E Commerce

E – Commerce

Business have been looking for ways to increase their profits and market share . The search for more efficient ways of doing business has been driving another revolution in the conduct of business .This revolution is known as electronic commerce which is any purchasing or selling through an electronic communications medium. Business planners in institutions and organizations now see technology not only as a supportive cofactor, but as a key strategic tool. They see electronic commerce as a “wave of future”.

Information technology has revolutionized and digitalized economic activity , and made it a truly global phenomenon .One of the most visible icons of the IT Revolution is the internet – the world wise web. Which is a gigantic anarchic network of computers world wide , which is essentially used for communicating , interaction , interactive long distance computing and exchange of information giving rise to a host of applications from military and government to business , education and entertainment.

E-commerce exists because of internet. It has been born on the net and is growing with the net . It involves carrying business on and through the net .

E-commerce is a product of the digital economy. It is a source of a paradigm shift , in redefining technology, individual and global societies , as well as national and global economies.

Electronic commerce is a symbolic integration of communications , data management , and security capabilities to allow business applications within different organizations to automatically exchange information related to the sale if goods and services . Communication services support the transfer of information from the originator to the recipient. Data management services define the exchange format of the information.Security mechanisms authenticate the source of information, guarantee the integrity of the information received , prevent disclosure of information to inappropriate users , and document that the information was received by the intended recipient.

Prior to the development of e-commerce, the process of marketing and selling goods was a mass-marketing and sales-force driven process . Customers were viewed as passive targets of advertising “campaigns” .Selling was conducted in well-insulated “channels” .Consumers were trapped by geographical and social boundaries, unable to search widely for the best price and quality .

E-commerce has challenged much of this traditional business thinking.

E-Commerce Defined :

“The use of internet and the WEB to transact business . More formally , digitally enabled commercial transactions between and among organizations and individuals.”“Electronic commerce is commerce via any electronic media , such as TV,fax, and online networks.Internet-based commerce makes use of any Internet facility and service. Web-based commerce focuses on the opportunity of the World Wide Web apparatus , in particular , its ubiquity and its ease of use .”

Benefits/Features of E-Commerce :

Electronic commerce increases the speed,accuracy, and efficiency of business and personal transactions. The benefits of E-commerce include the following :

•Ubiquity : E-commerce is ubiquitous, meaning that it is available just about everywhere , at all times.It liberates the market from being restricted to a physical space and makes it possible to shop from your desktop, at home, at work , or even from your car using mobile commerce .From customer point of view , ubiquity reduces transaction costs – the costs of participating in a market.To transact it is no longer necessary to spend time and money traveling to market.At a broader level, the ubiquity of e-commerce lowers the cognitive energy required to transact in a marketplace . Cognitive energy refers to the mental effort required to complete a task.

•Global Reach : E-commerce technology permits commercial transactions to cross cultural and national boundaries far more conveniently and cost effectively than is true in traditional commerce.As a result, the potential market size for e-commerce merchants is roughly equal to the size of the world’s online population.The total number of users or customers an e-commerce business can obtain is a measure of its reach.

•Universal Standards : The technical standards for conducting e-commerce , are universal standards – they are shared by all nations around the world. The universal technical standards of e-commerce greatly lower the market entry costs - the cost merchants must pay just to bring their goods to market. At the same time , for consumers , universal standards , reduce search cost – the effort required to find a suitable products.

•Richness : Information richness refers to the complexity and content of a message.

•Interactivity : E-commerce technologies are interactive , meaning they allow for two-way communication between merchant and consumer .It allows an online merchant to engage a consumer in ways similar to a face-to face experience , but on a much more massive , global scale.

•Information Density : the internet and the Web vastly increase information density –the total amount and quality of information available to all market participants , consumers, and merchants alike.E-commerce technologies reduce information collection, storage , processing , and communication costs .At the sale time, these technologies increase greatly, the accuracy and timeliness of information-making information more useful and important than ever.As a result information becomes more plentiful,cheaper and of higher quality.

•Personalization/Customization : E-commerce technologies permit personalization – merchants can target their marketing messages to specific individuals by adjusting the message to a person’s name,interests , and past purchases.The technology also permits customization –changing the delivered product or service based on a users preference or prior behavior.Given the interactive nature of e-commerce technology, a great deal of information about the consumer can be gathered in the marketplace at the moment of purchase.With the increase in information density , a great deal of information about the consumer’s past purchases and behavior can be stored and used by online merchants.The result is increase in the level of personalization and customization.

Types of E-Commerce :

There are different types of e-commerce and many different ways to characterize these types .

The five major types of e-commerce are :

1. B2C

2. B2B

3. C2C

4. P2P

5. M-Commerce

B2C : (Business-to-Consumer)

The most commonly discussed type of e-commerce is Business-to-Consumer (B2C) e-commerce, in which online business attempt to reach individual consumers is done .It has grown exponentially since 1995, and is the type of e-commerce that most consumers are likely to encounter . Within the B2C category there are many different types of business models: portals , online retailers , content providers , transaction brokers , market creators , service providers , and community providers.

B2B : (Business-to-Business)

In this type of e-commerce , one business focuses on selling to other business .It is the largest form of e-commerce.The ultimate size of B2B e-commerce could be huge . At first, B2B e-commerce primarily involved inter-business exchanges , but a number of other B2B business models have developed, including e-distribution , B2B service providers , matchmakers , and info-mediaries that are widening the use of e-commerce.

C2C : Consumer-to-Consumer

C2C e-commerce provides a way for consumers to sell to each other , with the help of an online market maker such as the auction site .In C2C e-commerce , the consumer prepares the product for market , places the product for auction or sale, and relies on the market maker to provide catalog , search engine ,and transaction clearing capabilities so that products can be easily displayed , discovered , and paid for.

P2P : (Peer-to-Peer)

Peer-to-Peer technology enables Internet users to share files and computer resources directly without having to go through a central Web server. In peer-to-peer’s purest form, no intermediary is required . Entrepreneurs and venture capitalists have attempted to adapt various aspects of peer-to-peer (P2P) e-commerce.

E.g. Napster.com established to aid internet users in finding and sharing music files (mp3 files). It is partially peer-to-peer because it relies on a central database to show which users are sharing music files.

M-commerce :

Mobile commerce or m-commerce , refers to the use of wireless digital devices to enable transactions on the Web . These devices utilize wireless networks to connect cell phones and handheld devices to the Web. Once connected , mobile consumers can conduct many types of transactions , including stock trades, banking, travel reservations , and more.

***B2G : Business to Government

E-Commerce Business Models :

A business model is a set of planned activities (sometimes referred to as business process) designed to result in a profit in a marketplace. The business model is at the center of the business plan.

A business plan is a document that describes a firm’s business model .

An e-commerce business model aims to use and leverage the unique qualities of the internet and the World Wide Web.

There are Eight Key Ingredients of a Business Model :

1. Value proposition : It defines how a company’s product or service fulfils the needs of the customers.To develop and/or analyze a proposition, the following questions need to be answered :

- Why will customers choose to business with your firm instead of another company ?

- What will your firm provide that other firms do not and cannot ?

From the consumer point of view , successful e-commerce value propositions include : personalization and customization of product offerings, reduction of product search costs, reduction of price discovery costs, and facilitation of transactions by managing product delivery.

2. Revenue model :

The firms revenue model describes how the firm will earn revenue , generate profits,and produce a superior return on invested capital.The function of business organizations is both to generate profits and to produce returns on invested capital that exceed alternative investments.

* The advertising model :

A website that offers its users content, services , and/or products also provides a forum for advertisements and receives fees from advertisers. Those websites that are able to attract the greatest viewer ship and are able to retain user attention are able to charge higher advertising rates.

* Subscription Revenue Model :

In the subscription revenue model , a Web site that offers its users content or services charges a subscription fee for access to some or all of its offerings .

* Transaction fee revenue model :

In this model a company receives a fee for enabling or executing a transaction. (e.g. Online auction websites taking some commission from buyer as well as the seller).

