MR2350
Instructor Notes
Rob Cashin
Contents
Chapter 1....................................................................................................................................................... 3
Chapter 2....................................................................................................................................................... 6
Chapter 3....................................................................................................................................................... 7
Chapter 4..................................................................................................................................................... 12
Chapter 5..................................................................................................................................................... 17
Chapter 6 – Supply Chains etc. ................................................................................................................... 22
Chapter 10 – Fraud & Security .................................................................................................................... 26
Chapter 11 – Payment Systems .................................................................................................................. 29
Chapter 16 – Regulatory, Ethical, Compliance Issues ................................................................................. 30
Chapter 1
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Concepts
o Define eCommerce:
(buy | sell | exchange) (products | services | information) via
computer networks
o Define eBusiness: goes beyond buy/sell/exchange … also service, collaboration, elec
transactions in an organization
o How much ‘e’? See Ex 1.2
 3 dimensions: <> product/service <> process <> delivery <>
 Some names: brick & mortar … click & mortar … pure online
o Can be electronic but not internet (private networks – or paying a vending machine with
a cell phone – yeah, you can)
o Electronic markets (pretty much wide open) … or intra-organizational systems (specific
organizations – 2 or more)
Framework & field
o Note: Internet, intranet, extranet
o Framework
 People, public policy, technical standards, business partners, support services (&
infrastructure)
 See ex 1.3
 That is to say … if you are to ‘know about’ EC, then these are the things you
must know
o Classifications
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B2B
B2C
B2B2C - a company pays AOL to provide its employees with Internet access
rather than having each employee pay an access fee directly to AOL.
 C2B – I get airlines to be low bidder for my ticket; or I sell stuff to organizations
 C2C – auctions & online classifieds
 Mobile commerce  Intrabusiness EC – transactions within an organization
 Collaborative commerce – companies work together online, maybe to design a
product
o History – (see text)
 EFT / EDI came before internet
 Successes, failures (often a business model problem), future
eCommerce 2.0
o Social computing – social behaviour meets technology (ex online consumer ratings)
o Web 2.0 – control of info in hands of ‘the people’ (wikis, blogs, etc)
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Instructor Notes
o
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p4/31
Social networks / services … like, friends / friends on facebook (for example, Facebook is
actually a social network service – the social network is the group of friends itself)
 Name some other networks besides Facebook (LinkedIn, YouTube, Friendster,
Flickr, MySpace, Twitter, LiveJournal, Tumblr, Diaspora)
 What stuff can you do on a social network?
 What do you think of the risk in posting stuff on these? Ex, when you go to get
a job.
o Enterprise social networks … like above, but focus on business. Note in text, how
companies use these (keep in touch with customers; comment / rate products;
sweepstakes & contests; etc)
o Virtual worlds (some people actually earn money in the virtual world)
Digital economy – economy based on digital technology.
o Ex 1.5
o Digital enterprise … uses IT as a fundamental tool in achieving 1 or more of 3 basic
objectives (reach & engage cust, boost productivity, improve efficiency) – see ex 1.6
o Portal – single point of access to an organization’s stuff (ex 1.7)
o Digital society – see all the ways we do things differently – a bunch of stuff, I won’t
cover it all
Drivers – see ex 1.9
1.6 EC Business Models! What do we do?.
o Revenue Model – how do we make money?
 Exercise: Name 1 business where the product is free but you pay for the service
(cell phone), and 1 business where you pay for the product but the service is
free (radio).
 Different models (ask students to give an example of each)
 Sales. Companies generate revenue from selling merchandise or
services over their Web sites. An example is when Wal- Mart, Amazon.
com, or Godiva sells a product online. .
 Transaction fees. A company receives a commission based on the
volume of transactions made. For example, when a homeowner sells a
house, he or she typi-cally pays a transaction fee to the broker. The
higher the value of the sale, the higher the total transaction fee.
Alternatively, transaction fees can be levied per transaction. With online
stock trades, for example, there is usually a fixed fee per trade,
regardless of the volume. .
 Subscription fees. Customers pay a fixed amount, usually monthly, to
get some type of service. An example would be the access fee for AOL.
Thus, AOL’s primary revenue model is subscription ( fixed monthly
payments). .
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Instructor Notes
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o
Advertising fees. Companies charge others for allowing them to place a
banner on their sites. This is how Google has made its fortune ( see
Chapter 4). .
Affiliate fees. Companies receive commissions for referring customers
to others’ Web sites. .
Other revenue sources. Some companies allow people to play games for
a fee or to watch a sports competition in real time for a fee ( e. g., see
espn. go. com).
Licensing fees ( e. g., datadirect- technologies. com). Licensing fees can
be assessed as an annual fee or a per usage fee. Microsoft takes fees
from each workstation that uses Windows NT, for example.
Benefits and limitations of EC
 Benefits: ex 1.15
 Limitations
 ( 1) resistance to new technology, ( 2) implementation difficulties, ( 3)
security concerns, ( 4) lack of technology skills, ( 5) lack of potential
customers, and ( 6) cost.
