Understanding E-Business

E-Business Origins

Long before the Internet became popular, there were still forms of electronic business transactions taking place.  One of the first technologies implemented was Electronic Funds Transfer (EFT) which has been practiced by the banking industry since the 1970's. 

Electronic Funds Transfer and Electronic Data Interchange

Electronic Funds Transfer (EFT) is a system of transferring money from one bank account directly to another without any paper money changing hands. One of the most widely-used EFT programs is Direct Deposit, in which payroll is deposited straight into an employee's bank account.   EFT refers to any transfer of funds initiated through an electronic terminal, including credit card, ATM, and point-of-sale (POS) transactions. It is used for both credit card transactions,  payroll payments, debit card transactions and other automated transactions such as mortgage payments and other bill payment transactions.

Transactions are processed by the bank through the Automated Clearing House (ACH) network, which is a secure transfer system that connects all U.S. financial institutions. For payments, funds are transferred electronically from one bank account to the receiving institution in usually less than a day after the scheduled payment date.

I actually worked for a subsidiary of Empire of America called Metroteller and we were one of the first EFT networks in the country to offer shared ATM and Point-of-Sale services to banking customers and financial institutions.  At that time, all ATMs and Point-of-Sale devices were connected to our mainframe with telephone lines.  For us to implement and new product or service enhancement, it required extensive programming and the ordering and installation of telephone lines at any new locations where a device would be located.  Remarkably, credit and debit cards were not electronically authorized until the late 1970's.  Retailers used manual

procedures and the telephone to call for a credit card authorization.   EFT really changed the way retailers and banks worked together and this provided tremendous benefits to consumers in the speed and accuracy of transaction processing.   This was particularly true for the front-end retail systems of large retail entities.   Customers were able to make their purchases using a debit card issued by their bank for their checking account and the retailer would receive an online authorization ensuring that they would be paid.  This brought huge efficiencies to retailers and ultimately significantly reduced their front-end operations costs.   Customers moved through the check-out process more quickly and retailers were handling less cash and checks which were very expensive to handle.  I actually was responsible for product development and strategic planning and sales and marketing of these products to retailers and financial institutions.  This was incredibly exciting for me as I traveled extensively around the country meeting with pioneers in this industry.  For consumers to have access to their cash through an ATM 24 hours a day was a huge customer service improvement as they were no longer limited to obtaining cash only when the bank was open.  As banks shifted people from their branches for these routine transactions   to ATMs, they too derived a financial benefit.  Bank branches were able to reduce the number of transactions being processed and could focus on specialized services.  

The growing popularity of EFT for online bill payment is paving the way for a paperless universe where checks, stamps, envelopes, and paper bills are obsolete. The benefits of EFT include reduced administrative costs, increased efficiency, simplified bookkeeping, and greater security. However, the number of companies who send and receive bills through the Internet is still relatively small.

Electronic Data Interchange is another form of E Business that has been taking place for years.   EDI is a standardized method for transferring data between different computer systems or

computer networks for business transactions. It is commonly used for e-commerce purposes, such as sending orders to warehouses, tracking shipments, and creating invoices. Because many online retailers sell products that they do not physically stock, it is important to have an easy way to transfer order information to the locations where the goods are stored. EDI makes this possible.  

E-Business and E-Commerce

E-business is the term used to describe using the internet to operate a business. E-business represents only a fraction of worldwide business, but is one of the fastest growing sectors and provides entrepreneurs with huge opportunities to enter the market. In a historical sense, the internet is a relatively new way to do business, with the growth of e-business taking off in the 1990's. The internet provides consumers with an increasing amount of ways to interact with businesses and has made buying and selling more competitive worldwide. 

E-commerce refers to ordering, buying, selling and paying for products and services using the internet. E-commerce is a subset of e-business and can make up the entirety of the business or be used alongside existing, traditional business models. E-commerce uses the internet to market, sell and conduct transactions with customers without face to face contact between the buyer and seller. Many e-businesses now conduct all of their operations online and have no physical store that customers can visit.  As the internet continues to grow in popularity,  more and more entrepreneurs are expected to take advantage of this delivery channel to operate their businesses.  The internet and the emergence of e-business has provided entrepreneurs with many new advantages and opportunities. The internet has created a business environment in which time and distance are less important, people have access to more information to help them make decisions and consumers have better access to a broader range of products and services. I have participated in e-commerce myself and have recently sold a domain name to a company located in Germany using Pay-pal.  It was very exciting. 

