Chapter 1 Business Driven Information Systems
1.1 Information Systems' Role in Business
Functional Organization - each functional area has its own systems and communicates with
every other functional area.
Information Systems Basics
Information Systems (IS) - are computer based tools that people use to work with information
and that support the information and information- processing needs of an organization.
Information Technology (IT) - is the acquisition, processing, storage and dissemination of
vocal, pictorial, textual, and numerical information by a micro electronics based combination of
computing and telecommunications.
Management Information Systems (MIS) - is the function that plans for, develops,
implements, and maintains IT hardware, software, and applications that people use to support
the goals of an organization.
Data, Information, and Knowledge
Data are raw facts that describe the characteristics of an object or event. Characteristics for a
sales event could include the date, item number, item description, quantity ordered, customer
name, and shipping details.
Information is data converted into meaningful and useful context. Information from sales events
could include best-selling item, worst-selling item, best customer, and worst customer
Information becomes knowledge when information can be acted upon. In this sense,
knowledge is "actionable information". Information systems can enable an organization to
increase efficiency in manufacturing, retain key customers, seek out new sources of supply, and
introduce effective financial management.
Key Resources - people, processes, and information systems. If one of these fails, they all fail.
They are all interconnected.
Culture influences the way people use information (their information behavior) and reflects the
importance that company leaders attribute to using information in achieving success or avoiding
Information - Functional Culture: Employees use information as a means of exercising
influence or power over others.
Information - Sharing Culture: Employees across departments trust each other to use
information ( especially about problems and failures) to improve performance.
Information - Inquiring Culture: Employees across departments search for information to
better understand the future and align themselves with current trends and new directions. Information - Discovery Culture: Employees across departments are open to new insights
about crisis and radical changes and seek ways to create competitive advantages.
Roles and Responsibilities in Information Systems
Chief Information Officer (CIO) is an executive - level position that involves high-level strategic
planning and management of information systems pertaining to the creation, storage, and use of
information of a business. The CIO is responsible for overseeing all uses of information
systems, and ensuing the strategic alignment of IS with Business goals and objectives.
Chief Technology Officer (CTO) is responsible for ensuring the throughput, speed, accuracy,
availability, and reliability of an organization's information technology.
Chief Security Officer (CSO) is responsible for ensuring the security of information systems,
and developing strategies and technical safeguards against attacks from hackers and viruses.
Chief Privacy Officer (CPO) is responsible for ensuing the ethical and legal use of information
within an organization.
Chief Knowledge Officer (CKO) is responsible for collecting, maintaining and distributing an
Business Priority of CIO
1. Increasing enterprise growth
2. Attracting and retaining new customers
3. Reducing enterprise costs
4. Creating new products and services (innovation)
5. Delivering operational results
Skills required by IT Executives and what they really mean
Skills What It Means
Communication Ability to communicate and influence at all levels
Business A need to understand and focus on how they can help their businesses
Knowledge grow and not just look at cuing costs and being more efficient
The vision that differentiates a CIO from a more traditional IT director-
innovation, creativity, flair, and entrepreneurial spirit
Leadership Good leaders inspire and motivate their teams and drive them to achieve
A practical understanding of technology fundamentals in order to make the
right strategic calls about the deployment and exploitation of IT.
1.2 Business Strategy
Organizations must create a competitive advantage to survive and thrive in the business world. Competitive Advantage is a product or service that an organization's customers place a
greater value on than similar offering from a competitor. Unfortunately, competitive advantages
are only temporary as competition usually finds a way to duplicate and therefore,
organizations must develop new strategies.
When an organization is the first to market with a competitive advantage, it gains a first mover
First-Mover Advantage occurs when an organization can significantly impact its market share
by being first to market with a competitive advantage.
As organizations develop their competitive advantages, they must pay close attention to their
competition through environmental scanning.
Environmental Scanning is the acquisition and analysis of events and trends in their
environment external to an organization.
