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					MIS486- Electronic and Mobile Commerce
     Technologies in the New Era
 Introduction
 Growth
 Conceptual
 Major Components
  Case Studies

 Security
 Challenges
          Electronic Commerce (EC)

 EC   is concerned with systems that support
 Creation   of information sources,
 Effective&efficient   interactions among sellers,
   consumers, intermediaries &producers, and
 Movement     of information across global networks
                     EC Objectives
 In   general -
    Increasing   the speed and efficiency of business
       transactions and processes and improving customer
       relationships and service
 Specifically, e.g.,
   Streamlining procurement processes; decrease costs
   Decrease length of production cycles
   Increase #of trading partners
   Achieve closer customer and vendor relationship
   Enhanced competitiveness and economic growth
   Enable enterprises to conduct business with distant
   Empower small businesses
                EC Environment

 Vast   Amount of MM data
   Distributed, Autonomous, and
    Heterogeneous Information sources
 Wide   range of user’s specialties and abilities
 Support   decision making
 The   Internet as an infrastructure
               Categories of EC

 B2B
 Has   strong potential for growth
 B2C
 Provides   opportunity for personalization
 B2G
 More  restrictive due to government regulations
 In the US, the Federal Acquisition Streamlining
  Act (FASA) has mandated that all government
  agencies conduct bidding via EDI by late 1999
                   Media for EC

 Proprietary   networks
 Internet
  Emerging     global market place
 Introduction
 Growth
 Conceptual
 Major Components
  Case Studies

 Security
 Challenges
                 Internet Growth

 The hyper-atmosphere surrounding the
 Internet and Internet growth ---->
  Over   emphasizes #of Internet users
 To   put in perspective
  World    population who use the Internet < 2%
  Top Web Countries ( as of March 1997)
1. Canada (1) + 80% *                2. US (4) + 140%
3. Ireland (3) + 110%               4. Iceland (2) + 68&
5. UK (14) + 336%                   6. Malta (5) + 155%
7. Australia (6) + 133%              8. Singapore (11) + 204%
9. New Zealand (7) + 140%           10. Sweden (9) + 101%
11. Israel (12) + 112%              12. Cyprus (8) + 72%
13. Hong Kong (15) + 148%            14. Norway (10) + 64%
15. Switzerland (13) + 75%            16. Denmark (16) + 105%
Ranked according to #of regional web sites per head of population
* country (Ranking on 7/96) + %change since then
Source: ht.://kumera.mit.edu/pww/top40.html
EC Growth - The Commercial Presence on
              the WWW
1. %Web users spent Web time searching for
  info when deciding to purchase a
                                             1995                 35%
                                             1997                 53%
2. %increase in Web commerce transactions
                                             1996                   500%
                                             1997                   400%
Msg --> +ve impact on B-to-C transactions
Source: 1. CommerceNet (Base 6,600 people)    2. International Data Corp.
    EC Growth - Business to Business

 Companies       engaged in interbusiness EC
  1995           95,000
  1996         111,00
  1997          135,000
  2000           435,000
 --> Businesses envision attractive possibilities
  by conducting trans.'s among themselves
     Source:   Volpe, Welty&Co.
     Expected Product Mix by Year 2000

Computer Products                                32%
Travel                                           24%
Entertainment                                    19%
Gifts & Flowers                                   10%
Food & Drink                                       5%
Apparel                                            5%
Others                                              5%
Source: Glasser, “Selling Online: Electronic Storefront That Works”
 Introduction
 Growth
 Conceptual
 Major Components
  Case Studies

 Security
 Challenges
Conceptual Model of EC
 Introduction
 Growth
 Conceptual
 Major Components
  Case Studies

 Security
 Challenges

 Facilitates   the E-exchange of business doc.s,
  e.g., PO and invoices among trading partners
 Benefits
  Manufacturing on demand
  Quick response in retail
  Efficient consumer response
  Automated procurement
  Automated order management
  Electronic settlement
  Paid on production
  Shortened receivable cycles
                      EDI Standards

