Management Information Systems,

Sixth Edition

Chapter 7:
The Web-Enabled Enterprise
 Objectives
• Describe how the Web and high-speed Internet
connections are changing business operations
• Explain the functionality of various Web
technologies
• Compare and contrast options for Web servers
• Explain basic business-to-business and
business-to-consumer practices on the Web
• Explain the relationship between Web
technologies and supply chain management

Management Information Systems, Sixth Edition 2

 Objectives (continued)

• Give examples of features and services that

successful business Web sites offer
• Learn about online annoyances such as spam
and adware, and how to protect against online
identity theft

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Web Business: Growing and Changing

• DLA Piper LLP is the second largest law firm in

the world
– 3200 lawyers in 24 countries and 63 offices
around the world
– Uses eRoom, a Web-based collaboration and
document-sharing tool from EMC Corp.
– Saves 15,000 labor hours annually, uses and
mails significantly fewer paper documents, and
reduces redundant work

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 Web Technologies: A Review
• Several standards and technologies enable the
Web to deliver rich information, including:
– HTTP, HTML, XML
– File Transfer
– RSS
– Blogs
– Wikis
– Podcasting
– IM
– Cookies

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 HTTP
• Hypertext Transfer Protocol (HTTP): transfer
and download Web information
• HTTPS: HTTP secure for confidential data
exchange
• Uniform Resource Locator (URL): unique
address given to each Web site
– IP address: a special numeric address
• Domain name: unique name for a Web site,
constructed with letters
– URL also refers to the domain name

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 HTML and XML

• Hypertext Markup Language (HTML): helps

developer create Web pages
– Determines look and location of content
• Extensible Markup Language (XML): enables
creation of various data types
– Conveys the meaning or content of the data
• XHTML: combination of XML and HTML
– Uses opening and closing tags to control format

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Management Information Systems, Sixth Edition 8
 File Transfer

• File Transfer Protocol (FTP): used to transmit

whole files
– Used in all downloads from Web sites
– Any type of file can be transferred
– Can place files on a server for shared use
– Often used to deliver purchased software
products on Web sites

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 RSS
• Really Simple Syndication (RSS): family of
XML file formats that allow automatic downloads
of content on a subscription basis
– Helps users check for updates
– Communicates short descriptions of content
– Allows transmittal of new information
– Useful on news Web sites
– Also called Rich Site Summary

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 Blogs
• Blog: contraction of “Web log”
– Invites surfers to post opinions and art
– Focuses on a topic or set of topics
– Trackback: a tool that notifies bloggers when
their posts have been mentioned elsewhere on
the Web
• Blogs are often used by businesses
• Importance of blogs to commercial organizations
is to find out what blog participants think and say
about the organization

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 Wikis

• Wiki (from Hawaiian, meaning “quick”): Web

application that enables users to add to and edit
the contents of Web pages
– All the software required to edit the Web pages is
embedded in the pages themselves
• Wikipedia: a popular online encyclopedia
• Wiki technology is a popular ingredient in
groupware (software used for collaboration)

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Management Information Systems, Sixth Edition 13
 Podcasting
• Podcast: publishing sound and video on the
Web for download
– Usually on a subscription basis
• Uses include:
– “Time-shifted” broadcast of radio station
programs for later listening
– Audio tours in museums
– Lectures in distance learning courses
– Garageband.com
• Allows aspiring musicians to post music tracks

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 Instant Messaging
• Instant messaging (IM): real-time chat
– Form of synchronized e-mail
– Chat room: communicate with a group
– Free applications for IM include:
• AIM: AOL instant Messenger
• Yahoo Messenger
• MSN Messenger
• ICQ
• Trillian
– Business uses
• Customers can chat with sales or support reps
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Management Information Systems, Sixth Edition 16
 Cookies

• Cookie: small file that stores information about a

Web site visitor, stored on the visitor’s computer
– Usually records the surfer’s ID
– Often stores the surfer’s preferences
– Provides convenience to consumers
– Can be temporary (single session) or permanent
– Potential for intrusion into surfer privacy
• Clickstream tracking: tracks a surfer’s clicking
activities
• Spyware: traces and reports online behavior
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 Proprietary Technologies

