e Biz Notes PDF

e-Business (2008) Class Notes (Semester 1) Prof. Max DCosta | max_dcosta@rediffmail.
com | cell: +91 9821439790
e-Business & e-Commerce Concepts

Semester 1
For MET School of Business Management
Page 1 of 91
e-Business (2008) Class Notes (Semester 1) Prof. Max DCosta | max_dcosta@rediffmail.com | cell: +91 9821439790
TableofContents
Introduction ......................................................................................................................... 4
E-Commerce ....................................................................................................................... 5
What is e-Business? ............................................................................................................ 6
Advantages of e-Business ............................................................................................. 19
e-Business - Some misconceptions ............................................................................... 21
e-Business v/s Traditional Business.............................................................................. 21
Types of e-Business .......................................................................................................... 24
Business-to-Consumers (B2C)...................................................................................... 24
Business-to-Business (B2B) ......................................................................................... 29
Challenges in implementing B2B initiative .................................................................. 35
Business-To-Government (B2G) .................................................................................. 38
Other Business Models / Hybrid Business Models........................................................... 40
2. Reverse markets: ....................................................................................................... 40
3. Infomediaries: ........................................................................................................... 41
4. Vertical Integration Portals: ...................................................................................... 41
Potential challenges to e-Business .................................................................................... 42
Implementing e-Business .................................................................................................. 43
Building an e-Business strategy ........................................................................................ 45
Factors to consider before setting up a website ................................................................ 46
e-Business and CRM......................................................................................................... 47
Value Chain .................................................................................................................. 47
Components of e-Business............................................................................................ 47
Customer Relationship Management and (eCRM) ....................................................... 48
Goal of CRM................................................................................................................. 49
What data do you really have on your customers? ....................................................... 49
Aspects of CRM............................................................................................................ 50
CRM Strategy ............................................................................................................... 51
Technology considerations for implementing CRM..................................................... 52
Is CRM for everyone? ................................................................................................... 52
How e-CRM helps improve customer satisfaction? ..................................................... 54
ERP (Enterprise Resource Planning) ............................................................................ 56
e-Business Models ........................................................................................................ 62
What is a Value Chain Integrator (VCI) ....................................................................... 62
(Refer to attached Case Studies on Value Chain Integration)What is an Electronic
Marketplace................................................................................................................... 62
What is an Electronic Marketplace ............................................................................... 63
e-Business models by provider & consumer ............................................................. 64
Business to Business (B2B) .................................................................................... 64
The evolution of B2B.................................................................................................... 65
Types of B2B Marketplaces.......................................................................................... 65
Business to Consumer (B2C) .................................................................................. 67
B2B versus B2C............................................................................................................ 70
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Business to Government (B2G) .............................................................................. 71

Steps to consider while implementing your e-Business ............................................... 75
Factors to focus on while setting up your e-Business initiatives .................................. 77
How to make your websites search engine friendly?.................................................... 79
Factors to consider while creating your website ........................................................... 79
World Wide Web Concepts .............................................................................................. 80
Introduction ................................................................................................................... 81
Difference between the Internet and the World Wide Web .......................................... 81
Advantages of the World Wide Web ............................................................................ 82
Web Clients and Web Servers ...................................................................................... 83
Client / Server Architecture .......................................................................................... 84
Hypertext Transfer Protocol (http://) ............................................................................ 85
Transmission Control Protocol / Internet Protocol (TCP/IP) ....................................... 85
Uniform Resource Location (URL) and Domain Name ............................................... 86
Common Gateway Interface (CGI)............................................................................... 88
Directories and Search Engines .................................................................................... 88
What sets the Web apart? .............................................................................................. 89
Lets sum up ...................................................................................................................... 90
Terminal exercise .............................................................................................................. 91
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Introduction
Globalization has brought the world closer and also enables to homogenize the experiences of
everyday life around the world. Global technologies like various new technologies, new markets
has also been implemented to business world. This leads to the origin of new concepts like eCommerce and e-business.
The entrepreneur has to really think in terms of new strategies and new business models in order
to survive and top the market. E-Commerce and e-Business are two prominent buzzwords in
todays business environment. Many people have heard about it but very few really understand it.
Being managers, we need to learn these terms because the technologies, strategies and
applications that currently constitute e-business will affect the Small-to-Mid size Enterprise (SME)
marketplace.
I hope you will enjoy knowing about e-business, types of e-business models that currently exist.
In this module, we are going to discuss about e-business, the concepts associated with it and
how these new models are changing the way companies think about their business functions.
Objectives:
After going through this module, you will be able to
Describe the term e-Commerce.
Describe the term e-Business.
Give the advantages of e-Business.
Identify the importance of e-Business.
Identify the kind of e-Business model given to you.
Differentiate e-Business from traditional business.
Evaluate the business plan given to you.
Compare advantages and challenges of e-Business.
Exercise:
Many of you are familiar with the term commerce. Also many of you might be commerce
graduates. Can you define the term commerce?
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E-Commerce
Have you come across any advertisement while surfing through net? Have you ever book the
tickets directly from Internet for the movie released in the multiplex next to your college building?
Yes, this is all due to e-Commerce.
E-Commerce:
Electronic commerce can be referred to as a marketplace on Internet. It primarily associates with
distributing, buying, selling, marketing and servicing of products or services via electronic
systems such as the Internet and other computer networks.
E-commerce is the complete set of processes that support commercial /business activities on a
network.
Multiple users (buyers and sellers) use electronic networks to transmit information (e.g., Credit
card information, membership information, and order requests) that can facilitate the purchase of
goods or services.
The techniques like credit cards, automated teller machines (ATM) and telephone banking are
forms of e-commerce. Nowadays, e-commerce also includes Enterprise Resource Planning
(ERP), data mining and data warehousing.
Supplier offering services to e-commerce practitioners are i-Bill, Moneybookers, PayPal,

WebMoney, Yahoo, Google Checkout, Paymate, PaidByCash, ewise, Verisign.
Biggest five online e-Commerce sites are ebay.com, Yahoo.com, Amazon.com, Google.com,
Buy.com
The term e-commerce has changed over the last 30 years. E-commerce originally meant the
facilitation of commercial transactions electronically using technology like Electronic Data
Interchange (EDI) and Electronic Funds Transfer (EFT).
Activity:
Find out more information about Electronic Data Interchange (EDI) and Electronic Funds Transfer
(EFT).
Although the benefits of e-commerce systems are enticing, developing, deploying, and managing
these systems is not always easy. In addition to adopting new technology, many companies will
need to reengineer their business processes to maximize the benefits of e-commerce.
Exercise:
Explain the term e-Commerce in your own words.
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What is e-Business?
Yeah! Now we can sit at home and can ask for yummy chocolate brownie cake from a shop
located at USA. You just need to create an account for the same. All this is possible because of
e-Business. But e-Business is more than that. So lets understand about it in detail. e-Business
may be defined as any business process that relies on an automated information system.
Electronic business methods enable companies to link their internal and external data processing
systems more efficiently and flexibly, to work more closely with suppliers and partners, and to
better satisfy the needs and expectations of their customers.
e-Business is a collection of tools and practices involving Internet technologies that allow a
company to create, maintain and optimize business relationships with customers and other
businesses. e-Business can be conducted over the public Internet, through internal intranets and
over secure private extranets.
In practice, this involves the introduction of new revenue streams through the use of eCommerce, the enhancement of relationships between clients and partners and improving
efficiency from using knowledge management systems.
e-Business software solutions allow the integration of intra and inter firm business processes. eBusiness can be conducted using the Web, the Internet, intranets, extranets, or some
combination of these. e-Business can include any business transactions that is information
laden including inter and intra company communications, procurement, sales and marketing,
business processes and after sales service. e-Business involves transactions like electronic
purchasing, supply chain management, processing orders electronically, handling customer
service, and cooperating with business partners.
In order to undertake an e-Business initiative, a company must be ready to redesign its old
methods of doing business. Independent research shows that nearly 60% of the businesses in
the Middle East are still doing business independently. Approximately around 70% people in this
world are still unclear about e-Commerce.
Remember this:
e-Business is more than just e-commerce. E-Business refers to more strategic focus with an
emphasis on the functions that occur using electronic capabilities, whereas e-Commerce is a
subset of an overall e-Business strategy.
e-business means using the Internet or related technologies for any of your normal business
operations. You might use it for buying, selling, advertising, managing you name it.
Customers want companies they do business with to improvise on the following:

a) Speed
b) Security
c) Convenience
d) Personalization
e) Price
f) After Sales Service
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To give Customers what they want and to survive, companies have now begun to
Outsource the following businesses using Offshore / Near Shore models, namely:
BPO (Business Process Outsourcing) / ITES (IT Enabled Services)

Jobs outsourced under BPO / ITES
Accounting & Payroll

Employee Benefits Management
Finance and Admin
Human Resources
Call Center
Customer Service Activities
ITO (Information Technology Outsourcing)

Jobs outsourced under ITO
Hiring a third party company / service provider for Application Management, Application
Development, Data Center Operations and Testing & Quality Assurance.
KPO (Knowledge Process Outsourcing)

Jobs outsourced under KPO
Legal Services
Engineering R&D
Product Development
Market Research & Analytics
Writing & Content Development
Pharma R & D
Healthcare Services
Education & Training
BTO (Business Transformation Outsourcing)

Jobs outsourced under BTO
The service providers contribute to transform the business into a leaner, dynamic, agile & more
flexible organization. Examples of BTOs are Consultancy entities.
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A few prominent KPOs and the skills required:

Segments
Services
Skill Sets Required
Legal Services
Reviewing Transactional & Litigation docs,

drafting contracts, Due Diligence Reports,
Prosecuting Patents etc.
Knowledge of US/UK laws, adept in legal application,

ability to reason & research
Engineering R&D
2D,3D Modeling, conversion, technical specs

for tenders etc.
CAD/CAM, Drafting & Modeling, Prototyping, Product

Design skills
Mkt Research &

Analytics
Primary & Secondary Research, Conversion of

findings to knowledge, formatting reports
Statistical tools, research techniques, report writing &

presentations
Writing & Content

Dev
Editorial, content delivery, digitization of

content, data warehousing, proof reading,
template designing etc.
English communication skills, journalism, experience in

writing skills
Pharma R&D
Research & Development, Drug Discovery,

Clinical Research
Doctors, Masters degree in Science, PhDs
Healthcare Services
Diagnostics, Genetic Profiling etc.
Medical Degree, Specialized subject knowledge
Education & Training
E-Learning, Curriculum Design, Content

Development
Teaching methods / techniques, cultural sensitivity,

online teaching methods etc.
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e-Business might affect some of the business processes. These business processes are:
Supply Chain Management and supplier processes

Customer Relationship Management
Enterprise Resource Planning
Supply chain Management (SCM) and Supplier processes:

Supply chain management is the process of planning, implementing, and controlling the
operations of supply chain with the purpose to satisfy customer requirements as efficiently as
possible. Suppliers are linked electronically to automate procurement, ordering, inventory control
and payment processing.
SCM is about optimizing business processes and business value in every corner of the
enterprise from your suppliers supplier to your customers customer.
Using technology manufacturers & vendors can share sales forecasts, manage inventories,
schedule labor, optimize deliveries & improve productivity.
Supply Chain Components
Upstream Supply Chain: includes the activities of the suppliers (Manufacturers /

Assemblers) and their suppliers.
Internal Supply Chain: includes all in-house processes used in transforming the inputs
received from suppliers into the organizations output.
Downstream Supply Chain: includes all the activities involved in delivering the product
to the final customers.
4 Major Supply Chain drivers that affect a companys cost are:
Inventory (e.g. Dell and Amazon)

Facilities (e.g. Amazon)
Transportation (e.g. Software companies)
Information (e.g. All)
Assignment:
Find out how Dell & Amazon handle their inventories.
Find out how inventories are controlled in the Automobile Spare Parts Industry.
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Some of the processes included within SCM are:
Procurement
Inventory Management
Forecasting
Warehousing
Logistics
With a little automation in the SCM processes we value in the form of:
E-Procurement
Automatic Inventory Management
Availability of Data Metrics to predict trends and forecasts
Using RFID to manage warehousing
Online tracking
ERP Modules for logistics
Order Aggregation & Drop Shipping
What is Drop Shipping in SCM &

Drop shipping is a product delivery method in which the seller (retailer) accepts payment for an
order, but the customer receives the product(s) directly from the manufacturer. In a drop shipping
arrangement, the retailer acts as a middleman between the manufacturer and the customer. His
profit in the transaction is the difference between the wholesale and retail price of the items sold.
Drop shipping is very beneficial to smaller retail shops, internet-only storefronts and those who
primarily use catalogs for sales. Customers of these outlets don't always expect to walk out with
their purchases, so a slight delay between ordering and drop shipping is not a drawback. A
representative item may be displayed on the store's shelves or pictured in its catalog, but the
actual product purchased may be sitting in a factory's warehouse 3000 miles away.
One of the biggest problems drop shipping addresses for retailers is inventory control. In a
traditional retail store setting, products are ordered in bulk from the manufacturer and must be
stored in a secure area until displayed. This means maintaining a proper storage area, hiring
employees to handle the stock and investing in security measures to prevent theft. With drop
shipping, the retailer does not keep a large inventory on the premises. More space can be
devoted to displays, and fewer employees need to be hired to handle shipping, receiving,
inventory and security.
Many manufacturers also embrace the idea of drop shipping, because the retailer essentially
becomes an additional salesman. Delivering large orders or bulky items to a retailer costs money
in handling and fuel. With drop shipping, the manufacturer can use inexpensive shipping methods
(UPS, FedEx, local delivery companies) to get the ordered product to the customer directly.
Manufacturers also own much more secured warehouse space than most retailers, so their
products remain safe until ordered.
There are some drawbacks to using a drop shipping system, however. Some manufacturers will
not allow for drop shipping at all. Personnel have to be assigned to process and ship these
individual orders, which means the main shipping and receiving system may become bottlenecked. Some companies only deal in bulk orders to larger retailers, making it impossible for
smaller outlets to custom order only a few items. The customer may have to assume the cost of
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shipping as well as the retail price, which could be prohibitive in the case of large items like
furniture or high-end electronics.
When drop shipping is available, many small retailers and internet-only stores discover it solves
many more problems than it creates. Shipping is left up to professionals, there is virtually no
inventory to track and more retail space is available. Smaller shops can offer exotic or over sized
products without worrying about importation costs or expensive storage. Manufacturers also
benefit from reduced shipping costs and more sales exposure of their products.
Why are online merchants turning to Drop Shipping:
To minimize stock on hand