 Van Toorn et al. ( 2006) believe that the barriers are sectoral barriers (
e. g., government, private sector, interna-tional organizations), internal
barriers ( e. g., security, lack of technical knowledge, and lack of time
and resources), and external barriers ( e. g., lack of government
support).
 Van Toorn et al. ( 2006) also list the top barriers with regards to global
EC: cultural differences, organizational differences, incompatible B2B
interfaces, international trade barriers, and lack of standards.
 Ethics – can vary by country
Exercise
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p5/31
Review RFID info
Break into groups
Come up with as many uses as you can for RFID
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Instructor Notes
Chapter 2
Hmmm … notes gone missing … will hunt them down and post …
p6/31
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Instructor Notes
p7/31
Chapter 3
(Note: Assignment 2 - http://www.heliohost.org – posted online @
http://mr2350.wordpress.com/2011/01/22/assignment-2-version-2)
3.1 – Internet Marketing & Electronic Retailing
45 % of internet users are shoppers – but growth of users will slow – so they need to get shoppers
spending more
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Overview of electronic retailing
o ‘Real world’ - retailer is the middle man (a store owner) – not always required, but
often. ‘e-tailing’ can eliminate the middle man.
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Size & growth of B2C market
o B2C EC sales estimates are extremely varied – too many factors. Growing 14% per
year!! Internet also influences brick & mortar sales
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What sells on the internet
o See ex 3.2 – computer hw/sw is biggest seller, followed by consumer electronics
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Characteristics & advantages of successful etailing
o Same as offline – plus some other stuff, like infrastructure. Ex 3.3 is a good list of the
differences
3.2 – E-tailing business models
How will the company make money?
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Classification by distribution channel
o
Direct marketing by mail order companies
o
Direct sales by manufacturers (Usually click & mortar, sometimes pure-play)
o
Pure-play e-tailers – no stores (Amazon)
o
Click & mortar retailers (usu offline adds online, but seeing some online adding offline –
like Dell)
o
Retailing in online malls
 Referring directory … the ‘mall’ just connects you to another store.
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Instructor Notes
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Mall with shared services … the mall provides sellers with services (order,
payment, shipment…)
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Other B2C Models & special retailing
o Ex 3.5
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B2C in social networks
o Social retailing – making places where people can collaborate, get advice, etc. See how
Amazon provides a place to rate, compare, review, discuss, etc.
3.3 – Travel & Tourism online
Half of all travelers book online, and almost half those researched online. Sites include travel agencies,
search engines, company owned sites (airlines, hotels, etc)
Revenue models include commissions, ads, lead-generation payments, consultancy fees, subscription,
revenue sharing, etc.
Trends: differentiation (adding value); travel bots; social networking
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Services provided – same as offline, but much more – Can you think of any?
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Special services online
o
Travel-oriented social networks
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Benefits & limitations of online travel services
o Lots of info; discounts; sellers can sell empty spots
o Non-internet users; complexity of some arrangements
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Corporate travel – set up so employees book through travel companies, who help cut costs
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Impact of EC on the travel industry
o Travel agents haven’t gone away 
o But some predict their role may change
3.4 – employment placement and the job market online
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The internet job market – now bigger than print!
o Employers and employees moving online to connect (also online are the job agencies,
government etc., consortiums of companies)
o Also, companies setting up employment portals – cuts costs and time
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Instructor Notes
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Benefits - Ex 3.6 and 3.8; neat example Ex 3.7
Benefits & limitations of the electronic job market
o Again … people without PCs … companies still use print – but it’s disappearing
o Flooded with apps! Some use ‘intelligent agents’ to match applicants with job
requirements
o Security issues
3.5 – Real estate, insurance, stock trading
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Real estate online
o Online advertising now bigger than print
o Buyers doing a lot of research of their own
o MLS – some agents wanted this closed to ‘the public’. But check www.mls.ca!
o But agents have not been ‘disintermediated’ – buyers use net AND agents
o Craigslist etc may cut into traditional ‘classifieds’. Note also ‘MakeMeMove’
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Insurance online
o Some presence online – some people don’t trust it, while others like the low price – so
companies are using both online and agents
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Online stock trading
o Much lower commission fees
o No busy phone lines, less error (miscommunication); anywhere any time, lots of free
info
o Risks – security !
3.6 – Banking & personal finance – growing !!
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Home banking – ex 3.10
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Virtual banks – have not been doing well – be careful before dealing – make sure they’re legit.
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International and Multiple-currency banking
o quick exchange of currencies
o often international transactions done with CC, but some other services may be required
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Online financial transaction implementation issues
o SECURITY !!!
o Access to intranet by customers
o Images (of cheques for ex.)
o Fees … hmmm … do you charge for online, or for offline ? (observation … odd, it costs a
LOT more to do an in-branch transaction than an online one – about $1 vs $.01 – but
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Instructor Notes
you get CHARGED for online …. Weird huh?)
