasing is very simple. Once a purchase order has been written, the document is translated into a specific format and submitted to the supplier via the Internet. It must be ensured that the document used by both parties is in exactly the same format.
Security is an important issue for companies using EDI. Data security is controlled throughout the process using passwords, encryption and user identification. The EDI has software that checks and edits the documents for accuracy.
Basically, all that is needed to run this method of document exchange is a computer and access to the Internet. There are many companies that supply no-fuss EDI software application packages. These have their own encryption software and the installation process can be completed in a few minutes. From a small initial outlay, companies can use EDI to improve efficiency while saving time, money and labor.
What are the Challenges?
EDI presents many opportunities, each having a distinct flavour, however fundamental to all of these is a challenge presented to the industry to collaborate more intelligently and more effectively. To achieve this goal companies must invest know-how in an environment that rewards their input without compromising their competitive edge. Collaboration is essential if we are to achieve sustained improvement in the way projects are designed and delivered.
For EDI standards such as the CIS to proliferate, they must be the products of industry. The challenge here is to maintain a form of ownership of these standards that encourages both participation and implementation, without which a standard is of little value.
Governments have a role to play in facilitating such activities, where industry will not fully finance the education, research and development required. Governments, uniquely, can act to mobilse an industry often entrenched in confrontational relationships where individualism is often promoted. This mobilisation must be achieved at the earliest opportunity, to enable those in the main body of industry to implementg latest EDI technology before it develops further still.
What are the costs and challenges associated with implementing EDI?
Your computer system must be able to translate the transactions it creates into a standard form that can be received and understood by your trading partner's computer. This used to be a major problem, as the EDI "X.12" standard was written in general terms. As a result, one company's version of the EDI purchase order was not necessarily the same as another firm's EDI purchase order. Companies incurred significant expense modifying their EDI software (or "maps") for each trading partner. Recently a new specific standard, EDIPro™, has ensured that a company can trade transactions with nearly any partner with standard EDI software. Though originally developed for electrical distributors, EDIPro is quickly being adopted by other industries to facilitate EDI implementation.
IMPLEMENTING EDI
DEFINE A STRATEGY
It is important from the outset to understand that EDI is a tool. It is not a panacea. As a company's management team begins to plan it's EDI strategy a careful assessment of the problems the company wishes to address is critical. Such a review can help to insure that applying an EDI solution will actually contribute to solving problems and rather symptoms.
Without a strategic analysis it is very easy to solve the wrong problem. If FastPart successfully implements a project that reduces retail order processing time from days to hours, but has failed to understand that reducing delivery time from weeks to days is the real problem, the benefits of the improvement will go un-noticed. Or, worse yet, the effort put into an EDI implementation will be written off as a bad investment, and further implementations may be curtailed or eliminated.
SEEK OBJECTIVES OF MUTUAL BENEFIT
EDI is first and foremost an enterprise requiring partnership. Nothing is guaranteed to quell enthusiasm for an EDI project more quickly than the perception that benefits and costs are not shared equally within the partnership. Setting forth objectives that are advantageous to only one partner is a sure-fire method of guaranteeing failure.
Returning to the FastPart company, suppose that a major customer has required that they be invoiced electronically. The advantage to the customer is a major reduction in the overhead in processing their invoices. The problem with this approach is that FastPart will obtain no benefit from the exchange. While it will help the customer, it will not guarantee that FastPart gets paid any sooner. If the customer is an important one, FastPart may have little choice but to implement the transaction.
This is not an ideal method for encouraging and developing a true business partnership. A more realistic approach to this EDI partnership would be to offer, in exchange for electronic invoicing, automatic fund transfer for payment, thereby helping the FastPart to reduce the cycle of their accounts receivable. Everybody goes home a winner.
DEFINE REALISTIC OBJECTIVES
Everyone has had contact at one time or another with a sales representative who was pitching a product that would solve every problem put to it, and insure proper weather on the weekend for the company golf outing. So even if the product did everything it was designed to, if it rained on the golf outing, the product would be perceived as a failure.
For initial EDI projects, limited objectives with perceivable benefits should be sought out. If FastPart selects, for its first project an ambitious plan to completely overhaul their entire retail distribution process, they may well be attempting too large a first step. A more realistic initial project would be to automate customer order processes, along with providing order confirmations and delivery notifications.
An even more realistic objective would be to implement a project that can be undertaken on a pilot basis, to clearly demonstrate benefits, with very limited risk. A properly selected and limited pilot project will be easier to implement with minimal impact. The success of the pilot will surely be an asset in selling expansion of the project to company-wide application.
PROVIDE MEASURABLE OBJECTIVES
Of the many entries on "the most frustrating experience" list, one of them has surely got to be completing a project and not knowing whether it was a success. A key factor in insuring success is defining the objectives in terms that can be measured.