To decrease overall shipping costs
To cut down on delivery time to consumers
Online sellers collect orders online, send them to the manufacturers / warehouses, who in turn
drop ship the items directly to the customers.
The online merchant does the promotion & collection of payment, and the supplier looks after the
order fulfillment.
Advantages of Drop Shipping to Online Sellers:
Since warehousing companies buy in huge volumes, they are able to offer lower
Since warehousing companies buy in huge volumes, they are able to offer lower prices
on shipping which will benefit your consumers who buy from you online
The online seller does not need to make capital investment
No danger of having to pile outdated items in the inventory
Online sellers can now promote many items without having to stock it physically
Instead of worrying about inventory & delivery, the online seller can focus on listening to
market trends and add new products on the site
Dangers of Drop Shipping to Online Sellers:
You may attract many companies who would like to enter into a drop shipping agreement
with you to sell their goods on your site, choose your tie-ups wisely
Check to see if your tie-ups will ship international for your overseas customers?
Check to see your tie-ups shipping methods and their logistics partners
See if your tie-ups offer your credit (which is a rare case)
Ask your tie-ups about their returns policy & who would foot the bills for customer returns.
Check to see your tie-ups response times to an order
Check to see your tie-ups credibility
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How does SCM become e-Business enabled:

Companies with a network of suppliers, vendors and distributors need a faster way to
disseminate info & enable two way communications. This is done over the web using:
Extranet sites
Web Servers
Groupware (email integrated collaborative software)
Extranet
An extranet is a private network that uses Internet protocols, network connectivity, and possibly the public
telecommunication system to securely share part of an organization's information or operations with
suppliers, vendors, partners, customers or other businesses. An extranet can be viewed as part of a
company's intranet that is extended to users outside the company (e.g.: normally over the Internet). It can be
understood as an extended Intranet which is open to the organizations employees, customers, vendors,
stakeholders etc.
Briefly, an extranet can be understood as an intranet mapped onto the public Internet or some other
transmission system not accessible to the general public, but is managed by more than one company's
administrator(s). For example, military networks of different security levels may map onto a common military
radio transmission system that never connects to the Internet.
Web Servers
A Web Server is a Computer running a Web Server Computer program that is responsible for accepting
HTTP requests from web clients, which are known as web browsers, and serving them HTTP responses
along with optional data contents, which usually are web pages such as HTML documents and linked
objects (images, etc.). For e.g. Hotmail Web Servers serve millions of users their hotmail when they connect
to the hotmail system via their browsers.
Groupware
Collaborative software (also referred to as groupware or workgroup support systems) is software designed
to help people involved in a common task achieve their goals. Collaborative software is the basis for
computer supported cooperative work. Such software systems as email, calendaring, text chat, wiki belong
in this category. It has been suggested that Metcalfe's law the more people who use something, the more
valuable it becomes applies to such software.
Examples of some popular groupware tools can be found at:
www.teamspace.com
www.nextgroupware.com
www.egroupware.org
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SCM flows can be divided into three mail flows:
The Product Flow:

(Includes Logistics & Reverse Logistics)
The Information Flow:

(Includes information on Orders and Delivery of Orders)
The Finances Flow:

(Includes Credit Terms, Payment Schedules, Consignments & Title Ownerships)
There are two main types of SCM Softwares:
Planning Softwares:
Execution Softwares:
Components of a SCM Planning & Execution Software:
Strategic Network Design:

(Tools for determining most effective number, location, size and capacity of facilities to
meet customer service goals, time-phased tactical planning for determining where and
when to make, buy, store, and move the product through the network)
Demand Planning:
(Forecasting tools to predict customer demand with accuracy)
Distribution Planning:
(Inventory Analysis, synchronized replenishment for all network points)
Manufacturing Planning:
(Constraint based advanced planning system for engineering, assembly and repetitive
manufacturing environments)
Production Scheduling:
(Production capacity scheduling for engineering, assembly and repetitive environments,
batch processing production facilities)
Transportation & Logistics Planning:

(Transportation planning, procurement, route planning, transportation management,
parcel shipping and logistics)
Warehouse Management System:

(end-to-end fulfillment & distribution including inventory, labor, work and task
management, cross docking, value-added services, yard management, multiple inventory
ownership etc.)
RFID (Radio Frequency Identification Device):

(Tracking solutions using RFID Technology, continuous replenishment of goods on shelf
using RFID)
Event Management:
(Real-time exception management tool for detecting conditional changes anywhere in the
supply chain and communicating it instantly for resolution)
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Reverse Logistics in Supply Chain Management

Reverse logistics represents one of the largest and most overlooked opportunities for savings and
improvement. At most companies, returns are primarily managed through a series of
disconnected and paper-intensive processes through multiple channels taking enormous time
before the goods can be returned to the selling floor thus bringing fore the fear of becoming
obsolete. Equally problematic is that companies and customers have limited visibility into the
returns process.
Reverse logistics stands for all operations related to the reuse of products and materials. It is "the
process of planning, implementing, and controlling the efficient, cost effective flow of raw
materials, in-process inventory, finished goods and related information from the point of
consumption to the point of origin for the purpose of recapturing value or proper disposal. More
precisely, reverse logistics is the process of moving goods from their typical final destination for
the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities
also may be included in the definition of reverse logistics." The reverse logistics process includes
the management and the sale of surplus as well as returned equipment and machines from the
hardware leasing business. Normally, logistics deal with events that bring the product towards the
customer. In the case of reverse, the resource goes at least one step back in the supply chain.
For instance, goods move from the customer to the distributor or to the manufacturer.
The area of reverse logistics is likely to be more and more important in the years to come. We
concentrate on the following problem in reverse logistics: inventory policies when manufacturing
and re-manufacturing options are available. The crux of the problem is as follows: the
manufacturing stream is "controllable" and is governed by certain triggers (e.g. replenishment
levels). On the other hand, the stream of returns, from the domain where the product is used, is
unpredictable.
The main decisions are therefore to
decide what to do with a return when it arrives (i.e. turn it over for re-manufacturing or
keep it in stock for a while or dispose it); and
decide when to initiate fresh production of items
Many organizations and individuals have tried to define Reverse Logistics. We refer to the term
"reverse logistics" as all activity associated with a product/service after the point of sale, the
ultimate goal to optimize or make more efficient aftermarket activity, thus saving money and
environmental resources.
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The chart below shows how Reverse Logistics comes into play in the Supply Chain.
Other terms synonymous to Reverse Logistics (RL) are Aftermarket Logistics, Retrogistics, or
Aftermarket Supply Chain. The reverse supply chain is also a term used in the industry. RL is not
to be confused with forward logistics or getting the product to market commonly known as the
forward supply chain. Types of activity common with reverse logistics includes: logistics,
warehousing, repair, refurbishment, recycling, e-waste, after market call center support, reverse
fulfillment, field service and many others.
Business Implications of Reverse Logistics

In today's marketplace, many retailers treat merchandise returns as individual, disjointed
transactions. "The challenge for retailers and vendors is to process returns at a proficiency level
that allows quick, efficient and cost-effective collection and return of merchandise. Customer
requirements facilitate demand for a high standard of service that includes accuracy and
timeliness. Its the logistic company's responsibility to shorten the link from return origination to
the time of resell." By following returns management best practices, retailers can achieve a
returns process that addresses both the operational and customer retention issues associated
with merchandise returns. Reverse logistics is more than just returns management; it is all
activities related to returns avoidance, gate keeping, disposal and all other after-market supply
chain issues. Returns management increasingly being recognized as affecting competitive
positioning provides an important link between marketing and logistics. The broad nature of its
cross-functional impact suggests that firms would benefit by improving internal integration efforts.
In particular, a firm's ability to react to and plan for the influence of external factors on the returns
management process is improved by such internal integration. Third-party logistics providers see
that up to 7% of an enterprise's gross sales are captured by return costs. Almost all reverse
logistics contracts are customized to fit the size and type of company contracting. The 3PL's
themselves realize 12% to 15% profits on this business.
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Examples of reverse logistics:
Nokia had to resort to reverse logistics for their faulty batteries

Honda / Toyota / Skoda had to recall their cars for defects
Mattel had to recall their toys having high lead content
Companies for who reverse logistics are a daily part of their business:
Pepsi, Coke and Milk bottling business

Newspapers and other recyclable items etc.
Some facts on reverse logistics:
For some companies, brand protection is of paramount importance.

Such companies will ensure that their products are not sold in secondary markets or end
up in discount stores. (e.g. Some very high profile apparel brands)
Such companies may directly think of disposal rather than re-channelize the products
back into the mkt.
Possible options for a reclaimed / returned product:
Refurbish (Improve product beyond original specs)

Recondition (Return product to original specs)
Salvage (Separate components for reuse)
Repair (Prepare for sale as a used product)
Internal Use
Sell to 3rd Party (by way of auction or as raw materials)
Recycle / Re-use
Donate (for Tax exemptions / CSR initiatives)
Discard/Liquidation (Landfill)
Disposition Logic in SCM:
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Challenges companies face w.r.t reverse logistics:
Lack of awareness of current costs associated with reverse logistics (due to poor
processes & lack of network)
Due to the variable nature of returns, the business process must be flexible enough to
manage the returns process
Products are designed keeping manufacturing efficiency & lower costs in mind. Very few
design products keeping the disposal factor / re-usable factor / upgradable factor in mind.
(This could help companies Up-sell / Cross-Sell their products)
Poor selection of 3PL (3rd Party Logistics) Providers
Poorly trained Customer Service Personnel handling R/L
Use of paper work can slow down the process
Companies use e-Business based SCM solutions to:
Lower operating costs through reduced inventory requirements

Improve customer satisfaction by maintaining adequate stock
Improve productivity through better data integrity, few order entry errors, less rework,
faster transaction times
Improved competitive position
References:
1.
Course paper on Completing the Supply Chain Model School of Business, Stockholm University
PDF [ http://www.seydl.eu/en/papers/Rengel_Seydl_Reverse_Logisitics_2002_23_05_en.pdf ]
2.
Reverse Logistics Association (www.reverselogisticstrends.com)
3.
Reverse Logistics Executive Council (www.rlec.org)
4.
Reverse Logistics Professional Report (www.ReverseLogisticsProfessional.com)
5.
Other attached articles on Reverse Logistics provided with these notes.
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Customer relationship Management (CRM):

Organizations manage their relationship with customers including collecting storing and analyzing
their data by using electronic networks to provide marketing, sales, order and payment
processing and customer support.
CRM has been discussed in detail in these notes.
Enterprise Resource Planning (ERP):

ERP system integrates all data and information of an organization in a single integrated
database. It enables automation of back office functions such as operations, finance and personal
management.
Exercise:
Some of you might have experience of working with the above mentioned business processes.
Share your experiences about working with these processes with your classmates.
Also divide yourselves in 3 groups and prepare presentations on the above 3 processes and
present it.
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Advantages of e-Business
Now lets move on to advantages of e-Business.
No need of real Estate or a Physical Office:
e-Business can be conducted via public internets, local intranets and through secure extranet.
One can do business virtually sitting at home or at caf where there is availability of the net. Thus
it doesnt actually need a place or Office to do business.
No boundary barriers to business:
One can do e-Business without having any geographic barriers. Because it gives you an
opportunity to work virtually. You can sell your products to customers in far away countries.
Announce your availability:
You can always be available to anyone and everyone through internet. Hence, business can be
done 24 hrs, whole day, 365 days, a year.
Penetrate Markets:
You can reach out to consumers, business and even Government bodies and can spread your
market across the boundaries.
Build Buyers/Seller Relationships Online:
Buyers can receive quality customized services from you and hence will have developed a strong
faith and loyalty in your brand.
Improve Marketing Capabilities:
You can contact your users through electronic information system. Thus you can reach upto them
and can study them. Thus data that you need to market your products can be available easily.
You can also lookout for the user satisfaction level.
Build your Brand in the crowd:
In the crowd of several brands, you can build your own market and increase the number of users.
You can compete with thousands of business even if you are small.
Lower Prices can hook buyers:
e-Business provides a large market to the seller. Hence, the operating and marketing costs are
reduced. Thus one can lower the product prices and make more sales.
Minimum investment:
To start a new business traditionally, one needs a large sum of money. Also the output may not
necessarily covers the operating costs. E-Business provides you an opportunity to cover your
operating costs as well as make profits with a little investment.
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Increases functional literacy among users:

