Online Chapter 18
Building E-Commerce
Applications and Infrastructure
Learning Objectives
1. Discuss the major steps in
developing an EC application.
2. Describe the major EC applications
and list their major functionalities.
3. List the major EC application
development options along with their
benefits and limitations.
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Learning Objectives (cont.)
4. Describe various EC application
outsourcing options.
5. Discuss the major components of an
electronic catalog and EC application
suite.
6. Describe various methods for
connecting an EC application to backend systems and databases.
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Learning Objectives (cont.)
7. Describe the criteria used in selecting
an outsourcing vendor and package.
8. Discuss the value and technical
foundation of Web services in EC
applications.
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Learning Objectives (cont.)
9. Understand the value and uses of EC
application log files.
10. Discuss the importance and
difficulties EC application
maintenance.
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Tracking United Parcel
Service Shipments
The Problem
Since 1907 United Parcel Service (UPS)
has been in the package distribution
business
It is the world’s largest package
distribution company, transporting over 3
billion parcels and documents each year
in over 200 countries.
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Tracking United Parcel
Service Shipments (cont.)
UPS provides the means for customers to
track their shipments to determine the
status and whereabouts of a particular
package
In the past, this was done primarily over
the telephone
Customers would call UPS with the
tracking number of their shipment
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Tracking United Parcel
Service Shipments (cont.)
An operator would look up the status of
the shipment in the UPS database and
relay the information to the customer
Servicing these calls cost an estimated $2
per call
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Tracking United Parcel
Service Shipments (cont.)
The Solution
UPS created a Web site (ups.com) that
enabled customers to:
track their shipments online
determine the cost and transit time for
delivery of a package
schedule a package for pickup
locate the nearest drop-off facility
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Tracking United Parcel
Service Shipments (cont.)
These online facilities are accessed from
the UPS homepage
The customer clicks the “Tracking” tab
at the top of the homepage
This takes the customer to an online
form where the customer simply enters
the tracking number and then hits the
“Track” button
The customer receives precise
information about the location of the
designated shipment
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Tracking United Parcel
Service Shipments (cont.)
The front end of the UPS Web site is
simple, but the back-end processing
used to handle a tracking request is
more complicated
Requests are handed off to one of a
handful of Web servers
This server passes the request to the
appropriate application serve
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Tracking United Parcel
Service Shipments (cont.)
The application server passes the request
to an IBM AS/400 computer attached to
the UPS tracking database (the largest
transaction database in the world—20
terabytes of data
The mainframe performs the database
search for the status information
Then it is passed back up the line through
the various servers to the customer’s
browser
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Tracking United Parcel
Service Shipments (cont.)
The Results
The UPS site services over 4 million
online tracking requests per day
It keeps UPS competitive with other
shipping companies that also offer online
tracking services and customer
information (FedEx)
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Tracking United Parcel
Service Shipments (cont.)
UPS now offers customers the option of
tracking their packages through wireless
devices (cell phones, PDAs, and Webenabled pagers
Web pages have been modified to
support the particular wireless device
being used
Specialized servers are used to deliver the
pages over the wireless communication
networks
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Tracking United Parcel
Service Shipments (cont.)
UPS (ec.ups.com) offers a set of ecommerce solutions and a technology
infrastructure that enables other
companies to incorporate UPS’ online:
order entry
Shipping
tracking capabilities
Example: Amazon.com
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Tracking United Parcel
Service Shipments (cont.)
The company also offers e-commerce
tools and services for managing an
enterprises’ overall supply chain
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Tracking United Parcel
Service Shipments (cont.)
What we can learn …
There is more to an EC Web site than
meets the eye
Behind the scenes of virtually every ecommerce site, a number of hardware
and software components are supporting
these applications
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The Development Process
Several options are available for
developing an EC site
The components making up a Web site
come from a small number of vendors or
from several different vendors
Small storefronts with a few key
components can be developed with
HTML, Java, or another programming
language
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The Development
Process (cont.)
Application service provider
(ASP): A company that provides
business applications to users for a
small monthly fee
The cost of developing an EC site can
run in the thousands of dollars
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The Development
Process (cont.)
To ensure success, a systematic
development process is needed to
create, implement, and maintain a site
A project team is also needed to
manage the development process and
the relationships with outside vendors
and business partners
The development process includes
four steps
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The Development
Process (cont.)
Step 1: Creating an EC architecture
EC architecture: A plan for organizing
the underlying infrastructure and
applications of a site
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The Development
Process (cont.)
