System Testing

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E-Commerce Architectures and Technologies
Rob Oshana Southern Methodist University
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Who am I ?

• Robert Oshana
• Adjunct Professor at SMU, School of Engineering
  and Applied Science, Graduate Software
  Engineering Program
• Engineering Manager, Texas Instruments

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Syllabus
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Syllabus

• Web page
• http//www.seas.smu.edu/eets/8392
• Times
• 0900 - 1200
• Location
• SMU Main campus
• Instructor
• Rob Oshana

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Syllabus

• Office hours after/before class or by
  appointment
• Phone
• 214-415-9690 or 281-274-3211
• Internet
• oshana_at_airmail.net
• Book Scaling for E-Business, by Daniel A.
  Menasce and Virgilio A.F. Almeida, Prentice Hall,
  ISBN 0-13-086328-9

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Course Outline

• 08/26/00
• Introduction
• What is internet commerce?
• E-Commerce technologies
• Strategic Issues
• Case Studies

• 09/02/00
• Internet technologies and infrastructure
• Business to Business
• Business to Consumer
• Models for E-Business

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Course Outline

• 09/09/00
• System Design Issues
• Network protocols
• Intranets/Extranets
• Client/Server
• Design Principles

• 09/16/00
• Customer Behavior Models
• CBMG
• CVM
• Anatomy of E-Business functions

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Course Outline

• 09/23/00
• Infrastructure for Electronic Business
• Quantitative analysis of authentication services
  and payment systems

• 09/30/00
• Capacity planning for E-Business
• Performance modeling concepts

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Course Outline

• 10/07/00
• Performance models for E-Business sites
• Modeling contention for software servers

• 10/14/00
• Midterm Exam

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Course Outline

• 10/21/00
• Characterizing E-Business workloads
• Preparing for E-Business waves of demand

• 10/28/00
• E-Commerce Technologies
• HTML
• DHTML
• Images, links, and URLs

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Course Outline

• 11/04/00
• E-Commerce Technologies
• XML
• Cookies
• CGI
• personalization

• 11/11/00
• E-Commerce Technologies
• Java
• Applets
• Java Platform
• Java Security

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Course Outline

• 11/18/00
• E-Commerce Technologies
• JINI
• Technology Building Blocks
• Enterprise Java Beans
• Active X

• 11/25/00
• Thanksgiving Vacation

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Course Outline

• 12/02/00
• E-Commerce tools and building blocks

• 12/09/00
• Final Exam

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Student Evaluation

• The course grade will be computed as follows
• Midterm Exam 40
• Final Exam 40
• Homework/Project 20

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Questions so far?
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The World of E-Commerce
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Internet Economy
We Are Moving Towards a Worldof a
BillionConnectedComputersand a Trillion
Connected Dollars
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E-Business

• Business processes automated among networked
  computers
• Once in a generation change in the way business
  is transacted
• mechanical support for intellectual and
  human-centered activities of business
• strategy
• marketing
• customer relations

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E-Commerce

• Sales transactions completed on the Internet
  (agreement and payment)
• Business to Consumer (B2C)
• personal payment, personal information, trust
• Business to Business (B2B)
• processes, documents, ongoing relationships
• Marketplaces (exchanges, etc)
• many B and C meeting together to do business

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Phases of Public Excitement

• B2C
• Portals
• B2B
• e-Marketplaces
• e-Business
• Pervasive e-commerce
• Service-oriented Commerce

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Phases of Public Excitement - Challenges

• B2C storefront, images, payment, auction,
  authentication, privacy
• Portals content, collaboration
• B2B protocols, processes, robustness
• e-Marketplaces negotiation, services, databases

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Phases of Public Excitement - Challenges

• e-Business business processes, models,
  stability, inter-organizational federated
  computing
• Pervasive e-commerce scale, user experience,
  application and content adaptation
• Service-oriented Commerce highly distributed
  computing, management

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Fundamental Business Problem
Make it known to potential buyers
Something to sell
Accept payment
Deliver the goods or services
Provide appropriate service
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Why the internet and why now?

• The top line
• ability to reach new customers
• create more intimate relationship with all
  customers
• every business has a global presence
• computing and information technology allows us to
  know more about our customers
• use it to improve relationships and create sales

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Why the internet and why now?