 Need  for interoperability and conformance ?
 Lack of standards would result in exclusion of
  SMEs from broad areas of opportunities
 Existing EDI standards
     ANSI X12
           standards - developed by Accredited Standards
   National
   World   wide standards - developed by a UN committee
  provide a framework for formatting a given EDI message
                 EDI Components

 Data   Elements
    A   brief description
 Data   Segment
    A   brief description
 Transaction    Set
    A   brief description
 Functional   group
    A   brief description
                       EDI Transaction

 Sending      an EDI transaction involves
       Identify needed elements in the DB to create an EDI trans. - done once per
        a new trans.

       Collect predefined data from DB

       Translate data into EDI standards using Translation SW

               EDI Impediments

 The   relatively high cost of investment to
 utilize EDI has kept its use restricted to large
  In   the US, ~90% of the Fortune 100 companies
   use EDI, of the other 10 million companies, less
   than 10% can make such a claim
          EDI Impediments (Cont’d)

 Large companies have been able to pressure
 their suppliers to invest in EDI or do business
 elsewhere ...
  Result has been a reduction in the overall
 #of suppliers to a certain company and the
 exclusion of SMEs from broad areas of

   Is any GUI, typically a Web page, that supports
    online   shopping, ordering, and payment
 Is   more than a list of products --
    is   a gateway to a digital version of the business
 Presents    a new medium with new capabilities
 Stand   alone -
   Anindependent web site, primarily used for online retailing, e.g.,
   Peapod, Amazon

 E-mall
  A  collection of catalogs from different merchants--online
   retailing, e.g., Internet shopping network

 Embedded
   Are part of a large corporate web site. Primarily for nonretail
   purposes, e.g., marketing, customer support. Corporations using
   it include HP, DEC, Bank of America
E-Catalogs vs. Traditional Printed Catalogs
1. Interactivity
  Allow  2-way communication channel between B
   and C that can occur in real time
  Allow for the development of new and closer
   relationships between B and C
2. Dynamic updating capabilities
  Companies       can
      quickly  adapt to market conditions by adjusting
       prices, repackaging, rechanneling, etc.,
      ubiquitously and instantaneously adding value to
       everywhere its catalogs reach
E-Catalogs vs. Traditional Printed Catalogs
3. Global presence
  SME    can enter the global E-marketplace thus
   gaining undreamed of advantages that transcend
   traditional limitations
         E-Catalogs- Functional Features
1. Content
  Scope (products, services, and pricing info, detailed descriptions, links to
      other resources, etc)
     Search and filtering
2. Presentation
  Layout (the spatial arrangement of the catalog as well as what MM
      capabilities it might use)
     UI and HCI
3. Back-end processing
  Level         of integration (with company’s DBs and legacy systems,
      with financial institutions, etc.)
     Integration and interoperability
4. Usage tracking
   Data    warehousing and data mining
5. Computational services
   Salability     and efficiency
         Data Warehousing and Mining
   DW is a repository of integrated information from
    distributed, autonomous, and possibly
    heterogeneous information sources for query,
    analysis, decision support, and data mining
    purposes - OLAP, OLTP
 Data   mining -- tools for clustering,
    associating, and performing pattern analysis
    on EC related data
           Data Warehousing - Issues
   Translating data from ISs to warehouse data model
 Data scrubbing
   Erroneous data
   Deletion of duplicates
   Default insertion
 Warehouse   Design
 Populating the warehouse
 Warehouse schema evolution
 Metadata management
 Detecting and propagating changes to ISs
      Digital Currency- Characteristics

