This action might not be possible to undo. Are you sure you want to continue?
POST GRADUATE DIPLOMA IN MANAGEMENT UNDER THE GUIDANCE OF: SUBMITTED BY: MR. FAISAL NOMAN ANIMESH KUMAR ROLL NO.: 1012003 SESSION: 2010-2012 ASST. PROFESSOR
LLOYD BUSINESS SCHOOL
PLOT NO.11, KNOWLEDGE PARK-II
GREATER NOIDA, U.P. (201306)
ords often fail to express one’s inner feelings of gratitude and indebtedness to one’s benefactors, but then it is the only readily available medium through
which the undersigned can express her sincere thanks to all those who are associated with the work in one way or the other. A project can never exist and thrive in solitude. Project work is never the work of an individual. It is more a combination of use, and contributions and work involving many individuals. This project also bears the impact of many people. Thus one of the most pleasant parts of writing this report is the opportunity to thank all those who have contributed towards it. First and foremost, I would like to thank Mr. Faisal Noman my faculty mentor for being the guiding and encouraging figures all through the duration of this project. Without their cheering and invaluable insights into this project, the project work would not Last but not the least I would also like to thank my family members and my friends for encouraging me all the time.
have been accomplished.
E conomic studies are expected to be not only theoretical but also practical to equip the students coming out of any Managerial Educational Institution after having been mounded and shaped with the knowledge of various Managerial Function would be able to efficient to plan, organize, direct and control man, material and money and contributing their respective share in the achievement of both organization and individual motive. This would enrich not only the individuals but also the whole humanity at large. Finance is regarded as the lifeblood of a business enterprise. This is because the modern money market economy, finance is one of the basic foundations of all kinds of economic activities. It is the master key, which provides access to all the sources being employed in manufacturing and merchandising activities. Hence effective management of every business enterprises is closely linked with efficient management of its finances. Thus Financial Management is mainly concerned with the proper management of funds. The financial manager must there fore realize that the action have far reaching consequence for the firms because these action will influences the size, profitability, growth, understanding and a strong grasp of the nature and scope of finance functions. Page35 risk, survival of the firms. Therefore he must have a clear
Working on a relevant and particular project is apart and parcel of any specialized courses of higher education. To fulfill this requirement as a student of PGDM I have chosen the project on Costing system in BHEL.
N ame: Animesh Kumar PGDM Roll No: - 1012003
and Tools Chapter 11: Implementing Merchandising Strategies Chapter 12: Implementing E-Commerce Databases Page35 . Techniques.Electronic Commerce Chapter 1: What Is Electronic Commerce? Chapter 2: Types of E-Commerce Technology Chapter 3: Types of E-Business Models and Markets Chapter 4: Types of E-Commerce Providers and Vendors Chapter 5: E-Commerce Web Site Creation Chapter 6: Managing E-Commerce Web Site Development Chapter 7: Building Shopping Cart Applications Chapter 8: Mobile Electronic Commerce Chapter 9: Enhancing a Web Server with E-Commerce Application Development Chapter 10: Strategies.
Electronic Commerce Page35 .
and new. It also describes how the platform. The chapter also describes B2B/M2M Protocol Exchange. and mySAP. that require extensions to the punchout mechanisms. portal. corporate purchasing. and financial and information services. the threshold for conducting successful business online will move increasingly higher.Electronic Commerce Chapter 1: What Is Electronic Commerce? I n a remarkably short time. Businesses. Chapter 2: Types of E-Commerce Technology I n addition to a general discussion of e-commerce technology. which sets the stage for the rest of the book. as the Web evolves further. private marketplaces. sophisticated medium for business. and they come with very high expectations and a degree of control that they did not have with traditional brick-and-mortar companies. are rushing to join the Internet revolution. viable competitors are emerging in all industries. a tool that IBM has implemented that can map between various protocols used by different procurement systems. and external private marketplaces. Specifically. the chapter shows how WCBE-based suppliers and WCS MPE-based marketplaces can connect to buyers at procurement systems that use punchout. The chapter describes how WCBE-based suppliers and private marketplaces can connect to diverse procurement systems. and suppliers. this chapter also covers various business-to-business connectivity protocols between procurement systems. such as request for quotations (RFQs). and service. too. This chapter details introductory strategies and priorities for electronic commerce. selling. Online consumers are flooding to the Internet. the chapter outlines the types of trading mechanisms that can be supported by existing punchout protocols and the asynchronous trading mechanisms. and partners are critical to solving business problems in the four most common areas of electronic commerce: direct marketing. Although this chapter Page35 . and. other suppliers. Next. the Internet has grown from a quirky playground into a vital. value chain integration. The chapter then describes how a WCS MPE-based supplier or private marketplace could originate a punchout process in order to connect to either an external supplier or another private marketplace. such as Ariba. Commerce One.
many cannot make money at e-commerce. over 74% will be selling online. owning and operating an e-commerce infrastructure does not make economic or operational sense. such as the processes to handle purchase orders. employees. ensure reliability and scalability in your Web site and order processing. and information to gain or maintain marketshare. for midsized retailers ($800 million to $50 billion in sales). By mid-2004. Chapter 3: Types of E-Business Models and Markets T o be successful. retailers (over $50 billion in annual sales) will be e-commerce enabled. but none can afford to avoid trying. a large part of the integration effort for suppliers is the tie-in to internal processes. For most of them. how the next-generation ESP model delivers complete. retailers have raced to drive e-commerce growth to $66 billion in 2003 (5. Chapter 4: Types of E-Commerce Providers and Vendors S elling online has become an imperative for retailers and an increasing number of manufacturers. the chapter discusses the need for an integrated value chain and challenges e-business to optimize its intellectual assets and its investments in core business systems in order to deliver its products and services to an unpredictable market. one-stop online sales channels. With the preceding in mind. It addresses three topics: why many early adopters have struggled with the first generation buy/build approach.Electronic Commerce focuses on the external partner business-to-business (B2B) protocols. And. This chapter discusses why the e-business market affords organizations of all sizes and types the opportunity to leverage their existing assets. technology infrastructure. solid knowledge management practices.7% of U. You will also learn how an ESP model enables manufacturers and retailers to achieve profitability at $40 million to $180 million in online sales.S. this chapter examines types of e-commerce service providers (ESPs) and vendors. Recognizing that a 13% loss in customers can completely eliminate the profitability of their offline stores. and which major advantages companies gain by outsourcing their e-commerce infrastructure. focus your organization on real profit drivers—not technology. Yet these adopters face a fundamental challenge: using the first generation buy/build model. over 94% of the largest U. e-businesses must have a continuous optimization business strategy. No matter what the business. and integrated business process domains. the e-business model processes are the same. Finally.S. avoid managing numerous integrations and third-party service Page35 . retail).
the underlying landscape of mobile technologies is changing rapidly. servlets must supply formatted strings to println() calls. creating the need for solutions to . Site development can proceed along parallel tracks (Java design and HTML design). This chapter takes a look at how an ecommerce Web site is managed as it is being developed. thereby making reuse of both more likely. when servlets generate HTML. JavaServer Pages (JSP) pull HTML out of Java code and create a role for HTML designers. Chapter 5: E-Commerce Web Site Creation T his chapter helps you discover new integrated services that make it easier than ever to secure your Web site and accept online credit card payments. In other words. this chapter is not necessarily about electronic commerce in general. JavaServer Pages also encourage loose coupling between business logic components and presentation components. thereby delivering a Web site faster. Page35 Chapter 8: Mobile Electronic Commerce T he demand for and use of mobile technologies is increasing at a phenomenal rate. Chapter 7: Building Shopping Cart Applications o generate Hyper Text Markup Language (HTML). the best way to secure and authenticate your site so your customers feel comfortable providing sensitive information. This technique clogs Java™ code with line after line of hard-to-comprehend HTML. You will also learn how to create an e-commerce Web site as well as how to avoid the risks and challenges involved in e-commerce trust. Furthermore.Electronic Commerce relationships. but focuses exclusively on Web site servers. Simultaneously. and upgrade functionality continuously and seamlessly over time. and how to enable your site to process online payments in seconds—including credit and debit cards. In addition. Chapter 6: Managing E-Commerce Web Site Development E T lectronic commerce is quickly shaping up to be the way business will be conducted in the future. Web page design requires programmers. this chapter does not discuss management concepts or other tools available to implement e-commerce. It is actually an exercise in building and managing a business-to-consumer electronic commerce site. The shopping cart application discussed in this chapter examines the role of JSP in Web architectures and offers a practical example of how to get the most out of your e-business applications.