• Proprietary technology: intellectual property of

developer, not free for all to use
• Examples:
– Local search engine
– Shopping cart applications
– Wish lists
– Video streaming tools
– Tools to analyze and predict Web visitor
behavior, especially shopper behavior

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 Web-Enabled Business

• Web-enabled business are classified according

to the interacting parties:
– Business-to-business (B2B)
– Business-to-consumer (B2C)
– Government-to-business
– Government-to-consumer

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 B2B Trading
• Business-to-business (B2B): trading between
businesses only
• B2B forms include advertising through:
– Search advertising: advertisements placed on a
search site result page
– Banners: images placed on Web sites that link to
a company site selling a product or service
• Impression: occurs when a page with a banner
is downloaded
• Reach percentage: the percentage of Web
users who visited a site in the past month
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Management Information Systems, Sixth Edition 21
 B2B Trading (continued)
• Exchanges and auctions act as online marketplaces
• Intranet: network used only by employees of an
organization
• Extranet: network shared by employees of different
organizations, usually business partners
• Exchange: extranet for organizations that deal in
products and services of a particular type
– Exchange operator profits from transaction fees
• Auction: sells a great variety of items

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Management Information Systems, Sixth Edition 23
 B2B Trading (continued)

• Online business alliances: collaboration

between businesses in establishing a Web site
– Site operator works for the allied companies
– Suppliers are invited to sell through the site and
compete among themselves, driving prices down

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 B2C Trading

• Business-to-consumer (B2C): trading with the

general public
• E-Tailing: online retailing to consumers
• Fulfillment activities: picking, packing, shipping
• Consumer profiling: know customers better by
gathering information about their online activities
– Some consider this a violation of privacy
• Conversion rate: the proportion of site visitors
who make a purchase

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Management Information Systems, Sixth Edition 27
 B2C Trading (continued)
• Auction sites serve as a hub for consumers to buy
and sell
• Reverse auction: customers name their own
price for desired goods and services
• Content providers: offer information, artistic
work, classified ads, and video
• Electronic bill presentment and payment
(EBBP): provides online bills and payment options
for customers
• Phishing: type of fraud involving a fake Web site

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Management Information Systems, Sixth Edition 30
 B2C Trading (continued)
• Extra-organizational workforce:
– Companies purchase labor from a larger pool
• Mobile commerce, or M-commerce:
– Business conducted on mobile devices
• Many experts believe that information delivery is
the main mobile application, not commerce
– Exceptions are Japan and South Korea
– Japan’s DoCoMo’s i-mode service allows users
of smart cell phones to purchase canned soda
from vending machines, fast food

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 B2C Trading (continued)
• M-commerce also raises privacy concerns
– GPS provides location tracking
• New top-level domain names with .mobi available
for mobile applications
– Sites should use special technologies to optimize
content for easy viewing on mobile devices
• Virtual world: a combination of images, video,
sound, and avatars that resemble the real world
– Accessible for interaction by subscribers
• Avatar: 3D graphical character that represents a
user in a virtual world

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 Supply Chains on the Web
• Supply chain management (SCM) systems may
be connected to the Web to allow suppliers to
participate directly
– Use of XML allows companies to set standards
for data exchange
• Electronic Data Interchange (EDI): a system
used prior to the Web to exchange documents
electronically
– Set standards for data formats
– EDI networks are owned and managed by value-
added network (VAN) companies

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Management Information Systems, Sixth Edition 34
 Options in Establishing a Web Site

• Web site: Web pages that make up information

and links
• Internet server: a computer connected to the
Internet backbone
• Businesses have two choices for a Web site:
– Installing and maintaining their own Web servers
– Contracting with a Web hosting service

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 Owning and Maintaining a Server
• Owning and maintaining Web servers is costly
– Provides the greatest degree of control, but requires
expertise to set up and maintain
– Must obtain a high-speed link to the Web
• Load balancing: transfer data requests from a busy
server to a less busy server
• Mirror servers: servers with duplicated content
• Pure-play: company whose entire business is online
• Brick-and-mortar: company that owns physical
stores and a Web site