E-Business Models 

There are five distinct E-Business models.   They are:   

• Business-to-Consumer (B2C)
• Consumer-to-Consumer (C2C)
• Consumer-to-Business (C2B)
• Business-to-Businesss (B2B) 
• Business-to-Government (B2G)

There are many components to effectively implementing an E-Business and they vary by the type of business segment you are participating in.  An E-Business requires storefront software, payment authorization and processing, and fulfillment.    Although practiced only since 1990, E-Business activity nationally and internationally is growing steadily.  Shown below is the online business-to-consumer activity from 2009 with projections to 2014.   This is US online retail sales only.  You can imagine the explosive growth of E-Business across all of the E-Business segments.  

Internet Technologies and Security

Networking Basics

With regard to internet technologies, there are three basic network configurations used to connect businesses and people to the internet.   The network configuration that is used is predominantly determined by the physical location of the network. 

Local Area Networks (LAN) 

A Local Area Network(LAN) provides networking capability to a group of computers in proximity to each other such as in an office building, a school, or a home. A LAN is useful for sharing resources like files, printers, games or other applications.  A LAN is typically used for applications in a small area such as an office building, university, or even a residential home. Most mid to large-sized businesses today use LANs, which make it easy for employees to share information.  LANs are either ethernet-based or wireless.   Computers connected to the LAN are called nodes.  A hub connects multiple nodes on a LAN network.   LANs are designed as peer-to-peer or client/server configurations depending upon the size of the network. 

  Peer-to-peer configurations are typically used for a home or small office whereas a client/server configuration is used in applications where there are multiple devices connecting to the network (PC's, printers) and that network has one or more servers.  

 A client/server LAN uses a network operating system to manage the main functions of the network such as data storage, email services, remote communications for employees out of the office, centralized storage of files, and management of web-based services.  

Metropolitan Area Networks (MAN)

A Metropolitan Area Network(MAN) is a computer network which connects computers in multiple

locations across a city or multiple university, government, or research locations across a region.  The primary difference between a Metropolitan Area Network versus a LAN is that it covers a large area or group of buildings and is not generally owned by a single organization.  The communication links and equipment are generally owned by a consortium of users or by a network service provider that sells the service to the users. 

Wide Area Networks (WAN)

A Wide Area Network (WAN) is long-distance network that covers a wide geographic area, such as a state or country.  WANs service large regional areas or an entire nation. Large enterprises have their own private WANs to link remote offices.  A Wide Area Network can be comprised of multiple connected LANs.  Unlike LANs, WANs are not limited to a single location. Many wide area networks span long distances via telephone lines, fiber-optic cables, or satellite links. They can also be composed of smaller LANs that are interconnected. The Internet could be described as the largest WAN in the world. 

Chapter 5 - Getting More out of the Internet - Portals

Web portals are websites that act as gateways to information contained on the internet.  Some of the better known portals are referred to as search engines although they offer extensive access to information way beyond search.   Portals are categorized as consumer, vertical, hyperlocal, industry or corporate depending upon the application.  Shown below is a simple diagram of how a consumer portal maybe structured:

This diagram shows the various content options that exist within a typical consumer portal.

Popular consumer portals are AOL, iGoogle, MSN and Yahoo!.  These web portals typically offer access to a large offering of information such as local, regional, and national news, stock quotes, research information, reference tools, search tools, sports scores, shopping as well as email services and much more.   Shown below is the Yahoo! portal: 

Yahoo! Portal -  Notice the Content Links

While there are many web portals designed for general use by consumers, there are also portals that are created for use by people with specialized interests.  These are referred to as vertical portals.  These can include interests as varied as gardening, social issues, children's issues, parenting, almost anything you can think of in which people would share a common interest.  While these portals may provide content links, the content is specific to the subject of the portal. 