while fostering development. Chapter 10: Strategies. Chapter 12: Implementing E-Commerce Databases n just over seven years. businesses take a pragmatic view of investments in information technology (IT). secure. This chapter explains how each strategy relies not only on a great Web site. and operations improvement. e-commerce database technology has become the common user interface of choice for many information dissemination systems. system-ready information about products and the merchandising programs that drive sales. virtual build-out. Although many successful formulas for e-business development now exist. the key to success is to provide the maximum business value for the minimum cost. Chapter 11: Implementing Merchandising Strategies he Internet is changing the basis of competition for companies of all sizes. and some are taking a wait-and-see attitude.Electronic Commerce facilitate the long-term growth and success of mobile enterprise initiatives. Techniques. This chapter addresses the challenges of designing and implementing e-commerce database-integrated Web sites. There are several competing technologies available that often do not address the issues of heterogeneous environments and Webbased application development. This chapter discusses how some e-business industries are moving ahead as fast as technologies permit. For IT managers. This chapter shows how IT must align enhanced server-based application development and operations with the needs and priorities of the business. and Tools he e-business revolutin that began in 1997 is proceeding at a revolutionary pace—which is to say that it is proceeding rapidly. This rapid explosion has led to new challenges for IT managers and developers. and maintain the mobile application’s infrastructure. but not uniformly and not always in the ways that were predicted. This chapter discusses how important it is for software vendors to provide comprehensive solutions to manage. integration. most are based on one of the following merchandising strategies: Web entrepreneurship. The integration of the two technologies have made rapid advances over the last few years. Chapter 9: Enhancing a Web Server with E-Commerce Application Development T T T I oday. Page35 . but also on high-quality. and access to applications and information over wireless media. relational database management systems (RDBMS) have been the cornerstone for information warehousing for years. Whereas.
this part of the chapter very briefly highlights emerging threats specific to e-commerce application security and provides guidance on effective approaches to e-commerce application protection. it focuses on e-commerce database-Web difficulties in heterogeneous database environments. This chapter discusses how e-business security is evolving from an old notion of an information fortress that keeps others out. Leveraging existing products is quite often the quickest way to improving both security and the bottom line. high-performance e-business infrastructure demands close coordination of both technical and management policies and procedures. organizations can address most of their e-commerce application concerns or problems with the products they already own. more than ever. Page35 Chapter 16: Building an E-Commerce Trust Infrastructure B usinesses that can manage and process e-commerce transactions can gain a competitive edge by reaching a worldwide audience. and deploying Web applications meets e-business intelligence (e-BI) application development solution criteria very effectively. in many cases. This chapter discusses how the Web poses a unique set of . and remote employees access to your business data. organizations will make better choices that ultimately lead to greater security. Chapter 15: Protocols Information for the Public Transport of Private C reating a high-security. Chapter 14: Types of Security Technologies oday. to a new notion of privacy and trust as you give customers. testing. at very low cost. This chapter also examines the business and technical requirements for applying and managing e-BI tools for application development solutions. integration Chapter 13: Applying and Managing E-Business Intelligence Tools for Application Development A T n organization can effectively address business problems. This chapter very briefly shows how a fully Web commerce-integrated. With the preceding in mind. Finally. partners.Electronic Commerce Furthermore. realizing immediate returns on investment in technology. organizations are challenged with improving security without incurring a corresponding increase in cost or burden to their existing staff. Windows-based development environment for building. By comparing the benefits that a new product will provide to the total cost of that product.
Chapter 18: Strong Environments Transaction Security in Multiple Server F or the strongest. The technology. Chapter 19: Securing and Managing Your Storefront for E-Business Page35 W ith its worldwide reach. by ensuring the security of online payments. Customers submit information and purchase goods or services via the Web only when they are confident that their personal information. the chapter describes the many challenges of enforcing security in component-based applications. SSL certificates allow your Internet site or corporate network to enable SSL encryption. Finally. which authenticates your server and guarantees against alteration and interception of data. such as credit card numbers and financial data. it presents the features you can expect if you decide managed PKI for SSL certificates is right for your organization. Chapter 17: Implementing Security Integration E-Commerce Enterprise Application T his chapter explores e-commerce enterprise application security integration and new technology’s support of rapid deployment of secure e-commerce applications. which is used to tie together many different security technologies and. the chapter formally introduces Enterprise Application Security Integration (EASI). businesses can minimize risk and reach a far . which businesses must address at the outset to minimize risk. businesses can reach the millions of people around the world already using the Internet for transactions. and how e-commerce solutions create new security responsibilities. Next. It then lays out the reasons you might consider managed PKI for SSL certificates as an alternative to one-by-one purchasing. Finally. In addition. represents new power to mount secure. most reliable protection of your client-browser communications.Electronic Commerce trust issues. This chapter provides you with a basic introduction to digital ID technology and SSL certificates. the Web is a lucrative distribution channel with unprecedented potential. scalable e-commerce services. based on the integration of distributed component computing and information security. provides the framework for building secure component architectures. By setting up an online storefront. Secure Sockets Layer (SSL) certificates are widely recognized as the industry standard. as a result. is secure. The chapter also describes how security enables new e-commerce applications that were not previously feasible.
payment processing is easy. It started in the form of a card embossed with details of the cardholder (account number. the most important step in putting your Web site to work for you. technology has simplified this process so that. secure. you’ll understand the issues and essential elements of accepting payments online. Fortunately. This chapter provides you with what you need to know about online payment processing issues: online payment processing basics. what you should know about fraud. with the right solution. and provide detailed reporting capabilities. the smart card appeared. which could be used at a point of sale to purchase goods or services. support backend payment-processing workflows and procedures. That’s what this chapter is all about! Chapter 22: Electronic Payment Systems he payment stage of any electronic bill presentment and payment (EBPP) implementation must be able to integrate tightly with accounts receivable (A/R) and accounts payable (A/P) systems. how payment processing works. with very detailed explanations of key issues related to online storefront security. In the end. and what to look for in a payment processing solution. The magnetic stripe was soon introduced as a means of holding more data than was possible by embossing alone. Page35 Chapter 23: Digital Currencies his chapter discusses the market implications of adopting electronic payment systems and digital currencies in electronic commerce. and seamless for both you and your customers. this chapter is about electronic payment systems. the payment processing network. This chapter is a continuation of Chapter 18. expiration date). It also describes the technologies that are used to address the issues. name. With the preceding in mind. The key to understanding and exploiting electronic commerce is to . and provides step-by-step instructions for obtaining and installing an SSL certificate. Chapter 21: Electronic Payment Methods Through Smart Cards T T T he payment card has been in existence for many years. After you’ve read this chapter. Chapter 20: Payment Technology Issues O nline payment processing requires coordinating the flow of transactions among a complex network of financial institutions and processors.Electronic Commerce larger market: the 89 percent of Internet users who still hesitate to shop online because of security concerns.
Chapter 25: Business-to-Business and Business-to-Consumer o help companies make informed decisions and capitalize on the right opportunities. this chapter summarizes and explores some of the implications to both business and business computing of the continuing evolution of e-business. in which all components of a market interact and must be analyzed collectively. The supplier enablement initiative and technology solutions (whether they be B2B or B2C) are aimed at helping companies of all sizes to sell to their trading partners more effectively by integrating with customers’ procurement systems. Conclusions. Chapter 24: International E-Commerce Solutions T T he Internet connects potential customers with merchants in many different countries. and CRM). affecting product choices.Electronic Commerce recognize it as a market mechanism. The chapter also discusses decision points and the fundamental importance of something even more critical to e-business . electronic payment systems bring more than lowered transaction costs. In short. and copyrights. supplier enablement solutions will make it easier for your company to reach its customers through whatever purchasing method they prefer. pricing. this chapter discusses solutions designed to help companies integrate business partners more effectively. Although this notion encompasses a wide range of business challenges and solutions (including supply chain management. No matter how large or small a business is. This chapter discusses how international ecommerce payment solutions provide a channel for money to cross oceans and borders. product differentiation—the commoditization of consumer information and advertisements. For example. this chapter focuses specifically on one concept: supplier enablement. and Recommendations Page35 F inally. the lemons problem. Finally. digital product pricing. or how complex or simple its business processes. electronic payment systems are one of the critical factors that allow process innovations via electronic commerce. Chapter 26: Summary. these process innovations may either promote competitive and efficient markets or worsen the trend toward the vertical integration and monopolization in the globalized economy. This chapter also examines economic implications of electronic payment systems—especially micropayments enabled by digital currencies in terms of size advantage. and other electronic sales channels—all from a single e-business foundation. procurement. e-marketplaces. and competition.