If management proposes to install an EDI system, but fails to adequately identify why it is doing so, and what specific benefits should be achieved, the targeted user community will quickly define its own objectives, with little guarantee that any can actually be met.
If, on the other hand, the objective of a project is stated as reducing a specific expense, or specific transaction cycle time by some amount, when the project is complete, the numbers will bear out the success.
PLAN CAREFULLY
Much of the work of planning an implementation can be eased if objectives have been carefully defined. Implementing a company-wide comprehensive EDI solution cannot be integrated into the existing framework of a company's business in one step. It must be applied carefully, step by step.
An important aspect of implementation planning is involving all concerned parties at all steps of the project. Good communication is essential, so that newly installed EDI capabilities will change the way business is done, not disrupt it.
One of the most valuable ways of providing good communication and project management is to define an EDI coordinator's position. This position should be filled by an individual with strong knowledge of both the business requirements being addressed, and the technical requirements of EDI.
A critical step in implementation planning is the testing process. Before users are actually committed to depending on their new EDI function, they must be comfortable that the process actually works reliably, all the time. This must be proven beyond doubt by carefully constructed testing and validation procedures. In most cases, since data is being transferred to another trading partner, it will be necessary to assure both internal and external users that correct information is being traded.
KNOW THE COSTS
In any project, it is necessary to know what the true cost of implementation will be, and it is no different with EDI implementations. Some of the cost exposures are obvious, such as hardware and software. This list is certainly not definitive, but may provide some direction in anticipating costs that are not so obvious.
1. Translation Software: Cost is usually on a per-CPU basis, and most vendors will negotiate site license costs.
2. Software Maintenance: Purchasing a software maintenance contract is always advisable, since this will usually provide technical assistance, and will frequently guarantee automatic updates. With translation software, the updates should include additional transaction sets as they are implemented.
3. Internal Software development costs: Modifications to internal systems should be cosseted as any other software project would be.
4. Hardware costs: Cost will depend not only upon platform, but upon the specific configuration of the platform. Additional costs may be encountered in operating system software licensing, hardware interfaces for networking, and additional peripheral devices such as tape backup systems.
5. Training costs: these costs can include in-house training for new procedures, vendor training for software products and for hardware.
6. Additional resource costs: If a business is venturing for the first time into the UNIX open-systems environment, it may be necessary to hire a technical specialist that s familiar with system administration and support for the platform.
7. Specialty hardware: the EDI project may require special data collection devices such as bar code equipment or special printers.
8. Networking costs: If a private network will be used, there are leasing costs for phone lines, and additional networking hardware costs. If the business opts for the use of a VAN, explicit pricing policies for all services should be available, allowing for exact determination of start-up and on-going communications costs.
9. Legal costs: Since EDI requires entering partnerships with other companies, it will require that contractual relationships are defined. For EDI, a standard contract form has been developed called and EDI Trading Partner Agreement. This form helps define relationships and responsibilities. It is a fairly straight-forward form, and should serve as the basis for any contractual arrangements. Also, it is always advisable to insure that such contracts properly protect parties, so legal costs may have to be factored into project estimates.
10. Consulting costs: It may be a worthwhile investment for a company new to EDI to hire the consulting services of knowledgeable experts. Professional expertise can be invaluable in initial planning, particularly in determining strategic objectives.
--===================================================
Digital Certificate
E-commerce has flourished because of the ability to perform secure transactions online using the proper tools. These tools are public key encryption and digital certificates.
Public key encryption uses SSL (Secure Sockets Layer) to encrypt all data between the customer's computer and the e-commerce website. Information is sent in encrypted form to the site using the site's public key. Upon receiving the information, the site uses its private key to decrypt the information. This is called a key pair. Interlopers that might capture data en route will find it unreadable.
The problem, however, is that anyone can create a website and key pair using a name that doesn't belong to them. This is where digital certificates come in. Digital certificates are trusted ID cards in electronic form that bind a website's public encryption key to their identity for purposes of public trust.
Digital certificates are issued by an independent, recognized and mutually trusted third party that guarantees that the website operating is who it claims to be. This third party is known as a Certification Authority (CA). Without digital certificates, the public has little assurance as to the legitimacy of any particular website.
A digital certificate contains an entity's name, address, serial number, public key, expiration date and digital signature, among other information. When a Web browser like Firefox, Netscape or Internet Explorer makes a secure connection, the digital certificate is automatically turned over for review. The browser checks it for anomalies or problems, and pops up an alert if any are found. When digital certificates are in order, the browser completes secure connections without interruption.
Though rare, there have been cases of phishing scams duplicating a website and 'hijacking' the site's digital certificate to fool customers into giving up personal information. These scams involved redirecting the customer to the real site for authentication, then bringing them back to the duped website. Other phishing scams use self-signed digital certificates to dispose of the trusted third party or Certificate Authority altogether. The issuer of the digital certificate and the signer are one in the same. A browser will alert in this case, but most users click through anyway, not understanding the difference.
