Value Added Services on the Internet

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					Chapter 6

Value Added Services on the Internet
Throughout this course we have been learning about the protocols of the Internet which
facilitate services on the internet. We refer to value added services in this chapter to refer
to those high level services which run on top of these basic protocols and services. While
there can never be a complete inventory of such services on such a dynamic and creative
an infrastructure as the Internet, this chapter outlines some of the more common value
added services available today on the Internet.

6.1 eLearning
eLearning has many definitions. Most broadly it covers any form of technology enhanced
learning mechanism. This can range from blended learning environments where
electronic and traditional face-to-face classroom learning are combined in effective ways
to completely non-face-to-face distant based education delivery where the learner has no
physical interaction with any other participant in the learning process.
       eLearning can be categorized along several axes: the underlying pedagogical
assumptions, the content model employed, and the size, distribution and level of network
access of the learners.


6.1.1 Pedagogical Assumptions

Based on the underlying pedagogical assumptions, we can categorize eLearning into
those that view it:
       - as a way of enhancing traditional face-to-face teaching by transferring some of
the content and interaction designed for classroom situations to electronic means
       - as a whole new model of learning in which some of the traditional pedagogical
assumptions must be questioned; typically these systems will attempt to apply some
known educational psychology models (e.g. constructive alignment) to a non-face-to-face
       - in a more pragmatic way as a combination of the above in order to achieve the
best possible result; this would range from utilizing appropriate electronic means to
enhance an essentially classroom environment to employing appropriate face-to-face
situations in a fundamentally online distant mode course

6.1.2 Content Model Used

Another way of classifying eLearning is by the content model used. By this we mean
both the way content is provided and interaction is facilitated.
       In a system which is fundamentally an extension to a traditional classroom model
content which is designed with the underlying assumption of face-to-face interaction is
put online. This would include traditional teacher supplied notes and assignments. In
addition, submission of assignments thus set would typically be via email to the teacher.
       In a distance mode system in which physical interaction is expensive or not
possible, the reliance on mostly (or even solely) electronic means tends to demand the
redesign of content and interaction sooner than later. Content in this mode necessarily
needs to be more engaging and hence more attractive and interactive. Since the majority
of (if not the only) the interaction is possible through electronic means, and a much richer
virtual learning environment infrastructure is usually employed.
       Even in distant mode course delivery a balance between providing rich interactive
content (which is very expensive to produce), and face-to-face teacher notes is often
struck. This could for instance be of the form of pre-recorded face-to-face teaching audio
or video together with a synchronized set of presentation slides.

                                                                             6.1 eLearning

6.1.3 Other Classifications

While there could be many other ways to classify eLearning systems, we look at three
other factors by which this can be done, namely, the size of the class, the geographical
spread of the learners, and internet accessibility.
        The size of the class has implications especially with respect to the level of
interaction possible. In large class situations providing feedback and grading of
assignments would need to be automated or minimal. For small class situations on the
other hand electronic means could provide a very flexible medium on which an even
greater level of interaction could be provided by a teacher in his or her own time.
        The geographical spread of the student population has bearings on the eLearning
model adopted especially if a policy of equal access is in force. If most of the learners are
from neighboring areas to the provider, more possibilities for physical interaction provide
more flexibility in the delivery modes. On the other hand, for a geographically spread
learner group, more reliance on non-traditional (electronic) means would need to be
        Internet access has major implications for the eLearning model adopted (figure
6.1). In situations where such access to the home is near universal the scope for flexible
learning is optimized providing for instance an ideal environment for part time learners.
Where access is more of a luxury than part of the infrastructure, other types of delivery
channels including CD-based, Audio or Video Cassette based and TV and radio
broadcast based need to be employed.

6.1.4 Current Status and Trends

eLearning is a technology in evolution. As such many of the standards required and
models which are desirable are still being tested out empirically.


                            Figure 6.1: An eLearning website

Rich Content

While many eLearning courses still consist of uploaded text, word processed documents
and presentation slides, the move is to recognize the importance of using richer content
able to provide more authentic learning environments. These include animations, audio,
video and interactive content.