Users including buyers and sellers can learn more about how to get comfort from e-business
related activities. Learning new things regarding their business or any e-Business, getting
information about new product is an added advantage of e-Business.
A sample view of e-Business
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e-Business - Some misconceptions

Though till now we have discussed several things regarding e-business, Im sure some of you still
think it as something different.
Remember this:
e-Business is NOT
Simply about restructuring or adding an IT department because it affects the methods

used by all departments to carry out various functions.
Simply about a website which asks you to pay for some goods or services.
Simply about Information Systems or Electronic Data Interchange.
Simply about computerization of a department or an office.
e-Business is about a combination of all these in such an effective manner wherein the
information systems or data collaborate with the electronic media to carry out the basic rules of
business namely giving the users what they want, when they want it, at the right price, and at the
right time.
e-Business v/s Traditional Business

e-Business has 3 elements that differentiate it from traditional business, namely:
1. Knowledge Exchange and Processing:
With e-Business, many different individuals, organizations or departments within organizations
are able to exchange and process information rapidly. This enables companies to have a better
understanding of their customers and business partners.
Electronic communications like e-mail, online reporting, and online budgeting can provide a
common platform for exchange of information. Once information has been exchanged, it can be
processed more efficiently. Thus information can be processes more accurately, more quickly
and less expensively than through traditional means.
Many business services like, statistical reporting, ordering can benefit from the continual increase
in the processing speed of todays computers. This increased speed allows companies to better
react to changes that take place.
Examples
Online inventory control, Online Budgeting, on the fly credit card processing, Online Bank
Account Transaction processing, etc.
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2. Physical Proximity and Time:

e-Business allows parties to communicate and transact business without being in the same
physical location. In e-Business, the business factors like price, product features, responsiveness
and service are the more crucial factors than the factor like physical proximity between buyer and
seller. e-Business has given rise to the concept of Death of Distance.
Communication and transaction can takes place anytime. As a result, small and medium-sized
businesses are able to reach new, potentially far-flung markets at a low cost around the clock.
It is necessary to incorporate effective security measures to promote secure transactions.
Example
NRI can sand money to their families in a matter of minute through direct transfers.
3. Mass customization:
Mass customization means producers can offer and consumers may demand products and
services customized to their particular tastes. The traditional mentality of one size fits all is
replaced with customized production. e-Business allows the producers to use information
technologies to create products and experiences for their customers. They can create something
different than their competitor.
Example
Dell computers grew richer than many other Computer Vendors because it pioneered the concept
of allowing users to design their own dream computers online, which they would then
manufacture, and ship across to their users.
It prefers the Build to Order model instead of the Build to Stock model, and therefore it can offer
better deals to its customers by keeping low inventory and carrying costs.
Exercise:
Cotton pride is a new company, which deals with manufacturing and merchandising of clothes.
You have to prepare a proposal in order to convey them how Internet will be the best medium to
reach up to the consumers and to capture the market.
Exercise:
Now you all are familiar with advantages of e-Business. Now, its time to test you. Certain
statements are given below. You have to identify and classify the statements related to eBusiness and traditional business in the respective columns:
Statements:
Higher customer satisfaction
Competitive quickness
Lack of universal access to relevant information
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Accelerated time to market

Double efforts
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Types of e-Business
now lets have a look at the types of e-business.
There are 3 broad categories of e-Business based on the type of users involved in transactions,
namely
Business-to-consumers (B2C)
Business-to-Business (B2B)
Business-to-Government (B2G)
Business-to-Consumers (B2C)
Business-to-consumer (B2C), describes activities of commercial organizations serving the end
consumer with products and/or services. It is usually applied exclusively to electronic commerce.
Exchange of information, product and services is between a business and a consumer. The
company facilitates transaction between users and the sellers. It usually involves shopping online.
The key of being successful in B2C e-business is the effective communication and value to the
consumers.
B2C ordinarily refer to on-line trading and auctions, for example, on-line stock trading markets,
on-line auction for computers and other goods. B2C e-commerce refers to the emerging
commerce model where businesses /companies and consumers interact electronically or digitally
in some way. One of the best examples of B2C e-commerce is Amazon.com, an online bookstore
that launched its site in 1995.
In a B2C e-commerce the focus is more about enticing prospects and converting them into
customers, retaining them and share value created during the process. The ultimate goal is the
conversion of shoppers into buyers as aggressively and consistently as possible.
In a typical B2C flow of information between business and consumer typically is through the
medium of Internet (Refer Figure below). This flow includes product orders/service requests from
customers, product information, specifications, providing of services by Business etc. In addition,
it may also include, flow of tangibles (e.g. goods ordered from customer, documents transfers
between business and customer etc.)
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Flow of tangibles between Business & Customer (e.g. Goods, Documents)
Consumer
Computer
Terminal
(Client)
Internet
Computer
Terminal
(Server)
Business
(Company)
Flow of Information
Figure: Typical B2C enabled by Internet
Types of services typically covered under B2C e-commerce

a) Auction stores (e.g.ebay.com)
b) Online stores (e.g. amazon.com)
c) Online services (e.g. www.travelocity.com)
(a) Auctions:
Electronic auctions (on the Internet) offer an electronic implementation of the bidding mechanism
also known from traditional auctions. This can be accompanied by multimedia presentation of the
goods. Usually they are not restricted to this single function. They may also offer integration of the
bidding process with contracting, payments and delivery. The sources of income for the auction
provider are in selling the technology platform, in transactions of a collection of e-shops, usually
enhanced by a common umbrella, for example of a well-known brand. It might be enriched by a
common guaranteed payment method.
Advantages of Internet auctions
Convenience: It gives the participants convenience as bidder can stay at his home or
office
and still participate in the bidding just as in traditional auctions. In addition, it is also more
convenient for a bidder to find more about the goods being auctioned.
Flexibility: Traditional auctions allow only synchronous bidding requiring all bidders to
participate at the same time. In contrast, Internet auctions allow asynchronous bidding lasting
days or weeks, which offers more flexibility to the bidders.
Increased reach: The potential of reach of an Internet based auction site is global and thus the
market for auctioned good is very large.
Economical to operate: These are cheaper to run as lot of costs relating to infrastructure
required for a conventional auction system is not necessary for this.
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Disadvantages of Internet auctions

Inspection of goods: In an Internet based auction, it is not possible to physically inspect the
goods. The bidders have to rely on the information provided or sometimes, may have to rely on
some electronic images of the goods on auction.
Potential for fraud: Internet bidder has to trust that the seller would actually send the good for
which he paid. Also typically payments are made by providing credit card details through the
Internet, which may also be always safe.
(b) Online Stores:

It refers to marketing of a companys products through the web. It may be done either to promote
the company and its products and services or to actually sell the products/services through this
virtual store. One of the best examples of an e-store is Amazon.com, which started selling books
online and gradually extended to other product categories.
Benefits for the company:
Increased demand
A low-cost route to global reach
Cost-reduction of promotion and sales
Reduced costs
Benefits for the customers
Lower prices
Wider choice
Better information
Convenience
Shopping through the online stores is fast gaining popularity and acceptance. Although majority
of the revenue is in the B2B sales, B2C sales are also expected to improve in the coming years.
However, for this to occur, online stores need to deliver far more value to the customers and at
the same time find new ways to generate revenues.
Delivering value to customers:
In order to develop more value to the customers, the following may be considered.
Merchants have to try to find ways to gain competitive advantage in factors other than just the
price.
Online shops need to provide a shopping-experience that addresses all of the customers
requirements. It should also try to provide an environment that is easy to explore
Expansion of the range of services:
Find cost-effective ways to increase customer base and generate higher revenues
New ways to generate revenues:
One of the key problems, which the online stores face, is the lack of a good and effective revenue
model. Online stores therefore have to explore new ways to generate revenues (e.g. collect
membership fees from customers).
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(c) Online Services

This is another area where companies can exploit Internet. Many companies are using Internet to
provide customer service. Service sector banking and stock trading is one such example.
Companies like eTrade.com have brought the ease of trading stocks to customers PC. Another
interesting example is of Makethemove.com.
Mike McCabe founded MaketheMove.com in 1998. Its mission is to simplify the lives of Internet
users by creating functional, interactive services that will make their lives easier and better. They
provide secure, Internet-based electronic commerce infomediary solutions for the business-toconsumer market. MaketheMove.com offers individuals the opportunity to set-up, transfer and
cancel utilities such as gas, electric and local phone; and services such as long distance and
wireless telephone, cable television, Internet service providers, paging, newspapers, magazines,
and more when customers shift from one location to another.
Capabilities and functionalities of B2C model:

With the Internet fast becoming a vital component of the businesses, the role and importance of
electronic markets has been increasing manifold. The power of the electronic conduits like the
Internet to increase the efficiency of business performance is one of the most important reasons
for the same. The capability and potential of electronic marketplaces therefore depends on how
well, they leverage the power of Internet to build sustainable competitive advantages.
Some of the capabilities which an electronic marketplace has, which speak of their potential, are:
Instantaneous Communication: It helps in instantaneous communication between the various
participants of business systems. It also helps in reducing "time to market" for new products.
Global Access: The products/services offered through the electronic markets have a global
reach and give access to larger markets and new markets
Customization: By offering capability to offer goods and services in real time, the ability to
customize goods to the needs is higher.
Increased availability: E-Commerce offers greater availability; company's products are available
24 X 7 X 365.
De-Intermediation: It helps in elimination of inefficient middlemen, offering simplified electronic
distribution and product differentiation based on customer choice.
Consolidation and convergence: They help in increased consolidation and convergence, which
facilitates economies of scale, making it easier to place orders and fulfill them. This enables
revitalized products that add value through depth, context or digitization
Collaboration: They facilitate automation of transactions between electronic enterprises, and
support the real-time exchange of information and thus enable collaborative processing.
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Challenges in implementing B2C initiative:

Organizational change: For successful transformation from a traditional to a B2C e-business
company, there should be a radical organizational change. This becomes particularly difficult as a
result of strong resistance to change by the employees.
Business process redesign: As explained earlier, there are radical differences in the way a
traditional business functions to how an e-business functions. Therefore, one of the most
important challenges for a traditional company to perform B2C e-commerce is to re-design the
existing processes and streamline them to suit the new way of business.
System integration hurdles: In addition, B2C e-business also requires that various systems,
which make up a business as well as those of its supply chain partners, are integrated. This is
because the real power of e-business is when systems are integrated.
Difficulty in matching technology to business needs: Having technology is one thing, while
using it to effectively solve business problems is altogether different. One of the prominent
problems which many e-businesses face is about matching the technology to business needs.
The problem is further aggravated, as the market is flooded with myriad products and the
technology itself taking galloping advancements.
Role of intermediaries: The growth of e-business has reduced the role of intermediaries, as
models such as B2C enable direct interaction between the business and the final customer.
Therefore, one of the key challenges for a traditional business (Which performed its business
through the intermediaries) transforming into an e-business is to define the role of intermediaries
in its supply chain.
Getting browsers to buy things: Getting visitors to the site is only half the battle. Whether they
buy something is what determines the success of a B2C site.
Building customer loyalty: Customer relationship management is probably one of the most
important challenges this can be done by following ways:
1. Personalization
2. Creating an easy-to-use customer service application
3. Making the site easy to use.
Fulfillment: Successful B2C e-commerce requires that customers orders be fulfilled as
promised. This can be done by increasing focus and investment in supply chain and logistical
technologies.
Exercise:
The masters of B2C e-Business are eBay, Amazon.
Can you find out some companies who use B2C model?
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Business-to-Business (B2B)
Business-to-Business model is largest of the three in terms of the total dollar amount. It is
growing faster than the B2C e-Business model. It includes the transaction of business between
trading partners. The focus of B2B e-business models is usually on Supply Chain Management in
manufacturing.
Definition of B2B commerce
In simple words B2B commerce can be defined as "doing business electronically" or business
that is conducted over the Internet. It is most commonly associated with buying and selling
information, products and services via the Internet or through the use of private networks shared
among business partners.
B2B can also be defined as exchanging of structured messages with other business partners
over private networks or Internet to create and transform business relationships. B2B exchanges
also called e-Markets are playing a crucial role in today's digital economy. E-Markets are building
capabilities to host critical supply chain applications, providing support to cross enterprise
collaboration. This results in what is being termed as "synchronized industry coordination". This
allows companies to synchronize activities like product design, procurement, transportation
planning, production planning and marketing. E-markets provide the participants with an open,
flexible, reliable, highly available, and scalable environment. Its functionality spans array of
capabilities that cross business processes delivering the greatest value to the customer, industry,
or groups of customers and industries.
B2B can be defined as doing business electronically or exchanging of structured messages with
other business partners over private networks (i.e. EDI, VPN, Extranets) or Internet to create and
transform business relationships.
B2B exchanges are also called as e-Markets

B2B is the largest model in terms of dollar amount
Usually focused on SCM in Manufacturing
Features of Business-to-Business (B2B) sites
B2B initiatives bring two or more firms together on the virtual marketplace.
B2B initiative needs a large infrastructure
B2B companies need to restructure its systems and business processes
It involves many participants with complex rules, higher purchasing amounts & complex
products
B2B initiative lays stress on Order Fulfillment
Unlike B2C, brand value of a site is not critical, here the Suppliers & Buyers care about
the Value Added Services
B2B e-Commerce sites are managed by experts in their relevant domains
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The evolution of B2B:

