Electronic business

Electronic business, commonly referred to as "eBusiness" or "e-business", may be defined as the application of information and communication technologies (ICT) in support of all the activities of business. Commerce constitutes the exchange of products and services between businesses, groups and individuals and can be seen as one of the essential activities of any business. Electronic commerce focuses on the use of ICT to enable the external activities and relationships of the business with individuals, groups and other businesses ^[1].

Louis Gerstner, the former CEO of IBM, in his book, Who Says Elephants Can't Dance? attributes the term "e-Business" to IBM's marketing and Internet teams in 1996.

Electronic business methods enable companies to link their internal and external data processing systems more efficiently and flexibly, to work more closely with suppliers and partners, and to better satisfy the needs and expectations of their customers.

In practice, e-business is more than just e-commerce. While e-business refers to more strategic focus with an emphasis on the functions that occur using electronic capabilities, e-commerce is a subset of an overall e-business strategy. E-commerce seeks to add revenue streams using the World Wide Web or the Internet to build and enhance relationships with clients and partners and to improve efficiency using the Empty Vessel strategy. Often, e-commerce involves the application of knowledge management systems.

E-business involves business processes spanning the entire value chain: electronic purchasing and supply chain management, processing orders electronically, handling customer service, and cooperating with business partners. Special technical standards for e-business facilitate the exchange of data between companies. E-business software solutions allow the integration of intra and inter firm business processes. E-business can be conducted using the Web, the Internet, intranets, extranets, or some combination of these.

Basically, electronic commerce (EC) is the process of buying, transferring, or exchanging products, services, and/or information via computer networks, including the internet. EC can also be benifited from many perspective including business process, service, learning, collaborative, community. EC is often confused with e-business.

Subsets

Applications can be divided into three categories:

1. Internal business systems:
• customer relationship management
• enterprise resource planning
• document management systems
• human resources management
2. Enterprise communication and collaboration:
• VoIP
• content management system
• e-mail
• voice mail
• Web conferencing
• Digital work flows (or business process management)
3. electronic commerce - business-to-business electronic commerce (B2B) or business-to-consumer electronic commerce (B2C):
• internet shop
• supply chain management
• online marketing
• offline marketing

Models

When organizations go online, they have to decide which e-business models best suit their goals. ^[2] A business model is defined as the organization of product, service and information flows, and the source of revenues and benefits for suppliers and customers. The concept of e-business model is the same but used in the online presence. The following is a list of the currently most adopted e-business models such as:

• E-shops
• E-commerce
• E-procurement
• E-malls
• E-auctions
• Virtual Communities
• Collaboration Platforms
• Third-party Marketplaces
• Value-chain Integrators
• Value-chain Service Providers
• Information Brokerage
• Telecommunication
• Customer relationship

Classification by provider and consumer

Roughly dividing the world into providers/producers and consumers/clients one can classify e-businesses into the following categories:

• business-to-business (B2B)
• business-to-consumer (B2C)
• business-to-employee (B2E)
• business-to-government (B2G)
• government-to-business (G2B)
• government-to-government (G2G)
• government-to-citizen (G2C)
• consumer-to-consumer (C2C)
• consumer-to-business (C2B)

It is notable that there are comparably less connections pointing "upwards" than "downwards" (few employee/consumer/citizen-to-X models).

See also

• Electronic commerce
• Very Large Business Applications
• Sectoral e-Business Watch

References

Who says Elephants can't dance(2002), Louis Gerstner. pg 172

1. ^ Beynon-Davies P. (2004). E-Business. Palgrave, Basingstoke. ISBN 1-4039-1348-X
2. ^ Paul Timmers, (2000), Electronic Commerce - strategies & models for business-to-business trading, pp.31, John Wiley & Sons, Ltd, ISBN 0-471-72029-1

Sectoral e-Business Watch

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Sectoral e-Business Watch (SeBW)^[1] is a continuous study project on behalf of the Directorate-General for Enterprise and Industry of the European Commission, implemented in 2002.^[2] It monitors and analyses the uptake of Information and communications technologies (ICT) by companies in different sectors of the European economy and its economic impact, allowing the identification of competitiveness-enhancing industrial policy challenges.