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Personal finance online
o Paying bills etc. Combine banking with personal finance, trading, etc.
o # of real cheques declining
3.7 – On-demand delivery of products, digital items, entertainment, gaming
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On-demand delivery of products
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FreshDirect
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Online delivery digital products, entertainment, and media
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Online entertainment
3.8 – Online purchase / decision aids
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Shopping portals
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Shopbots software agents
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‘Spy’ services
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Business ratings sites
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Trust verification sites
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Other shopping tools
3.9 – Problems with e-tailing – lessons learned
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3.10 – Issues in e-tailing
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Disintermediation and reintermediation
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Channel conflict
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Determining the right price
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Product and service customization & personalization
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Instructor Notes
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Fraud & illegal activities
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How to make customers happy
p11/31
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Instructor Notes
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Chapter 4
4.1 Learning About Consumer Behavior Online
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A model of consumer behaviour online
o Individuals and organizations – focus here on individuals
o See Ex 4.1
§ Note ‘uncontrollable’ versus ‘controllable’
o Behaviour process model - AIDA(S) … Attention, Interest, Desire, Action Satisfaction
o Also: Attitude-Intention-Behaviour
4.2 The Consumer Purchasing Decision- Making Process
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A generic purchasing-decision model
o 1 – identify needs (marketers help you realize you have a need, and they can fix it!)
o 2 – search for info (product and merchant brokering)
o 3 – alternative evaluation
o 4 – purchase/delivery
o 5 – post-purchase behaviour (customer service; evaluation … lead to repeat
purchases)
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Customer decision support in web purchasing
o See Ex 4.2
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Players in the consumer decision process
o Initiator; influencer; decider; buyer; user – may not all be the same (give me an
example) – makes the marketer’s job more difficult
4.3 Mass Marketing, Market Segmentation, and One- to- One Marketing
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Instructor Notes
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Mass-marketing to one-on-one marketing
o Note the ‘roadblock’approach by Ford!
o Market segmentation – with internet, you get to one-to-one!
o Instead of selling one product to many customers, you can try selling many products
to one customer
o Do this by collecting detailed customer info after 1st purchase – then tailor your
offering (4 Ps) to the customer
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How one-to-one relationships are practiced
o Note http://www.emarketer.com/Article.aspx?R=1008226 - Requiring separate
registration hurts conversion and engagement – many people just leave the site … they
seem to like the idea of logging in with their FB credentials, for example. (So what are
the advantages of this for the marketer? People stay; such social network users may be
better prospects, and; info is more up-to-date)
4.4 Personalization and Behavioral Marketing
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Personalization in e-Commerce – how?
o Get info directly from user; use cookies; profiles from previous purchases; marketing
research; inferences
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Behavioural marketing and collaborative filtering
o based on your searches and site visits
o ‘customers who bought THIS also bought THAT’
o Ask questions s/a income … direct car ads based on that
o There may be ethical issues (I think FB had some plan to do some of this – follow you
on the web - but scrapped it)
4.5 Loyalty, Satisfaction, and Trust in EC
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Customer loyalty – costs more to get ‘em than to keep ‘em ! – note the MANY advantages of
loyalty (lower costs of marketing, advert, transaction, turnover, failure, warranty; keeps
away from competition; lower price sensitivity; better word-of-mouth (remember my Kindle
story))
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Instructor Notes
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Satisfaction in EC (Ex 4.5) online changes it a little – not just friends & fam anymore
Trust in EC (Ex 4.6)
4.6 Market Research for EC
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Objectives and concepts of market research online
o Online is cheaper and easier
o They can track your movement through a site – see what people look at, how they
navigate, whether they’re confused (Note my my Bell experience – to change my billing!
And no response!!)
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Representative market research approaches
o segmentation … for example, based on your comfort with Internet shopping
o Email, surveys, focus groups, chatrooms, forums, blogs, tracking web activity …
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Limitations of online market research and how to overcome them
o Too much data! – automate with data warehousing & data mining
o No face-to-face … L … but also offers anonymity
o Not truly representative (why?)
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Biometric marketing – to make sure YOU is YOU.
4.7 Web Advertising
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Overview of web advertising – trad mkt expensive because most ads are wasted. Web allows
you to mkt interactively to people who are interested in your stuff.
Why internet advertising? – TV viewers going to net; more time on net; mode educated,
higher income; more precise, targeted
Advertising networks – like DoubleClick. They track you and target ads to you (based on
stuff like the sites you’ve visited)
4.8 Online Advertising Methods
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Banners, banner exchanges – we’re getting immune – click-through is declining
o Swapping – A posts B’s ad, B posts A’s. Banner exchanges help arrange this
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Instructor Notes
p15/31
Pop-up (pop-under) and similar ads. Annoying.