* Sales Revenue Model :

In the sales revenue model , a companies derive revenue by selling goods, information , or services to customers .

E.g. amazon.com

* Affiliate Revenue model :

In the affiliate revenue model , sites that steer business to an “affiliate” receive a referral fee or percentage of the revenue from any resulting sales.

3.Market Opportunity :

The term market opportunity refers to the company’s intended marketplace and the overall potential financial opportunities available to the firm in that marketplace . The market opportunity is usually divided into smaller market niches. The realistic market opportunity is defined by the revenue potential in each of the market niches .

4. Competitive Environment :

The firms competitive environment refers to the other companies operating in the same marketplace selling similar products . The competitive environment for a company is influenced by several factors : how many competitors are active, how large their operations are , what the market share of each competitor is , how profitable these firms are , and how they price their products.

5.Competitive Advantage :

Firms achieve a competitive advantage when they can produce a superior product a superior product and/or bring the product to market at lower than most, or all, of their competitors . Firms also compete on scope .Some firms can develop global markets while other firms can only develop a national or regional market .Firms that can provide superior products at lowest cost on global basis are truly advantaged.

6. Market strategy :

Market strategy is the plan the company put together that details exactly how the company intend to enter the market and attract new customers.

7.Organizational Development :

Describes how the company will organize the work that needs to be accomplished.

8. Management Team :

Employees of the company responsible for making the business model work.

Categorizing

E-Commerce Business Models

Major B2C business models :

There are a number of different models being used in the B2C e-commerce arena . The major models include the following :

•Portal :-Offers powerful search tools plus an integrated package of content services ;typically utilizes a combined subscription/advertising revenue/transaction fee model ;may be general or specialized.

•E-tailer :- Online version of traditional retailer; includes virtual merchants (online retail stores) , clicks and mortar e-tailers (online distribution channel for a company that also has a physical store);catalog merchants (online version of direct mail catalog); online malls (online version of mall);manufacturers selling directly over the Web.

•Content Provider :- Information and entertainment companies that provide digital content over the Web; typically utilizes an advertising , subscription ,or affiliate referral fee revenue model.

•Transaction broker :- Process online sales transactions; typically utilizes a transaction fee revenue model.

•Market creator :- Uses Internet technology to create markets that bring buyers and sellers together ; typically utilizes a transaction fee revenue model.

•Service provider :- Offers services online.

•Community provider :- Provides an online community of like-minded individuals for networking and information sharing ; revenue is generated by referral fees , advertising , and subscription.

Major B2B business models :

The major business models used to date in B2B arena include :

•Hub, also known as marketplace/exchange – electronic market place where suppliers and commercial purchasers can conduct transactions ; may be general (a horizontal marketplace ) or specialized (a vertical marketplace) .

•E-distributor :- Supplies products directly to individual businesses.

•B2B service provider :- Sells business services to other firms.

•Matchmaker :- Link business together , changes transaction on usage fees.

•Infomediary :- Gathers information and sells it to business .

Major C2C business models :

A variety of business models can be found in the customer-to-customer e-commerce , peer-to-peer e-commerce, and m-commerce areas :

•C2C business models connect consumers with other consumers .The most successful has been the market creator business model used by eBay.com .

•P2P business models enable consumers to share files and services via Web without common servers. A challenge has been finding a revenue model that works.

•M-commerce business models take traditional e-commerce models and leverage emerging wireless technologies to permit mobile access to the Web.

•E-commerce enablers business models focus on providing the infrastructure necessary for e-commerce companies to exist, grow, and prosper.

Key business concepts and strategies applicable to e-commerce :

•Industry structure : The nature of players in an industry and their relative bargaining power – by changing the basis of competition among rivals , the barriers to entry , the threat of new substitute products , the strength of suppliers , and the bargaining power of buyers.

•Industry value chains : The set of activities performed in an industry by suppliers , manufacturers , transporters , distributors and retailers that transforms raw inputs into final products and services – by reducing the cost of information and other transaction costs.

•Firm value chains : The set of activities performed within an individual firm to create final products from raw inputs – by increasing operational efficiency .

•Business strategy : A set of plans for achieving superior long-term returns on the capital invested in a firm – by offering unique ways to differentiate products , obtain cost advantages , compete globally , or compete in a narrow market or product segment.

Technology Infrastructure for

E-Commerce

The Internet and World Wide Web E-Commerce Infrastructure

The Internet : Technology Background

The Internet is an interconnected network of thousands of networks and millions of computers (sometimes called as host computers or just hosts) linking business , educational institutions , government agencies , and individuals together .The internet provides services such as e-mail, news-groups, shopping, research , instant messaging , music videos and news . No one organization controls the Internet or how it functions , nor it is owned by anybody , yet it has provided the infrastructure for a transformation in commerce, scientific research, and culture .The word internet is derived from the word internetwork or the connecting together of two or more computer networks.The World Wide Web is one of the internet’s most popular services, providing access to over one billion Web pages , which are documents created in a programming language called HTML and which can contain text , graphics , audio, video, and other objects, as well as “hyperlinks” that permit a user to jump from one page to another.

The Internet : Key Technology Concepts;

Based in the definition , the internet means a network that uses the IP (Internet Protocol) addressing scheme, supports the Transmission Control Protocol (TCP), and ,makes services available to users much like a telephone system makes voice and data services available to the public.

Behind this formal definition are three extremely important concepts that are the basis for understanding the Internet : packet switching , the TCP/IP communications protocol , and client/server computing .Although the Internet has evolved and changed dramatically, these three concepts are at the core of how the Internet functions today and are the foundation for Internet.

Packet Switching : It is a method of slicing digital messages into parcels called “packets” sending the packets along different communication paths as they become available , and then reassembling the packets once they arrive at their destination .Prior to the development of packet switching , early computer networks used leased , dedicated telephone circuits to communicate with terminals and other computers.

In packet-switched networks , messages are first broken down into packets.Appended to each packet are digital codes that indicate a source address(the origination point) and the destination address, as well as sequencing information and error-control information for the packet.Rather than being sent directly to the destination , in a packet network , the packets travel from computer to computer until they reach their destination. The computers are called Routers . Routers are special purpose computers that interconnect thousands of different computer networks that make up the internet and route packets along to their ultimate destination as they travel.To ensure that packets take the best available path towards their destination, the routers use computer programs called routing algorithms.

Packet switching makes full use of almost all available communication lines and capacity.If some lines are disabled or too busy , the packets can be sent on any available line that eventually leads to the destination point.

TCP/IP :

TCP refers to the Transmission Control Protocol . IP refers to the Internet Protocol. A protocol is a set of rules for formatting , ordering , compressing , and error checking messages.It may also specify the speed of transmission and means by which devices on the network will indicate they have stopped sending and/or receiving messages. Protocols can be implemented in either hardware or software .TCP/IP is implemented in Web software called server software .It is the agreed upon protocol for transmitting data packets over the Web.TCP establishes connections among sending and receiving Web computers , handles the assembly of packets at the point of transmission , and their reassembly at the receiving end.

IP addresses :TCP handles the packetizing and routing of Internet messages . IP provides the Internet’s addressing scheme .Every computer connected to the Internet must be assigned an address – otherwise it cannot send or receive TCP packets .When a user sign’s onto the Internet using a dial-up telephone modem, the computer is assigned a temporary address by the Internet service provider.

Internet addresses known as IP addresses , are 32-bit numbers that appear as a series of four separate numbers marked off by periods such as 201.61.186.227. Each of the four numbers can range from 0-255. This “dotted quad” addressing scheme contains up to 4 billion addresses of the computer ( 2 to the 32nd power).The leftmost number typically indicates the network address of the computer , while remaining numbers help to identify the specific computer within the group that is sending (or receiving) messages.

Domain Names and URLs : Most people cannot remember 32-bit numbers .IP addresses can be represented by a natural language convention called domain names.The domain name system (DNS) allows expressions to stand for numeric IP addresses.

