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Systems of Electronic Commerce
Prof. Jukka HeikkiläInformation systems, eBusiness
Dept. of CS & ISFaculty of Information Technology
University of Jyväskylä
tel:+358 50 581 8361email: [email protected]
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Terminology
eCommerce = sähköinen, elektroninen kaupankäynti– Transaction between
buyer and sellereBusiness = elektroninen liiketoiminta– Structuring the value
chain/business network for value add
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Fitting 5. with 1-4: b-to-c• E.g. standardised stages of
acquisition process• Purchases
– Inquiry– Offer / bidding– Order– Order confirmation– Delivery– Payment
• Exception handling• Complaints
– Reclamation processes– Returns
• Ancillary services• escrow, insurance, upgrades etc.
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N-tier architecture (Microsoft, 2000)
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Component-based
• ‘Functional’– necessary components for the business
• ’Non-functional’– necessary components for the operation of the
technical system, but not for the business
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Balancing strategy, processes, and components (Allen & Frost, 1998)
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Functional components for webstores (c.f. Porra, 1999)
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’Non-functional’ components for web-stores
• Depends...– logs– proxies– load balancers– access management– back-up & restore– availability assurance– monitoring– etc...
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An example:Product architect
ure blueprint (Mustikkamaa, 2001)
1) Terminal domain
2) Network domain
3) Enabling technology/
platform domain
4) Application domain
5) Content domain
Telecom Network
Mobile Network
IP Network
Service Gateways
User, Service & Security Management
Application Management
System Management Content & Data Management
Product Platform
Self-care concept
Trading concept
Communication concept
Business support concept
Entertainment concept
Information concept
Content Gateways
Content 1
Mobile phones
Computers PDA’s
6) Business domain
Content 2 Content 3 Content 4 Content 5 Content N
Content provider
1
Content provider
2
Content provider
3
Content provider
4
Content provider
5
Content provider
N
Application Gateways
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1) Terminal domain
2) Network domain
3) Enabling Technology/
platform domain
4) Application domain
5) Content domain
Telecom Network
Mobile Network
IP Network
Service Gateways
User, Service & Security Management
Application Management
System Management Content & Data Management
Information Systems Platform
Management applications
Product Development applications
Product Delivery &
Development applications
Sales & Marketing
applications
Customer Care a
plications
Billing applications
Content Gateways
Business data
Product data
Operation & manitenance
dataCustomer data Event
data
Mobile phones
Computers PDA’s
Business Data Management
Product Data Management
Operation Data Management
Customer Data & Event Management
Management
process
Product Delivery
Management process
Delivery and
Production process
Sales & Marketing
process
Customer Care
processBilling process
6) Business domain
An example: IS archi-tecture
blue-print (Mustikkamaa, 2001)
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What does it cost (adapted from Laudon & Traver, 2009)
• Your options horizon on cost factor 100€ - 1x107€– From scratch (LAMP-stack; Linux/Apache/MySQL,
Perl/Python/PHP)– Tailor from packaged components
(OpenCommerce) and toolsets (MS Commerce Server, IBM WebSphere)
– Pre-Built services (Amazon, GoogleApps etc.)• The technology cost has come down 50% since
year 2000• The system maintenance and content
development has come up constantly (24/7 and 360)
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Cost drivers (Laudon & Traver, 2009)
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Content Design And Development15 %
Hardware10 %
Software8 %
Telecomms10 %
System Development22 %
System maintenance35 %
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B-to-B transactions: POfor dyadic relationship
process
An example of PIP: It specifies the public process between companies. Public process specification creates a need for company’s internal processes (Anilinker & Iocore, 2002).
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Service oriented architecture and web services is claimed to be the next
general ICT trend (Gartner)
1970 1980 1990 2000
Ado
ptio
n R
ate
Time
Mai
nfra
me
Structured Programming
(1970s)
Clie
nt /
Serv
er
4GL (1986)
Object Oriented
Programming(1980s)
CORBA (1992)
ERP
Web
Netscape (1994)
J2EE (2000)
COM/DNA (1997)
SOA
/Web
Se
rvic
es
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A way of managing business processes and building systems utilizing layered BPM/SOA
Concepts
1 2 3 Intra-/Inter-OrganizationalProcesses Flow
Service 1 Service 1 Service 1External
Business Process Management
Business Rules
Corporate Systems & ComponentsERP, CRM, PDMLegacy Systems
Other Corporate SW Components
Vendors & PartnersSystems & Components
Old WayTraditional Monolith Systems with implicit business process management, rules and services and bad connectivity.
Business Process Management
Service Oriented Architecture / Web Services
Systems /software level
EAI, middleware
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What about earning logic?• Are we after
– cost savings?– productivity?– customer lock-in?– new markets?
• eBusiness is real business• participation fees• visibility/contact fees (ads)• click-throughs and referrals (banners, portals, agents)• transaction fees (provision)• investments in webstores
– establishing– running– upgrades, scaling-up and changes
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Three stages of development(Ash & Burn, 2003)
= the convergence of technologies for informationflow within and between organisations, e.g. e-ERP implementations;
= asset and competency sourcing for providingcheaper, faster, and improved quality of products and services
= the architecture of the firm and its network of partners for creating, marketing and delivering value.