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 Using a Hosting Service
• Web hosting: Web server managing service
• Several types of Web hosting:
– Shared hosting: stores the client’s Web site on
the same physical server as other clients
– Virtual private hosting: simulates a single server,
allowing a client to have its own domain name
– Dedicated hosting: client has exclusive use of an
entire physical Web server
– Co-location: server owned and managed by a
client is co-located with other clients’ servers in a
secure physical location
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 Considerations in Selecting
a Web Host
• Compare host vendors using a point system
• Dynamic Web pages: enable communication
between browser and database
• Factors to consider when selecting Web host:
– Allows use of database management system
– Storage space capacity
– Technical and Web site design support
– Scalability
– Security: physical and virtual

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 Considerations in Selecting
a Web Host (continued)
• Factors to consider when selecting Web host
(continued):
– Availability: minimize downtime
– Costs, including:
• Setup fees
• Traffic-based fees
• Monthly fees

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Management Information Systems, Sixth Edition 40
 More Than Meets the Eye

• Several elements are essential to conducting

business on the Web:
– Inquiry interface: connects to database to allow
user to search a catalog of products or services
– Order processing application, including:
• Credit-card verification application
– Order-fulfillment system: picks, packs, and ships

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 Rules for Successful
Web-Based Business
• Business success depends on availability and
use of software
• Elements needed to support B2C commerce:
– Targeting customers
– Capturing the customer’s complete experience
– Personalizing the service
– Shortening the business cycle
– Let customers help themselves
– Be proactive and de-commoditize

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 Target the Right Customers

• Target customers needing your products and

services
– Most important effort of marketing
• Involves identifying the sites that your audience
frequently visits
• Consider blogs and podcasting sites for
advertisement placement

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 Capture the Customer’s Total
Experience
• Use cookies to record shopper’s movements
within the site
• Use CRM software to create consumer profiles
• Shopper experience becomes an asset of
business, allowing:
– Fine-tuning of the product portfolio
– Tailoring of Web pages to individual customers
– Individual e-mails to shopper offering products of
interest

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 Personalize the Service

• CRM software and Web page customization

software can be combined to:
– Personalize Web pages shown to a customer
– Allow the customer to select the type of e-mail
content desired
– Respect visitor privacy by offering opt-in rather
than opt-out
– Allow the customer to tailor products to be
purchased

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 Shorten the Business Cycle
• Business on the Web saves time for customers
• Fulfillment is a major challenge for businesses
– Activities after customer places order
• Fast shipping is desired because:
– It produces higher customer satisfaction
– Business collects payments faster
• Can outsource the entire fulfillment task to
fulfillment organizations such as:
– UPS’s e-Logistics
– FedEx’s Supply Chain Services

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 Let Customers Help Themselves

• Customers need information from organization:

– Status of order
– Status of shipped item
– Installation instructions
– Troubleshooting
• E-mail messages sent to customers with
information about orders and how to track them
• FAQs online allow customers to find answers to
common questions

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 Be Proactive and De-Commoditize
• Prompt e-mail replies expected
• Proactive alerts expected for changes in orders
or services, or product recalls
• Automatic reordering features are desirable
• Must take initiatives to de-commoditize products
– Commodity: a product sold at roughly the same
price by many vendors (no differentiation)
– Addition of features or services prevents a
product from becoming a commodity by creating
differentiation

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 E-Commerce is Every Commerce

• Web technologies have been highly integrated

into the business world
– Difficult to identify which business activities are
on the Internet and which are not
• Web has been highly integrated into daily
activities of customers also
• Commerce and e-commerce generally have the
same meaning today

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 Summary

• Some industries have changed drastically

because of the Web
• HTTP is an Internet standard controlling Web
server addresses
• HTTPS is a security version of HTTP
• XML is a standard for description of data
• Blogs enable people to create discussion Web
pages

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 Summary (continued)

• Cookies help Web sites personalize the visitor’s

experience
• Many Web technologies are proprietary
• A business can maintain its own Web server or
use a Web hosting service
• Organizations should consider several factors
when selecting a Web host
• Web-enabled commerce is classified into B2B
and B2C

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 Summary (continued)
• B2B trading relies on electronic data interchange
(EDI) and XML
• Wireless handheld computers allow mobile
commerce, called m-commerce
• Online businesses must adhere to several factors
to be successful
• Virtual worlds provide a means to meet and
conduct business and social activities on the Web
• Spam and spyware are online annoyances
• Phishing is a pervasive fraud crime

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