Mission and methodology

The overall mission of Sectoral e-Business Watch is to study and assess the impact of ICT on enterprises, industries and the economy in general. It highlights barriers for ICT uptake, such as issues hindering a more effective use of ICT by enterprises in Europe. Further objectives are identification and discussion of public policy challenges stemming from the observed developments, notably at the European level, and to engage in dialogue with stakeholders from industry and policy institutions, providing a forum for debate on relevant issues.

In its scientific approach Sectoral e-Business Watch includes various research methods, such as enterprise surveys with computer-assisted telephone interviews, online surveys, case studies, expert interviews, Delphi-style interviews, econometric analyses, and literature evaluation. Enterprise surveys were conducted in 2002, 2003, 2005, 2006 and 2007. They cover varying sectors and countries and a different number of enterprises. The largest Sectoral e-Business Watch survey was the one in 2006 which included around 14,000 enterprises in 29 countries^[3][4]. The results are presented in shape of study reports, table reports with survey findings, brochures with selected findings, and annual synthesis reports. All reports as well as files with survey data and accompanying information are available for free download from the project website. Researchers can apply for raw data.

Key findings

According to the study reports, Sectoral e-Business Watch has affirmed that basic ICT infrastructure, such as simple computer networks and access to the internet, has become a commodity for a majority of enterprises in all sectors^[5]. These technologies have become so widely used that they are now essential in daily business. Beside its basic role, ICT creates wide strategic potential for enabling new business models, influencing value chains and increasing process efficiency. The Sectoral e-Business reports could repeatedly show the critical role of ICT in tomorrow's economy^[6]. Advanced information infrastructures, services and value creating activities are made possible by computer networks and internet access.

Moreover, Sectoral e-Business Watch has found evidence that e-business is nowadays far beyond systems and technology. It is about optimally managing relationships with customers, suppliers and business partners in a complex and often global competitive environment^[7]. Furthermore, e-business is not just about accomplishing electronic transactions such as procurement and sales. It is about accessing, providing and sharing information in business networks. Ultimately, it is about doing business in the advancing digital economy^[8]. The way business is done is changing rapidly, mainly due to globalisation. Large companies are moving rapidly to exploit the advantages offered by ICT for their business strategies. Smaller companies will have to follow suit, or risk being excluded from digital supply chains^[9].

The trend towards digitally integrated value systems connected through ICT is considered by Sectoral e-Business Watch as a new life-cycle of e-business^[10]. The period between 1995 and 2000, over which internet based trade emerged, is referred to as "e-Business 1.0". During this time, companies connected to the internet and were quickly lured into buying all sorts of immature technology. After the shake-out of several failed business models, e-business between 2001 and 2005 focused on cutting costs. This period of more conservative attitude towards ICT is referred to as "e-Business 2.0". However, currently companies have been growing more "e-friendly" again. The underlying information infrastructures have matured and today no one doubts their importance for modern business. According to Sectoral e-Business Watch "A new era appears to have emerged - 'e-Business 3.0'".^[11]

With regard to today's economic crisis Sectoral e-Business Watch states that companies, even in times of economic difficulties, tend to exploit the innovative potential of ICT in order to cut costs and thus emerge stronger and more competitive out of the crisis.^[12]

Subjects of study

References

1. ^ Sectoral e-Business Watch project homepage
2. ^ European Commission, Directorate General Enterprise and Industry, Policy Area ICT for Competitiveness & Innovation
3. ^ The European e-Business Report 2006/07 edition
4. ^ Nepelski, Daniel und Sushmita Swaminathan (2007): OSS Adaption: Who is Leading and Why? in: DIW Weekly Report, No. 1/2007, Volume 3, pp 2-3 (Scientific article about open source software adoption based on data from the e-Business Watch survey 2006.)
5. ^ The European e-Business Report 2005 edition, p 21
6. ^ The European e-Business Report 2008 edition
7. ^ The European e-Business Report 2008 edition
8. ^ The European e-Business Report 2008 edition
9. ^ The European e-Business Report 2005 edition, p 13
10. ^ The European e-Business Report 2008 edition, p 9
11. ^ The European e-Business Report 2008 edition, p 9
12. ^ The Sectoral e-Business Watch ICT and e-Business Impact Studies – 2009

Very Large Business Applications

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A Very Large Business Application (VLBA) is a Business Application, which can be implemented through different types of Business Application Systems as well as through System Landscapes. They support one or more processes of business application fields like accounting, human resources, logistic, distribution or marketing, in which at least one of those processes is a business process. According to that, a VLBA is directly successfully effective and has a strategic relevance through the support of possibly inter-company business processes.