Digital certificates play an integral role in keeping online commerce safe. If your browser alerts you to a problem with a digital certificate, you are well-advised not to click through. Instead, call the business using a telephone number from your statements or phone book, and inquire as to the problem.
Not all Certificate Authorities are equal. Some CAs are newer and less well known. Two examples of highly trusted CAs are VeriSign and Thawte. If your browser does not recognize a Certificate Authority, it will alert you.
--======================
Introduction to Digital Certificates
| |
| |
|Digital Certificates provide a means of proving your identity in electronic transactions, much like a driver license or a passport does in face-to-face |
|interactions. With a Digital Certificate, you can assure friends, business associates, and online services that the electronic information they receive |
|from you are authentic. |
|This document introduces Digital Certificates and answers questions you might have about how Digital Certificates are used. For information about the |
|cryptographic technologies used in Digital Certificates |
|What is a Digital Certificate? |
|Digital Certificates are the electronic counterparts to driver licenses, passports and membership cards. You can present a Digital Certificate |
|electronically to prove your identity or your right to access information or services online. |
|Digital Certificates, also known as digital certificates, bind an identity to a pair of electronic keys that can be used to encrypt and sign digital |
|information. A Digital Certificate makes it possible to verify someone's claim that they have the right to use a given key, helping to prevent people from |
|using phony keys to impersonate other users. Used in conjunction with encryption, Digital Certificates provide a more complete security solution, assuring |
|the identity of all parties involved in a transaction. |
|A Digital Certificate is issued by a Certification Authority (CA) and signed with the CA's private key. |
|A Digital Certificate typically contains the: |
|Owner's public key |
|Owner's name |
|Expiration date of the public key |
|Name of the issuer (the CA that issued the Digital Certificate |
|Serial number of the Digital Certificate |
|Digital signature of the issuer |
|The most widely accepted format for Digital Certificates is defined by the CCITT X.509 international standard; thus certificates can be read or written by |
|any application complying with X.509. Further refinements are found in the PKCS standards and the PEM standard. |
|What are Digital Certificates used for? |
|Digital Certificates can be used for a variety of electronic transactions including e-mail, electronic commerce, groupware and electronic funds transfers. |
|Netscape's popular Enterprise Server requires a Digital Certificate for each secure server. |
|For example, a customer shopping at an electronic mall run by Netscape's server software requests the Digital Certificate of the server to authenticate the|
|identity of the mall operator and the content provided by the merchant. Without authenticating the server, the shopper should not trust the operator or |
|merchant with sensitive information like a credit card number. The Digital Certificate is instrumental in establishing a secure channel for communicating |
|any sensitive information back to the mall operator. |
|Why do I need a Digital Certificate? |
|Virtual malls, electronic banking, and other electronic services are becoming more commonplace, offering the convenience and flexibility of round-the-clock|
|service direct from your home. However, your concerns about privacy and security might be preventing you from taking advantage of this new medium for your |
|personal business. Encryption alone is not enough, as it provides no proof of the identity of the sender of the encrypted information. Without special |
|safeguards, you risk being impersonated online. Digital Certificates address this problem, providing an electronic means of verifying someone's identity. |
|Used in conjunction with encryption, Digital Certificates provide a more complete security solution, assuring the identity of all parties involved in a |
|transaction. |
|Similarly, a secure server must have its own Digital Certificate to assure users that the server is run by the organisation it claims to be affiliated with|
|and that the content provided is legitimate |
|What Digital Certificate Services do you offer? |
|We provide issuing, revocation, and status services for three types of Digital Certificates -- Server Certificates, Developer Certificates for software |
|publishers, and personal Digital Certificates for use with Web Browsers and S/MIME applications. |
|Server Certificates enable Web servers to operate in a secure mode. A Server Certificate unambiguously identifies and authenticates your server and |
|encrypts any information passed between the server and a Web browser. |
|Developer Certificates are used in conjunction with Microsoft AuthenticodeTM Technology (software validation) provide customers with the information and |
|assurance they need when downloading software from the Internet. |
|Personal Digital Certificates are used by individuals when they exchange messages with other users or online services. |
|We offer three classes of Digital Certificates. The classes are differentiated by their assurance level--the level of confidence that can be placed in the |
|Digital Certificate based on knowledge of the process used to verify the owner's identity. The identification requirements are greater for higher numbered |
|classes--for example, a Class 1 Digital Certificate verifies the owner's e-mail address, while a Class 2 Digital Certificate offers the additional |
|assurance of verification of the owner's personal identity. |
|What is authentication? |
|Authentication allows the receiver of a digital message to be confident of both the identity of the sender and the integrity of the message. |
|What is a digital signature? |
|A digital signature functions for electronic documents like a handwritten signature does for printed documents. The signature is an unforgeable piece of |