Learning Objects

Many eLearning courses still are created in a way which makes them virtually impossible
to be used again in a different context. Their content can only be used in their entirety.
The move to breaking down courses into lessons and finally to learning objects
consisting of assets are gaining momentum and are envisaged and will eventually make
the creation of content more cost effective. The Sharable Content Object Reference
Model (SCORM) standard is one of the earliest attempts at standardizing this process.

                                                                             6.1 eLearning

Content Creation Process

Formalizing the process of content creation and maintenance is an urgent need and is
currently evolving to maturity. While storyboarding is a fairly matured process as far as
the instructional design activity is concerned, a more holistic model incorporating the
roles required and processes to be adopted along the lines of a software development
methodology need to be established in the field.


Some of the most effective learning environments have been software simulations of real
world phenomena. From airplane cockpits to ‘dry labs’ for chemistry experiments
simulators have proved powerful learning tools. Creating and maintaining such
environments can be expensive even though highly desirable.

Feedback mechanisms

Increasingly, the practice of eLearning is pointing to the need of sufficiently sophisticated
feedback mechanisms in order to ensure desirable success rates of learning outcomes.
While these can be as rich as possible in small class scenarios, the strength of eLearning
of scaling up access usually leads to larger classes. Providing feedback to large classes
requires creativity and could turn out to be the most expensive component of any
eLearning course.

Useful URLs

     •    eLearning on Wikipedia:

     •    Free Online eLearning Magazine from ACM:

     •    eLearning Guild - A community of practitioners:

     •    Listing of Learning Object Collections:


     •     MERLOT - Online Learning Object Repository:

     •     eLearning White Papers:

     •     The UK Higher Education Academy eLearning Resources:

6.2 eCommerce
eCommerce and eBusiness are sometimes interchangeably used terms which refers to one
of two broad definitions. The narrow end definition is ‘the activity of buying and selling
products and services on the web’ (figure 6.2). The broad definition is ‘using internet
technologies to perform any business process’. This latter definition includes all business
activities of an organization including selling goods and services, collecting payments,
ordering materials and supplies, hiring personnel, shipping finished goods to customers,
identifying new and loyal customers, managing the manufacturing process, quality
control and testing, paying bills, and planning.
         Some users limit the scope of eCommerce to the former and refer to the latter as
eBusiness while others do exactly the opposite. In this course we will use the terms
eCommerce and eBusiness interchangeably to mean the same, broader (second)
definition above. Using this definition eBusiness is not limited to for-profit companies
only, but rather also could refer to activities of non-profit organizations.
         eCommerce may also be classified in two common ways: the first by the type of
participants (businesses, consumers or governments) is the more common way; but a
second classifies it by the types of activities covered (make sales, provide services, buy
materials, hire people etc.).

Classification by Participants

Under this classification, a company which sells goods to individuals is called business to
consumer (B2C) eCommerce. Similarly a business selling goods or services to another
company or non-profit organization is said to be involved in Business to business (B2B)

                                                                       6.2 eCommerce

eCommerce. Companies also have business dealings with government agencies and this
kind of eCommerce is known as business to government (B2G) while consumers dealing
with consumers in an online auction for example are said to be involved in consumer to
consumer (C2C) eCommerce.
       It is not too difficult to extend this terminology to cover areas such as G2C to
refer to so called citizen services of a government (one aspect of eGovernment) and G2G
to refer to dealings between various government agencies (another aspect of