First Stage - Electronic Data Interchange (EDI)
Where a buyer maintained separate connections with each supplier

This was both difficult and expensive to maintain
It neither increased the population of buyers nor sellers
It was not transparent
Second Stage -The Basic e-Commerce Model

Where companies put their product catalogues on the Internet and conducted one-to-one
transactions.
Third Stage:
Unlike the first two stages, B2B e-Commerce is in its 3rd Stage of evolution
Here a B2B initiative brings together large number of buyers & sellers thereby creating a
community of traders
As many buyers & sellers gather at a common place, the information flow increases and
so does the transparency
This also guarantees uniform pricing
This in turn reduces the overall transactions cost
Types of B2B Marketplaces

The different types of B2B Marketplaces are:
Private e-Marketplace
- Buyer Controlled Exchanges (Buy - Side)
- Seller Controlled Exchanges (Sell Side)
Public e-Marketplace
Consortia
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The 3 types of B2B Exchanges:

A) Private e-Marketplace: owned by a single company
a) Buyer Controlled Exchanges
These are a consortium of buyers who aggregate their purchases
(e.g. Auto giants DaimlerChrysler, Ford, General Motors, Toyota recently formed a
consortium to help them manage their procurement process efficiently with lower
administration costs and uniform pricing.
b) Seller Controlled Exchanges
Here sellers who cater to fragmented markets such as chemicals, auto components etc.
come together to create a common trading place for the buyers. While sellers aggregate
their market power, it helps buyers search for alternative sources.
Illustration of www.ec21 a B2B Website
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B) Public e-Marketplace:
These are neither buyers nor sellers

They are markets usually owned by an independent 3rd party with many buyers and
sellers
They thrive purely on the fees generated by matching buyers and sellers
E.g. businessdubai.com, chemconnect.com, chemdex.com etc.
C) Consortia:
Usually owned by a small group of major sellers or buyers usually in the same industry.
(e.g. metaljunction.com)
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Capabilities and Functionalities of e-Markets:

As mentioned earlier true e-marketplaces should provide the participants with an open, flexible,
reliable, highly available, and scalable environment. It should have functionality and capabilities
that cross business process thus providing its members the greatest values.
E-Markets or B2B are changing the business paradigm. E-Markets are not only bringing trading
partners together but also competitors. Private exchanges bring together trading partners while
industry consortiums bring together industry competitors. The idea behind this is to share
information, increase collaboration to increase the bottom line and provide greater value to
business shareholders. Lines of distinction between cooperation and competition are blurring.
Competitors are working together with other competitors to determine market demand, and share
information to increase the efficiency across the entire supply chain.
Exchanges are getting more sophisticated and developing more end-to-end capabilities.
Exchanges are beginning to include more "core" functional ERP type solutions and services.
In the following lines we mention some of the capabilities these exchanges should have:
a) Integration and collaboration orientation:
A true e-Market should promote multi-partner collaborative capabilities. They should enable
collaboration in inventory management, planning and scheduling. Activities like collaborative
product design have become possible as a result of exchange capabilities. Hewlett Packard for
example is supporting collaborative effort between 1000 suppliers and its product divisions to
manufacture standard nameplates for HP's various hardware offerings. Such collaboration would
have not been possible without collaborative software on HP's private exchange.
Another important capability that e-Markets should have is enterprise application integration
capabilities (EAI). This will allow even incompatible legacy systems to integrate with the e-Market
using some translation technology like Electronic data interchange (EDI), middleware or
extensible Markup Language (XML).
b) Functionality:
E-Markets should strive to provide functionality and services that caters to larger number of
participants. Specialized functionality and service may be developed for private exchanges, which
are more closely centered around a company and its trading partners.
c) Scalability/availability:
An ideal e-Market should have capabilities to handle large volume of data . A proper IT
infrastructure should be in place to ensure load handling and availability of services. Availability of
service 24 x 7 x 365 is no longer a matter of choice but a requirement for all e-business
applications.
d) Security:
The e-Market should have capabilities to provide secure transactions processing for its
customers. Technologies like encryption, Secure Socket Layer or validation keys are few
technologies that can be used. Proper authentication and authorization procedures should be in
place. These tools and procedures should be continuously updated to stay ahead of hackers and
cyber criminals. Security can be a make-or-break issue.
e) Privacy:
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Adequate privacy policies should be in place and effectively implemented. Companies do not
want to share their proprietary information with anyone. Engaging independent third parties like
internal auditors to look at these processes and certify the adequacy of practices and procedures
implemented can be very effective confidence building exercise.
f) Content/catalog management:
Capability to create and manage web site elements such as text graphics, embedded files and
applets is another important aspect. Web site should be user friendly and easy to navigate.
Features like personalization and customization can not only increase user satisfaction and make
experience more enriching but also make exchanges more effective.
g) Hub-and-spoke architecture:
Developing and building on an open architecture, where players can easily be added, removed
and experience growth is very important capability that an e-Market should have. Having a
structure that is scalable, without having to reengineer with changing circumstances is critical
success factor. In this respect hub and spoke architecture has an advantage.
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Challenges in implementing B2B initiative

Most companies have recognized the potential of B2C and B2B commerce. Thus by choice or by
force (as a result of competition) they have jumped onto the bandwagon in some form or the
other, often without realizing the magnitude of implementation challenges. To fully exploit the
benefits of this new phenomenon, companies must set their house in order. Any company that
participates in the e-business faces many challenges. In the following pages we have mentioned
few important challenges. In his book Opening Digital Markets, Walid Mougayar has categorized
challenges into following categories:
Technological Challenges
Business challenges
Legal and regulatory challenges
Behavioral challenges
a) Technological challenges:
Key challenges faced by organizations under this category are
Security:
Providing adequate security to IT resources of company is a very important issue. Adequate
measures must exist to provide security to databases, networks, applications, payment systems
and transaction systems.
Authentication procedures and policies should be developed, implemented and regularly updated
to provide secure environment. Use of technologies like encryption, Secured Socket Layer and
Public key infrastructure can help organization over come this challenge.
Another challenge that arises is that company should have clear privacy policies. Customers will
not like to trade on exchanges where the information is not secured or and privacy policies are
not in place. Implementation of initiatives like TRUSTe,Verisign etc. goes a long way in
establishing companies creditability and gaining customer confidence.
Integration of systems:
Most organizations run a multitude of incompatible legacy systems, data definitions and
communications standards. Organization must integrate its disparate systems to consolidate the
information and thus leverage its power.
Communication gap between disintegrated and isolated systems can not only lead to increased
inventory and purchasing but also lead to critical material shortage and disruption of business
processes.
Integrating e-Market platforms and implementing new protocols and processes are the most
challenging steps in an e-Market development program. This process is both complex and difficult
not only because there are many points of integration within company but also technology keeps
changing and new markets keep emerging.
b) Business Challenges:
Managing Change:
Among business challenges, managing change is big challenge whether an organization is
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implementing new system or developing new ideas, companies have to spend considerable
amount of energy and resources managing change.
Resistance to change can come from within the organization and from external partners of a
company. Speaking in the context of supply chain the resistance can come from buyer, sellers or
e-Markets.
Resistance can be against new process or procedures to be followed, new systems, increased
job responsibilities. For example as e-Market become omnipresent and corporate jump on to
them, procurement personnel will be required to gain new skills and improve existing skills. They
will have to respond to dynamic pricing, 24 x 7 x 365 availability, quick turnaround and shorter
response time towards their customers queries. Implementing new IT systems requires extra
coordination between more than one business function and process. Employees will have to
acquire new skills like risk management to understand concepts like hedging. While some may
enjoy these challenges, some would resist this.
Another important issue is e-Market-related change. Buyers, sellers and channel partners for
example might feel the e-Market system works against them. For example in eAuctions and
competitive trading partners may feel that probability to win future contract is minimum. General
Electric is convincing its sellers to participate in eAuctions, by positioning eAuctions as potentially
profitable, fast and negotiating platform3. On the hand buyers may shy away from e-Markets if it
does not provide large number of sellers or does not provide adequate services like logistics,
finance and risk management system.
These challenges cannot undermine the importance of e-Markets. Training and education of
parties involved in e-Market operation can help organizations over come the resistance to
change. While, in some cases hiring fresh talent may solve this problem. Often companies fail to
understand the potential of ecommerce. Companies exhibit lack of decisiveness and lack of
enthusiasm in implementing such applications. This factor can play an important role in overall
success and failure of the whole venture.
Business Models:
There are no successful proven business models that organizations can study and try to emulate
in their strategy. Lack of understanding of environment increases the risk in such initiatives.
However, as more and more companies are taking initiatives this will no longer be challenge.
Many consulting companies have already developed pool of knowledge created as a result of
their being part of such initiatives. Hiring such consulting companies can definitely will be a
source of guidance.
Channel conflict:
Organizations need to look at how the role of traditional sales function is changing. They need to
evaluate the role of all entities - customers, distributors, retailers and company sales
representatives involved in sales. Traditional sales channel alone is no longer a viable option and
does not provide complete value. Companies need to evaluate web enabled sales channels.
They need to understand how these can provide greater value to the company. Roles of entities
need to be evaluated and re-defined to make it fit into this new paradigm.
Another important aspect is that there are no successful proven business models that
organizations can study and try to emulate in their strategy. This increases risk in such initiatives.
c) Legal and regulatory challenges:
There are many legal and regulatory issues involved. Electronic copyright, cash policies, tariffs,
privacy, digital offers to name a few. Since e-business is a new phenomenon, there is lack of
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consistent rules and procedures. There are issues related to taxes, which need to be carefully
reviewed, by companies.
Companies that buy and sell over the Internet, often conduct business beyond the national
boundaries of one country. This gives rise to another important issue about the role of
Government and other nations' laws.
d) Behavioral and educational challenges:
Another barrier that can be difficult to overcome is related to consumer and employee attitude. It
is difficult for companies to encourage customers to change their habits and start shopping
online. Besides, companies have a huge task to gaining customers trust and confidence. They
have to provide reasonable assurance to trading partners and customers that their private
information is secured and will not be compromised. Initiatives like TRUSTe spearheaded by
Electronic Frontier Foundation can go a long way in helping companies overcome this challenge.
Also companies have to re-train their employees and business partners to adapt to new business
model and become conversant with new technologies. As mentioned earlier employees may have
to learn new skill set. Employees may not always be willing to learn new skills and learn new
ways of doing thing. Education and change management programs can be effective methods in
tackling this challenge.
Conclusion
E-Markets, provide considerable value creation. Even though e-Markets are in their infancy, they
definitely have number of advantages. Each type has it own set to specialties and functionalities.
Companies need to evaluate what model fits their need best or do they need to participate in
multiple e-Markets of different types. Companies may adopt more than one model. For example
Dow Chemicals has diverse need and hence it participates in independent e-Markets, consortium
and private exchange. For more details about this see case study of Dow's Portfolio of E-Markets
in Smart path forward.
As e-Markets evolve further, become more efficient and develop more sophisticated capabilities,
and make way for greater information sharing and collaboration, companies will definitely
associate themselves with them in some or the other form.
Reference Article(s):
SeeBeyond: Powering Today's and Tomorrow's E-Businesses
http://www.ascet.com/documents.asp?d_ID=443
B2B e-Markets: The Smart Path by Jeff Brooks and Roger Dik Boston
http://www.accenture.com/xd/xd.asp?it=enweb&xd=_scm\
scm_stuff.xml&scmdoc=scm_thought_smartpath_0801
E-Marketplaces: The Shape of the New Economy (5/1/01) Ascet Volume 3 By
Mohammed Hajibashi, Accenture http://www.ascet.com/documents.asp?d_ID=475
EHubs: The New Web-Enabled Technology Driving True Supply Chain Collaboration by Kevin M. McKelvie,Accenture
and Mark Simmonds, Yantra Corp. (5/1/01) Ascet Volume 3. http://www.ascet.com/documents.asp?d_ID=505
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Business-To-Government (B2G)
B2G model involves the exchange of information or monetary transactions between business and
government agencies, also known as eGovernance. It allows government agencies to increase
their efficiency and decrease the cost of processing paperwork by hand. This involves a lot of
training and orientation and knowledge exchange to make such a business model work
successfully.
Through Business-to-Government e-business model, government agencies conduct transactions
directly with businesses using the Internet. Examples include electronic tax filing, availability of
online regulatory information and access to government databases for market and technology
research. Countries like US, UK, Sweden, Germany, UAE, etc have successfully implemented
such B2G systems. India too is opening itself to the wave of eGovernance, but it all depends on
the willingness and the level literacy on the part of the government officials who would be using it
to do business with other commercial entities.
On the Internet, B2G is business-to-government; the concept that businesses and government
agencies can use central Web sites to exchange information and do business with each other
more efficiently than they usually can off the Web. For example, a Web site offering B2G services
could provide businesses with a single place to locate applications and tax forms for one or more
levels of government (city, state or province, country, and so forth); provide the ability to send in
filled-out forms and payments; update corporate information; request answers to specific
questions; and so forth. B2G may also include e-procurement services, in which businesses learn
about the purchasing needs of agencies and agencies request proposal responses. B2G may
also support the idea of a virtual workplace in which a business and an agency could coordinate
the work on a contracted project by sharing a common site to coordinate online meetings, review
plans, and manage progress. B2G may also include the rental of online applications and
databases designed especially for use by government agencies.
Examples:
Indian Chambers of Commerce are connected to Government applications through the internet
whereby the information of various businesses is constantly accesses or updated or simply
shared by both the businesses and the government bodies. Some more examples may include
Filing IT returns online, Application of PAN online, Right to Information Online, Online Tenders
etc.
Another example: (www.tendercity.in)
Tendercity an established market leader for advertising and viewing online tender notices for
more than seven years is all set to re-launch its core domain portal www.tendercity.in on 16th
June 2007. Tendercity, Indias biggest portal amongst Government Contractors and in B2G
segment was started in 1999 as a pioneer to publish tender notices, auction notices and
corrigendum invited from various Public and Private sectors in India.
Tendercity an established market leader for advertising and viewing online tender notices for
more than seven years is all set to re-launch its core domain portal www.tendercity.in on 16th
June, 2007. Tendercity, Indias biggest portal amongst Government Contractors and in B2G
segment was started in 1999 as a pioneer to publish tender notices, auction notices and
corrigendum invited from various Public and Private sectors in India.
Tendercity has been very successful in achieving larger cap of the market in Tenders infomediary
segment that was because of its larger content coverage in time and high standard of services for
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its user base.
In September 2004, the largest Indian portal Indiatimes, thought of entering in to Tenders
infomediary segment and formed an alliance with Tendercity and launched their co-branded
portal www.tendercity.indiatimes.com. After a successful association for more than 2 years,
Tendercity realized Indiatimes disseminated focus between various domains and to capitalize on
their core-domain expertise that is crucial fundamentals of superb customer support, superior
content and coverage, Tendercity is re-launching their original, independent portal
www.tendercity.in on 16th June, 2007.
www.tendercity.in will have a new and fresh look, better users interface, enhanced coverage and
increased quality for customer satisfaction.
About Applitech Tendercity.com (I) Pvt. Ltd. (Tendercity)
Tendercity is an established market leader for advertising and viewing online tender notices for
more than seven years. Owned by Applitech Tendercity.com (I) Pvt. Ltd., an ISO 9000, CMM
Level 5 group Company and a cross holding management of eNucleus Inc. (U.S.A), a NASDAQ
listed company, Tendercity has constantly made dedicated and sincere efforts to satisfy
increasing user base and their expectations in respect to content and services. Tendercity has a
rock-solid domain expertise in the area of tender notification services.
Tendercity provides exceptional packages dedicated to notifying all the latest and specialized
business opportunities, from both the private as well as government sectors through out India.
Tendercity is the most comprehensive source available compared to other so-called notification
services. Tendercity is regarded as a synonym for the most accurate, easiest and reliable service
of its kind ensuring to get only those notices specific to ones area of expertise and business.
Tendercity covers approximately 8 Lakh tender notices annually from various government and
private organizations. Tendercity provides a broad range of categories that caters for every
industry. Tendercity constantly monitor the market and refine unique categorization system to
guarantee up to date and accurate information. Tendercity is committed to deliver tender notices
to their customers on the day they are published and make every possible effort not to miss out
any tender invitation from all across India.
Over 10,000 highly satisfied customers are registered for Tendercity services. Both high and low
value Tenders are collected from a variety of sources and a broad selection of opportunities are
distributed to customers every day. Tendercity support team has a wealth of understanding,
experience and knowledge in procurement. For more information, visit Tendercity at
www.tendercity.in.
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Other Business Models / Hybrid Business Models