Chapter 1: What Is Electronic Commerce? “It is impossible for ideas to compete in the marketplace if no forum for their presentation is provided or available.Electronic Commerce success: ease of integration. It is about using the power of digital information to understand the needs and preferences of each customer and each partner to customize products and services for them. An electronic commerce strategy should help deliver a technology platform. Platforms are the foundation of any computer system. and a professional expertise that companies can leverage to adopt new ways of doing business.” —Thomas Mann (1875–1955) Overview Electronic commerce is doing business online. online banking and billing. An e-commerce platform should be the foundation of technologies and products that enable and support electronic commerce. many companies today engage in electronic commerce for direct marketing. and establish and strengthen customer and partner relationships. and corporate purchasing. developing. automated services offer businesses the potential to increase revenues. secure distribution of information. lower costs. high-value commerce systems that are easy to grow as business grows. Although the benefits of electronic commerce systems are enticing. deploying. a portal for online services. and customer service. With it. value chain trading. In addition to adopting new technology. Personalized. businesses can develop low-cost. An e-commerce platform’s breadth Page35 . and managing these systems is not always easy. many companies will need to reengineer their business processes to maximize the benefits of electronic commerce. selling. and then to deliver the products and services as quickly as possible. To achieve these benefits. This part of the chapter pinpoints 15 essential best practices or recommendations for effective e-service.
Across consumertargeted commerce sites. for many purposes. more Web sites focus on direct marketing. portal. Page35 . Barnes & Noble. Selling. online banking and billing. secure distribution of information. value chain integration. It is fast. and the introduction of etickets by major airlines. Independent software vendors (ISVs) have created specialized commerce software components that extend the platform. selling. Portals are the crossroads of the Internet. where consumers gather and where businesses can connect with them. selling. which sets the stage for the rest of the book. and value chain trading and corporate purchasing. and there are four main areas in which companies conduct business online today: direct marketing. and service than on any other type of electronic commerce. and generates qualified sales leads through observation and analysis of customer behavior. and Service Today. and to a development system. This chapter details introductory strategies and priorities for electronic commerce. The Internet is one of the newest and. best business communications channels. inexpensive. and partners are critical to solving business problems in the four most common areas of electronic commerce: direct marketing. corporate purchasing. to an application infrastructure and development tools. there are several keys to success: • Marketing that creates site visibility and demand. and service. targets customer segments with personalized offers. and service. ranging from operating systems to application servers. and has proven to be a stepping-stone to more complex commerce operations for many companies. E-Commerce: Doing Business on the Internet Businesses communicate with customers and partners through channels. proving the reach and customer acceptance of the Internet. selling.Electronic Commerce should also be unmatched. Successes such as Amazon. Direct selling was the earliest type of electronic commerce. Dell Computer. Direct Marketing. and universally accessible—it reaches virtually every business and more than 200 million consumers. reasonably reliable. and financial and information services. It also describes how the platform. Doing business online is electronic commerce.com. have catalyzed the growth of this segment. Companies normally provide customers with a wide range of choices for professional implementation services and tightly integrated software for commerce solutions.
and mutual funds can all be performed electronically by using the Internet to connect consumers and small businesses with their financial institutions. Targeted and automated up-selling and cross-selling are the new fundamentals of online retailing. Integrated sales-processing capabilities that provide secure credit card authorization and payment. • • • Financial and Information Services A broad range of financial and information services are performed over the Internet today. and tight integration with existing backend systems. capture and track information about consumer requests.Electronic Commerce • Sales-enhancing site design that allows personalized content and adaptive selling processes that do more than just list catalog items. Page35 . you have: • • • Online banking Online billing Secure information distribution Online Banking Consumers and small businesses can save time and money by doing their banking on the Internet. businesses of all sizes. Sites that most frequently provide the best and most appropriate products and services are rewarded with stronger customer relationships. and sites that offer them are enjoying rapid growth. These sites are popular because they help consumers. bonds. This business-to-consumer (B2C) electronic commerce increases revenue by reaching the right customers more often. resulting in improved loyalty and increased value. For example. such as inventory. and financial institutions distribute some of their most important information over the Internet with greater convenience and richness than is available using other channels. automated tax calculation. making transfers between accounts. Paying bills. and trading stocks. Automated customer service features that generate responsive feedback to consumer inquiries. and automatically provide customized services based on personal needs and interests . flexible fulfillment. and distribution. billing.
better enforce purchasing policies. information is their most valuable asset. and Operations (MRO) The Internet also offers tremendous time and cost savings for corporate purchasing of low-cost. high-volume goods for maintenance. Supply Chain Management Supply chain management (SCM) is changing as companies continue to look for ways to respond faster. improve service for customers. Repair. Maintenance.Electronic Commerce Online Billing Companies that bill can achieve significant cost savings and marketing benefits through the use of Internet-based bill-delivery and receiving systems. and utilities. credit card companies.and paperwork-intensive process into a self-service application. SCM solutions must support highly configurable products. The Internet can transform corporate purchasing from a labor. Digital Rights Management provides protection for intellectual and information property. suppliers can ship the requested goods and invoice the company over the Internet. Although the Internet can enable businesses to reach huge new markets for that information. and replacement parts. and have heightened awareness for competing supply chains (see sidebar. and is a key technology for secure information distribution. and give companies more power in negotiating exclusive or volume-discount contracts. global markets Page35 . In addition to reduced administrative costs. Internet-based corporate purchasing can improve order-tracking accuracy. Purchase order applications can then use the Internet to transfer the order to suppliers. businesses must also safeguard that information to protect their assets. Secure Information Distribution To many businesses. In other words. Typical MRO goods include office supplies (such as pens and paper). Today. and maximize sales while decreasing costs. consumers receive an average of 23 bills per month by mail from retailers. “Supply Chain Management”). such as computers and automobiles. the Internet and e-business have changed the way enterprises serve customers and compete with each other. Company employees can order equipment on Web sites. computers. and suppliers can keep their catalog information centralized and up-to-date. and operations (MRO) activities. repair. In response. company officials can automatically enforce purchase approval and policies through automated business rules. provide better customer and supplier service. reduce inventories. office equipment and furniture.
Electronic Commerce with local specifications. N. but are disconnected from the actual demand. The future of supply chain management lies in the ability of the enterprise to respond instantaneously to shifts in global supply and demand. and improved cash flow by 13 percent. companies increasingly need to respond to changes in hours and minutes. However. mySAP SCM has demonstrated bottom-line benefits for its users. flexibility. velocity. and to major events that occur across extended supply chain processes. sequential fashion.Y. Management Shift As supply chain networks extend across organizational and geographic boundaries. sequential. For example. enterprise systems supplier SAP is delivering what it believes is the most adaptive supply chain management solution available on the market. networking. Supply chains in this century must be adaptive and provide greater visibility. The reason: mySAP SCM enables end-toend integration of supply chain planning. For example. Decisions are made centrally. execution. According to SAP. and designed for controlled conditions.-based Colgate-Palmolive increased forecast accuracy to 98 percent. The Profits of Adaptive Proponents of adaptive supply chain networks say that by sharing information about customer demand with all partners simultaneously— rather than in the traditional. In fact. Supply chain management is now the key to increasing and sustaining profitability. and widely dispersed suppliers and partners. with Walldorf. Connecticut-based Gartner Group recently predicted that 91 percent of leading companies that fail to leverage supply chain management would forfeit their status as preferred vendors. New York. Stamford. or even months. In addition. weeks. and responsiveness to enable enterprise value networks to adapt to changes in supply and demand in real time. and coordination. Germany-based SAP® mySAP™ Supply Chain Management (mySAP(tm) SCM). Yet most companies’ SCM solutions are linear. They rely on accurate forecasting of demand. SAP is developing adaptiveagent technology and repair-based optimization that is expected to enable the next generation of adaptive solutions and services. reduced inventory by 13 percent. companies must find ways to manage the unmanageable. Page35 . with its inherent delays— network partners can act more like a single entity to stay in-sync with customer needs. the more value that will be created. The faster a supply network can adapt to these events. and changes typically take days.