• The bottom line
• drastic cost reductions for distribution and
  customer service
• internet lowers distribution costs for
  information
• improves ability to keep information current
• customers demanding more and more information
  about products and services
• information may be the product

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Key properties of the internet

• Internet is interoperable
• a computer is connected to the Internet if it can
  communicate with any other computer connected to
  the Internet
• standardized protocols
• universal naming, addressing, routing
• no prearranged agreements

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Key properties of the internet

• The Internet is global
• based on universal connectivity
• used to distribute software
• worldwide base of users with a common set of
  software
• broad base of potential users

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Key properties of the internet

• The Web makes it easy
• highly functional multimedia content easily
  available to users worldwide
• connection possible for people with little or no
  computer experience

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Key properties of the internet

• Costs of network shared across multiple
  applications and borne by end users
• most businesses and consumers connected to
  Internet pay for their own connection
• network then free to use for various purposes

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Key properties of the internet

• provider of information does not need to pay for
  a distribution system
• users of service pay for distribution
• cost amortized by many applications and many users

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Access to a global market

• Internet accelerating globalization
• worldwide high-bandwidth communications
• cost is the same whether next door or around the
  world
• everybody on the internet has a global presence

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Access to a global market

• still must deal with international issues
• payment
• currency
• shipping
• national,regional, local regulations

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Dramatic Reduction in Distribution Costs

• Printed brochures can cost several dollars for
  each recipient
• Brochureware on web site is basically free
  (small one time setup charge)
• up to the minute
• more for less
• accurate
• searchable

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Digital goods

• Selling information or software in-line
• delivered over the net cheaply and efficiently
• no expensive packaging
• boxed
• CD-ROMs
• packing material
• cost is the same for customers everywhere

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Strategic Issues

• Concentration vs Empowerment
• great concentration of suppliers?
• thousands of small and medium sized suppliers in
  global niche markets?
• probably both
• few large music supersites
• market serving critical mass for antique buggy
  whips

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Strategic Issues

• New competitive challenges
• not necessary to create an expensive distribution
  channel to enter a new territory
• formerly disjoint enterprises in direct
  competition now
• selling financial instruments
• done by banks and brokerages
• publishers provided comparitive information
• internet blurs these lines
• is publisher in the trading business or is
  brokerage now a publisher?
• who owns the customer relationship?

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What is Internet Commerce?

• The use of the global Internet for purchase and
  sales of goods and services, including service
  and support after the sale
• Electronic commerce is more general
• longer history (behind the scenes)
• includes the use of computing and communication
  technology in financial business, on-line
  reservation systems, order processing, inventory
  management, etc

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What is Internet Commerce?

• Electronic Data Interchange (EDI)
• umbrella term for many different types of
  activities
• specialized for a perticular trading relationship
• often a long process
• message types
• data formats
• EDI and the Internet do not exclude one another
• EDI specifies types of messages
• Internet is a way of moving data

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What is Internet Commerce?

• Internet commerce transcends many of the
  restrictions of EDI
• communication over shared public network rather
  then building a specialized network
• spontaneous business transactions with no prior
  relationship
• once a relationship develops, EDI (or another
  method) can be used to work more effectively

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Business Issues in Internet Commerce

• Must have a clear idea of business goals
• technology cannot help you achieve those
• goals can change to take advantage of technology
• Internet may allow a company to achieve those
  goals in way that would have been too expensive
  or difficult to achieve without it

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Questions businesses must ask of any new idea

• How does it fit with our strategy? Should our
  strategy change?
• What does it mean to our competitive situation?
• Do we expect return in the short term, or is this
  a long-term investment?
• How much will it cost? What do we expect to
  accomplish?

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Questions businesses must ask of any new idea

• How will we measure the success?
• How does this affect our sales channels, our
  partners, our suppliers?
• Internet should not be exempted from such
  thinking!!

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Investment can vary

• Cost of getting started may be low
• big difference between a few static web pages and
  real-time catalog updating, customer profiling,
  etc
• Getting a web site up and running as soon as
  possible vs planning for growth and evolution
• Dont wait until you build the perfect system
• takes too long and technology changes too fast

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Technology Issues in Internet Commerce

• 1. How to apply Internet technology to business
  problems
• Web
• databases
• high-speed networking
• cryptographic algorithms
• multimedia

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Technology Issues in Internet Commerce

• putting all these technologies together can be
  challenging
• toolkits and packaged application software now
  available to help

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Technology Issues in Internet Commerce

• 2. Pace of change
• fact of life on the internet
• no end in sight
• successful sights must be able to incorporate new
  technologies quickly
• coherent system architecture
• focus on the ends and the fundamental principles
• packaged software helps by amortizing cost over
  many customers

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Who owns internet commerce in an Organization?

