BUILDING E-COMMERCE.pdf

BUILDING E-COMMERCE
APPLICATIONS AND
INFRASTRUCTURE
18
18
CHAPTER
Content
Tracking United Parcel Service Shipments
18.1 The Development Process
18.2 The Major EC Applications and Their
Functionalities
18.3 Development Options for EC
Applications
18.4 Criteria for Selecting a Development
Approach
18.5 Third-Party EC Components and Suites
18.6 Connecting to Databases and Other
Enterprise Systems
18.7 Rise of Web Services
18.8 Vendor and Software Selection
18.9 Usage Analysis and Site Management
Managerial Issues
Real-World Case: Whirlpool’s Trading Portal
Upon completion of this chapter, you will be
able to:
1. Discuss the major steps in developing an EC
application.
2. Describe the major EC applications and list
their major functionalities.
3. List the major EC application development
options along with their benefits and
limitations.
4. Describe various EC application outsourcing
options.
5. Discuss the major components of an
electronic catalog and EC application suite.
6. Describe various methods for connecting an
EC application to back-end systems and
databases.
7. Describe the criteria used in selecting an
outsourcing vendor and package.
8. Discuss the value and technical foundation of
Web services in EC applications.
9. Understand the value and uses of EC
application log files.
10. Discuss the importance and difficulties of
EC application maintenance.
Learning objectives
1

THE SOLUTION
In an effort to reduce transaction costs and to efficiently service
more customers, UPS created a Web site (ups.com) that enabled
customers to track their shipments online, to determine the cost
and transit time for delivery of a package, to schedule a package
for pickup, and to locate the nearest drop-off facility. These
online facilities are accessed from the UPS homepage. For exam-
ple, if a customer wants to track a shipment, they click the
“Tracking” tab at the top of the homepage. This takes the cus-
tomer to an online form where the customer simply enters the
tracking number and then hits the “Track” button. The customer
then receives precise information about the location of the des-
ignated shipment.
Although the front end of the UPS Web site is simple
enough, the back-end processing used to handle a tracking
request is a little more complicated. When a request first reaches
the UPS site, it is handed off to one of a handful of Web servers.
The particular server that is selected depends on a variety of fac-
tors such as the current load on the various machines. Next, the
selected server passes the request to the appropriate application
server. In this case, the application server is a tracking one.
From there, the application server passes the request to an IBM
AS/400 computer, which is attached to the UPS tracking data-
base. This database is one of the largest transaction databases
in the world, containing over 20 terabytes of data. The main-
frame actually performs the database search for the status infor-
mation associated with the tracking number. Once the informa-
tion is found, it is passed back up the line through the various
servers to the customer’s browser. Exhibit 18.1 provides a
schematic of the whole operation.
THE RESULTS
Today, the UPS site services almost 8 million online tracking
requests per day. It has kept UPS competitive with other ship-
ping companies (notably, FedEx) that also offer online tracking
services and customer information. Recently, the UPS site has
begun to offer customers the option of tracking their packages
through wireless devices (cell phones, PDAs, and Web-enabled
pagers). In these cases, the Web pages have been modified to
support the particular wireless device being used. In the same
vein, specialized servers are used to deliver the pages over the
wireless communication networks.
In addition to their own site, UPS offers a set of
e-commerce solutions and a technology infrastructure that
enables other companies to incorporate UPS’ online order entry,
shipping, and tracking capabilities (ec.ups.com). For instance,
Amazon.com uses UPS’s online tools to provide customers with
the online means to track packages shipped by UPS. UPS also
offers e-commerce tools and services for managing an enter-
prise’s overall supply chain.
Sources: ups.com (2003) and Tauscher (2002).
TRACKING UNITED PARCEL SERVICE SHIPMENTS
The Problem
United Parcel Service (UPS) has been in the package distribution business since 1907. It is the world’s largest package distribution com-
pany, transporting over 3 billion parcels and documents each year in over 200 countries. For years, UPS has provided the means for cus-
tomers to track their shipments to determine the status and whereabouts of a particular package. In the past, this was done primarily
over the telephone. Customers would call UPS with the tracking number of their shipment. An operator would look up the status of the
shipment in the UPS database and relay the information to the customer. Servicing these calls over the phone was an expensive proposi-
tion (estimated at $2 per call).
WHAT WE CAN LEARN . . .
There is more to an EC Web site than meets the eye. For example, on the surface, the UPS Web site appears to be relatively simple.
However, behind the scenes a number of hardware and software components are supporting these applications. The same is true of virtu-
ally every e-commerce site.
This online chapter describes the process for developing EC applications. The discussion covers the general steps in the process and
considers a number of different alternatives for implementing e-commerce applications.

Chapter Eighteen: Building E-Commerce Applications and Infrastructure 3
18.1 THE DEVELOPMENT PROCESS
Several options are available for developing an EC site. In some cases, the components mak-
ing up a Web site come from a small number of vendors. In other instances, they come from
several different vendors. Small storefronts with a few key components can be developed
with HTML, Java, or another programming language. They can also be quickly imple-
mented with commercial packages or leased from an application service provider (ASP), a
company that provides business applications to users for a small monthly fee. (Some packages
are available for a free trial period ranging from 30 to 90 days.) Building medium to large
applications requires extensive integration with existing information systems such as corpo-
rate databases, intranets, enterprise resource planning (ERP), and other application pro-
grams. Larger applications can be outsourced or developed in-house.They can also be imple-
mented with a commercial package or customized by hand.
Although the cost of developing an EC site of any size has dropped considerably over
the past few years (Carmichael 2001), the cost can still run in the thousands of dollars, even
for a small site. To ensure at least a modicum of success, a systematic development process is
needed to create, implement, and maintain a site. A project team is also needed to manage
the development process, as well as the relationships with outside vendors and business part-
ners. The development process should include the steps detailed in the following sections.
STEP 1: CREATING AN EC ARCHITECTURE
An EC architecture is a plan for organizing the underlying infrastructure and applications of
a site. The plan includes the business goals and vision for the site; the information and data
required to fulfill the goals and vision; the application modules that will deliver and manage
the information and data; the specific hardware and software on which the application
application service
provider (ASP)
A company that provides
business applications
to users for a small
monthly fee.
EC architecture
A plan for organizing the
underlying infrastructure
and applications of a site.
Source: UPS, Atlanta, GA.
AS/400
16-Terabyte
Database
New York
Router
Atlanta
Router
Internet
DNS
Round
Robin
Netscape
Enterprise
Servers
(Sun Microsystems)
Web
Application
Servers
EXHIBIT 18.1 Architecture of the UPS Web Site

4 Chapter Eighteen: Building E-Commerce Applications and Infrastructure
modules will run, as well as the security, scalability, and reliability required by the applica-
tions; and the human resources and procedures for implementing the architecture.
Various IT tools and methodologies can be used to support the creation of an application
architecture (e.g., see Kendall and Kendall 1999). Because the creation of an architecture is
an iterative process, collaborative methodologies such as Joint Application Development
(JAD) are especially useful in identifying and modifying system requirements.
STEP 2: SELECTING A DEVELOPMENT OPTION
EC applications can either be developed in-house, outsourced to another party, or some
combination of both. If the application is built in-house, it can be built entirely from scratch
or commercial products can be used and modified to meet specific needs. If the application is
outsourced, the application can be run entirely by an ASP, run on a third-party marketplace
(e.g., an auction site, exchange, or online mall), or run on another company’s Web site. Even
if the application is outsourced, a company will still need to participate in the architectural
design. At the end of this step, an application is built (or purchased) and ready to be installed.
STEP 3: INSTALLING, TESTING, AND DEPLOYING EC APPLICATIONS
Once an option has been selected, the next step involves getting the application up and run-
ning on the selected hardware and network environment. As the UPS tracking application at
the beginning of the chapter demonstrated, one of the steps in installing an application is
connecting it to back-end databases, to other applications, and often to other Web sites. For
example, if a prospective customer orders a product from a site, it would be helpful if the site
could determine if the product was in stock. In order to do this, the ordering system would
need to be connected to the inventory system.
During this step, the modules that have been installed need to be tested. A series of tests
are required: unit testing (testing the modules one at a time), integration testing (testing the
combination of modules acting in concert), usability testing (testing the quality of the user’s
experience when interacting with the site), and acceptance testing (determining whether the
site meets the original business objectives and vision). Once the applications making up an
EC site pass all of the tests, they can be deployed to the end users.
STEP 4: OPERATION AND MAINTENANCE
It usually takes as much time, effort, and money to operate and maintain a site as it does to
build and install it in the first place. To enjoy continued usage, a site needs to be continually
updated. For example, at a B2C site, new products need to be added to the catalog, prices
need to be changed, and new promotions need to be run. These changes and updates need to
undergo the same testing procedures used during the installation process. Additionally, usage
patterns and performance need to be studied to determine which parts of the underlying
applications should be modified or eliminated from the site.
Section 18.1 ◗ REVIEW
1. List the major steps in developing an EC application.
2. Define the various types of testing used during the EC development process.
18.2 THE MAJOR EC APPLICATIONS AND THEIR
FUNCTIONALITIES
When the Web was first getting started, there were few guidelines for developing an EC
site. Today, there are numerous examples of all types of sites, including B2C, B2B,
exchanges, and the like. Sites of a particular type generally have the same underlying appli-
cations and provide similar sorts of functionality. This simplifies the task of creating the
underlying application architecture for a particular type of site. The discussion that follows
describes the major characteristics and functionalities of some of the better-known EC
applications.
unit testing
Testing application soft-
ware modules one at
a time.
integration testing
Testing the combination
of application modules
acting in concert.
usability testing
Testing the quality of
the user’s experience
when interacting with
a Web site.
acceptance testing
Determining whether a
Web site meets the origi-
nal business objectives
and vision.