keep redefining markets and pricing. it also requires integration across systems that support a variety of functions beyond the traditional supply chain. SCM. aligning a company’s business model with operational capability requires engineering and sourcing products differently. In an adaptive supply chain network. Given the dynamics of today’s markets. Customer relationship management (CRM) is about capturing customer requirements. But. Although this flow of information generally does not occur now. a superior understanding of the customer drives everything—CRM. products tend to be designed in a modular fashion and sourced from fewer strategic suppliers. instead of just shifting costs to other parts of the supply chain. manufacturers need to rethink their business model on an almost continuous basis. and influencing demand through promotions. This information must be fed back into the supply chain network to improve planning. building life-long customer relationships and brand value. Competitive Advantage Page35 . it represents the key to customersegmentation strategies and effective demand management. supply chain operations. To support mass customization and postponement strategies. Internal integration helps enterprises break down functional silos and share actionable information. integration between a product life-cycle management (PLM) system and an SCM solution reduces time-to-market for new products and ensures that engineering changes are seamlessly integrated back into manufacturing. CRM. product design. The adaptive supply chain network relies upon realtime integration of all supply chain systems. including networking.Electronic Commerce The adaptive supply chain network puts the customer at the center of all activities in the supply chain. and provide increasingly customized products. execution. serve ever-smaller customer niches. That is the hallmark of a truly customer-centric organization—and the key to profitability. planning. which will lead to increasing overall profitability. Last but not least. which allows companies to improve overall costs and profits across the network. and ensure that products are designed for supply. Customer feedback and trends must also drive product development to ensure that products are designed according to customer requirements. With that kind of integration. Close collaboration with these suppliers on product design is essential to reduce time-to-market. and even the value proposition of the entire network. and PLM must all work together. In addition. and performance-management systems. increase product quality. coordination.
even small disruptions in supply chains initiate a wave of e-mails. Distributed execution allows the management of processes across different ERP systems by supporting cross-system integration and collaboration. Adaptive planning replaces batch-oriented. faxes. However. forecasting. real-time response to demand signals and changing supply situations. Event-driven coordination Page35 . intelligent resolution of exceptions. Adaptive Planning Today. companies can leverage the increased visibility within and across organizations to achieve change in their supply chain processes. and collaborative transportation management). Then. period planning with an event-driven. collaborative supply management.Electronic Commerce Making adaptive supply chains a reality means fundamental changes in a company’s internal operations. Distributed execution considers the distributed nature of processes in a world of outsourcing. Event-Driven Coordination Today. Distributed Execution Most execution systems are ill-prepared to support the emerging virtual supply network. in which multiple partners in the extended network might manage a single process. Adaptive supply chain networks address the challenge of managing the virtual enterprise through up-to-the minute monitoring and control of business processes and the rapid. these networks replace inventory and capacity buffers (long used to make up for a lack of supply chain visibility) with information. including functionality for the following. Dynamic Collaboration Traditional supply chains rely mostly upon inventory and assets. but the adaptive supply chain network is information-based—it uses shared data for planning and execution processes. starting with the integration of processes and systems across organizational boundaries. as companies aim to create virtually “inventoryless” supply chains. they require the ability to realign demand and supply almost continuously to consider the latest demand situation and supply status. and phone calls just to keep pace with the problem. and replenishment [CPFR]. collaborative planning. most supply chain planning and scheduling systems rely primarily upon historical data collected from enterprise resource planning (ERP) and legacy systems. By incorporating data garnered from collaborative processes (such as vendor-managed inventory [VMI].
Speed is clearly the business imperative for the value chain. optimized plans. The resulting out-of-stock events can mean lost business. and distributors quite like the value chain. the ability to adapt to change is increasingly important. these elements enable companies to implement closed-loop learning processes across the supply network. The Internet promises to increase business efficiency by reducing reporting delays and increasing reporting accuracy. Those who don’t may well become the dinosaurs of their industries . Value Chain Integration No other business model highlights the need for tight integration across suppliers. Besides addressing the need for consistent performance metrics. Combined. The Manufacturing E-Commerce Bottom Line Page35 .Electronic Commerce complements adaptive planning by trying to solve supply chain exceptions locally to support existing. The result? Faster response to market changes and instantaneous adaptation to customer needs across the enterprise and the network. the adaptive supply chain network will be an important competitive weapon. and to align operational targets with strategic objectives across functional silos. “The Manufacturing E-Commerce Bottom Line”). However. Continuous performance management enables closed-loop learning processes by allowing the company to measure the quality of processes constantly. In business. companies are increasingly complementing supply chain KPIs with balanced scorecards to get a level view of the state of the organization. manufacturers (see sidebar. Delays in inventory tracking and management can ripple from the cash register all the way back to raw material production. creating inventory shortages at any stage of the value chain. Continuous Performance Management Most executives would agree that consistent performance metrics are the key to steering the behavior of individuals and reconciling conflicting goals across functional areas. key performance indicators (KPIs) also play a major role in managing collaborative processes and in providing decision makers with actionable information to increase the quality and speed of decisions. For those who do it right. and by feeding this information back into supply chain planning.
companies like General Electric and General Motors were reporting increases in online sales and predicting gains in e-commerce by the end of 2003. but particularly in manufacturing. online revenue figures in manufacturing. But. and supply sectors have been difficult to determine. nearly three quarters of the companies surveyed reported they were developing e-commerce initiatives to grow their revenues. leading to the longest continual month-over-month decline in industrial production since World War II. But. engineering. a significant increase in focus was shown on e-commerce activities in 2002 within manufacturing and related industrial areas. Still. Economic statistics compiled by the U. Analysts also say they do not expect an uptick in manufacturing production until consumers begin spending with confidence. A recent study by the National Association of Manufacturers (the leading industry group of industrial producers) saw dramatic increases in the number of companies developing Web-based activities to reach both new customers and suppliers. a harbinger of dramatic change down the road. The Federal Reserve recently reported that production in American factories fell 3.3 percent. 56 percent of manufacturing concerns indicated Page35 . Historically. it is a trend toward increasing e-commerce revenues and initiatives within the industrial sectors. because most companies in those sectors do not separate online revenue from other income. According to the survey. In another recent study of e-business activities within the manufacturing sector (commissioned by Interbiz. Despite the intense hype surrounding ecommerce. The September 11 terrorist attacks created additional uncertainty in all markets. if there is a bright spot in what economists are predicting for manufacturers in 2004. there should be a significant increase in networking and business-to-business software investments. Consumer spending for durable goods took a drop in the wake of the attacks and as a result of the developing war on terrorism.S. determining the exact portion of the national economy they represent is difficult. Officials at GE indicate they expect to increase the amount of online revenue calendar-year-over-calendar-year from $9 billion to $24 billion. where inventory levels among retailers and suppliers were already high. right now it’s still just a small fraction of most business and manufacturing operations. Department of Commerce and others have consistently noted that although e-commerce activities have continued to grow despite unfavorable economic conditions.Electronic Commerce The economic downturn in the United States has played havoc with the country’s manufacturing and engineering sectors for more than three years. a division of Computer Associates International). As capital spending rebounds.
consumers. electronic commerce systems require significant investments in hardware. Page35 . approximately 60. and administration can be costly in terms of hardware. Today. Most EDI implementations use leased lines or value added networks (VANs) that require significant integration for each trading partner. speed can be costly. In fact. with 89 percent reporting effectiveness within their e-business strategies. it is not nearly as easy to develop and deploy commerce systems. Companies can face significant implementation issues: • • • • • Cost Value Security Leveraging existing systems Interoperability Cost Electronic commerce requires significant investments in new technologies that can touch many of a company’s core business processes. Open standards for electronic document exchange will allow all companies to become Internet trading partners and function as suppliers. As with all major business systems. software.Electronic Commerce they were actively involved in e-commerce. staffing. Issues in Implementing Electronic Commerce Although it is simple to describe their benefits. Network design. This integrated trading will tighten relationships between businesses while offering them greater choices in supplier selection.” Unfortunately. these costs are the key reason that EDI is most widely deployed only in larger companies. and staff. installation. or both in this business-to-business electronic commerce. Moving forward. all companies will be able to take advantage of value chain integration through the low cost of the Internet.000 businesses exchange business documents such as orders and invoices with their trading partners through a standard communication and content protocol called Electronic Data Interchange (EDI). software. 22 percent reported those activities as “highly effective. Businesses need comprehensive solutions with greater ease-of-use to help foster costeffective deployment. and training.
