Electronic Commerce by chenmeixiu

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									Electronic Commerce
      Overview
     Foothill College
  Electronic Commerce
       Electronic Commerce
          Topic overview
•   Context
•   Definitions
•   History
•   Statistics
•   Demographics
•   Requirements
•   The big picture
          Phrasing the Context of
           Electronic Commerce

• Computer - network mediated financial and
  information transactions (esp. the Internet)
• The paperless world of electronic business
  transactions, including EDI, EFT and EDMS
• Global commerce - and its synergistic relationship
  with electronic commerce
• Vertical integration and supply chain management
• Business Process Re-engineering (BPR)
Electronic Commerce - Definitions
• Purchasing goods “on-line”
  – moving “product”
• Exchange of business information electronically -
  EDI and EDMS
  – moving and managing digital information
• Information transactions that have value
  – moving currency and capital (banking and insurance)
• Electronic funds transfer (EFT) and payments
• “Electronic commerce is -
   commerce done electronically”
     Electronic Commerce - History
•   EFT - Electronic Funds Transfer
•   EDI - Electronic Data Interchange
•   Visa Net, MasterCard, and ACH
•   ATMs, online banking, POS terminals
•   Debit and smart cards - in all shapes and forms
•   Internet, WWW, intranets, and extranets
•   Distributed network computing architectures
   Electronic Commerce Drivers
Cost and efficiency of people vs. computers


    People              Computers
    • expensive            • cheap
    • slow                 • fast
    • errors               • reliable


   Networked business process
  Electronic Commerce - Statistics

• ~ $ 1.5 billion spent on the Internet in 1996
• ~ $ 320 billion was measured for the year 2001
• Most growth projections are exponential
   – from 50 to 100% per year for the next 3 - 5 years
• Projections of 1 trillion dollars by year 2003
• Most statistics are generated using a formula:
   – a rough estimate multiplied by an expectation
   – rigorous forecasting requires good modeling and data
   – trends are often more important than absolute numbers
Internet Spending by Category
                       travel
  5000
  4500
                       computer
  4000                 hardware
  3500                 computer
  3000                 software
  2500                 automobiles
  2000
  1500                 gifts
  1000
   500                 books
     0
         1996   2001   apparel

                       music
        Electronic Commerce
     Comparisons 1996 and in 2001
• $ 500 billion in credit card transactions worldwide in 1995
• There were $ 4.5 trillion cash purchases < $20
• $ 600 billion in Internet purchases in year 2001 (10x annual
  growth) would only equal 1996 credit card purchases
• Electronic purchases replace cash purchases, and smart
  cards will be as significant as credit card purchases.
• Electronic commerce makes sense for buying information,
  scheduling services, and bill payment - not just goods
            Electronic Commerce
               Demographics
•   300 - 500 million people use the Internet today
•   It’s still mostly a “North American” experience
•   Rapid growth in Europe, Asia, and Latin America
•   New users will be less affluent than current users
•   Shift from computer professionals to mainstream
  Closing the Gender Gap
Women and Men on the WWW
70
60
50
40
                                        % women
30                                      % men
20
10
0
     1995   1996   1997   1998   1999
Home Access and Office Access
 on the WWW (North America)
80
70
60
50
40                                             home
30                                             office

20
10
 0
     1996   1997   1998   1999   2000   2001
Percentage Spending on the Web
  100
   90
   80
   70
   60
   50                                      % spenders
   40                                      monthly $
   30
   20
   10
    0
        1996   1997   1998   1999   2000
            ATM User Preference %
60                                               • grew very slowly
50                                               • now 50% of users
40                                               • 12 billion transactions
30
                                        US         annually, 5,000 per
                                        Europe
                                                   month per ATM
20                                      Asia
                                                 • 1/3 cost of in branch
10
                                                 • over 1 trillion dollars
0
     1980
            1985
                   1990
                          1995
                                 2000




                                                   in annual transactions
                   Smart Cards
100                             • big in Europe
 90                             • field trials in US
 80
 70                             • Mondex / MasterCard
 60
 50
                       US       • replace cash
                       Europe
 40
                       Asia       transactions < $20
 30
 20                             • can be 2 or 3 party
 10
  0
                                • vertical industry use
      1998 1999 2000
                                • encryption is built in
      Point of Sale Terminal (PoS)
                                            • inventory input
100
 90                                         • transaction recording
 80
 70
                                            • connects cash registers to
 60                                           legacy systems
                                  Retail
 50
                                  Grocery   • key to integration of database
 40
 30                               Energy      marketing, VMI and SRC
 20                                         • can initiate an EC process
 10
  0
                                            • not just credit / debit cards
      1985

             1990

                    1995

                           2000




                                            • gas pumps are a EPoS
          Realistic Internet growth
         projections - on the record
• Number of users with “Internet access” will continue to grow
  by about 20 to 30 % annually through the year 2005
• The rate of growth may slow around the year 2003, but total
  growth continues well into 2005 (~ 30% to 50% annually)
• One billion people will have WWW access by 2005
• Half the planet could “be connected” by the year 2010
• The “Web” is more than just websites, it’s a method of
  connecting business processes through internetworking
       People on the Internet
            Worldwide
1000
 900
 800
 700
 600
 500
                                                             millions
 400
 300
 200
 100
   0
       '96   '97   '98   '99   '00   '01   '02   '03   '04
Ratio Data Bits to Voice Bits
 (North America estimates)
140

120

100

80
                                                voice bits
60                                              data bits
40

20

 0
      1997 1998 1999 2000 2001 2002 2003 2004
       Electronic Commerce
      Requirements for Growth
•   Trust (security)
•   Rock solid encryption
•   Secure digital payments
•   Rock solid infrastructure
•   Participation by major banks
•   Protocols for microcommerce
•   Uniform legal and commercial codes
What are the security issues of users?
                          Other

Don’t want any personal
                                                 Lack of Security
information on net                20%
Access to Personal        4%             28%
Information               4%
                          5%
     Theft                  7%          18%
                                  14%

      Unauthorized
      Access                                   Duplication &
                             Fraud             Forgery
    IBM’s E-business Vision


Customer Relationship   Supply Chain
    Management




             Electronic Bill
        Presentment and Payment
 Electronic Commerce
Business Solution Design
      Current            Future EC

  Business Process   User / Community




                      Integrated Information &
       User               Business Processes
Size of the Internet Commerce Market
 Software, Services, and Technology
     300

     250

     200
                           software
     150
                           services
     100                   technology

      50

      0
           1997    2002
             Looking for Parity
      • People              • Computers
      • Phones              • Networks
      • Paper               • Electronic documents


• Human trust is established face to face
• Compare written signatures with digital certificates
• Documents exchange data from storage to processor
• Networks let computers and processes talk to each other
    Seeing the Bigger Picture
• Information storage and delivery has changed -
  from primarily paper to primarily electronic
• Production and consumption of new information
  is transitioning from people to computers
• Commerce and workgroups are becoming
  human - digital hybrids, and forcing BPR
• Computers have become an integral part of our
  business lives - and commerce naturally follows
• Electronic commerce is absolutely driving the
  growth of global commerce - and vice versa

								
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