Email advertising - low cost, include a banner. Sent to subscribing members. Unsolicited =
spam. Send to email, and now PDAs & phones – will soon see use of current physical
location for targeting ads! – note hoaxes and frauds.
Newspaper-like and classified ads
Search engine advertisement – free! But hard to be #1 hit.
o Ads linked to your search keywords (Google service, 90% of their $$$!!!
o SEO !!!! – different methods
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Google – online advertising king (think about it – is Google’s main purpose to help you
search? Or to help companies advertise …)
Advertising in chat rooms – VERY targeted. The marketers can actually post and chat. Or
view competitors’ rooms
Other forms of advertising – press releases, video ads (YouTube), ‘advergaming’
4.9 Advertising Strategies and Promotions
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Social network advertising
o Facebook Beacon - Your FB friend Bob buys product X – YOU get a notification!
Sketchy.
o Direct ads on FB
o Groups & Pages – if you ‘Like’ a page you get entered in a draw.
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Video ads on the web and in social advertising
o Tracking: looks at the behaviour of ad viewers – did you watch it, how long, click on
an ad? did you share it, etc.
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Viral marketing – gets around ‘word of mouth’ – use on social networks – Sears let shoppers
share dress selections on FB – genius!
Other advertising strategies – affiliate marketing (A refers customers to company B); paid
viewing of ads; sell space by pixel; personalized ads
Online events, promotions, and attractions
Mobile marketing and advertising – phones, PDAs, even taxis. – cool example … send
Chapters coupon to you as you enter Chapters.
4.10 Special Advertising and Implementation Topics
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Permission advertising – what it says
Some implementation issues
Ad management
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Localization
Ad content
Intelligent agents and applications
Instructor Notes
p16/31
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Instructor Notes
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Chapter 5
5.1 Concepts, characteristics, models
o
o
o
Intro
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Concepts: transactions over a network (not necessarily the internet) with supply chain,
government, other businesses etc.
 Benefits: Collaboration, intra-organization integration, reduce delays etc.
 $15 TRILLION ! 85 or 90% of online business.
 Ex 5.1 good – this chapter does gen 2 & 3
Types of transactions and activities – ex 5.2
 (sell-side) One seller – many buyers
 (buy-side) One buyer many sellers
 (Exchange) Many to many
 Supply chain improvements & collaborative commerce (what’s the supply chain?)
 1:m and m:1 – private emarketplace (one company does all the buying – or all the selling)
 M:M – trading exchanges (public)
 Supply chain improvement (manufacturing, raw materials, shipments, logistics); and
collaborative commerce (cx, design, planning, info etc between companies – more than just
financial)
B2B characteristics
 Parties to the transactions (buyers, sellers, intermediaries)
 Types of transactions
o spot buying – buy as you need, at going rate, may not know seller – ex stock exchange
o strategic sourcing – long term contracts, parties know each other
 Types of materials
o direct – raw materials, usu scheduled & planned, large volume, extensive negotiating
o indirect – supplies (called MRO – maint, repair, operation) – aka nonproduction
materials
 direction of trades
o vertical – a marketplace specializing in car stuff
o horizontal – products & services used in many industries – like supplies, computers
 Supply Chain Relationships
o The buy/sell/movement along the line from raw materials to consumer purchase … B2B
can change this, make it more efficient, eliminate steps, create competitive advantage
etc.
 Service Industries
o See list (travel, finance, etc)
 Benefits & Limitations of B2B
o P200 - list
 Content of B2B Field – see ex 5.3
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5.2 One-to-many: sell-side e-marketplaces
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Sell-side models – B2C uses storefront – B2B uses an extranet
o A manufacturer or wholesaler selling to wholesaler, retailer, individual business
o Like B2C, but the processes are a little different – usu separate the two
o In addition to goods, can provide service (like product support to businesses as well as
consumers)
Sales from catalogues
o Often a common catalogue, plus custom ones for large customers
o Try to integrate with large buyer systems for efficiencies
o Can be channel conflict
o Possible customization
o Benefits & problems
 Benefits obvious
 Problems
 finding buyers! How to ‘advertise’ for them
 channel conflict
 EDC can be expensive to customer
(Online direct sales)
5.3 Selling via distributors & other intermediaries
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Manufacturers may sell directly to large buyers, but often farm the job out to distributors to
supply many smaller companies (SAMS for Walmart) usu horizontal, but can be vertical market
(Boeing PART)
5.4 Selling via e-auctions
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Auctions on sell side – sell off your assets – forward auction – obvious benefits
Auctions from company’s site – diy if you’re big enough – don’t pay a middleman
Intermediaries in auctions – conduct private auctions for a company, or the company may just
go to a 3rd party host – like ebay – a lot of efficiencies there – 3rd party takes care of the
mechanics – can also keep it ‘quiet’
(B2B forward auctions – examples)
5.5 One-from-many: Buy-side e-marketplaces & e-procurement
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Overview: Going to a seller’s (sell-side) marketplace can be inefficient (entering info into your
own system for example, or ‘shopping around’. A buyer’s (buy-side) marketplace helps solve
this. I have a ‘store’ with all the things I want to buy – sellers browse around and offer to sell
me their stuff.
