DCIT 209

E-BUSINESS ARCHITECTURES

SESSION 1 – INTRODUCTION TO E-BUSINESS

Stephen A. Adingo
Dept of Computer Sci/Dept of Distance Educ.
Contact Information: saadingo@ug.edu.gh

College of Education
School of Continuing and Distance Education
 Session Overview
• This introductory session provides an overview of the
concept of e-business and e-Commerce.

• You will learn about the origin, and growth of electronic

commerce and be able to discuss the advantages and
disadvantages of eCommerce and Compare and contrast
different eCommerce revenue models.

• Objectives:
1. Define e-business and e-commerce and explain the difference between them.
2. Understand that there are several different types of e-commerce and that a business can be engaged in
more than one type at the same time.
3. Explain what a business model is and why the model that is selected is so important.

2023 Slide 2
 Session Outline
The key topics to be covered in the
session are as follows:
• Definition of e-business & e-
commerce

• Types of e-commerce

• Evolution and growth of electronic

commerce

• E-commerce and Economic factors

• Opportunities, Cautions, and

Concerns on E-Commerce

2023 Slide 3
 Definition of Electronic-Business
• Electronic business is any kind of business or commercial transaction
that includes sharing information across the internet.

• E-business (electronic business) is the conduct of online business

processes on the web, internet, extranet or a combination of both.

• 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.

2023 4
 Definition of Electronic-Business
• These business
processes include:
• buying and selling goods and
services,
• servicing customers,
processing payments,
managing production and
supply chains,
• collaborating with business
partners,
• sharing information, running
automated employee services
and recruiting employees.

2023 5
 Electronic-Business Infrastructure
• The share of total economic
infrastructure used to
support e-business
processes and conduct e-
commerce transactions.
– Hardware
– Software
– Telecommunication
networks
– Support services
– Human resources

2023 6
 New Business Rules from E-Business
• Customers determine everything.

• Knowledge and information become more valuable than

physical assets.

• People want more choices of products and services.

• Time is present time, distance is zero.

• Technology and network determine how the business is

conducted.

2023 7
Categories of E- Business Applications

• Collaboration
• Customer Service
• Customization
• Streamlining
• Management
• Cutting Edge

2023 8
 Definition of eCommerce
The term “electronic commerce” means shopping
on the World Wide Web (the Web) which runs on
the Internet.

However, electronic commerce (or e-commerce)

also includes many other activities, such as
businesses trading with other businesses and
internal processes that companies use to support
their buying, selling, hiring, planning, and other
activities.

Some people use the term electronic business

(or e-business) when they are talking about
electronic commerce in this broader sense.

For example, IBM defines electronic business as

“the transformation of key business processes
through the use of Internet technologies.

Slide 9
2023
 Definition of eCommerce
Some other Definitions:
• E-Commerce or Electronic commerce is a process of buying, selling,
transferring, or exchanging products, services, and/or information via
electronic networks and computers

• “Electronic commerce is the application of new technologies, particularly

Internet and Web technologies, to help individuals, businesses, and other
organizations conduct business more effectively”.

• “All business activities that use internet technologies, the world wide web,
and other technologies such as wireless transmissions on mobile phones
or a personal digital assistant.”

• Any transaction completed over a computer-mediated network that

involves the transfer of ownership or rights to use goods or services

Slide 10
 Definition of eCommerce
• Exchange of value is important for understanding the limits of e-
commerce
• Commercial transactions involve the exchange of value (e.g.,
money) across organizational or individual boundaries in return
for products and services.
• Without an exchange of value, no commerce occurs
• The exchange of goods and services for money involes:
– Buyers - these are people with money who want to purchase a good
or service.
– Sellers - these are the people who offer goods and services to
buyers.
– Producers - these are the people who create the products and
services that sellers offer to buyers.

Slide 11
 E-Commerce Mechanisms
• Transformation of economic activity into digital
media
- Exchange information, content, agreements, and
services among parties that are connected to through
the Internet.