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Product = goods and services(Levitt, 1960)
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Relationship of the stages(modified based on Ash & Burn, 2003)
Cost leadershipin the segment
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1. Integration for efficiency: (c.f. IBM)
Business Strategy + Process
Web + IT Integration
E-Commerce Services
Enablement Services
Knowledge Management
Business Intelligence
SCM ERP CRMSuppliers Customers
Technology Value
Business Value
E.g. data mining
I.e., tailoringOutsourced development,
operation, security, etc.
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2. Integrating for differentiation: Customer centric product life cycle
(based on Ives, 1999)
Needs e.g. AIDA- marketing
Abandonment?- reflecting- returning- reselling
- recycling- disposing
Ownership/service provision-assembling, installing, setting up- training- using- following up- maintaining/serving- upgrading- supplying
Acquistion- selling- ordering - paying- delivering- reception
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3. Differentiating for value added
- exceptions’ handling
Retirement
Persuasion
AcquisitionOwnership
User Satisfaction Expectations mgmt
Org. learning Best practices
Learning from exceptions from/with customers/users
Designing and implementing business models for interorganizational network
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Key Design Issues:
• How are customer needs and processes brought into design?– How to gain right information and how to describe:
• Customer pain/problem and behavioural cycles– commitments
• Flow of transactions– Web stores, auctions, exchanges, joint purchases
• How to integrate the supply network to match the process desired
• How to manage transactions?– Technically– Can we change and implement the design rapidly
• What to do by ourselves, what to outsource?– Earning logic?– Risks of contracting (long lasting commitments)
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From business model to processes
• What are the means to describe business models in a meaningful way to achieve the targets?
• How are customer needs and processes brought into design?
– How to gain right information and how to describe:
• Customer pain/problem and behavioural cycles
– commitments
• Flow of transactions
– Web stores, auctions, exchanges, joint purchases
• How to integrate the supply network to match the process desired
• How to manage transactions?
– Technically
– Can we change and implement the design rapidly
• What to do by ourselves, what to outsource?
– Earning logic?
– Risks of contracting (long lasting commitments)
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An early example
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The Two Generic Processes of Handling Transactions
(c.f. Kambil & Van Heck, 1998)
SeeCCLC &
CRM
Legislation,lex
mercatoria,codes of conduct
Integration,tailoring,
BPR
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Basic Trade Processes(c.f. Kambil & Van Heck, 1998)
• Search• Valuation (Price negotiation)
– from purchasing to auctions• Logistics• Payment and settlements• Authentication
– Identification, – Authorization, – Conformance to the agreement, – Non-repudiation
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Trade Context Processes(c.f. Kambil & Van Heck, 1998)
• Product representation– how the product attributes can be described– how the product attributes is to described
• Legitimation– Valid and binding forms of exchange agreement
• e.g. property vs. flat
• Influence structures and processes– credible commitments, incentives, recommender/
reputation systems, sanctions (defined e.g. in LOI)
• Dispute resolution– negotiation, arbitration, courts– warranty, guarantees, consumer protection
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Multichannel model (c.f. Heikkilä et al., 1998; Haapanen & Vepsäläinen, 2000)
Persuasion
Deliveries
Commitments
Financing
Raw
materials
Consumption
Production Wholesale Retail
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Commitments
Past and present: each link does everything
Persuasion
Delivery
Financing
Raw
materials
Production Wholesale Retail
Consumption
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Specializing channels for transactions
• Persuasion - creating brands– product info, SP, PR, CRM, feedback
• Finance - to minimize payment risks– payment systems, credit, guarantees/securities, risk
management, chargeback• Commitments - trust is essential
– Documenting transactions: identification, authorization and responsibilities
• creating, tracking and keeping records for non-repudiation, reclamations, disputes, warranties, etc.
• Delivery - eThing builds on logistics– in addition to delivery, value-added services, such as
storing, maintenance, recycling, disposing
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Why channels separate?
• Efficiency and core competence– e.g., marketing, finance, contracts, transportation
• Instances of customers are different– e.g., customer profile, account#, transaction
record, delivery address(es)...• Roles and responsibilities of the suppliers
– mediahouse, creditor/lessor/insurer, trusted third party, coordinator
• Legislation is channel specific– marketing, financing/granting credit, product
liability, shipping, etc.• Specialised ISs and organizations• Specialised education and research
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E.g., publishing: facing the Infoeconomy
• Multiple simultaneous changes– Production
• all-digital
– Product: from physical to digital• Journals and periodicals (e.g. Springer-Verlag and thousands
periodicals),
• net-magazines,
• appendice (e.g. Talouselämä)
• evolving editions (e.g. Encyclopedia Britannica)
– Distribution channel• more digital
– Reading (customer behaviour)• from tourists to dwellers
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The Finnish way of the 90’s
Book storesLibrariesPublishers
and
printing houses
Book storesLibraries
Production
Reading
LogisticsPosti
Home banking
Direct marketing
Ordering systems
- Bookstore- Stockmann- Kiosks- Student bookshops- Supermarkets
outsourced
in-house
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Producer and client influence (c.f. Heikkilä et al., 1998)
Persuasion
Delivery
Commitments
Financing
Tuotanto
Kulutus
Productstage‘Back-End’
Clientstage‘Front-End’;
’Store-front’
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