An organization might not be able to fulfill its core businesses efficiently without the help of a VLBA. It is a strategic dependency of the constituted organization, which is given by an application of a VLBA. That is because changing or turning the system away is associated with big financial, organizational and personnel-related costs. Furthermore, VLBAs do not have any spatial, organizational, cultural or technical limits.

VLBAs are similar to a Business Information System in the manner that they can support several Business Application Fields and in this case, they are based on several types of Business Application Systems.

VLBAs are found in different fields within the different organizations regardless of their size. Systems of Enterprise-Resource-Planning (ERP), Supply-Chain-Management (SCM) and Customer-Relationship-Management (CRM) are examples of a VLBA. Within a Supply-Chain, small and middle organizations can participate in a VLBA.

Furthermore, VLBA indicates a field of research. The present-day heterogeneous and grown System Landscapes - like those usually discovered in business practice - suffer from the symptom of Spaghetti-Integration. Therefore, it seems to be practical to raise principles of the Software-Engineering to the level of the System Landscapes and to establish such a Design Theory in the sense of a System-Landscape-Engineering. However, some problems emerge through operating such landscapes, which are to be repaired through research and development. Those arise for example from the necessity of the automation, missing of a theoretical consolidation and from strategic decisions, which break off the technical limits of a VLBA so that they make the execution ability under constant requirements impossible. Target-Models originate from the solution of consisting problems. Equally, the technological limit takes on a wider meaning in a way that the following generations of the VLBAs move over into the focus. The dynamic character of the development of VLBAs is to be identified therein.

References

• Grabski, B.; Guenther, S.; Herden, S.; Krueger, L.; Rautenstrauch, C. and Zwanziger, A.: "Very Large Business Applications". In: Informatik Spektrum. volume 30, issue 4, August 2007, pp. 259-263.
• Grabski, B. & Krueger, L.: "System Landscape Methodology: Forschungsbedarf fuer VLBAs". In: Bichler, M.; Hess, T.; Krcmar, H.; Lechner, U.; Matthes, F.; Picot, A.; Speitkamp, B.; Wolf, P. (Eds.): Multikonferenz Wirtschaftsinformatik 2008. GITO, Berlin, ISBN 978-3-940019-34-9, pp. 1877-1888.
• Herden, S. and Zwanziger, A. (2008): "Assessment of VLBA Architectures: System Landscape Engineering in Practice: A case study to rollout a global e-recruiting platform with SAP and OpenCms at the Bayer AG". In: Proceedings of 3rd International Conference on Information and Communication Technologies (ICTTA Conference 2008) IEEE, Damascus, Syria, ISBN 978-1-4244-1752-0.

Electronic commerce

Electronic commerce, commonly known as e-commerce or eCommerce, or e-business consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail as well.

A large percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on a website, but most electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World Wide Web.

Electronic commerce that is conducted between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that is conducted between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com. Online shopping is a form of electronic commerce where the buyer is directly online to the seller's computer usually via the internet. There is no intermediary service. The sale and purchase transaction is completed electronically and interactively in real-time such as Amazon.com for new books. If an intermediary is present, then the sale and purchase transaction is called electronic commerce such as eBay.com.

Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of the business transactions.

History

Early development

The meaning of electronic commerce has changed over the last 30 years. Originally, electronic commerce meant the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to send commercial documents like purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce. Another form of e-commerce was the airline reservation system typified by Sabre in the USA and Travicom in the UK.

From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing.

An early example of many-to-many electronic commerce in physical goods was the Boston Computer Exchange, a marketplace for used computers launched in 1982. An early online information marketplace, including online consulting, was the American Information Exchange, another pre Internet^{[clarification needed]} online system introduced in 1991.