Organizations use three common tools to analyze and develop competitive advantages.
1) Five Forces Model
2) Three Generic Strategies
3) Value Chain Analysis
The Five Forces Model
is a useful tool to aid organizations facing the challenging decision of entering an new industry
or industry segment. It helps determine the relative attractiveness of an industry and includes:
1) Buyer Power
2) Supplier Power
3) Threat of substitute products or services
4) Threat of new entrants
5) Rivalry among existing competitors
Buyer Power is high when buyers have many choices of whom to by from and low when their
choices are few. There are two situations in the supply chain where organizations need to be
concerned about buyer power.
Supplier Power is high when buyers have few choices to buy from and low when they have
many choices. There are two situations in the supply chain where organizations need to be
concerned about supplier power.
Threat of substitute Products or Services is high when there are many alternatives to a
product or service and low when there are few alternatives from which to choose. If there are
two many competitors in the market, organizations can create a competitive by switching
costs. Switching Costs are costs that can make customers reluctant to switch to another
Threat of New Entrants is high when it is easy for new competitors to enter a market and low
when there are significant entry barriers to entering a market. Rivalry Among Existing Competitors is high when competition is fierce in a market and low
when competition is more complacent.
The Three Generic Strategies - Creating A Business Focus
An organization can follow Porter's three generic strategies when entering a new market
1) Broad Cost Leadership
2) Broad Differentiation
3) Focused Strategy
Broad Strategies reach a large audience;
Focused strategies target a niche market. A focused strategy concentrates on either cost
leadership or differentiation.
Porter suggests that an organization is wise to adopt only one of the three generic strategies.
A business process is a standardized set of activities that accomplish a specific task, such as
processing a customer's order. An organization creates value by performing a series of activities
that Porter identified as the value chain. The Value Chain approach views an organization as
a series of processes, each of which adds value to the product or service for each customer.
Business-Driven Information Systems and Business Strategy
The Three Generic Strategies are broad competitive approaches that organizations fall
under. Knowing which approach you are following can help make informed decisions about how
the company should compete with other firms.
Value Chain Analysis is a systematic approach organizations use to assess and improve the
value of their business activities. Knowing what value each activity offers a company can help
an organization decide how to change or improve those activities and become more
This is meant by Business-Driven Information Systems. These are implemented to support
a company's competitive business strategy.
Chapter 2 Decision Making and Business…
2.1 Decision Making and Information Systems
Primary Reasons for Growth of Decision-Making Information Systems 1. People need to analyze large amounts of information - improvements and
innovations in technology have resulted in a dramatic increase in the alternatives people
need to consider when making a decision
2. People must make decisions quickly - time is valuable and people do not have
enough of it to go through all information manually
3. People must apply sophisticated analysis techniques, such as modelling and
forecasting to make good decisions - information systems reduce the time required to
perform these analysis techniques
4. People must protect the corporate asset of organizational information - information
systems offer security to ensure confidential information is safe
An organization is similar to a pyramid with three different levels; each level requires different
information and decisions to address challenges.
Operational (bottom of the pyramid)
Employees develop, control, and maintain core business activities required to run day-to-day
operations. These decisions are structured decisions, which are made frequently, repetitive,
and they affect short term business strategies.
Managerial (middle of the pyramid)
Employees are continuously evaluating company operations to ensure the organization is
capable of identifying, adapting, and create change for company success. Managerial decisions
cover short and medium range plans, schedules, budgets, policies, procedures and business
objectives. These types of decisions are considered semi-structured decisions and they
occur in situations in which a few established processes help evaluate potential solutions but
not lead to a definite recommendation.
Strategic (top of the pyramid)
Managers develop overall business strategies, goals, and objectives, as part of the company's
strategic plan. They monitor the strategic performance and overall direction in the political,
economic, and business environment. These decisions are unstructured decisions, occurring
when no procedures or rules exist to guide decision makers. They are infrequent, extremely
important, and related to long term business strategy.