The plan includes:
Business goals and vision for the site
Information and data required to fulfill
the goals and vision
Application modules that will deliver
and manage the information and data
Specific hardware and software on
which the application modules will run
Human resources and procedures for
implementing the architecture
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The Development
Process (cont.)
Step 2: Selecting a development
option
EC applications can be:
developed in-house
outsourced to another party
some combination of both
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The Development
Process (cont.)
An application built in-house can be built
entirely from scratch or commercial
products can be used and modified to
meet specific needs
An outsourced application can be run:
entirely by an ASP
on a third-party marketplace
on another company’s Web site
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The Development
Process (cont.)
A company needs to participate in the
architectural design
At the end of this step, an application is
built (or purchased) and ready to be
installed
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The Development
Process (cont.)
Step 3: Installing, testing, and
deploying EC applications
Connecting the application to back-end
databases, to other applications, and to
other Web sites
A series of tests is required
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The Development
Process (cont.)
Unit testing: Testing application software
modules one at a time
Integration testing: Testing the combination of
application modules acting in concert
Usability testing: Testing the quality of the user’s
experience when interacting with a Web site
Acceptance testing: Determining whether a Web
site meets the original business objectives and
vision
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The Development
Process (cont.)
Step 4: Operation and maintenance
A site is continually updated
new products need to be added to the
catalog
prices need to be changed
new promotions need to be run
These changes and updates undergo the
same testing procedures used during the
installation process
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The Development
Process (cont.)
Usage patterns and performance need to
be studied to determine which parts of
the underlying applications should be
modified or eliminated from the site
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Major EC Applications and
Their Functionalities (cont.)
Three interrelated subsystems of an
electronic storefront:
1. A shopping cart is usually
2. A transaction system for processing orders,
payments, and other aspects of the transaction
3. A payment gateway that routes payments
through existing financial systems primarily for
the purpose of credit card authorization and
settlement
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Major EC Applications and
Their Functionalities (cont.)
Supplier sell-side B2B sites enable one
business to purchase goods and services
from another and include:
Personalized catalogs and Web pages for all major
buyers
A B2B payment gate
Electronic contract negotiation features
Product configuration by customers (e.g., Cisco or
Dell)
Affiliate program capabilities
Business alerts (e.g., special sales)
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Major EC Applications and
Their Functionalities (cont.)
E-procurement
Aggregating catalogs
Search engine for locating items with particular
characteristics
Comparison engine for alternative vendors
Ordering mechanism
Budget and authorization feature
Usage comparisons (among various departments)
Payment mechanism (e.g., use of a purchasing card)
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Major EC Applications and
Their Functionalities (cont.)
Reverse auctions buyers list the items
they wish to purchase and sellers bid to
provide those items at the lowest price
Sites provide:
Catalog
Search engine
Personalized pages for bidders
Reverse auction mechanisms
Facilities to deal with request for quotes
(RFQs)
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Major EC Applications and
Their Functionalities (cont.)
Reverse auction sites provide (cont.):
Ability to bid dynamically
Automatic vendor approval and workflow
Electronic collaboration with trading partners
Standardization of RFQ writing
Site map
Mechanism for selecting suppliers
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Major EC Applications and
Their Functionalities (cont.)
Reverse auction sites provide (cont.):
Automatic matching of suppliers with RFQs
Automatic business process workflow
Ability for bidders to use m-commerce for
bidding
Automated language translation
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Major EC Applications and
Their Functionalities (cont.)
Exchanges are e-marketplaces that tie
many buyers to many suppliers
combining the functionalities of
buy-side, e-procurement, and auction
sites
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Major EC Applications and
Their Functionalities (cont.)
Capabilities of exchanges also include:
Collaboration services
Community services
Web-automated workflow
Integrated business process solutions
Central coordination of global logistics
Integration services
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Major EC Applications and
Their Functionalities (cont.)
Capabilities of exchanges also include:
Data mining, customized analysis and
reporting, real-time transactions, trend
and customer behavior tracking
Transaction flow managers
Negotiation mechanisms
Language translation
Comprehensive links to related resources
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Development Options for
EC Applications
Insourcing: In-house development of
applications
Can be time-consuming and costly
May lead to EC applications that better fit
an organization’s strategy and vision
Requires specialized IT resources
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Development Options for
EC Applications (cont.)