 Relies on IT and high speed communications networks
  to store, transmit and receive representations of value
 Relies on cryptography to provide security in
  open network environment
 Strives to reduce costs through economies of
  scale and technological advances
 Requires loading from funds held within the
  financial system
              Digital Currency- Types
 Stored   value “smart” cards (debit/credit cards)
     Require   accounting settlement at end of billing cycle
  E-purses     and debit cards
          a given $, deduct $ of each purchase - No
     store
     accounting settlement
  Credit     card payment
     non-refutability,   privacy, speed of transactions, and
 E-Money
 Micropayments

 Digital   cash or E-token
  Should be bank-certified
  Can be exchangeable with other forms of
   payments, e.g., certified checks
  Tamper resistant -- avoid fraudulent payments
   Accessible remotely
  E-tokens stored in users’ computers, or 3rd party
   payment services, e.g., First Virtual
                  Micro/Mini payments
“Americans make more than 237 billion cash purchases
  totaling $600 billion each year, of this 84% is of purchases
  costing < $20.”*
 Payment   for low value payments on the
  Internet, e.g., intangible goods or online
  entertainment. Dealing with individuals
  selling goods
   Micropayments                ( ~< 15cents)
   Minipayments            ($.25 - $10.0)
      * According to MsterCard
       Micro/Mini payments (Cont’d)
 Issues   include
  A   cost effective and scaleable system that is a
    simple and secure (protects privacy of transactions).
   Cost of setting up accounting and billing procedures are
    minimal ?
   Low overhead- Managing and consolidating microdebts
 Payment    schemes
      Bearer   certificate(similar to cash--whoever holds the
       certificate holds the value)
      National System- transactions among parties are kept track
       of by a 3rd party
   Examples-Digicash,NetBill, Millicent, Payword,
    MicroMint, and Agora
                       Millicent System
 Developed by Digital Corp.
 Based on scrip broker model (overcomes traditional
    scrip model’s requirement of having vendors and consumers to have
    prior relationships before transacting)
     Its   operation-A broker, e.g., a bank accepts payments from, and
       issues its own scrip to, a consumer. The broker then scrips credits
       from vendors.
    Results in- each consumer has one account with a broker and
     each vendor has an account with a few brokers
    Provides “adequate” security by employing an
     encryption scheme with low computational requirements(costs
     more to break the protocol than value of the scrip) =====>High
       potential for fraud
                       eCash System
A  bearer certificate that is developed by DigiCash
 Privacy is its distinct feature- based on the notion:
    a bank issuing a token should not have to know which
    consumer receives which tokens.
   Its operation-
       A  consumer issues, using DigiCash purse SW, blank tokens
         and sends them to the bank for certification
        Bank certifies tokens, debits consumer’s account and send
         back consumer
        Before accepting a token, a vendor receives first the bank
         verification that this token has not been spent
        The bank keeps track of serial# of already spent tokens

    Limitations- Online verification of token could be a problem
             Case Studies - SEWP
   Scientific and Engineering Workstation Procurement

 Developed  by NASA and currently used by
  24 Federal agencies
 Current contract $1.8 billion.
 Niche - Electronic market place. Vendors
  include HP, IBM, Compaq, SUN, SGI
 Enables customers to browse and place orders
  for products and services to vendors from E-
  catalogs over the Web
 EDI is a core component
               Case Studies - Epistemics

 Infomaster is a pilot E-catalog system developed at
  Stanford and marketed by Epistemics
 Provides  integrated access to independent
  information from heterogeneous and
  distributed DBs-- Giving users the look and feel of a
  centralized and homogeneous DB
 Systems      Components
           catalog, a Knowledge base, smart catalog for each
    Virtual
     manufacturer, backend DBs, and UI
 Product line: Cookware. Participants include Regal
  Ware, Sears, Corning
            Case Studies - CyberCash
 Provides  secure payment processing services
  over the Internet
 Payment options
  Credit    cards, E-checks, and digital currency
 CyberCoin      is their micropayment system
   Consumers   perpay for CyberCoins.
   Funds are held in escrow in a proxy account for that consumer at
   CyberCash transfers CyberCoins from the consumer’s CyberCash
    Wallet to the vendor’s CashRegister
 Transactions      do not require inter-bank
 clearing--low overhead
 Introduction
 Growth
 Conceptual
 Major Components
  Case Studies