• Enables new ways of creating, delivering and

capturing value to customers.
- Availability
- Convenience

2023 12
 Examples of E-Commerce

• Retailing and Marketing

• Entertainment and Travel
• Education and Learning
• Banking and Investment
• Health-Care
• Auction
• Personal and Business Service

2023 13
 Differences between E-Business & E-
Commerce
• E-Commerce refers to the performing online commercial activities,
transactions over internet. It includes activities like buying and
selling product, making monetary transactions etc over internet.
Internet is used for E-commerce. Websites and applications (apps)
are required for e-commerce. it is mainly connected with the end
process of flow means connected with the end customer.
• Examples of E-Commerce are online retailers like amazon, flipkart,
Myntra, paytm mall, seller of digital goods like ebooks, online
service etc.
• Activities of E-Commerce are :
• Buying and selling product online
• Online ticketing
• Online Payment
• Paying different taxes
• Online accounting software
• Online customer support
• E-Business : E-Business refers to performing all type of business
activities through internet. It includes activities like procurement of
raw materials/goods, customer education, supply activities buying
and selling product, making monetary transactions etc over
internet. Internet, intranet, extranet are used in e-business.
Websites, apps, ERP, CRM etc are required for e-business.
• Examples of E-Business are e-commerce companies and its various
internal business activities, auction site, classified site, software and
hardware developer site etc.
• Activities of E-Business are :
• Online store setup
• Customer education
• Buying and selling product
• Monetary business transaction
• Supply Chain Management
• E-mail marketing

2023 14
 Competitive Advantages of E-Commerce

• Offers personalized products/services

• Enables customer self-service

• Reduces lead time

• Reduces overall cost for seller and customers

• Improves utilization of resources throughout the supply chain

• Increases customer satisfaction and loyalty

• Expands to global marketplace

2023 15
 Ways to Improve E-Commerce Operations

• Technology (hardware and software)

• Business Process Reengineering
• Agile production (mass customization)
• Just-in-time system
• Supply chain management
• Business intelligence
• Customer relationship management

2023 16
 Unique Features of E-commerce
Technology
• Ubiquity: Internet/Web technology is available everywhere: at
work, at home, and elsewhere via mobile devices, anytime.
• Global reach
• Universal standards
• Information richness: videos, audio and text marketing messages
• Interactivity: works with interaction with users
• Information: density-technology reduces information cost and
raises quality
• Personalization/customization
• Social technology-enable user content

Slide 17
 Suitability of Goods and Services to
eCommerce
Well suited to eCommerce Well Suited for eCommerce
and Traditional Commerce
Books and CDs Automobiles

Online delivery of software Online banking

Online shipment tracking Real estate sale and

purchase
Investment and insurance High value jewellery and
products antiques
Role of Merchandising in E-Commerce
Merchandising refers to the combination of years of
traditional commerce experience in :

– Creating a store environment that convinces the customer

to buy
– Combination of store design, layout and product
knowledge
– Identifying and exploiting customer needs

Slide 19
 Main Elements of eCommerce
• Main Elements of
eCommerce

• The two main types

of electronic
commerce as
subsets of the overall
business processes
in which a company
might engage
Schneider, G. (2017) Electronic Commerce 12th Ed, p.6

Slide 20
 Types of E-commerce
• E-commerce may be classified by
market relationship or technology

• E-commerce can also be categorized

by the types of entities participating
in the transactions or business
processes

Others include:

– Social e-commerce
– Mobile e-commerce (M-
commerce)
– Local e-commerce

2023 Slide 21
 Four Main Categories of E-Commerce

Business originating from...

Business Consumers

B2B C2B
Business

And selling to...

B2C C2C

Consumers

2023 22
 Main Types of eCommerce &
Description
Type Description
Business-to- consumer Businesses sell products or services to
(B2C) individual consumers

Business-to-business Businesses sell products or services to other

(B2B) businesses

Consumer-to- Individuals in online markets buying and

consumer (C2C) selling to each other

Business-to- Businesses selling goods or services to govt.

government (B2G) agencies

Slide 23
 Types of E-commerce and Examples
l . Business to Business (B2B) refers to the full spectrum of
e-commerce that can occur between two
organizations.
• This includes purchasing and
procurement, supplier management, inventory
management, channel management, sales
activities, payment management &service and
support.
• Examples: FreeMarkets, Dell
and General Electric
l Business to Consumer (B2C) refers to exchanges between
business and consumers, activities tracked
are consumer search, frequently asked questions and
service and support.
• Examples: Amazon, Yahoo and
Charles Schwab & Co
l (C2C) Peer to Peer exchanges involve transactions
between and among consumers. These
can include third party involvement, as in the
case of the auction website
Ebay.
• Examples:
Owners.com, Craiglist, Monster

l Consumer to Business (C2B) involves when consumers

band together to present
themselves as a buyer in group.
• Example: www.planetfeedback.com

2023 Slide 24
 E-commerce: History
• EC applications first developed in the early 1970s
- Electronic funds transfer (EFT)
• Limited to:
- Large corporations
- Financial institutions
- A few other daring
businesses

2023 25
 Evolution and Growth of Electronic-
commerce
• The electronic commerce business phenomenon has had an interesting
history from humble beginnings in the mid-1990s, electronic commerce grew
rapidly until 2000, when a major downturn

• However, beginning in 2003, electronic commerce began to show signs of a

profound rebirth.