Different ways to buy: bid, buy from mfctr/wholesaler/retailer, from intermediary, from internal
buyers calatogue (like ‘standing offer’ stuff), group purchasing (advantages?), exchanges,
collaborate with supplies – JIT stuff. (Walmart good example?)
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Instructor Notes
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Types of e-procurement (buying goods & services for organizations) EX 5.5
o Buy on the buyer’s website
o Buy at seller’s store
o Buy at exchanges
o Buy at other emarket sites
o E-sourcing, e-tendering, e-reverse auction, e-inform, web-based ERP, e-marketsites, eMRO
Traditional inefficiencies
o 80% if items make up 20% of value, lot of time wasted on data entry, error corrections,
etc.
o Maverick buying
Goals & benefits of e-procurement
o List, p 212-13 … improving process (info, payment, etc) , getting better prices, min
errors, etc.
5.6 Buy-side e-marketplaces: reverse auctions
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There’s so many, you can’t watch em all – there’s directories, and ‘agents’ (software)
Or an intermediary
Can also have group tendering sites (> 1 buyer)
5.7 Other e-procurement methods
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Combine the catalogues of all suppliers into a single buying catalogue – ‘internal procurement
marketplace’ – faster, cheaper (b/c of volume), fewer suppliers required, easy controls
Also have a buying card (for MRO) … kinda like a pre-approved ‘credit card’ for buyers.
Seller’s e-auctions
Group purchasing – internal, and even external (3rd party like buyerzone.com helps)
Purchasing DIRECT goods – 50-80% of stuff! Many benefits beyond price (inventory, unit cost,
shortages, production etc)
Bartering – trade ‘stuff’
5.8 B2B Electronic exchanges
Ex 5.10 is good
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Instructor Notes
Functions
o Match buyers/sellers
o Facilitate transactions
o Maintain policies & infrastructure
Dynamic pricing
Ex 5.2 – gains & risks for buyers & sellers
o Example – what if the marketplace folds?
Different revenue models, as discussed earlier in text
5.9 B2B Portals, directories, ownership of B2B marketplaces
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Portal provides INFO
Horizontal (Alibaba) or vertical (vortal)
Some evolving to provide transactions
Who ‘owns’ them?
o 3rd parties, who may try to MATCH buyers & sellers also (not just provide info)
o Consortiums – many large companies joined together in the venture
5.10 Partner and supplier relationship management
p20/31
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p21/31
PRM – Partner Relationship Management (my buying history, the sellers’ inventory levels, etc)
Communities – chat, BBS, personalized web pages
5.11 B2B in the web 2.0 environment & social networking
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New, growing – lots of opportunities (p230)
o Participate, monitor, use existing apps
5.12 Internet Marketing in B2B EC
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Ex 5.14
Fewer buyers, but bigger purchases, more complex, group buyers/decision makers
Marketing & advertising – in physical world it’s tradeshows, personal calls, industry magazine
ads ..
o In e-world, online directories, matching services, affiliate services, contacts through
trade assns, infomediaries & data mining, etc
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Instructor Notes
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Chapter 6 – Supply Chains etc.
SCM – the ‘back-end’; management of the flow of materials, information, services, and money into an
organization. VERY important – the ‘competitive differentiator’. Wal-Mart etc credit much of their
success to managing this well.
Chapter focuses on SCM in e-commerce (e-supply chain) plus related topics like collaboration &
integration along chain
? Examples of supply chain activities ?
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Getting raw materials, getting paid,
Very long, complex, involve many partners (outside your control) – so, prone to problems!
What kinds of problems (or results) could happen?
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Delays, products not in place @ right time, customer dissatisfaction, lost sales, higher expenses
Ex 6.1 – (doesn’t show reverse chain – what is that?)
Not just the movement of product/service – also the supporting procedures, plus the info & money, and
the organizations and people involved. Can even extend to product disposal (note ink cartridges)
Upstream – Internal – Downstream
Upstream (‘left’) – activities of company with its suppliers (manufacturers, assemblers, service
providers), and THEIR upstream people (‘2nd tier’). Goes back to farms, mines, etc. major activity is
Procurement.
Internal – ‘in-house’ processes used to transform stuff into your output (product). From entry to
organization, through to exit from organization to distribution. Major activity is Production
Management, Manufacturing, Inventory Control. Activities inside here are called the ‘value chain’;
primary activities (ops, outbound logistic, sales & support), and secondary activities (HR, finance, IT) …
that you do to get a product ‘out’. Objective – to add value along the internal supply chain.