Transactional Data and Analytical Information
encompasses all the raw facts contained within a single business process or unit of work;
primary purpose is to support performing daily operational tasks. Organizations use
transactional data when performing operational tasks and routine decisions, such as analysing
daily sales reports to determine how much inventory to carry
encompasses all summarized or aggregated transactional data; primary purpose is to support
performing analysis tasks. Analytical information also includes external information such as that
obtained from outside market and industry sources.
Two different types of processing occur in an organization related to transactional data and
analytical information; online transaction processing and online analytical processing.
Online Transaction Processing (OLTP) is the capturing of transaction and event data using information systems to (1) process the data
according business rules, (2) store the data, (3) update existing data to reflect new data
Online Analytical Processing (OLAP)
is the analysis of summarized or aggregated information retrieved from transaction processing
systems data, and sometimes external information to create business intelligence. Business
intelligence is a broad term describing information that people use to support their analytical and
strategic decision making efforts.
Consolidation, drill-down, and slice-and-dice are a few of the capabilities associated with OLAP.
involves the aggregation of information and features simple roll-ups to complex groupings of
enables users to view details, and details of details, of information.
is the ability to look at information from different perspectives. One slice of info could display all
product sales while another slice could display sales of one particular item.
Measuring Decision Success
Key Performance Indicators (KPIs) are the measures that are tied to business that measure
the organization's success through its operational years. Metrics are the detailed measures
that feed those KPIs. These can include numbers including: gross profit, labour efficiency, cost,
cycle time, etc.
Efficiency and Effective metrics are two primary types of metrics.
Efficiency IS Metrics measure the performance of the information system itself such as
throughput, speed and availability.
Effectiveness IS Metrics measure the impact IS has on business processes including
customer satisfaction, conversation rates, and sell-through increases.
Benchmarking - Baseline Metrics
these are baseline values the system seeks to attain. Benchmarking is a process of
continuously measuring system results, comparing those results to optimal system
performance, identifying steps and procedures to improve system performance.
TPS, DSS, AND EIS
These are three major classes of information systems in organizations that provides the
information to make decisions and measure performance.
TPS (Transaction Processing System)
is the basic business system that serves the operational level (clerks and analysts using a
payroll system or an order-entry system) DSS (Decision Support System)
models data and information to support managers, analysts, etc. for analytical purposes. These
system can be used both on transactional data and analytical information. Three quantitative
models often used by DSS include:
1. Sensitivity Analysis - the study of impact that changes one part of a model to another
2. What-If Analysis - checking the impact of a change in an assumption on the proposed
3. Goal-Seeking Analysis - finding the inputs necessary to achieve a goal. This analysis
set a target for one variable and changes other variables until the target is achieved
EIS (Executive Information System)
supports senior-level in the organization. This system contains information from external
sources as well as from internal data sources and contains very detailed information and is used
for strategic purposes. A common feature of this system is a digital dashboard. These
integrate information from multiple components and tailor the information to individual
simulates human intelligence such as the ability to reason and learn. These systems can learn
or understand from experience, make sense of contradictory information, reason to solve
problems and make decisions. The ultimate goal of this system is to build a system that can
mimic human intelligence.
are computerized advisory programs that imitate the reasoning processes of experts in solving
is a category of artificial intelligence systems that attempts to emulate the way the human brain
works. These networks analyze large quantities of information to establish patterns and
characteristics in situations where the logic or rules are unknown.
is an artificial intelligence system that mimics the evolutionary, survival-of-the fittest process to
generate increasingly better solutions to a problem.
is a special purpose knowledge-based information system that accomplishes specific tasks on
behalf of its users. An example of this is a shopping bot. A shopping bot is software that
searches several retailer web sites and provides a comparison of each retailer's offering,
including price and availability.