 Security
 Challenges

 Functions        and Requirements
  Privacy       - Ability to keep communicated info private, observer cannot
    determine parties involved

  User     Authentication- Ability of the authorized parties in a
    communication session to ascertain the identity of other authorized parties

  Data     Authentication- Ability to ascertain that exchanged info has
    not been subject to deletion, modification or addition

  Non-Repudiation- Ability to prevent an authorized party denying
    the existence/contents of a communication session

  Access       Control
                 Security (Cont’d)

 Security services may be provided at various
 layer of the network, e.g., the network layer, the
 session layer, and the application layer
 Security   services at
   lower layers provide greater transparency
  application layer may provide greater flexibility
                  Transaction Security
 Symmetric        and Public Key Encryption
  Symmetric Key- Same secret key is used for both
   encryption and decryption
     Limitation- Requires a secure transmission channel to transmit
      the secret key
  Public Key-Uses 2 keys. A public key for encryption and a
   private key for decryption. No need to exchange secret keys
     RSA is the most popular public key algorithm

   Responsible  for the generation, distribution, validation, deletion,
    and storage of keys
   Focuses on private- public key combination
         Transaction Security (Cont’d)
 Digital   Certificates&Certification Authorities
  A  certification authority is trusted by users. Generates digital
   A digital certificate includes name and public key and has the
    authority’s digital signature, using its private key

 Multiple     CAs
   Need   for cross certification that enables two Cas to
    recognize each others certificates ===> lower overhead
    and simplicity-- a user needs to deal with fewer
                    WWW Security
 Text   Encryption Protocols
  PGP - Pretty Good Privacy
     Hybrid (RSA and IDEA-International Data Encryption
      algorithm) encryption package that provides cryptographic
      protection of emails and files.
 Network     Protocols
  SSL - Secure Socket Layer
     Used on top of TCP/IP for secure communication between
      Web clients
  PPTP - Point to Point Tunneling Protocol
     Provides encryption between Windows NT clients and servers
     Limitation- Does not apply to non windows NT
             Protocols and Standards

 SET   - Secure Electronic Transaction
  Developed  by Visa and MC for E-card payments
  Uses public key for protecting credit card#
  Key elements- Digital certificates, public key encryption,
    digital signature, payment system connection and operating
    rules(informs user of recourse if keys are stolen)

          - Examples include ISO7498-2,
 Standards
 X.500 and DES
 Introduction
 Growth
 Conceptual
 Major Components
  Case Studies

 Security
 Challenges
                  Challenges in EC

 EC is inherently of an interdisciplinary nature
 Challenges may be classified into
  Legal and Policy
  Technical Issues --
      In   Response to Changing Business Models
       Business Models - Current State

 Most   EC businesses are:
  An    online version of traditional models
     An extension of physical businesses and are able
   to reduce cost and improve customer satisfaction
  Vertical   supply chain
   Business Models - Emerging Models

 Emerging   Business Models
  Virtual companies and markets- where a
   consortium of companies build on each others’
   businesses to exploit opportunities, e.g., Amazon
  Open buyer centric markets -- Comparison
  Coalition and outsourcing, e.g., Real estate:
   brokers, banks, escrow, title, inspection
  Supply chain -- Supply Web