1. Consumer-to-Consumer model (C2C):
It involves the electronically facilitated transactions between consumers through some third party.
The common examples of such models are online auctions created by companies like eBay.com
and OnSale.com. Here the consumer posts an item for sale and the other consumers bid to
purchase it, the third party charges some commission. The sites are only intermediaries; they
dont have to check the quality of the products being offered.
Example:
C2C model is more popular amongst the students. Universities themselves set up places for
students to sell textbooks and other stuff to other students. One can even advertise that he/ she
wants to sublet an apartment.
2. Reverse markets:
A reverse market is where the buyer-seller pricing relationship is reversed. Here, the buyers offer
a price and terms and sellers decide if they want to participate in the transaction.
One of the most recognizable examples of this is Priceline.com where you can bid on a variety of
items such as airline tickets, hotel rooms, groceries, long distance phone service and cars.
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3. Infomediaries:
An infomediary is a Web site that provides specialized information on behalf of producers of
goods and services and their potential customers. Virtual buying agents are changing the
dynamics of certain industries, and often shifting the power from sellers to buyers.
An example of this is Cnet.com, which offers information on consumer electronics including

product descriptions, buying advice, reviews and up-to-date pricing comparisons of online
merchants for selected products.
4. Vertical Integration Portals:

Virtual middlemen that help facilitate B2B e-business transactions. In addition to providing much
of the role of an infomediary, the vertical integration portals are also assisting or actually
conducting the transaction between parties.
Examples of this include, CommerceOne.com, Ariba.com, and VerticalNet.com
Exercise:
By now, you are familiar with the type of e-Business. Some websites are given below. You have
to identify the type of e-Business performed through each one of it. Also justify your answers.
http://amsquare.com/
http://www.clickbuysell.com/cgi-bin/Auction
http://www.tigerbooks.ca/sellBooks.php
http://www.dti.gov.uk/
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Potential challenges to e-Business

Getting beyond the four edges of a challenge is one of the basic skills you need in business.
By Thomas Kinkade
Though there are many advantages of e-Business, there are challenges that one cant ignore. To
be successful you need to identify the challenges and try to overcome it. Following are some of
the challenges in e-Business.
Customs:
Countries may have a difficult time enforcing and determining if transactions made over the
Internet are subject to customs and duties.
Confidentiality:
The widespread availability of data requires measures to respect individual rights to
confidentiality.
Regulations:
The widespread availability of the Internet blurs the lines for enforcement and jurisdiction of
regulation issues.
Fraud:
The Internet may provide anonymity to those involved in fraudulent activity.
Security:
Protecting the integrity of information is important to the growth of electronic commerce.
Intellectual Property Infringement: The ease of publication and duplication of digital property on
the Internet poses many challenges for the future of e-Business.
E.g. You cannot copy a design or logo of another company and call it your own, this action is
liable for punishment and the owner of the logo or design who has a valid copyright or patent for it
can sue you in the court of law.
Exercise:
You want to start a new website for selling electronic appliances, identify the challenges and try
to suggest solutions for it. Prepare a report on expected advantages and the probable
challenges of using this business strategy.
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Implementing e-Business
While planning your e-Business implementation, you must be aware of the following:
a) Sources of assistance:
Wide range of government bodies, organizations and private business provide information and
sources of financing for e-Business. Private funding, Bank Loans, Markets, Venture Capital are
also sources one could look at for funding an e-Business venture.
b) Technology:
Technology can be classified here as Basic, Intermediary and Transactional. One should
understand the technologies involved from getting you connected, to email softwares, websites
to web applications to ERPs. And then choose what fits your scope and budget.
c) Security:
Understand the real security issues to data and software for your business. Identify precautions,
tools, techniques and software to help you operate safely online.
d) Privacy:
Respect your customers personal information. Put privacy policies in place. Be aware of privacy
legislations. E.g. In Germany, the use of cookies without user consent is illegal as per privacy
legislation. Your privacy policy should state how the personal information you are collecting of
your users will be used.
e) Legal Issues:
Ensure you comply with Criminal & Contract laws, Intellectual Property Laws, Civil Liability,
Jurisdiction & Taxation legislations.
Areas of law that apply to e-Commerce & Internet in general

(i) Consumer Protection:
- Be honest about who you are online especially when you transact with people
- Provide information that consumers need
- Make sales terms easy to find (e.g. Asterix on advertisements for conditions that apply)
- Provide online security using SSL (Secure Sockets Layer) or Encryption
- Protect users privacy
- Respond to complaints
- Avoid sending unsolicited emails
(ii) Privacy:
Respect customer privacy and work with existing legislations to ensure you do not expose your
customer data to others without their prior consent.
(iii) IPR Law:
Understand Copyright, Trademark and Trade Secret legislations. Domain Names, Meta Tags
& Copyright material can be also considered as Intellectual Property.
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(iv) Civil Liability:

Understand and be aware of communication of erroneous information and unfair competition
(v) Defamation:
An actionable harm to the reputation of an individual or an entity can put you or your business in
serious legal trouble.
(vi) Criminal Law:
As far as the internet is concerned, criminal law is generally confined to child pornography, hate
propaganda, obscenity and fraud.
(vii) Contract Law:
A contract is a legally recognized agreement between two or more persons. Most of them today
happen online and are considered as proof in courts.
(viii) Jurisdiction:
In the wired world, relevant jurisdictions may be provincial / state / territorial / national /
international. (E.g. Soliciting pornography or related activities for instance escort services etc in a
country like India are illegal, but the same is legal in a country like Netherlands. Another example
can be of a social networking site like Orkut.com which is banned in many Middle Eastern
countries.
(ix) Taxation:
Issues relating to Internet Taxation are Taxation Jurisdiction, Collection & Enforcement. E.g. in
Canada, Service Tax and Sales Tax, Import Duties are applicable to business activities
conducted over the internet.
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Building an e-Business strategy

(A) Key questions to answer while deciding on an e-Business strategy
1. Which business processes currently offer greatest opportunity for cost reductions and
increased profitability?
2. Where can my business gain competitive advantage over my competitor? (i.e. location
wise and process wise)
3. Which areas of my business are or would be prone to customer service & satisfaction
related problems?
4. How will the e-Business solution alter the basic structure of the organization (e.g.
Changes in staffing, skills etc?)
5. Is the senior management committed to implement such an e-Business solution?
6. Identify and prepare for change management and employee training
7. What is the potential ROI v/s other Investment options
8. Account for Risks or Contingencies and does your e-Business plan cover it.
(B) Get Started:

1. Examine your business needs & challenges by doing a SWOT Analysis.
Think about your overall business strategy which should be about Increased
Productivity, Customer Satisfaction, and Market Penetration. Apply e-Business tools to
assist, enhance or attain these goals wherever applicable. Do not use technology if it
appears to be an overhead. Only use it if it offers a value proposition and if you can see
its ROI.
2. Competitor Intelligence: Look at what others in your domain or vertical are doing. Identify
in your domain the trends and competitors. You can do this by examining industry
publications by attending trade shows & exhibitions, conferences & chamber of
commerce meetings, or by simply surfing the web or your competitors websites, or by
visiting forums online.
3. Identify possible Internet based solutions: You need to identify what you are currently
using, what solutions are your rivals using, what is available and what is predictable.
4. Get online and try the following:
Reach out to your customers, staff, and suppliers by email

Run a simple web based promotion and measure its effectiveness
Get your own domain name
Build your simple website and enhance it functionally as your business grows
Network your computers and departments in your organization
These simple steps will help you gain experience and build momentum as your business grows.
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Factors to consider before setting up a website

The following are the questions one must answer while deciding to build his website.
1. Have you determined the purpose and budget of your website?
2. Will the website be purely informational, intermediary or transactional?
3. If your website decides to accept transactions, who and what will be your choice of a
merchant account provider & a payment gateway service provider?
4. What type of customers will your website attract?
5. How will your customers interact with your website?
6. How will your website influence or promote customer interaction?
7. How much sales do you expect to make each month?
8. What additions / enhancements do you plan moving forward & how do you plan to reflect
it on your website?
9. Which countries do you wish to target, i.e. would your website be multi-lingual?
10. Would your monthly profits justify the monthly costs incurred on your website?
11. How would you measure the effectiveness & performance of your website to know if it is
working for your business or not?
12. Is your domain name and website design professional to suit your business?
13. Is your website secure? If yes, which security services does your website use to ensure a
safe customer experience to your website viewers?
14. Have you accounted for website domain & hosting services renewal as well as website
maintenance costs?
15. Have you planned for adequate backups to ensure business continuity planning and
assure users of a zero downtime?
16. Have you planned for and accounted for Website Marketing & Search Engine
Optimization Costs?
17. Do you have a plan to promote your website amongst your vendors, partners, customers
and end users?
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e-Business and CRM

Any business process that relies on Automated Information systems / Web based technologies.
E-Business allows companies to link their internal / external data processing systems more
efficiently / flexibly, to work more closely with suppliers and partners and satisfy their customer
needs and expectations.
Value Chain
e-Business can be conducted using the Internet, Intranet, Extranet or a combination of these.
Components of e-Business
e-Business consists of e-Business Applications & e-Business Models.
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Customer Relationship Management and (eCRM)

Its a broad term that covers the concepts / activities used by companies to manage their
relationships with their customers.
Information about
Customer
Vendors
Partners
Capture
Internal & External Processes
Storage
Analysis
Databases & Data warehouse
CRM is the business strategy that aims to understand, anticipate, manage, personalize /
customize the needs of the organizations current and potential customers.
In the case of traditional CRM practiced by your local shop owner; he knows almost all his
customers by name, religion, family background, purchasing habits etc. He also uses this info to
connect with this customers and further mines them for more business. CRM now in the form of
technology now enables this same approach of customer centricity on a much wider scale.
Some of the benefits of using a CRM strategy are:
Ability to make quick and informed decisions
Ability to create Cross-Selling and Up-Selling opportunities
Ability to create and measure marketing effectiveness
Ability to deliver personalized customer care
Ability to track repeat users and service them with better offers and maintenance
contracts
Ability to inform existing customers about product launches or refinements and offer them
the same at better prices
Ability to gather feedback and complaints and act on them quickly
Ability to create and sustain a good reverse logistics plan for supporting future crisis
situations like product recalls, or call back of defective goods from all customer locations
Ability to generate trends and predict business pipeline
Ability to provide management with forecasts and projections based on past consumer
behavior and purchasing patterns.
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Goal of CRM
CRM is not about simply buying & installing a CRM software

To make it work, organizations must understand Who its customers are and what their
Value is over a lifetime
Organizations must determine the needs of its customers & device ways to meet those
needs
E.g. FIs track their customers Life Stages and accordingly market their offerings to them.
What data do you really have on your customers?