|data that asserts that a named person wrote or otherwise agreed to the document to which the signature is attached. |
|A digital signature actually provides a greater degree of security than a handwritten signature. The recipient of a digitally signed message can verify |
|both that the message originated from the person whose signature is attached and that the message has not been altered either intentionally or accidentally|
|since it was signed. Furthermore, secure digital signatures cannot be repudiated; the signer of a document cannot later disown it by claiming the signature|
|was forged. |
|In other words, Digital Signatures enable "authentication" of digital messages, assuring the recipient of a digital message of both the identity of the |
|sender and the integrity of the message |
|How is a digital signature used for authentication? |
|Suppose Alice wants to send a signed message to Bob. She creates a message digest by using a hash function on the message. The message digest serves as a |
|"digital fingerprint" of the message; if any part of the message is modified, the hash function returns a different result. Alice then encrypts the message|
|digest with her private key. This encrypted message digest is the digital signature for the message. |
|Alice sends both the message and the digital signature to Bob. When Bob receives them, he decrypts the signature using Alice's public key, thus revealing |
|the message digest. To verify the message, he then hashes the message with the same hash function Alice used and compares the result to the message digest |
|he received from Alice. If they are exactly equal, Bob can be confident that the message did indeed come from Alice and has not changed since she signed |
|it. If the message digests are not equal, the message either originated elsewhere or was altered after it was signed. |
|Note that using a digital signature does not encrypt the message itself. If Alice wants to ensure the privacy of the message, she must also encrypt it |
|using Bob's public key. Then only Bob can read the message by decrypting it with his private key. |
|It is not feasible for anyone to either find a message that hashes to a given value or to find two messages that hash to the same value. If either were |
|feasible, an intruder could attach a false message onto Alice's signature. Specific hash functions have been designed to have the property that finding a |
|match is not feasible, and are therefore considered suitable for use in cryptography. |
|One or more Digital Certificates can accompany a digital signature. If a Digital Certificate is present, the recipient (or a third party) can check the |
|authenticity of the public key |
|How long do digital signatures remain valid? |
|Normally, a key expires after some period of time, such as one year, and a document signed with an expired key should not be accepted. However, there are |
|many cases where it is necessary for signed documents to be regarded as legally valid for much longer than two years; long-term leases and contracts are |
|examples. By registering the contract with a digital time-stamping service at the time it is signed, the signature can be validated even after the key |
|expires. |
|If all parties to the contract keep a copy of the time-stamp, each can prove that the contract was signed with valid keys. In fact, the time-stamp can |
|prove the validity of a contract even if one signer's key gets compromised at some point after the contract was signed. Any digitally signed document can |
|be time-stamped, assuring that the validity of the signature can be verified after the key expires |
|What is a digital time-stamping service? |
|A digital time-stamping service (DTS) issues time-stamps which associate a date and time with a digital document in a cryptographically strong way. The |
|digital time-stamp can be used at a later date to prove that an electronic document existed at the time stated on its time-stamp. For example, a physicist |
|who has a brilliant idea can write about it with a word processor and have the document time-stamped. The time-stamp and document together can later prove |
|that the scientist deserves the Nobel Prize, even though an arch rival may have been the first to publish. |
|Here's one way such a system could work. Suppose Alice signs a document and wants it time-stamped. She computes a message digest of the document using a |
|secure hash function and then sends the message digest (but not the document itself) to the DTS, which sends her in return a digital time-stamp consisting |
|of the message digest, the date and time it was received at the DTS, and the signature of the DTS. Since the message digest does not reveal any information|
|about the content of the document, the DTS cannot eavesdrop on the documents it time-stamps. Later, Alice can present the document and time-stamp together |
|to prove when the document was written. A verifier computes the message digest of the document, makes sure it matches the digest in the time-stamp, and |
|then verifies the signature of the DTS on the time-stamp. |
|To be reliable, the time-stamps must not be forgeable. Consider the requirements for a DTS of the type just described: |
|The DTS itself must have a long key if we want the time-stamps to be reliable for, say, several decades. |
|The private key of the DTS must be stored with utmost security, as in a tamperproof box. |
|The date and time must come from a clock, also inside the tamperproof box, which cannot be reset and which will keep accurate time for years or perhaps for|
|decades. |
|It must be infeasible to create time-stamps without using the apparatus in the tamperproof box. |
|A cryptographically strong DTS using only software has been implemented by Bellcore; it avoids many of the requirements just described, such as tamperproof|
|hardware. The Bellcore DTS essentially combines hash values of documents into data structures called binary trees, whose "root" values are periodically |
|published in the newspaper. A time-stamp consists of a set of hash values which allow a verifier to recompute the root of the tree. Since the hash |