 Reduce  the Complexity involved in making a
  change in the EDI standards (a request has to
  be submitted and approved by the X12
  committee, translation SW has to be updated)
 Eliminate the use of translation SW&VAN
 EDI transaction should capture the semantics
  of the business transactions and maintains
  history of negotiations
 Rethink EDI with an XML foundation
 JAVA and EDI
            Interoperable Commerce
   All suffer from one or more limitations: too expensive,
    too dumb, a formatting language, a private language
    between 2 partners
 Need an open framework for commerce
   Standards is just one approach. Others include:
    negotiation protocol; mapping from one to another
 Need  to have a common means to exchange
  information between applications required to
  support EC process flow and fully utilize such
  components as DBs, EDI, browsers, agents,
             Catalogs Ineroperablility
Users need to be able to search for products using
 catalogs from multiple suppliers--
 Requirements       for interoperable catalogs
  [commerceNet Report Feb. 98]:
  Community       management
       Enable and control access to the procurement system
        by authorized/authenticated users
       Administer the privileges and preferences that have
        been established for each authorized user
  Catalogs Interoperablility (Cont’d)
Content     Management
   Enable  buyers to find desired items from a broad and
    diverse set of items with a UI and navigational
    environment that is consistent across suppliers
   Create “shopping carts” that can be used by the
    requisition/order management system and that are
    compatible with the general ledger coding practices
    used by the buying organization
   Enable suppliers to easily review, correct, and update
    their product information
   Enables procurement officials to review the product
    information for compliance with all applicable
    regulations and contractual agreements
  Catalogs Interoperablility (Cont’d)
Requisition   management
   Conversion  of the shopping cart into a valid
   requisition (compatible with buyer’s system) and
   routing the requisition to authorized individual for
Order   and document management
   Conversion  of shopping cart into one or more POs
   Transmission of the Pos electronically to the correct
   Reconciliation with receiving and accounts payable

Management      reporting
   Meetreporting needs by end user requisitioners,
   professional buyers, management and supplier
 Automated Interactions between Buyers
              and Sellers
 Today’s web sites are publishing information
  for people.
 Tomorrow’s web sites need to publish
  information for computers--
   Buyers   and sellers need to exchange requests for quotes,
    price lists, Pos, invoices, shipping notices, and other
    documents. Need to be able to automate this interaction.
   EC applications need to extract information from web
    resources such as comparison shopping and tracking
    services -- can not be handled by HTML
      XML as a replacement for HTML - makes it possible
       for information to be available to machines. Will
       make it possible for sites to publish documents that
       computer can understand
        Data Warehousing and Mining
 Information intensive environment-- B is able
 to collect enormous amount of info about
 consumers --
   Need for data mining
   Need to be able to customize their shops and services

 Online consumers have shown interest in
 making quicker, better informed decisions
 rather than always demanding the lowest
   needfor data mining,
   powerful search engines,

   catalog   integration and cross-catalog search
             Workflow Management

    Integrate business processes -- real time info
    sharing, planning
    Business  has to adapt to rapid change and
      development ==> Need to constantly reengineer
      and optimize business processes and their
      information support --- Workflow management
       Integration and Interoperability
 Efficientmechanism to provide seamless
 access to heterogeneous data sources whose
 data are related but incompatible, e.g.,
  Syntactic differences, e.g., one source includes middle
   initials for names, another does not
  Semantic  differences, e.g., employees includes
   consultants in one and only FT in another
  Schema differences, e.g., address is represented as a string
    in one and is broken in its components in another
      Search and Resource Discovery

 Provide retrieval tools for searching images,
 video, text by contents and concepts
  Identifying and extracting concepts from objects
  Classifying objects and indexing them based on
   extracted concepts
  Automatic/semi-automatic IE, classification and
   indexing of objects
     Manual  IE, classification and indexing of objects is
      resource intensive and economically infeasible
Search & Resource Discovery-Ontologies
 Enable users to effectively retrieve information
  using terms they are familiar with
 Enable users with diverse backgrounds to query
  across multiple domains.
 Must cater to users with diverse backgrounds by
  offering broader, more general, ontologies that are
  interlinked to cover many domains
       Security and Access Control

 Provide  content-based authorization
 Provide secure payment mechanism with low
  overhead for EC materials
 Provide mechanisms to allow anonymous
  access to fee based EC
 Provide mechanisms to audit access of EC
  objects while upholding confidentiality
 Support copyright protection and copy

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