• Sales and marketing?
• MIS group?
• Accounts receivable group?
• Answer is critical to success
• Confusion results when more than one group thinks
  it is responsible
• duplicate efforts and investments

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Who owns internet commerce in an Organization?

• A combined effort
• strengths of many groups required
• sales and marketing effective presentation of
  products/services on the Net
• MIS operating/outsourcing 24/7 commerce systems
• etc

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Buyer/Seller Transactions
Information flow
Seller
Buyer

• Digital data and
• documents
• Multimedia content
• Software programs
• Products/services

• Digital Products
• Services
• Information

Online transactions
Payment flow
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Product type Transactions
Producers
Consumer

• Digital data and
• documents
• Multimedia content
• Collateral
• information
• Customer
• participation

• Digital Products
• Services
• Processed orders

Online production process
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Network enabled business practices
Technical data interchange (engineering)
Mass customization (demand-driven manufacturing)
Electronic data interchange (procurement)
Virtual and team based enterprises
Network enabled Business practices
Electronic mail (communication)
Outsourcing and coordination of logistics
Document workflow systems
Desktop video conferencing
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Internet Business Strategy
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Commerce and Technology Revolutions

• Changes in technology or infrastructure affect
  commerce in two phases
• improve old processes or business models
• completely reinvent the business
• Railroad transition took 50 years
• Internet transition occurring much more quickly

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Changes from rail transportation

• Before railroad
• travel between Boston and New York in four days
• 8,000 US time zones
• Vacation near home
• 5-15 cents per mile for a ton of goods

• After the railroad
• travel between Boston and New York in less than
  one day
• 4 US time zones
• Vacation away from home
• 1 cent per mile for one ton of goods

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Comparison of Railroad and Internet Infrastructure
Railroad (1825-
Internet (1969-
1890)
1999)
New
First water-
First global
infrastructure
independent
public
transportation
information
infrastructure
infrastructure
Original
Passenger traffic,
Military and
purpose (not
military
civil defense
commerce)
research
Importance of
Width of tracks
Network and
standards
(gauge)
communication
protocols
(TCP/IP)
New security
Railway police
Security
standards
hired to manage
protocols and
new crimes
standards
Source of
Steel production,
Software,
innovation
accounting,
networking,
logistics
fiber optics
Accelerate
Industrial age (key
Information
fundamental
enabler steam
age (key
economic trends
engine)
enabler
computer)
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Historical Analogy

• The utility of a network increases as the square
  of the number of nodes connected Metcalfe
• Routing goods between arbitrary factories vs
  routing information between arbitrary computers

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Other Factors

• Economies of scale
• larger operations now possible (one store)
• Source of competitive advantage
• single sites can offer full services
• Inventory needs
• just in time delivery of goods (or none at all!)
• Variety, choice and availability
• distribution bottlenecks eliminated
• New opportunities

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Internet Value Proposition

• Used to transform customer relationships

Supplier-centered
Customer-centered
Supplier chooses hours of
Supplier always available,
operation
customer chooses hours
Supplier chooses
Service delivered at
locations of service
customer location
Supplier delivers services
Customer serves himself
Focus on supply chain
Focus on customer needs
One to many
One to one
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Internet Value Proposition

• Displace the source of value

Physical world
Information world
Atoms
Bits
Physical value
Digital value
Economies of scale
Economies of scope
Mass produced
Mass customized
Information value
Knowledge value
Distribution as a constraint
Distribution as an enabler
Local
Global
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Internet Business Strategies

• Channel master
• Customer magnet
• Value chain pirate
• Digital Distributor

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Channel Master

• Use the internet to build deeper relationships
  with customers in order to sell ones traditional
  goods and services
• Organized around products and the best possible
  delivery
• Re-engineer customer-facing strategies
• Must integrate into existing operations

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Channel Master

• Cisco
• Attract get and keep customer interested
• full online catalog price change notification
• Interact turn interest into orders
• online catalog for searching intelligent agents
• Act coordinate order fulfillment
• order management DBs order status
• React provide after-sales service
• comprehensive self help Bug Alert mechanism