|functions are one-way, the set of validating hash values cannot be forged. The time associated with the document by the time-stamp is the date of |
|publication. |
|The use of a DTS would appear to be extremely important, if not essential, for maintaining the validity of documents over many years. Suppose a landlord |
|and tenant sign a twenty-year lease. The public keys used to sign the lease are set to expire after two years. Solutions such as recertifying the keys or |
|resigning every two years with new keys require the cooperation of both parties several years after the original signing. If one party becomes dissatisfied|
|with the lease, he or she may refuse to cooperate. The solution is to register the lease with the DTS at the time of the original signing; both parties |
|would then receive a copy of the time-stamp, which can be used years later to enforce the integrity of the original lease. |
|In the future, it is likely that a DTS will be used for everything from long-term corporate contracts to personal diaries and letters. Today, if an |
|historian discovers some lost letters of Mark Twain, their authenticity is checked by physical means. But a similar find 100 years from now may consist of |
|an author's computer files; digital time-stamps may be the only way to authenticate the find. |
|What is the legal status of documents signed with digital signatures? |
|If digital signatures are to replace handwritten signatures they must have the same legal status as handwritten signatures, i.e., documents signed with |
|digital signatures must be legally binding. The Australian Government and most states and territories in Australia have already enacted legislation that |
|gives electronic communications the same status as written communications at law (both criminal and civil). These are known as the Electronic Transactions |
|Acts. There are some limitations on when electronic communications are effective, but the basic principle is that transactions are not invalid because they|
|took place electronically. |
|However, since the validity of documents with digital signatures has never been challenged in court, their legal status is not yet well-defined. Through |
|such challenges, the courts will issue rulings that collectively define which digital signature methods, key sizes, and security precautions are acceptable|
|for a digital signature to be legally binding. |
|Digital signatures have the potential to possess greater legal authority than handwritten signatures. If a ten page contract is signed by hand on the tenth|
|page, one cannot be sure that the first nine pages have not been altered. However, if the contract was signed with digital signatures, a third party can |
|verify that not one byte of the contract has been altered. |
|Currently, if two people want to digitally sign a series of contracts, they might first sign a paper contract in which they agree to be bound in the future|
|by any contracts digitally signed by them with a given signature method and minimum key size. |
|How do I use Digital Certificates? |
|When you receive digitally signed messages, you can verify the signer's Digital Certificate to determine that no forgery or false representation has |
|occurred. |
|When you send messages, you can sign the messages and enclose your Digital Certificate to assure the recipient of the message that the message was actually|
|sent by you. Multiple Digital Certificates can be enclosed with a message, forming a hierarchical chain, wherein one Digital Certificate testifies to the |
|authenticity of the previous Digital Certificate. At the end of a Digital Certificate hierarchy is a top-level Certification Authority, which is trusted |
|without a Digital Certificate from any other Certification Authority. The public key of the top-level Certification Authority must be independently known, |
|for example by being widely published. The more familiar you are to the recipient of the message, the less need there is to enclose Digital Certificate. |
|You can also use a Digital Certificate to identify yourself to secure servers such as membership-based Web servers. |
|Generally, once you've obtained a Digital Certificate, you can set up your security-enhanced Web or e-mail application to use the Digital Certificate |
|automatically. |
--===================================================
Digital Signatures
What is a Digital Signature?
An introduction to Digital Signatures, by David Youd
[pic]
|[pic] |[pic] |[pic] |
|Bob | |(Bob's public key) |
| | |[pic] |
| | |(Bob's private key) |
Bob has been given two keys. One of Bob's keys is called a Public Key, the other is called a Private Key.
|Bob's Co-workers: |
|[pic] |[pic] |[pic] |[pic] |[pic] |
| | | | |Anyone can get Bob's Public Key, |
| | | | |but Bob keeps his Private Key to |
| | | | |himself |
|Pat |Doug |Susan | | |
Bob's Public key is available to anyone who needs it, but he keeps his Private Key to himself. Keys are used to encrypt information. Encrypting information means "scrambling it up", so that only a person with the appropriate key can make it readable again. Either one of Bob's two keys can encrypt data, and the other key can decrypt that data.
Susan (shown below) can encrypt a message using Bob's Public Key. Bob uses his Private Key to decrypt the message. Any of Bob's coworkers might have access to the message Susan encrypted, but without Bob's Private Key, the data is worthless.
|[pic] |[pic] |"Hey Bob, how about |[pic] |HNFmsEm6Un BejhhyCGKOK|
| | |lunch at Taco Bell. I | |JUxhiygSBCEiC |
| | |hear they have free | |0QYIh/Hn3xgiK |
| | |refills!" | |BcyLK1UcYiY |
| | | | |lxx2lCFHDC/A |
|[pic] |[pic] |HNFmsEm6Un BejhhyCGKOK|[pic] |"Hey Bob, how about |
| | |JUxhiygSBCEiC | |lunch at Taco Bell. I |
| | |0QYIh/Hn3xgiK | |hear they have free |
| | |BcyLK1UcYiY | |refills!" |
| | |lxx2lCFHDC/A | | |
With his private key and the right software, Bob can put digital signatures on documents and other data. A digital signature is a "stamp" Bob places on the data which is unique to Bob, and is very difficult to forge. In addition, the signature assures that any changes made to the data that has been signed can not go undetected.