  

There are also hyperlocal portals which are specific to a region or geographic location.  These provide content about a given area and are generally written by people living and working within that area who possess knowledge about the region. For example, a chamber of commerce from a region might develop a portal highlighting the unique characteristics of their city with links to hotels and entertainment venues.    Industry portals are used by individuals seeking content on a specific industry.    There are also corporate or business portals where access is only permitted to those with login credentials issued and managed by the company. Portals of this type allow employees to access corporate systems to access documents and other data. Corporate portals may also be used to enable customers to browse, search, and make purchases from the company.

There are also government portals. As with the corporate portals, authorized users must have login credentials, security clearance, and other proprietary access codes. This helps to ensure that employees can only gain access to data that is considered within their area of responsibility and  prevents the use of proprietary data by unauthorized individuals. 

The growing reliance on the Internet and consumer demand for easy access to information on the Internet will cause Web portals to continue to grow and evolve over time.  

Soundcloud Assignment

I loved this assignment.  Soundcloud is a blast to work with.   Although it is used predominantly by musicians, I think Soundcloud could be a very useful tool for business applications as well.   I plan to continue to use this application when the course is over and integrate sounds and interviews into my not-for-profit blog and website.

Social Networking - April 13 Assignment

A social networking service is an online service or site that focuses on building a network among people who share similar interests, activities, backgrounds or real life connections.   Social networking has become an essential way for people to connect with family, friends, and others with whom they share common interests.   Social networking sites are not only for people to connect with their community of friends, they are also used for business applications.  Facebook offers businesses an opportunity to market their products using Facebook Pages which functions differently than the social component of Facebook. LinkedIn is a social network that is used extensively by business people to connect with and build business connections.  Social networking sites allow users to share ideas, activities, and events within their individual networks.   

When engaging in social networking activities, each user sets up a profile that reveals information about themselves and their interests.   Facebook and similar social networking sites like MySpace allow for pictures to be posted.    

To effectively use social networking sites for business applications it’s important to manage your network of friends and connections.  It’s best to establish connections with people you know or with people who share your professional interests.  Identifying these people is particularly useful in seeking out conversations and connections of interest to you. One way to start is to actively follow content that is relevant to your career or personal life.  Following blogs is a great way to accomplish this.  Bloggers usually have a social networking presence as well so you can follow them on Facebook, Twitter, LinkedIn, etc.   You could also write a blog yourself and gain your own network of followers!  In many cases, social networking sites are used to drive the individual to your website or blog.  

Twitter can be a very useful tool as well.   A good way to find people and join a conversation is to search for keywords related to the topics in which you are interested. For example, if you work in social media, the best place to start is with the keyword "social media".  This requires some trial and error to see which keywords get you the results you want. You can also reply to people’s tweets and give your feedback or comments.

LinkedIn groups are good for career-related discussions.  Members share articles and start online conversations with each other. Do a quick group search on LinkedIn, and you will likely find a long list of groups within your field.  If the group is open (vs. invite-only), take a look at the discussions and members to get a feel for the content and makeup of the group and see if it’s a group that you would like to join.

Social networking provides a powerful tool for communicating and gaining access to individuals in your area of interest.  Used effectively, social networking can be a powerful tool in your professional arsenal. 

Email Marketing - April 13 Assignment

With the continued use of the Internet as a marketing tool, email marketing is a way for businesses to use the power of the Internet to market their products directly to their customers.   Email marketing is a form of direct marketing and is simply the practice of sending out email messages to obtain and retain customers. The benefits to using this technology are clear.   Email provides a low-cost delivery channel that is much less expensive than many other forms of marketing.   Email is easy to use and allows all types of businesses and not-for-profit entities to deliver their message quickly and efficiently.  In addition, it is easy to track and monitor results of an email marketing campaign.  Email allows you to stay in touch with customers which can lead to repeat sales and also allows customers to give honest feedback since they don't have to share their feelings directly. According to Prestige Marketing Inc., consumers who make purchases through email spend 138% more than those who do not receive email offers.   93% of online consumers interact with brands through email more than any other marketing method.  70 million consumers check email on mobile devices.   It's clear the opportunity that email marketing offers. 