Uniform Resource Locators (URLs ) are addresses used by Web browsers to identify the location of content on the web, also use domain names as a part of the URL.A typical URL contains the protocol to be used when accessing the address, followed by its location. The protocol used is HTTP (Hypertext Transfer Protocol).A URL can have more than one paths.

Client/Server computing :

It is a model of computing in which very powerful personal computers called Clients are connected together in a network together with one or more server computers.These clients are sufficiently powerful to accomplish complex tasks such as displaying rich graphics , storing large files, and processing graphics and sound files , all on a local desktop or hand held device. Servers are networked computers dedicated to common functions that their client machines on the network need. Such as storing files , software applications, utility programs such as Web connections , and printers.

Other Internet Protocols :

SMTP :Simple mail transfer protocol

POP : Post Office Protocol

IMAP : Internet message access protocol

FTP : File Transfer Protocol for transferring files

SSL : Secure Socket Layers for Security

For Sending Email

E-Commerce Security Environment

It is difficult to estimate the actual amount of e-commerce crime for a variety of reasons . In many instances , e-commerce crimes are not reported because companies ear of losing the trust of legitimate customers. And even when crimes are reported , it may be hard to quantify the losses incurred .The most serious losses involved theft of proprietary information and financial fraud.Online credit card fraud is perhaps the most high profile form of e-commerce crime. In some cases , the criminals aim to just deface , vandalize and/or disrupt a Web site, rather than steal goods or services . The cost of such an attack includes not only the time and effort to make repairs to the site but also damage done to the site’s reputation and image as well as revenues lost as a result of the attack. Estimates of the overall cost of the various forms of cyber vandalism range into billions.

What is Good E-Commerce Security ?

What is a secure commercial transaction ?

Anytime a user goes into a market place , he/she takes risks, including the loss of privacy (information about what you purchased).The prime risk as a customer is that you do not get what you paid for.As a merchant in the market , you don’t get paid for what you sell,.Thieves take merchandise and then either walk off without paying anything , or pay you with a fraudulent instrument , stolen credit card , or forged currency.

Burglary, breaking and entering , embezzlement , trespass , malicious destruction, vandalism – all crimes in traditional commercial environment – are also present in e-commerce.However , reducing risks in e-commerce is a complex process that involves new technologies, organizational policies and procedures, and new laws and industry standards that empower law enforcement officials to investigate and prosecute offenders.

Security Threats in the E-Commerce Environment :

From the technology perspective , there are three key points of vulnerability when dealing with e-commerce : the client, the server and the communication pipeline.

•Malicious Code

It includes a variety of threats such as viruses , worms , Trojan horses , and “bad applets” . A virus is a computer program that has the ability to replicate or make copies of itself , and spread to other files. In addition to the ability to replicate , most computer viruses deliver a “payload”(destroying files,reformatting the computers hard drive or causing programs to rum improperly.

A Trojan horse does something other than expected . The Trojan horse is not itself a virus because it does not replicate , but is often a way for viruses or other malicious code to be introduced into a computer system.

Bad applets also referred to as malicious mobile code , are expected to become an increasing problem as java and Active X controls become more commonplace.

Malicious code is a threat to the system’s integrity and continued operation, often changing how a system functions or altering documents created on the system . In many cases the user is unaware of the attack until it affects the system and the data on the system.

•Hacking and Cyber vandalism :

A hacker is an individual who intends to gain unauthorized access to a computer system . Within the hacking community , the term cracker is typically used to denote a hacker with criminal intent although in the public press , the terms hacker and cracker are used interchangeably. Hackers and crackers get unauthorized access by finding weaknesses in the security procedures of Web sites and computer system , often taking advantages of various features of internet that make it an open system that is easy to use.

Cyber vandalism is intentionally disrupting,defacing , or even destroying the site.

Group of hackers called as “tiger teams” are used by corporate security departments to test their own security measures.By hiring hackers to break into the system from outside , the company can identify weaknesses in the computer systems.

•Credit Card Frauds

The fear that the credit card information will be stolen frequently prevents the users from making online purchases . In e-commerce the greatest threat to the consumer is that the merchant’s server with which the customer is transacting will “lose” the credit information to permit it to be diverted for a criminal purpose.Credit card files are the major targets of Web site hackers.

Dimensions of E-Commerce security :

There are six dimensions to e-commerce security :

1. Integrity

2. No repudiation

3. Authenticity

4. Confidentiality

5. Privacy

6. Availabilty

Integrity refers to the ability to ensure that information being displayed on a Web site , or transmitted or received over the internet , has not been altered in any way by an unauthorized party.e.g. an unauthorized person intercepts and changes the contents of an online communication , such as by redirecting a blank wire transfer into a different account , the integrity of the message has been compromised because the communication no longer represents what the original sender intended .

Non repudiation refers to the ability to ensure that e-commerce participants do not deny (I.e. repudiate) their online actions.

Authenticity refers to the ability to identify the identity of a person or entity with whom you are dealing on the internet. How does the customer know that the Web site operator is who it claims to be ? How can the merchant be assured that the customer is really who he/she say he/she is ? Someone who claims to be someone they are not is “spoofing” or misinterpreting themselves.

Confidentiality refers to the ability to ensure that messages and data are available only to those who are to view them . Confidentiality is something confused with privacy , which refers to the ability to control the use of information a customer provides about himself or herself to an e-commerce merchant.

Availability refers to the ability to ensure that an e-commerce site continues to function as intended .

E-Commerce security is designed to protect these six dimensions.When any one of them is compromised , it is a security issue.

Electronic Data Interchange

EDI is defined as inter organization exchange of documents in standardized electronic form directly between computer applications. Examples of typical business documents include purchase orders, invoices, and material releases. In basic terms, EDI can be thought of as the replacement of paper-based purchase order with electronic equivalents. Documents originate in the sender’s computer, which prints them on forms-these are then typically send via mail or fax. When receivers get the paper document, they are forced reenter the information in to their computers. This is a slow, inefficient and error-prone method of moving commerce related data from one computer to another. With EDI, the business documents are moved electronically from sender’s computer application to receiver’s application. Besides application-to-application communication, ideally one wants data in standard format so that users do not have each other’s internal data formats.

EDI’s goal is to enable easy and inexpensive communication of structured information through out corporate community. EDI can facilitate integration among dispersed originations. Another of EDI’s goal is to reduce the amount data capture and transcription; this results in decreased incidence of errors, reduced time spent on exception handling, and fewer data caused delays in the business process. Benefits can be secured in inventory management, transport and distribution, administration, cash management. In addition, faster handling of transactions results in increased cash flow.

The key aspects of EDI are as follows-

      The utilization of electronic transmission medium (normally a VAN) rather than physical storage media such as paper, magnetic tapes, and discs.

      Use of structured, formatted messages based upon agreed standards (such that messages can be translated, interpreted, and checked for compliance with an explicit set of rules).

      Relatively fast delivery of documents from sender to receiver (generally implying receipt with hours to minutes).

      Direct communication between applications (rather than just between systems)

VAN : Value Added Network

•EDI can fit business transaction continuum. Pre-purchasing activities can be supported by electronic version white/yellow pages; supplier directories; and on price list, offers, or period contracts. Purchasing and logistic can be made more efficient by providing EDI links for messages that have known formats and contents, supplemented by e-mail links between partners, to handle exceptions. The post purchasing tasks can be addressed through so-called EDI, whereby check writing and dispatch processes are replaced by instructions delivered electronically to the corporation’s bankers. The challenge confronting corporate planners is to deliver each of these capabilities to their organizations cost-effectively.

EDI’s benefits –

Business secures many benefits when utilizing EDI. However, investment will be necessary in order to lower costs, and planning and control is needed insure that the savings are actually realized.

      Monitory savings are obtained by automating existing business procedure. Cost savings arises in relation to the preparation, postage and handling of mainstream transactions or in secondary but expensive areas such as the preparation and dispatch of applications for approval by a regulatory authority or other reporting functions.