Downstream – delivering product to final customers. Main concerns: distribution, warehousing,
transportation, after-sale service
MANAGEMENT of Supply Chains – a big deal
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Minimize inventory levels (why?), optimize production, increase throughput, decrease
manufacturing time, optimize logistics & distribution, streamline order fulfillment, reduce costs
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Instructor Notes
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of all these. VERY DIFFICULT … complex, out of your control, different time zones, customers,
internal depts, external companies. Esp bad for fast moving goods (? Example: supermarkets)
Information Technology
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SCM (procurement)
ERP
Tough (but very important job) job to link the web side with all your other stuff!
Now, ENTERPRISE SYSTEMS … job is to link
MANAGING SUPPLY CHAINS
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All partners should view collaboration as a strategic asset!
Information visibility along entire chain (accessible, well-defined,managed…)
Speed,cost,quality, tight integration
Activities
o SC replenishment – keep in sync
o E-procurement
o RFID!
o Bar codes, wireless … automatic re-ordering on inventory trigger
o Collaborative planning – share info
o Collaborative design/development
o E-logistics – acquisition, warehousing, transportation
Infrastructure – all the networks, portals, softwareetc
PROBLEMS & SOLUTIONS
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Can lose business – and wars!
Pure play are moreprone – may rely on externals like Amazon
Bullwhip effect – results from supply/demand fluctuations, esp when uncertain – you get
stockpiling all along the chain – it gets magnified!
Must SHARE info well
Solutions include tech to manage visibility, order taking, order fulfillment, payments, risk, min
inventories, collaborative forecasting
Mobile tech- ensures synch of supply chains – how?
RFID
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Very important technology! Track individual items (can even put them in people)
Can replace car keys,credit cards,etc – can relay info such as temp; batch checkout!
Mr2350
Instructor Notes

 cost, range, harsh environments (though better than barcodes), accuracy, privacy; who
manages tag on a product (mfctr,retailer,etc)
RuBee is new,complimentary tech

p24/31
COLLABORATIVE COMMERCE (c-commerce)
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Collaboratively plan, design, develop, manage, research products & services; uses Web2 tools
Ex: Boeing working with parts mnfctr
Collaboration hub – many collaborative spaces
Collaborative networks – not as ‘linear’ left-to-right along the supply chain – each node
connects to others
(SOME EXAMPLES)
BARRIERS
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Tech stuff – standards, security, privacy, distrust, skills, even language & culture
Will come as ppl see advantage of smoothing supply chain etc
COLLABORATIVE PLANNING
CPFR: collab planning, forecasting, replenishing
share planning & demand forecasting, so inventory levels along the chain are optimal
APS:
advanced planning & scheduling
mathematical models for optimal solutions to constraint bound problems
PLM:
product life cycle management
shares data over broader life cycle – design & development
SUPPLY CHAIN INTEGRATION
‘interorganizational business process re-design’
Integration of your OWN systems in your own company – databases with each other; front-end with
back-end (uses ERP)
PLUS
integration of your OWN systems with OTHER companies – my order system with my supplier’s
fulfillment system – this relies on a set of standards called ‘Web Services’
(INTEGRATION ALONG SUPPLY CHAIN)
CORPORATE (ENTERPRISE) PORTALS
Mr2350
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Instructor Notes
p25/31
Overview: gateway to a corp web site & other info sources; may have separate portals for
insiders & outsiders
Types:
o Suppliers & other partners – suppliers can see what they sold you, plus your inventory
levels
o Customers – view products & services, place orders; make payment, arrange deliveries
o Employee – like at CNA – I can view my paycheque, submit IT requests
o Executive/supervisor – do managery stuff – scheculing etc
o Mobile – use your smart phones to access (mobile versions of web pages)
Issues – what to offer, how, etc.
COLLABORATIVE-ENABLING ENVIRONMENTS AND TOOLS

Goals: improve collaboration, efficiency, cx with customers, reduce travel costs, supplier
collaboration
Workflow: SKIP IT
COLLABORATION AND GROUPWARE
General • Built- in e- mail, messaging system, instant messaging • Browser interface • Joint Web- page
creation • Sharing of active hyperlinks • File sharing ( graphics, video, audio, or other) • Built- in search
functions ( by topic or keyword) • Workflow tools • Use of corporate portals for communication,
collaboration • Shared screens • Electronic decision rooms • Peer- to- peer networks
Note diff between synchronous and asynchronous
Synchronous ( same time) • Webinar • Webcast • Videoconferencing, multimedia conferencing •
Audioconferencing • Shared whiteboard, smart whiteboard • Text chart • Brainstorming, polling (
voting), and other decision support ( consensus builder, scheduler)
Asynchronous ( different times) • Threaded discussions • Voice mail • Users can receive/ send e- mail,
SMS • Users can receive activity notification via e- mail • Users can collapse/ expand threads • Users can
sort messages ( by date, author, or read/ unread) • Chat session logs • Bulletin boards, discussion
groups • Use of blogs, wikis • Web publishing • Collaborative planning and/ or design tools

Virtual Teams
o Drivers: work anywhere anytime, flexible, productive, 24/7
o Benefits: travel costs, parking, offices, can incl p/t & telecommuters, physical handicaps,
best talent
o Not clearly defined – Wikipedia might be a good example
VIRTUAL MEETINGS
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Ex- GoTMeeting.com, conferencing, IM, blogs, wikis, forums, …
Mr2350
Instructor Notes
p26/31
Chapter 10 – Fraud & Security
SECURITY ISSUES
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Drivers of EC security problems
o Internet is inherently vulnerable
o Shift from ‘recreational hacking’ to profit
o Internet underground economy – selling info you find (like credit card info)
o Innovation, insiders
Attacks
o Unintentional
 human error (programming, data entry, etc)
 environmental (flood, fire…)
 computer malfunctions (faulty hardware, poor testing)
o Intentional
 Theft of data and hardware; misuse of data; vandalism; sabotage; viruses; fraud
Can the web site visitor trust the site? Can the site trust the visitor?