   

Although email marketing provides many benefits to companies it can have a negative impact on your business if not managed properly. Companies that use email marketing should follow "best practices" such as only sending email to customers who "opt in" versus "opting out".  Companies should cultivate their own email list rather than buying one, and should be careful not to send too many email solicitations since customers can become irritated if they receive too many emails from you and "opt out".  Also, companies must always avoid spamming which is the sending of unsolicited emails. Spamming can result in the suspension of your email account or the closing down of your website. In essence, you should not send a business email to anyone without their permission. The following link provides an excellent graphic from Prestige Marketing Inc. that outlines best practices for an email marketing campaign. I found this graphic on a blog that I receive from Social Media Today.  Please take the time to click on the link and then click on the graphic so you can see the entire chart.  I think it does an excellent job of explaining email marketing.  http://socialmediatoday.com/800321/email-marketing-best-practices

It is also very important that the email subject line have impact.  The subject line is the most prominent part of an email.  The subject line can determine whether or not your email will be opened and read.  Write a meaningful subject line and make sure there are no misspellings or typographical errors which will make you look sloppy.  

Communicating Online - Email Clients, Servers, and Protocols - April 13 Assignment

Chapter Four introduced the concepts of communicating online. One method of online communications is electronic mail or email.  Email is a system in which you can compose a message using your laptop, computer or smartphone and that message is sent through various networks to reach the intended email recipient.  The advantages to email over regular mail are clear.  Email is fast, low-cost, convenient, and easily managed. Further, email is accessible through any device that is configured to receive email such as your laptop, computer, or smartphone. 

There are several components to an email system.  Each email recipient must have their own unique address on a server.  This is called a user ID.  The user ID is comprised of a unique identifier for a person.  Most often, it is the recipients name but sometimes people will create a user ID that they creatively generate.  In addition to the user ID, there is a host name.  The host is the server where the email service and recipient's account resides.  The user ID and the host name is separated by the @ symbol.  The final piece of an individual's email address is the top-level domain.  A top-level domain identifies something about the website such as its purpose, the organization that owns it or the geographical area where it originates.  The top-level domain follows the host name and is preceded by the period in the email address.  The person who generates the email enters the email address when they create the message just as a person would address an envelope to identify their intended mail recipient.  

There are several steps in the creation and delivery of an email message.  In order to use email, users must have access to an email client which is a program that is used to create, send, and receive email.  Email clients are installed on your computer.  Next are email servers and protocols.  The outgoing mail server determines the best route to deliver the email message to the recipient. The Internet Service Provider's (ISP) incoming mail server receives the message and places it in the recipients inbox.  

A protocol is a standard method used at each end of a communication channel in order to properly transmit information.  The email client and email server exchange information with each other using an established protocol.  The email message is transmitted over the internet using the packet-switching and TCP/IP technology that govern all communications over the internet.   The recipients email server and email client exchange information with each other using an established protocol.   There are a variety of protocols that can be used. They are as follows: 

IMAP (Internet Message Access Protocol) is a standard protocol for accessing email from your local server. IMAP is a protocol in which email is received and held for you by your ISP's server.  IMAP requires only a small data transfer so this works well even over a slow connection such as a modem.  Only specific email messages requested will be downloaded from the server.  

POP (Post Office Protocol) provides a simple, standardized way for users to access mailboxes and download messages to their computers.  When POP protocol is used, all your email messages will be downloaded from the email server to your laptop or PC.  You can choose to leave copies of your emails on the server as well. The advantage is that once your messages are downloaded, you can terminate the internet connection and read your email without incurring further communication costs. 

The SMTP (Simple Mail Transfer Protocol) is used by the email server to deliver your email to the recipient's email server.  The SMTP protocol can only be used to send emails, not to receive them.  The outgoing SMTP server contacts the Domain Name System (DNS) to identify the host domain name of the email address and determine the best route to send the message.  

The HTTP protocol is not a protocol dedicated to email communications but it can be used for accessing your mailbox.  Also called web-based mail, this protocol can be used to compose or retrieve emails from your account.   Hotmail is an example of using HTTP as an email protocol.  

Shown below is the life-cycle of an email message: 

I like this illustration because it pretty clearly demonstrates in the first section, my understanding of email transactions prior to reading this chapter!   As you can see, it is much more complex that it looks to the email user.