• As the economy grew, electronic commerce also grew, but at a faster pace
than the overall economy

• In the general economic recession that started in 2008, electronic commerce

suffered far less than most of the economy.

• Electronic commerce has consistently expanded more in the good times and
contracted less in the bad times than other economic sectors.

Slide 26
 Early Electronic- commerce
Mid 1960s-1970s:
• E- commerce meant the facilitation of commercial transactions electronically, using
technology such as:
• Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT),
• Allowing businesses to send commercial documents like purchase orders or invoices
electronically.
1980s
• The growth and acceptance of credit cards
• Automated teller machines (ATM)
• Telephone banking
• Airline reservation system
1990s:
• The Internet commercialized and users flocked to participate in the form of dot-coms,
or Internet start-ups
• Innovative applications ranging from online direct sales to e-learning experiences
2000s
Many European and American business companies offered their services through
the World Wide Web.
Since then, People began to associate a word “ecommerce”

Slide 27
 Growth of E-commerce
• 1995-2003: The 1st Wave of e-commerce
• Beginning in 1995 with the first widespread use of the Web to advertise, First
sales of banner advertisements products
• E-commerce meant selling retail goods, usually, quite simple goods, on the
Internet. There simply was not enough bandwidth for more complex products.
• Marketing was limited to unsophisticated static display ads and not very
powerful search engines.
• characterized by its rapid growth, often called a “boom,” which was followed
by a rapid contraction, often called a “bust.”
• For example, E-commerce became fastest growing form of commerce in
United States
• The first wave of electronic commerce was predominantly a U.S.
phenomenon. Web pages were primarily in English, particularly on commerce
sites
• Electronic mail (or e-mail) was used in the first wave as a tool for relatively
unstructured communication
• Many companies took the strategy called the first-mover advantage ie.
investors believed that being the first Web site to offer a particular type of
product or service would give them an opportunity to be successful.
Slide 28
 Growth of E-commerce
• 2004-2009: The 2nd Wave of e-commerce
• Characterized by an expanding international scope, with sellers beginning to do
business in other countries and languages.
• Language translation and currency conversion were two impediments to rapid
global expansion of electronic commerce in its second wave
• Although businesses typically had broadband connections, most consumers
connected to the Internet using dial-up modems.
• The increase in broadband connections in homes is a key element in the B2C
component of the second wave.
• Although business customers, unlike retail customers, have had fast connections to
the Internet for many years, the increasing availability of wireless Internet
connections increased the volume and nature of B2B electronic commerce during
the second wave.
• In the second wave, both B2C and B2B sellers began using e-mail as an integral part
of their marketing and customer contact strategies
• Web 2.0 group of technologies emerged in the second wave that made new online
businesses possible.
• More businesses followed the smart-follower strategy ie. an approach in which a
business observes first-mover failures and enters a business later, when large
investments are no longer required and business processes have been tested.

Slide 29
 Growth of E-commerce
• 2010-: The 3rd Wave of e-commerce
• A critical mass of mobile users with powerful devices (smartphones and
tablets) that, for the first time, allowed them to interact online with
businesses along with proliferation of high-speed mobile phone networks
throughout the world that provide useful connections among users and
companies
• An increase in electronic commerce activity, both domestic and across
borders, in developing countries, especially those with large populations .
• Widespread participation in social networking platforms combined with
businesses’ increased willingness to use them for advertising, promotion,
and sales
• Increased online participation by smaller businesses in sales, purchasing,
and capital-raising activities
• Highly sophisticated analysis of the large amounts of data that companies
collect about their online customers
• Increased integration of tracking technologies into B2B electronic
commerce and the management of business processes within companies

Slide 30
Key characteristics of the first three
waves of electronic commerce

Slide 31
 Advantages of eCommerce
• Electronic commerce is attractive to businesses as it
can increase sales and decrease costs:
– Advertising can get promotional message out to a
worldwide audience
– Providing buyers with a wider range of choices than
traditional commerce
– Creates virtual communities

