Intelligent Information Systems
4. Electronic Commerce
Gio Wiederhold
EPFL,
April-June 2000, at 14:15 - 15:15, room INJ 211
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Schedule for Seminar Course on
Presentations in English -- but I'll try to manage discussions in French and/or German.
•
I plan to cover the material in an integrating fashion, drawing from concepts in databases, artificial
intelligence, software engineering, and business principles.
1. 13/4 Historical background, enabling technology:ARPA, Internet, DB, OO, AI., IR, XML.
2. 27/4 Search engines and methods (recall, precision, overload, semantic problems).
3. 4/5 Digital libraries, information resources. Value of services, copyright.
4. 11/5 E-commerce. Client-servers. Portals. Payment mechanisms, dynamic pricing.
5. 19/5 Mediated systems. Functions, interfaces, and standards. Intelligence in processing. Role of
humans and automation, maintenance.
6. 26/5 Software composition. Distribution of functions. Parallelism. [ww D.Beringer]
7. 31/5 Application to Bioinformatics.
8. 15/6 Educational challenges. Expected changes in teaching and learning.
9. 22/6 Privacy protection and security. Security mediation.
10.29/6 Summary and projection for the future.
•
Feedback and comments are appreciated.
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Definition
Sales of Information and goods over the Internet
• Information -- two-way transport via the Internet
Dig
– some backup by FAX, post, express
Lib
• scientific, health information, training, catalogs, music, videos
H
A
R
D
E
R
• Goods -- ordering, often payment, over the Internet
– delivery by pickup or shipment
– Vouchers -- no physical shipment of goods
• tickets for travel, entertainment -- pickup based on voucher
– Fungible -- shipped: items are indistinguishable, returnable
• books, CDs, oil, building materials an increasing fraction
– Unique (to some degree): best viewed before acceptance
• cars, groceries, jewelry, art
+ other dimensions: price of good, time value, spoilable, payment.
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Size and Growth
•
•
•
•
1999:
2003:
2006:
2013:
$138B *. === small percentage (1%?) of world business
$540B * (~ 45% / year) --- $4 000B**
~factor 10 over 1999
if it continues at the current rate*
~factor 100 of current = all unlikely, but likely largest fraction
Difference by area
– Easy areas sooner -- travel, books, CD, toys
• traditional businesses feel the effect now
• eventually structural changes
» example: programming
structural changes
* per Yankee Group
** per Business Week
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t?
4
Business practices
Compare to B&M
(Brick-and-Mortar)
stores
• Getting to the customer
– portals
• general, clientele -specific
– follow-up
differs a bit by type of good
• Getting the customer’s commitment
– pre-payment, esccrow, post-payment?
• Building
– build-to-order is preferable
– personalize, low inventory -- less waste, but delay?
• Shipping
– by own (limited locale) or by common carrier
• Return policy
– return needed? by carrier (awkward) to B&M if possible
more on these topics 
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European/US differences
• Credit cards -- help E-commerce in the U.S.
– more prevalent in US
– no / low liability in US
– allow canceling payment if goods are unsatisfactory
• Store hours -- encourage E-commerce in Europe
– long opening hours are common in US, Asia, not in Europe
– working individuals, couples driven to purchase on the net?
• Sales Taxes -- help E-commerce in the U.S.
– Interstate Sales taxes hard to collect (sales taxes may disappear ?)
– VAT is invisible, hard to avoid
• Store density? Traffic? Security?
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Implementation
Many suppliers now for various types of servers
• Low density boutique systems ( < $5 000)
• fixed rat Internet costs to some limit
• Server services (incremental costing, high reliability)
• Shared staffing
• Portal-based systems
• Amazon associates
• Dedicated high end systems (10-200+ processors)
• in-house staffing
• Distributed (peripheral) service replication [Akemai]
• reduced bandwidth cost, increased response
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Access to Sales Info.