      EDI also eliminates other paper handling tasks. On the sender’s side, envelopes no longer have to be stuffed documents and mailed to the recipients. On the receiver’s side, documents no longer have to remove from envelopes, photocopied, filled and reentered in to a computer.

In addition to the pre-transaction cost savings, benefits can arise from reduced exceptions handling. Generally a significant amount of staff’s time is traceable to errors in original data capture to the detection, investigation, adjustment, and rework of erroneous transactions. With EDI, data need to be captured once only; by imposing appropriate integrity controls at original data entry, staff time and costs can be ameliorated.

      Among the major benefits is the elimination of re-keying the data. With EDI, business documents transit automatically from the sender’s business applications to the receiver’s application. The receiver needs not to reenter the information from a paper form; keypunching errors are avoided and accuracy of the data increases. Fewer staff hours are devoted to paper shuffling, data entry, and fixing keypunching errors, and more efforts can be channeled to more productive work.

     With EDI organization exchange business documents more quickly, resulting in a shorter business cycle. Manufacturers can get the correct supplies and materials more quickly, allowing them to reduce their baseline stock and thus their inventory cost. Companies that utilize Just-in-Time Manufacturing in order to reduce inventory levels find EDI an important , if not indispensable, tool. As shelf items are sold, these retailers automatically send purchase orders to their venders via EDI in order to quickly replenish these items.

     Furthermore, EDI can positively impact customer service factors such as the incidence of errors and timeliness of deliveries. Hence even simple automation by EDI can contribute to a company’s competitive advantage either by enhancing its cost -effectiveness or by improving its Client-service posture.

     Other advantages accrue to organizations that utilize EDI as an opportunity to rationalize (rethink) operations , via business process reengineering. Mature EDI using organizations are now beginning to seek the intrinsic gains that realization can offer. For example, business partners who are confident in one another’s data processing apparatus can do away with invoices and pay on the basis of a receipt of goods matched against a purchase order . In many sectors, EDI is likely to contribute to reallocation of functions between business partners.

Migration from non-EDI to EDI operations is generally driven by the demands of dominant organizations. E.g. Subcontractors to major industrial establishments using EDI are at times forced to adopt the technology in order to continue doing business.

Companies can send Edi transactions across the internet in two ways .The first way via the File Transfer Protocol(FTP) and the second is via e-mail.

Most Internet EDI implementations use e-mail because it is relatively more secure and requires more administration.With e-mail, the trading partners do not have to be concerned about login Ids, passwords , directory names , or file names.

FTP requires the user to administer a login ID and password for each trading partner .The trading partners must also agree on directory names and file names before they can exchange EDI via The overhead associated with FTP becomes significant when large number of trading partners are involved.The login and password are sent across the Internet with no encryption and could be intercepted by hackers; the hacker would then be able to login to the trading partner’s computer and access the same files and directories . With Internet e-mail , the sender and receiver do not log in to each other’s computers.

Security of Data During Transmission :

Business with computers containing confidential data connected to the Internet do not want the public to have unauthorized access to specific parts of their files; at the same time they might want the public to have access to specific parts of their information base.Business that offer services that require payment by methods including credit card transactions need to be cautious .If these transactions are not secured, hackers can access the users account information.

Risk management

Risk : “The possibility of loss or injury .”

E-commerce risk involves understanding potential problems that might occur in the business and affect on success.

Risk management is an activity undertaken to lessen the impact on potentially adverse events on business .Risk management is an investment .There are costs associated with it.The investment in risk management depends upon the nature of the business .

Risk Assessment :

The first step is to inventory the information and knowledge assets of E-commerce site and company . What information is at risk ? Is it customer information, proprietary designs, business activities, secret processes , or other internal information , such as price schedules , executive compensation , or payroll ?

For each type of information try to estimate the losses for the firm.

Based on the quantified list of risks, one can start to develop a security policy I.e a set of statements prioritizing the information risks, identifying acceptable risk targets, and identifying the mechanisms for achieving these targets.

Technology Solutions

Protecting internet communications

Because e-commerce transactions must flow over the public internet, and therefore involved thousands of routers and servers through which the transaction packets flow , security experts believe the greatest security threats occur at the level of internet communications. This is very different from a private network where a dedicated communication line is established between the two parties. A number of tools are available to protect security of internet communications, the most basic of which is message encryption.

ENCRYPTION

Encryption is the process of transforming plain text data in to cipher text that can not read by anyone outsider of the sender and the receiver. The purpose of encryption is (a)to secured stored information and (b) to secure information transmission . Encryptions can provide four of the six key dimensions of

E-commerce security .

•Message integrity – provides assurance that the message has not been altered

•Nonrepudication – prevents the user from denying he or she sent the message.

•Authentication – provides verification of the identity of the person (or machine) sending the message.

Confidentiality – gives assurance that the message was not read by others. This transformation of plain text to cipher text is accomplished by using a key or cipher. A key (or cipher) is any method of transforming plain text to cipher text. Encryption can be practiced since the earliest form of writing and commercial transaction. Ancient Egyptian and Phoenician commercial records were encrypted using substitution and transposition ciphers. In a substitution cipher, every occurrence of given letter is replaced systematically by another letter. For instance, if we used the cipher ”letter plus two”- meaning replace every letter in a word with a new letter two places forward – then the word “hello” in plain text would transformed into the following cipher text :”jgnnq”. In a transposition cipher , the ordering of the letters of each word is changed in some systematic way.

Symmetric Key Encryption: In order to decipher this message , the receiver would have to know the secret cipher that was used to encrypt the plain text. This is called symmetric key encryption or secret key encryption. In symmetric key encryption , both the sender and the receiver use the same key to encrypt and decrypt the message. How do the sender and the receiver have the same key? They have to send tit over some communication media or exchange the key in person .The possibilities for substitution and transposition ciphers are endless, but they all suffer from common flaws. First, in the digital age, computers are so powerful and fast as these ancient means of encryption can be broken quickly. Second, symmetric key encryptions require that both parties share the same key. In order to share the same key, they should send the over a presumable insecure medium where it could be stolen and used to decipher messages. If the secret key lost or stolen, entire encryption system fails.

Third, in commercial use where we are not all parts of the same team or army, you would need a separate key for each of the parties with whom you transacted, that is, one key for the bank, another for a department store, and another for the government. In large population of users, this could result in as many as n (n - 1) keys. In population of millions of Internet users, thousands of millions of keys would be needed to accommodate all e-commerce customers (established at about 35 million purchasers in the United States). Potentially, (35 millions )2 different keys could be needed. Clearly this situation would be too unwieldy to work in practice.

Modern encryption system are digital. The ciphers or keys used to transform plain text in to cipher text are digital strings. Computers store text or other data as binary strings composed of 0s and 1s . For instance, the binary representations of the capital letters “A” in ASCII computer code is accomplished with eight binary digits (bits):01000001. One in which digital strings can be transformed into cipher text is by multiplying each letter by another binary number, say, an eight- bit key number 01010101. If we multiplied every digit character in our text messages by this eight-bit key, sent the encrypted message to a friend along with the secret eight-bit key, the friend could decode the message easily.

The strength of modern security protection is measured in terms of the length of the binary key used to encrypt the data. In the above example, the eight-bit key is easily deciphered because there are only 28 or 256 possibilities. If the intruder knows you are using eight-bit key, then he or she could decode the message in a few seconds using a modern desktop PC just using the brute force method of checking each of the 256 possible keys. For this reason, modern digital encryption systems use keys with 56,128,256, or 512 binary digits. With encryption of 512 digits, there are 2512possiblities to check out. It is estimated that all the computers in the world would need to work for ten years before stumbling upon the answer.

The most widely used systematic key encryption on the internet today is the Data Encryption Standard (DES) developed by the National Security Agency (NSA) and IBM in the 1950s. DES uses 56-bit encryption key. To cope with much faster computers, Triple DES – essentially encrypting the message three times each with a separate key, has improved it recently. There are many other symmetric key systems, DES requires a different set of keys for each set of transactions.