2.2 Business Processes
Understanding The Importance of Business Processes
A business process is a standardized set of activities that accomplish a specific task (such as
processing a customer's order) These processes change a set of inputs into a set of outputs
(goods or services). Examining business processes helps an organization determine bottlenecks, eliminate duplicate
activities, combine related activities, etc. To stay competitive, organizations must optimize and
automate their business processes.
Customer-Facing Processes result in a product or service that is received by an
organization's external customer.
Business-Facing Processes are invisible to the external customer but essential to the
effective management of the business and include goal setting, day-to-day planning,
performance feedback, rewards, and resource allocation.
Business Process Improvement
attempts to understand and measure the current process and make performance improvements
Examples of customer-Facing and Business-Facing Processes
Customer Facing Processes:
• order processing
• customer service
• sales process
• customer billing
• order shipping
Business Facing Processes:
• strategic planning
• tactical planning
• budget forecasting
• purchasing raw materials
Steps in Business Process Improvement are as follows:
Document as-is Process-----Establish Measures-----Follow Process-----Measure
Performance-----Identify and Implement Improvements-----Repeat
Business Process Re-Engineering
is the analysis and redesign of workflow within and between enterprises. This thought process
is different than that of business processes. It assumes the current process is out of date, does
not work, and needs to be overhauled and re-done. The basic steps of this thought process is
Set Project Scope-----Study Competition-----Create New Processes-----Implement Solution
Business Process Modelling
is the activity of creating a detailed flow-chart work flow diagram, use case diagram, or process
map showing process inputs, tasks, and activities to determine whether a process is working.
A business model is a graphic description of a process, showing the sequence of tasks that
complete the process from a selected viewpoint. This process usually begins with an AS-IS
Process Model. As-Is Process Model
represents the current state of the operation that has been mapped, without any specific
improvements or changes to existing processes.
The next step is to build a TO-BE Process Model.
To-Be Process Model
shows the results of applying change improvement opportunities to the current (As-Is) process
model. This approach ensures that the process is fully and clearly understood before the details
of a process solution are decided.
(As-Is is what is in place right now and the To-Be is what the business would like it to change
Business Process Management
A key advantage of information systems is their ability to improve business processes. A BPM
integrates all of an organization's processes to make individual processes more efficient. It can
be used to solve a single glitch or to create one unifying system to consolidate a myriad of
Key Reasons for BPM are listed as:
• introduce greater efficiencies/improved productivity
• improve service
• reduce operational costs
• improve organizational agility
• improve process visibility
• meet regulatory compliance
• deal with integration issued
Chapter 3 - The Internet and E-Business
Digital Darwinism: implies that organizations cannot adapt to the new demands laced on them
for surviving in the information age are doomed to extinction.
Disruptive versus Sustaining Technology A disruptive technology is a new way of doing things that initially does not meet the needs of
existing customers. Open new markets and destroys old ones.
A sustaining technology produces an improved product that customers are eager to buy, such
as a faster car or larger hard drive. Provides us with better, faster, and cheaper products in
New Investment (disruptive technology) Existing investment (sustaining technology)
Disruptive technologies typically cut into the low end of the marketplace and eventually evolve
to displace high-end competitors and their reigning technologies.
Internet is a global public network of computer networks that pass information from one to
another using common computer protocols
Protocols are standards that specify the format of data as well as the rules to be followed
Several parties oversee the Internet and set standards:
Internet Engineering Task Force (IETF): The protocol engineering and development arm of the
Internet Architecture Board (IAB): Responsible for defining the overall architecture of the
Internet, providing guidance and broad direction to the IETF.
Internet Engineering Steering Group (IESG): Responsible for technical management of IETF
activities and the Internet standards process.
World Wide Web (www) is a global hyper-text system that uses the Internet as its transport
Hypertext transport protocol (HTTP): is the internet standard that supports the exchange of
information on the WWW.
August 6 1991 First Website built by Tim Berners-Lee
March Andreesen developed a new computer program called the NCSA Mosaic browser.