CUSTOMER DATA THAT YOU CAN USE
Problems
Pains
Fears
Needs
Wants
Likes
Goals
Influences
Relationships
Affiliations
Alliances
Experiences
Aspirations
Expectations
Questions
Knowledge
Skills
Activities
Communications
Interactions
Emotions
Memories
Satisfaction
Perceptions
Beliefs
Admirations
Attitudes
Opinions
Values
Learning
Ideas
Motivation
Objections
Priorities
Risks
Investments
Rewards
Lifestyle
Lifestyle Stage
Social Class
Culture
Culture / Sub Culture
Age & Family
Caste
Education
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Aspects of CRM
a) Operational CRM:
Provides support to Front Office Business Processes including Sales & Marketing or
any other division in the company that involves interactions with customers.
Each interaction with a customer is added to the customers interaction history
This allows the customers to interact with different people or different contact channels of
a company over time without having to repeat the history of their interaction each time
Example: Call Center Agents use CRM for their callers
b) Collaborative CRM:
Covers direct interaction with customers, for a variety of purposes like Feedback, Issue
Reporting etc.
Interaction can be possible through a variety of channels such as web pages, email,
automated phone (IVR) or SMS.
Objectives of collaborative CRM can be broad including cost reduction & product /
service improvements
c) Analytical CRM:
This aspect of CRM analyses customer data for a variety of purposes including design &
execution of targeted marketing campaigns to optimize marketing effectiveness.
Design & execution of specific customer campaigns including customer acquisition, cross
selling, up selling, customer retention etc
Analysis of customer behavior to aid product/service decision making (e.g. Pricing, New
Product Development etc)
Helps Management decisions like Financial Forecasting and Customer Profitability
Analysis Competitor Analysis
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CRM Strategy
Several CRM softwares are available today. CRM is not just a technology but an approach that
an organization follows while dealing with its customers. This includes policies and processes,
customer service, employee training, marketing, management information systems (MIS) etc. The
objective should be in using and deploying technology according to customers needs and
expectations.
Some CRM Softwares for Large Companies
Company Name
Applix
Chordiant
Amdocs
Siebel (Now taken over by Oracle)
eGain
Epicor
Firstwave
J.D.Edwards (Now an Oracle Product)
Oracle
PeopleSoft (Now an Oracle Product)
SAP
CRM Product
iCRM
Chordiant 5
Amdocs CRM
Siebel CRM
E3
eFront Office
Ecrm 7.0
Enterprise One
Oracle CRM
Oracle PeopleSoft CRM
mySAP
Some CRM Softwares for Small & Medium Companies (SMEs)

Company Name
CRM Product
Front Range
Goldmine
Maximizer
Maximizer CRM
Super Office
Super Office CRM
NetSuite
NetSuite CRM
Salesforce.com
Salesforce
Sage
Sage CRM
Microsoft
Microsoft CRM
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Technology considerations for implementing CRM

The basic technology blocks of a CRM strategy may require a Database to store customer
information. Data warehousing and Data Mining solutions will be needed to make sense of the
historical pool of information. Operational CRM requires Customer Agent Support software to
track customer interaction / support history. Collaborative CRM requires Customer Interaction
Systems e.g. Website, Automated or IVR Phone systems etc. And finally Analytical CRM needs
Statistical Analysis softwares.
CRM is sub-divided into 3 basic modules
Marketing
- Market Planning
- Campaign Mgmt
- Lead Mgmt
Sales
- Opportunity Management
- Quotation Phase
- Sales Order Management
- Activity Management
Service
- Service Order Mgmt

- Service Contract Mgmt
- Planned Services Mgmt
- Warranty Mgmt
- SLA Mgmt
- Resource Planning &
Scheduling
- Knowledge Mgmt (FAQs,
How Tos etc)
- Call Center Support
- Resource Planning
Is CRM for everyone?

How can you say if your business is ready to move up to a CRM system or if the time & expense
might be misdirected?
The answer to this would be to focus on Seven factors that would help you decide whether you
should go in for a CRM solution or not.
1) How different are your consumers?
Are they spread across a wide geographic area?

Are they mobile
Cultural attributes
Their average age range
Their average size of purchase
Uniformity (If your customers are uniform, then CRM may not be critical because there is
not a lot of demographic data that influences your organization. CRM is good for handling
complexity.
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2) Nature & Periodicity of Purchase?

If your business sells only a limited number of items, or items that tend to last for years together
(e.g. a Modular Kitchen), then tracking buying habits of such customers is simpler and does not
need a CRM solution. But if customers buy on a fairly frequent basis, or buy a variety of products,
then CRM is useful in knowing Whos buying what?, How Often? and those times of the year
when those purchases are likely to occur.
3) Do you need help in watching overall trends?
If your business needs to know if their average transactions are going up or down
If your business needs to know about Customer Satisfaction
If your business needs to know if the marketing plans are effective or off-target
If yes the CRM solution is what can help you.
4) Need help in watching out for internal competition or needless duplication?

A sales prospect will be put off by calls from two sales people within the same company. CRM
can offer proper co-ordination
5) How do you communicate with customers?

If your customer communication happens through varied means, ranging from face to face
conversations to phone or internet contacts via email, or through sms or fax, then CRM helps in
keeping customer communications focused & organized.
6) Can and will your employees use it?

First make sure that the CRM co-ordinates with your existing software. All employees are to be
introduced to your CRM system and the utility and value proposition should be sold to them. If
they resist change then you may have a tough time deriving the true benefits of this CRM
solution. Training and organizational policy changes can help make CRM a practice to be
followed by everyone across all levels of the organization.
7) Will CRM enhance your customer relationships and not negatively affect them?
CRM should compliment your relationships but not change it. CRM software can help you know
who your customers are and how to address their needs. You still need to give a personal touch
to your customer relationships.
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How e-CRM helps improve customer satisfaction?

1) Support your remote sales force
Authorized personnel can retrieve or update all customer information via the internet.
They can visit reports, quotations
Communications can be recorded or retrieved while not at office
2) Share customer information
All authorized personnel have access to the same information

Information is centrally located
Information from different departments is shared regardless of location
3) Keep the customer always informed via the customer portal

Via the internet, your clients can view their own data including communications, documents and
financial transactions. This helps you work in a partnership model with your clients
4) Add value to your Resellers via a reseller portal
Provide prospects, customer information and contract data, product news, company news etc via
the reseller portal, so that your resellers can serve your end consumers well. Remember your
Resellers also represent you, so you need to empower them to reach out to the end consumer.
5) Keep track of your prospects
You can record new prospects yourself or a prospect can request information via your internet
site. The prospect info now becomes a part of a workflow can be traced via e-CRM
6) Improve account management
Your accounts, communications, contacts, tasks and financial information are visualized in one
screen. You can track customer requests in the workflow and assign tasks. Roles and
responsibilities can now be effectively delegated and their progress tracked.
7) Reports & Statistics
Where are your customers?

What is the performance of your sales / Service Department?
How long does it take to answer customer questions / requests?
How much does it cost to convert a prospect to a customer v/s the cost of servicing or
account mining an existing customer etc.
8) Security
Systems Security factors that aid CRM are Virtual Private Networks (VPNs), Virtual LANs
(VLANs), Firewalls and other network level restrictions. Role based logins contribute to
Information security and management.
All in all, the core of the E-CRM system consists of Workflow, Messaging and Security
modules.
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The things that make e-CRM work for your customers are:
a) Portal
b) Customization
c) Personalization
d) Collaboration
The things that make e-CRM work for your administrator or your partners are:
a) Tracking
b) Content Management
c) Document Management
d) Collaboration
e) Analytics & Reporting
The things that make e-CRM support everyone are:
a) Call center
b) Global and contextual help
c) Wizards
d) Knowledge bases
e) Message / Bulletin Boards
f) Chat
g) FAQs etc.
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ERP (Enterprise Resource Planning)

Enterprise resource planning (ERP) is the planning of how business resources (materials,
employees, customers etc.) are acquired and moved from one state to another.
An ERP system supports most of the business system that maintains in a single database the
data needed for a variety of business functions such as Manufacturing, Supply Chain
Management, Financials, Projects, Human Resources and Customer Relationship Management.
An ERP system is based on a common database and a modular software design. The common
database can allow every department of a business to store and retrieve information in real-time.
The information should be reliable, accessible, and easily shared. The modular software design
should mean a business can select the modules they need, mix and match modules from
different vendors, and add new modules of their own to improve business performance.
Ideally, the data for the various business functions are integrated. In practice the ERP system
may comprise a set of discrete applications, each maintaining a discrete data store within one
physical database.
Origin of the term:
The initials ERP originated as an extension of MRP (material requirements planning, and then
manufacturing resource planning) and CIM (computer-integrated manufacturing) and was
introduced by research and analysis firm Gartner. ERP systems now attempt to cover all basic
functions of an enterprise, regardless of the organization's business or charter. Nonmanufacturing businesses, non-profit organizations and governments now all use ERP systems.
To be considered an ERP system, a software package must provide the function of at least two
systems. For example, a software package that provides both payroll and accounting functions
could technically be considered an ERP software package.
However, the term is typically reserved for larger, more broadly based applications. The
introduction of an ERP system to replace two or more independent applications eliminates the
need for external interfaces previously required between systems, and provides additional
benefits ranging from standardization and lower maintenance (one system instead of two or
more) to easier and/or greater reporting capabilities (as all data is typically kept in one database).
Examples of modules in an ERP which formerly would have been stand-alone applications
include: Manufacturing, Supply Chain, Financials, Customer Relationship Management (CRM),
Human Resources, Warehouse Management and Decision Support System.
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Overview of ERP Solutions:

Some organizations typically those with sufficient in-house IT skills to integrate multiple
software products choose to implement only portions of an ERP system and develop an
external interface to other ERP or stand-alone systems for their other application needs. For
example, one may choose to use human resource management system from one vendor, and the
financial systems from another, and perform the integration between the systems themselves.
This is very common in the retail sector[citation needed], where even a mid-sized retailer will
have a discrete Point-of-Sale (POS) product and financials application, then a series of
specialized applications to handle business requirements such as warehouse management, staff
rostering, merchandising and logistics.
Ideally, ERP delivers a single database that contains all data for the software modules, which
would include:
Manufacturing
Engineering, Bills of Material, Scheduling, Capacity, Workflow Management, Quality
Control, Cost Management, Manufacturing Process, Manufacturing Projects,
Manufacturing Flow
Supply Chain Management

Order to cash, Inventory, Order Entry, Purchasing, Product Configurator, Supply Chain
Planning, Supplier Scheduling, Inspection of goods, Claim Processing, Commission
Calculation
Financials
General Ledger, Cash Management, Accounts Payable, Accounts Receivable, Fixed
Assets
Projects
Costing, Billing, Time and Expense, Activity Management
Human Resources
Human Resources, Payroll, Training, Time & Attendance, Rostering, Benefits

Sales and Marketing, Commissions, Service, Customer Contact and Call Center support
Data Warehouse
and various Self-Service interfaces for Customers, Suppliers, and Employees
Enterprise Resource Planning is a term originally derived from manufacturing resource planning
(MRP II) that followed material requirements planning (MRP). MRP evolved into ERP when
"routings" became a major part of the software architecture and a company's capacity planning
activity also became a part of the standard software activity.[citation needed] ERP systems
typically handle the manufacturing, logistics, distribution, inventory, shipping, invoicing, and
accounting for a company. Enterprise Resource Planning or ERP software can aid in the control
of many business activities, like sales, marketing, delivery, billing, production, inventory
management, quality management, and human resource management.
ERP systems saw a large boost in sales in the 1990s as companies faced the Y2K problem in
their legacy systems. Many companies took this opportunity to replace their legacy information
systems with ERP systems. This rapid growth in sales was followed by a slump in 1999, at which
time most companies had already implemented their Y2K solution.
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ERPs are often incorrectly called back office systems indicating that customers and the general
public are not directly involved. This is contrasted with front office systems like customer
relationship management (CRM) systems that deal directly with the customers, or the eBusiness
systems such as eCommerce, eGovernment, eTelecom, and eFinance, or supplier relationship
management (SRM) systems.
ERPs are cross-functional and enterprise wide. All functional departments that are involved in
operations or production are integrated in one system. In addition to manufacturing, warehousing,
logistics, and information technology, this would include accounting, human resources, marketing,
and strategic management.
ERP II means open ERP architecture of components. The older, monolithic ERP systems
became component oriented.
EAS Enterprise Application Suite is a new name for formerly developed ERP systems which
include (almost) all segments of business, using ordinary Internet browsers as thin clients.
Before ERP:
Prior to the concept of ERP systems, it was not unusual for each department within an
organization to have its own customized computer system. For example, the human resources
(HR) department, the payroll department, and the financial department might all have their own
computer systems.
Typical difficulties involved integration of data from potentially different computer manufacturers
and systems. For example, the HR computer system (often called HRMS or HRIS) would typically
manage employee information while the payroll department would typically calculate and store
paycheck information for each employee, and the financial department would typically store
financial transactions for the organization. Each system would have to integrate using a
predefined set of common data which would be transferred between each computer system. Any
deviation from the data format or the integration schedule often resulted in problems.
After ERP:
ERP software, among other things, combined the data of formerly separate applications. This
simplified keeping data in synchronization across the enterprise, it simplified the computer
infrastructure within a large organization, and it standardized and reduced the number of software
specialties required within larger organizations.
What forces a business to re-think its strategy?
The challenges of globalization