PUBLIC KEY CRYPTOGRAPHY

Two mathematically related digital keys are used: a public key and private key. The private is kept secret by the owner, and public is widely disseminated. Both keys can be used to encrypt and decrypt the message. However, once the keys are used to encrypt a message, that same key can not be used to unencrypt the message.

To check the confidentiality of the message and ensured it has not been altered in transit, a hash function is used first to create a digest of the message. A hash function is an algorithm that produces a fixed length number called a hash or message digest . A hash function can be simple, and count the number of digital “1s”in a message, or it can more complex, and produce a128-bit number that reflects the number of 0s and 1s, the number of 00s, 11s, and so on.

One more step is required to ensure the authenticity of the message, and to ensure the nonrepudiation , the sender the encrypts the entire block of cipher text one more time using the sender’s private key. This produces a digital signature (also called an e-signature) or “signed” cipher text that can be sent over the internet.

Digital envelop - a that uses symmetric encryption for large documents, but public key encryption to encrypt and the symmetric key.

Digital certificates and Public key Infrastructure (PKY)

 There are still some deficiencies in the message security regime described above. How do we know that people and institutions are who they claim to be? Anyone can make up a private and public key combination and claim to be the defense department or Santa Clause. Before you place an order with an online merchant such as Amazon. Com, you want to be sure it really be Amazon.com you have on the screen and not a spoofer masquerading as Amazon. In the physical world, if someone asks who are you and you show a social security number, they may well ask to see a picture ID or a second form of certifiable or acceptable identification. If they really doubt who you are , they may ask for references to other authorities and actually interview these other authorities. Similarly in the digital world, we need a way to know who people and institutions really are.

Digital certificates, and the supporting public key infrastructure, are an attempt to solve this problem of digital identity. A digital certificate is a document issued by a trusted certification authority (CA) that contains the name of the subject or company, the subject public key, a digital certificate serial number, an expiration date, an issuance date, the digital signature of the certification authority (the name of the CA encrypted using the CA’s private key), and other identifying information.

Public key infrastructure (PKI)

Certification authorities and digital certificate procedures that are accepted by all parties.

 Pretty good privacy (PGP)

A widely used e-mail public key encryption software program

 S_HTTP (Security Hypertext Transfer Protocol)

A secure message-oriented communications protocol designed for use in conjunction with HTTP. Cannot be secure non-HTTP messages.

  Virtual Private Networks (VPN)

VPN allow remote users to securely access internal networks via the internet, using the point-to-point Tunneling Protocol (PPTP)

Point-to-point Tunneling Protocol (PPTP)

PPTP an encoding mechanism that allows one local network to connect to another using the internet as the conduit.

PROTECTING NETWORKS

Once you have protected communications as well as possible , the next set of tools to consider are those that can protect your networks , and severs and clients on those networks.

 Firewalls:Firewalls and proxy servers are intended to build a wall around your network, and the attached servers and clients, just like physical-world firewall protect you from fires for a limited period of time. Firewalls and proxy servers share some similar functions, but they are quite different. Firewalls are software applications that act as filters between a company private network and the internet. They prevent remote client machines from attaching to your internal network. Firewalls monitor and validate all incoming and outing communications. Every message that is to sent or received from the network is processed by the firewall software, which determines if the message meets security guidelines established by the business. If it does, it is permitted to be distributed , and if it doesn’t , the message is blocked.

There are two major methods firewall used to validate traffic :packet filters and application gateways. Packet filters examine data packets to determine whether they are destined for a prohibited port , or originate from a prohibited IP address (as specified by the security administrator). The specifically looks at the source and destination information , as well as the port and the packet type , when determining whether the information may be transmitted. One down side of the packet filtering method is that it is susceptible to spoofing , since authentication is not one of its roles.

Application gateways are a type of firewall that filters communications based on the application being requested, rather than the source or destination of the message. Such firewalls also process requests at the application level, farther away from the client computers than the packet filters. By providing a central filtering point , application gateways provides greater security than packet filters, but can compromise system performance.

Proxy servers (proxies) : are software severs (usually located on dedicated machine) that handle all communications originating from or being sent to the internet, acting as a spokesperson or bodyguard for the organization. Proxies act primarily to limits access of internal clients to external internet severs act as firewall as well . Proxy servers are sometimes called dual home systems because they have to network interfaces. To internal machines, a proxy server is known as the gateways, while to external machines it is known as a mail server or numeric address.

When a user on an internal network requests web pages, the request is routed first to the proxy sever . The proxy server validates the user and the nature of the request , and then sends the request on to the internet. Pages sent by the external internet server passed to the proxy server. If acceptable, the pages pass on to the internal network web server and then to the client desktop. By prohibiting users from communicating directly with the internet, companies can restrict access to certain types of sites, such as pornographic , auction, or stock trading sites. Proxy servers also improve Web performance by storing frequently requested Web pages locally , reducing upload times, and hiding the internal network’s address , thus making it more difficult for hackers to monitor.

Risk assessment –an assessment of risks and points of vulnerability

 Security policy- a set of statements prioritizing the information risks, identifying acceptable risk targets, and identifying the mechanism for achieving these targets.

 Implementation plan – the action steps you will take to achieve the security plan goals.

 Security organization –educates and trains users, keeps management aware of security threats and breakdowns, and maintains the tools chosen to implement security.

 Access controls – determine who can gain legitimate access to a network.

Authentication procedure include the use of digital signatures, certificates of authority , and public key infrastructure.

Biometrics the study of measurable biological or physical characteristics. 

Authorization policies determining differing levels of access to information asset for differing levels of users. 

Authorization management system establishes where and when a user is permitted to access a certain parts of a web site.

Security audit involves the routine review of access logs (identifying the outsiders are using the sites as well as how insiders are accessing the site’s assets) 

Tiger team a group whose sole job activity is attempting to break in to a site.

PAYMENT SYSTEM

TYPES OF PAYMENT SYSTEM

There are five main types of payment systems:

1. Cash

2. Checking transfer

3. Credit cards

4. Stored value and

5. Accumulating balance.

Cash 

Cash, which is legal tender, defined by a national authority to represent value, is the most common form of payment in terms of number of transactions.

The key feature of cash is that it is instantly convertible into other forms of value without the intermediation of any other institution. For instance, free airline miles are not cash because they are not instantly convertible into other forms of value- they require intermediation of by a third party (the airline) in order to be exchanged for value (an airline ticket) . Private organizations sometimes create a form of private cash called scrip that can be instantly redeemed by participating organizations for goods or cash. Example includes Green Stamps and other forms of consumer loyalty currency.

Checking Transfer

Checking Transfers which are transferred directly via a signed draft or check from a consumer’s checking account to a merchant or other individual, are the second most common form of payments in terms of number of transactions and the most common in terms of total amount spent.

Checks can be used for both small and large transactions, although typically they are not used for micro payments. Checks have some float (it can take up to ten days for out-of-state checks to clear) and the unspent balances can earn interest. Checks are not anonymous and required third party institutions to work. Checks also introduces security risks for merchants. They can be forged more easily than cash; hence authentication is required. For merchants, checks also present some additional risk compared to cash because they can be cancelled before they clear the account or they may bounce if there is not enough money in the account.

Money orders, cashier checks , and travelers checks are ensured checks that address some of the limitations of personal checks described above. Ensured checks reduced the security risk of a personal check by requiring an up-front payment to a trusted third party – A bank or money transferred company such as American express, Wells Fargo , or Western Union. These trusted third parties then issue a guaranteed payment draft called money order that is as good as cash, although less anonymous. Merchants are guaranteed the funds in an any transaction with an ensured check. Trusted third parties make money by charging consumers a fee and receiving interest on the money consumers deposited with them . Ensured checks provide merchants with lower risk, but they add cost for the consumer. In return, consumers have a payment instrument that is accepted almost everywhere and in some cases is insured against loss.