• Currently mainly HTML/CGI scripts to databases
– well established technology with many tools, people
• Assumption moving to XML-based access unclear
– better (content semantics sensitive) format
– DTD standards for various domains
– full exposure of contents - may not be wanted by suppliers
• loss of competitive information, say inventory
• selective access for known/registered customers in B2B
– XML has representation defined, not yet processing
• much initial focus on document processing  HTML
• no algebra, no universal quantification, no typing
– the basis for and computation & composition
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XML access technology
• in hold, waiting for W3C blessings of query language:
– search, views, joins, sorting, ranked results, keyword search
HTML Alg
UQ Srch Vw
J
Srt Rnk Key
support
XSL
A
-
-
C
-
-
B
-
-
[Microsoft]
XQL
-
D
A
C
-
-
B
-
-
W3C document
XML-QL
-
C
-
B
C
B
B
-
-
[AT&T INRIA]
-
B
D
B
[Poli Milano]
C
D
B
XML-GL WML* C
-
C
Lorel
A
B
-
B
C
B
B
[Stanford projects]
...
WebML[torisoft] can translate WML to HTML
*
Many research questions - logical and performance
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Other Functions
• Visual GUI Interfaces [XML-GL]
• DTD / Schema management (XMI [OMG], RDF, DAML)
• required for multi-domain integration
• Update capability [Lorel] maintainer vs. querier
• Validation capabilty LINT maintainer
• Protection
maintainer vs. querier types
• related to views?
Can / should a single language handle all?
• SQL doesn’t handle everything
• if not, must have a convenient API for common languages C++
• multi-level, mediated architectures (next Friday at EPFL)
• insert application with specific domain functions
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Customer Aquisition
• Through Portals
– pay for each click through
– pay for each purchase
– pay for each registration
show 8% growth rate versus 1%*
• Direct mail
• Advertising
Follow-up with adequate services
42%* poor
Corporate presence - public relations
36% inadequate Top level catalog of information
22% satisfactory On-line ordering + with return policy
15% good
On-line payment + security
3% excellent
Personalization + rapid response
* abstracted from1999 IBM survey of 2373 companies
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Personalization
• of Interfaces
• per individual
• per group and assignment of individual to groups
– automatic (hard)
– by self selection (awkward, unreliable)
• per multiple groups
– appreciated
– privacy concerns - small, vocal group?
» “3/4 employees don’t mind email monitoring [AngusReid]”
• Vendors: IBM, ATG [Dynamo], Netscape, Microsoft
• of Domain vocabularies
– DTDs for
• universal use [CommerceOne]
• B2B legal, chemistry, genomics, oil, . [industry consortia]
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Document Type Definition (DTD)
Computation requires is aided by having types
– XML is still focused on documents
• DTD allows definition of structure, but not of type • always text: PCODE (= UNICODE 8 - 16 bit)
• numeric values require additional conventions ( , . E $ £ )
• Additional proposals
– XML-schema[W3.org]: to cover all {OO,R}DBMS-like types
• extensible base types, typed links, integrity constraints
– ambitious
– XMI [OMG]: for interchange
– WebML[Poly Milano]: web site specification with functions
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Health-related sites
• Long-term leverage -- most health states persist
• Corporate benefits per person insurance ~$5000/year
– early intervention
– coercive?
• Real privacy concerns
– info sold to
• pharmaceutical companies
• drug retailers
• Health Maintenance Organizations
– “Employers have information now to weed out high cost employees”
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Communities
• Real communities
– Example: MaplewoodOnLine.com
• Virtual communities
– distributed hobby, . . . . groups
– 1000’s
– distributed problem groups - social, health, . . .
– 1000’s
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Portal Payment Schemes
• User pays
• Free View - public service
• Free View - advertisement
– Goodwill
– pay-per-page or ad display hit (newspaper model)
• do robots/ multi-fetch page count?
• hacker schemes?
– pay per click-through on ads
– pay per lead (name, email, category, location)
– pay per sale (%tage): Amazon associates
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Google model
•
•
•
•
•
No messy ads on first page
when a search is done, then relevant ads may appear
+ payment by other portals, as Netscape Netcenter
+ sales to Intranets, corporate sits (as Redhat.com)
Growth
–
–
–
–
–
–
–
–
–
–
–
–
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spring 1995 - Page & Brin met as CS PhD admittees
Fall 1995 work on Stanford’s DL project
fall1996 - Google project disclosure to Stanford OTL
summer 1997 - stanford.google.edu services
1998 Page Brin buy a terabyte of disk ($15 000)on their credit cards
summer 1998 Angel fundng (Bechtolsheim, Cheriton),
October 1998 rent garage from friend, hire
Jan 1999 move to commercial space in Palo Alto
June 1999 Venture funding $25M.