Classification by Activities

This scheme is organized around what the business activities are designed to accomplish.
The way a company sets about its business is called its business model. While this would
defer from industry to industry and company to company, they all must necessarily
generate revenues and pay the associated costs concerned.
       The early days of eCommerce (in the mid-1990’s) saw many new companies
forming only for online eCommerce without proper business models. The lead to the
bubble burst of 2000 where many companies which were highly over-valued based on
the false hopes of online commerce failed. Since then, companies have been much more
careful to use the web as a medium for improving the business processes for which they
already had a solid business model.
       In this classification, companies which find ways of enhancing their sales,
expanding their customer base, and streamlining the delivery of goods and services are
said to involve eCommerce in revenue model processes. Those which employed internet
based systems to improve their purchasing, hiring, receiving, and manufacturing
processes are said to involve eCommerce in their operational model processes.
       The main expected benefit of eCommerce is to finally contribute to increased
revenue while helping in reducing operational costs. This way, eCommerce is able to
reduce the transaction costs involved in doing business in order to enable a company to
create a competitive advantage over another in its domain.


6.2.1 Revenue Models for eCommerce

The first and most obvious way in which companies try to gain a competitive advantage
over its competitors is by building a sustainable revenue model around the web. There are
several ways in which revenue can be generated on the web.

Online Catalog

Companies have been using mail order catalogs as a way to reduce costs for a long time.
After the advent of the telephone, the more progressive companies started accepting
telephone orders from customers. In much the same way, with the advent of the
commercial internet, companies have started enhancing or completely replacing their
mail order catalogs with much more flexible online catalogs.

                          Figure 6.2: An eCommerce Website

       Companies which have no real physical stores and do business only through the
web are referred to as dot com companies. Probably the most famous of these is – the largest (virtual) bookstore in the world.

                                                                             6.2 eCommerce

Advertising and Subscription

Just as some newspapers in large cities pay for themselves through advertising revenue
and so can be distributed free of charge, so one revenue model on the web is to use it
purely as a channel for advertising. This model did not work or scale very well at the
beginning when rival companies just expected consumers to happen to visit their site as
opposed to another’s.
       Online advertising however has evolved to employ very sophisticated methods in
order to become a justifiable alternative to newspaper, radio or television. One such
strategy is to deliver advertisements dynamically depending on whatever is already
known about a customer from various sources. This is referred to as targeted marketing
and is a highly sought after service to exploit.
       Successful websites, web portals, web directories, information gateways and
search engines are often more successful in attracting larger numbers of potential
customers and therefore market themselves as the best places for advertisers. For
example, Google uses a creative way of using targeted advertising by returning paid-for
links relevant to a given web search at the top or side of the list of resulting web links.
       Charging for subscription is another way to generate revenue especially in areas
where advertisements are felt to be intrusive and detrimental to a neutral view of the
material presented. Radio and TV channels such as the BBC were able to avoid
advertisements by using a subscription model for their services. Similarly many scholarly
works require subscription rather than rely on advertising to fund their operations.
       In practice however many businesses employ a hybrid approach combining
advertisement and subscription in creative ways. The Yahoo! web directory/portal for
instance provides many services including email and games free of charge based on
advertising revenue but also offers enhanced services based on subscription.
       Another popular subscription-based revenue model is to charge occasional
visitors a premium for individual content or services but offer same at lower rates to
subscribers. In addition to this free samples or free access to limited resources themselves
act as advertising to attract business from satisfied visitors to the website concerned. Yet
variant of the advertisement based revenue model is to offer classified advertisements at a
cost to advertisers and provide access to such advertisements completely free of charge to
potential customers.


Direct Fee Model

In this model, a fee is charged for a service provided and still attracts customers since
physical travel is avoided. This, while saving costs for the customer, it also allows cost-
cutting for companies which no longer need to maintain many physical stores – which in
turn allow the company to minimize the fee. As larger numbers of customers are won, the
fee can also be further reduced.
        This last concept leads to the idea of micro payments wherein the cost of a full
product or service is shared among large numbers of users by breaking it into smaller
sized components, each of which is charged only a small fee. Examples of this are where
libraries or bookstores can charge on a per page basis or movies can be charged on a per-
view basis.
        Fee based services are often able to offer value-addition to their non-online
versions. For example, travel agencies provide excellent information filtering services,
and are no longer only able to reserve airline tickets but also package other services such
as car rental and tours at the destination.
        One of the more innovative eCommerce applications is the Online Auction. eBay
(figure 6.3) is the best known of these and has its own set of rules for bidding. It also has
created value-addition by providing ways of building trust among the community of
buyers and sellers. Many of these sites also provide automated agents which can be
instructed by the bidder to place bids in a way that he or she desires.