Credit card

A credit card represents an account that extends credit to consumer, permits consumers to purchase items while deferring payment, and allows consumers to make payment to multiple vendors at one time. Credit card association such as Visa and MasterCard are nonprofit associations that set standards for the issuing banks – such as Citibank- that actually issue the credit cards and process transactions. Other third parties (called processing centers or clearinghouses) Usually handle verification of accounts and balances. Credit card issuing banks act as financial intermediaries, minimizing the risk to the transacting parties.

Credit card offers consumers a line of credit and the ability to make small and large purchase instantly. They are widely accepted as form of payment , reduce the risk of theft associated with cash , and increase consumer convenience. Credit card also offer consumers considerable float. With a credit card, for instance, a consumer typically need not pay for goods purchased until receiving a credit card bill thirty days later. Merchant’s benefits from increased consumers spending resulting from credit card use, but they pay a hefty transaction fee of 3% to 5% of the purchase price of the issuing banks. In addition, federal regulation places the risks of the transactions (such as credit card fraud, repudiation of the transaction, or nonpayment) largely on the merchant and credit card issuing bank.

Credit cards have less finality than other payment systems because consumers can refuse or repudiate purchase under certain circumstances, and they limit risk for consumers while raising it for merchants bankers.

Stored ValueAccounts created by depositing funds in to an account and from which funds are paid out or withdrawn as needed are stored-value payment systems . Stored value payment systems are similar in respects to checking transfers – which also stored funds – but do not involve writing a check. Example include debit card, gift certificates , prepaid cards and smart cards . Debit cards look like credit cards, but rather than providing access to a line of credit , they instead immediately debit a checking or other demand deposit account. For many consumers, the use of debit card eliminates the need to write a paper check. Be cause debit cards are dependent on funds being available in consumers bank account, however, large purchases are still generally paid for by credit card.

Accumulating balanceAccounts that accumulate expenditure to which consumers make periodic payments are Accumulating balance payment systems. Traditional examples include utility, phone, and credit card bills s, all of which accumulate balances, usually over a specified period (typically a month) , and are paid in full at the end of the period.

New forms of payment include:Digital cash :Systems that generate a private form of currency that can be spent at e-commerce sites.Online stored value systems :Systems that rely on prepayments , debit cards, or checking accounts to create value in an account that can be used for e-commerce shopping.Digital accumulating balance systems : Systems that accumulate small charges and bill the consumer periodically. These systems are especially suited for processing micropayments for digital content. Digital credit account :System that extend the online functionality of existing credit card payment systems.Digital checking :Systems that create digital checks for e-commerce remittances and extend the functionality of existing bank checking systems.

HOW AN ONLINE CREDIT CARD TRANSACTION WORKSOnline credit card transactions are processed much the same way that in-store purchases are , with the major differences being that online merchants never see the actual being used , no card impression is taken , and no signature is available. Online credit card transactions most closely resemble MOTO transactions (mail order, telephone order) transactions. These type of purchases are also called CNP (Card Not Present) transactions and are the main reason that charges can be disputed later by consumers. Since the merchants never sees the credit card, nor receives a hand sign agreement to pay from the customer, when disputes arise, the merchant faces the risk that the transaction may be disallowed and reversed, even though he has already shipped the goods or the user has downloaded a digital product.

There are five parties involved in an online credit card purchase: consumer, merchant, clearinghouse, merchant bank (sometimes called the “acquiring bank”), and the consumers card issuing bank. In order to accept the payment by credit card, online merchants must have a merchants account established with a bank or financial institution. A merchant account is simply a bank account that allows companies to process credit card payments and receive funds from those transactions.

CREDIT CARD E-COMMERCE ENABLERSCompanies that have a merchant account still need to buy or build a means of handling the online transaction; securing the merchant account is only step one in a two part process. Today, Internet payment service providers can provide both a merchant account and the software tools needed to process credit card purchases online.

DIGITAL WALLETSA digital wallet – let’s call it your “analog wallet” – resides in your pant pocket or in your purse. Analog wallets are pretty universal; just about every transaction–based culture has some form of portable value storage and identifying device. A wallet typically contains your Ids , cash, phone cards, credit/debit cards, old receipts and records, photos of those close to you, and other miscellaneous items. A digital wallet seeks to emulate the functionality of an analog wallet. The most important function of a digital wallet are to (a) authenticate the consumer through the use of digital certificates or other encryption methods, (b) store and transfer value, and (c) secure the payment process from the consumer to the merchant.

DIGITAL CASH

Digital cash (some times called e-cash) was one of the first forms of alternative payment systems developed for e-commerce. The name digital cash is in fact something of a misnomer. Recall our original definition of cash : legal tender (called currency) created by national authorities that is instantly convertible to other forms of value (goods and services) without the intermediation of any third parties.

Most of the early examples of digital cash have failed , many of the ideas have survived today as the part of P2P(peer-to-peer) payment system.

Online stored Value SystemsOnline stored value payment systems permit consumers to make instant, online payments to merchants and other individuals based on value stored in an online account. Some stored value systems require the user to download a digital wallet.

Smart Cards as Stored Value Systems

Smart cards are another kind of stored value system base on credit-card-sized plastic cards that have embedded chips that store personal information. Where as credit cards store a single charge account number in the magnetic strip on the back, smart cards can hold 100 times more data , including multiple credit card numbers and information regarding health insurance , transportation , personal identification , bank accounts, and loyalty programs, such as frequent flyer accounts. This capacity makes them an attractive alternative to carrying a dozen or so credit or ID cards in a physical wallet. Smart cards also require a password , unlike credit cards, adding another layer of security.

There are actually two types of smart cards – contact and contact less – depending on the technology embedded. In order for contact cards to be red, they must be physically placed into a card reader, while contact less cards have an antenna built in that enables transmission of data without direct contact. A stored-value smart card, such as retail gift card purchased in a certain dollar value, is an example of a contact card because it must be swiped through a smart card reader in order for payment to be processed.

Digital Accumulating Balance Payment Systems :

Digital accumulating balance payment systems allow users to make micro payments and purchases on the Web , accumulating debit balance for which they are billed at the end of the month . Like a utility or phone bill , consumers are expected to pay the entire balance at the end of the month using checking or credit card account .Digital accumulating balance systems are ideal for purchasing intellectual property on the web such as music tracks , books , or any articles .

Digital Checking Payment Systems :

It seeks to extend the existing the functionality of checking accounts for use as online shopping payment tools. It can be thought of as an extension to the existing checking and banking infrastructure. Some of the simpler systems are used to electronically pay individuals and to settle accounts at online auction sites . More sophisticated systems are used by the Treasury Department to transfer billions of dollars electronically .

Digital Checking Payment Systems have many advantages :

1. They do not require consumers to reveal account information to other individuals when settling an auction.

2. They do not require consumers to continually send sensitive financial information over the WEB.

3. They are less expensive than credit cards for merchants. And

4. They are much faster than paper-based traditional checking.

Digital Payment Systems and the Wireless Web :

Wireless device usage has exploded and is expected to continue as new products and services are introduced .From cellular phones to pagers and personal digital assistants (PDAs), wireless devices have spurred the creation of new Web sites to support them. One area in which there is substantial interest is in financial services, including stock trading and money transfer .

B2B Payment System :

B2B payment systems pose special challenges and are much more complex than B2C payments , in large part because of the complexity involved in business purchasing. Sometimes a dozen of more documents may be needed to consummate the transaction, including purchase order , invoice , bill of landing or shipping , insurance papers , financial documents , regulatory documents , credit verifications , service documents (if any) , authentication , letters of credit (foreign transactions), and payment methods or instruments . In addition , B2B payment systems must link to existing ERP (Enterprise Resource Planning) systems that integrate inventory , production , shipping , and other corporate data , and into EDI (Electronic Data Interchange) systems which are systems that replace paper-based purchase orders with electronic equivalents .