Digital Divide occurs when those with access to technology have great advantages over those
without access to technology.
Internets impact of information:
• E asy to compile – Searching information on products, prices, customers, suppliers,
and partners is faster and easier when using the internet.
• Increased Richness – Information richness refers to the depth and breadth of
information transferred between customers and businesses. Businesses and customers
can collect and track more detailed information when using the Internet.
• Increased Reach – Information reach refers to the number of people a business can
communicate with, on a global basis. Businesses can share information with numerous
customers all over the world. • Improved content – Provides dynamic relevant content.
Web 2.0 is a set of economic, social and technology trends that collectively form the basis for
the next generation of the Internet – a more mature, distinctive medium characterized by user
participation, openness, and network effects.
Web Mashup is a website or web application that uses content from more than one source to
create a completely new service.
Application programming interface (API) which is a set of routines, protocols, and tools for
buildings software applications.
Mashup editors are What you see is What you get for mashups. They provide visual interface
to build a mashup, often allowing the users to drag and drop data points into a Web application.
Web 3.0 evolution of web usage and interaction among server
Semantic Web is an evolving extension of the World Wide Web in which Web content can be
expressed not only in natural language but also in a format that can be read and used by
software agents, thus permitting them to find, share, and integrate information more easily.
1. Transforming the Web into a database – is the emergence of the data driven Web as
structured data records are published to the Web in formats that are reusable and able
to be queried remotely.
2. An evolutionary path to artificial intelligence – used to describe an evolutionary path for
the Web that leads to artificial intelligence that can reason about the Web in a quasi-
3. The realization of semantic Web and service-oriented architecture – Service Oriented
Architecture is a business driven IS architectural approach that supports integrating a
business as linked, repeatable tasks or services.
4. Evolution towards 3D – Concept of Second Life
Intranet is an internalized portion of the internet, protected from outside access, that allows an
organization to provide access to information and application software to only its employees.
Provides central location where employees can find information.
Extranet is an intranet that is available to strategic allies. Having a common area where
employees, partners, vendors, and customers access information can be a major competitive
advantage for an organization.
Portal is a web site that offers a broad array of resources and services, such as email, online
discussion groups, search engines, and online shopping malls.
Kiosk is a publicly accessible computer system that has been set up to allow interactive
information browsing. Few operating controls. There are 3 common forms of service providers
1. Internet Service Provider (ISP) – is a company that provides individuals and other
companies access to the internet along with additional related services such as website
building. Another form of ISP family is wireless Internet service provider (WISP), an
ISP that allows subscribers to connect to a server at designated hotspots or access
points using a wireless connection. Web hosting, Hard- Disk storage space,
2. Online service provider (OSP) – offers an extensive array of unique services such as its
own version of Web browser. Helps distinguish ISP’s that offer internet access and their
own online content, such as AOL
3. Application service provider (ASP) is a company that offers an organization access over
the Internet to systems and related services that would otherwise have to be located in
personal or organizational computers. Employing the services of an ASP is essentially
outsourcing part of a company’s business logic. Service Level Agreements (SLA)
define the specific responsibilities of the service provider and set the customer
ASP market is growing
3.2 E - Business
E-commerce is the buying and selling of goods and services over the Internet. E-commerce
refers only to online transactions.
Advantages of E-Business
Easy access to real time information is a primary benefit of e-business. Information richness
refers to the depth and breadth of details contained in a piece of textual, graphic, audio, or video
information. Information reach measures the number of people a firm can communicate with
all over the world. Buyers need to make informed purchases.