Buy the applications: turnkey
approach involves:
Buying a commercial package
Installing it
Starting it up
Buying a commercial package requires
much less time and money than
in-house development
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Development Options for
EC Applications (cont.)
Major advantages of the turnkey approach:
Many different types of off-the-shelf software are
available
It saves time and money (compared to in-house
development)
It requires fewer personnel
The company knows what it is getting before it
invests in the product
The company is not the first and only user
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Development Options for
EC Applications (cont.)
Major disadvantages of the turnkey
approach:
Software may not meet the company’s needs
Software may be difficult or impossible to modify
The company may experience loss of control
over improvements and new versions
Off-the-shelf applications can be difficult to
integrate with existing systems
Vendors may drop a product or go out of
business
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Development Options for
EC Applications (cont.)
Leasing an application package can
result in substantial cost and time
savings
Advantageous for:
Small to medium enterprises (SMEs)
Large company wants to experiment with a
package
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Development Options for
EC Applications (cont.)
How leasing can be accomplished
1. Lease the application from an
outsourcer and then install it on the
company’s premises
2. Lease the application from an ASP that
hosts the application at its data center
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Development Options for
EC Applications (cont.)
Other development options
E-marketplaces, exchanges,
auctions, or reverse auctions
Joint ventures and consortia
Internet malls
ISPs
Telecommunication companies
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Criteria for Selecting a
Development Approach
Flexibility
Information requirements
User friendliness
Hardware and software resources
Installation
Maintenance services
Vendor quality and track record
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Criteria for Selecting a
Development Approach (cont.)
Estimating costs
Personnel
Technological evolution
Scaling
Scalability: How big a system can grow in
various dimensions to provide more service;
measured by total number of users, number of
simultaneous users, or transaction volume
Sizing
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Criteria for Selecting a
Development Approach (cont.)
Performance
Latency: The time required to complete
an operation such as downloading a Web
page
Throughput: The number of operations
completed in a given period of time;
indicates the number of users that a
system can handle
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Criteria for Selecting a
Development Approach (cont.)
Reliability
Security
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Third-Party EC
Components and Suites
Electronic catalog: The virtual-world
equivalent of a traditional product catalog;
contains product descriptions and photos,
along with information about various
promotions, discounts, payment methods,
and methods of delivery
Merchant server software: Electronic
catalogs
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Third-Party EC Components
and Suites (cont.)
Merchant server software features:
Templates or wizards for creating a storefront
and catalog pages
Electronic shopping carts
Web-based order forms for making secure
purchases
A database for maintaining product descriptions,
pricing, and customer orders
Integration with third-party software for
calculating taxes and shipping costs and for
handling distribution and fulfillment
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Third-Party EC Components
and Suites (cont.)
EC suites offer builders and users
greater:
Flexibility
Specialization
Customization
Integration in supporting complete frontand back-office functionality
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Third-Party EC Components
and Suites (cont.)
EC suite functionality is distributed
across a number of servers and
databases instead of relying on a
single server and database, as is done
in merchant server systems
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Third-Party EC Components
and Suites (cont.)
Microsoft’s Commerce Server is a
comprehensive framework for building
tailored EC solutions including:
Product Catalog System
Targeting System
Profiling System
Business Processing Pipelines System
Business Analytics System
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Third-Party EC Components
and Suites (cont.)
IBM’s WebSphere Commerce Suite is
designed to support B2C, B2B, or private
exchange business models providing:
Order management
Collaborative filters
Portal capabilities
Localization support
E-coupons
Additional bundled products
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Third-Party EC Components
and Suites (cont.)
Oracle’s EC products
Oracle
Oracle
Oracle
Oracle
Oracle
Oracle
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iStore
Marketing
iPayment
Quoting
iSupport
Configurator
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Connecting to Databases and
Other Enterprise Systems (cont.)
Multitiered application architecture: EC
architecture consisting of four tiers: Web
browsers, Web servers, application servers,
and database servers
Separation of functions makes it easier to
change any tier (or layer) without impacting the
other layers
An application server can be designed to
interface or communicate with a wide variety of
databases and database management systems
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Connecting to Databases and
Other Enterprise Systems (cont.)
Several technologies can be used to
integrate an EC application with a
back-end database
EC applications also require integration
with a variety of other systems—ERP,
CRM, SCM, EDI, data warehouses, and
other important internal systems—
both inside and outside the company
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Connecting to Databases and
Other Enterprise Systems (cont.)