ATTACK METHODS
Technical vs non-technical
Technical
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Malware is the generic term for nasty software, which includes:
Viruses – a program that gets into your computer, ‘propagates’, and does stuff in varying
degrees of nasty
o Worms – spreads without human intervention
o Macro virus or worm
o Trojan horse – appears to have a useful function but hides something nasty
Denial of service – flood a site or network and overload it
Server/page hijacking – uses tricks to direct you to a crap site instead of the one you really want
Botnet – bunch of hijacked computers that all forward spam or viruses. Your computer could be
a bot
Non-technical (Phishing, Fraud, Spam, Social engineering)
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Phishing – “Hey, this is Visa – we need to verify your account info – please log in with your Visa
#,password, etc” (skip ‘man-in-the-middle’ method)
Fraud – all kinds of stuff. Fake banks to get your deposits; taking down-payments on stuff you
don’t get; fake escrow; identity theft;
Spam – 100 billion per day! – ‘splogs’- sites created only to link to a crap site – raises it’s ranking
Mr2350
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Instructor Notes
p27/31
Spyware – gets on your PC and watches you, collects personal info, changes computer settings
Social engineering – getting info by going on social networking and media sites (fb,
twitter,blogs,etc)
DEFENSE METHODS
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Authentication – is that really you?
Authorization – are you allowed in here to do that?
Auditing – who did what, when? Can we roll back?
Availability – redundancy to make sure system can handle the transactions
Norepudiation – ways to ensure that you can’t ‘repudiate’ – say you didn’t agree to something
(purchase, transaction etc) when in fact you did.
Encryption
‘Plaintext’ is the actual data. You encrypt it using an algorithm and a key. (The algorithm might say,
‘add the first digit of the key to every number, add the second digit to every second number). So if
someone intercepts your encrypted data, they can’t easily read it. Can be cracked, especially since
many algorithms are widely known. Bad guys then only have to guess the key, which is easy using a
computer! But if the possible number of keys is large enough, it can take forever!
Certificates
(From Wikipedia: http://en.wikipedia.org/wiki/Certificate_authority)
Public-key cryptography can be used to encrypt data communicated between two parties. This can
typically happen when a user logs on to any site that implements the HTTP Secure protocol. In this
example let us suppose that the user logs on to his bank's homepage www.bank.example to do online
banking. When the user opens www.bank.example homepage, he receives a public key along with all the
data that his web-browser displays. When the user enters some information to the bank's page and
submits the page (sends the information back to the bank) then the data the user has entered to the
page will be encrypted by his web browser using the public key that was issued by www.bank.example.
The key that can be used to decrypt the information is called the private key and it is only known to the
bank, therefore even if someone can access the data that was communicated from the user to
www.bank.example, the data that the user has entered can only be decrypted by the bank as only the
bank knows the private key.
This mechanism is only safe if the user can be sure that it is the bank that he sees in his web browser. If
the user types in www.bank.example, but his communication is hi-jacked and a fake web-site (that
pretends to be the bank web-site) sends the page information back to the user's browser, the fake webpage can send a fake public key to the user. The user will fill the form with his personal data and will
submit the page which will be encrypted by the fake public key. The fake web-page will get access to the
user's data since the fake web-page owns the fake private key.
Mr2350
Instructor Notes
p28/31
A certificate authority is an organization that stores public keys and their owners and every party in a
communication trusts this organization. When the user's web browser receives the public key from
www.bank.example it can contact the certificate authority to ask whether the public key does really
belong to www.bank.example. Since www.bank.example uses a public key that the certification authority
certifies, a fake www.bank.example can only use the same public key. Since the fake www.bank.example
does not know the corresponding private key, it cannot decrypt the user's answer.
(There are two ways that you can determine whether a site is secure: 1) There is a small icon of a lock
located at the bottom right hand corner of the web browser indicating that the website is encrypted,
and 2) In the address section of your web browser, the URL will start with "https://" rather than
"http://." The "s" indicates that encryption is active.)