Customer information also needs to be protected from internal and external misuse. inventory. product. but companies must protect their assets against accidental or malicious misuse. System security. businesses achieve cost reduction. and reliability. Leveraging Existing Systems Most companies already use information technology (IT) to conduct business in non-Internet environments. order management. and industry partners). portal. however. a successful strategy for delivering this vision is described by three workflow elements (platform. Privacy systems should safeguard the personal information critical to building sites that satisfy customer and business needs . and customer service. For example. must not create prohibitive complexity or reduce flexibility. and cost reduction must be met. Interoperability When systems from two or more businesses are able to exchange documents without manual intervention.Electronic Commerce Value Businesses want to know that their investments in electronic commerce systems will produce a return. Failing to address any of these issues can spell failure for a system’s implementation effort. business-process automation. Business objectives such as lead generation. each backed by comprehensive technology. your company’s commerce strategy should be designed to address all of these issues to help customers achieve the benefits of electronic commerce. such as marketing. Page35 . Your company’s vision for electronic commerce should also be to help businesses establish stronger relationships with customers and industry partners. improved performance. but it is imperative that electronic commerce systems integrate existing systems in a manner that avoids duplicating functionality and maintains usability. performance. Therefore. and service offerings. Security The Internet provides universal access. billing. and more dynamic value chains. Systems used to reach these goals need to be flexible enough to change when the business changes. The Internet represents an alternative and complementary way to do business. distribution.
Every Web page click is an opportunity to invoke workflow-based interaction. a successful workflow strategy can be the underlying engine delivering state-based. Suite 100.” © Copyright 2003 SAP AG. 1–19. “Electronic Commerce Explained. an instant change to the workflow process can be accomplished with a simple change to the workflow map by a nonprogrammer. to effect temporary or continuous changes in the business process.. Human labor is expensive. Strategic Planning & Support Office.  Runge. A workflow driven e-business will see immediate shifts that allow it to process more efficiently under high volume circumstances. and is the glue for process coordination and consistency. Beverly Hills. The bottom line? Workflow design tools should be a core requirement for ebusiness applications. SAP America Inc. and in some cases eliminate. “Types of E-Commerce Technology. and workflow technology allows e-businesses to supplement. 3999 West Chester Pike. Workflow addresses business needs. 2002 edition of MSI. Workflow Technology Creating e-business processes without a vision for workflow is shortsighted and expensive. and fulfillment. E-business flexibility can be realized through workflow’s logic encapsulation that isolates the logic of the business process from the Web server middleware and associated Web pages. For example. thereby allowing corporations to relocate human resources to more difficult tasks. Self-service applications are perfect examples of how workflow can be employed to automatically coordinate requests and track fulfillment.Electronic Commerce From self-service portals to transaction processing. thus accommodating short-term business needs or long-term process improvements. processedfocused control services for e-business applications. Microsoft Corporation. (August 2002): pp.” ©2003 Microsoft Corporation. The discussion centers around the Session Initiation Protocol’s (SIP) effect on multimedia-enabled e-commerce. “Adaptive Networks Broaden Relationships.USA. PA 19073. reliance on human supervision and intervention. CA 90212. All rights reserved.” Now. All rights reserved. Alexander. guidance. A detailed discussion of workflow technology is presented in Chapter 2. Newtown Square. let’s take a look at the transformation of the scope of the Internet and the Web. E-businesses need workflow technology to react rapidly to process changes.  Page35 . Wolfgang and Renz. [Advertising supplement in June. streamlines transactions. The Business Forum 9297 Burton Way.
voice. As more advanced standards mature and enhanced capabilities and features become available. 2500 Clearwater Drive. SIP servers perform a routing service that puts the caller in contact with the called party.323 is currently the dominant standard for initiating a voice session. so do complementary standards. and dramatically reduced call setup time. But.Electronic Commerce Reed Business Information. taking into account the desired service and user preferences. such as point-topoint calls. text.. Hence. 2001. The Benefits of SIP As the new voice-ready IP standard. McGraw-Hill Trade. For example. more robust standards are needed. the creation of an HTTP-based protocol —Session Initiation Protocol (SIP). Because SIP has its foundation in HTTP. H. Net Privacy: A Guide to Developing & Implementing an Ironclad ebusiness Privacy Plan. such as video. As multiple technologies evolve and interoperate. Page35 . gain acceptance in an Internet Protocol (IP) environment. gaming. The advancement of multimedia applications for the Web has resulted in a wave of new technologies to enhance the Internet experience. Oak Brook.  The Scope of the Internet and the Web The renaissance of the Internet age launched an entirely new set of communication technologies and methods. and virtual reality. it eases the integration of voice with other Web services. the adoption of VoIP has begun to take off. Using the protocol. such as those for multimedia applications. From voice to video. Voice over IP (VoIP) has gained acceptance within the last few years. John R. It defines the desired service for the user. or video. the latest developments have resulted in the requisite standards to allow for the full maturation of the technology. SIP’s main functions are signaling and call control for IP-based communications. instant chat. chat. voice. Vacca. SIP enables the initiation of an interactive Internet experience involving multimedia elements. as more multimedia services. The main advantages of SIP for the VoIP market include enhanced scalability. video conferencing. with older standards enabling the technology. IL 60523 (June 2002)]. multipoint conferencing. easy implementation. and presence. such as unified messaging.
allows for communications to happen in a spontaneous fashion. Presence lets users know the availability of other parties. As customers experience the benefit of multiple touch points. enterprises are compelled to integrate these new communication methods into their CRM systems.Electronic Commerce Another key benefit of SIP for VoIP is the easy integration with many other IP services. service providers can easily add services and applications for VoIP customers while minimizing interoperability issues. Users on either network can reach any point on the Public Switched Telephone Network (PSTN) or the Internet without giving up the existing devices or advantages of either. Traditional voice call centers for customer support are migrating to Web support centers where the focus is shifting from pure voice (800 numbers) to e-mail support. The integration of these applications brings a fresh dimension of communication to customer-facing Web sites. By taking advantage of the Internet. IP-based communications can use SIP Uniform Resource Locators (URLs) for addressing. As the enabling protocol. Page35 . The simplicity of SIP technology is facilitating the spread of VoIP around the world. Because support for instant messaging and presence is built into the SIP. Through SIP. SIP is well-suited to bring these capabilities to the user. SIP runs over IP networks. text chat. SIP technology provides new service capabilities while supporting the use of key services from the circuitswitched telephone network. regardless of the underlying networking technology—asynchronous transfer mode (ATM). a whole new level of customer communications can take place. and when coupled with instant messaging and conferencing. similar to the World Wide Web. voice. With these added functionalities. SIP is flexible and extensible. enabling the next generation of e-commerce through the use of VoIP and multimedia applications. SIP’s straightforward approach has encouraged developers of e-commerce applications and telecommunications providers to implement it into their customer relationship management (CRM) systems. and video with click-to-connect service. easily supporting a wide array of endpoint devices and configurations. More importantly. the online consumer can experience a rich customer support environment. The support of both telephony and Web-type addressing enables IP communication to seamlessly bridge a telephone network and the Internet. Enabling Multimedia E-Commerce with SIP The emergence of SIP has opened up new doors of innovation. in which the form of the URL resembles an e-mail address.
however. once you have received personal attention from someone at a store. effectiveness. it enhances Internet call center productivity. it isn’t hard to decide where to go next time. The challenges that e-businesses face. John R. placing a premium on the performance. it also includes a wide range of entirely measurable Web site elements. High rates of customer retention (and the referrals that accompany happy consumers) can mean the difference between success and going back to the drawing board. A shopper who drives to the bookstore is not likely to put down the book he wants and drive to another location because of a line at the checkout stand. and for networks to identify users regardless of location. in earning and retaining customers are different from those confronted by traditional business. Although customer experience includes intangible. SIP-based communications can be achieved with any device. this functionality will increase in importance. The adoption of e-commerce will be bolstered further as consumers begin to rely upon this type of online customer service. To succeed in e-business. 2001. let’s look at how to use the Web to reach customers. i-mode Crash Course. such as laptops and Internet-ready phones .. keeping customers is vastly cheaper than getting new ones. And. This level of customer service allows an immediate personal connection with customers—one of the most critical aspects in CRM. just as in brick-andmortar. fixed or mobile. And. because SIP supports name mapping and redirection services.Electronic Commerce Because SIP enables real-time voice and video to become viable applications on many e-commerce Web sites. helping you find exactly what you need. it is possible for users to initiate and receive communications and services from any location. Now. As e-commerce spreads to cell phones and other handheld devices. The options and flexibility of doing business online put much more control in the hands of the consumer.  Vacca. or when an Page35 . Using the Web to Reach Customers The rules are the same. With the click of a mouse. In addition. you need customers. McGraw-Hill Professional. a customer can talk to or be in faceto-face contact with a service representative. nonquantifiable aspects. Someone looking for the biggest selection of CDs cannot go to 20 stores in 6 states in half an hour to check their selection. and reliability of an organization’s Web site. There is no one to apologize to Internet customers when the service goes down. This adds an additional level of usability from a CRM perspective.