Operating New Markets. E-Business is perfect for increasing niche-product sales. Mass
customization is the ability of an organization to tailor its products or services to the customers’
specifications. Personalization occurs when a company knows enough about a customer’s
likes and dislikes that it can fashion offers more likely to appeal to the person, say by tailoring its
Web site to individuals or groups based on profile information, demographics, or prior
transactions. Long Tail refers to the tail of the typical sales curve. This strategy demonstrates
how niche products can have viable and profitable business models when selling via e-
Intermediaries are agents, software, or businesses that provide a trading infrastructure to bring
buyers and sellers together. The introduction of e-business brought about disintermediation,
which occurs when a business sells directly to the customer online and cuts out the
In reintermediation, steps are added to the value chain as new players find ways to add value
to the business process. Cybermediation refers to the creation of new kinds of intermediaries that simply could not have
existed before the advent of e-business including comparison- shopping sites.
Improving Effectiveness – Interactivity measures advertising effectiveness by counting visitor
interactions with the target ad, including time spent viewing the ad, number of pages viewed,
and number of repeat visits to the advertisement. Through Clickstream data, they can observe
the exact pattern of a consumer’s navigation through a site.
Marketing via E-business
1. Associate (affiliate) program allows a business to generate commissions or referral
fees when a customer visiting its Web site clicks on a link to another merchant’s Web
2. Banner ad is a box running across a Web site that advertises the products and services
of another business, usually another e-business.
3. Click-through is a count of the number of people who visit one site and click an
advertisement that takes them to the site of the advertiser.
4. Cookie is a small file deposited on a hard drive by a Web site containing information
about customers and their browsing activities.
5. A Pop-up ad is a small Web page containing an advertisement that appears outside of
the current Web site loaded in the browser. A pop –under is a form of a pop –up ad that
users do not see until they close the current Web browser screen.
6. Viral Marketing is a technique that includes Web sites or users to pass on a marketing
message to other Web sites or users, creating exponential growth in the message’s
visibility and effect.
Web site Visit Metrics
Stickiness (visit duration time) The length of time a visitor spends on a Web
Raw visit depth (total Web pages exposure The total number of pages a visitor is
per session) exposed to during a single visit to a Web site
Visit depth (total unique Web pages exposure The total number of unique pages a visitor is
per session) exposed to during a single visit to a Web site
Web Site Visitor Metrics
Unidentified visitor A visitor is an individual who visits a Web site.
An “unidentified visitor” means that no
information about that visitor is available.
Identified Visitor A unique visitor is one who can be
recognized and counted only once within a
given period of time
Identified visitor An ID is available that allows a user to be
tracked across multiple visits to a Web site Web Site Hit Metrics
Hits When visitors reach a web site, their
computer sends a request to the site’s
computer server to begin displaying pages.
Each element of a requested page is
recorded by the Web site’s server log file as a
An e-business model is an approach to conducting electronic business on the Internet. E-
Business transactions take place between two major entities – business and consumers.
Business B2B B2C
Consumer C2B C2C
B2B customers are other businesses while B2C markets to consumers.
Business to Business (B2B) applies to businesses buying from and selling to each other over
the Internet. Online access to data, including expected shipping date, delivery date, and
shipping status, provided either by the seller or a third – party provider is widely supported by
B2B models. Electronics marketplace, or e-marketplace, are interactive business
communities providing a central market where multiple buyers and sellers can engage in e-
Business to Consumer (B2C) applies to any business that sells its products or services to
consumers over the Internet.
E-shop is a version of a retail store where customers can shop at any hour of the day without
leaving their home or office. These online stores sell and support a variety of products and
Types of Businesses:
Brick and mortar business A business that operates in a
physical store without an
Pure – Play (virtual) A business that operates on
business the Internet only without a
physical store. Examples
Click and mortar business A business that operates in a
physical store and on the
Internet. E-Mall consists of a number of e-shops ; it serves as a gateway through which a visitor can
access other e-shops.
Consumer to Business (C2B) applies to any consumer that sells a product or service to a
business over the Internet.
Consumer to Consumer (C2C) applies to sites primarily offering goods and services to assist
consumers interacting with each other over the Internet.