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Customer Magnet

• Internet used to attract a customer group
• knowledge sharing environment
• aggregated supplier access
• Organized around customer group
• Broad range of products and services
• Destination of choice for a whole category of
  customers
• Must integrate many value chains into a
  customer-facing whole

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Customer Magnet

• Tripod (320,000 Gen Xers!)
• Attract get and keep customer interested
• free information links to many sites
• Interact turn interest into orders
• partners with banks for home banking service
• Act coordinate order fulfillment
• 24 hour home banking service access to account
• React provide after-sales service
• 24/7 customer service online forums for advice

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Value Chain Pirate

• Capturing someone elses margins by displacing
  them from the value chain
• Leapfrog upstream and downstream providers to
  more directly connect suppliers with customers
• Seeks the positions on the value chain which
  offers the greatest leverage
• Must use the commerce chain to support a new
  buyer/supplier relationship

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Value Chain Pirate

• ONSALE (24 hr online auction for computers and
  consumer electronics)
• Attract get and keep customer interested
• customers notified of upcoming auctions
  (profiles)
• Interact turn interest into orders
• auctions open 24 hours a day

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Value Chain Pirate

• Act coordinate order fulfillment
• Automated shipping and tracking over net
• React provide after-sales service
• inquiries managed by e-mail (customer profiles)

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Digital Distributor

• Eating away at traditional value propositions
• focus on pieces that can be delivered better over
  the internet
• Organized around disaggregating traditional
  bundles of products and reaggregating for more
  efficient delivery over the web
• Must create a new customer value chain from
  scratch

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Digital Distributor

• Classified2000 (web based classified advertising
  in many categories)
• Attract get and keep customer interested
• free links to sites related to purchases
• Interact turn interest into orders
• e-mail to customers with new profiles postings
• Act coordinate order fulfillment
• links to intermediary to handle transactions
• React provide after-sales service
• campaign reports sent to advertisers

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New Competitive Threats

• Channel master
• Can competitors create superior channels to your
  customers?
• Customer magnet
• Can competitors attract your customers and sell
  them your products?

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New Competitive Threats

• Value chain pirate
• Can competitors hijack your position in the value
  chain?
• Digital Distributor
• Can competitors disaggregate your value
  proposition?

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Example - traditional full service broker

• Channel master
• Another brokerage goes online with full services
  and more convenient channel
• Customer magnet
• Motley Fool forms a community of avid investors
  and offers brokerage services under their brand

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Example - traditional full service broker

• Value chain pirate
• ETrade bumping traditional brokers out of their
  value chain
• Digital Distributor
• Wall Street City selling analysis without trading
  services from their web site

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New Creative Opportunities

• Channel master
• Can you improve your customers buying experience
  by improving cost, convenience?
• Customer magnet
• Do your customers share broad interests that lend
  themselves to new bundles of products?

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New Creative Opportunities

• Value chain pirate
• Can you jump over your direct suppliers or
  customers and capture their margins?
• Digital Distributor
• What parts of other companies value chain can you
  improve by selling them over the web?

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E-Business Technology
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Introduction

• Electronic business growing rapidly
• So are the problems associated with this growth
• Download times cause potential customers to leave
• High availability is a must
• Cannot just wing it!
• Need quantitative analysis and models

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Quantitative Approach

• What determines the quality of service of an
  E-Commerce site?
• Site architecture
• network capacity
• system software structure
• Unpredictable public behavior
• usage patterns can change quickly
• breaking news for a newspaper
• advertising campaign

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Quantitative Approach

• Can I handle the surge in volume?
• How can I justify a costly site expansion?
• Do I have enough servers to handle the peak
  traffic?
• How can I guarantee quality of service different
  scenarios?
• How fast can I scale my architecture?

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Electronic Business Challenges

• Computers are becoming more pervasive
• Wireless internet devices will add an order of
  magnitude to the traffic
• Local access technologies will change workloads
  arriving from traditional end systems
• Software agents will lead to more traffic

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Electronic Markets

• Definition any form of business transaction in
  which the parties interact electronically
• A transaction involves a number of different
  interactions between parties
• marketing
• ordering
• payment
• fulfillment

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Electronic Markets

• Allows participating buyers and sellers to
  exchange goods and services with the support of
  information technology
• Three main functions
• matching buyers and sellers
• facilitating commercial transactions
• providing legal infrastructure

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Electronic Markets

• Players
• businesses
• individuals
• government organizations