September 1999 Offices in Mountain view
September 1999 3.5M searches/day
December 1999 6.M searches/day
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Paying for SW Services
You can not run an effective (SW) business and not be
reimbursed for it. How? Four approaches:
– Sell Software
– Lease copy / usage rights
– Time / user limited access
– Charge by use instance
General problems, effects differ
– IP protection?
protect
– keeping SW updated
update
– billing for est.value
bill
– performance effect
perform
June 1998
CHAIMS
sell oilfield to customer
lease well
fill tank
provide bus
Buy
Lease Limit
Use
poor
some
fair
good
poor
ok
good
good
simple simple awkw.
hard
no
no
little
some
18
JMC: support electronic journals by page charges.
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E-Commerce in the Digital Library
Steven Ketchpel & DL Economics Group
Payment
Delivery
CyberCash
DigiCash
First Virtual
SET
Cryptolope
DigiBox
HTTP
E-mail
Major
Integration
Problem
Shopping Models: Pay-per-view, Subscription,
Session, Shareware, Auctions, Site License,
Gift Certificate, Layaway, Pre-paid vouchers, … .
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Methods
•
•
•
•
•
Trust
Escrow
Subscriptions
Debit cards
Credit cards
– cost per transaction about $0.50 > many Internet Txs
– limited number of acceptors
• new scheme:
• Wallets
Limited amount instantly available, not secured against loss,
suitable for small payments, could be anonymous. Poor acceptance.
• dynamic pricing
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DL Copyright Management
unique
id
Library of Congress
Copyright Office
Rights System
Work Repositories
Authors
Publishers
Rightsholders
courtesy of CNRI
requests
exclusive
rights
use
rights
Readers
Libraries
Consumers
Gio Wiederhold
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Shopping model: merchant-independent
logic controlling flow of business model
Example shopping models:
Order, Pay, (Deliver 52 times)
(1 month; Order, Deliver) Pay
State
Information
Event Handlers
Abstract API
allows application to
interact with many
different services
in a consistent way
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2
1
Order
Complete
3
Start Transfer $
4
Payment
Complete
Event Handlers
Event Handlers
Customer
Bill
Merchant
Event Handlers
Payment/Delivery/
Other Services
EPFL4E - Gio spring 2000
Proxy event handlers
translate from
native applications
to shopping model
defined protocols
23
B2B Commerce
Total $ B2B volume is 3-5 x retail -- but fewer transactions
• XML common business Library [Commerce One]
–
–
–
–
catalog interoperability
to come: bank clearinghouse
transaction fee for buyers and suppliers
value is in number of potential suppliers / buyers
• Specialized consortia [ENERVA for petroleum prods]
– focus on automating back-office work for existing types of product
exchanges
– started by Ethyl corp, 60 participants
• Managed services [Envive]
Supplier entry requires trust, not lowest price
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Source of Changes
If you're listening to your customer. it's almost preordained that
you'll miss the new market. And when the new market expands
to encompass the old market ... that's when companies can
become obsolete [David Isenberg, AT&T researcher, 1998]
• Sequence
1.
2.
3.
4.
5.
6.
7.
novelty
investigation (by many, elation by inventor)
disappointment at problems, speed of acceptance
market visibility
broad acceptance
commodization
stasis
market size no. suppliers
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Conclusions
• Much change expected
– uncertainty
– hard to predict time scales
• Industry & Business ahead of academia
– Industry has the problems, ad hoc, fast fixes
– Most academics don’t listen enough to the world
• Standards provide needed infrastructure for next phase
–
standards require acceptance, not fanciness
• Governmental / Organizational initiatives lag Ind. & Aca.
– HTML versus
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W3C initiatives
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