B2C STOREFRONTS
An electronic storefront must support the same steps and tasks that a physical store must
support. In particular, an electronic storefront (a seller’s Web site where purchases can be
made) needs to offer certain capabilities to buyers and to the merchant. These are shown in
Exhibit 18.2.
In order to provide these capabilities, an electronic storefront must contain at least three
interrelated subsystems (DeWire 1998):
1. A merchant system or storefront that provides the merchant’s catalog with products,
prices, and promotions. A shopping cart is usually included.
2. A transaction system for processing orders,payments,and other aspects of the transaction.
3. A payment gateway that routes payments through existing financial systems primarily
for the purpose of credit card authorization and settlement.
For a comparison of various software packages that support the creation of an B2C storefront
see ecommerce.internet.com/reviews/glance/0,,3691_3,00.html.
SUPPLIER SELL-SIDE B2B SITES
A sell-side B2B site is similar to a B2C storefront, enabling one business to purchase goods
and services from another. However, a B2B site also has additional features, including:
◗ Personalized catalogs and Web pages for all major buyers
◗ A B2B payment gate
◗ Electronic contract negotiation features
◗ Product configuration by customers (e.g., Cisco or Dell)
◗ Affiliate program capabilities
◗ Business alerts (e.g., special sales)
EXHIBIT 18.2 Capabilities Needed by Users of Electronic
Storefronts
Buyers Need Ability To: Sellers Need Ability To:
• Discover, search for, evaluate, and compare products • Provide access to a current catalog of product offerings,
for purchase using e-catalogs. allowing prospective buyers to analyze and evaluate the
• Select products to purchase and negotiate or determine offerings.
their total price. • Provide an electronic shopping cart in which buyers can
• Place an order for desired products using a shopping cart. assemble their purchases.
• Pay for the ordered products, usually through some form • Verify a customer’s credit and approve the customer’s purchase.
of credit. • Process orders (back-end services).
• Confirm an order, ensuring that the desired product • Arrange for product delivery.
is available. • Track shipments to ensure that they are delivered.
• Track orders once they are shipped. • Provide the means for buyers and visitors to register at the
site, to make comments, or to request additional information.
• Answer customers’ questions or pass queries and requests to
a Web-based call center.
• Analyze purchases in order to customize buyers’ experiences.
• Provide Web-based post-sale support.
• Create the capability for cross-sell and up-sell.
• Provide language translation if needed.
• Measure and analyze the traffic at the site in order to modify
and maintain the various applications.

E-PROCUREMENT
An e-procurement site is an online intermediary that offers businesses access to hundreds of
parts and services provided by suppliers. There are several variations of e-procurement sys-
tems, each with their own specialized capabilities.
Aggregating Catalogs
In large organizations, multiple buyers are involved in making purchases from a large number
of suppliers. One way to reduce costs and other inefficiencies in the purchase process is to
aggregate the items from approved suppliers into a single online catalog. Some of the spe-
cialized requirements for this type of site include:
◗ Search engine for locating items with particular characteristics
◗ Comparison engine for alternative vendors
◗ Ordering mechanism
◗ Budget and authorization feature
◗ Usage comparisons (among various departments)
◗ Payment mechanism (e.g., use of a purchasing card)
Reverse Auctions
In a reverse auction, buyers list the items they wish to purchase and sellers bid to provide
those items at the lowest price. Sites of this sort provide the following capabilities:
◗ Catalog of items to be tendered and their content management
◗ Search engine (if there are many items)
◗ Personalized pages for potential large bidders
◗ Reverse auction mechanisms, sometimes in real time
◗ Facility to help prepare,issue,manage,and respond to a buyer’s request for quotes (RFQs)
◗ Ability to bid dynamically
◗ Automatic vendor approval and workflow (e.g., SmartMatch’s supplier identification
technology)
◗ Electronic collaboration with trading partners
◗ Standardization of RFQ writing
◗ Site map
◗ Mechanism for selecting suppliers
◗ Automatic matching of suppliers with RFQs
◗ Automatic business process workflow
◗ Ability for bidders to use m-commerce for bidding
◗ Automated language translation
EXCHANGES
An exchange is an e-marketplace tying many buyers to many suppliers. In addition to com-
bining the functionalities of buy-side, e-procurement, and auction sites, they also have a
number of other capabilities:
◗ Collaboration services (including multichannel ones)
◗ Community services
◗ Web-automated workflow
◗ Integrated business process solutions
◗ Central coordination of global logistics for members, including warehousing and ship-
ping services
◗ Integration services (systems/process integration into e-marketplace, trading partners,
and service providers)
◗ Data mining, customized analysis and reporting, real-time transactions, trend and cus-
tomer behavior tracking

◗ Transaction flow managers
◗ Negotiation mechanisms
◗ Language translation
◗ Comprehensive links to related resources
These lists of major characteristics and functionalities can be used by application developers
as outlines or checklists from which to develop plans for specific EC applications. For a list-
ing of software packages that support the various capabilities of B2B sites see
business2.com/webguide/0,,3789,00.html?ref=wg_el.
1. List the major subsystems of an electronic storefront.
2. Describe some of the major functions required by an aggregating catalog.
3. Describe some of the major functions needed to build a reverse auction.
4. List some of the functional requirements of an online exchange.
18.3 DEVELOPMENT OPTIONS FOR EC APPLICATIONS
There are three basic options for developing an EC Web site: (1) develop the site in-house
either from scratch or with off-the-shelf components, (2) use a packaged application
designed for a particular type of EC site, or (3) lease the application from a third party. Each
of these approaches has its benefits and limitations.
IN-HOUSE DEVELOPMENT: INSOURCING
Although in-house development—insourcing—can be time-consuming and costly, it may lead
to EC applications that better fit an organization’s strategy and vision and differentiate it from
the competition. Rarely is a site built from scratch. Instead, the required applications are often
constructed from standard components (e.g., Web servers such as Apache or Microsoft’s IIS)
using Web scripting languages such as PHP, Microsoft’s Active Server Pages (ASP), JavaServer
Pages (JSP), or ColdFusion. These scripting languages make it easier to integrate application
functionality with back-end databases and other back-office systems (e.g., order entry).
Insourcing is a challenging task that requires specialized IT resources. For this reason,
most organizations usually rely on packaged applications or completely outsource the devel-
opment and maintenance of their EC sites.
BUY THE APPLICATIONS: TURNKEY APPROACH
A number of commercial packages provide the standard features required by EC applica-
tions. A turnkey approach involves buying a commercial package, installing it, and starting it
up. Buying a commercial package requires much less time and money than in-house devel-
opment. When selecting a particular package, the package should not only satisfy current
needs, it must also be flexible enough to handle future ones. Otherwise the package may
quickly become obsolete. Additionally, because one package can rarely meet all of an organi-
zation’s requirements, it is sometimes necessary to acquire multiple packages. In this case, the
packages need to be integrated with each other and with other software and data.
This option has several major advantages:
◗ Many different types of off-the-shelf software are available.
◗ It saves time and money (compared to in-house development).
◗ It requires fewer personnel.
◗ The company knows what it is getting before it invests in the product.
◗ The company is not the first and only user.
This option also has some major disadvantages:
◗ Software may not exactly meet the company’s needs.
◗ Software may be difficult or impossible to modify or it may require huge process changes.
insourcing
In-house development of
applications.

◗ The company may experience loss of control over improvements and new versions.
◗ Off-the-shelf applications can be difficult to integrate with existing systems.
◗ Vendors may drop a product or go out of business.
The buy option is especially attractive if the software vendor allows for modifications.
However, the option may not be attractive in cases of high obsolescence rates or high soft-
ware cost. In such cases, one should consider leasing.
LEASING
Leasing an application package can result in substantial cost and time savings. In those
cases where extensive maintenance is required or where the cost of buying is very high,
leasing is very advantageous, especially for small to medium enterprises (SMEs). Leasing
is also advantageous when a company wants to experiment with a package before mak-
ing a heavy up-front investment, protect its own internal networks, quickly establish a pres-
ence in the market, or rely on experts to establish a site over which they can later assume
control.
Leasing can be done in one of two ways. The first way is to lease the application from an
outsourcer and then install it on the company’s premises. The vendor can help with the
installation and frequently will offer to contract the operation and maintenance of the sys-
tem. Many conventional applications are leased this way.
The second way is to lease the application from an ASP that hosts the application at its
data center (Kern and Kreijger 2001). The applications are then accessed via the Internet
through a standard Web browser interface. In such an arrangement, applications can be
scaled, upgrades and maintenance can be centralized, physical security over the applications
and servers can be guaranteed, and the necessary critical mass of human resources can be effi-
ciently utilized. Leasing from ASPs not only saves various expenses (e.g., labor costs) in the
initial development stage, it also helps reduce the software maintenance, upgrading, and user
training costs in the long run.
EC Application Case 18.1 describes the hosting services provided by a typical ASP.
CASE 18.1
EC Application
HOSTING SERVICES FROM VERIO
Verio (verio.com) hosts Web sites at various service levels,
each priced higher than the previous level. In each case,
Verio offers state-of-the-art servers, a tier-1 network, and a
team of experts to assist in the process. It also promises
the following features: availability (get started quickly),
reliability (99.9% uptime), confidentiality (secure files),
data integrity (they perform daily backups to protect files
from loss or corruption), throughput (pages come up
quickly), scalability (upgrade account as client grows), sup-
port (24/7 access), control (easily changed Web design), and
information (Web site traffic statistics, etc.). Clients can
acquire self-service accounts for simple transactional func-
tionality or they may work closely with Verio to design and
build robust systems to be hosted by Verio. For an additional
charge, clients may also purchase payment-processing func-
tionality to ease some of the security concerns in a trans-
actional Web site.
Verio also offers other value-added services related to
Web site design and hosting. It offers NetAnnounce Premiere,
a professional Web site promotional service, to help Web sites
get noticed. Besides registering its clients’ sites with over
250 search engines, it also offers several proprietary tech-
niques to help a site get listed prominently, including opti-
mized word relevancy advice and optimized meta tags. It
also offers load balancing, server monitoring, security, and
system administration services. Some of their clients share
servers with other clients (essentially renting space on a Web
server alongside other “tenants”), whereas others pay higher
fees to have their own dedicated servers. Clients can also
utilize additional technology applications such as Active
Server Pages (ASP) and ColdFusion. Although most of these
services are B2C oriented, Verio hosts B2B sites as well.
Source: Compiled from verio.com (July 2003).
Questions
1. What are some of the major features provided by Verio?
2. What are the value-added services offered by Verio?

Leasing from ASPs does have its disadvantages. Many companies are concerned with
the adequacy of protection offered by the ASP against hackers, theft of confidential informa-
tion, and virus attacks. More importantly, with the demise of many dot-com companies, a
large number of ASPs have gone out of business (Koch 2000). Before an ASP is used, it is
imperative that a prospective customer investigate the ASP’s financial viability.
A detailed list of the benefits and risks associated with ASPs is provided in Exhibit 18.3.
Information about the general state of the ASP marketspace can be obtained from the
Computing Technology Industry Association’s (CompTIA) Software Services (comptia.org/
sections/ssg/default.asp).
OTHER DEVELOPMENT OPTIONS
In addition to ASPs, several other leasing and hosting options are available for developing
and maintaining an EC site. These include:
◗ E-marketplaces, exchanges, auctions, or reverse auctions. With this option, a company
plugs itself into an existing EC Web site. For example, a company can place its catalogs
in Yahoo’s marketplace and rely on Yahoo’s store to attract buyers. In this instance, a
company pays Yahoo a monthly fee for the catalog space. In other cases, fees are charged
for each transaction or for a percentage of the sales revenues. In most of these cases,
templates are provided for plugging into the site.
◗ Joint ventures and consortia. Several different partnership arrangements may facilitate
EC application development. In some cases, companies can team up with a company or
a consortium that already has an application in place or they can join with a series of
partners to create a new application and site (e.g., Covisint).
◗ Internet malls. The Web has several thousand Internet malls. Like a real-world mall, an
Internet mall consists of a single entry displaying a collection of electronic storefronts. In
contrast to earlier cybermalls, today’s malls have a common look and feel. A well-run
mall offers cross-selling from one store to another and provides a common payment
structure by which buyers can use a single credit card purchase to buy products from
multiple stores. Theoretically, a mall has wider marketing reach than a stand-alone site
and, as a consequence, generates more traffic. The downside is that income must be
shared with the mall owner.
EXHIBIT 18.3 Benefits and Risks of Using an ASP
Type Benefits Potential Risks
Business Reduces the need to attract and retain skilled IT professionals Loss of control and high level of dependence
Enables companies to concentrate on strategic use of IT on ASP
Enables small- and medium-sized companies to use tier-1 Inability of ASP to deliver quality of service;
applications (e.g., ERP, SCM, and CRM) lack of skills and experience
Application scalability enables rapid growth of companies
Technical Fast and easy application deployment Level of customization and legacy application
Higher degree of application standardization integration offered by ASP is insufficient
Access to wide range of applications Low reliability and speed of delivery due to
Application maintenance simplified and performed by ASP bandwidth limitations
Simplified user support and training Low capability of ASP to deal with security
and confidentiality issues
Economic Low total cost of ownership Pricing changes by ASP unpredictable for
Low up-front investments in hardware and software application updates and services
Improved cost control as result of predictable subscription costs
Source: Kern and Kreijger (2001).

◗ ISPs. In addition to providing Internet access to companies and individual users, a large
number of ISPs offer hosting services for EC. For the most part, ISPs are focused on
operating a secure transaction environment and not on store content. This means that
merchants using the services of an ISP must still design their own pages. Of course, this
task can be outsourced to a third party.
◗ Telecommunication companies. The major telecommunication companies, such as MCI
(global.mci.com/us/enterprise/internet/hosting) and AT&T (business.att.com/products/
category.jsp?categoryid=hosting), provide Web hosting services that can support a full
range of EC solutions.
◗ Software houses.Many software companies, such as IBM and Ariba, offer a range of out-
sourcing services for developing, operating, and maintaining EC applications.
1. Define insourcing.
2. List some of the pros and cons of using packaged EC applications.
3. Describe the major forms of application leasing.
4. List some of the alternative leasing and hosting options.
18.4 CRITERIA FOR SELECTING A DEVELOPMENT
APPROACH
If a company decides to buy or lease an EC application, the following selection criteria need
to be considered.
◗ Flexibility. Commercial packages need to be modified or adapted to the specific require-
ments of an application. Therefore, it is important to evaluate the extent to which a
package can be adapted and the willingness of the vendor to perform or support the
adaptation.
◗ Information requirements. The selected package should satisfy the information require-
ments of the EC application. Information collection, storage, and retrieval capabilities
and the database structure should be carefully examined.
◗ User friendliness. User friendliness is especially important for B2C, G2C, and some B2B
sites. In these cases, if an application is hard for the average visitor or customer to use,
then it will have an immediate impact on the bottom line.
◗ Hardware and software resources. The computer type and the operating system required
by the package must be compatible with the existing platform. The CPU and storage
requirements are also important considerations.
◗ Installation. The installation effort required to implement the package should also be
taken into account. Some packages are complex, and their installation requires extensive
consultation. The installation process may also take a considerable amount of time.
◗ Maintenance services. Because EC application requirements are constantly changing,
continuous maintenance is required. It is important to consider how often the package
needs to be upgraded and whether the vendor provides assistance for its maintenance.
◗ Vendor quality and track record. It is less risky to acquire an EC package from a vendor
that has a good reputation and track record than from one with a less-than-stellar or
unknown reputation. The quality of the vendor can be indicated by their related experi-
ence in the particular application and their sales and financial records, as well as their
responsiveness to clients’ requests. Vendor support may include online help and cus-
tomer relationship management (CRM) programs, as well as partner relationship man-
agement (PRM) tools. To minimize risk, minor applications should be leased first.
◗ Estimating costs. The costs of EC projects are usually difficult to assess and often
underestimated. In addition to the obvious costs associated with EC development, it is
also important to factor in the costs of installation, integration, customization, and
maintenance.

◗ Personnel. Staffing requirements should be planned for in advance to ensure that the
organization has the appropriate human resources for systems development (in the case
of in-house development), implementation, operation, and maintenance. Currently, it is
difficult to recruit and retain IT personnel with appropriate knowledge and experience
in EC application development. Special expertise can be acquired from external consul-
tants, but usually at a very high cost.
◗ Technological evolution. Planning ahead for technological evolution facilitates the
upgrade of EC applications and enables the organization to adopt innovations more
quickly than the competition. It is therefore very important to allow for flexibility in
the application design so that the chosen options do not impose major limitations on
future choices. Given the rapid pace of IT evolution, it is sometimes preferable to
develop EC applications incrementally in order to take advantage of the latest develop-
ments in the technology.
◗ Scaling. System scalability refers to how big a system can grow in various dimensions to
provide more service. Scalability can be measured in several ways, including the total
number of users, the number of simultaneous users, and the transaction volume. These
dimensions are not independent, because scaling up the size of the system in one dimen-
sion can affect the other dimensions. The growth of scale is facilitated or constrained by
the system architecture.
◗ Sizing. The required size and performance of an application are also difficult to predict,
because the growth of the user population of certain EC applications is hard to antici-
pate. Overloading the application decreases performance. For regular IT applications,
deterioration in performance may affect productivity and user satisfaction; for EC appli-
cations, it could result in a major loss of business.
◗ Performance. System performance is a critical factor for business success, particularly if
the system is used for EC. In addition to convenience, good performance also brings
customers and competitive advantages. Performance is measured by two main metrics:
latency and throughput. Latency measures the time required to complete an operation
such as downloading a Web page. It is an indicator of the users’ experience with the
system. Throughput measures the number of operations completed in a given period
of time. It indicates the capacity or number of users that a system can handle.
Throughput and latency are interrelated. An increase in either measure will lead to an
increase in the other.
◗ Reliability. Reliability is an essential requirement for a successful system. System failures
and downtime may lead to public embarrassment. When an EC application fails, busi-
ness is interrupted and the company loses customers. System reliability can be enhanced
through redundancy (i.e., back-up systems).
◗ Security. Security is one of the most important factors for the adoption and diffusion of
EC. Data and information flow in EC, as well as stored data, may include private and/or
proprietary information. Thus, a selected package must meet strict security require-
ments. Systems, communication, and data security must be addressed early in the design
of EC applications and not after their implementation. In addition to technological
solutions such as firewalls and encryption, physical and procedural security measures
must also be enforced.
1. List some of the major criteria to consider when deciding whether to buy or lease an EC
application.
2. Define latency.
3. Define throughput.
18.5 THIRD-PARTY EC COMPONENTS AND SUITES
If a company opts to purchase its EC applications from a third-party vendor, two basic cate-
gories of software are available: electronic catalogs and EC suites.
scalability
How big a system can
grow in various dimen-
sions to provide more ser-
vice; measured by total
number of users, number
of simultaneous users, or
transaction volume.
latency
The time required to
complete an operation
such as downloading a
Web page.
throughput
The number of operations
completed in a given
period of time; indicates
the number of users that
a system can handle.

ELECTRONIC CATALOGS
Electronic catalogs are the virtual version of traditional product catalogs. Like its paper
counterpart, an electronic catalog contains written descriptions and photos of products, along
with information about various promotions, discounts, payment methods, and methods of
delivery. Electronic catalogs, also known as merchant server software, include features that
make it simple and relatively inexpensive (usually less than $10,000) to set up a catalog oper-
ation that has a straightforward pricing and product configuration.
This type of software commonly includes the following features:
◗ Templates or wizards for creating a storefront and catalog pages with pictures describing
products for sale
◗ Electronic shopping carts that enable consumers to gather items of interest until they are
ready for checkout
◗ Web-based order forms for making secure purchases (either through SSL encryption or
the SET protocol)
◗ A database for maintaining product descriptions, pricing, and customer orders
◗ Integration with third-party software for calculating taxes and shipping costs and for
handling distribution and fulfillment
Exhibit 18.4 outlines the major components of merchant server software. As shown in the
figure, a single server is used to handle product presentation, order processing, and payment
processing (Treese and Stewart 1998). Likewise, in such systems a single database is used to
store the catalog (i.e., product descriptions) and handle the details of customer orders. The
pages of the electronic catalog are created dynamically from the product descriptions con-
tained in the catalog database. For those merchants with only a few products for sale, there is
no need to store the product descriptions in a database. Instead, the pages of the Web catalog
can be created ahead of time.
EC SUITES
EC suites offer builders and users greater flexibility, specialization, customization, and integra-
tion in supporting complete front- and back-office functionality. In an EC suite, the function-
ality is distributed across a number of servers and databases instead of relying on a single server
and database, as is done in merchant server systems.The elements displayed in Exhibit 18.5 are
indicative of the components contained in an EC suite, the processes supported by an EC suite,
and the back-end databases and operational systems utilized by the processes.
Internet
Web
Server
Web
Browser Database
Catalog
Order
Merchant
Server
Store
HTML Pages
Third-Party
Applications
Financial
Network
EXHIBIT 18.4 Merchant Server Architecture
electronic catalog
The virtual-world equiva-
lent of a traditional prod-
uct catalog; contains
product descriptions and
photos, along with infor-
mation about various pro-
motions, discounts, pay-
ment methods, and
methods of delivery.
merchant server
software
Electronic catalogs.

Internet
Web
Server
Web
Browser
Payment
Database
Order
Database
Customer
Database
Catalog
Database
Order
Capture,
Completion
Catalog
Application
Fulfillment
Systems
Financial
Network
Customer
Management,
Registration,
Profiles,
Service
Payment
Processing
(SET &
Purchase
Order)
EXHIBIT 18.5 Components of an EC Suite
Over the past few years, the EC suite marketspace has experienced a substantial amount
of consolidation. Among the major products that remain on the market are Microsoft’s
Commerce Server (microsoft.com), IBM’s WebSphere Commerce Suite (ibm.com), and
Oracle’s EC applications (oracle.com).
Microsoft’s Commerce Server
Microsoft’s Commerce Server offers a comprehensive framework for building tailored EC
solutions. The framework consists of five main systems:
◗ Product Catalog System. Enables the creation, management, and syndication of customer-
specific and location-specific catalogs with specialized pricing and sophisticated search
capabilities.
◗ Targeting System. Used to create and deploy multilingual merchandising and advertising
campaigns that support advanced discounting, cross-selling, and customer profiling.
◗ Profiling System. Enables catalog personalization, pricing, business processing, mer-
chandising, and advertising to specific needs of customers, suppliers, and partners.
◗ Business Processing Pipelines System. Allows a business to tailor its order and merchandis-
ing processes to handle currency conversion, multiple shipments, and complex discounting.
◗ Business Analytics System. Offers businesses the ability to analyze, forecast, and mine the
business data resulting from EC activities and processes including clickstream usage,
purchase histories, browsing behaviors, campaign effectiveness, and currency preferences
so that they can make informed decisions about the success of their online business.
Microsoft’s Commerce Server comes in three editions—Standard, Developer, and
Enterprise—which are designed to handle medium, large, and extremely high-traffic sites,
respectively. All three editions are built on top of Microsoft’s Windows operating system,
SQL Server database, and Visual Studio .NET development environment. All three editions
also operate seamlessly with Microsoft’s other .NET servers (e.g. Microsoft’s Content
Management Server). An example of a business built using Microsoft’s Commerce Server is
described in EC Application Case 18.2 (next page).
Source: Courtesy of InterWorld Corporation, www.interworld.com.

CASE 18.2
EC Application
FLORICULTURE PARTNERSHIP STREAMLINES
REAL-TIME ORDERING
The floriculture market consists of brokers who take orders
from growers for plants and rootstock produced by plant-
material suppliers. Until recently, the market relied on mobile
salesmen to take handwritten orders from growers. The order
would later be keyed into the broker’s computer system and
rekeyed into the suppliers’ systems. From start to finish, the
process required an average of 12 manual touch-points,
including tasks such as entering orders, determining inven-
tory availability, establishing prices, and reentering data
because of lost, duplicate, or inaccurate orders.
In 2002, Syngenta/S&G Flowers, a major broker, part-
nered with the Flower Fields Alliance (FFA), whose combined
market share represents about 40 percent of the plant mate-
rials sold, to build a portal that would make it easier for
growers to buy plants from suppliers in the alliance. The por-
tal was actually developed by the Advantage Factory, a
Microsoft Certified (Development) Partner. The portal was
built using Microsoft’s Commerce Server 2002, the SQL Server
2000 relational database, and the .NET development frame-
work. The portal provides growers with a single, real-time
interface to the suppliers’ inventory databases and the bro-
ker’s order entry system. In this way, a grower can search for
product items across multiple suppliers and can place an
order without the need for manual assistance.
The portal not only reduces entry errors and makes the
various processes more efficient but, more importantly, it
reduces by approximately 80 percent the risk that the plant
materials will perish before they reach the grower.
The portal took six developers 6 months to build.
The system has about 10,000 users and had an uptime of
99.995 percent during its first 8 months of operation. In the
first 18 months since its inception, the portal resulted in an
estimated savings of approximately $2.5 to $3.0 million dol-
lars in operating costs for the suppliers in the alliance.
Source: Flower Fields Alliance (2002).
Questions
1. What business problems were addressed by the FFA
portal?
2. What are the business benefits provided by the FFA
portal?
IBM’s WebSphere Commerce Suite
IBM’s WebSphere Commerce suite is a comprehensive EC development platform designed
to support B2C, B2B, or private exchange business models. The suite provides the follow-
ing functions:
◗ Order management that optimizes movement of products through the supply chain
◗ Collaborative filters that enable an enterprise to better understand customers’ buying
patterns and preferences
◗ Portal capabilities that provide customers with personalized access to multiple commerce
and noncommerce site applications
◗ Localization support that enables customized price, tax, and shipping calculations in the
currency format and language dictated by the shopper’s locale
◗ E-coupons that can be used by customers during online shopping
◗ Additional bundled products, including WebSphere Catalog Manager and WebSphere
Payment Manager
IBM’s suite is built on open industry standards such as Java, Java Servlets, JavaServer Pages
(JSP), Enterprise JavaBeans (EJB), and XML. These standards make it easier to integrate
new products with existing back-office transaction systems and databases.
Oracle’s EC Products
Oracle 11i E-Business Suite provides a vast array of applications aimed at supporting mar-
keting, selling, and servicing of customers, suppliers, and partners online. Among the appli-
cations that are specifically aimed at B2C and B2B operations are:

◗ Oracle iStore. Enables merchants to build, deploy, manage, and personalize online
storefronts. iStore is one of Oracle’s key applications. It supports product catalog and
content management, interactive and complex selling, personalized pricing, flexible
check and payment options, account and contract management, and post sales order and
shipping service. iStore integrates easily with Oracle’s online marketing and
eMerchandising functionality.
◗ Oracle Marketing. Provides automation and tools for the entire marketing process,
ranging from initial marketing analysis to determine what and who should be targeted,
campaign planning, budget and list maintenance, and multichannel execution, to cam-
paign monitoring.
◗ Oracle iPayment. Offers risk management capabilities, transaction routing features, and
a flexible payment architecture that supports every major online payment option.
◗ Oracle Quoting. Automates the creation and management of quotes for customized
sales and service.
◗ Oracle iSupport. Provides customers with the ability to service and assist themselves
over the Web.
◗ Oracle Configurator. Used to interactively capture, configure, and validate specialized
manufacturing, sales, and service orders from customers, suppliers, and partners.
Like IBM’s EC suite, Oracle’s EC applications are also built on open industry standards such
as Java, Java Servlets, JSP, EJB, and XML. As one would expect, Oracle’s applications rest on
the market-leading Oracle database.
1. List the major features of an electronic catalog.
2. Describe the basic business systems in Microsoft’s Commerce Server.
3. Describe the functions supported by IBM’s WebSphere Commerce suite.
4. Describe the key EC applications provided by Oracle for building B2C and B2B sites.
18.6 CONNECTING TO DATABASES AND OTHER
ENTERPRISE SYSTEMS
Like the UPS system described at the beginning of the chapter, virtually every EC applica-
tion requires database access. For example, when a customer orders a product online, the
product description, inventory count, and order information are likely to be retrieved from
and stored in one or more databases (see Exhibit 18.6). An EC application can be connected
to a back-end database in a variety of ways.Today, most of these connections are accomplished
Browse data source,
make transactions
Web
Server
Application
Server
Database
Servers
Gateway and
document delivery
Netscape API
CGI
Microsoft API
Brokers request
between client
and database
Data repository
Web Browser
EXHIBIT 18.6 Example of Multitiered Application Architecture
Connected to Database

via a multitiered application architecture like the one depicted in Figure 18.6. In this archi-
tecture there are four tiers:
1. A Web browser where data and information are presented to and data are collected from
the end user.
2. A Web server that delivers Web pages, collects the data sent by the end user, and passes
data to and from the application server.
3. An application server that executes business rules (e.g., user authorization), formulates
database queries based on the data passed by the Web server, sends the queries to the
back-end database, manipulates and formats the data resulting from the database query,
and sends the formatted response to the Web server.
4. A database server in which the data are stored and managed and database requests are
processed.
This separation of functions makes it easier to change any tier (or layer) without impacting the
other layers.Thus, an application server can be designed to interface or communicate with a wide
variety of databases and database management systems (e.g., Oracle, MS SQL Server, DB2).
In some cases, the data being accessed are stored in an existing (legacy) database (e.g.,
inventory or order databases). In these cases, it is better to tie the application server directly
to the legacy database rather than duplicating the data in a database established solely for the
EC application. This approach ensures that the data are up-to-date, that they are consistent
across the applications accessing the data, that a minimum of storage space is used, and that
there is only one database to create and maintain rather than two.
Several technologies can be used to integrate an EC application with a back-end data-
base. All of the commercial electronic catalogs and EC suites have built-in integration capa-
bilities. If a company wants to build its own database interface, a couple of options are avail-
able. First, all of the Web scripting languages (e.g., PHP, JSP, and ASP) have commands that
simplify the process. More specifically, these scripting languages enable a programmer to build
Web pages that can issue queries to a back-end (relational) database and process the database’s
response to the query. Second, a number of specialized application servers are available that
simplify the task of integrating an EC application with one or more back-end databases.
Among these specialized servers, BEA Inc. WebLogic Server (bea.com) is the market leader.
In addition to connecting to back-end databases, most EC applications also require integra-
tion with a variety of other systems—ERP, CRM, SCM, EDI, data warehouses, and other
important internal systems—both inside and outside the company. Again, electronic catalogs
and EC suites usually have built-in modules for integration with these systems.The integration
can also be handled with a class of software called enterprise application integration (EAI).
These products focus on the integration of large systems.TIBCO (tibco.com) and webMethods
(webmethods.com) are examples of companies that have offerings in the EAI arena.
1. Describe the basic elements of a multitiered application architecture.
2. List the ways in which an EC application can be connected to back-end databases and
other transaction processing systems.
18.7 RISE OF WEB SERVICES
Except in the simplest of cases, EC sites require the integration of software applications writ-
ten in different programming languages and residing on different computer hardware dis-
tributed across the Internet. For example, on many B2C sites order entry is handled by one
software application or module, payment authorization by another application or module,
and shipping by yet another application or module. In these cases, there is a good chance that
the order entry, payment authorization, and shipping software modules all reside on separate
application servers linked through a Web server (recall the architecture used to track UPS
shipments). Even when packaged applications are used, a substantial amount of the imple-
mentation effort revolves around the task of tying together these disparate applications or
modules in such a way that the underlying connections are transparent to the end users.
multitiered application
architecture
EC architecture consisting
of four tiers: Web
browsers, Web servers,
application servers, and
database servers.
enterprise application
integration (EAI)
Class of software that
integrates large systems.

Existing technologies make the integration a difficult task for a number of reasons
(Tabor 2002):
◗ Platform-specific objects. Existing EC software applications consist of a series of soft-
ware objects. Software objects have properties (attributes) and methods (actions that can be
performed on or by the object). For example, an order-entry application might have an
“order” object that has a property specifying the “quantity” being ordered and a method
called “set” that allows the quantity to be updated. In a distributed application, such as an
EC storefront, the application objects residing on different computers must have a way
to communicate with one another across the network.
There are two main technologies for accomplishing this task: Microsoft’s
Distributed Component Object Model (DCOM) for Microsoft’s Windows operating
systems and the Object Management Group’s (OMG) Common Object Request Broker
Architecture (CORBA) for Unix-based systems. The problem is that there is limited
interoperability between these two technologies. If one component or application is
based on DCOM and another component or application is based on CORBA, then they
cannot communicate easily with one another. Special software called a DCOM/
CORBA bridge must be used to accomplish the task.
◗ Dynamic environment. In today’s rapidly changing business environment, business part-
ners come and go and so do software vendors and their applications. If a software com-
ponent or application is no longer available because the vendor is no longer in business or
has dropped a particular product line, then an existing EC application has to be flexible
enough to substitute a new component or application for the old. If a new business part-
ner requires additional functionality, then an existing EC application has to be flexible
enough to incorporate new features, functions, or applications. Again, existing EC appli-
cation architectures make it difficult to accommodate these types of changes.
◗ Security barriers. Companies use firewalls to protect their networks against security
risks. Firewalls are designed to limit the types of communications and requests that can
be made from one computer to another. In most cases, only the simplest sorts of Web
requests using standard communication protocols (such as HTTP) are allowed. This
makes it very difficult for one component or application residing on one computer to
communicate with another component or application residing on another computer.
THE ROLE OF XML
What is required to address these problems is a technology that can be integrated across differ-
ent hardware and operating systems, that can interface with both new and legacy systems, and
that minimizes network security risks. This is where Web services come into play. According to
the World Wide Web Consortium (W3C), a Web service is defined as (Champion et al. 2002):
A software system identified by a URI (uniform resource indicator), whose public inter-
faces and bindings are defined and described using XML. Its definition can be discovered
by other software systems.These systems may then interact with the Web service in a man-
ner prescribed by its definition, using XML based messages conveyed by Internet protocols.
As the definition indicates, Web services are based on XML (see Appendix B). The opera-
tions (or methods) that a Web service can perform are “defined and described” using XML.
Likewise, when another program or application wants to invoke the operations or methods
of a Web service, the request is sent as an XML message.
An XML document or message is a text file with a set of tags and content (or values).
The tags within an XML document (denoted by “ ”) describe the content. For instance,
the following XML document might be used to represent an order placed by a customer for
a digital camera:
ORDER
ORDER_ID123/ORDER_ID
ORDER_ITEMDigital Camera ABCORDER_ITEM
ORDER_QUANTITY1ORDER_QUANTITY
/ORDER
Web service
A software system identi-
fied by a URI (uniform
resource indicator),
whose public interfaces
and bindings are defined
and described using XML.

Because XML messages are text based, they can be sent over the Web using standard Web
communication protocols (e.g., HTTP). This makes it easy for programs or applications
written in different program languages and running on different hardware to interoperate. It
also means that the messages sent from one program or application to another can easily pass
through firewalls.
KEY TECHNOLOGIES IN WEB SERVICES
In addition to XML, three other technologies are also instrumental in providing Web ser-
vices. These include:
◗ Simple Object Access Protocol (SOAP). SOAP is the most frequently used protocol or
message framework for exchanging XML data across the Internet. A SOAP message,
which is written as XML, consists of three parts: an envelope, an optional header, and a
body. The envelope encapsulates the message, the header provides optional information
about the message, and the body is the XML data being exchanged. For example, the
following SOAP message might be used to request the number of items in inventory
available for purchase:
SOAP-ENV: Envelope
SOAP-ENV:Body
s:getInventoryQuantity
itemDigital Camera ABC/item
/ s:getInventoryQuantity
/SOAP-ENV:Body
/ SOAP-ENV: Envelope
When a program wants to invoke a process or method performed by a specific Web
service (e.g., getInventoryQuantity in the example), it simply sends a SOAP message to
the service over the Web. In turn, the Web service sends a SOAP message in response.
◗ Web Services Description Language (WSDL). WSDL is an XML document that
defines the programmatic interface for a Web services.The document specifies the oper-
ations or methods that the Web service can perform, along with the parameters that the
service needs to carry out the operations and the values that the service will return in
response to a particular request.
◗ Universal Description, Discovery, and Integration (UDDI). UDDI is a general busi-
ness registry that originally was used as a way for the participants in a B2B exchange to
share information about their business and business processes (Deitel et al. 2003). More
recently, UDDI has been used as a XML framework for businesses to publish and find
Web services online. The Web service entries in a UDDI typically point to the Web
address (URL) of the WSDL file associated with the Web service.
Exhibit 18.7 describes the interaction of these of the key components in a Web service.
A WEB SERVICES EXAMPLE
As a simple example of how Web services operate, consider the following example of an air-
line Web site that provides consumers with the opportunity to purchase tickets online. The
airline recognizes that customers also might want to rent a car and reserve a hotel as part of
their travel plans.The consumer would like the convenience of logging on to only one system
rather than three, saving time and effort. Also, the same consumer would like to input per-
sonal information only one time instead of three.The airline does not have car rental or hotel
reservation systems in place. Instead, the airline relies on car rental and hotel partners to pro-
vide Web service access to their systems.
The specific services that the partners provide are defined by a series of WSDL docu-
ments. When a customer makes a reservation for a car or hotel on the airline’s Web site,
SOAP messages are sent back and forth in the background between the airline’s and the
partners’ servers. In setting up their systems, there is no need for the partners to worry about
the hardware or operating systems each is running. Web services overcome the barriers
Simple Object Access
Protocol (SOAP)
Protocol or message
framework for exchanging
XML data across the
Internet.
Web Services
Description Language
(WSDL)
An XML document that
defines the programmatic
interface—operations,
methods, and parameters—
for Web services.
Universal Description,
Discovery, and
Integration (UDDI)
An XML framework for
businesses to publish and
find Web services online.

Source: Web Services: A Technical Introduction by Deitel, H. et al. © 2003. Reprinted by permission of Pearson
Education, Inc., Upper Saddle River, NJ.
Web
Service
Client
WDSL
Document
UDDI
Registry
1
2
3
4
5
6
1. Client queries
registry to
locate service.
2. Registry refers
client to WSDL
document.
3. Client
accesses
WSDL
document.
4. WSDL
provides data
to interact with
Web Service.
5. Client sends
SOAP-
message
request.
6. Web Service
sends SOAP-
message
response.
EXHIBIT 18.7 Key Components of Web Services
imposed by these differences. An additional advantage for the hotel and car reservation sys-
tems is that their Web services can be published in a UDDI so that other businesses can take
advantage of their services.
WEB SERVICES PLATFORMS
A number of the major hardware and software vendors have created software development
environments that help programmers create and deploy Web services. The development
environments provided by two of the leaders in this arena—Microsoft and IBM—are briefly
described here. For a more extensive list, see Newcomer (2003).
◗ Microsoft .NET. Microsoft has been a leader in the Web service marketplace. Microsoft’s
.NET framework provides the foundation for Web services that can be created and
deployed on Windows 2000 and XP. The development environment for the .NET
framework is Visual Studio .NET. Visual Studio .NET enables software developers to
design, develop, and deploy Web services with the major Windows programming
languages—C, C# (C Sharp), and Visual Basic .NET.
◗ IBM WebSphere. The foundation of IBM’s Web-based applications, including their EC
offerings, is the WebSphere Application Server (see Section 18.5). Over the past couple
of years, IBM has integrated various Web services technologies (e.g., SOAP and
WSDL) into its application server. To assist software and application developers with
the design, development, and deployment of Web services on the WebSphere platform,
IBM has enhanced its existing development environment—the WebSphere Studio
Application Developer—to support Web services and has created a new development
environment called the Emerging Technologies Toolkit.
WEB SERVICES IN THE MAINSTREAM
A survey of corporate IT buyers conducted in 2002 by International Data Corporation (IDC)
found that close to 80 percent of the respondents expected to be deploying Web services by
the end of 2003. Among these buyers, the total spending for Web services will reach an esti-
mated $3 billion during that same time period (McMillan 2003). Most of these services will

be deployed on existing hardware and will provide interfaces to existing applications. The
rate-quote system of Yellow Transportation, a subsidiary of Yellow Corporation (yellow
corp.com), a $2.5-billion-dollar trucking company, exemplifies the kinds of services that
these buyers expect to deploy (Salkever 2003). At the end of 2001, Yellow Transportation cre-
ated a Web-services function that would let its customers access Yellow’s internal systems and
pull out shipping rates based on schedules the two parties had already negotiated.The system
is based on IBM’s WebSphere technologies, accessing an Oracle database on the back end.
Some of the more popular sites on the Web are also turning to Web services as a way of
providing access to their internal systems. In this way, the content and operations supported
by these systems can be transparently integrated with applications developed by other com-
panies or individuals. Among these sites, Google’s and Amazon.com’s services have received
the most publicity.
Google’s Web services API (application programming interface) enables programmers
and application developers to issue (SOAP-based) search requests to Google’s index of more
than 3 billion Web pages and to receive results as XML data. As Google notes (Google
2003), its Web services provide a range of possibilities, including issuing regularly scheduled
search requests to monitor the Web for new information on a subject; performing market
research by analyzing differences in the amount of information available on different subjects
over time; and searching via non-HTML interfaces, such as the command line, pagers, or
visualization applications.
Amazon.com also offers an extensive set of Web services that can be used by its
“Associates” and other product sellers and vendors. The Amazon.com Associates program
allows Web sites to link to Amazon.com’s site and to earn money for sales generated through
the link. For Associates, Web services provide a way to make their Web sites fresher and more
dynamic. For example, Associates can use Amazon.com’s Web services to dynamically re-
trieve prices, generate lists of products, display search results, produce recommendation
lists, and even add items to the Amazon.com shopping cart directly on their Web sites
(Amazon.com 2003). Other companies use Amazon.com’s development platform to sell
their products on Amazon.com’s Web site. In this case, Amazon.com’s new Web services
enable these companies to do things such as manage their inventory, generate orders, and
produce competitive pricing information.
ADVANTAGES AND HURDLES
Over the years, a number of programming initiatives have attempted to solve the problem of
interoperability (i.e., getting software and applications from different vendors running on
different hardware and operating systems to communicate with one another in a transparent
fashion). The Web services initiative is just the latest. Why is this initiative different from its
predecessors? Web services offer a number of distinct advantages, including the following
(Deitel et al. 2003; Shirky 2003):
◗ Web services rely on universal, open, text-based standards that greatly simplify the prob-
lems posed by interoperability and lower the IT costs of collaborating with external part-
ners, vendors, or clients.
◗ Web services enable software running on different platforms to communicate, reducing
the cost and headaches of multiple platforms running on everything from mainframes to
servers to desktops to PDAs.
◗ Web services promote modular programming,which enables reuse by multiple organizations.
◗ Web services are easy and inexpensive to implement because they operate on the existing
Internet infrastructure. They also offer a way to maintain and integrate legacy IT sys-
tems at a lower cost than typical EAI efforts.
◗ Web services can be implemented incrementally, rather than all at once.
In spite of these advantages, Web services are not a panacea. Among the current barriers
inhibiting widespread adoption of the technology are the following:
◗ The standards underlying Web services are still being defined, thus interoperability is
not automatic. Even in those instances where the standards are relatively stable, it still
requires programming skill and effort to implement and deploy Web services.

◗ One area where the Web services standards are not well-defined is security. In terms of
interoperability, the good news is that Web services enable distributed applications to com-
municate with ease. The bad news is that Web services also enable applications to bypass
security barriers (such as firewalls) with ease. Standards such as XML, SOAP, WSDL, and
UDDI say nothing about privacy, authentication, integrity, or nonrepudiation.
In an effort to bridge the gap between these standards and existing security stan-
dards (such as public key encryption), several vendors and organizations have proposed
and are currently debating a number of Web service security standards. One of these is
WS-Security, which is being proposed by Microsoft, IBM, and VeriSign.
◗ Although Web services rely on XML as the mechanism for encoding data, higher-level
standards are still required, especially in B2B applications. For example, if two banks
want to communicate, they still need standards to define the specific content that is
being communicated. This is where standards such as OFX (Open Financial
Exchange), which defines the content of transactions between financial institutions,
come into play. The lack of coordination among all interested parties for high-level
standards is why Web services will first be adopted within organizations and later across
organizations.
1. List some reasons why it is difficult for applications running in different environments on
different computers to communicate with one another.
2. Define Web services.
3. What role does XML play in Web services?
4. Describe the key technologies underlying Web services.
5. What types of Web services do Amazon.com and Google offer application developers?
6. What are some of the advantages of Web services?
7. What are some of the factors limiting the adoption of Web services?
18.8 VENDOR AND SOFTWARE SELECTION
Few organizations, especially SMEs, have the time, financial resources, or technical expertise
required to develop today’s complex e-business systems. This means that most EC applica-
tions are built with hardware, software, hosting services, and development expertise provided
by outside vendors. Thus, a major aspect of developing an EC application revolves around
the selection and management of these vendors and their software offerings. Martin et al.
(2000) identified six steps in selecting a software vendor and a package.
STEP 1: IDENTIFY POTENTIAL VENDORS
Potential application vendors can be identified from software catalogs, lists provided by hard-
ware vendors, technical and trade journals, consultants experienced in the application area,
peers in other companies, and Web searches.
These sources often yield so many vendors and packages that one must use some prelimi-
nary evaluation criteria to eliminate all but a few of the most promising ones from further
consideration. For example, one can eliminate vendors that are too small or that have no
track record or a questionable reputation. Also, packages may be eliminated if they do not
have the required features or will not work with available hardware, operating system, com-
munications network, or database management software.
STEP 2: DETERMINE THE EVALUATION CRITERIA
The most difficult and crucial task in evaluating a vendor and a packaged system is to deter-
mine a weighted set of detailed criteria for choosing the best vendor and package. Some areas
in which detailed criteria should be developed are characteristics of the vendor, functional
requirements of the system, technical requirements the software must satisfy, amount and
quality of documentation provided, and vendor support of the package.

service level agreement
(SLA)
A formal agreement
regarding the division of
work between a company
and its vendors.
request for proposal
(RFP)
Notice sent to potential
vendors inviting them to
submit a proposal
describing their software
package and how it would
meet the company’s
needs.
These criteria should be documented in a request for proposal (RFP), which is sent to
potential vendors inviting them to submit a proposal describing their software package and
how it would meet the company’s needs. The RFP provides the vendors with information
about the objectives and requirements of the system, the environment in which the system
will be used, the general criteria that will be used to evaluate the proposals, and the condi-
tions for submitting proposals. It may also request a list of current users of the package who
may be contacted, describe in detail the form of response that is desired, and require that the
package be demonstrated at the company’s facilities using specified inputs and data files.
STEP 3: EVALUATE VENDORS AND PACKAGES
The collective responses to an RFP generate massive volumes of information that must be
evaluated to determine the gaps between the company’s needs (as specified by the require-
ments) and the capabilities of the vendors and their application packages. Often, the vendors
and packages are given an overall score by assigning an importance weight to each of the cri-
teria, ranking the vendors on each of the weighted criteria (say 1 to 10), and then multiplying
the ranks by the associated weights. A short list of potential suppliers can be chosen from
those vendors and packages with the highest overall scores.
STEP 4: CHOOSE THE VENDOR AND PACKAGE
Once a short list has been prepared, negotiations can begin with vendors to determine how
their packages might be modified to remove any discrepancies with the company’s desired EC
application.Thus, one of the most important factors in the decision is the additional develop-
ment effort that may be required to tailor the system to the company’s needs or to integrate it
into the company’s environment. Additionally, the opinions of the users who will work with
the system and the IT personnel who will have to support the system have to be considered.
STEP 5: NEGOTIATE A CONTRACT
The contract with the software vendor is very important. Not only does it specify the price of
the software, but it also determines the type and amount of support to be provided by the
vendor. The contract will be the only recourse if the system or the vendor does not perform
as specified. Furthermore, if the vendor is modifying the software to tailor it to the company’s
needs, the contract must include detailed specifications (essentially the requirements) of the
modifications. Also, the contract should describe in detail the acceptance tests the software
package must pass.
Contracts are legal documents, and they can be quite tricky. Experienced contract nego-
tiators and legal assistance may be needed. Many organizations have software purchasing
specialists who assist in negotiations and write or approve the contract. They should be
involved in the selection process from the start. If an RFP is used, these purchasing specialists
may be very helpful in determining its form and in providing boilerplate sections of the RFP.
STEP 6: ESTABLISH A SERVICE LEVEL AGREEMENT
Service level agreements (SLAs) are formal agreements regarding the division of work
between a company and its vendors. Such divisions are based on a set of agreed-upon mile-
stones, quality checks, “what-if” situations, how checks will be made, and what is to be done
in case of disputes. If the vendor is to meet its objectives of installing EC applications, it must
develop and deliver support services to meet these objectives. An effective approach to man-
aging SLAs must achieve both facilitation and coordination. SLAs do this by (1) defining
the partners’ responsibilities, (2) providing a framework for designing support services, and
(3) allowing the company to retain as much control as possible over their own systems.
1. List the major steps in selecting an EC application vendor and package.
2. Describe a request for proposal (RFP).
3. Describe a service level agreement (SLA).

access log
A record kept by a Web
server that shows when a
user accesses the server;
kept in a common log file
format, each line of this
text file details an indi-
vidual access.
18.9 USAGE ANALYSIS AND SITE MANAGEMENT
To improve EC Web sites, it is advisable to monitor what customers are doing (usage analy-
sis). Both B2C and B2B Web sites require a thorough understanding of the usage patterns of
their sites—the who, what, where, when, and how.
LOG FILES
Every time a user accesses a Web server, the server logs the transaction in a special access log
file. Access logs are text files. Each line of the file details an individual access. Regardless of
the type of Web server, access logs use a common log file format. This makes them easy to
analyze and compare. Because log files can become quite voluminous, it is hard to analyze the
accesses by hand. For this reason, most Web server EC software vendors provide “free” soft-
ware for analyzing access log files. Commercial products that provide more sophisticated log
analyses are also available (e.g., NetIQ’s WebTrends).
Access logs provide a variety of statistics that can be used for analyzing and improving
marketing and advertising strategies. Among the more valuable statistics are:
◗ Pageviews by time slot. Pageviews allow frequent review of the number of site accesses.
Grouping pageviews by “time bucket” (time slot) also enables the company to ascertain the
time slots, such as morning, afternoon, or evening, during which customers visit the site.
◗ Pageviews by customers’ log-in status. This information helps determine whether requir-
ing customers to log in is worthwhile or not. For instance, if the number of pageviews of
customers who log in is substantially greater than those who do not, the company may
find the login requirement effective and worthwhile.
◗ Pageviews by referrers. Some customers are drawn or referred to the site by clicking on
banners or links on other Web sites. Knowing the source of such referrers is useful for
assessing the effectiveness of the location of banners, and customers’ interest can also be
determined from the nature of the Web site with those banners.
◗ Pageviews by visitor’s hardware platform, operating system, browser, and/or browser ver-
sion.These types of pageviews allow the company to obtain information on the hardware
platform (e.g., Macs or PCs) and browser type (e.g., Internet Explorer or Netscape) used
by the viewer.
◗ Pageviews by visitor’s host. This type of pageview provides information on the cus-
tomers’ host site. Knowing where customers are coming from can enable the company to
target potential customers via popular hosts such as AOL.
Some of the marketing and business questions to which these statistics can be applied are
listed in Exhibit 18.8 (next page).
E-COMMERCE MANAGEMENT TOOLS
Managing the performance of a Web site is a time-consuming and tedious administrative
task. Several vendors offer suites of products or individual packages that can assist with the
management process. A detailed list of vendors is provided by Hower (2003).
One of the more prominent vendors of IT and Web management tools is BMC Corp.
(bmc.com). BMC offers the following products:
◗ Patrol for e-business management. This package includes Patrol for Internet Services for
measuring Web response time, Patrol for Firewalls for firewall administration, and
Patrol for Microsoft or Netscape application servers.
◗ MainView for e-business management. This package includes MainView for WebSphere
for managing mainframe-based EC applications, MainView for Network Management
for monitoring mainframe network connections, and MainView for Systems Manage-
ment for systems administration.
1. List some of the statistics provided by an access log.
2. Describe some of the uses of an access log.