|[pic] |[pic] |[pic] |
|[pic] |To sign a document, Bob's software will crunch down the data into just a few lines by a process called "hashing". These few lines are |
| |called a message digest. (It is not possible to change a message digest back into the original data from which it was created.) |
|[pic] |[pic] |[pic] |
Bob's software then encrypts the message digest with his private key. The result is the digital signature.
|[pic] |[pic] |[pic] |
Finally, Bob's software appends the digital signature to document. All of the data that was hashed has been signed.
|[pic] |[pic] |[pic] |
| |[pic] |[pic] |
Bob now passes the document on to Pat.
|[pic] |First, Pat's software decrypts the signature (using Bob's public key) changing it back into a message digest. If this worked, then it |
| |proves that Bob signed the document, because only Bob has his private key. Pat's software then hashes the document data into a message |
| |digest. If the message digest is the same as the message digest created when the signature was decrypted, then Pat knows that the signed |
| |data has not been changed. |
Plot complication...
|[pic] |Doug (our disgruntled employee) wishes to deceive Pat. Doug makes sure that Pat receives a signed message and a public key that appears to |
| |belong to Bob. Unbeknownst to Pat, Doug deceitfully sent a key pair he created using Bob's name. Short of receiving Bob's public key from |
| |him in person, how can Pat be sure that Bob's public key is authentic? |
It just so happens that Susan works at the company's certificate authority center. Susan can create a digital certificate for Bob simply by signing Bob's public key as well as some information about Bob.
|Bob Info: |[pic] |[pic] |[pic] |[pic] |
| Name | |[pic] | | |
| Department | | | | |
| Cubical Number | | | | |
|Certificate Info: | | | | |
| Expiration Date | | | | |
| Serial Number | | | | |
|Bob's Public Key: | | | | |
| [pic] | | | | |
| | | | | |
Now Bob's co-workers can check Bob's trusted certificate to make sure that his public key truly belongs to him. In fact, no one at Bob's company accepts a signature for which there does not exist a certificate generated by Susan. This gives Susan the power to revoke signatures if private keys are compromised, or no longer needed. There are even more widely accepted certificate authorities that certify Susan.
Let's say that Bob sends a signed document to Pat. To verify the signature on the document, Pat's software first uses Susan's (the certificate authority's) public key to check the signature on Bob's certificate. Successful de-encryption of the certificate proves that Susan created it. After the certificate is de-encrypted, Pat's software can check if Bob is in good standing with the certificate authority and that all of the certificate information concerning Bob's identity has not been altered.
Pat's software then takes Bob's public key from the certificate and uses it to check Bob's signature. If Bob's public key de-encrypts the signature successfully, then Pat is assured that the signature was created using Bob's private key, for Susan has certified the matching public key. And of course, if the signature is valid, then we know that Doug didn't try to change the signed content.
[pic]
Although these steps may sound complicated, they are all handled behind the scenes by Pat's user-friendly software. To verify a signature, Pat need only click on it.
Digital Signature
A large amount of communication takes places these days electronically. People send emails, faxes, and files with the help of computers. With each and every file that is sent electronically, even emails, the possibility for a security breach exists.
Hackers live for challenges, but they make a living from non-challenges. In order to protect data that you transfer electronically, you might want to invest in a digital signature. This is a powerful, technologically advanced way to make sure that your communique reaches only the intended recipient. A digital signature is an electronic signature that can be attached to documents to prove that the original content is still the content of record. In other words, a document containing a digital signature has been certified by its sender as accurate to his or her intentions and has not been altered by an unintended third party.
One of the main components of a digital signature is its timestamp. This tells both the sender and the recipient the exact time at which the file was sent. The sender can match the timestamp to his email or other method of file transfer in order to prove that no one intercepted the file and altered its data in transit, or worse, stole its data for good so that the transfer never took place.
A digital signature is usually the product of a dedicated software application, although it can be included as part of another application. The random number generator function of a computer generates a series of 0s and 1s that make up a letters-and-numbers sequence to protect your data by allowing your intended recipient to verify that the file has been encrypted to your specifications.
Technically, the digital signature process smashes the digital data and all its aspects into a handful of lines of code. This process is called hashing, and the resulting set of coding is called a message digest. The digital signature software then encrypts the message digest. On the other end, a decryption program is required to turn the message digest back into an "unhashed" document.