Electronic Commerce image is missing. traditional business to the Internet (or of starting a new. pure-play Internet business) involves a variety of factors: • • • • • Global reach Higher profile 24 × 7 availability Targeted focus Cost savings Global Reach A small organization no longer has to be a local organization. if not preeminent. deep-pocketed competitor. speed. . The Shift to E-Business There is no free lunch. and along with the benefits of doing business in the new economy comes a new kind of customer. Thus. dependability. the user experience is the most significant factor in customer retention. one with different expectations and standards by which companies are judged. For online consumers. as well as less quantifiable aspects of a Web site. even with relatively modest depth and breadth to its inventory. Customer experience comprises a range of issues. Web sites must offer a consistently positive customer experience to win over consumers. And. or in a café in Bordeaux) can spend their time. alternatives are just a click away. including ease-of-use. in a log cabin in Alaska. As the Internet matures and evolves into a ubiquitous. those companies best able to monitor their Web sites and ensure a positive. a small but very efficient company can have the profile of a much larger. Inspiring loyalty is the biggest challenge to e-businesses. though. and their money. medium for business. rewarding customer experience will have an unparalleled advantage in the race to create and retain loyal customers. Anyone with Web access (in a living room in Chicago. On the Internet. the attraction of moving an established. at any online business. and e-consumers are a tough group to win. Higher Profile Page35 A company can have a significant Web presence and profile. or to explain what an error message means.
they know they can go somewhere else.Electronic Commerce 24 × 7 Availability E-businesses do not have to close at the end of the day. Targeted Focus and Cost Savings Companies do not have to be all things to all consumers. and making necessary modifications and upgrades to ensure speed. Speed Wins Speed is crucial for successful e-businesses. among other things. as uncomplicated as buying a newspaper or filling the car with gas. A useful starting point is the eight-second rule of thumb. Through the Internet. Vital for success in any e-business is ongoing monitoring of the performance of its site. New Medium and New Expectations Internet consumers expect e-business to be faster and more extensive. affect how fast a site will function. and as technology improves and speeds increase. streamlining inventory and distribution channels are possible in effective e-businesses. The rule says that a significant number of users are unwilling to wait longer than eight seconds for a page to load or an action to be executed. individual customers can get goods and services tailored to their needs. It is estimated that as much as $473 million is lost per month from customer bailout from impatience. And. and be there in no time. to another Web site. Information and services can be available any time. the time users will wait before leaving the site is likely to decrease. or have difficulty understanding how it works. any day. Significant savings from. from fundamental site architecture to network traffic at certain times of the day. than brick-and-mortar alternatives. or are otherwise frustrated. identifying cycles of usage and ranges of performance. allowing revenue to be earned without interruption. There have been attempts to quantify the economic loss due to unacceptably slow Web page download speeds. with more options and services. Many factors. Page35 . if they encounter any problems with the site. Consumers expect Web sites to be fast. which is one aspect of ebusiness customer churn. They expect their experience online to be easy.
Web sites that frustrate users scare them away. easy experiences keep their customers. and the appeal of adding new features is a strong temptation. Seventy-nine percent found computer problems more stressful than having to spend a weekend with a spouse’s parents. one that attracts new customers and urges old ones to return. and they will stay there. customers are cautious when sending such information and wary about sites that they suspect may not adequately guard the privacy of their demographic and Page35 . and this complicates the issue of glitches and raises the ante for Web sites to function smoothly. and a site that changes so often and in such ways that customers must relearn the site.Electronic Commerce If It Isn’t Broken Key to the user’s experience and level of comfort in e-business is consistency. or have patience with. Instead of spending the extra time to deal with the hassle. The relative cost for changing the look and feel of an e-business is low. Twenty-three percent found computer problems more stressful than being left by a partner or spouse . The Often Missing Piece A less tangible but equally vital aspect to customer loyalty in e-business is trust. participation in a typical Internet business model requires divulging personal information for registration purposes. between a “sticky” site. and some do. the one that is fundamentally consistent in its presentation and functionality. Whereas a brick-and-mortar business could not redesign the store every month. A recent survey conducted by ICL. often including sending credit card numbers to the site. There is a fine line. • No Web site runs perfectly 100 percent of the time. an e-business services company. they will go to the competition. but also with the Internet in general. A computer neophyte is less likely to understand. For consumers. Web sites that consistently offer pleasant. technical difficulties. however. indicates relatively high levels of stress and anxiety caused by computer problems for “typical” users. but those that are close to 100 percent (Web sites that minimize outages and are able very quickly to detect and correct problems when they do occur) have a significant advantage. e-businesses can. • • Forty-nine percent found computer problems more stressful than being stuck or delayed on public transportation. Increasingly. No Experience Required Many new e-business consumers are novices not only with online transactions.
pushing them to other providers that instill stronger confidence and. loyalty. the key to maximizing revenue is keeping them. Companies can increase profits by almost 100% if 6% more of their customers were retained. Estimates show up to 91–96% of a brand’s profits come from loyal customers. or dies.Electronic Commerce financial information. A study by McKinsey & Co. • • • • Page35 The preceding are potentially frightening data to e-business. in their customers. therefore. • • It is 7 to 11 times cheaper to keep a current customer than to add a new one. customers will click away. In the realm of ebusiness. To be successful. in a medium where jumping from one Web site to another. Easy and consistent 3. calculates that an 11% increase in repeat customers translates to a 10. going to the sites that give consumers the interaction with e-business that they expect and require./Mainspring research shows that online grocers must keep customers for 29 months just to break even . Web sites that have prolonged outages or frequent transaction failures break the chain of trust with their consumers. but everyone understands that once a company has acquired customers. Bain & Co. is easier and faster than ever. Acquisition. Extremely reliable  Without these. A Xerox study showed that their totally satisfied customers were 7 times more likely to make additional Xerox purchases in the subsequent 29 months than the merely satisfied. high rates of retention are imperative for success and even survival. Sophisticated and fast 2. Retention. and Referrals Customer acquisition costs range wildly from one company to the next. which lives. .6% increase in company value. changing brands and loyalties. an e-business has to be: 1.
grant their loyalties ultimately to those businesses that offer them the best experience. is a unique challenge facing e-business. you get cozy at your desk and go there. According to a recent Bain & Co. Consumer trust. Going to a brick-and-mortar store lends a sense of confidence and implicit trust that has to be earned in other ways in the context of the Internet and of doing business through a computer screen. offering repeat buyers the opportunity to earn points that can be redeemed for goods or services. Although low prices and points programs are a strong draw initially for consumers.” or is at least a significant offset to the marketing and sales budgets for customer acquisition. The recent boom in online loyalty reward programs demonstrates that e-business understands the lifetime value of loyal customers and is starting to shift resources to retention efforts. People who are committed to Buick and who will not buy a car from any other manufacturer are the ideal consumers for Buick. you might decide not to go because of the distance./Mainspring survey. as well as customers lost due to negative reactions about a particular Web site. A referral from a trusted friend or colleague is invaluable to establishing a relationship between consumers and e-businesses. They do not require further acquisition expenses. When a friend recommends a Web site. discussed earlier. If a friend recommends a music store that is 45 minutes away. but user experience and customer service are the tools of retention. Many of these incentives are financial.Electronic Commerce Loyal customers are the best customers. Every customer who is referred to a company is “free. of which price is just one of several considerations. and they are statistically much more likely to buy up. Even a local store may not tempt you if you know that the parking is a nightmare or if the skies just dropped two feet of snow outside your window. Low prices are the carrot on the stick for acquisition. e-consumers will. Of special interest to e-business are customers gained through referrals from existing customers. Standard barriers to following through on a referral are absent in e-business. The global reach of the Internet becomes a handicap when a consumer brings up a list of dozens of online retailers in a given industry. word-of-mouth . as in traditional business. online apparel customers referred 4 people after the initial purchase and 8 people after 11 purchases. E-business consumers are generally anxious for referrals from people they trust to help guide them through the ever-growing sea of Web sites. getting newer models loaded with optional equipment. they will buy Buick cars for their children and recommend Buick to their friends. Page35 Referrals also provide an exception to the high cost of acquiring new customers. Though somewhat more difficult to measure.