There are 3rd parties called Certificate Authorities that provide this service, for a fee, to the organization
hosting the web site. Well-known CAs are VeriSign, Thawte, Geotrust, Comodo, Entrust, DigiCert,
GoDaddy, and Network Solutions. There are many more, some cheaper or even free – and supposedly
just as good.
Firewall
Hardware and/or software that sits between your PC and the internet. Your computer receives data in
little chunks called packets, and each packet contains the unique IP address of the source computer.
The firewall ‘watches’ the addresses of incoming data and can filter out any data it doesn’t like before it
gets ‘into’ your computer. How does it know to admit packets from all the sites you visit? Because the
firewall knows if a packet comes in that is not in response to one you sent.
Mr2350
Instructor Notes
p29/31
Chapter 11 – Payment Systems
Payment Systems
PROBLEM – example of e-books
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Buy a whole book – ok for fiction; what abt textbooks, travel guides, etc.
Pay-per-view pages (or chapters)
BUT … Transaction fee is to large compared to item cost
People use mostly Credit Cards to purchase online (abt 70% - includes debit cards). PayPal is fairly
common alternative.
What to use? VERY hard sell – people aren’t likely to use it until it catches on !?#! Chicken & Egg
Important factors in a payment system:
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Independence – from special hardware etc.
Interoperability & portability – your system must work with CC, banks, PayPal etc.
Security
Anonymity – as with cash
Divisibility – huge and tiny purchases, and anything in between. ‘Micropayments’ would be
things like, buying a bar for $.50, or an iTunes song for $.70 … one way to accommodate this is
to let the purchases accumulate and bill @ end of month.
Ease of use – VERY important
Transaction fees – esp important for smaller pchses
International support
Regulations – complex, rigid
SMARTCARDS – your credit card, with the ‘chip’
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The chip is memory whose contents can be read, PLUS - possibly - a microprocessor, which
allows modification of data
Contact and non-contact cards – non-contact cards can be read from some distance (good for
toll-booths, security doors, etc.)
Needs a reader – obviously – this jumps the cost
Uses:
o Banking/payment
o Loyalty and promotions
o Access control
o Stored value
o Identification
o Ticketing
o Parking and toll collection
Mr2350

Instructor Notes
p30/31
e-cash is cash is represented by two models
o One is the on-line form of e-cash (introduced by DigiCash) which allows for the
completion of all types of internet transactions.
 CyberCash – a system for servicing online credit card transactions over the
Internet since April 1995. Bought by VeriSign, which was then bought by PayPal
(which is owned by eBay). See diagram attached.
o The other form is off-line; essentially a digitially encoded card that could be used for
many of the same transactions as cash.
 Example: Mondex – money on a card (MasterCard)
(http://www.mondex.com/faq.html)
Chapter 16 – Regulatory, Ethical, Compliance
Issues
INTELLECTUAL PROPERTY LAW p671
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Copyright – the right to print, copy, sell, etc – goes for (depending on country) 50, 70 years after
creator’s death – forever for corporations.
o ‘Infringement’ is when you break the copyright law
o DRM – digital rights management – technologies to prevent copying of digital stuff
o (Why is copying music a bigger deal now, versus in the days of cassettes & vinyl?)
Patent – rights to an invention
Trademark – a symbol
Trade secret – KFC recipe
FREE SPEECH, PRIVACY – all of p680
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What is free speech?
Are there limits on free speech (examples?)
Privacy – how much privacy must people give up to allow for our own protection? Why is this more
important in the digital age? []
Buyer
Merchant
1
2
3
10
4
9
CyberCash
Server
5
8
6
Card-issuing
Bank
Merchant’s
Bank
7
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
The buyer clicks BUY on merchant's website.
The merchant's CyberCash program sends invoice to the buyer's CyberCash Wallet program.
Buyer selects a credit card from the ones bound to their wallet, clicks OK. Buyer's CyberCash Wallet digitally
signs and encrypts the invoice and credit card information with the key assigned to that Wallet-ID. The
encrypted packet is then sent to the Merchant's CyberCash program.
The merchant software adds info to the packet, requesting authorization. The merchant's CyberCash software
digitally signs and encrypts the packet with their CyberCash key. The packet is sent to the CyberCash server.
(The merchant never sees the customer’s credit card number. The packet is encrypted twice before arriving at
CyberCash's server, once by the buyer's software and once by the merchant's.)
The CyberCash server decrypts the message and checks for tampering. The credit card info and the merchant's
authorization request are encrypted. This information is sent over dedicated lines to the merchant's acquiring
bank.
The merchant's bank processes the merchant's request as it would any other credit card transaction. It forwards
the request to the card issuing bank.
The card-issuing bank sends an approval or denial code back to the acquiring bank.
The acquiring bank then sends this code to CyberCash.
CyberCash sends the merchant an encrypted message indicating success or failure of the credit card payment
transaction.
The merchant's SMPS software then sends a message back to the buyer's CyberCash Wallet indicating success or
failure of the payment transaction