Fierce competition due to Govt. deregulations
Changing nature of workforce
Shrinking Government subsidies
Rapid political changes
Shifting of mass production systems to mass customization systems
Dealings with multiple countries and currencies
Trade barriers are falling
Changes in consumer tastes and awareness levels
Global warming and other international laws & treaties etc.
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Illustration of an ERP concept:
ERP installation takes time because of:
Size of Business
Scope of Change
Scope of BPR (Business Process Engineering)
Extent of Customization
Data Migration
Willingness of Customer to take Ownership for Project
E.g. Siemens took 4 years to Implement ERP (SAP) & go Live.
Data Migration Issues can cause delays in implementation:
Should the company use old data

Should the company exchange data from legacy systems
How much data is enough data?
Normalization of Data
Data formats to consider
Page 59 of 91
Evolution of ERP:
Problems taken care of by ERP systems:
Availability check at the time of accepting sales orders

On-line material status & shortages
Productivity Enhancements
Material Planning
Customer Service
Cash Management
Inventory
Quality
Sub-systems of ERP:
Logistics
Bill of Materials (BOM)
Sales & Marketing
Master Scheduling
Materials Requirement Planning
Capacity Requirements Planning
Purchasing
Shop Floor Control
Accounts Payable / Receivable
Human Resources
Page 60 of 91
Significance of BPR while preparing for ERP:
BPR is an in-depth study of existing systems / processes is required before ERP can be
setup.
BPR is a study that brings out the deficiencies of the existing system / processes.
BPR attempts to re-structure and re-organize the human resources, functional areas,
man-machine interfaces in the organization.
BPR aims to maximize productivity.
Factors to consider while selecting an ERP solution:
Check whether all functional aspects of your business are covered

Check whether all business functions and processes are integrated
Check whether all latest IT trends are covered
Check whether the ERP vendor has customizing and implementing capabilities
Check the service options available
Check your budget and calculate your ROI
Preparing the base for ERP in your organization:
Do not start without management commitment

Allocate sufficient funds for this project
Identify core project team
Select specialists from all functional areas of your business
Evaluate and select the right ERP package / modules
Evaluate your ERP implementation partner
Make an implementation plan
Get approvals from management
Present the plan to employee groups for their approval
Plan for User Training
Plan for future upgrades & scalability
Page 61 of 91
e-Business Models
A Business Model is defined as the organization of product, service, information flows, sources &
flow of revenue, benefits for suppliers & customers.
The most adopted e-Business models are:
eShops
e.g.www.archiesonline.com (Onlineshopforgreetings&gifts)
eProcurement
e.g.www.quotemed.com (OnlineProcurementSiteforMedicalSupplies),
www.buyjunction.com(Indiaseprocurementwebsite)
eMalls
e.g.www.amazon.com
eAuctions
e.g.www.ebay.com
VirtualCommunities
e.g.www.orkut.com,www.facebook.com,www.secondlife.com,etc.
CollaborationPlatforms
e.g.www.webex.com,www.groupsense.net,www.freeconference.com,
www.teamspace.com,www.zimbra.cometc.
ThirdPartyMarketPlaces
e.g.www.businessdubai.com,www.priceline.com,www.verisign.com,
www.logisticsonline.com,www.expopoint.cometc.
ValueChainIntegrators
e.g.Onlinemoduleforconsignmenttrackingforthefedexwebsite,Google
MapsforLogistics,GoogleCheckoutforOnlinetransactionbasedwebsites
InformationBrokerage
e.g.www.cnet.download.com,www.naaptol.com,www.compareindia.com
What is a Value Chain Integrator (VCI)

The process in which multiple enterprises within a shared market co-operatively plan, implement
and manage (electronically and physically) the flow of goods, services and information from the
point of origin to point of consumption in a manner that increases customer-perceived value &
optimizes the efficiency of the chain.
(Refer to attached Case Studies on Value Chain Integration)
Page 62 of 91
What is an Electronic Marketplace

Electronic marketplace is defined as a space in which sellers and buyers exchange goods and
services for money (or for other goods and services) electronically.
Functions of markets:
Match buyers and sellers

Facilitate exchanges of goods / services / information / payments associated with market
transactions
Provide Institutional infrastructure
Components of a Marketplace:
i.
Customers:
Hundreds of people surfing the web are your prospective customers looking for a good
deal, customized items, collectors items, entertainment etc.
ii.
Sellers:
Thousands of Web Storefronts offering a huge variety of products.
iii.
Products:
Both physical & digital products purchased & sold online.
iv.
Infrastructure:
Hardware, Software, networks etc.
v.
Front End:
Customer facing portion of your business (e.g. Sellers portal, e-catalogs, Shopping carts,
Search Engine and Payment Gateways).
vi.
Backend:
Activities that support Online Order-Tracking. (e.g. Order Aggregation Process &
fulfillment, inventory mgmt, procurement, payment processing, packaging & delivery.
vii.
Intermediaries:
viii.
Who create & manage online markets.

Who match buyers and sellers & allow them to transact
Who mostly operate as computerized systems (e.g. Merchant Bank)
Other Business Partners:

Who collaborate with you across your supply chain.
ix.
Support Services:
Ranging from Certification to Trust services.
Page 63 of 91
e-Business models by provider & consumer

Following are the business models classified by provider and consumer.
a) Business to Business (B2B)
b) Business to Consumer (B2C)
c) Business to Government (B2G)
d) Business to Employee (B2E)
e) Government to Business (G2B)
f)
Government to Government (G2G)
g) Government to Citizen (G2C)

h) Consumer to Consumer (C2C)
i)
Consumer to Business (C2B)
j)
Reverse Markets
k) Infomediaries
l)
Vertical Integration Portals (VIP)
Business to Business (B2B)

B2B can be defined as doing business electronically or exchanging of structured messages with
other business partners over private networks (i.e. EDI, VPN, Extranets) or Internet to create and
transform business relationships.
B2B exchanges are also called as e-Markets
B2B is the largest model in terms of dollar amount
Usually focused on SCM in Manufacturing
Features of Business to Business (B2B) sites
B2B initiatives bring two or more firms together on the virtual marketplace.
B2B initiative needs a large infrastructure
B2B companies need to restructure its systems and business processes
It involves many participants with complex rules, higher purchasing amounts &
complex products
B2B initiative lays stress on Order Fulfillment
Unlike B2C, brand value of a site is not critical, here the Suppliers & Buyers care
about the Value Added Services
B2B e-Commerce sites are managed by experts in their relevant domains
Page 64 of 91
The evolution of B2B

First Stage: Electronic Data Interchange (EDI)
Where a buyer maintained separate connections with each supplier
This was both difficult and expensive to maintain
It neither increased the population of buyers nor sellers
It was not transparent
Second Stage: The Basic e-Commerce Model

Where companies put their product catalogues on the Internet and conducted one-to-one
transactions
Third Stage:
Unlike the first two stages, B2B e-Commerce is in its 3rd Stage of evolution.
Here a B2B initiative brings together large number of buyers & sellers thereby creating a
community of traders
As many buyers & sellers gather at a common place, the information flow increases and
so does the transparency
This also guarantees uniform pricing
This in turn reduces the overall transactions cost
Types of B2B Marketplaces

The different types of B2B Marketplaces are:
Private e-Marketplace
- Buyer Controlled Exchanges (Buy - Side)
- Seller Controlled Exchanges (Sell Side)
Public e-Marketplace
Consortia
Page 65 of 91
1) Private e-Marketplace: owned by a single company

a) Buyer Controlled Exchanges:
These are a consortium of buyers who aggregate their purchases (e.g. Auto giants
DaimlerChrysler, Ford, General Motors, Toyota recently formed a consortium to help
them manage their procurement process efficiently with lower administration costs and
uniform pricing.
b) Seller Controlled Exchanges:

Here sellers who cater to fragmented markets such as chemicals, auto components etc.
come together to create a common trading place for the buyers. While sellers aggregate
their market power, it helps buyers search for alternative sources.
2) Public e-Marketplace:
These are neither buyers nor sellers

They are markets usually owned by an independent 3rd party with many buyers and
sellers
They thrive purely on the fees generated by matching buyers and sellers
E.g. businessdubai.com, chemconnect.com, chemdex.com etc.
3) Consortia:
Usually owned by a small group of major sellers or buyers usually in the same industry.
(e.g. metaljunction.com)
Page 66 of 91
Business to Consumer (B2C)

(B2C, sometimes also called Business-to-Customer) describes activities of businesses serving
end consumers with products and /or services.
Types of Marketplaces under B2C Model
Electronic Storefronts
Electronic Malls
Electronic Storefronts:
It is a single companys website where product / services are sold (electronic store)
Mechanisms used by Electronic Storefronts (e-shops)
E-Catalogs (presentation of products in electronic form)

Search Engine (used to allow users to search for products)
Electronic Shopping Cart to allow users add items & pay online
E-Auction facilities
A payment gateway (for e.g. PayPal, Google Checkout or CCAvenue)
Electronic Malls:
It is an online shopping center where many stores are located (e.g. Amazon)
Some things to remember:
In a B2C model Businesses interact with customers for product & services.
In B2C the seller facilitates the transaction between its site and the users.
The seller takes liability for any shortcomings in service
Types of services usually covered under B2C e-Commerce:

Auction Stores (e.g. www.ebay.com)
Online Stores (e.g. www.amazon.com)
Online Services (e.g. www.travelocity.com)
AUCTIONS
It is a market mechanism by which a Seller places an offer to sell a product and Buyers make
bids sequentially & competitively until a final price is reached.
Limitations to offline / physical auctions
Short time for each item (little time to make decision to bid or not)
Sellers dont get the right price (or buyers may pay more)
Little time to examine the product
Physical presence limits the potential bidders
Page 67 of 91
Difficulty in moving goods to auction sites

Cost of rent of auction site, advertisements, auctioneer fees etc.
ELECTRONIC AUCTIONS (e-Auctions)

These are auctions conducted online (e.g. ebay)
How Dynamic Pricing affects e-Auctions
Dynamic Pricing has several forms (bargaining & negotiations).

There are four major forms of dynamic pricing depending on the number of buyers and
sellers present;
- One buyer, one seller
- One seller, many potential buyers
- One buyer, many potential sellers
- Many buyers, many sellers
One Seller, One Buyer

Negotiations, bargainin g & bartering is used. Prices usually determined by each partys
bargaining power as well as demand & supply in the market & the business environment.
One Seller, Many Buyers (a.k.a FORWARD AUCTIONS)
Here a Seller entertains bids from buyers.
English & Yankee Auctions: Prices increase as auction progresses
Dutch & Free Fall: Prices decrease as auction progresses
One Buyer, Many Sellers
Reverse Auctions: A buyer places an item for bidding (tendering) on a Request for Quote (RFQ)
system, Potential Sellers bid for the item with price reducing sequentially until no more reductions
and the lowest bidder wins (mostly B2B, G2B mechanism)
Name your-own-price-model: A buyer specifies the price (and other terms) on which they would
want to buy in order to enable suppliers decide to serve them.
(e.g. C2B model started by www.priceline.com)
Many Sellers, Many Buyers (a.k.a. DOUBLE AUCTION)
Multiple buyers & their bids are matched with multiple Sellers & their asking prices, considering
the quantities.
Page 68 of 91
Types of E-Auction Frauds
Bid Shielding: Having fake (phantom / ghost) bidders bid at a very high prices and then
later pull out at the last minute
Shilling: placing fake bids on auction items to artificially jack up the bidding price
Fake photos and misleading descriptions
Improper grading techniques
Selling reproductions
Failure to pay
Inflated Shipping and handling cost
Failure to ship merchandise
Loss and damage claims
Sale of stolen goods
Protecting against E-Auction Fraud
User ID verification
Authentication service
Grading services
Feedback
Insurance Policy
Escrow Service (e.g. www.escrow.com, www.safefunds.com)
Physical verification
Page 69 of 91
B2B versus B2C

B2B
B2C
Customers
Business
Individual
Transaction
Complex (High $ value)
Simple (Low $ value)
Negotiations
Price, Delivery, Product Specifications
None
Integration
Requires Integration with other sys
None
Mode of
Payment
B2B partners usually have trading accounts

with each other
Credit Card, Debit Cards, CoD
Sale Period
Longer time to complete Sale
Short time to complete Sale
Content
Requires good & in-depth content
Requires minimum content
Nature of
buying
Workflow driven buying process
Individually driven buying process
Use of
Shopping
Cart
May or may not be required as goods /

services sold on B2B sites require Presale
discussions, price negotiations &
customization of the product before the
sale is executed
Shopping carts are required to simplify the

online buying process
Page 70 of 91
Business to Government (B2G)
Involves exchange of Information / transactions between business and govt. agencies
Most of the e-Governance projects come under the B2G model
Focuses on reduced paper work and more transparency in the govt.
Examples include: E-filing of returns, Availability of Regulatory Information online or via