The B2B payment market is actually much larger than the B2C market because of the larger size of transactions among businesses and the frequency of transactions

Electronic billing presentment and payment (EBPP) systems :

These are new forms of online payment systems for monthly bills . EBPP services allow customers o view bills electronically and pay them through electronic funds transfers from bank or credit card accounts. More and more companies are choosing to issue statements and bills electronically , rather than mailing out paper versions.

Online Market Research

Market research involves gathering information that will help a firm identify potential products and customers .There are two general types of market research .

Primary research involves gathering first-hand information using techniques such as surveys , personal interviews and focus groups.This type of research is typically used to gain feedback on brands, products , or new marketing campaigns where no previous study has been done.

Secondary research relies on existing , published information as the basis for analyzing the market .

Both primary and secondary research can be completed online more efficiently , less expensively , and more accurately than offline.In addition to two different approaches to market research , there are two types of data to be studied . Quantitative data is data that can be expressed as a number , such as percentage . Quantitative data can be analyzed using statistical programs that identify relationship between certain variables , or factors that affect how someone responds. Qualitative data is data that cannot be easily quantified , such as opinions , survey questions that yield qualitative responses are analyzed by grouping responses into similar sub segments based on the answer given . One type of analysis is content analysis , which tries to identify the major categories of responses given.

Primary Research : Surveys and questionnaires are the most popular and frequently used market research tools.Using a survey instrument , which is a list of questions , researchers can approach groups of people to ask their views on virtually any imaginable topic.

Online surveys can be typically be administered more quickly and less expensively than traditional mail or telephone surveys.Companies can hire an outside market research firm to conduct the survey or create and administer their own .

Online surveys also make it possible to track respondents and follow up with those who haven’t yet completed survey, which help to improve response rates , the percentage of people who complete a survey. A low response rate can damage the validity , or believability , of a survey’s results.

Feedback forms, which ask users to provide input regarding a site’s operations in a set format , are another type of inline survey. Requesting regular input from site visitors may provide more qualitative data , which is more difficult to analyze , but the resulting information can assist in improving and enhancing site performance.

Personal interviews are another primary research tool . The interview is generally guided by a set of questions very similar to survey instrument. Although it is more difficult to incorporate personal interviews within Web sites , it is possible to conduct research online via live chat or e-mail , with trained researcher interacting with the study participants .Personal interviews offer an opportunity to gather more in-depth information on a topic.In some cases , personal interviews are used as second phase of a research project , following initial information gathering by survey.

Secondary Research : It involves gathering information using WEB sites as the information source.

The Key to being efficient and effective as a researcher is identifying the WEB sites most likely to provide answers to the questions posed in the research .By establishing and agreeing on the key question to be answered through market research , as well as why that information will be useful , researchers can zero in on their information needs. Understanding how the information will impact other decisions also helps to further refine information collection.

Some popular secondary research tools ( Web Sites)

1. Factiva.com

2. Businesswire.com

3. Hoovers.com

4. Localeyes.com

5. Thomasregister.com

6. Corporateinformation.com

7. sec.gov

8. Aol.com (America Online)

Online Marketing

Technologies that support Online Marketing :

•Web transaction logs : Records that document user activity at the Web site .

•Transaction logs : Coupled with data from the registration forms and shopping cart database , these represent a treasure trove of marketing information for both individual sites and the online industry as a whole.

•Cookies : A small text file that Web sites place on visitors /client computers every time they visit , and during the visit , as specific pages visited . Cookies provide Web marketers with a very quick means of identifying the customer and understanding his or her prior behavior at the site.

•Web bugs : Tiny graphic files hidden in marketing e-mail messages and on Web sites . Web bugs are used to automatically transmit information about the user and the page being viewed to a monitoring server.

•Databases , data warehouses, data mining , and “profiling “ :Technologies that allow marketers to identify exactly who the online customer is and what they want , and then to present the customer with exactly what they want, when they want it, for the right price.

•Advertising networks : best known for their ability to present users with banner advertisements based on a database of user behavioral data . Specialized ad servers are used to store and send users the appropriate banner ad.

CRM systems : A repository of customer information that records all of the contacts that a customer has with a firm and generates a customer profile available to everyone in the firm who has a need to “know the customer”.

IT enabled marketing and branding strategies :

•Online marketing techniques to online customers include permission marketing , affiliate marketing , viral marketing , and brand leveraging.

•Online techniques for strengthening customer relationships include one-to-one marketing ; customization , transactive content ; and customer service (CRMs,FAQs,live chat , intelligent agents , and automated response system).

•Online pricing strategies include offering products and services for free ,versioning , bundling , and dynamic pricing.

•Strategies to handle the possibility of channel conflict.

Direct E-mail marketing :

E-mail marketing messages sent directly to interested users (direct e-mail marketing) has proven to be one of the most effective forms of marketing communications. The key to effective direct e-mail marketing is “interested users”. Direct e-mail marketing is not spam . SPAM involves sending unsolicited e-mail to a mass audience of Internet users who have expressed no interest in the product . Instead , direct e-mail marketing messages are sent to an “opt in” audience of Internet users who have expressed at one time or another an interest in receiving messages from the advertiser. By sending e-mail to an opt-in audience , advertisers are targeting interested customers. Because of the comparatively high response rates and low cost, direct e-mail marketing is the fastest growing form of online marketing.

The primary cost of e-mail marketing is for the purchase of the list of names to which the e-mail will be sent .

Due to the cost savings possible with e-mail , the short time to market , and high response rates , companies are expected to increasingly use e-mail to communicate directly with customers.

Online Catalogs :

Online Catalogs are the equivalent of paper-based catalog. The basic function of a catalog is to display the merchant’s wares. The electronic version typically contains a color image of each available product , a description of the item , as well as size , color, material composition , and pricing information . While simple catalogs are , technically , hard coded HTML pages and graphics displaying softwares , most sites with more than 15-20 products generate catalog pages from a product and price database that be easily changed . Simply by clicking on an order button at the site , customers can make a purchase instantly.

Public Relations :

Another marketing communications tool used to increase awareness of a site , and potentially boost traffic , is public relations. Public Relations (PR) involves communicating with target audiences, pr publics , using methods other than advertising . Some of these methods include publicity (media coverage), special events , such as a grand opening celebration or press conference ; and publications , such as newsletters and customer bulletins.

Public Relations firms can also support a Web site by creating promotional strategies , developing relationships with reporters and producers of interest to the client company , proposing articles and TV program subjects , and generally keeping the press aware of any good news regarding an online company. Some firms specialize in dot-coms or have an online media specialty .The major advantage of public relations is the low cost relative to other media exposure.

Online Marketing Metrics :

1. Impression

2. Clickthrough Rate (CTR)

3. Hits

4. Page Views

5. Stickness (Duration)

6. Unique visitors

7. Loyalty

8. Reach

Continued …

9. Recency

10. Acquisition rate

11. Conversion rate

12. Attrition rate

13. Abandonment rate

14. Retention rate

1. Impressions are the number of times an ad is served .

2. Clickthrough rate (CTR) measures the percentage of people exposed to an online advertisement who actually click on the advertisment.

3. Hits are the number of http requests received by a firm’s server .Hits can be misleading as a measure of site activity because a “hit” does not equal a page : a single page may account for several hits if the page contains multiple images or graphics.A single site visitor can generate hundreds of hits .

4. Page views are the number of pages requested by visitors. A single page that has three frames will generate three page views.

5. Stickiness (Duration) is the average length of time visitors remain at a site .The longer amount of time a visitor spends at a site , the greater the probability of purchase.

6. Unique visitors counts the number of distinct, unique visitors to a site , regardless of how many pages they view.

7. Loyalty measures the percentage of users who return in a year. This can be good indicator of the trust shoppers place in site.

8. Reach is typically a percentage of the total number of consumers in market who visit a site.

9. Recency like loyalty, measures the power of site to produce repeat visits and is generally measured as the average number of days elapsed between shopper or customer visits.