Something else is going on here as well. The person who creates the digital signature uses a private data "key" to do the hashing. His or her other "key," a public one, is known to the intended recipient. When the sender transmits data using the digital signature, the recipient enters the sender's public key and is able to decrypt the document. Only if the sender's private key, which the recipient doesn't view, is intact will the file appear unblemished, as it was intended.
--==========================================================================
PKI Infrastructure
Refer Print Out
--============================================
SSL
SSL or Secure Sockets Layer is a security protocol created by Netscape that has become an international standard on the Internet for exchanging sensitive information between a website and the computer communicating with it, referred to as the client.
SSL technology is embedded in all popular browsers and engages automatically when the user connects to a web server that is SSL-enabled. It's easy to tell when a server is using SSL security because the address in the URL window of your browser will start with https. The "s" indicates a secure connection.
When your browser connects to an SSL server, it automatically asks the server for a digital Certificate of Authority (CA). This digital certificate positively authenticates the server's identity to ensure you will not be sending sensitive data to a hacker or imposter site. The browser also makes sure the domain name matches the name on the CA, and that the CA has been generated by a trusted authority and bears a valid digital signature. If all goes well you will not even be aware this handshake has taken place.
However, if there is a glitch with the CA, even if it is simply out of date, your browser will pop up a window to inform you of the exact problem it encountered, allowing you to end the session or continue at your own risk.
Once the handshake is completed, your browser will automatically encrypt all information that you send to the site, before it leaves your computer. Encrypted information is unreadable en route. Once the information arrives at the secure server, it is decrypted using a secret key. If the server sends information back to you, that information is also encrypted at the server's end before being sent. Your browser will decrypt it for you automatically upon arrival, then display it as it normally does.
For those running a secure server it is also possible to authenticate the client connecting to the server to ensure, for example, that the person is not pretending to be someone who has been granted restricted access. Another feature of SSL technology is the ability to authenticate data so that an interceder cannot substitute another transmission for the actual transmission without being detected.
Though SSL makes exchanging sensitive information online secure, it cannot guarantee that the information will continue to be kept secure once it arrives safely at the server. For assurance that sensitive information is handled properly once it has been received, you must read the site's privacy policy. It does little good to trust your personal data to SSL, if the people who ultimately have it will be sharing it with third parties, or keeping it on servers that are not bound by restricted access and other security protocols. Therefore it is always wise to read any site's privacy policy, which includes security measures, before volunteering your personal information online.
How SSL Works
The Secure Sockets Layer (SSL)
The Secure Sockets Layer (SSL) is a protocol that provides secure communication between client and server. Here the client is your browser and server is the web site you're communicating with. Secure communication has three main goals: privacy, message integrity, and authentication.
A Typical Scenario
Alice wants to buy a book from Bob's online bookstore. In order to complete the process she'll need to transmit sensitive personal information, such as her credit card number. Alice wants to make sure that the information she sends to Bob is kept confidential (privacy), and cannot be altered along the way (message integrity). She also wants to make sure that she's really sending the information to Bob and not an imposter (authentication).
Privacy
The sensitive information Alice sends to Bob is kept private by cryptography. A plaintext message is encrypted into ciphertext. To anyone who might eavesdrop and intercept the message, the ciphertext is meaningless. It's estimated that trying to crack the ciphertext by brute force alone (trying every possible combination) would take millions of years even if all the computers in the world were linked together to solve the puzzle.
Note: The Alice and Bob scenario is an adopted convention used in cryptographic circles. Other characters include Eve the eavesdropper and Victor the verifier.
Public Key Cryptography
The information used to turn a plaintext message into an encrypted ciphertext message is a key. Public key cryptography makes use of a pair of keys, one is public, and the other is private. Alice wants to send Bob private information, so Bob says, "Here Alice, use this public key to encrypt your message before sending it to me. When I receive your encrypted message I will use my private key to decrypt your message." It's okay for anyone to have a copy of the public key, but only Bob should have a copy of his private key. A plaintext message encrypted with the public key can only be decrypted with the private key.
Message Integrity
When Alice sends a message to Bob, someone could intercept that message, alter it, and send it on its way. She could end up buying the wrong book or more copies than she really wanted. Message integrity is achieved by sending a message digest along with the encrypted message. A message digest is a fixed-length representation of a message. Think of it as a fingerprint of the original message. Alice says to Bob, "I'm going to send you an encrypted message. So that you know my message to you hasn't been intercepted and altered along the way, I'm also sending a fingerprint of my original message. Please check the fingerprint to see if it matches when you receive my message."
Authentication
Alice's message to Bob is encrypted for privacy, and fingerprinted for message integrity, but how does Alice know that she is really sending the message to Bob? Alice needs to authenticate Bob, to make sure he's really Bob and not someone else. Authentication is achieved by digital certificates.
Digital SSL Certificates
When Alice and Bob first negotiate their SSL session, Bob sends Alice a copy of his digital certificate. A digital certificate is an electronic document. Inside that certificate is a copy of Bob's public key and information about its owner (domain name, organization name, location).