Enterprise application integration
(EAI): Class of software that integrates
large systems
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Rise of Web Services
Most EC sites require the integration of
software applications written in
different programming languages and
residing on different computer
hardware distributed across the
Internet
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Rise of Web Services (cont.)
Existing technologies make the
integration a difficult task for the
following reasons:
Platform-specific objects
Dynamic environment
Security barriers
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Rise of Web Services (cont.)
The role of XML
Web service: A software system identified by a
URI (uniform resource indicator), whose public
interfaces and bindings are defined and
described using XML
Because XML messages are text based, they can
be sent over the Web using standard Web
communication protocols
enhanced interoperability
easily passes through firewalls
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Rise of Web Services (cont.)
Key technologies in Web Services
Simple Object Access Protocol (SOAP):
Protocol or message framework for
exchanging XML data across the Internet
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Rise of Web Services (cont.)
Web Services Description Language
(WSDL): An XML document that defines
the programmatic interface—operations,
methods, and parameters— for Web
services
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Rise of Web Services (cont.)
Universal Description, Discovery, and
Integration (UDDI): An XML framework
for businesses to publish and find Web
services online
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Rise of Web Services (cont.)
A Web Service example—an airline Web
site that provides consumers with the
opportunity to purchase tickets online
The airline relies on car rental and hotel
partners to provide Web service access to
their systems allowing customers to rent
cars and reserve hotel rooms by logging
on to the airline site saving time and
money
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Rise of Web Services (cont.)
Web Services platforms
Microsoft.NET
IBM’s WebSphere
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Rise of Web Services (cont.)
Web Services in the mainstream
A survey of corporate IT buyers
conducted in 2002 found that close to
80% of the respondents expected to be
deploying Web services by the end of
2003
Among these buyers, the total spending
for Web services will reach an estimated
$3 billion during that same time period
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Rise of Web Services (cont.)
Most of these services will be deployed
on existing hardware and will provide
interfaces to existing applications
Some popular sites on the Web are
turning to Web services as a way of
providing access to their internal systems
Google
Amazon.com
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Rise of Web Services (cont.)
Google’s Web services provide a range of
possibilities including:
Issuing regularly scheduled search requests to
monitor the Web for new information on a
subject
Performing market research by analyzing
differences in the amount of information
available on different subjects over time
Searching via non-HTML interfaces, such as the
command line, pagers, or visualization
applications
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Rise of Web Services (cont.)
Amazon.com associates can use
Amazon.com’s Web services to:
Dynamically retrieve prices
Generate lists of products
Display search results
Produce recommendation lists
Add items to the Amazon.com shopping
cart directly on their Web sites
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Advantages and Hurdles
Advantages of Web Services
Rely on universal, open, text-based
standards that simplify the problems posed
by interoperability and lower the IT costs
of collaboration
Enable software running on different
platforms to communicate
Promote modular programming, which
enables reuse by multiple organizations
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Advantages
and Hurdles (cont.)
Advantages of Web Services (cont.)
Are easy and inexpensive to implement
because they operate on the existing
Internet infrastructure
Can be implemented incrementally, rather
than all at once
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Advantages
and Hurdles (cont.)
Barriers inhibiting widespread adoption
of Web Services:
The standards underlying Web services
are still being defined
One area where the Web services
standards are not well-defined is security
Higher-level standards for encoding data
are still required, especially in B2B
applications
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Vendor and
Software Selection
Few organizations, especially SMEs,
have the time, financial resources, or
technical expertise required to develop
today’s complex e-business systems
A major aspect of developing an EC
application revolves around the
selection and management of vendors
and their software offerings
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Vendor and
Software Selection (cont.)
Step 1: Identify potential vendors from:
Software catalogs
Lists provided by hardware vendors
Technical and trade journals
Consultants experienced in the application
area
Peers in other companies
Web searches
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Vendor and
Software Selection (cont.)
Step 2: Determine the evaluation
criteria including:
Characteristics of the vendor
Functional requirements of the system
Technical requirements the software must
satisfy
Amount and quality of documentation
provided
Vendor support of the package
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Vendor and
Software Selection (cont.)
Request for proposal (RFP): Notice sent
to potential vendors inviting them to
submit a proposal describing their
software package and how it would meet
the company’s needs
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Vendor and
Software Selection (cont.)