Communities of Interest – People interact with each other on specific topics, such as golfing
and stamp collecting
Communities of relations – People come together to share certain life experieces, such as
cancer patients, senior citizens, and car enthusiasts
Communities of fantasy – people participate in imaginary environments, such as fantasy
football teams and playing one on one with Michael Jordan
Organizational Strategies for E-Business
Primary Business areas taking advantage of e-business include:
2. Financial Services
4. Customer Service
Electronic Auction (e-auction) – Sellers and buyers solicit consecutive bids from each other
and prices are determined dynamically
Forward Auction – An auction that sellers use as a selling channel to many buyers and the
highest bid wins
Reverse Auction – An auction that buyers use to purchase a product or service, selecting the
seller with the lowest bid.
Marketing/ Sales – Direct selling was the earliest type of e-business and has proven to be a
stepping stone to more complex commerce operations.
Financial Services – • Financial cybermediary is an Internet – based company that facilitates payments over
the Internet (Pay Pal)
• Electronic cheque is a mechanism for sending a payment from a chequing or savings
account. There are many implementations of electronic cheques, with the most
prominent being online banking.
• Electronic Bill Presentment and payment (EBPP) is a system that sends bills over the
Internet and provides an easy to use mechanism to pay the bill. Available through local
• Digital Wallet is both software and information – the software provides security for the
transaction and the information includes payment and delivery information.
Types of Online Business Payments
Electronic data interchange (EDI) is a standard format for exchanging business data. One
way an organization can use EDI is through a value- added network. A Value-Added Network
is a private network, provided by a third part, for exchanging information through a high –
Financial EDI (financial electronic data interchange) is a standard electronic process for B2B
market purchase payments.
• Maintenance, repair, and operations (MRO) materials (indirect materials) are
materials necessary for running an organization but do not relate to the company’s
primary business activities.
• E-Procurement is the B2B purchase and sale of supplies and services over the internet.
The goal of many e-procurement applications is to link organizations directly to pre-
approved supplier catalogues and to process the entire purchasing transaction online.
An electronic catalogue presents customers with information about goods and services
offered for sale, bid, or auction on the Internet.
Customer Service - E-Business enables customers to help themselves by combining the
communications capability of a traditional customer response system with the content richness
only the Web can provide – all available and operating 24/7.
Consumer Protection is an organization that wants to dominate by using superior customer
service as a competitive advantage must not only consider how to service its customers, but
also how to protect its customers. Issues: Unsolicited goods and communications, Illegal or
harmful goods, services, and content, Insufficient information about goods or their suppliers,
Invasion of privacy, Cyberfraud.
E-Business Security Methods:
Encryption scrambles information into an alternative form that requires a key or password to
decrypt the information. Encryption is achieved by scrambling letters, replacing letters,
replacing letters with numbers and other ways.
A secure socket layer (SSL) 1. Creates a secure and private connection between a client and server company
2. Encrypts the information
3. Sends the information over the Internet. SSL is identified by a Web site address that
includes an “s” at the end – https
A Secure electronic transaction (SET) is a transmission security method that ensures
transactions are secure and legitimate. SET encrypts information before sending it over the
Internet. However, SET also enables customer authentication for credit card transaction.
E-Business Benefits and Challenges
Highly Accessible Businesses can operate all year at any time
Increased Customer Loyalty Additional channels to contact, respond to,
and access customers helps contribute to
Improved Information Content In the past, customers had to order
catalogues or travel to a physical facility
before they could compare price and product
Increased Convenience E-Business automates and improves many of
the activities that make up a buying
Increased Global Reach Business, both small and large, can reach
Decreased Cost The Cost of conducting business on the
Internet is substantially lower than traditional
forms of business communications.
• Protecting Consumers: Consumers must be protected against unsolicitated goods and
communication, illegal or harmful goods, insufficient information about goods or their
suppliers, invasion of privacy, and cyberfraud.
• Leveraging Existing Systems: Most companies already use information technology to
conduct business in non-internet environments suc