6.2.2 Optimizing Operational Costs and Efficiency

The other way in which to employ eCommerce in a business is to aim to reduce
operational costs and increase efficiency. This is done by internet enabling internal
operations of the company.
The use of Electronic Fund Transfers (ETFs or wire transfers) between banks and the use
of Electronic data interchange (EDI) by businesses to exchange transaction information
are examples of eCommerce from before the advent of the web.

                                                                            6.2 eCommerce

                          Figure 6.3: An online Auction Website

       Reducing transaction costs is not only possible at the seller’s end, but also for the
buyer. The traditional ways in which buyers typically find what they want include
visiting a store they hope may have what they want, making telephone calls and sending
faxes. In contrast, a web search for the same product will be much faster and cheaper for
the buyer. In addition, some specialized agent based services such as Price Watch even
allow automatic search for the best prices on the web for a product of interest.
       From a seller’s point of view, one of the most expensive aspects of a transaction
tends to be the provision of after sales support. The web allows the seller to reduce this
cost by providing Frequently Asked Questions (FAQ) lists, software wizards to help
users self-diagnose problems, email support and even online helpdesk facilities.
       Using Intranets and Extranets is a powerful way in which businesses improve
their operational efficiency. An Intranet is a web site that is accessible only to employees
of a given organization. Parts of this internal web site could be made available to
suppliers and customers of a company. When access of a (portion of an) intranet is
provided to its partners, they are said to be part of the organization’s Extranet.
       For example the package tracking services offered by freight companies such as
DHL, UPS and FedEx form an Extranet through which customers access parts of their
Intranet which track the various stages of the movement of their goods. Organization can


use intranets to improve efficiencies of their internal operations and extranets to enhance
their relationships with suppliers and customers.
       One common mechanism used by companies to help manage their partners better
is through creating profiles which can be customized by the partner (usually customers).
In this way for instance, a company can set up alerts for products and services which may
be of interest to the customer concerned.

6.2.3 Issues Confronting eCommerce

Primarily among the issues needing to be dealt with in an eCommerce environment are
the two consumer issues: transaction security which includes both the reliability of the
seller and the security of the payment, and violation of privacy by which is meant the
possibility of other parties accessing personal information which is necessitated in any
       In order to address these issues an intermediary generically known as an
assurance provider needs to be part of the transaction. VeriSign is one of the best known
such trust providers.

What makes a service secure?

Many users think that services which display a lock (or padlock) on the browser window
(or more technically, use the https protocol which relies on the secure socket layer (SSL))
are secure. In reality, the only security this provides is that the information you submit to
that website is encrypted and so unlikely to be tampered with or viewed by others. The
larger picture involves trust in the website, in the merchant providing the service and the
party providing trust between parties. These aspects are covered in the next chapter.
       In addition to these issues, in countries such as Sri Lanka, there are also fewer
options available for the currency of transaction. Globally, the Credit Card has become
the dominant currency of the internet. While there are other systems such as PayPal and
electronic wallets, the primary system of trust has to be established using credit cards – a
commodity which is not accessible to the masses. More recently, in Sri Lanka, several
systems such as eMoney Order have been trialed to work out their feasibility as a “poor
man’s” currency on the web (figure 6.4).

                                                                      6.2 eCommerce

                     Figure 6.4: A Sri Lankan eCommerce Website

       The International nature and scope of eCommerce has its own issues in practice.
Two of the most common ones are the need for multilingual support and the need to
adhere to national and regional laws and taxes.

Useful URLs

   •    eCommerce on Wikipedia:

   • - The Global Virtual Bookstore on the web:

   •    eBay - The Online Auction:

   •    Sri Lankan eCommerce Example:


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