Step 3: Evaluate vendors and packages
Determine gaps between the company’s
needs and the capabilities of the vendors and
their application packages
Vendors and packages are given an overall
score by assigning an importance weight to
each of the criteria, ranking the vendors on
each of the weighted criteria and then
multiplying the ranks by the associated
weights
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Vendor and
Software Selection (cont.)
Step 4: Choose the vendor and package
Negotiate with short list of vendors to
determine how their packages might be
modified to remove any discrepancies with
the company’s desired EC application
Opinions of the users who will work with the
system and the IT personnel who will to
support the system should be considered
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Vendor and
Software Selection (cont.)
Step 5: Negotiate a contract
The contract specifies the price of the
software and determines the type and
amount of support to be provided by the
vendor
The contract must include detailed
specifications of the modifications required
The contract should describe in detail the
acceptance tests the software package must
pass
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Vendor and
Software Selection (cont.)
Step 6: Establish a service level
agreement
service level agreement (SLA): A formal
agreement regarding the division of work
between a company and its vendors
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Usage Analysis
and Site Management
Access log: A record kept by a Web
server that shows when a user
accesses the server; kept in a common
log file format, each line of this text
file details an individual access
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Usage Analysis
and Site Management (cont.)
Access logs provide statistics that can be
used for analyzing and improving marketing
and advertising strategies including
pageviews by:
time slot
customers’ log-in status
referrers
visitor’s hardware platform, operating
system, browser, and/or browser version
visitor’s host
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Usage Analysis
and Site Management (cont.)
E-commerce management tools:
Managing the performance of a Web site
is a time-consuming and tedious
administrative task
BMC Corp. (bmc.com) is a prominent
vendor of IT and Web management tools
is offers:
Patrol for e-business management
MainView for e-business management
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Managerial Issues
1. What is our business perspective?
2. Do we have a systematic
development plan?
3. Insource or outsource?
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Managerial Issues (cont.)
4. How should Web services be
deployed?
5. How should we choose a
vendor/software?
6. Have we analyzed the data?
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Summary
1. The major steps in developing an EC
application.
2. The major EC applications and their
major functionalities.
3. The major EC application
development options along with their
benefits and limitations.
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Summary (cont.)
4. EC application outsourcing options.
5. The major components of an
electronic catalog and EC application
suite.
6. Methods for connecting an EC
application to backend systems and
databases.
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Summary (cont.)
7. The rise of Web services.
8. Criteria used in selecting an
outsourcing vendor and package.
9. The value and uses of EC application
log files.
10. The importance and difficulties of EC
application maintenance.
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Real World Case:
Whirlpool’s Trading Portal
Whirlpool (whirlpool.com) is a world
leader in the manufacture and
marketing of major home appliances
Constantly improves the efficiency of
its operations while still providing topnotch service to members of its sales
chain
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Whirlpool’s Trading Portal (cont.)
Relationships with its middle-tier trade
partners
25% of Whirlpool’s trading partners but
only 10% of its revenues
Because of their size, these partners had
to submit their orders by phone or fax
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Whirlpool’s Trading Portal (cont.)
Whirlpool developed a B2B trading-partner
portal that enables its middle-tier sellers to
order online using:
IBM WebSphere Application Server, Advanced
Edition
IBM Net.Commerce
IBM HTTP Server
IBM VisualAge for Java
IBM Commerce Integrator with IBM MQSeries
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Whirlpool’s Trading Portal (cont.)
The portal, called Whirlpool Web World
allows middle-tier trade partners to select
the goods they want to order by checking
off the appropriate SKUs and indicating
quantities
The portal has cut the cost per order to under
$5-a savings of at least 80%
Whirlpool has also gained an extendable EC
platform that it has leveraged for other
applications
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Whirlpool’s Trading Portal (cont.)
The first-generation portal was
developed to give the company a
chance to test the Web waters
In the first 3 months, the amount of
revenue that flowed through the portal
equaled expectations for the first 12
months
The investment paid for itself in 8 months
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Whirlpool’s Trading Portal (cont.)
Whirlpool chose IBM for its secondgeneration portal because:
IBM had worked with Whirlpool on joint
product development and with Whirlpool’s
ERP system design and architecture
An overwhelming number of Fortune 100
companies use IBM e-business solutions.
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Whirlpool’s Trading Portal (cont.)
Whirlpool also developed its
e-business platform taking advantage
of Application Framework’s rapid
development cycles and associated
cost reductions
A year later the suite of IBM tools
enabled Whirlpool to get its
applications to market much faster
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