Govt. websites, Access to Govt. databases for market & technology research, Application
of PAN, Right to Information Online, Government Tendering & Bidding etc.
Some websites that fall under this model are: www.rajgovt.com, tenders.indiamart.com,
www.tendercity.in, www.ibef.org
REMEMBER:
When getting into a contract with State, Local, Central Government entities, the
Government is considered an Agent of the people
Because of this public responsibility, many details of the contract, rules & regulations,
bidding process, award & selection of vendor process etc. are clearly defined by the legal
statutes
The process is also open to public scrutiny (as per RTI Act)
The processes & transactions can be slower and time consuming
SCOPE of e-Governance:
Government to Citizen (G2C)
Citizen to Government (C2G)
Government to Government (G2G)
Government to Business (G2B)
Government to NGO (G2N)
Government to Citizen (G2C) initiatives:
E-Citizen
(Integrated service centers offering services like issuing Certificates, Ration Cards,
Passports, Payment of Bills, Taxes etc. These centers can become one-stop Govt. Shop
for delivery of services)
E-Transport
(Registration of Motor Vehicles, Issue of Driving Licenses, Issue of permits, Tax & Fee
collection through cash and bank challans, control of pollution, etc.)
Page 71 of 91
E-Medicine
(Linking various hospitals across the country & provide better medical services to the
users)
E-Education
(Programs to educate both the Citizens as well as the Government bodies)
E-Registration
(Allowing online registrations for transfer of property documents and Stamp duty thereby
reducing paper work & redundancy)
Citizen to Government (C2G) initiatives:
E-Democracy
Includes areas like:
- Election: when Citizens vote for the Government
- Census: where the Citizen provides info about himself to the Government
- Taxation: where the Citizen pays his taxes to the Government
Government to Government (G2G) initiatives: (a.k.a. e-Administration)
E-Secretariat
(Secretariat which is the seat of power has a lot of valuable information regarding the
functioning of the state. The cross-linking of various departments & exchange of
information amongst various components will simplify the process of governance)
E-Police
(Having 2 databases, one for Police Resources & Personnel and the other to capture
Criminal Information. Police database should have the current & previous Postings, the
cases handled by them; the forensic expertise, geographical & regional capabilities &
expertise etc so as to enable the Police Administration depute the right official on the
right case in the right location and at the right time along with the right resources.
Page 72 of 91
Criminal databases will be synced with National Databases & Interpol's, Info about the
past & pending cases, modus operandi, area of operations etc can be made available to
the Police as and when they require such data.
Module for Online Filing & Tracking of FIRs, Lost & Found Database, Module for
Informers etc.)
E-Court
(Information Systems for speeding Court Cases, Automation for allowing online
application of valid PILs, Audio / Video Conferencing for enabling virtual cases to be
heard by Judges to save time and for privacy reasons, Multi-Lingual options for Court
Transcripts and Notices for better clarity for out of state plaintiffs and defendants etc.)
State Wide Networks

(Linking State Departments with the Center and connecting all the states of the country to
allow free flow of information for better and timely decision making)
Government to Business (G2B) initiatives:
E-Taxation & Licensing Services:

(Tax Benefits & Subsidies, Licenses which Government bodies give to business houses)
Government to NGO (G2N) initiatives:
E-Society
(Developing communities, building public-govt. partnerships)
Examples:
Mohalla Committees,
Jaagore India Campaign with Tata Tea and an NGO by the name Janaagraha.
Page 73 of 91
Institutions that we require to establish in India for e-Governance:
A Commission to look into the Interoperability of all IT Projects
A Commission to ensure universal access to Information
An Institution for R&D in e-Governance on the lines of C-DAC
An Institution for Training & Coaching of Human Resources
An Institution for spreading awareness about e-Governance
An Institution to support PKI (Public Key Infrastructure)
A Software and Technology Standards organization
Government Certification Authorities
Page 74 of 91
Steps to consider while implementing your e-Business

While planning your e-Biz implementation, you must be aware of the following:
1. Sources of Assistance:
Wide range of Govt. bodies, Private businesses provide Information and sources of
financing for your e-Business project. (e.g. Self Finance, Banks, Financial Institutions,
Private Loans, Venture Capital, Foreign Investment and Capital Markets.
Public Sector Banks like SBI, BoB, Andhra Bank etc offer Working Capital Finance,
Term Finance, SME Loan Packs, Deferred Payment Guarantees, Project Finance etc.
Small Industries Development Organisation (SIDO) which offers credit facilities,
technology support services, marketing assistance etc.
National Small Industries Corporation Ltd. (NSIC) for promoting, aiding and fostering
growth of SSIs in the country by way of offering Marketing Support Schemes where it
promotes the SSI products, Credit Support Schemes in the form of offering equipment
financing, Financing for procurement of raw materials, Financing for marketing activities,
Financing through syndication with banks, Performance & Credit Rating Schemes for
small industries and finally Technology Support Schemes. Etc.
2. Technology: (Basic, Intermediary, Transactional)

Understand technologies from getting you connected to email softwares, to websites, to
web based applications, to ERP.
For example:
- Static Websites
- Websites with user interactions & transactional abilities
- Websites with Enterprise level transactional capabilities
3. Security:
Understand security issues to data & software of your business. Identify tools &
processes to help you keep your business secure both online and offline. (E.g. SSL,
Encryption, Digital Signature Certificates etc.)
4. Privacy:
Respect your customers personal information. Put privacy policies in place. Be aware of
privacy legislations. (E.g. In Germany use of cookies without users consent is illegal as
per legislations)
5. Legal Issues:
Ensure you comply with Criminal & Contract Laws, Intellectual Property, Civil Liability,
Jurisdiction, and Taxation legislations.
Areas of law that apply to e-Commerce and Internet:
Page 75 of 91
a) Consumer Protection:
Be honest about who you are & provide Info that customers need
Make Sales terms & conditions easy to find (e.g. The Asterix * on advts for conditions
apply)
Provide Security & Privacy and Avoid sending unsolicited e-Mails
Respond to complaints
b) Privacy:
Respect Customer Privacy & work within existing legislations
c) IPR Laws:
Copyright, Trademarks, Trade Dress, Trade Secrets. Domain names, meta tags &
copyright materials can also be considered as Intellectual property.
d) Civil Liability:
Understand and be aware of Communication of Erroneous Information and Unfair

Competition.
e) Defamation:
An actionable harm to reputation of an individual or an organization
f)
Criminal Law:
As far as the Internet is concerned, criminal law is generally confined to Child

Pornography, Hate Propaganda, Obscenity, Online Threats & Profanity and Frauds.
g) Contract Law:
Most contracts are considered as proof in the court of law.
h) Jurisdiction:
Jurisdictions may be Provincial / State / Territorial / National / International (e.g. Soliciting

XXX online in India is illegal but the same is legal in some countries in Europe. Sites
offering Escorts services are banned in India but are common in the west and in some far
eastern countries.)
i)
Taxation:
Issues relating to Internet Taxation are Taxation Jurisdiction, Collection, Enforcement

E.g. In Canada, Service Tax & Sales Tax, Import Duties etc are applicable to business
activities conducted over the Internet.
Page 76 of 91
Factors to focus on while setting up your e-Business initiatives

(i) Your Strategy:
-
Are you marketing something?

What can you sell on the Internet?
Are you a first mover or a late comer?
(ii) Your Business Idea:

-
Is it innovative?
Is it of a tangible or intangible kind?
Does it have mass appeal?
Is it scalable?
(iii) Your Product:

-
Tangible or Intangible?
Would it be accompanied by Shipping Cost?
How do you calculate the shipping cost for your products?
Is it a niche product for a niche market?
Is it your cash cow product?
Does it drive your core competency?
(iv) How do you manufacture?

-
Are you capable of manufacturing the whole product yourself?

Would you manufacture just a part of it yourself?
Would you want to outsource it to third party manufacturing entities?
Do you have Product Protection mechanism in place i.e. Patents, Trademarks?
(v) Your Marketing Plan:

-
If your product has many competitors, try selling it yourself?

If your product is new & has less or no competition, try selling it through others
via affiliates or franchise systems
Look at how you market locally as well as internationally
Review your Segmenting, Targeting & Positioning strategies
(vi) Your Delivery Mechanism?

-
If you are selling through your website, your logistics would require warehousing,
packaging and administration
Your website can also act as an order aggregator & you can simply drop ship
You would need to set up a transactional website
You would need to focus on delivery & fulfillment
Page 77 of 91
(vii) Your Collection System?

-
Which Payment Gateway would you use?

If you are a small entrepreneur, PayPal and Google Checkout are a good
choice
You would need a Merchant Account (e.g. ICICI Bank offers a merchant a/c)
If you cannot get a Merchant Account from your Bank, try using the Services of
Worldpay and 2checkout
Check to see what all types of Credit Cards does your payment gateway accepts
(e.g. Master, Visa, Diners Club, JCB, Discover, AMEX etc.)
Does your payment gateway also accept Debit Cards
(viii) Your Promotions?

-
Create e-Marketing Campaigns, Mailers, Narrow & Broadcast Advts etc.

Support your Promotions with Offline campaigns like Posters, Press Releases
For global promotions try Online Press Releases
(ix) Branding?
-
A company is known by its brand. Does your online business have a brand?
Your branding strategy should revolve around the thought What is it that you
want people to remember you for?
Your branding will cover all your channels, your packaging, your delivery systems
and even your front desk.
(x) How to be found?

-
If you have a website, you need to optimize it (a.k.a. SEO) for enhancing your
rankings in the search engines
Your website needs to draw Natural Traffic and should have a stickiness factor
Your website needs to have a good Conversion rate. You can buy Traffic by
subscribing to Googles Pay-Per-Click & Overtures Pay-Per- Inclusion
programs for which you end up paying around 10 cents to 10 $ for each click to
your site.
Page 78 of 91
How to make your websites search engine friendly?

Search Engines want to put trustworthy sites on top of their SERPs (Search Engine Results
Pages).
You can become a trustworthy website by:
Listing your company particulars like addresses and phone numbers
Give it a clean professional feel
Do not put the buy button or hyperlink on the homepage
Avoid using unscrupulous JavaScript's which are designed to do harm
Have plenty of unique contents that are not found in others websites
Show guarantees wherever relevant in your website
Have a good returns policy
Have relevant downloadable contents
Have alternate representations for images / flash on your website
Factors to consider while creating your website

1) Will the website be informative or transactional?
2) What type of customers will the website attract?
3) How will these customers interact with your website?
4) How will your website influence / promote customer interaction?
5) How much page views you expect each day?
6) How much sales do you expect to make each month?
7) What additions / modules / features do you plan to add to your website?
8) Which countries do you wish to target (multi-lingual website)?
9) Do the monthly profits justify the monthly costs?
10) How will you measure the performance of your website? Is it working for you?
11) Is your domain name & site design professional, usable & accessible?
12) Is your website secure & can you convey it via your website?
13) Have you determined the purpose & budget to run your website?
14) Have you accounted for website maintenance costs?
15) Have you accounted for website marketing and SEO costs?
Page 79 of 91

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e-Business (2008) Class Notes (Semester 1) Prof. Max DCosta | max_dcosta@rediffmail.

com | cell: +91 9821439790

e-Business & e-Commerce Concepts

For MET School of Business Management

Business to Government (B2G) .............................................................................. 71

For MET School of Business Management

For MET School of Business Management

Supplier offering services to e-commerce practitioners are i-Bill, Moneybookers, PayPal,

For MET School of Business Management

Customers want companies they do business with to improvise on the following:

For MET School of Business Management

BPO (Business Process Outsourcing) / ITES (IT Enabled Services)

Accounting & Payroll

ITO (Information Technology Outsourcing)

KPO (Knowledge Process Outsourcing)

BTO (Business Transformation Outsourcing)

For MET School of Business Management

A few prominent KPOs and the skills required:

Skill Sets Required

Reviewing Transactional & Litigation docs,

Knowledge of US/UK laws, adept in legal application,

2D,3D Modeling, conversion, technical specs

CAD/CAM, Drafting & Modeling, Prototyping, Product

Mkt Research &

Primary & Secondary Research, Conversion of

Statistical tools, research techniques, report writing &

Writing & Content

Editorial, content delivery, digitization of

English communication skills, journalism, experience in

Research & Development, Drug Discovery,

Doctors, Masters degree in Science, PhDs

Diagnostics, Genetic Profiling etc.

Medical Degree, Specialized subject knowledge

Education & Training

E-Learning, Curriculum Design, Content

Teaching methods / techniques, cultural sensitivity,

For MET School of Business Management

Supply Chain Management and supplier processes

Supply chain Management (SCM) and Supplier processes:

Supply Chain Components

Upstream Supply Chain: includes the activities of the suppliers (Manufacturers /

4 Major Supply Chain drivers that affect a companys cost are:

Inventory (e.g. Dell and Amazon)

For MET School of Business Management

Some of the processes included within SCM are:

What is Drop Shipping in SCM &

For MET School of Business Management

Why are online merchants turning to Drop Shipping:

To minimize stock on hand

Advantages of Drop Shipping to Online Sellers:

Dangers of Drop Shipping to Online Sellers:

For MET School of Business Management

How does SCM become e-Business enabled:

For MET School of Business Management

SCM flows can be divided into three mail flows:

The Product Flow:

The Information Flow:

The Finances Flow:

There are two main types of SCM Softwares:

Components of a SCM Planning & Execution Software:

Strategic Network Design:

Transportation & Logistics Planning:

Warehouse Management System: