E BUSINESS (CUIM 206) LECTURE NOTES

I NT R OD U C T I O N

In the emerging global economy, e-commerce and e-business have

increasingly become a necessary component of business strategy and a
strong catalyst for economic development. The integration of information
and communications technology (ICT) in business has revolutionized
relationships within organizations and those between and among
organizations and individuals. Specifically, the use of ICT in business has
enhanced productivity, encouraged greater customer participation, and
enabled mass customization, besides reducing costs.

DEFINITION OF E-BUSINESS

E-Business (electronic business) is, in its simplest form, the conduct of

business on the Internet. It has broader implications because it refers to not
only buying and selling but also servicing customers and collaborating with
business partners.

According to IBM (www.ibm.com )it is the transformation of key business

processes through the use of internet technologies. It is therefore, all
electronically mediated information exchanges, both within an
organization and with external stakeholders to support a range of
business processes. These include marketing, manufacturing, R&D as well
as inbound and outbound logistics.

E Commerce refers to all electronically mediated information exchanges

between an organization and its stakeholders. Connecting critical business
systems and constituencies directly via the internet, extranets and
intranets. Therefore it has to be viewed from both the supply and demand
perspectives(buy side e commerce and sell side e commerce).

PERSPECTIVES UNDERWHICH E-BUSINESS CAN BE DEFINED

 From a communication perspective

Electronic Business is the delivery of goods, services ,information ,or payments over computer
networks or by any other electronic means.

 From a business process perspective.

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It is the application of technology toward the automation of business transactions and workflow.

 From a services perspective.

Electronic Business is a tool that addresses the desire of firms, consumers, and management to
cut services costs while improving the quality of customer service and increasing the speed of
service delivery.


 From an online perspective.

Electronic Business provides the capability of buying and selling products and information over
the Internet and other online services.

 From a collaborative perspective.

E-business is the facilitator of for Inter-and Intra-organizational collaboration.

 From a community perspective.

It provides a gathering place for community members, to learn, transact, and collaborate.

Distinction and relationship between e commerce and e

business
There are three perspectives that can be considered in trying to distinguish the two:


There is some degree of overlap between e commerce and e business. This can
however be refuted by the fact that the overlap between buy side and supply side e
commerce is significant often with linkages in the form of intranets ( a private network
within a single company using internet standards to enable employees to share
information using e mail and web publishing).

E Business and e commerce are synonymous as the two are broadly equivalent.


E commerce is a subset of e business. This seems more realistic since e commerce
does not refer to many of the transactions within a business such as processing a
purchase order that are part of e business. E business therefore emphasizes full
integration and application of technologies to operations.

E-business compared to E-commerce

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 
While some use e-commerce and e-business interchangeably, they are distinct concepts.
In e-commerce, information and communications technology (ICT) is used in inter-
business or inter-organizational transactions (transactions between and among
firms/organizations) and in business-to-consumer transactions (transactions between
firms/organizations and individuals).

In e-business, on the other hand, ICT is used to enhance one’s business. It includes any
process that a business organization (either a for-profit, governmental or non-profit
entity) conducts over a computer-mediated network. A more comprehensive definition
of e-business is:


“The transformation of an organization’s processes to deliver additional customer value
through the application of technologies, philosophies and computing paradigm of the new
economy.”

Three primary processes are enhanced in e-business:


1. Production processes, which include procurement, ordering and replenishment of
stocks; processing of payments; electronic links with suppliers; and production control
processes, among others;


2. Customer-focused processes, which include promotional and marketing efforts,
selling over the Internet, processing of customers’ purchase orders and payments, and
customer support, among others; and


3. Internal management processes, which include employee services, training,
internal information-sharing, video-conferencing, and recruiting. Electronic applications
enhance information flow between production and sales forces to improve sales force
productivity. Workgroup communications and electronic publishing of internal business
information are likewise made more efficient. [6]


IST H E I N T E R N E T E C O NO M Y SY NO NY M O U S WI T H E - C O M M E R C E A ND E -
BUSINESS?

The Internet economy is a broader concept than e-commerce and e-business. It includes
e-commerce and e-business.

The E-Business Framework.

For e-business to work efficiently, there need for certain applications to be

available and there execution depends on the following:

 Right information
 Infrastructure, and

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  Support services

Some of the supporting pillars of an E-business application are as follows:

 People
 Public Policy

 Technical standards and protocols

 Business partners

 Support services

E-C O M M E R C E A PP LI C A T I O N S : I S S U E S A ND P RO SP E C T S

Various applications of e-commerce are continually affecting trends and

prospects for business over the Internet, including e-banking, e-tailing and
online publishing/online retailing.

A more developed and mature e-banking environment plays an important

role in e-commerce by encouraging a shift from traditional modes of
payment (i.e., cash, checks or any form of paper-based legal tender) to
electronic alternatives (such as e-payment systems), thereby closing the e-
commerce loop.

a) Benefits of e Commerce

• Expanded Geographical Reach

• Expanded Customer Base

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 • Increase Visibility through Search Engine Marketing

• Provide Customers valuable information about your business

• Available 24/7/365 - Never Close

• Build Customer Loyalty

• Reduction of Marketing and Advertising Costs

• Collection of Customer Data

b) Basic Benefits of e Business eCommerce

 increase sales - this is the first thing that people consider when dealing with e-commerce

 decreasing costs

 increase profits

 understanding that profits is not the same as sales

 Expands the size of the market from regional to national or national to

international

 Contract the market

 reach a narrow market

 target market segmentation allows you to focus on a more

select group of customers

 and therefore have a competitive advantages in satisfying them

ADVAN TAG E S AND DISADVANTAG E S OF E - BU SINE SS

 There a few advantages and disadvantages when it comes to trading on-

line these include (the benefits listed hereunder refer to business to
business markets)

Tangible benefits

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  Increased sales from new sales leads giving rise to increased revenue from new customers
and markets as well as from existing customers through repeat selling and cross selling.
 Marketing cost reductions from reduced time in customer service, online sales, and
reduced printing and distribution costs of marketing communications.

 Supply chain cost reductions from reduced levels of inventory, increased competition
from suppliers and shorter cycle time in ordering.

 Administrative cost reductions from more efficient routine business processes such as
recruitment, invoice payment etc

Intangible benefits

 Corporate image communication

 Enhance brand

 More rapid, more responsive marketing communications including PR.

 Faster product development lifecycle enabling faster response to market needs.

 Improved customer service

 Learning for the future

 Meeting customer expectations to have a website.

 Identify new partners, support existing partners better.

 Better management of marketing information and customer information.

 Feedback from customers on products

Advantages

 work from home, saves money of renting office/shop place.

 if trading on-line wont have to employee as many staff and this will also save the business
money.

 able to buy from it 24 hours a day

 larger market of potential customers on-line

 elderly people or people with disability’s who are not able to go to the shops can still be
customers of yours

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E-commerce makes “mass customization” possible. E-commerce
applications in this area include easy-to-use ordering systems that allow
customers to choose and order products according to their personal and
unique specifications. For instance, a car manufacturing company with an e-
commerce strategy allowing for online orders can have new cars built
within a few days (instead of the several weeks it currently takes to build a
new vehicle) based on customer’s specifications. This can work more
effectively if a company’s manufacturing process is advanced and
integrated into the ordering system.

E-commerce allows “network production.” This refers to the parceling

out of the production process to contractors who are geographically
dispersed but who are connected to each other via computer networks. The
benefits of network production include: reduction in costs, more strategic
target marketing, and the facilitation of selling.

Limitations of E-Business

 Security and
Technological privacy concerns
 There is lack of
Limitations deter customers
universally
from buying.
accepted standards
for quality, security,  Trust in E-
and reliability. Business and in
 The unknown sellers
telecommunication hinders buying.
bandwidth is
 National and
insufficient.
International
 government
regulations
 Software
sometimes get in
development tools
the way.
are still evolving.
 It’s difficult to
 There are
measure the
difficulties
benefits of
intergrating the
effectiveness of
Internet and the E-
online
Business software
advertising.
wuth some existing
(especially legacy)  Some customers
applications and like to feel and
databases. touch
products .Custo
 Special web servers
mers are
in addition to the

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 network servers are resistant to the
needed (added change from a
costs). real to an online
store.
 Internet
accessibility is still  People do not
expensive and /or yet sufficiently
inconvinient. trust paperless,
faceless
transactions.

 There is an
insufficient
number (critical
mass) of sellers
and buyers
needed for
profitable E-
Business
operations.

Classification of E-Business by nature of

Transaction.

Ecommerce can be broken into four main categories: B2B, B2C, C2B, and
C2C.

 B2B (Business-to-Business)
Companies doing business with each other such as manufacturers selling to distributors and
wholesalers selling to retailers. Pricing is based on quantity of order and is often negotiable.
Examples include organization sites such as www.dell.com or business marketplaces such
as commerceone.

 B2C (Business-to-Consumer)
Businesses selling to the general public typically through catalogs utilizing shopping cart
software. By dollar volume, B2B takes the prize, however B2C is really what the average Joe
has in mind with regards to ecommerce as a whole.eg organization sites like

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 www.amazon.com or consumer marketplaces such as www.shopsmart.com .

Having a hard time finding a book? Need to purchase a custom, high-end computer system?
How about a first class, all-inclusive trip to a tropical island? With the advent ecommerce, all
three things can be purchased literally in minutes without human interaction. Oh how far
we've come!

 C2B (Consumer-to-Business)

C2B models involve interactions originating from the customer. Such businesses fall into the
following categories:

Idea collectors

A company can motivate consumers who have innovative ideas to improve existing products
or services and buy the ideas at a reasonable price.
A consumer posts his project with a set budget online and within hours companies review
the consumer's requirements and bid on the project. The consumer reviews the bids and
selects the company that will complete the project. The internet empowers consumers
around the world by providing the meeting ground and platform for such transactions.eg
www.ideas.com

Reverse auctions

The process starts with asks or offers from buyers and sellers compete to serve the buyer
Consumers are allowed to submit binding bids by credit card for the purchase of products
such as airline tickets eg www.priceline.com

Complaint centres

This allows individuals to post complaints about a business, view other complaints about
any given business ,and interact directly with the business in question. The company
presents a business response time and effectiveness and effectiveness for public display, and
makes money by selling aggregated complaint research data. Eg www.ecomplaints.com

Paid advertising models

Companies such as Cybergold and Alladvantage.com sought to pay consumers to view

targeted adverts.The advertisers would get better targeting and consumers would see ads
for products they cared for.

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 C2C (Consumer-to-Consumer)
There are many sites offering free classifieds, auctions, and forums where individuals can
buy and sell thanks to online payment systems like Pay Pal where people can send and
receive money online with ease. EBay’s auction service is a great example of where person-
to-person transactions take place everyday since 1995.

Companies using internal networks to offer their employees products and

services online--not necessarily online on the Web--are engaging in B2E
(Business-to-Employee) ecommerce.

G2G (Government-to-Government), G2E (Government-to-Employee), G2B

(Government-to-Business), B2G (Business-to-Government), G2C
(Government-to-Citizen), C2G (Citizen-to-Government) are other forms of
ecommerce that involve transactions with the government--from
procurement to filing taxes to business registrations to renewing licenses.
There are other categories of ecommerce out there, but they tend to be
superfluous.

The basic categories of business models discussed in the table below

include:

 Brokerage
 Advertising

 Infomediary

 Merchant

 Manufacturer (Direct)

 Affiliate

 Community

 Subscription

 Utility

Type of
Model: Description:

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Brokerag Brokers are market-makers: they bring buyers and
e sellers together and facilitate transactions. Brokers
Model play a frequent role in business-to-business (B2B),
business-to-consumer (B2C), or consumer-to-
consumer (C2C) markets. Usually a broker charges
a fee or commission for each transaction it enables.
The formula for fees can vary. Brokerage models
include:

Marketplace Exchange -- offers a full range of

services covering the transaction process, from
market assessment to negotiation and fulfillment.
Exchanges operate independently or are backed by
an industry consortium. [Orbitz, ChemConnect]

Buy/Sell Fulfillment -- takes customer orders to

buy or sell a product or service, including terms
like price and delivery. [Cars Direct, Respond.com]

Demand Collection System -- the patented "name-

your-price" model pioneered by Priceline.com.
Prospective buyer makes a final (binding) bid for a
specified good or service, and the broker arranges
fulfillment. [Priceline.com]

Auction Broker -- conducts auctions for sellers

(individuals or merchants). Broker charges the
seller a listing fee and commission scaled with the
value of the transaction. Auctions vary widely in
terms of the offering and bidding rules. [eBay]

Transaction Broker -- provides a third-party

payment mechanism for buyers and sellers to settle
a transaction. [Pay Pal, Escrow.com]

Distributor -- is a catalog operation that connects a

large number of product manufacturers with
volume and retail buyers. Broker facilitates
business transactions between franchised
distributors and their trading partners.

Search Agent -- a software agent or "robot" used to

search-out the price and availability for a good or
service specified by the buyer, or to locate hard to
find information.

Virtual Marketplace -- or virtual mall, a hosting

service for online merchants that charges setup,
monthly listing, and/or transaction fees. May also
provide automated transaction and relationship
marketing services. [zShops and Merchant Services
at Amazon.com]

Advertisi The web advertising model is an extension of the

ng traditional media broadcast model. The

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Model broadcaster, in this case, a web site, provides
content (usually, but not necessarily, for free) and
services (like email, IM, blogs) mixed with
advertising messages in the form of banner ads.
The banner ads may be the major or sole source of
revenue for the broadcaster. The broadcaster may
be a content creator or a distributor of content
created elsewhere. The advertising model works
best when the volume of viewer traffic is large or
highly specialized.

Portal -- usually a search engine that may include

varied content or services. A high volume of user
traffic makes advertising profitable and permits
further diversification of site services. A
personalized portal allows customization of the
interface and content to the user. A niche portal
cultivates a well-defined user demographic.
[Yahoo!]

Classifieds -- list items for sale or wanted for

purchase. Listing fees are common, but there also
may be a membership fee. [Monster.com,
Craigslist]

User Registration -- content-based sites that are

free to access but require users to register and
provide demographic data. Registration allows
inter-session tracking of user surfing habits and
thereby generates data of potential value in
targeted advertising campaigns. [NYTimes]

Query-based Paid Placement -- sells favorable

link positioning (i.e., sponsored links) or
advertising keyed to particular search terms in a
user query, such as Overture's trademark "pay-for-
performance" model. [Google, Overture]

Contextual Advertising / Behavioral Marketing

-- freeware developers who bundle aware with
their product. For example, a browser extension
that automates authentication and form fill-ins,
also delivers advertising links or pop-ups as the
user surfs the web. Contextual advertisers can sell
targeted advertising based on an individual user's
surfing activity.

Content-Targeted Advertising -- pioneered by

Google, it extends the precision of search
advertising to the rest of the web. Google identifies
the meaning of a web page and then automatically
delivers relevant ads when a user visits that page.
[Google]

Intromercials -- animated full-screen ads placed at

the entry of a site before a user reaches the

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 intended content. [CBS MarketWatch]

Ultramercials -- interactive online ads that require

the user to respond intermittently in order to wade
through the message before reaching the intended
content. [Salon in cooperation with Mercedes-
Benz]

Infomedia Data about consumers and their consumption

ry habits are valuable, especially when that
Model information is carefully analyzed and used to target
marketing campaigns. Independently collected data
about producers and their products are useful to
consumers when considering a purchase. Some
firms function as infomediaries (information
intermediaries) assisting buyers and/or sellers
understand a given market.

Advertising Networks -- feed banner ads to a

network of member sites, thereby enabling
advertisers to deploy large marketing campaigns.
Ad networks collect data about web users that can
be used to analyze marketing effectiveness.
[DoubleClick]

Audience Measurement Services -- online

audience market research agencies.
[Nielsen//Netratings]

Incentive Marketing -- customer loyalty program

that provides incentives to customers such as
redeemable points or coupons for making
purchases from associated retailers. Data collected
about users is sold for targeted advertising.
[Coolsavings]

Metamediary -- facilitates transactions between

buyer and sellers by providing comprehensive
information and ancillary services, without being
involved in the actual exchange of goods or services
between the parties. [Edmunds]

Merchant Wholesalers and retailers of goods and services.

Model Sales may be made based on list prices or through
auction.

Virtual Merchant --or e-tailer, is a retail merchant

that operates solely over the web. [Amazon.com]

Catalog Merchant -- mail-order business with a

web-based catalog. Combines mail, telephone and

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 online ordering. [Lands' End]

Click and Mortar -- traditional brick-and-mortar

retail establishment with web storefront. [Barnes &
Noble]

Bit Vendor -- a merchant that deals strictly in

digital products and services and, in its purest
form, conducts both sales and distribution over the
web. [Apple iTunes Music Store]

Manufact The manufacturer or "direct model", it is

urer predicated on the power of the web to allow a
(Direct) manufacturer (i.e., a company that creates a
Model product or service) to reach buyers directly and
thereby compress the distribution channel. The
manufacturer model can be based on efficiency,
improved customer service, and a better
understanding of customer preferences. [Dell
Computer]

Purchase -- the sale of a product in which the right

of ownership is transferred to the buyer.

Lease -- in exchange for a rental fee, the buyer

receives the right to use the product under a “terms
of use” agreement. The product is returned to the
seller upon expiration or default of the lease
agreement. One type of agreement may include a
right of purchase upon expiration of the lease.

License -- the sale of a product that involves only

the transfer of usage rights to the buyer, in
accordance with a “terms of use” agreement.
Ownership rights remain with the manufacturer
(e.g., with software licensing).

Brand Integrated Content -- in contrast to the

sponsored-content approach (i.e., the advertising
model), brand-integrated content is created by the
manufacturer itself for the sole basis of product
placement.

return to top

Affiliate In contrast to the generalized portal, which seeks to

Model drive a high volume of traffic to one site, the
affiliate model, provides purchase opportunities
wherever people may be surfing. It does this by
offering financial incentives (in the form of a
percentage of revenue) to affiliated partner sites.
The affiliates provide purchase-point click-through
to the merchant. It is a pay-for-performance model
-- if an affiliate does not generate sales, it

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 represents no cost to the merchant. The affiliate
model is inherently well-suited to the web, which
explains its popularity. Variations include, banner
exchange, pay-per-click, and revenue sharing
programs. [Barnes & Noble, Amazon.com]

Banner Exchange -- trades banner placement

among a network of affiliated sites.

Pay-per-click -- site that pays affiliates for a user

click-through.

Revenue Sharing -- offers a percent-of-sale

commission based on a user click-through in which
the user subsequently purchases a product.

Communi The viability of the community model is based on

ty user loyalty. Users have a high investment in both
Model time and emotion. Revenue can be based on the
sale of ancillary products and services or voluntary
contributions; or revenue may be tied to contextual
advertising and subscriptions for premium
services. The Internet is inherently suited to
community business models and today this is one
of the more fertile areas of development, as seen in
rise of social networking.

Open Source -- software developed collaboratively

by a global community of programmers who share
code openly. Instead of licensing code for a fee,
open source relies on revenue generated from
related services like systems integration, product
support, tutorials and user documentation. [Red
Hat]

Open Content -- openly accessible content

developed collaboratively by a global community of
contributors who work voluntarily. [Wikipedia]

Public Broadcasting -- user-supported model

used by not-for-profit radio and television
broadcasting extended to the web. A community of
users support the site through voluntary donations.
[The Classical Station (WCPE.org)]

Social Networking Services -- sites that provide

individuals with the ability to connect to other
individuals along a defined common interest
(professional, hobby, romance). Social networking
services can provide opportunities for contextual
advertising and subscriptions for premium
services. [Flickr, Friendster,Facebook,Twitter]

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Subscripti Users are charged a periodic -- daily, monthly or
on annual -- fee to subscribe to a service. It is not
Model uncommon for sites to combine free content with
"premium" (i.e., subscriber- or member-only)
content. Subscription fees are incurred irrespective
of actual usage rates. Subscription and advertising
models are frequently combined.

Content Services -- provide text, audio, or video

content to users who subscribe for a fee to gain
access to the service. [Listen.com, Netflix]

Person-to-Person Networking Services -- are

conduits for the distribution of user-submitted
information, such as individuals searching for
former schoolmates. [Classmates]

Trust Services -- come in the form of membership

associations that abide by an explicit code of
conduct, and in which members pay a subscription
fee. [Truste]

Internet Services Providers -- offer network

connectivity and related services on a monthly
subscription. [America Online]

Utility The utility or "on-demand" model is based on

Model metering usage, or a "pay as you go" approach.
Unlike subscriber services, metered services are
based on actual usage rates. Traditionally, metering
has been used for essential services (e.g., electricity
water, long-distance telephone services). Internet
service providers (ISPs) in some parts of the world
operate as utilities, charging customers for
connection minutes, as opposed to the subscriber
model common in the U.S.

Metered Usage -- measures and bills users based

on actual usage of a service.

Metered Subscriptions -- allows subscribers to

purchase access to content in metered portions
(e.g., numbers of pages viewed). [Slashdot]

The impact of B2B markets on the economy of

developing countries

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The impact of B2B markets on the economy of developing countries is
evident in the following:

Transaction costs. There are three cost areas that are significantly reduced
through the conduct of B2B e-commerce. First is the reduction of search
costs, as buyers need not go through multiple intermediaries to search for
information about suppliers, products and prices as in a traditional supply
chain. In terms of effort, time and money spent, the Internet is a more
efficient information channel than its traditional counterpart. In B2B
markets, buyers and sellers are gathered together into a single online
trading community, reducing search costs even further. Second is the
reduction in the costs of processing transactions (e.g. invoices, purchase
orders and payment schemes), as B2B allows for the automation of
transaction processes and therefore, the quick implementation of the same
compared to other channels (such as the telephone and fax). Efficiency in
trading processes and transactions is also enhanced through the B2B e-
market’s ability to process sales through online auctions. Third, online
processing improves inventory management and logistics.

Disintermediation. Through B2B e-markets, suppliers are able to interact

and transact directly with buyers, thereby eliminating intermediaries and
distributors. However, new forms of intermediaries are emerging. For
instance, e-markets themselves can be considered as intermediaries
because they come between suppliers and customers in the supply chain.

Transparency in pricing.Among the more evident benefits of e-markets is

the increase in price transparency. The gathering of a large number of
buyers and sellers in a single e-market reveals market price information
and transaction processing to participants. The Internet allows for the
publication of information on a single purchase or transaction, making the
information readily accessible and available to all members of the e-market.
Increased price transparency has the effect of pulling down price
differentials in the market. In this context, buyers are provided much more
time to compare prices and make better buying decisions. Moreover, B2B e-
markets expand borders for dynamic and negotiated pricing wherein
multiple buyers and sellers collectively participate in price-setting and two-
way auctions. In such environments, prices can be set through automatic
matching of bids and offers. In the emarketplace, the requirements of both
buyers and sellers are thus aggregated to reach competitive prices, which
are lower than those resulting from individual actions.

Economies of scale and network effects. The rapid growth of B2B e-markets
creates traditional supply-side cost-based economies of scale. Furthermore,
the bringing together of a significant number of buyers and sellers provides
the demand-side economies of scale or network effects. Each additional

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 incremental participant in the e-market creates value for all participants in
the demand side. More participants form a critical mass, which is key in
attracting more users to an e-market.

M-COMMERCE

M-commerce (mobile commerce) is the buying and selling of goods and

services through wireless technology-i.e., handheld devices such as cellular
telephones and personal digital assistants (PDAs) using short message
service(SMS),mobile e mail as with the Blackberry,Wi fi and Bluetooth.
Japan is seen as a global leader in m-commerce.

As content delivery over wireless devices becomes faster, more secure, and
scalable, some believe that m-commerce will surpass wireline e-commerce
as the method of choice for digital commerce transactions. This may well be
true for the Asia-Pacific where there are more mobile phone users than
there are Internet users.

Nature of m commerce

M commerce has five important characteristics:

 Ubiquity it is available on the go, anywhere at any time

 Localisation with m commerce the customers profile includes his or her location in real time.

 Time sensitivity the user is always on.It is possible to target the user at the appropriate time

 Instant connectivity

 Personalisation

Because the graphic user interface on cellphones,PDAs and other handheld

devices is small and constrained the user experience is often different to
someone using a PC.Users cannot browse large documents,conduct
transactions involving several steps or type in long website URLs.As a result
users will do less browsing and more direct searching for email and
information such as stock prices,weather etc

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 Industries affected by m-commerce include:

 Financial services, including mobile banking (when customers use their handheld devices
to access their accounts and pay their bills), as well as brokerage services (in which stock
quotes can be displayed and trading conducted from the same handheld device);

 Telecommunications, in which service changes, bill payment and account reviews can all
be conducted from the same handheld device;

 Service/retail, as consumers are given the ability to place and pay for orders on-the-fly; and

 Information services, which include the delivery of entertainment, financial news, sports
figures and traffic updates to a single mobile device.

F ORCES FUELING E - COMMERCE .

There are at least three major forces fuelling e-commerce: economic forces,
marketing and customer interaction forces, and technology, particularly
multimedia convergence.

Economic forces. One of the most evident benefits of e-commerce is

economic efficiency resulting from the reduction in communications costs,
low-cost technological infrastructure (technology has a tendency to become
cheaper with time), speedier and more economic electronic transactions
with suppliers, lower global information sharing and advertising costs, and
cheaper customer service alternatives. Global competition and the
proliferation of products and services worldwide have added unusual
pressure on operating costs and profits commerce addresses these
concerns quickly, efficiently and at low cost.

Economic integration is either external or internal. External integration

refers to the electronic networking of corporations, suppliers,
customers/clients, and independent contractors into one community
communicating in a virtual environment (with the Internet as medium).
Internal integration, on the other hand, is the networking of the various

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 departments within a corporation, and of business operations and
processes. This allows critical business information to be stored in a digital
form that can be retrieved instantly and transmitted electronically. Internal
integration is best exemplified by corporate intranets. Among the
companies with efficient corporate intranets are Procter and Gamble, IBM,
Nestle and Intel.

Market forces. Corporations are encouraged to use e-commerce in

marketing and promotion to capture international markets, both big and
small. The Internet is likewise used as a medium for enhanced customer
service and support. It is a lot easier for companies to provide their target
consumers with more detailed product and service information using the
Internet.

Technology forces. The development of ICT is a key factor in the growth of

e-commerce. The steady increase in computing power and decreasing costs
has made navigation on the internet a widespread reality. For instance,
technological advances in digitizing content, compression and the
promotion of open systems technology have paved the way for the
convergence of communication services into one single platform.
Convergence has made it possible for digital devices to communicate with
one another i.e. video, film, documents, voice and data. This in turn has
made communication more efficient, faster, easier, and more economical as
the need to set up separate networks for telephone services, television
broadcast, cable television, and Internet access is eliminated. From the
standpoint of firms/businesses and consumers, having only one
information provider means lower communications costs.

Moreover, the principle of universal access can be made more achievable

with convergence. At present the high costs of installing landlines in
sparsely populated rural areas is a disincentive to telecommunications
companies to install telephones in these areas. Installing landlines in rural
areas can become more attractive to the private sector if revenues from
these landlines are not limited to local and long distance telephone charges,
but also include cable TV and Internet charges. This development will
ensure affordable access to information even by those in rural areas and
will spare the government the trouble and cost of installing expensive
landlines.

T HE RELEVANCE OF THE I NTERNET TO E-B USINESS

The Internet allows people from all over the world to get connected
inexpensively and reliably. As a technical infrastructure, it is a global

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 collection of networks, connected to share information using a common set
of protocols. Also, as a vast network of people and information, the Internet
is an enabler for e-commerce as it allows businesses to showcase and sell
their products and services online and gives potential customers, prospects,
and business partners access to information about these businesses and
their products and services that would lead to purchase.

Before the Internet was utilized for commercial purposes, companies used
private networks-such as the EDI or Electronic Data Interchange-to transact
business with each other. That was the early form of e-commerce. However,
installing and maintaining private networks was very expensive. With the
Internet, e-commerce spread rapidly because of the lower costs involved
and because the Internet is based on open standards.

T HE IMPORTANCE OF AN INTRANET FOR A BUSINESS ENGAGING IN E-

B USINESS
An intranet aids in the management of internal corporate information that
may be interconnected with a company’s e-commerce transactions (or
transactions conducted outside the intranet). Inasmuch as the intranet
allows for the instantaneous flow of internal information, vital information
is simultaneously processed and matched with data flowing from external
e-commerce transactions, allowing for the efficient and effective integration
of the corporation’s organizational processes. In this context, corporate
functions, decisions and processes involving e-commerce activities are
more coherent and organized.

The proliferation of intranets has caused a shift from a hierarchical

command-andcontrol organization to an information-based organization.
This shift has implications for managerial responsibilities, communication
and information flows, and workgroup structures.

add-on products, services, and new systems when they are needed. With
network production, a company can assign tasks within its non-core
competencies to factories all over the world that specialize in such tasks
(e.g., the assembly of specific components).

E BUSINESS INFRASTRUCTURE

This relates to the hardware and software architecture necessary to achieve

electronic communication within a business and with its partners. It is a
combination of hardware such as servers, PCs, networks used and the
software applications used to deliver the services.

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The internet

It is a physical network that links computers across the globe. It consists of

servers and communication links between the computers that are used to
hold and transport information between client PCs and web servers. The
internet is therefore a large scale (global) client server network.

The client server architecture consists of client computers sharing

resources such as a database stored on a more powerful server computers.
Client PCs in homes and offices are connected to the internet via local
internet service providers (ISPs) with connections to the national or
international infrastructure or backbones (high speed communication links
used to enable internet communications across a country and
internationally).

The internet started in the 1960s as the Arpanet research and defense
network in the United States that linked servers used by the military and
academic collaborators. It was established as a network that would be
reliable even if some of the links were broken. This was achieved since data
and messages sent between users were broken up into smaller packets and
could follow different routes. Although the internet was subsequently
extended worldwide it was initially used extensively by academic and
defense communities. It has only recently catapulted into the mainstream
business and consumer usage.

The World Wide Web (www)

The web is an organisation of files designed around a group of servers on

the internet programmed to handle requests from browser software on
users personal computers.

It was invented by Tim Berners Lee of the European Particle Physics

Laboratory as a program called hypertext editor, to help share research
easily. It allowed information highlighted in a document to link with other
documents on a computer network with a mouse click. Its advent is
responsible for the massive growth in the business use of the internet. It is
the most common technique for publishing information on the internet. It is
accessed through web browsers which display web pages of embedded
graphics and HTML (hypertext markup language) or XML encoded text.

HTML can be thought of as similar to a word processing format such as

Microsoft word documents. It has been widely adopted as a standard on the
internet because:

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 It offers hyperlinks (a method of moving between one we site page and another, indicated to
a user by an image or text highlighted by underlining or a different colour).It allows for
easier surfing.
 HTML supports a wide range of formatting making documents easy to read on different
devices.

 Graphics and animations can be integrated into web pages.

 Interaction is possible through HTML based forms that enable users to supply their personal
details for more information on a product, perform searches, ask questions, make comments
etc

The combination of web browsers like Microsoft Internet Explorer and

HTML has been successful in establishing widespread use of the internet.
To distinguish the internet from the web (www) the analogy of television
can be used. The internet would be equivalent to the broadcasting
equipment such as masts, transmitters, satellites, studios while the web is
equivalent to the content of different TV programmes.

Internet terms

1. Web browsers are software programmes used to access information on the web. They provide
an easy method of accessing and viewing information stored as web documents on different
servers. Examples include Microsoft Internet Explorer, Mozilla Firefox and Netscape Navigator.
2. Web servers are powerful computers that store and present the web pages accessed by web
browsers.

3. FTP(File Transfer Protocol) refers to programme standards used to upload and download files to
and from web servers.

4. Intranet is a private network within an organisation using internet standards to enable the
sharing of information using email and web publishing within the organisation.

5. Extranet is formed by extending the intranet beyond a company to customers, suppliers and
collaborators.

6. Firewall is a specialised software application mounted on a server at a point the company is

connected to the internet. Its purpose is to prevent unauthorised access into the company from
outsiders.

7. Search engine is a website or a database and the tools to search it e.g. google.com

Networking Standards and terms

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 HTTP(hypertext transfer protocol) is a standard which defines the way
information is transmitted across the internet between web browsers and web
servers. When you click on a link while viewing a website , the web browser
you are using will request information from the server computer hosting the
website using http protocol hence the letters http:// are used to prefix all we
addresses. According to Tim Berners Lee (1999) HTTP rules defines things like
which computer speaks first and how they speak in turn. When two computers
agree they can talk, they have to find a common way to represent their data so
that they can share it.

URL(Universal/Uniform Resource Locator)is the technical term for web

addresses used to locate a web page on a web server. URLs are therefore a
standard method of addressing a website e g http://www.cut.ac.zw

Domain name refers to the name of the web server and is usually selected to
be the same as the name of the organisation and the extension will indicate its
type. This extension is known as the global top level domain(gTLD).There are
also some country code top level domains(coTLD) e g .zw for Zimbabwe or .za
for South Africa. Common gTLDs are:

 .com representing a commercial organization or business in general.

 .co.zw representing an organisation in Zimbabwe.

 .ac.zw representing a university in Zimbabwe.

 .org for non profit organisations.

 .net for network providers(companies supporting the internet)

 .edu for an educational institution(college or university).

 .gov for a US government agency (non military)

 .mil for a US government military agency.

Look out for the full list of domain names on www.geocities.com

To establish web presence a company needs to register a domain name unique

to it via an internet service providers(ISP) or from domain name services.

Web Page Standards

Website content (information, graphics and interactive elements) determines

the attractiveness of a website. Technically text information is usually

24
 presented in HTML(hypertext markup language).It ensures that any web page
authored according tote definitions in the standard will appear the same way in
any web browser.

XML(extensible markup language) is a standard for transferring structured data

and is more versatile than HTML.

Graphics can be incorporated into web pages using formats like:

 GIF(graphics interchange format) a graphics format and algorithm best used for simple graphics
like banner adverts.
 JPEG(joint photographics experts group) a graphics format and algorithm best used for
photographs.

Other enhancements include:

 Streaming media(sound and video that can be experienced within a web browser before the
whole clip is downloaded)
 Plug ins are add on programs to a web browser providing extra functionality such as animation
or reading other formats like PDF e g Adobe Acrobat and Macromedia Flash.

What makes for a good website

When designing a website 3 elements must be in mind i.e. the purpose, target
audience and expected behaviour.

Purpose relates to the sites reason for existence, its essence and what it aims
to accomplish. As such, it is important to define the stance of the site i.e. is it
formal or informal or whether is serious or fun. This can be shown in the style
of the site communicated through the use of colour, images, typography and
layout. What is shown should be in line with the way a product is branded or
positioned.

Target audience. Website designers must understand clearly who will benefit
from the site. It is useful to prepare a short description of the audience and
display it prominently. The definition of the audience must not be too broad or
too narrow and the audience must be substantial and reachable. A business
audience often requires detailed information while a consumer site is more
graphically intensive.

Expected Behaviour refers to details such as the attention paid to content,

frequency of visits, downloads and printouts e.t.c. This determines whether the

25
 website will be static (one way) or interactive (two way) depending on the
amount of activity.

Quality of a website

There are 3 aspects of website quality:

 Information quality relates to the factuality or correctness of information. Users do not need to
be inconvenienced checking and rechecking a site. In formation that is obviously propaganda or
unconditional praise leads to increased cynicism amongst users. Incorrect spellings and poor
grammar obviously affect user opinion. The quality of links matters. Brocken links (links that do
not work or lead to a page not found message) and wrong links (links that take you to a place you
did not expect) detract from the quality of information.
 Information structure quality. Information also needs to be organised effectively. This helps
individuals understand the scope of the information provided and help them quickly locate
information they care about. Structure quality is detracted by too many categories, too few
categories, not enough information in a category and no logical arrangements.

 Usability captures the quality of the user’s experience. High usability indicates great navigation
and easy access leading to a satisfying user experience. The top web design problems related to
usability are:

Long download times many users are very impatient about long download times and switch
away to another page if the page does not load in a few seconds.

Lay out Users must understand the overall structure of the page at all times and where they are
in relation to the homepage. Providing a site map or a consistent menu visible on all pages
alleviates this problem. Users can also make assumptions about the layout e g they assure that if
they click on the site logo in the left hand corner and go to the home page .If this does not
happen they may become confused.

Non standard link colours colours have meaning on line. Typically, darker colours like dark blue
are reserved for unread links and light colours like light brown are reserved for links that have
been used before.

Scrolling text and animations a document with a lot of text accessible only if users scroll to the
bottom is badly designed. Each page should have a small chunk of information that can be easily
understood. Simplicity is advisable for visuals. Many users are irritated by flashing, blinking, or
noisy things that detract from their main objective.

According to Yahoo website managers a profitable and effective website should have 3
characteristics:

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  Magnetic in terms of acquisition of visitors by way of promotions and making it
attractive.
 Sticky in terms of retention or keeping customers on the site once they arrive and
encouraging them to engage in revenue generating activities.

 Elastic or extension referring to persuading customers to return particularly for revenue

generating activities.

Managing E Business infrastructure

The management of e business infrastructure is informed by reviewing 2
different perspectives of the infrastructure i.e.

 Technology infrastructure / hardware (provision of servers, clients, networks, operating systems

etc)
 Applications infrastructure (refers to the software provision of the infrastructure. This is the
applications software used to deliver services to employees, customers etc

Managing technology infrastructure

This means that decisions have to be made or issues such as

a. Systems software

The key issue is standardization throughout the organisation. Standardisation leads to

reduced numbers of contacts for support and maintenance

Standardisation can reduce purchase prices through multi/user licenses. These choices occur for the
client, server and network.

Standardized plug ins should also be installed across the organisation.

b. Transport or Network

Such decisions are based on the internal company network and its link
to the public internet. The main management business is whether internal or
external network management will be performed by the company or
outsourced to a third party.

Standard hardware e.g. modern card or external modems is also needed to

connect clients to the internet

c. Storage

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Storage can be managed internally or externally. This is not an either or choice
e.g. intranet and extranet can be managed internally while internet storage
such as the corporate website is commonly managed externally or at an
application service provides.

Decisions also need to be made involving 3rd party service providers of the
technology infrastructure e.g.

Internet service providers ISP are companies that provide home or business
users with a connection to access the internet and hosting of websites e.g.
ecoweb, telone, zim on line.

ISPs provide a link to the worldwide web and also they host websites or provide
a link from a company’s web services to enable other companies and
consumers access to a corporate websites.

The primary issue in managing ISPs is to ensure a satisfactory service quality

which is determined by

i. speed

ii. Availability

iii. Security

i. The speed of access is determined by the speed of the server and the
speed of the network connection to the server. Often the speed of the server
depends on the number of users. Often to ensure reliability companies can pay
ISPs foe services of a dedicated server a server that only contains contents and
application for a single company or using several servers to spread the demand
load i.e. web farms

speed is also governed by the speed of network connection commonly termed

band with

Bandwidth indicates the speed at which data is transferred using a particular

network media, measured in bits per second.

ii. Availability refers to the amount of time a website is available to

consumers. For a company offering 24/7 services it should be 100% for e
business sites lack of availability has revenue loss implication.

To ensure the best speed and availability a company should check the service
level agreements (SLAs) when outsourcing web site hosting services. The SLA
should define confirmed standards of availability and performance. It should

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also include notification to the customer derailing when the web service
becomes unavailable and reasons why and estimates when service will be
restored.

iii. Security ensures confidentiality and lowers exposure to risk.

Measures to be taken will be discussed in detail later.

EDI electronic Data Interchange

EDI is the exchange, using digital media of structured business information,

particularly for sales transactions such as purchase orders and invoices
between buyers and sellers.

The benefit of using EDI to streamline business process include-

Rapid fulfillment of orders. Reduced lead times are achieved through reduced
times in placing and receiving orders, reduced times of information in transit
and through interaction with other processes.

Fewer errors in data entry and less time spent by the buyer or supplier on
exception handling

Reduced costs resulting from reduced staff time material savings such as paper
and forms and improved inventory control.

E environment

Social Factors

Much of activity online is social in native considering the use of email, social
networks such as face book, music sharing, gaming, and shopping among other
activities.

It is useful for e business mangers to understand the different factors that

affect how many people actively use the internet among other factors
governing adoption of e business activities are

Cost of access initial costs of the computer are a major expenditure for many
households as well as costs of using an ISP

And the media phone line or cable charges also affect adoption.

Value proposition customers need to perceive a need to be on time. What the

internet can offer that other media cannot.

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Ease of use refers to ease of connecting through the ISP and the ease of using
the web once connected.

Security relates to risks of fraud or invasion of privacy etc

Fear of the unknown especially a general fear of technology a domain for the
young mostly under 45 years old. Other demographics webographics according
to Grossnickle and Raskin 2001 include

Usage location i.e. country/region, home or business use

Access device browse or computer platform

Experience level

Usage type

Usage level

Economic and competitive factors

The economic health competitive environment in different countries will

determine the e business potential of each country. The most developed
countries and communities tend to have more developed e business
infrastructure in place and the highest levels of e business activity

Political Factors

The political environment is shaped by the interplay of government agencies,

public opinion, consume pressure groups and industry backed organisation that
promote best practice amongst companies. The political environment also
drives the establishment of privacy laws and taxation of international bodies to
coordinate he internet such ICAN the Internet Corporation for assigned Names
and Numbers.

Interaction in government can also be enhanced be e government the use of

internet technologies to provide good services to citizens.

Internet governance is such that it is difficult for a single country to have

complete control over internet activities as such cyberspace has different layers
of jurisdiction according to Dyson *1998

i. Physical space comprising each individual country where its own laws
e.g privacy taxation or trading laws hold.

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 ii. ISPs make the connection between the physical and the virtual world

iii. Domain name of control and community

iv. Agencies such as TRUSTe (truste.org)

Ethical & Legal Issues

i. Privacy and Trust

The privacy of consumers on the internet covers three related issues

a) collecting and holding personal information

Since it is difficult to identify the end user in order to target them appropriately, often it
is necessary to invade the user’s privacy by planting cookies (small text files stored on an
end users computer to enable websites to identify them) or electronic tags on the end
users computer. Cookies have a bad reputation since it is believed that they could be
used to capture credit card information and other personal information. In most cases
customers would be unaware that their privacy is being invaded.

b) Disclosing personal information to third parties

Customers may be quite happy to give personal information to a company that they
have formed a relationship with. They are likely to be less than happy if this company
sells the information to another company and they are subsequently bombarded with
promotional material. The other risk is of hackers accessing information held about a
customer on servers within a company.

c) Sending unsolicited e mails to consumers

Spamming is the sending of unsolicited mail or messages to large numbers of internet

users. It is intrusive and irritating to most net users. For ethical reasons, e marketers can
adopt an opt in / opt out principle. Opt in is when a customer proactively agrees to
receive further information. Opt out is when a customer declines the offer to receive
further information.

Legal Factors

Some of the main e business related loyal issues on which companies seek specific legal
advice are:

 Domain name registrations and trade marking of internet brands.

31
  Advertising standards. Most countries have specific laws to avoid
misrepresentation to the consumer and uncompetitive practices.

 Defamation and libel. Information published on a site critical of another

company’s people or products could represent libel.

 Copyright and intellectual property rights. Permission must be sought for

information or images sourced elsewhere in the same way as for any other
media.

 Data Protection and privacy law. A website must protect data held on
consumers according to the local law.

 Taxation on e business. The global nature of e business raises questions as to

where revenue is taxable as well as the appropriate tax jurisdiction. Current
international tax treaties are such that the right to tax is divided between the
country where the enterprise derives its revenue and that from where it is
resident.

Technological Factors

The availability of technology infrastructure and the general awareness of a

population determines the levels of adoption of innovations.

E SUPLLY CHAIN MANAGEMENT

Supply chain management is the coordination of all supply activities by an

organisation from its suppliers and partners to its customers. The supply chain
therefore consists of two sides:

 The upstream supply chain(transactions between an organisation and its suppliers or

intermediaries)
 The downstream supply chain(transactions between an organisation and its customers and
intermediaries)

Due to interlinkages within an organisation the setup develops into more of a supply chain network
which links between an organisation and all its partners with multiple supply chains. Logistics is a
concept closely related to supply chain management. It is the time related positioning of resources or
the strategic management of the supply chain. It relates to inbound logistics resources entering an
organisation from suppliers and outbound logistics resources supplied by an organisation to its
customers and intermediaries.

Look up value chain concept and analysis Michael Porter

32
Development in supply chain management

To understand how e business can enhance supply chain and logistics management it is important to
consider the historical context of management approaches to supply chain management. The
following stages can be identified.

1960/70s Physical distribution Management PDM

This focused on the physical movement of goods by treating stock management, warehousing, order
processing and delivery as related rather than separate activities.

Although information systems were developed to manage these processes they were often paper
based and not integrated across different functions. However some leading companies had
started using EDI at this time

1970/1980 logistics Management Materials requirements Planning MICP and Just in Time JIT

The JIT philosophy aims to make the process of raw materials production and distribution as efficient
and flexible as possible in terms of response supply and customer service. Minimum order
quantities and stock levels were sought by the customer and therefore manufacturers had to
introduce flexible manufacturing process and systems that interfaced directly with the customer
who would call an order directly against a prearranged schedule with a guarantee between that
it would be delivered on time.

MRP systems were important in maintaining resources at an optimal level. For JIT and MRP emphasis
was on lean production and lean supply where supply chains efficiency is aimed at eliminating
waste and minimise inventory and work in progress.

1980s/90s Supply Chain Management and Efficient Customer ECR

This involved closer integration the supplier, customer and intermediaries. Supply chain
management aimed at maximising the efficiency and effectiveness of the total supply chain for
the benefit of all the players and to maximum the opportunity for customer purchase by
ensuring adequate stock level at all stages of the process. Integrated systems such as SAP
Enterprise Resource Planning(ERP) system have helped manage the entire supply chain. ERP
system include modules which are deployed throughout the business and interface with
customers .Technology has enabled the introduction of faster, more responsive and flexible
ordering, manufacturing and distribution systems , which has diminished even the need for
warehouses to be located near to markets that they serve.

The ECR concept was developed for the food retailing business in the US but
has been applied to other products and other countries. It aimed at timely,
accurate, and paperless information flow by revising of processes supported by
information to ensure smooth continual flow of products matched to

33
 consumption. To do so other areas such as retail space ,promotions and new
product development were prioritised.

1990s/00s Technological Inter face Management

According to Hammil and Gregory(1997), the challenge facing suppliers,

intermediaries and customers in the supply chain will shift from a focus on
physically distributing goods to a process of collection collation , interpretation
and dissemination of vast amounts of information. Enterprise Resource
planning systems are continuously being updated to support direct data
interfacing with suppliers and customers to support EDI. With increasing out
sourcing of core activities companies are rapidly becoming virtual organisations
which use ICT to allow operations without clearly defined boundaries between
different functions. It provides customised services by outsourcing production
and other functions to third parties.

Effect of information systems on SCM

The adoption of ICT to SCM has led to changes including:

1. Increased efficiency of individual processes. The cycle time needed to complete a process as
well as the resources needed to execute it has been reduced.
2. Reduced complexity of the supply chain .Disintermediation has resulted in a simpler supply
chain with a reduced cost of channel distribution.

3. Improved data integration between elements of the supply chain. A company can now share
information with its suppliers on the demand for its products to optimise the supply process. An
associated benefit has been the reduction in cost of paper processing.

4. Reduced cost through outsourcing. A company can outsource or use virtual integration to
transfer assets and costs such as inventory holding costs to third party companies. Technology
also enables formation of value networks and in changing suppliers on the basis of cost and
quality. Costs are lowered through price competition and reduced spending on manufacturing
and holding capacity.

5. Innovation. It is possible to offer new products or new ways of ordering and servicing products to
customers e.g. a B2B company may use e commerce to enable its customers to specify the
mixture of chemical compounds and additives used to formulate their plastics and refer to a
history of previous formulations. This results in better customer responsiveness.

There is also need to look at how e commerce can deliver to customers at the
other end of the supply chain by:

 Increased convenience through 24/7 ordering.

34
 Increased choice of suppliers leading to lower costs.

 Faster lead times and lower costs through reduced inventory holding.

 The facility to tailor products to customer specifications.

 Increased information about products and transactions such as technical data sheets and order
histories.

There are two alternative viewpoints on the impact of e commerce on supply chains. One holds
that electronic networks may lock in customers to a particular supplier because of the overheads
and risks associated with moving to another supplier.

The other view is that electronic marketplaces are characterised by ephemeral relationships.
Steinfield et al (1996) suggest that it is easier to form an electronically mediated relationship and
is as easy to break it. They however stress the importance of personal relationships which may be
strengthened further by electronic contact.

E PROCUREMENT

It is the electronic integration and management of all procurement activities including purchase
request, authorisation, ordering, delivery and payment between a purchaser and a supplier. E
procurement should be aimed at improving performance for each of the 5 rights of
purchase ,which are sourcing items:

 At the right price

 Delivered at the right place

 Of the right quality

 Of the right quantity

 From the right source

E procurement is not very new .There have been many attempts to automate
the process of procurement for the buyer using electronic procurement
systems(EPS), workflow systems and links with suppliers through EDI.

E procurement has resulted in reduced cycle time from search for goods to
payment by up to 4 days for low value items. Amongst other benefits of are:

 reduced purchasing cycle time and cost

 enhanced budgetary control(achieved through rules to limit spending and improved reporting
facilities)

35
 elimination of administrative errors(correcting errors is traditionally a major part of a buyers
workload)

 increasing buyers productivity(enabling them to concentrate on strategic purchasing issues)

 lowering prices through product standardisation and consolidation of buys.

 Improving information management(better access to process from alternative suppliers and

summaries of spending)

 Improving the payment process.

Implementing e procurement

Different types of systems cover different parts of the procurement cycle.

These include:

 Stock control system relates to mainly production related procurement. The system highlights
when reordering is required, when the number in stock falls below reorder thresholds.
 CD/Web based catalogue .Paper catalogues have been replaced by electronic ones that make it
quicker to find suppliers.

 E mail or database workflow systems integrate the entry of the order by the originator, approval
by the manager and placement by the buyer. The order is routed from one person to the next
and will wait in the inbox for actioning.

 Order entry on website. The buyer often has the opportunity to order directly on the suppliers
website but this will involve rekeying and there is no integration with systems for requisitioning
or accounting.

 Accounting systems. Networked accounting systems enable staff in the buying department to
enter an order which can then be used by accounting staff to make payments when the invoice
arrives.

 Integrated e procurement or ERP systems. This aims to integrate all processes from requisition of
order, approval to payment for the goods.

Companies face a difficult choice in achieving full cycle e procurement. They

have the option of trying to link different systems or purchasing a single new
system that integrates the facilities of the previous systems. Purchasing a new
system may be the simplest option technically, but it may be more expensive
than trying to integrate existing systems. It also requires retraining in the
system as well as linking to the supplier systems for one to fully benefit from its
implementation.

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 E MARKETING

According to Chaffey et al (2000) e marketing is the application of the internet

and related digital technologies to achieve marketing objectives. E marketing
therefore entails all marketing activities in an electronic or online platform. The
primary purpose of the internet in e marketing is promotional. Issues involved
include customer acquisition, viral marketing, advertising and search engine
optimisation amongst others.

Customer acquisition process

The attraction of customers online entails various issues including:

 Cost benefit analysis

The customer acquisition process requires a comparison of the incremental benefit of attracting
a customer with the incremental benefit of doing so.The benefit is measured in terms of the
lifetime value of a customer i.e. the discounted cashflows (potential revenues less the cost of
attracting and retaining the customer) that are expected to arise from a customer over his or her
lifetime.

 Consumer profitability analysis

Profits arising from each individual customer are determined by comparing the revenue from the
individual to the sum of acquisition and retention costs to date. Customers who contribute the
most to company profitability should be rewarded with preferential treatment while those high
maintenance customers should be fired.

 Building a customer database

There are three approaches to building a database:

 Defense

This programme is designed to retain the company’s loyal customers. These

individuals are rewarded and offered special access not offered to others.

 Tough defense

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 This is designed to entice customers of he competition to switch. This could prove
expensive especially if the competition retaliates and must therefore be managed
carefully.

 Easy offense

This is designed to capture the ‘’low hanging fruit’’ i.e. consumers who are known
to be price switchers are persuaded by using price promotions such as coupons or
sales.

Once a database is in place the company can encourage customers to buy more or
in other categories e.g. Amazon .com entered the marketplace selling books but
once they had established a database they tried to do this by up selling and cross
selling.

Up selling means trying to sell more to existing customers e.g. if a customer

enquired about a book, he or she is presented with a list of other books by the
same author or of potential interest.

Cross selling involves selling other products to existing customers e.g. selling book
customers music CDs and DVDs.

 The budget for customer acquisition

In setting the budget, the following two factors have to be considered:

o Diminishing returns

The budget is appropriate if it is at a point where increasing it by a dollar

leads to less than a dollar in profits. After a point increasing the budget
does lead to more customers but the cost of getting outweighs their value.

o Competition

One has to monitor and keep pace with what the competition is doing to
acquire customers. However, setting the budget at the same level as
competition may be unwise because it can lead to escalating acquisition
costs.

VIRAL MARKETING

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 Viral marketing proposes that messages can be rapidly disseminated from
consumer to consumer, like the spread of a virus, leading to large scale market
acceptance. It is based on the idea of word of mouth advertising. With the
advent of the internet and e mail, marketers have to view markets as networks
of consumers rather than an amorphous mass and use this knowledge to
enhance the spread of their message.

Types of viral marketing

There are three types of viral marketing:

 Incidental contagion
 Contagion due to transaction consummation

 Consumers as professional recruiters.

 Incidental contagion

In this case the consumer is not made aware of his or her role in the message dissemination
process. Consumers sign on to a service while using the service, unwittingly increase the
awareness of the product. Consumers do not perform any special promotional tasks and do
receive any reward.

 Contagion due to transaction consummation

In this case a firm makes an attractive product available for free provided that all interested
parties register for the service. In other words, a service is available to a particular individual only
if others sign up giving the user an incentive persuade others to sign up as well e.g. PayPal which
allows users to make small payments to one another online, paid $10 to its early users to sign up
and a few more dollars for each new member they referred. As a result PayPal reached 3 million
users in the first 9 months. Once it reached a critical mass PayPal reduced its payments to $5.

 Consumers as Professional Recruiters

In this case consumers are encouraged to contact others and inform them about the product.
This can be done in two ways. No incentive might be provided to the consumer. The “tell a
friend” icon might appear right next to a product display or news story. Alternatively, the
marketer sets up an explicit incentive structure to reward consumers who bring in the most
traffic.

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When to use viral marketing

From a strategic perspective viral marketing is called for when you care about the quantity rather
than the quality of traffic frequenting you site i.e. building up a crowd. Viral campaigns also work
well for markets that are homogeneous rather than heterogeneous. Viral marketing works best
for products or services that have one or more of the following characteristic:

 Uniqueness.

It works very well for products that are market creators or are nothing like what is
available on the market and represent a new way of thinking e.g. Hotmail at its
launch was in an era of paid for e mail.It being a free e mail service represented a
new way of thinking about customer acquisition.

 Exciting product concept

Viral marketing works when individuals are excited about a product and its value
proposition. As such, viral marketing is great for products that are entertaining,
colourful and exhilarating to use.

 Simple product concept

The product has to be as simple as possible for a consumer to explain to his or her
friends. A concept as simple as “free e mail”, as in the case of Hotmail, was naturally
easy to disseminate.

 Low cost trial

In trying a product, the total cost of adopting a product should be low. The total
cost can be broken down into several components i.e. switching costs, transaction
costs and the cost of the product. Switching costs refer to the cost of moving from
an old product under use to a new product. The price of a product entails the
products value. Viral marketing works best for products that are free or inexpensive
e.g. digital products, free communication technologies e.t.c.

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 Transaction costs involve actual payment to make the move and hassles involved
e.g. filling up forms. For a successful viral market campaign the actual sign up or
registration process must be seamless.

Negative aspects of viral marketing

1. Brand control is reduced by viral marketing. One has no control over the audiences
contacted in the process and how the message may be modified leading to variability in
how your brand is perceived.
2. Uncharted growth. Viral marketing can lead to unanticipated growth paths which may
lead to abrupt changes in strategic direction like being led to unplanned for markets.

3. Lack of measurement. Results of viral marketing are difficult to track and measure. In
many cases it may not be possible to tell if people who adopted your service did so
because of your viral marketing technique.

4. Spam Threats. Poorly done viral marketing can lead to large scale spam(unsolicited e
mail) especially in the case of paid for viral marketing where people who want to earn
money go about sending as many messages as possible which might not be as well
received.

How to manage the viral marketing process

Though viral marketing offers an organic customer led growth path, continuous managerial
oversight is required. This can be done:

 Carefully picking the initial recipients of the message. Viral pioneers must be
popular (have access to a large social network), influential and representative of the
target market. It is also important to identify and pick people who play a bridging
role in bringing together two social networks. It is not advisable to pick such
individuals out of convenience e.g. friends of employees rather than by any
strategic consideration.
 Carefully picking the message. The message should be designed such that it
communicates the value proposition clearly and simply, so that it is easy for
consumers to pass the message on.

 Putting control mechanisms in place. This will measure the impact of the viral
marketing campaign. A simple way of doing this is to ask new customers how they
heard about your service. One must constantly monitor how consumers are
spreading the message.

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As with any other form of promotion, viral marketing works for products that offer
general value to customers. If a product is bad viral marketing can sink it fast.

Search Engine Optimisation

Search engines like google.com and directories like www.yahoo.com are designed to
help consumers navigate the millions of pages on the web. Search engine optimisation is
therefore, trying to get the best out of these resources. Search engines use software
programmes called spiders or crawlers to search the web and create a large database or
index of what is available online.

Search engines can either be:

 Paid listing search engines which only includes listings from companies who
have paid to be included e.g. Go To.com.
 Reward based search engines which reward customers for using the engine by
entering them into a contest e.g. iwon.com.

 Community based directories which have links contributed by members e.g.

zeal.com.

 Meta search engine which searches across multiple search engines e.g.
metacrawler or vivismo.com.

 Global search engines. Which focus on a global market.

 Natural language querry which allows users to ask questions using full form
English instead of key words e.g. AskJeeves.com

People often use search engines to locate information on the internet. In searching for
information individuals are presented with hundreds of selections but will not read
through all selections but the top few entries. To get more traffic it is advisable to design
a website so that it shows up in the top five of any listing. Search engines rank web
pages using:

 Key words in the title.

 Key words near the top.

 Frequency of keywords.

 Link popularity.

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 There is a penalty for search keyword spamming (i.e. if you try to include every
popular keyword with the hope that you will show up near the top in many
searches, there is a penalty you may end up at the end of the list.)

To attain and maintain a position at the top end of a listing the following strategies
can be followed.

1. Change the Meta tags on the page. All web pages are written using HTML
which has a set of commands known as tags that determine how the page
looks. A Meta tag does not affect how the page looks but rather it is a
secret instruction of visiting search engines on where to put the page in
the index.
2. Change the page title.

3. Link reciprocally .i.e. site A and site B agree that they will place a link to
the others site on their page. This way a wider audience is exposed to both
pages.

4. Purchase multiple domain names i.e. be available on .com, .net, co.zw

e.t.c.

5. Have multiple home pages.

6. Pay for position approach. This entails paying the search engine to place
you in the top five.

Internet advertising

It is essentially advertising done within the space of a web page. It is in the

form of banner adverts and sponsorship.

a) Banners are small rectangles that appear on the top, bottom and sides of the in a website. They
come in many sizes ranging from small buttons to skyscrapers which occupy a large portion of
the screen. The are 3 banner advertisement variations :

 Interstitials appear when the user transitions from one website to another. An
interstitial occupies an entire screen and can either be automatically timed out or the
user may be asked to initiate closure.

 Pop up adverts appear abruptly when a consumer first visits a site or at any other point
during the browsing experience.

 Pop unders open up in a new window that is visible only when the user closes the
current window.

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 These variations of the banner catch the user by surprise but are likely to annoy
customers.

b) Site sponsorships involve advertisers signing long term agreements to have the logo displayed at
all times son a given website. As with banners consumers can click on the logo to visit the
sponsor’s site.

 Affiliate or associate programmes

This concept was pioneered by Amazon.com boss Jeff Bezos, who described it as a micro
franchising strategy e.g. a small site that specialises in Zimbabwean stone sculpture
signs up for Amazon.com associates programme. As part of the agreement the site posts
a small Amazon .com banner and encourages visitors to purchase books on Zimbabwean
stone sculpture from Amazon.com. The site receives 15% of the sales. Associate
programmes benefit both the advertiser and the associate. The advertiser gets traffic
from the site and the associate gets a commission every time a customer they refer buys
something. Associate programmes are also a great branding tool as they provide more
exposure at basically no charge while enjoying the benefits of associating with big
names.

Associate programmes are a decentralised traffic generation tool. Instead of going to

one large portal site such as Yahoo to generate traffic this method uses thousands of
small sites. This spreads out the cost of traffic generation and reduces the risk to the
advertiser.

Personalisation

It is targeting taken to the extreme. It envisions creating a unique marketing

mix for each individual. Rather than having one online storefront, one could
have a million storefronts for one million visitors e.g. one of the tabs on
Amazon .com is titled “your store” and contains information that is
personalised to each returning customer. It has information based on past
purchases, favourite areas e.t.c.

Personalisation differs from customisation or 1:1(one to one) marketing in that

it includes both company led and customer led approaches to targeting a
segment of size one. Personalisation reduces transactional burden on the side
of the consumer who does not have to search through many untargeted
alternatives and can focus on a few that are sited to their taste. It also builds
loyalty since users who have personalised site content return more than those
who don’t.

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 When to adopt personalisation

 Dispersion in customer lifetime value and needs

Personalisation only makes sense if customers differ in their value to the organisation
and if they have dramatically different needs.

 Customer sensitivity

This refers to whether customers care if the personalisation is offered or not. Where
levels of customer involvement are low the value of personalisation is low.

 Process amenability

This refers to whether technology for personalisation exists and how extensive or
expensive it is to implement. It also entails whether the organisation has the level of
detail regarding customer needs and if the marketing personnel can analyse such
information.

 Competitive environment

This refers to how competitive forces in the market enhance or detract from the
advantage the company has from implementing personalisation i.e. how competitors
react and how much competitive edge personalisation gives.

 Organisational readiness

This refers to the company’s culture and resources and how much they can cope with
the change.

Permission marketing

It envisions every customer shaping the targeting behaviour of marketers.

Consumers empower a marketer to send them promotional messages in
certain interest categories.Permission marketing therefore entails:

 Co creation(marketers and customers are partners in creating a marketing mix)

 Consumer control( a firm cannot send a message to a consumer who has not given it
permission)

Permission marketing uses mostly e mail though SMS and other formats are
increasingly being adopted.

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 Types of permission marketing

a) Opt out

This refers to a situation when a marketer sends an unsollicited e mail and then provides an
individual an option of not recieving future messages.

b) Opt in

It requires the consumer to tell the marketer explicitly that it has the permission to send
messages.Opt in can either be :

 Directly between the advertiser and the consumer (direct relationship maintenance).
 Between the consumer and the web portal or site which then alerts its
partners(permission partnership)

 Between a consumer an infomediary and advertisers(ad market)

 A permission pool where firms pool together information sent by consumers then send
promotional material.

c) Double or confirmed opt in

To avoid instances when consumers receive unwanted e mails or messages as in the case of
someone signing in on someone else’s behalf, double opt in asks the marketers to send a
confirmation email to individuals who opted in. When an individual confirms, the cycle is
complete and the organization can be doubly sure that it has the right person on its list.

Permission marketing best practices

 Explain in plain language and in plain view the intended use of the e mail address.
 Avoid using a ‘must fill’ field for the e mail address so that it does not appear like you are
confiscating e mail address.

 Always send a confirmation auto reply following registration. This reiterates the intent of the
programme and gives the registrant a last chance to opt out.

 Ask only critical targeting questions minimising the online collection of basic demographic data.

Problems with permission marketing

 Consumers are often asked for their permission when they initially register and then never asked
to revisit their preferences.

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 Permission is given once and thereafter they are repeatedly targeted with marketing messages
resulting in them becoming less engaged and more irritated.

 Opt in programmes often encompass broad categories which may mean the bulk of messages
would be of no use to the consumer.

 It places demands on consumers who have to work to get relevant adverts mainly by filling out
surveys about themselves. It may therefore fail to attract consumers with limited.

Steps in creating permission marketing programme

 Explicit permission seeking process must be free from deceptive tactics and the customers right
to be left alone must be honoured.
 Verification processs must avoid consumers signing in friends or associates indiscriminately,
placing an undue transactional burden on them.

 Recognition of relationship must be a two way, mutually beneficial relationship.

 Access to personal information must benefit the firm while empowering and reassuring the
consumer.

 Communication control. The consumer must be able to control the nature and volume of
messages being sent to them.

 Frictionless exit ability. A consumer should be able to effortlessly exit from a permission
marketing relationship. Frustrated consumers stop attending to the messages leading to low
response rates.

Pricing and distributing digital products

A digital product is anything that can be digitised or presented in digital form

e.g.

a. Information based services like research services.

b. Literature i.e. books, magazines, newspapers.

c. Auditory information like music or lectures.

d. Movies

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e. Images i.e. photographs, art, advertisements e.t.c

f. Financial assets e.g. stocks and bonds

g. Communication e.g. phone ,fax

h. Other information e.g. recipes, directions, maps e.t.c.

Pricing strategies for digital products include zero pricing, bundling, differential
pricing, subscription and site licensing

1) Zero pricing entails not charging for the product e.g. readers pay $1 for a hard copy of the Herald
but can access it for free on www.herald.co.zw. There is also free software which can be
in the form of freeware (copyrighted software given away for free by the author) OR shareware
(delivered free of charge though the owner might require a small fee and does not allow one to
pass it on for free) OR public domain (when a program is not copyrighted and can be used
without restriction.

Why zero pricing?

 When the primary revenue stream is from advertising the company expects greater profits when
it achieves higher levels of customer traffic or activity.To attract traffic they offer the product for
free.
 To generate and encourage trial especially for products that have complicated quality attributes
that cannot be determined without using the product.

 Some digital products are offered for free in exchange for personal information which is more
valuable as it can be used to target consumers in other fields or can be sold to other marketers.

 A way to gain market acceptance especially with software often written by hobbyists for personal
growth and satisfaction.

2) Bundling

This refers to offering a combination of products instead of selling products individually e.g.
Microsoft Office is a bundle of Word, Excel, PowerPoint, Outlook, Access and other programs.
Bundling can either be mixed bundling (which gives some room for choice) or pure bundling (take
it or leave it basis).Bundling is useful when:

 Consumer preferences are diverse.

 There is a synergy between the components e.g. individuals can copy and paste
documents between Microsoft Office programmes.

 Even if a large proportion of the population is indifferent about most of the bundles,
components it can be profitable if the total number of components is high e.g. DSTV’s

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 premium bouquet has several channels which most viewers don’t watch but is still
profitable.

 When there is a high degree of variability in the component prices. By presenting

consumers with a bundle, the company can hide the price increases of some
components by decreasing the prices of others.

 When complementary bundles are provided, the company may be in a position to

impose a surcharge for making the bundle available.

Differential pricing

The basis of this strategy is to charge different customers different prices. In

economic terms it is price discrimination. It can be in the form of:

 Providing discounts on the basis of purchase history to reward loyal customers or to entice first
time buyers.
 Identity based or personalised pricing (charging each individual a different price) on the basis of
the offer given or income levels. It however can cause controversy and negative publicity if
customers find out they are charged much higher prices.

Subscription

This is when a buyer promises to buy access to content over a specific period of
time e.g. internet access over a year or pay TV over a year. On the internet,
subscription pricing can be:

 All content available to paid subscribers only e.g. www.emeraldinsight.com

 Some content is free while premium content is available to subscribers only e.g. www.espn.com

 All content is free upon registration e.g. www.newyorktimes.com

 All content is free and no registration is required e.g. www.cnn.com

 Users are rewarded for browsing e.g. www.cbs.sportsline.com

Subscription reduces the seller’s demand uncertainty over time. A paid up subscription means
assured demand for the period. Many publishers offer price discounts for this reduced
uncertainty. It also reduces administrative costs of tracking transactions. Subscriptions can
increase consumer usage, leading to higher advertising and sponsorship rates.

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 Site licensing

This pricing practice is often used with institutional buyers. Typically a large
company or university pays a flat fee so that everyone in the institution or
some subset of individuals can use a software programme or gain access to an
online database e.g. a journal site like Emerald Insight is subscribed by
universities. Licensing has the following benefits for the software seller:

 It places the burden of enforcing the license and checking for software piracy on the consumer.
 It is a simple pricing model and is easy to enforce.

 It encourages new users to try a software package thus stimulating more usage.

 It reduces maintenance costs by standardizing the programme features.

Distribution of digital products

1. Digital products can be distributed as either product or service

Digital products like software can be delivered in a box or can be a service downloadable
from the internet as with antivirus products. The important distinction is that consumers do
not pay for the product that comes on a CD but pay a recurring service fee.

Customers benefit with just in time functionality. If a new feature is designed, the customer
has immediate access. They also enjoy a seamless upgrade process which can be done
remotely ‘while you sleep’. Customers get to spread out costs over time thus improving
levels of access. From a company’s perspective, moving to a service distribution system is
advantageous since costs associated with the upgrade process are reduced if not eliminated.
The company no longer pays to produce CD’s and manuals and by using bundling strategies
can create a more profitable pricing structure. The challenge for the company is on changing
mindsets regarding appreciating a service instead of a tangible product, once off payments
and seamless upgrades

2. Versioning

This involves creating a menu of products and charging different prices for each version.
Digital products can be versioned as:

 No banner ads

Some users simply hate banner ads and are prepared to pay fora version without
advertisements.

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  Delay

This is designed for those information products with a value tied to timelines e.g.
get stock price quotes in real time at a higher price or thirty minutes later at a
reduced price OR an online version of a paper or magazine appearing after some
delay to allow sales of the print version.

 User interface i.e. charging more for a sophisticated user interface.

 Image resolution e.g. a small low quality image might be available for free while a
small fee is charged for a better resolution image.

 Features .A stripped down version is available for a low price but if the user wants
to upgrade to the next level he or she is charged a very high price.

 Speed of access i.e. consumers get low access for free or a high access speed for a
small fee.

Versioning can face problems in the case of:

 A higher version can be easily changed into a lower priced version leading to public
outrage or public relations problems.
 Arbitrage e.g. a user who has obtained the high end product for a high price can
easily make multiple copies and sell them to others. Alternatively a low end user
can make the product available to high end users.

CUSTOMER RELATIONSHIP MANAGEMENT(CRM)

CRM is an approach to building and sustaining long term business with

customers. The application of technology to achieve CRM is a key element of e
business. A study by Riechfield and Schefter(2000) shows that acquiring online
customers is so expensive(20 to 30 % higher than for traditional businesses)
that start up companies may remain unprofitable for at least 2 or 3 years. The
research also shows that by retaining 5% more customers online, companies
can boost their profits by 25% to 95%.They say “if you can keep customers
loyal, their profitability accelerates faster than in traditional businesses. It costs
you less and less to service them”. CRM, therefore consists of three phases:

 Customer acquisition
 Customer retention

 Customer extension

1) Customer acquisition

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 This entails techniques used to gain qualified leads that result in sales from new
customers. Customer acquisition starts with properly qualifying a customer
profile that details a customer’s product interests, demographic or role in the
buying process. Essentially, marketing communications both online and offline
can be used in attracting customers. Offline techniques include print adverts,
public relations and word of mouth. Online techniques include search engine
optimization, link building, viral marketing and banner advertising.

2) Customer retention

It aims to retain customers of the organization (repeat customers) and to keep

customers using online channels (repeat visits).To retain customers it is
important to analyse drivers of satisfaction amongst e customers since
satisfaction drives loyalty and loyalty drives profitability. Such a relationship can
be illustrated as bellow.

LOYALTY
Evangelist

Zone of
affectio
n

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 Zone of indifference

Zone of affection
Zone of
defectio
n

Terrorist SATISFACTION

Marketers should then drive customers up the curve towards the zone of
affection. It is worth noting that the majority of customers are not in that zone
and to achieve retention marketers must understand why customers defect or
are indifferent. Drivers of loyalty include order fulfillment, product
performance and post sale service and support.

Customer retention can also be achieved by:

 Personalization (the delivery of individualized content through web pages or email).

 Mass customization (delivering customized content to groups of users through web pages or e
mail.

 Online community (customer interaction delivered via email groups, web based discussion
forums or chat rooms)

Most importantly retention is assured by excelling in e commerce service

quality. This can be assessed by the following dimensions of the service quality
model (SERVQUAL)

1. Tangibles (this dimension is influenced by the ease of use and visual appeal based on the
structural and graphic design of the site).such issues as the quality of the content, download
speeds, updates, coupons and incentives are tangibles expected by customers.
2. Reliability (refers to the availability of the website i.e. how easy it is to connect to he website as
a user)

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3. Responsiveness (refers to the feedback customers get as well as the time it takes for a page
request to be delivered to the user’s browser as a page impression.)

4. Assurance (refers to the quality of response and level of privacy and security of customer
information).

5. Empathy (can be achieved online by way of personalized facilities on a website as well as the
response to customer feedback by way of interactive tools).

Customer Extension

Customer extension aims at increasing the lifetime value of the customer to a

company by encouraging cross sales and other forms of repeat purchases. It is
essentially the deepening of relationship with customers through increased
interaction and product transaction.

CRM Applications

The aim of CRM is to provide an interface between the customer and the
employee that replaces or facilitates direct interaction. The ultimate aim of
CRM systems is to enable contact regardless of the communications channel
that the customer wants to use. Integration of such a system is essential to give
visibility of the customer information to everyone in the organization and to
provide excellent customer support.

E BUSINESS IMPLEMENTATION

Change Management

It is the process of dealing with process, technical; staff and culture change
within an organization. The following aspects have to be considered in
managing a change process:

 Schedule (what are the suitable stages for introducing change?)

 Budget (how much will it cost?)

 Resources needed(types of resources needed, sources of resources and subsequent

responsibilities)

 Organizational structures (do we need to revise the organizational structure?)

 Managing the human impact of e business change(what is the best way to introduce large scale
e business change to employees)

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 Technologies to support e business change (the role of knowledge management ,groupware and
intranets explored)

 Risk management (implications of e business led change)

Perspectives on e business change

The following levers of change need to be assessed to maximize the benefits of

e business:

 Market and business models

 Business processes

 Organizational structure and culture

 Technology infrastructure

To achieve these different aspects of change a series of success factors is

required including:

 Management buy in and ownership

 Effective project management

 Attraction and retention of the right staff to achieve change

 Employee ownership of change.

Scale of change

The extent and scale of changes varies in intentions, involvement and risks
involved. Three approaches can be identified:

a) Business Process Re engineering(BPR)

It is the fundamental rethinking and radical redesign of business processes to achieve dramatic
improvements in critical, contemporary measures of performance such as cost, quality, service
and speed. It has the highest risk of failure.

b) Business Process Improvement(BPI)

It involves optimizing existing processes typically coupled with enhancements in information

technology.

c) Business Process Automation(BPA)

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 It involves automating existing manual ways of working through information technology.

Planning change

The project of implementing e business changes requires project management

skills. As a result the following aspects:

a) Estimation (identifying the activities involved in the project i.e. work breakdown structure
(WBS)).
b) Resource allocation.

c) Scheduling or planning (the amount of time for each task can be determined by the
availability and skills of the people assigned to the tasks. It can be monitored by comparing
effort time (expected time for completion of a task) and elapsed time (actual time taken).

d) Monitoring and controlling ( this ensures that the project is working according to plan and
taking corrective action in case of deviations)

Managing the human dimension of change

Adoption of any e business change depends on whether the change has any
positive influences and whether the people involved buy into it. It is therefore
essential to obtain both management and staff commitment. To management
commitment is key to any change can be influenced :

 The degree to which the leaders can break from previous ways of working.
 The significance and comprehensiveness of change.

 The extent to which the head of the organization is actively involved with the change process.

It is the job of the manager in charge of e business to lobby top management to

adopt to the changes. In trying to achieve staff commitment change is never
smooth. The change involved in introducing a new system needs to be
managed such that staff motivation and productivity are not affected. If the
rationale behind the change is not explained then all the classic symptoms of
resistance will be apparent. The transition in adoption of technologies may
involve the following stages:

 Shock
 Denial

 Emotional turmoil(fear, anger, guilt, grief)

 Acceptance(letting go)

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 New ideas and strategies

 Search for meaning

 Integration

In some cases, outright hostility to change on the form of sabotage to the

system is not uncommon and in some instances users can project blame onto
the system and will exaggerate claims of major faults. A major problem is
avoidance of the system whereby workers work around the system to continue
with their previous ways of working.

Lewin and Schein suggested a model for achieving organizational change

involving three stages:

a) Unfreeze the present situation by creating a climate of change by education, training and
motivation of future participants.
b) Quickly move from the present situation by quickly developing and implementing the new
system.

c) Refreeze by making the system an accepted part of the way the organization works.

To achieve the unfreeze stages; different staff can be identified for different roles by the project
manager:

 System sponsors. (Senior managers or board members who have bought into the e business
initiative. They will try to fire up staff with their enthusiasm and stress why the system is
important to the business and its workers).
 System owners.(managers in the organization of key processes such as the procurement
manager or the marketing manager who will use the e business system to achieve benefits in
their area).

 System users.(staff in different areas of the business who are actively involved in making the
process happen e.g. a buyer or a brand manager)

Three special types of system users should be influenced. These are:

a) Stakeholders.(these are staff who are respected by co workers and who can act as a
source of enthusiasm for the system)
b) Legitimisers. (They protect the norms and values of the system. They are experienced in
their job and are regarded as experts by fellow workers. They may be initially resistant
to change and therefore need to be influenced early)

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 c) Opinion leaders (these are people whom others watch to see whether they accept new
ideas and change. They usually have little formal power but are regarded as good ideas
people who are receptive to change and also need to be involved early in the project)

Knowledge management

Knowledge is the application of experience to problem solving. It entails the

techniques and tools of disseminating knowledge within an organization.
Knowledge is either explicit (readily expressed and recorded within information
systems) or tacit (intuitive and not recorded but part of the human
mind).Knowledge management looks to turn tacit knowledge into explicit
knowledge.objectives for knowledge management include:

 Improving profit or growing revenue.

 Retaining key talent or expertise

 Increasing customer retention or satisfaction

 Defending market share against new entrants

 Gaining faster time to market new products

 Penetrating new marketing segments

 Developing new products or services

According to Sveiby(2000), based on an analysis of 40 companies implementing

knowledge management, there are 3 general types of knowledge management
initiatives.

a) External structure initiative i.e. to gain knowledge from customers or offer customers additional
knowledge.
b) Internal structure initiative i.e. such as building a knowledge sharing culture, creating new
revenues from existing knowledge then storing and spreading it.

c) Competence initiatives such as creating careers based on knowledge management and creating a
microenvironment for knowledge transfer and learning.

In implementing knowledge management, it is important to incentivize sharing

of knowledge amongst staff. Saunders (2000) suggests an approach termed
connection in knowledge management. This involves:

 Connection to the explicit knowledge via an intranet with a portal with search tools and a
directory of information.

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 Connection of people to people with specialized knowledge through an expertise locator (a type
of phone directory with people in different expertise categories also accessed via search tools)

 Connection to communities of practices which can help sharing and learning between people

 Connection of knowledge and people with processes, products and services.

Alternative tools for managing knowledge include:

o Intranets and document databases or knowledge bases as Lotus Notes or Domino.

o Communications techniques such as chat, discussion groups and video conferencing.

o Electronic document management systems such as Interleaf Publish.

o Expert systems

In summary, the stages for achieving knowledge management are:

a) Capturing knowledge
b) Interpreting knowledge

c) Deploying knowledge through intranets or knowledge portals.

d) Staff training

e) Measurement of the impact of knowledge management programmes.

Risk Management

It entails evaluating potential risks, developing strategies to reduce risks and

learning about future risks. The process involves:

a) Identifying risks including their probabilities and impacts.

b) Identifying possible solutions to these risks.

c) Implementing solutions targeting the highest impact and most likely risk areas.

d) Monitoring the risks to learn for future risk assessment.

Organisational risk exposure factors include:

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 Growth risks such as pressures for performance, rate of expansion and inexperience of key
employees.
 Culture risks i.e. rewards for entrepreneurial risk taking. Executive resistance to bad news and
lack of action and levels of internal competition.

 Information management risks like transaction complexity and velocity, gaps in diagnostic
performance measures (poor reporting capabilities) and the degree of decentralized decision
making.

Security design

Security concerns are a major barrier to e business adoption. It is therefore

important for security to ensure safety of funds from fraud as well as ensuring
privacy. Security risks from a customer or merchant perspective include:

 Transaction or credit card details stolen in transit.

 Customer credit card details stolen from merchant’s server

 Merchant or customer are not who they claim to be.

Principles of secure systems

Generally a transaction involving transfer of funds involves players such as:

 The purchaser(consumers buying the goods)

 The merchant(the retailers)

 The certification authority( a body that issues digital certificates that confirm the identity of
purchases and merchants)

 Banks

 Electronic token issues(a virtual bank issues digital currency)

The basic requirements for security systems from these different parties
include:

a) Authentication (confirming if the parties to the transaction are who they claim to be)
b) Privacy and confidentiality

c) Integrity (checks that the message sent is complete and that it is not corrupted)

d) Non repudiability (ensures sender cannot deny sending message)

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e) Availability (how threats to continuity and performance of the system be eliminated)

Implementation and maintenance

Testing

The testing of new e business technologies or systems aims to check for non
conformance with business or user requirements and to identify errors or bugs.
The testing process should be conducted in a structured way using a test
specification which can include developer tests, feasibility testing, system
testing, usability testing, acceptance tests and content or copy testing.

Changeover

Migration from a previous information system to a new system is a critical

component in e business. When introducing a new e business system there are
two basic choices i.e.

 Test the system in a controlled environment before going live thus minimizing the risk of adverse
publicity due to problems with the site.

 The company can also conduct a soft launch whereby a preliminary site launch is done with
limited promotion to provide initial feedback and testing of an e business site.

Methods of effecting a changeover include:

a) Immediate cutover i.e. straight from the old system to a new system on a single date. Its main
advantage is that it is rapid and incurs the lowest cost in the short term. It however means high
costs and major disruptions if there are serious errors with the system.
b) Parallel running i.e. old system and new system run side by side for a period of time. This has risk
that immediate cutover but is slower and incurs higher costs than immediate cutover.

c) Phased implementation i.e. involves different modules of the system introduced sequentially. It is
a good compromise between parallel running and immediate cutover but it is technically difficult
to achieve due to interdependencies between modules.

d) Pilot system involves a trial implementation before widespread deployment. It is essential for
international or national rollouts but it has to be used with other methods in the process.

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 Content management and maintenance

The moment an e business system is live it require updates to the content and
services. The frequency of fixing problems depends on the category and
seriousness of the problem (fault taxonomy Jorgenson 1995).Changes on the
content are mostly in response to customer demands or competitor
innovations.

According to Chaffey (2000) the following tasks can be followed in maintaining

content change.

 Write. (involving writing the copy and designing layout of copy and associated images)
 Review. (An independent review of the copy is necessary to check for errors before the
document is published. It can be reviewed for corporate image, marketing copy, branding and
legality.)

 Correct. Whatever is recommended in the review.

 Publish (to a test environment). (putting the corrected copy on a web page for further checking
from within the company)

 Test. For technical issues such as whether the page loads successfully on different browsers.

 Publish (to a live environment) i.e. to the main website and to customer.

Ways of protecting internet communication

Encryption

A process of transforming plain text or data into cipher (to make it unreadable) text

The transformation of a cipher text is accomplished by using a key por a cipher code

Key

Any method of transforming a plain text into a cipher text

a software application that acts as filters between a company’s private network and the
internet , they monitor and validate all incoming and outgoing comm., every massage
that is sent or received from the network is processed by the firewall software which

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determines if the massage meets security guidelines established by the business or
organization,

Operating system controls

Typically have built user and password requirement that provides a level of
authentication

Application software including Microsoft office contain security management features

that can be used on networks and internet to manage access to data files

Antivirus software

Easiest and list expensive way to prevent threats to systems intergrity that is the
installation of antivirus software

Antivirus identify and eradicate the most common type of viruses as they enter a
computer as well as destroy those already on the hard drive

It is however not enough to simply install the software at once as it requires constant
updating . since new viruses are developed daily routine updates are needed to prevent
new threats from being loaded

Mobile commerce

Buying and selling of goods and services thru wireless services

Defined as “the use of handheld wireless devices to communicate ,interact and transact
via high speed connection to the internet”

According to the definition given by CARASEWICH ET AL 2002 in their paper issues in

mobile commerce “mobile e-commerce (m-commerce) is defined as all activities to on
commercial transaction conducted thru communication networks that interface with
wireless or mobile devices”

It is also used to describe the growing trend of using networks that interact with
wireless devices e.g. laptops personal digital assistance mobile phones etc to initiate or
complete online e commerce transactions

As content delivery over wireless devices becomes faster, more secure, and scalable
some believe that m-commerce will surpass wireless ecommerce as a method of choice
for digital commerce transactions

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 CHARACTERISTICS OF M-COMMERCE

According to Ding, Iijima and Ho who concurred that m-commerce has 5 basic and
important characteristics

1. Ubiquity
2. Convenient

3. Accessibility

4. Personalization

5. Localization

UBIQUITY

 provides easier information access in real time

 communication is independent of the user’s location

CONVENIENT

 devises that store data are always at hand

 it is getting easier and easier to use

ACCESSIBILITY

 the user can be contacted anywhere anytime

 the choice to limit accessibility to particular persons or times is available

PERSONALIZATION

 preparation of infor specific for individuals

 creating services that customize the end user experience

localization

 matching the services to their location

other to add on the sixth characteristic of m-commerce which is security

depending on the specific end user device, the device offers a certain level of
inherent security

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 DISADVANTAGES OF M-COMMERCE

 Mobile devices offer limited capabilities such as limited display. Between mobile
devices, these capabilities vary so much that end user services will need to be
customized accordingly.
 The heterogeneity of device, operating systems, and network technology is a challenge
for uniform end user platform.

 Mobile devices are more prone to theft and destruction.

 Communication over the air interface between mobile devices and networks introduces
additional security threats.

M-commerce business models

They are built from a basic model and other models when different
technologies where in place, in the 2G models

1. Basic model,
2. Network operator centric model

3. Service and content abbreviator

4. Service and content provider centric model

THE BASIC MODEL S

M
E
O
R
B
V
I
I
L
C
E
E

N
E
C
T
O
W
N
O
T
R
A
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T

P S P
R U R
O B O
V S V
I C I
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R B R
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/

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In the basic model the third party services and application providers are
separated from the MNO. in this model it leads to more business
opportunities from the market point of view as well as more available
services from the customers point of view

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 THE NETWORK OPERATOR CENTRIC MODEL

The use subscribes to a mobile network operator which is responsible

for the provision of telecommunication services and delivers services
and applications offered by third party players. The network operator is
responsible for charging and billing. After that the operator then
apportions the revenue among all players involved.

THE SERVICE AND CONTENT ABBREVIATOR CENTRIC MODEL

It is responsible for providing users with its own services and application
in addition to other services and applications offered by third party
independent services and application providers. The service or content
abbreviator comes into a direct arrangement /agreement with a
network provider for delivering content and services through the
network provider’s infrastructure

…………..diagram…………….

Based on the subscription the service and content abbreviator defines

the prices, collects the charging information and charges the user based
on both the transport part and services and content part

THE SERVICE AND CONTENT PROVIDER CENTRIC MODEL

In this model instead of the service and content abbreviator, the service
and content providers come directly into agreement with network
providers for delivery their applications and services through the latter’s
telecommunications infrastructure. The service and content providers
define the pricing and payment policies and charge the user based on
their usage of transport and service and content

………diagram…….

Industries affected by the use of m-commerce

Financial services, Information services

The management of e-business infrastructure

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 I. Technology infrastructure or hardware
II. Applications infrastructure

Systems software- the key issue is standardization throughout the organization

standardization means the reduced numbers of contacts for support and maintenance

Standardization can reduce prices through multi user licences. These choices occur for the
client, server and network

Transport/network

The decisions on network infrastructure are based on the internal company network and its
link to the public internet, the main management decision is whether the internal or external
network management would performed by the company or outsourced from a third party

Storage

Storage can be managed internally or externally this is not an either or choice e.g. intranet and
extranet can be managed internally while internet storage like the company website is
commonly managed externally. Decision also need to be made involving third party service
providers of technology infrastructure such as internet service providers

Internet service providers

These are companies that provide home or business users with a connection to access the
internet and the hosting of websites e.g. ecoweb, tel-one. ISP PROVIDE A LINK TO THE WWW
and they also host the websites and provide a link from a company’s web services to enable
other companies and consumers to get access to a co-operate’s website . the primary issue in
managiging isps is to ensure the satisfactory service quality which is determined by

I. Speed
II. Availability

III. Security

Speed is determined by the speed of the server and the speed of the network connection to
the server. Often the speed of the server has determined by the number of users. To ensure
reliability companies can pay ISPs for services of the dedicated server that only contains
contents and applications for a single company or through using several servers to spread
demand load

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Availability refers to the amount of time the website i.e. available to consumers a company
offering 24 hr service to ensure that its website is available 100% because lack of availability
translates to lost revenue. To ensure the best speed and availability a company should check
the service level agreement when outsourcing website hosting services. Service level
agreements should define confirmed standards of availability and performance it should also
include notification to the customer detailing when the web service becomes unavailable the
reasons why and it should also estimate when services would be restored

Security

Security ensures of confidentiality and lowers exposure to risk therefore measures should be
taken to ensure that security is at its maximum

Ethical & Legal Issues

i. Privacy and Trust

The privacy of consumers on the internet covers three related issues

a) collecting and holding personal information

Since it is difficult to identify the end user in order to charge them often it is necessary to
invade the users’ privacy by planting cookies (they are small text files stored on an end
user’s computer to enable websites to identify them) or electronic tags on the end user’s
computer.

Cookies have a bad reputation since it is believed that they could be used to capture
credit card information and other personal information in most cases customers will not
be aware that their privacy is being invaded or intruded upon

d) Customers may be quiet happy to give personal information to a company that they
have a relationship with. They are likely to be less than happy if this company sells
the information to another and their subsequently bombarded with promotional
material. The other risk is of hackers accessing information held about a customer on
severs within a company
e) Sending unsolicited e-mails to consumers, spamming the sending of unsolicited mails
or massages to a large number of internet users. it is inclusive and irritating to most
internet users. For ethical reasons, e-marketers can adopt and opt in or opt out
principle. Opt in is when a customer proactively agrees to receive server information
opt out is

Legal factors

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 Some of the main e-business related loyal issues on which companies
seek specific legal advice are

 Domain name registration and trade marking of internet brand

 Advertising standards most countries have specific laws to avoid misrepresentation to the
consumer and uncompetitive practices

 Defamation and libel. Information published on a site critical of another company’s people or products
could represent libel.

 Copyright and intellectual property rights permission must be sort for information or images sourced
elsewhere in the same way as for any other media

 Data protection and privacy law a website must protect data held on consumers according to the local
law

 Taxation on business, the global nature of e-business raises questions as to where revenue is taxable as
well as the appropriate tax jurisdiction . current international tax are such that the right to tax is divided
between the country where the enterprise derive its revenue and that to where it is

Many people use cash because

 it is portable, requires no authentification or it is easy to authentificate

 Cash provides instant purchasing power

 The use of cash is free in that neither the merchant nor consumer pays a transaction fee for using
it

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 Other forms of payment requires significant use of other third parties , paper trail, however cash is
limited to smaller transactions, it moved in large amounts it can be easily stolen

Funds are transferred directly via a signed draftor cheque from a consumer’s chequing account to a
merchant they can be used for both small and large transactions

 They are not anonymous and require third part interfererence for them to work
 They are Risk for merchants, they can be forged more easily than cash hence authentification
is required.

 Cheques also present risk in that they can be cancelled before they cleared or may bounce
back, if there is not enough money in the account

 Money order cashier cheques and travellers cheques are insured cheques that address some of
the limitations of the

o They reduce security risk of a personal cheque by requiring an upfront paymentto a

trusted third party.

 Credit card

 A credit card system represents an account that extends credit to customers i.e
permitting customers to purchase items while deferring payment

 They offer customers a line of credit and the ability to make small or large purchases
instantly they are a widely accepted form of payment and they reduce the risk of theft
and associated with carrying cash and also decrease customer convenience

STORE VA LUE SY STE M

 Accunts created by depositing funds in an account and from which funds are paid out or
withdrawn as needed. They are similar to some extent to chequeing transfere which
also store funds but the store value system does not involve writing a cheque. Eg smart
cards and debt cards
 Debt cards look like credit cards but rather than providing access to a line of credit they
instant immediately debt the account debt cards are dependant on funds being
available in a customer’s bank account

 Accumulating balance ac that accumulate expenditure and to which the customer makes
periodic payments are accumulating balance payment system e.g. utility bills like internet

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 bils which accumulate balances mutually over a month and then paid in full at the end of the
period

DIGITAL GOODS

 Digital goods is a general term used to described any goods that are stored delivered
and used in electronically. They are shipped electronically to the consumer through e-
mail or downloaded from websites.
 They are also called e-goods

METHODS OF PRICING DIGITAL GOODS

 Zero pricing – it entails not charging



 it entails not charging for the product

REASONS FOR ZERO PRICING

 When the primary revenue stream from advertising , the company expects greater profits
when it achieves high levels of traffic or activity
 To generate and to encourage trial especially for products that have complicated attributes
that cannot be determined without using the product

BUNDLING

INSTEAD OF SELLING THE PRODUCT INDIVIDUALL EG MICROSOT OFFICE

IS A BUNDLE

DIFFERENTIAL PRICING
The base of this is to charge different customers different prices for the same
products it can be in the form of discounts on the bases of purchase to
promote customers Or to intise first time buyers

It can also be identity based or personalized pricing on the bases of income

levels, it can cause controversy , however and negative publicity if customers
find out that they are being charged higher prices

SUBSCRIPTION

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 WHEN A BUYER PROMISES TO BUY ACCESS TO CONTENT OVER A SPECIFIC PERIOD OVER A YEAR E.G.
INTERNET ACCESS OVER A YEAR SUBSCRIPTION REDUCES THE SELLERS DEMAND UNCERTAINITY OVER
TIME.

 A PAID UP SUBSCRIPTION MEANS ASSURED DEMAND FOR THE PERIOD

SITE LICENSING
THIS PRICING SCHEME IS OFTEN USED BY INSTITUTIONAL OR ORGANIZATIONAL
BUYERS TYPICALLY A LARGE COMPANY PAYS A FLAT FEE SO THAT EVERYONE IN
THE INSTITUTION OR SOME SUBSET OF INDIVIDUALS CAN USE A SOFTWARE
PROGRAM OR GAIN ACCESS TO THE ONLINE DATA BASE

TECHNIQUES USED BY COMPANIES TO IMPLEMENT CHANGE

 IMIDIATE CUT OVER (BIGBANG) IT INVOLVES MOVING DIRECTLY FRO AN ORIGINAL SYSTEM TO THE
NEW SYSTEM AT A PARTICULAR POINT IN TIME ON A DESIGNATED DATE, ON THAT DATE THE OLD
SYSTEM IS SWITCHED OFF AND ALL STAFF MOVE TO USE THE NEW SYSTEM

THIS IS A HIGH RISK STRATEGY SINCE THERE IS NO CALL BACK CONDITIONS WHICH SERIOUS
CHALLENGES ARE ENCOUNTERED

HOWEVER THIS SYSTEM IS ADOPTED BY MANY LARGE COMPANIES SINCE IT MAYBE IN PRACTICAL AND
COSTLY TO RUN DIFFERENCE SYSTEMS IN PARALLEL. BEFORE CUT OVER OCCURS THE COMPANY WILL
DESIGN THE SYSTEM CAREFULLY AND CONDUCT EXTENSIVE TESTING TO MAKE SURE THAT IT IS
RELIABLE AND THEREFORE REDUCE THE RISK OF FAILURE.

 PARALLEL RUNNING

 THIS IS THE CHANGE OVER WHICH INVOLVES THE OLD AND THE NEW SYSTEM OPERATING
TOGETHER AT THE SAME TIME UNTIL THE COMPANY IS CERTAIN THAT THE NEW SYSTEM WORKS

 PARALLEL RUNNING PREVENTS A LOWER RISK THAN IMMEDIATE CUTOVER METHOD SINGE IF THE
NEW SYSTEM FAILS THE COMPANY CAN REVERSE THE OLD SYSTEM AND BUSINESS OPERATIONS
WILL NOT BE AFFECTED

 PARALLEL RUNNING INVOLVES USING THE MANUAL AND PAPER BASED SYSTEM AS BACKUP IN CASE
THE NEW SYSTEM FAILS. THE COST OF RUNNING TWO SYSTEMS IS HIGH NOT ONLY IN TERMS OF
MAINTAINING TWO SETS OF SOFTWARE AND POSSIBLY BUT ALSO IN THE COARSE OF HUMAN
OPERATERS

 ADDITIONAL OVERTIME STAFF

 PARRAREL RUNNING MAYBE ONLY APPROPRIATE WAY THE OLD & NEW SYSTEM PERFORMSIMILAR
FUNCTION & USE SIMILAR SOFTWARE & HARDWARE COMBINATIONS

3 PHASED IMPLIMENTATION

 THIS INVOLVES INTRODUCING DIFFERENT MODULES OF THE NEW SYSTEM GRADUALLY

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  IT INVOLVES DELIVERING THE PART OF THE NEW SYSTEM AT DIFFERENT TIMES.

 THESE MODULES WILL NOT BECOME FUNCTIONAL SIMULTANEOUSLY BUT RATHER IN SEQUENCE.

 EACH MODULE CAN BE INTRODUCED AS EITHER IMMEDIATE CUTOVER OR IN PARALLEL, THIS GIVES
STAFF THE OPPORTUNITY TO LEARN ABOUT THE NEW SYSTEM MORE GRADUALLY, AND PROBLEMS
ENCOUNTERED IN EACH MODULE CAN BE FIXED BEFORE MOVING ON TO THE NEXT MODULE

 THE PILOT SYSTEM

 THE NEW SYSTEM IS TRIED IN A MORE LIMITED AREA BEFORE IT IS IMPLEMENTED EXTENSIVELY
ACROSS THE BUSINESS. THIS INCLUDE DEPLOYING THE SYSTEM IN ONE OPERATING REGION OF THE
COMPANY POSSIBLY A SINGLE COUNTRY OR A LIMITED NUMBER OF OFFICES.

 THIS SYSTEM IS COMMON IN MULTINATIONAL COMPANIES WITH SEVERAL OFFICES. SUCH A PILOT
SYSTEM USUALLY ACTS AS A TRIAL BEFORE MORE EXTENSIVE DEPLOYMENT OF THE SYSTEM

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