– Increases purchasing opportunities for buyers

– Digital products can be delivered directly

Slide 32
 Benefits f e-commerce to Organizations

Powerful tool for building customer relationships

Can reduce costs

Can increase speed and efficiency

Offers greater flexibility in offers and programs

Is a truly global medium

2023 33
 Benefits e-commerce to Society

More individuals can work from home

Benefits less affluent people

Third world countries gain access

Facilitates delivery of public services

2023 34
 Disadvantages of eCommerce
• Some business processes might never lend themselves to
electronic commerce. For example, perishable foods and
high-cost, unique items such as custom-designed jewelry
can be very difficult to inspect adequately from a remote
location, regardless of any technologies that might be
devised in the future:
• Four issues that currently act as barriers to electronic
commerce
– Some products not suited to eCommerce
– Critical mass of potential buyers required with internet access
– Return on Investment (ROI) can be difficult to calculate
– Problems in integrating software
– Cultural and legal obstacles

Slide 35
 Specific Limitations of E-commerce
• To organizations:
– lack of security, reliability, standards, changing technology,
pressure to innovate, competition, old vs. new technology

• To consumers:
– equipment costs, access costs, knowledge, lack of privacy for
personal data, relationship replacement

• To society:
– less human interaction, social division, reliance on technology,
wasted resources, JIT manufacturing
2023 36
Economic Forces and Electronic
Commerce

• Economics is the study of how people allocate scarce

resources.
• One important way that people allocate resources is through
commerce
• Economists use a formal definition of market that includes
two conditions:
– first, that the potential sellers of a good come into contact
with potential buyers, and
– second, that a medium of exchange is available.
• This medium of exchange can be currency or barter.
• Most economists agree that markets are strong and effective
mechanisms for allocating scarce resources.
Google Confidential and Proprietary
Transaction Costs

“That transaction costs were the main motivation for moving

economic activity from markets to hierarchically structured
firms- Ronald Coase (1937)

• Transaction costs are the:

“Total of all costs that a buyer and seller incur as they gather
information and negotiate a purchase-sale transaction.”

Google Confidential and Proprietary

Using Electronic Commerce to Reduce
Transaction Costs
• Businesses and individuals can use electronic
commerce to reduce transaction costs:
– by improving the flow of information and increasing the
coordination of actions.
– by reducing the cost of searching for potential buyers and
sellers and
– by increasing the number of potential market participants,
• Electronic commerce can change the attractiveness
of vertical integration for many firms

Slide 39
 Technical limitations
• There is a lack of universally accepted standards for quality,
security, and reliability
• The telecommunications bandwidth is insufficient
• Software development tools are still evolving
• There are difficulties in integrating the Internet and EC software
with some existing (especially legacy) applications and
databases.
• Special Web servers in addition to the network servers are
needed (added cost).
• Internet accessibility is still expensive and/or inconvenient

2023 40
 E-commerce Today
• The Internet is the perfect vehicle for e-commerce because of its
open standards and structure.

• No other methodology or technology has proven to work as well as

the Internet for distributing information and bringing people
together.
•
• It’s cheap and relatively easy to use it as a medium for connecting
customers, suppliers, and employees of a firm.

• No other mechanism has been created that allow organizations to

reach out to anyone and everyone like the Internet.

2023 41
 E-commerce Today
• The Internet allows big businesses to act like small ones
and small businesses to act big.

• The challenge to businesses is to make transactions not

just cheaper and easier for themselves but also easier and
more convenient for customers and suppliers.

• It’s more than just posting a nice looking Web site with
lots of cute animations and expecting customers and
suppliers to figure it out

2023 42
 Key Drivers of E-commerce

• Technological – degree of advancement of telecommunications

infrastructure

• Political – role of government, creating legislation, funding and

support

• Social – IT skills, education and training of users

•
• Economic – general wealth and commercial health of the nation

2023 43
 Key Drivers of E-business
• Organizational culture- attitudes to R&D, willingness to innovate and use
technology

• Commercial benefits- impact on financial performance of the firm

• Skilled/committed workforce- willing and able to implement and use new

technology

• Requirements of customers/suppliers- in terms of product and service

• Competition- stay ahead of or keep up with competitors

2023 44
Key Business Drivers of E-Commerce

• Internet
• Information
• Collaboration
• Agility
• Speed
• Service

2023 45
Identifying eCommerce Opportunities
• Internet technologies can be used to improve a wide range
of business processes that can be difficult for managers to
decide where and how to use them

• One way to focus on specific business processes

– Break the business down into series of value-adding activities
that combine to generate profits and meet other goals of the
firm

– Analyse business activities as a sequence of activities that

create value

Slide 46
 Strategic Business Unit Value Chains

• Michael Porter introduced the concept of value chain in

1985.