In 1990, Tim Berners-Lee invented the WorldWideWeb web browser and transformed an academic telecommunication network into a worldwide everyman everyday communication system called internet/www. Commercial enterprise on the Internet was strictly prohibited until 1991.^[1] Although the Internet became popular worldwide around 1994 when the first internet online shopping started, it took about five years to introduce security protocols and DSL allowing continual connection to the Internet. By the end of 2000, many European and American business companies offered their services through the World Wide Web. Since then people began to associate a word "ecommerce" with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services.

Timeline

• 1979: Michael Aldrich invented online shopping
• 1981: Thomson Holidays, UK is first B2B online shopping
• 1982: Minitel was introduced nationwide in France by France Telecom and used for online ordering.
• 1984: Gateshead SIS/Tesco is first B2C online shopping and Mrs Snowball, 72, is the first online home shopper
• 1985: Nissan UK sells cars and finance with credit checking to customers online from dealers' lots.
• 1987: Swreg begins to provide software and shareware authors means to sell their products online through an electronic Merchant account.
• 1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT computer.
• 1992: J.H. Snider and Terra Ziporyn publish Future Shop: How New Technologies Will Change the Way We Shop and What We Buy. St. Martin's Press. ISBN 0-312-06359-8.
• 1994: Netscape releases the Navigator browser in October under the code name Mozilla. Pizza Hut offers online ordering on its Web page. The first online bank opens. Attempts to offer flower delivery and magazine subscriptions online. Adult materials also become commercially available, as do cars and bikes. Netscape 1.0 is introduced in late 1994 SSL encryption that made transactions secure.
• 1995: Jeff Bezos launches Amazon.com and the first commercial-free 24 hour, internet-only radio stations, Radio HK and NetRadio start broadcasting. Dell and Cisco begin to aggressively use Internet for commercial transactions. eBay is founded by computer programmer Pierre Omidyar as AuctionWeb.
• 1998: Electronic postal stamps can be purchased and downloaded for printing from the Web.
• 1999: Business.com sold for US $7.5 million to eCompanies, which was purchased in 1997 for US $149,000. The peer-to-peer filesharing software Napster launches. ATG Stores launches to sell decorative items for the home online.
• 2000: The dot-com bust.
• 2002: eBay acquires PayPal for $1.5 billion.^[2] Niche retail companies CSN Stores and NetShops are founded with the concept of selling products through several targeted domains, rather than a central portal.
• 2003: Amazon.com posts first yearly profit.
• 2007: Business.com acquired by R.H. Donnelley for $345 million.^[3]
• 2009: Zappos.com acquired by Amazon.com for $928 million.^[4] Retail Convergence, operator of private sale website RueLaLa.com, acquired by GSI Commerce for $180 million, plus up to $170 million in earn-out payments based on performance through 2012.^[5]
• 2010: US eCommerce and Online Retail sales projected to reach $173 billion, an increase of 7 percent over 2009.^[6]

Business applications

Some common applications related to electronic commerce are the following:

• Email
• Enterprise content management
• Instant messaging
• Newsgroups
• Online shopping and order tracking
• Online banking
• Online office suites
• Domestic and international payment systems
• Shopping cart software
• Teleconferencing
• Electronic tickets

Government regulations

In the United States, some electronic commerce activities are regulated by the Federal Trade Commission (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over e-mail. The Federal Trade Commission Act regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive.^[7] Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers’ personal information.^[8] As result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC.

The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in 2008, amends the Controlled Substances Act to address online pharmacies.^[9]

Forms

Contemporary electronic commerce involves everything from ordering "digital" content for immediate online consumption, to ordering conventional goods and services, to "meta" services to facilitate other types of electronic commerce.

On the consumer level, electronic commerce is mostly conducted on the World Wide Web. An individual can go online to purchase anything from books or groceries, to expensive items like real estate. Another example would be online banking, i.e. online bill payments, buying stocks, transferring funds from one account to another, and initiating wire payment to another country. All of these activities can be done with a few strokes of the keyboard.

On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and security are very hot and pressing issues for electronic commerce today.

Impact on markets and retailers