there are no humans to counter a negative experience. The message is clear for any company that wants to succeed in the Internet economy: make sure the site . new services. At issue for consumers is the tension between knowing they have more control with e-business and feeling overwhelmed by the choices. Poor Performance and Failure E-businesses tread a thinner line than traditional businesses in efforts to attract and keep consumers. there are enough other online toy retailers that this consumer need never return to the one that failed.Electronic Commerce advertising is extremely important and can have a remarkable impact on a company’s bottom line. A recent study of online shopping by the Boston Consulting Group for a 12-month period reveals unsettling statistics for ecommerce companies battling to attract and keep consumers. dissatisfied first-time purchasers spent $250 in 5 transactions. Internet users are increasingly barraged by new sites. • • Consumers who are satisfied with their first-time online purchase spent. If someone tries to buy a puzzle online and the transaction fails. Page35 • In e-business. there is no dress rehearsal and often no second chance. they don’t return and they tell their friends not to go. and this tension can spell disaster for an e-business that does not adequately mind its store. All it takes to leave is typing a new Web address or following a link. and broad selection. Someone who drives to a store will extend greater latitude to that shop (in terms of what the consumer likes or dislikes about the store. its selection. When consumers find a site they like. leaving the consumer alone at the computer to decide if it makes more sense to try again or go elsewhere. A failed transaction or a site crash is extremely difficult to qualify or explain online. 29% of all online purchases failed. For e-business. 7% also stopped shopping at that company’s brick-and-mortar store. its layout. on average. And when a site does not satisfy consumers. Twenty-four percent of online shoppers who experienced a failure stopped shopping at that site. $600 in 13 transactions. all competing for their eyes and their dollars. Online consumers expect speed. they add a bookmark and stop hunting. reliability. Often a single negative experience for a consumer means he or she will not return to that site to give that company another chance. they leave. its service) than to a Web site. When they do not get it. Five out of six e-consumers experienced a failed purchase.
ranging from a few minutes to several hours. Not only does an outage scare off otherwise potentially loyal customers. Moving the apparatus for trading to the desktop. When a popular Web service had a nearly-24-hour outage. The reach of brokerage houses has extended into demographic sectors that previously had neither the time for nor the access to securities trading. it forces the brokerage to write checks to unhappy customers on their way out the door. and the costs to these businesses go far beyond the defection of angry customers. Online brokerages are having to compensate customers for losses suffered when trades could not be executed because of outages.Electronic Commerce works extremely well. while securities markets have extended their hours. The new and rapidly expanding business of online securities trading offers a vivid example of the best and the worst for e-businesses. and of failures. A final significant problem facing e-businesses (at least those that are publicly traded) is the response on Wall Street to reports of prolonged service failures or customer dissatisfaction. The price paid by e-business (in lost revenue from dissatisfied customers as well as payments made for consumer losses) from inadequate performance and significant site outages is potentially crippling. filling the coffers of online trading firms. however. even fatal. the company’s CEO recognized that such an event could be disastrous. and she or he effectively lived in the IT operations center during the crisis and the following weeks. of transactions. those traders lose money and can very accurately identify how much they have lost. With the Internet. especially for pure-play Internet companies that have no other customer base or business medium to depend on. No Web site is perfect. In a market where a company that reports earnings slightly below projections can see the price of its stock tumble. has resulted in a wealth of information passing to the customer. Thousands of consumers place millions of trades at relatively low commission. and these payments are stretching into the millions of dollars for each of several leading online brokerages. word of a serious disruption of service can be crushing as investors (many of them trading online) flee and unload their stock in that company. with a corresponding shift in power away from the brokerage company. with talk of 24-hour trading on the horizon. find out about it and fix it fast. and when something goes wrong. Most of the leading Internet brokerages have suffered outages. customers are more aware of stock prices. The key for e-business is to establish performance Page35 . for the company. and glitches are a reality in any online application. which it inevitably will. When a glitch prevents online traders from selling stock or canceling orders when the price falls. Online trading has offered unprecedented access for thousands of users to securities markets. however.
or waiting until increased traffic crashes the system. It is this integrated Web quality monitoring that Forrester sees as the next step to managing the total quality of Web-based business. Monitoring software also gives companies the data they need to make projections about future site usage and the improvements required to accommodate increased activity. however (not simply whether a page is available) that give important insight into the user experience and associated rates of retention and referral. If. but also design shortcomings. Page35 . it will be those companies with effective monitoring systems already in place that are able to survive and succeed. The more quickly and accurately a problem and its cause are identified. No e-business will be successful without adequate and appropriate tools to monitor performance of its Web site and alert site operators immediately about slowdowns and failures of service. a system weakness that is responsible for transactional failures.Electronic Commerce benchmarks to attract and keep customers and to minimize technical problems that make sites unavailable or prevent them from meeting necessary standards. and a site monitor must be sophisticated enough to measure more than uptime. and even fewer monitor transaction success rates. It is these more complex data. only 27% of site managers look beyond uptime to specific network performance standards. loyal customers. Additionally. According to Forrester Research. Identifying whether a slowdown is from an application failure or from a network bottleneck is advantageous to IT personnel trying to fix the problem. e-commerce reaches global hypergrowth by 2003. the need for effective sitemonitoring applications is paramount. Understanding growth and anticipating future needs can mean the difference between recognizing the need and getting that extra server now. for example. effective use of monitoring software can identify not only real-time glitches. as they predict. and monitoring applications gives internal operators and hosting facilities the tools they need to measure other important parameters. Ensuring the Customer Experience Given the economic repercussions of a company’s inability to build and retain a base of satisfied. Thorough reports from monitors might show. the faster it can be fixed. Features and services like these (what Forrester Research calls “Transaction Management Services”) are provided through effective. Successful e-businesses can see their usage double in as little as three to six months. sophisticated monitoring software. Service-level agreements (SLAs) that provide real value stipulate more than simply what percent of time a site will be up.
Today.” © Copyright 2003 Mercury Interactive Corporation. or buy electronic trading network services? This next part of the chapter answers these questions and further discusses the costs. Sunnyvale. Venture capitalists hide their money-stuffed mattresses when Silicon Valley experts drop by with business plans. and perceptions of technologies that enable interenterprise information exchange. Building A. range from $22 million to $42 million.000 transactions/day) for companies building from scratch. Yet. and even fewer return an attractive ROI at those levels. Mercury Interactive Corporation. Types of E-Commerce Providers and Vendors Overview The Internet has proven to be a disappointment for many retailers and manufacturers. or what is described as the transaction management market (TMM). how do industry-leading executives perceive the use of e-commerce technology in their companies? What are the business benefits provided by transaction management systems? Should your company build and maintain its own transaction management system.  Benefits of the E-Commerce Market The letter “e” lost much of its language-domineering swagger with the fall of the dot-com economy. industry analysts estimate that one-time e-commerce setup costs. depending on transaction volume (5. For many companies demanding online profitability and reliability. and Compaq. Procter and Gamble. 2003. 1325 Borregas Avenue. benefits. new business architectures enabled by e-commerce Internet service providers (ECISPs) allow companies to establish fully customized online sales channels. Very few companies make money.000 to 25. Technology marketers. including technology and labor. journalists. as sales channels are hyped to be both efficient and virtual.Electronic Commerce With the preceding in mind. the traditional buy/build approach is no longer the best option. electronic commerce veterans in some of the largest companies in the United States. Wal-Mart. see opportunity in the midst of ecommerce turmoil. Without ever buying a piece of software or hardware. Cisco. CA 94089. First generation e-commerce adopters now find themselves mired in technology bearing little in common with their core businesses. Under guarantees of worldPage35 . “E-Business Customer Retention. McKesson. because they invested in an infrastructure often costing hundreds of millions of dollars. companies such as Ford. and analysts now cringe at “e”-inspired products and concepts.
Dow. and Microsoft (see Table 4. customer service. routers and firewalls.Electronic Commerce class service delivery. load balancers. which major advantages companies gain by outsourcing their e-commerce infrastructure. build B2B marketplaces. and the secure facility that hosts it all. most companies rely on a systems integrator for 3 to 12 months of hard work that is rarely completed on time or within budget. avoid managing numerous integration and third-party service relationships. and ongoing management of this infrastructure can be outsourced. It addresses three topics: how the next generation ECISP architecture delivers complete. merchandising. Traditional Buy/Build Approach Over 93 percent of first generation e-commerce adopters utilized a “buy/build architecture” in establishing their technology platform. ECISPs radically improve the attractiveness of e-commerce. This chapter examines types of ECISPs and vendors. and application servers. including database. and why many early adopters have struggled with the first generation buy/build approach. . focus your organization on real profit drivers—not technology. and upgrade functionality continuously and seamlessly over time. Table 4. business intelligence. and electronically enable Covalex. manage corporate Chevron. Hardware connects this infrastructure to the Internet. marketing. Bolted upon this are dozens of individual applications to manage the online channel: planning. fulfillment. suppliers and commerce service providers on Merck the Internet. Page35 Ariba provides an open commerce platform to CheMatch. onestop online sales channels. Web. merchandise. and so on.1: Sample of e-commerce software vendors Vendor Description Sample Customers Ariba Commerce Commerce One enables buyers and sellers to Duke Energy. Blue Martini. purchasing. By freeing retailers and manufacturers to focus on their brand. ATG. and customers—not the technology. You will also learn how an ECISP architecture enables manufacturers and retailers to achieve profitability at $50 million to $290 million in online sales. ensure reliability and scalability in your Web site and order processing. the ownership.1). integration. This architecture generally begins with a commerce software package from leading vendors such as BroadVision. To customize and integrate the platform.
