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ELECTRONIC COMMERCE

Session 6 15:00 - 15:30
Dr . Deepak B Phatak
IIT Bombay
OVERVIEW
◆ Dimensions Of E-Commerce
◆ Major Issues
◆ Underlying Technologies
◆ Notions Of Security
◆ SMARS Project at IIT

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COMMERCE
◆ Commerce
– Activities Involved In Exchange of
Goods / Services On a Large Scale
◆ Business
– Carrying Out Commercial
Activities Profitably

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COMMERCE
◆ Contracting Parties
– Buyer And Seller
◆ Intermediaries
– Other Participants Facilitating
Commercial Transactions
*Direct (Distributors, Retailers)
*Indirect (Banks, Regulators)

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COMMERCE
◆ Money Is A Valued Medium To
Facilitate Transactions
◆ Attributes Of Money
– Wide acceptability
– Security, Anonymity
– Portability, Divisibility
– Durability, Interoperability

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COMMERCIAL ACTIVITIES
◆ Advertising,Marketing
◆ Contracting Business Deals
– Order Processing
◆ Payment Systems
– Instruments (Cheques, LoC)
◆ Supply Chain Management
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DIMENSIONS OF
ELECTRONIC COMMERCE
◆ E-Commerce
– Use Of Electronic Networked
Information Systems To Carry
Out Commercial Activities
– Started with EDI

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DIMENSIONS OF
ELECTRONIC COMMERCE
◆ Facilitated
By Internet
Technologies
◆ Current Focus on World Wide
Web (WWW)
◆ Communication Channel
Between Buyer And Seller
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DIMENSIONS OF
ELECTRONIC COMMERCE
◆ Intra Business
◆ Business To Business
◆ Business To Individual
◆ Individual To Individual

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ECOMMERCE
FRAMEWORK
ECOMMERCE
APPLICATIONS
Technical
Common Business Services Standards
Policy,
Legal, For
Messaging & Info Distribution Documents
Privacy
Issues Security
Multimedia Content & Network
Network Publishing Protocols

Network
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ECOMMERCE
FRAMEWORK
◆ Applications
– Video On Demand
– Remote Banking
– Marketing, Advertisement
– Home Shopping
– Supply Chain Management

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ECOMMERCE
FRAMEWORK
◆ Business Service Infrastructure
– Security
– Authentication
– Electronic Payment
– Directories And Catalogues

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ECOMMERCE
FRAMEWORK
◆ Messaging & Information
Distribution Infrastructure
– EDI
– E Mail
– Hyper Text Transfer Protocol
– Secure Protocols

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ECOMMERCE
FRAMEWORK
◆ Content Infrastructure
– HTML, CGI Scripts, Perl
– XML
– WWW, Java
– Site Hosting And Management

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ECOMMERCE
FRAMEWORK
◆ Network Infrastructure
– Telecom
– Wireless (Microwave, VSAT)
– Cable TV
– Internet, Intranets

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ECOMMERCE
FRAMEWORK
◆ Standardization
– Proposal For OO Framework
– ECO System, CBL
* Layer of Middle ware
* OO Development Environment
* Application “Agents”

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Social vs.Technological
acceptance 120

100

80
Technology
Advances
60
Social
Acceptance
40

20

0

ECommerce Wave Is
Just Beginning……...
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E-Commerce Scenarios
Direct
marketing, Brand Direct Customer
selling, and development selling service
services

Financial and
information Online bill payment, investment
services services, banking, and soft goods

Corporate Employee self-service purchasing
purchasing from suppliers

Value chain Establish “direct” process linking
with trading partners
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E-Commerce For Everyone
Web sites that deliver
results
Employee self-service

Value chain

Effective sites for small
business

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Better online
Electronic Commerce
shopping 19
Web Life Style:Still Early
Size Online today
50 million vehicles
Automotive $700 billion car sales
> 4%
200 million tickets
Travel $180 billion on travel < 1%
$189 billion in
Advertising advertising < 1%
Real estate 4.2 million homes
Banking $728 billion in loans < 1%

Retail 2 Trillion < 1%
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Consumer Orders for personal and
household goods
13.3

($Billion) •50% by Credit Card
6

4 •Excludes Stock trades
1.5

1996 1997 1998 2001

Source: Inetco Research

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U.S. Internet B2B revenues
327 350
300
250

($Billion) 183 200
150
105
100
41 50
8 17
0
1998

2000

2001

2002
1997

1999

Source: Forrester Research
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BUSINESS-TO-BUSINESS
-
◆ Extend Electronic Data Interchange
(EDI) to the Internet
– Apply EDI features to new application
environments
– Inter-operate with existing, new, and
future information interchange systems
– Support new standards and associations

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------------------------------------
◆ Conduct Transactions Cost-
effectively
– Scale Economies for Suppliers and
Buyers
– Integrate With Legacy Systems
◆ Full-featured Apps Enable More
Than Just Transactions
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Interoperation via XML:
Commerce Interchange Pipeline
Trading
Partner
(CIP)
Internet
Commerce Interchange
Decrypt Trading
Map
Initialize
Partner
Initialize
(Hosted CIP
Sign Verify signature
--Browser)
Encrypt Receipt generate
Pre transport audit Map Trading
Transport Pre app audit Partner
Post transport audit (EDI Gateway)
App integration VAN
Audit
Trading
Partner
(EDI Gateway)

Platforms
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Interoperation via XML:
◆ Business to Business data interchange
◆ Transport and format independent
◆ XML/XSL for mapping

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E Commerce Requirements
Create cost-effective Conduct business online
commerce sites and with secure and scaleable
applications, with targeted order processing and
online advertising and integration with existing
marketing, and personalized systems.
promotions
Engage Transact

Analyze
Understand customer and partner
purchases and usage to improve online
business
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MAJOR ISSUES
◆ Business Transaction
– Authentication
– Secure Transmission
– Non Repudiation
– Automatic Response (At least At
One End)

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UNDERLYING
TECHNOLOGIES
◆ Work Stations, Servers
– Multimedia PC, Application, Web,
OLTP, IVR, Data Warehouse
◆ Internet
– Secure Protocols (SSL), XML, JAVA
◆ Intranets

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REGULATORY ISSUES
◆ Internet Regulations
– Practically None
◆ Banking Regulations
– Overwhelming
– Compliance Monitoring

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SMART CARDS AT IIT
◆ Smart Rupee System
◆ Launched In December 1998
◆ ~1000 Cards, 25 Merchants
◆ ~Rs. 1.5 Crore Outlay
◆ Interface Standards For India

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SMART CARDS AT IIT
◆ Loading Station To Card
◆ Card To PoS Terminal
◆ Terminal To Host
◆ Host To Settlement System

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PLANS
◆ Recommend Indian Standards To RBI
– Based On EMV, DES3 Security
– Time Frame: May-June 1999
◆ Continue Pilots For New Applications
◆ R&D For Future Applications
– Home Banking (Telephones, Terminals)
– Reservation, Ticketing
– Multi-Application Framework

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