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Why Should Alice Trust the Information
Because the SSL certificate is verified or "signed" by a trusted third party Certificate Authority, such as GeoTrust. The trusted Certificate Authority's job is to verify Bob's application for a digital SSL certificate. The authentication process can range from verifying that Bob has authoritative control of his domain (for GeoTrust QuickSSL), to requiring Bob to submit legal documents that verify Bob's business or organization (for GeoTrust True BusinessID). Once Bob's identity has been verified he will be issued a digital SSL certificate.
All of these concepts- privacy by encryption, integrity by message digests (fingerprinting), and authentication by digital SSL certificates- are integrated into the SSL protocol to allow Alice and Bob to communicate securely.
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Ecommerce & Ebusiness
Ecommerce
E-commerce, (electronic commerce), is online commerce verses real-world commerce. E-commerce includes retail shopping, banking, stocks and bonds trading, auctions, real estate transactions, airline booking, movie rentals—nearly anything you can imagine in the real world. Even personal services such as hair and nail salons can benefit from e-commerce by providing a website for the sale of related health and beauty products, normally available to local customers exclusively.
While e-commerce once required an expensive interface and personal security certificate, this is no longer the case. Virtual storefronts are offered by a variety of hosting services and large Internet presences such as eBay and Yahoo!, which offer turnkey solutions to vendors with little or no online experience. Tools for running successful e-commerce websites are built into the hosting servers, eliminating the need for the individual merchant to redesign the wheel. These tools include benefits like shopping carts, inventory and sales logs, and the ability to accept a variety of payment options including secure credit card transactions.
Though early e-commerce was stunted by security fears, improved technology has made millions of people worldwide feel comfortable buying online. Seeing the vast potential in e-commerce, most credit card companies helped allay fears by guaranteeing cardholders would not be held responsible for fraudulent charges as a result of online shopping. All of these factors have helped e-commerce become the booming industry it is today.
The growing popularity of e-commerce is understandable considering the time and hassle involved in running from store to store, searching for an item in the real world. It not only takes valuable time and energy, but gasoline. With today’s crowded cities and high gas prices, shopping online whenever the mood strikes—even in the middle of the night—has unarguable, unbeatable advantages. Not only is it convenient to shop at a myriad of vendors from the comfort of your computer chair, it’s also a snap to find the best deal by allowing sites like PriceGrabber and Froogle sift through hundreds of sellers for you.
E-commerce also has other advantages. Employee overhead is virtually nonexistent, and the yearly fee for an e-commerce website is nominal. Compare this to rental of storefront property, particularly in a busy mall. To top it off, most transactions are handled by software processes, never requiring a real person until the item is ready to be packed and shipped. This translates into real savings to the customer. As a result, real world businesses often cannot compete with their e-commerce counterparts, though one does have to watch for inflated shipping fees that might negate savings.
If you’ve been reticent to jump into the world of e-commerce head first, you might find your trepidations no longer founded. There are only a few simple rules when buying online. First, check to see that the seller is credible by referring to a site like , and then read the site’s return and privacy policies. Also, never hand over personal information unless the website is operating through a secure server. You can identify a secure server by the address beginning with https, rather than http. The “s” means the information flowing between your computer and the website will be securely encrypted.
Electronic commerce or ecommerce is a term for any type of business, or commercial transaction, that involves the transfer of information across the Internet. It covers a range of different types of businesses, from consumer based retail sites, through auction or music sites, to business exchanges trading goods and services between corporations. It is currently one of the most important aspects of the Internet to emerge.
Ecommerce allows consumers to electronically exchange goods and services with no barriers of time or distance. Electronic commerce has expanded rapidly over the past five years and is predicted to continue at this rate, or even accelerate. In the near future the boundaries between "conventional" and "electronic" commerce will become increasingly blurred as more and more businesses move sections of their operations onto the Internet.
Business to Business or B2B refers to electronic commerce between businesses rather than between a business and a consumer. B2B businesses often deal with hundreds or even thousands of other businesses, either as customers or suppliers. Carrying out these transactions electronically provides vast competitive advantages over traditional methods. When implemented properly, ecommerce is often faster, cheaper and more convenient than the traditional methods of bartering goods and services.
Electronic transactions have been around for quite some time in the form of Electronic Data Interchange or EDI. EDI requires each supplier and customer to set up a dedicated data link (between them), where ecommerce provides a cost-effective method for companies to set up multiple, ad-hoc links. Electronic commerce has also led to the development of electronic marketplaces where suppliers and potential customers are brought together to conduct mutually beneficial trade.
The road to creating a successful online store can be a difficult if unaware of ecommerce principles and what ecommerce is supposed to do for your online business. Researching and understanding the guidelines required to properly implement an e-business plan is a crucial part to becoming successful with online store building.
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