EXHIBIT 18.8 Areas of Usage Analysis and Sample Business
Questions for Online Stores
Area of Analysis Business Questions
Overall Store Performance • What is the sales value for a specific period of time, say, 1 week?
• What is the number of customer visits for the day?
• What is the store conversion rate of the week?
• What is the sales value index for the week?
Advertising • Which banner ads are pulling in the most traffic?
• How many sales are driven by each banner ad?
• What products do shoppers select from a particular banner?
• What is the conversion rate for each banner ad?
External Referrals (from others to your site) • Which portal sites are pulling in the most traffic?
• Which are generating the most sales?
• How many sales are generated by each referral site/search engine?
• What products do shoppers from a particular portal site purchase?
Shopper Segmentation • How many visitors are from a specific domain?
• What is the distribution of first-time vs. repeat shoppers?
• What characterizes shoppers of a particular set of products?
• What characterizes shoppers who abandon shopping baskets?
Product Grouping • How much do cross-sells/up-sells contribute to gross revenue?
• What are the best performing cross-sell pairs? Worst?
• What is the overall conversion rate for cross-sells/up-sells?
Promotions and Recommendations • How much do promotions contribute to gross revenue?
• Which promotions are generating the most sales?
• What is the overall conversion rate for promotions?
• What is the overall conversion rate for recommendations?
• At what levels in site hierarchy are the best promotions located?
Shopping Metaphor • What generates the most sales value: searching or browsing?
• How much does searching contribute to gross revenue?
• What is the conversion rate for searching?
Design Features • What are the features of links customers most frequently click?
• What are the features of links customers most frequently buy from?
• What parts of pages do customers most frequently buy from?
• Do products sell better in the upper-left corner?
Product Assortment • What are the top sellers for the week?
• What is the conversion rate for a particular department?
• How is a product purchased: purchase frequency and quantity?
• What characterizes the products that end up being abandoned?
• How much of the sales of each product are driven by searching?
MANAGERIAL ISSUES
Some managerial issues related to this chapter are as follows.
1. What is our business perspective? When one thinks
of the Web, one immediately thinks of the technology.
But some of the most successful sites on the Web rely
on basic technologies—freeware Web servers, simple
Web page design, and limited bells and whistles. What
makes these sites successful is not the technology, but
their owners’ understanding of how to meet the needs
of their online customers.

2. Dowehaveasystematicdevelopmentplan?The cost of
developing and maintaining even a small EC site can be
substantial. To ensure success, development and mainte-
nance issues need to be approached systematically, just
like any other IT development project. Within this plan,
the specification of the EC architecture is crucial. If the
architecture is wrong, the entire project is at risk.
3. Insource or outsource? Many large-scale enterprises are
capable of running their own EC Web sites. However,
EC Web sites may involve complex integration, security,
and performance issues. For those companies venturing
into the EC arena, a key issue is whether the site should
be built in-house (insourced), thus providing more direct
control, or outsourced to a more experienced provider.
Outsourcing services, which allow companies to start
small and evolve to full-featured functions, are available
through many ASPs, ISPs, telecommunication compa-
nies,Internet malls,and software vendors that offer mer-
chant server and EC applications.
4. How should Web services be deployed? Many orga-
nizations face problems of integrating systems, appli-
cations, and data. The IT costs associated with getting
applications and databases running on different hard-
ware and operating systems to communicate with one
another are substantial. Web services offers the means
to solve this interoperability problem in an open,
straightforward, and efficient fashion without the need
for new hardware or application reprogramming. The
key to deploying Web services is to create a stepped
plan for their introduction, concentrating on those sys-
tems where the integration needs are greatest.
5. How should we choose a vendor/software? Because
most EC applications are built from either packaged
applications and components or outsourced to a third
party, the success of the EC applications rests on
choosing the best vendor and package. Like any other
part of the development process, a detailed list of
selection criteria is needed for the selection process.
6. Have we analyzed the data? All EC sites provide the
means to gather data about system usage. These data
should be analyzed frequently to modify and redesign an
existing site to better meet the needs of current and
prospective customers and users.This analysis can also be
used to personalize the experience of these same users.
SUMMARY
In this chapter, you learned about the following EC issues as they relate to the learning objectives.
1. The major steps in developing an EC application.
Because of their cost and complexity, EC sites need to
be developed in a systematic fashion. The develop-
ment of an EC site should proceed in steps. First, the
EC architecture is defined. Next, a decision is made
whether to build, buy, or outsource the development.
Third, the system is installed, tested, and deployed.
Finally, the system goes into maintenance mode, with
continual changes being made to ensure the system’s
continuing success.
2. The major EC applications and their major func-
tionalities. Every type of EC application has a long list
of functional requirements. Fortunately, most of these
requirements can be met by packaged applications.
Online storefronts can be developed with the aid of
electronic catalog or merchant server software. Simi-
larly, B2C, B2B, and exchange applications of all sorts
can be constructed from more advanced EC suites
3. The major EC application development options
along with their benefits and limitations. EC sites
and applications are rarely built from scratch. Instead,
enterprises either buy a packaged EC suite and cus-
tomize it to suit their needs or they outsource the
development to a third party. The selection of one
option over another should be based on a systematic
comparison of a detailed list of requirements that
examines flexibility, information needs, user friendli-
ness, hardware and software resources, and so on.
4. EC application outsourcing options. If an enterprise
elects to outsource the development and maintenance
of its EC site and applications, a number of alterna-
tives are available. EC applications can be hosted by
ASPs, ISPs, or by a telecommunication company. An
enterprise can rely on an existing e-marketplace or
exchange. An online storefront can be hosted by an
Internet mall. Or, an enterprise could enter into a joint
development agreement with a venture partner or a
consortium. Again, the choice depends on the func-
tional requirements of the EC site or application.
5. The major components of an electronic catalog and
EC application suite. An online storefront has the
same requirements as a brick-and-mortar storefront.
Simple sites can be built from packaged electronic
catalog or merchant server software. More complex
online storefronts and other types of EC sites (e.g.,
B2B, exchanges, etc.) can be built from comprehen-
sive EC suites such as Microsoft’s Commerce Server
or IBM’s WebSphere Commerce Suite.

6. Methods for connecting an EC application to back-
end systems and databases. Virtually every EC appli-
cation requires access to back-end relational databases
and other transaction systems (e.g., ERP, SCM, CRM,
etc.). Integration can be accomplished in a variety of
ways, including using integration modules supplied
with electronic catalog or EC suite packages, customiz-
ing the integration with a Web scripting language (e.g.
PHP, ASP, or JSP), employing specialized application
servers, or employing a full-blown EAI tool.
7. The rise of Web services. Web services is the newest
technology aimed at solving the interoperability prob-
lem (getting applications running in different com-
puter environments to communicate with one another).
Web services rely on open standards, including
XML, SOAP, WSDL, and UDDI, to overcome the
problem. WSDL defines the operations that a Web
service can perform. To invoke a Web service, an
application sends a SOAP/XML message to the ser-
vice, which in turn responds with a SOAP/XML mes-
sage. Companies can publish their Web services in
an UDDI registry, so that any application can take
advantage of the operations the services perform.
Although Web services require minimal changes and
reprogramming of existing systems and applications,
they still require advanced programming skills to
implement and deploy them. Toward this end, hard-
ware and software vendors such as Microsoft and IBM
have provided software development environments to
ease the task.
8. Criteria used in selecting an outsourcing vendor and
package. A systematic process should be used in select-
ing a third-party tool or outsourcing service. Among
the key steps in making the selection are: (1) identify-
ing potential vendors and packages, (2) detailing the
evaluation criteria, (3) using the criteria to produce a
short list of possible vendors, (4) choosing a candidate
from the short list, (5) negotiating the deal and modifi-
cations needed to meet overall application needs, and
(6) establishing a SLA to define who is responsible for
specific aspects of the development and maintenance
and the quality metrics for the services to be rendered.
9. The value and uses of EC application log files. Most
EC applications produce log files of detailed system
usage. The data in these files can be analyzed with an
eye toward modifying the application’s content and
flow. In this way, the application can be better aligned
with the enterprise’s marketing and advertising strate-
gies. In the same vein, the application can be adjusted
to meet user’s needs.
10. The importance and difficulties of EC application
maintenance. Maintenance of an ongoing application
requires as much, if not more, time and effort than the
original development and installation. Several vendors
offer tools to assist with the process.
KEY TERMS
Acceptance testing 4
Access logs 23
Application service
provider (ASP) 3
EC architecture 3
Electronic catalog 12
Enterprise application
integration (EAI) 16
Insourcing 7
Integration testing 4
Latency 11
Merchant server software 12
Multitiered application
architecture 16
Request for proposal (RFP) 22
Scalability 11
Service level agreement (SLA) 22
Simple Object Access Protocol
(SOAP) 18
Throughput 11
Unit testing 4
Universal Description, Discovery,
and Integration (UDDI) 18
Usability testing 4
Web services 17
Web Services Description
Language (WSDL) 18
DISCUSSION QUESTIONS
1. Discuss the advantages of leasing an application over
purchasing one.
2. A large company with a number of products wants to start
selling on the Web. Should it use a merchant server or an
EC application suite? Assuming it elects to use an EC
application suite, how would you determine whether the
company should outsource the site or run it themselves?
3. A large chemical manufacturing company is interested
in starting an online exchange. What are some of the
ways it could achieve this goal?
4. A firm decides to make its EC Web site more dynamic
by tying its application to a back-end database. What
are some of the ways in which the firm could accom-
plish this task?