HAHT Commerce e. and those looking for a comprehensive e-procurement solution and robust return on investment. and related Amoco. those who want to host portals for others. partners and global information sources so Procter & credit and financing decisions can be Gamble. is the leading global Celanese. Shell. is a leader in the market for Beckman. With Commerx.OxyChem. selling. and Sigma-Aldrich service functions across the entire business Crossworlds Software e-Credit HAHT Commerce Page35 . Commerce One offers Praxair. BP real-time credit. automate marketing. Scenarios™ are the first suite of packaged Montell Internet applications that integrate and Polyplefins. commerce solutions. eCredit. Dow provider of business-to-business sell-side e.Co intelligently connects businesses to financing m).com. Inc. for all trading partners. e-business infrastructure software to enable DuPont. the technology that allows Internet market makers to build open marketplaces and link them to the Global Trading Web. solutions for companies who want to establish Schlumberger a portal on the Global Trading Web. CrossWorlds Software is a leading provider of Dow Chemical. Inc. financing. Inc. Conoco.Electronic Commerce Table 4.com Global Financing Network™. services for e-business through the Chevron. Texaco processed in real time at the point of sale. eCredit. Cargill. the company (PlasticsNet.Corning. Royal the integration and automation of business Philips processes within enterprises and among trading partners using the Internet (acquired by IBM).1: Sample of e-commerce software vendors Vendor Description Sample Customers One trade and creates new business opportunities Eastman. The company’s products include the Commerce One BuySite e-procurement application and the Commerce One MarketSite Solution. the Global Financing Network. HAHT Commerce. fulfillment.
selling. The RHYTHM family of software provides comprehensive decision support across both interenterprise and intraenter-prise supply chains: from suppliers’ suppliers to customers’ customers. eareas: building efficient and flexible supply Chemicals.Electronic Commerce Table 4.1: Sample of e-commerce software vendors Vendor Description Sample Customers customer life cycle. It provides the infrastructure. IBM e-business technology and solutions help BOC. security. i2 Technologies i2 Technologies is the leading provider of OxyChem supply chain optimization solutions. Moai is a leading provider of negotiated e.com Page35 . and applications to transform IBM Moai mySAP. improve service levels. allowing companies to increase revenue. delivering more than price and quality in customer relationships.Eastman commerce solutions for online auctions. online procurement. and collaborating within and across industries. Degussachemical and petroleum companies compete Hüls. and building business value through ERP extensions. providing emarket solutions that transform your business architecture. the company also has customers in the business-to-consumer and consumer-toconsumer markets. The mySAP.com marketplace is an open Various electronic hub that creates seamless intercompany relationships for buying. value chains. and lower costs to their distribution channels and customers. Although Moai’s primary focus is on customers in the business-to-business market. Eastman for market leadership in the following key Chemical. and e-marketplaces.
FMC connecting them to major B2B marketplaces Corp. and implementing e-business solutions. as well as in designing. infrastructure. webMethods OxyChem. customizing. integration. Sapient provides Internet strategy consulting. professional services for help in formulating ebusiness strategy.. and support services. and ChemConnect. and Chloro application products. develop. is the world’s leading supplier of Hoechst Marion software for information management. webMethods is the leading provider of open Ashland solutions for business-to-business (B2B) Chemicals. a comprehensive suite of Internet-enabled business applications. launch support to Global 1000 and start-up Praxair companies. The Roussel.Electronic Commerce Table 4. Reichhold Oracle provides an Internet-ready platform for Chemicals building and deploying Web-based applications. The webMethods B2B(tm) ChemConnect. interactive Company. Sapient webMethods Page35 . along with related Chemicals. communication through the Internet. architect. Ventro Corp. tools. education. The Geon and enabling real-time. Powered by XML. and implement solutions to execute those strategies. Optimum regardless of existing technology Logistics. ICI company offers database. in more than 145 countries around the world. Sapient helps clients define their Internet strategies and design. sophisticated end-to-end solutions. solution provides companies with integrated. B2B can automate critical business processes.1: Sample of e-commerce software vendors Vendor Description Sample Customers previously disconnected business transactions into a single collaborative process. Global Inc. IMC consulting. Chemical. Eastman direct links to buyers and suppliers. As Architects for the New Economy(r). Amoco. Oracle Oracle Corp.
A succession of antifraud measures have been introduced over the years. especially for midsized retailers and manufacturers. Bits and pieces might be outsourced to gain scale and expertise. and operating the facilities in which their stores reside. name. Drawing a real estate analogy. As the criminal fraternity found ways of producing sufficiently good counterfeit cards. this technology ownership approach has proven challenging. Electronic Payment Methods Through Smart Cards Overview The electronic payment card has been in existence for many years. It started in the form of a card embossed with details of the cardholder (account number. supply chain management. The magnetic stripe also allowed cardholder details to be read electronically in a suitable terminal. expiration date). procurement and financial services. Card technology has advanced over the years to keep ahead of the worldwide increase in card-related crime. In an industry that has never invested heavily in IT (under 5% of revenues on average). so that checks could be made with little or no human intervention about the cardholder’s creditworthiness or whether the card had been reported lost or stolen. each retailer and manufacturer reluctantly enters the technology management business and replicates an infrastructure that exists at every other company. this would be similar to all mall-based retailers building.1: Sample of e-commerce software vendors Vendor Description Sample Customers such as customer relations. but the core technology platform gets re-created countless times. With this approach. and sell-side/buy-side e-commerce. the card companies introduced new ways of combating the problem. the Page35 . The magnetic stripe was soon introduced as a means of holding more data than was possible by embossing alone. owning.Electronic Commerce Table 4. such as the hologram. rather than renting floor space from specialized mall developers. logistics. which could be used at a point of sale to purchase goods or services.
This has caused the card associations to look at new technologies to take the plastic card well into the twenty-first century. and so forth. the banks are interested mainly in providing payment-related services to their customers and most of the current activity surrounding the provision of . The only difference the cardholder sees is a small metal area on the face of the card that contains a set of electrical contacts through which the chip can be accessed. a small computer chip embedded into a plastic card with the same dimensions as the magnetic stripe card. Today. there is the possibility of modifying the way the card works. such as parking. and access to information facilities (libraries) coresident on the card. As well as these antifraud measures. Magnetic stripe cards have now been developed to the point where there is little or no further scope for introducing more anticrime measures. newspapers. such as loyalty schemes. The ability to have other applications. Secret values can be stored on the card that are not accessible to the outside world —allowing. a value stored on the magnetic stripe that can be used to determine if a card has been produced illicitly). tickets. usually for lower-value transactions. Page35 • There are many issues to be resolved before such all-embracing cards become commonplace. for example. These additional benefits are an integral part of building the business case for introducing smart card technology. there are a number of benefits in adopting the smart card. From the anticrime perspective. One technology that offers many benefits is the smart card—essentially. the card to check the cardholder’s PIN without having to go online to the card issuer’s host system. Also.Electronic Commerce Card Verification Value (CVV. and in some cases. photographs of the cardholder. The card itself (or in conjunction with the terminal) can make decisions about whether or not a transaction can take place. the smart card is seen as offering a number of other benefits to the card issuer and cardholder. the most obvious ones being who owns the card and who controls which applications can be loaded or deleted. For example. Some of the other benefits of introducing smart cards are: • • The ability to have more than one payment application resident on the card. The possibility of reducing online validation costs by allowing the card to operate offline more of the time. while it is inserted in a point-of-sale terminal—even to the point of blocking the card from further transactions if it has been reported lost or stolen. a card could contain an “electronic purse” to provide the equivalent of cash.
Electronic Commerce smart card-based credit/debit services—sometimes with an additional electronic purse facility.com Page35 www.ecommercepaypal.com .onlinebook. BIBLIOGRAPHY www.com www.google.
Electronic Commerce some part from wikipedia Page35 .
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.