• A value chain is a way of organizing the activities that each

strategic business unit undertakes to design, produce,
promote, market, deliver, and support the products or
services it sells.

• In addition to these primary activities, Porter also includes

supporting activities, such as human resource management
and purchasing, in the value chain mode

Slide 47
E-Commerce Supply Chain Members?

2023 48
 Potential Supply Chain Members of E-Commerce
• End users
• E-store
• payment processor
• Distributors’/Producers’ supply chain
• Transportation/logistics providers
• Customer service providers

2023 49
 Industry Value Chains

An example of an
industry value
chain for a wooden
chair

Slide 50
Value Chain Strategic Business Unit

Slide 51
 Value Chain Strategic Business Unit
• Design: activities that take a product from concept to manufacturing, including concept
research, engineering, and test marketing

• Identify customers: activities that help the firm find new customers and new ways to serve
existing customers, including market research and customer satisfaction surveys

• Purchase materials and supplies: procurement activities, including vendor selection, vendor
qualification, negotiating long-term supply contracts, and monitoring quality and timeliness of
delivery

• Manufacture product or create service: activities that transform materials and labor into
finished products, including fabricating, assembling, finishing, testing, and packaging

• Market and sell: activities that give buyers a way to purchase and that provide inducements
for them to do so, including advertising, promoting, managing salespeople, pricing, and
identifying and monitoring sales and distribution channels

• Deliver: activities that store, distribute, and ship the final product or provide the service,
including warehousing, handling materials,
Slide 52
 Evaluating Business Unit Opportunities:
SWOT Analysis
Strengths Weaknesses
• What does the company • What does the company
do well? do poorly?
• Is the company strong in •What problems could be
its market? avoided?
Opportunities Threats
• Do new markets exist for • What are competitors
the company? doing well?
• Can new technologies be • Are there changes in the
exploited? business environment?
International Nature of eCommerce
– Trust issues on the Web
– Language Issues
– Culture Issues
– Government control
– Infrastructure Issues

Slide 54
 Summary
– In this session , you learned that electronic commerce is
the application of new technologies, particularly Internet
and Web technologies, to help individuals, businesses, and
other organizations conduct business more effectively.
– Electronic commerce is being adopted in waves of change
– Variety of eCommerce business models – the most
common being B2C and B2B
– Not all products and services are suitable for eCommerce
– Need to analyse business activities and processes to
identify opportunities
– Value chains and SWOT analysis are useful tools
– Range of international issues to consider
Slide 55
 Reading List
RECOMMENDED TEXT
Read Chapter 1 (Pages 4 – 48) of Recommended Text – Gary P. Schneider (2017)
Electronic Commerce, 12th edition

Slide 56
 References
1. Gary P. Schneider (2015) Electronic Commerce, 12th edition
2. Beynon-Davies, P. (2004). E-Business. Palgrave, Basingstoke.
3. Administration Handbook (4th Edition). Prentice Hall.
4. Kenneth, C. L., Carol, G. T., Carol, G. T. E-commerce: Business, Technology, Societ.y United States.
5. Lowry, P. B., Cherrington, J. O., Watson, R. J. (2001). E-Business Handbook. Boca Raton, FL: CRC
Press.
6. Pettit, R. (2012). Learning from Winners: How the ARF Ogilvy Award Winners Use Market Research
to Create Advertising Success. Taylor & Francis
7. Prsentation on E-commerce by R.SIVA NAGESWARA RAO III B.Com
8. IS 495-03 Electronic Commerce
Chapter 1:The Revolution Is Just Beginning: Copyright © 2014 Pearson Available at:
http://www.w3.org/Consortium/
9. Niederst, J. (2006). Web Design in a Nutshell: A Desktop Quick Reference. O'Reilly Media.
10. W3C WAI Resources on Introducing Web Accessibility
11. Available at: http://www.w3.org/WAI/gettingstarted/Overview.html
12. A practical introduction to computers and communications by Williams b.K., Sawyer s.C and
hutchinson s.E.
13. Computers – concepts, implications and applications by Fritz j. Erickson and john A. Vonk

Slide 57