10.Acquisition rate measures of the percentage of visitors who register or visit product pages (indicating interest in the product)

11.Conversion rate measures the percentage of visitors who actually purchase something.

12. Attrition rate measures the percentage of customers who purchase once , but never return within a year.

13.Abandonment rate measures the percentage of shoppers who begin a shopping cart form but then fail to complete the form and leave the site.

14.Retention rate indicates the percentage of existing customers who continue to buy on a regular basis.

Online Advertisement : It is the most common and familiar marketing communications tool .The advantages of online marketing are the ability to target ads to narrow segments and to track performance of advertisements in almost real time. Online advertisements also provide greater opportunities for interactivity – two – way communication between advertiser and the potential customer .

Different forms of online advertisements include :

•Banner and rich media ads

•Paid search engine illusion and placement

•Sponsorships , and

•Affiliate relationships

•Direct E-mail marketing

IT Enabled Services in Banking

Banks are institutions , which help in mobilizing the savings of a country . The two basic functions of bank are accepting deposits and providing advances to track and manage money , there by playing an important role in increasing money supply of any country.Although majority public sector banks in India still function manually but these too have suffered a lot of limitations in their working because of human calculation errors , difficulty in managing bulky files , inability to provide services to their customers during holidays, difficulty in physical accessibility during emergency situation faced by their customers and inconvenience to their customers due to queuing up at bank branches . With the introduction of online banking concept lot of these disadvantages have been done away with.

Concept of Online Banking :

India has a big banking network . Many of the banks have their branches fully computerized .This automation is the first step for IT enabled banking services .

Online system allows customers to plug into host of banking services from personal computer by connecting with the bank’s computers over telephone wires .

Online banking offers services like allowing customers to check the balances in their accounts , transfer funds among accounts , order electronic bill payments, allow customers to apply for loans , download information about their own accounts into their computers , trade stocks or mutual funds , and look at images of their cheque and deposit slips.

Minimum Requirements for any bank to go Online :

a) About The Bank – The bank should offer information about itself and details about all the services it offers , including interest rates and various service charges . This information needs to be updated regularly.

b) Details of Branches – There should be a searchable list of physical branches and ATM’s with their full address , telephone numbers and e-mail addresses.

c) Procedural Guidelines –There should be detailed guidelines on how to start accounts , apply for loan or credit card etc.

d) Tracking Facilities –An account holder or credit card holder should be able to create an account at site , should be able to see his balance , see whether

e) Transfer of Money : It should accept standing introduction charges like transferring a stipulated sum every month to another account . It should allow customers to transfer money to some other account operated by someone else.

f) Mail Linkages : There should be facilities at the site to interact with the bank , to clarify doubts etc . Moat of the banks give a mailto link on the page that is opened by their email clients .

Approaches to Online Banking :

There are two approaches to online banking

1. PC banking or Client based Banking

2. Internet Banking

PC Banking or Client Based Banking :

PC works through special software and a dial-up service that uses a modem to connect its association’s business office to an electronic bank site , from which one can access financial information.

The “Client-Based” system in which customers use their own software , generally use personal financial managers – specialized computer programs that help customers carry out a variety of personal finance activities .

These programs typically allow customers to do much of their work offline , and then dial in to complete their bank transactions.These client-based systems have the advantage of allowing customers to integrate all their banking information with other personal data using a single program.

Internet Banking : IN this the customers use a PC , modem and Internet Service Provider to get onto the World Wide Web , locate their bank’s website and get their account details .Internet Banking has a massive potential as a marketing tool because of its low costs compared to investing in branches.

Internet Banking allows customers to simply dial in and use the bank’s software or software provided by Internet Service Provider . Many customers find it easier to use , especially for the customers who want electronic banking services but not interested in doing a lot of other personal finance calculations.

New Services Offered through Online Banking

1. Treasury management services : It let’s the customers manage their money , including reviewing and reconciling their business accounts .(to check whether cheque has been cleared )

2. Payment Information : It includes online bill payment and fund transfers .Some banks also offer extra security features.

3. Receipt Information : This service enables the customer to view transactions and information regarding funds coming into their accounts online .

4. Miscellaneous financial transactions – It offers financial planning and brokerage services , permits purchase of foreign currency , typically via foreign wire ; and handle a variety of e-commerce tasks , such as processing payments online when members use credit cards .

5 .Electronic bill paying method : There are a number of special online bill paying facilities like billjunction.com , paymybills.com.sbionline.com etc.

6. Debit Cards : Debit cards are another facility offered by online banking .Every time the cardholder makes the payment the funds get automatically deducted from their personal bank account . Debit cards can be used as ATM cards.

Factors Affecting Application of Online Banking

1. Security

2. Cost

3. Size

4. Employee Attitude

5. State of Dilemma

Improvement in Service Quality through Online Banking :

1. High Interest Rates

2. Round The Clock Service

3. Time Saving

4. Wide Usage

5. Portable

6. Cost Effective

7. Liquidity

8. Wide Applicability

9. Convenient

IT enabled services for Governance

E-governance is an opportunity to re-think the business process following a logic that places the user at the center of every task performed.

E-governance facilitates economic efficiency, transparency as a means of preventing corruption and the importance of information in the analysis, articulation and acceptance of policy choices .

E-governance involves transformation from being passive information and service provider to active citizen involvement .

It includes the following dimensions:

1. Single source of information for user/customer

2. Equality and easy of access

3. Optimizing resource of multiple organizations with the aid of inter-organizational Information System

4. Intergovernmental participation

5. Public relation

6. Involving various stakeholders

7. Simulating debates

8. Exchanging views and information

9. Increasing participation by employees, customers in decision making

10. Public information feedback

E-governance from the government point of view is smoothen interface between government and citizens for Simple,Moral,Accountable,Responsive and Transparent (SMART) governance .

E-governance is “people,process and policies associated with managing technology.”

Why E-governance :

The major objective of any business organization is to provide better services and at the same time monitor the whole process.It facilitated the managers or role players to perform the task easily. It enables :

1. More responsive and accessible to changing needs of the customers

2. Provide high quality monitoring with lesser people

3. Economic growth can be achieved by means of wealth creation

4. Bring efficiency by quality delivery services

5. Better transparency and integrity in dealing with customer and government.

6. Greater synergy in decision making

7.Enable to create electronic/digital forums

8.Increased productivity and enhance the overall competitiveness

9.Reduction in duplication of information

10. Monitoring of business transaction at lower cost

11.Market expansion and contribute to the macro-economy of the state and country.

E-governance in organization :

In order to adopt change in the system one has to face challenges of different types. An organization may have to deal with the following issues and develop strategies for the same .

1. Mindset of people

2. Power of Knowledge

3. Structure

4. Legal framework

5. Labour and union

6. Knowledge Management

7. Language

8.Process Reengineering

9.Infrastructure

10.Connectivity

Issues for Implementation :

Following are the issues to be considered before an organization goes for implementing e-governance :

1. Technology issues

2. Change related issues

3. Funding issues

4. Language

5. Content

Technology issues : The organization has to decide about the technology infrastructure required to be a part of E-governance .This is as well an essential factor to provide efficient services .The technology issues can be categorized into :

1. Hardware issues

2. Software issues

Change Related Issues : These can be grouped under

1. Organizational issues

2. Political issues

3. Employee related issues

4. Language issues

Funding issues :Cost is a critical factor to be considered irrespective of private or public sector organizations .Since huge investment is required to introduce computers at different working levels both in government and business organizations one can think of leasing this activity to reduce cost involves in buying the computers.

Language issues : In India adoption of vernacular language poses a major challenge in the electronic environment .This will facilitate access to resources available in local languages .

Content : Content is the focus on E-Governance . The challenge is to develop web content into an integrated online experience that enhances the value of printed and online products .Content convergence is an important issue as it has a major relationship with

•Compute industry

•Information industry

•Communication networking