INTERNET EXERCISES
1. Access the Choice Mall Web site (choicemall.com).
Visit some of the online stores in the mall. What are
the functionalities of the mall? What are some of the
benefits of the online mall to the participating ven-
dors? To shoppers? Do you think a shopper is better
off using an online mall or using a search engine such
as AltaVista to locate a store providing a product of
interest? In what ways could Choice Mall improve the
chances that buyers will make return visits?
2. Visit a large online storefront of your choice. What
functions does it provide to shoppers? In what ways
does it make shopping easy? In what ways does it
make shopping more enjoyable? What support ser-
vices does it provide?
3. Enter hotwired.lycos.com/webmonkey and find the
tracking tutorials. What is the difference between a
“hit” and a “pageview”? Write a summary of the three
tutorials—gathering data, using databases, and using
pageviews.
4. Go to the WebTrends site (webtrends.com). What
types of information does its Analysis Suite provide?
How can this information be used to improve a Web
site? What types of tracking information are not pro-
vided by this suite? (See Discussion Question 3.)
5. Visit IBM’s site (ibm.com). Find
its WebSphere product. Read some
of the recent customer success sto-
ries. What makes this software so
popular?
6. Go to the World Wide Web Consortium’s discussion
of Web services architecture (w3.org/TR/ws-arch).
Based on this discussion, what role does a UDDI play
in Web services? If a company wants to publicize its
Web services, what means are available?
7. Visit Sun Microsystems (sunmicrosystems.com).
What type of development platform does Sun provide
for creating and deploying Web services? What are the
capabilities and benefits of the platform?
8. Visit the Microsoft Web site (microsoft.com). Find
its BizTalk product. What kind of software is this?
What role could it play in an EC application?
9. Go to covisint.com. What is Covisint? Who are the
partners involved in Covisint? What types of B2B
functionality does it provide? Based on the press
releases at Covisint’s Web site, has Covisint been suc-
cessful? Why or why not?
5. An online vendor wants to hook its shopping cart appli-
cation to a credit card authorization Web site. How could
this be done with Web services? How would the autho-
rization site advertise its services for other sites to use?
6. An enterprise wants to modify its EC site so that it
conforms more closely with its overall business strate-
gies. What sorts of online data are available for this
purpose? What types of business strategy questions
can be addressed by these data?
7. In what ways do you think a Web site’s log files violate
consumers’ privacy?
8. You have decided to use a third-party application to
develop and deploy a sell-side B2B site. Create a
checklist for determining which third-party EC ap-
plication products will best meet your application
requirements.
TEAM ASSIGNMENTS AND ROLE PLAYING
1. Select a series of Web sites that cater to the same type
of buyer (e.g., several Web sites that offer CDs or
computer hardware). Divide the sites among several
teams and ask each team to prepare an analysis of the
different sorts of functions provided by the sites, along
with a comparison of the strong and weak points of
each site from the buyer’s perspective.
2. Several vendors offer products for creating online stores.
The Web sites of these vendors usually list those online
stores using their software (customer success stories).
Assign each team a number of vendors.Each team should
prepare reports comparing the similarities and differences
among the vendors’ sites and evaluating the customers’
success stories. Do the customers take advantage of the
functionality provided by the various products?
3. As a team, explore the desired capabilities of various
EC applications (B2B, B2C, auctions, portals G2C,
etc.). Look at the capabilities of these applications and
at their functionalities, and then compare the two. (See
Section 18.3 for a list of functionalities.) If the func-
tionalities of the applications are not sufficient, explain
what additional functionalities are needed.

4. Amazon.com (amazon.com/webservices) provides
Web services for its Associates, as well as other product
sellers and vendors. Assign one team to explore the ser-
vices for Associates and another to the services for sell-
ers and vendors. Describe the services provided by each.
What are the benefits of these services? What compa-
nies are currently using these services? Go to their sites
and describe how they are using these services.
Whirlpool (whirlpool.com) is a world leader in the manu-
facture and marketing of major home appliances. Compet-
ing in a annual, global market of $75 billion, the com-
pany considers its distributors and partners to be critical
players in its continual quest to maintain industry leader-
ship. As a consequence, Whirlpool is constantly trying to
improve the efficiency of its operations while still provid-
ing top-notch service to members of its sales chain.
Until recently, one area of concern was its relation-
ships with its middle-tier trade partners. These partners
represent 25 percent of Whirlpool’s trading partners but
only 10 percent of its revenues. Because of their size,
Whirlpool was unable to dedicate system-to-system con-
nections with these partners. Instead, partners had to
submit their orders by phone or fax.
Wanting to infuse greater efficiency into this process,
Whirlpool turned to EC, developing a B2B trading-partner
portal that enables its middle-tier sellers to order online.
To make the portal work, the company needed to integrate
it with its SAP R/3 inventory system and Tivoli systems
management tools. Whirlpool conducted a vendor and
product analysis and decided to use IBM integration tools.
Following the guidelines of the IBM Application
Framework for e-business, Whirlpool built its portal with
the IBM WebSphere Application Server, Advanced Edition,
IBM Net.Commerce (now part of the IBM WebSphere
Commerce Suite family), IBM HTTP Server, IBM VisualAge
for Java, and IBM Commerce Integrator with IBM MQSeries.
Through the portal, called Whirlpool Web World,
several thousand middle-tier trade partners select the
goods they want to order by checking off the appropriate
SKUs and indicating quantities. Aside from appliance
ordering, they can also log on to the password-protected
site to track the status of their orders. The portal has
cut the cost per order to under $5—a savings of at least
80 percent. Whirlpool has also gained an unexpected
benefit—an extendable EC platform that it has leveraged
for other applications.
Whirlpool’s B2B portal is in its second generation (as
of summer 2001). The first-generation portal was developed
with low-level products, giving the company a chance to
test the Web waters. However, the portal took off faster
than the company expected. In its first 3 months, the
amount of revenue that flowed through the portal was
what Whirlpool had planned for the first 12 months. The
investment paid for itself in 8 months.
REAL-WORLD CASE
WHIRLPOOL’S TRADING PORTAL
With the success of its first-generation trading-partner
portal, Whirlpool was ready to migrate the solution to a
bigger, more scalable, and easier-to-manage platform. At
the same time, the company was also implementing SAP
R/3 for order entry. Thus, it was important for its second-
generation portal to integrate with SAP R/3.
For its second-generation portal, Whirlpool wanted to
partner with a vendor that would be around a while. It again
checked out IBM, plus a few others. IBM was selected
because IBM has worked with Whirlpool on joint product
development as well as with Whirlpool’s ERP system design
and architecture. In addition, when Whirlpool talked to
financial analysts, it found that an overwhelming number of
Fortune 100 companies use IBM e-business solutions.
Finally, Whirlpool saw that IBM is on the cutting edge of
industry Web standards such as Java and XML. After commit-
ting to IBM, Whirlpool also decided to develop its e-business
platform following the Application Framework for e-business,
taking advantage of its rapid development cycles and associ-
ated cost reductions. In developing the first-generation por-
tal, Whirlpool had to build certain functionalities on its own,
because the desired functionalities were not included in the
tools supplied by IBM. A year and a half later, the suite of
IBM tools included those functionalities, which enabled
Whirlpool to get its applications to market much faster.
Source: ibm.com (2002).
Questions
1. From Whirlpool’s point of view, what kind of a
B2B application is this: e-procurement, sell-side,
collaborative commerce, or other? Justify your
answer.
2. Why did Whirlpool decide to utilize third-party
applications with its second-generation portal?
Explain in detail.
3. Imagine you were in charge of selecting the third-
party applications to be used with the second-gen-
eration portal. What sorts of criteria would you use
in making your choice? How did IBM’s WebSphere
meet these criteria?
4. How can Whirlpool leverage this application with
other B2B processes?

REFERENCES
Amazon.com. “Web Services FAQ.” amazon.com/gp/
browse.html/ref=sc_bb_l_0/103–7982286–7763064?
no=3435361me=A36L942TSJ2AJAnode=3434651
(accessed June 2003).
Carmichael, M. “2001 Median Prices for Full-Site Devel-
opment.” btobonline.com/webPriceIndex, May 14,
2001 (accessed July 2003).
Champion, M., et al. “Web Services Architecture: W3C
Working Draft.” w3.org/TR/2002/WD-ws-arch-
20021114, November 2002 (accessed June 2003).
Deitel, H., et. al. Web Services: A Technical Introduction.
Upper Saddle River, NJ: Prentice Hall, 2003.
DeWire, D. Thin Clients: Delivery Information over the
Web. New York: McGraw-Hill, 1998.
Flower Fields Alliance. “Floriculture Consortium Com-
bines, Streamlines Real-Time Ordering with the .NET
Framework.” microsoft.com/resources/casestudies/
casestudy.asp?casestudyid=14262, July 2003 (accessed
July 2003).
Google. “Google API: Frequently Asked Questions.”
google.com/apis/api_faq.html (accessed June 2003).
Hower, R. “Web Site Test Tools and Site Management
Tools.” softwareqatest.com/qatweb1.html (accessed
April 2003).
IBM.com. “Whirlpool’s B2B Trading Portal Cuts Per-
Order Costs Significantly.” ftp://ftp.software.ibm.com/
software/solutions/pdfs/g325-6693-00.pdf, 2002 (ac-
cessed October 2003).
Kendall, K. E., and J. E. Kendall. Systems Analysis and Design,
4th ed. Upper Saddle River, NJ: Prentice Hall, 1999.
Kern, T., and J. Kreijger. “An Exploration of the ASP
Outsourcing Option.” Proceedings, 34th HICSS, Maui,
HI, January 2001.
Koch, C. “Boy, That Was Fast.” CIO Magazine, cio.com/
archive/111500/boy.html, November 15, 2000 (ac-
cessed July 2003).
Martin, E. W., et al. Managing Information Technology.
Upper Saddle River, NJ: Prentice Hall, 2000.
McMillian, R. “IDC: Web Services to Enable $4.3B
Hardware Market by 2007.” Computerworld, computer
world.com/developmenttopics/development/
webservices/story/0,10801,81496,00.html (accessed
July 2003).
Newcomer, E. Understanding Web Services. Boston:
Addison-Wesley, 2003.
Salkever, A. “Slowly Weaving Web Services Together.”
BusinessWeek Online, businessweek.com:/technology/
content/jun2003/tc20030624_3614_tc113.htm, June 24,
2003 (accessed June 2003).
Shirky, C. “Web Services—An Executive Summary.”
XML.com, webservices.xml.com/pub/a/ws/2002/04/
12/execreport.html, 2003 (accessed June 2003).
Tabor, R. Microsoft .NET XML Web Services. Indianapolis,
IN: Sams, 2002.
Tauscher, E. “Electronic Commerce at UPS.” nacsa.com/
slides/Apr2002_1.pdf, April 2002 (accessed October
2003).
Treese, G. W., and L. C. Stewart. Designing Systems for Inter-
net Commerce. Reading, MA: Addison-Wesley, 1998.

BUILDING E-COMMERCE.pdf

More Related Content

Similar to BUILDING E-COMMERCE.pdf (20)

Recently uploaded (20)

BUILDING E-COMMERCE.pdf