Unit 4

E-Commerce: Requirements
and Architecture

Structure
4.1 Introduction
Objectives
4.2 Requirements of E-Commerce
4.3 Functions of E-Commerce
4.4 E-Commerce Framework Architecture
4.5 I-way or Information Highway
4.6 Summary
4.7 Glossary
4.8 Terminal Questions
4.9 Answers
References

4.1 Introduction
In the previous units, you have learned about the origin and evolution of
e-commerce. You now know that e-commerce which began in the early 1970s,
grew rapidly alongside the advances in telecommunication and information
technology. Thus, today we find that there is hardly any form of business that
has not adopted e-commerce. Having made this statement, let us now look into
the various requirements that one should possess to venture into e-commerce.
This unit gives you the details of the essential components that are required
for setting up an e-commerce. The unit also highlights the various components
of the Information Highway or the I-Way that routes information and services
between the business and its clients.
Objectives
After studying this unit, you should be able to:
Describe the various requirements of e-commerce
State the various prerequisites of e-commerce
Describe the various functions of e-commerce
Recall and describe the architecture of e-commerce framework

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Assess the role of I-Way in e-commerce transactions

Identify the various components that make up the I-Way infrastructure

4.2 Requirements of E-Commerce

The following are the requirements of e-commerce:
Improved customer service
Origin of new business opportunities
Enhanced speed and accuracy of a product
Product cost saving
Improved customer services: These days, consumers want better
service. Therefore, e-commerce services offer a means of communication
between the consumer and the company. The consumer can even make
online complaints to a company. Most websites provide a different e-mail
id where complaints can be mailed. Customer-oriented organizations take
complaints very seriously. Not only are the grievances given a good
hearing. Action is taken almost immediately. It is possible for satisfied as
well as dissatisfied customers to express their opinions and also make
suggestions. The bonding between the company and the customer
strengthens.
Origin of new business opportunity: Bigger network between
consumers and companies can lead to new business opportunities.
For example, a business may find infinite possibilities to develop and
increase its consumer base. A company offering gardening-related
products may also think of venturing into delivery of bouquets, cakes and
gifts on request, for a price. Companies offering toys for toddlers could
also come up with a forum where parents can interact with paediatricians
or child psychologists to clarify doubts.
Enhanced speed and accuracy of a product: The usage of e-commerce
services reduces human errors and other problems like a duplication of
proceedings. This perfection in speed and accuracy, plus easy access to
documents and information affect the increase in production. A customer
care executive may often forget to enter necessary details of a transaction.
She may have to call up and bother the customer repeatedly to get some
information. In case of online interaction, the customer will fill in his own

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details. Reconfirmation may not be necessary at all. Wastage of time and

money can be checked.
Product cost saving: Despite the fact that you can reduce the cost of a
product by the use of e-commerce services, it also reduces the errors
and the cost of sending the information to partners.

4.2.1 Prerequisites of E-Commerce Procedure

More and more people are getting into e-commerce. This is natural because
there are hardly any barriers to entry. Online businesses can be run from home.
You do not really need degrees and certificates to get started. However, you do
need to give the venture some serious thought. A lot of work would be required,
at least initially.
In order to conduct e-commerce, the main things you will require include
the following:
1. A commercial website like www.futurebazaar.com
2. A product or service you want to sell through the respective websites
3. Shopping carts or purchase order forms
4. Current credit card account that will be accepted on e-payment
5. An online payment gateway, if you plan to process credit cards in real
time, over the Internet
6. A secure socket layer (SSL) to secure the gateway

Self-Assessment Questions
1. State whether the statements are true or false.
(a) E-commerce services offer a means of communication between the
consumer and the company.
(b) The usage of e-commerce services can reduce errors.
2. Fill in the blanks with the appropriate word.
(a) Besides reducing the number of human errors, e-commerce can
also lead to _______.
(b) While beginning an e-commerce activity a_____is required to secure
the gateway.

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4.3 Functions of E-Commerce

E-commerce applications enable various business functions and transactions
to be done electronically. Some of the functions are discussed as follows:
E-Advertising: Advertising of information is currently the largest
commercial activity on the Web. For example:
(i) A companys website contains its profile and all the information on
its products and services.
(ii) It displays banners that can be clicked.
(iii) E-commerce portals like www.yahoo.com.
(iv) Newsgroups also provide publicity.
E-Catalogues: Web pages that offer information on products or services
that a company offers are available on an e-catalogue. An e-catalogue
provides information on:
(i) Packaging
(ii) Product attributes and characteristics
(iii) Availability
(iv) Payment modes
(v) Cost, etc.
E-Publishing: This sector was among the first few to spend on this novel
technology especially on the Internet. E-publishing has led to several
successful e-commerce endeavours, such as an independent publication
through the Internet and electronic newspapers.
Online publications offer services, such as:
(i) Online reading/browsing
(ii) Online search
(iii) Customized information services
E-Banking: This facility offers remote banking electronically. Electronic
banking is also referred to as online banking, cyber banking, home banking
or virtual banking. It enables Web users to make online purchases and
pay for the same using an online-banking facility. It is cost-effective, simple
and available 24 hours. Customers have access to several services, such
as:

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(i) Bill payment

(ii) Electronic cheque writing
(iii) Record keeping
(iv) Tracking of bank account, credit cards

4.3.1 Shopping Services

Shopping services are of many types. A few of them are discussed as follows:
1. Services provided by independent businesses who send their
representatives to the stores to do comparison shopping for specific
products. A shopping service is hired on contract to compare competitive
prices or prices for the same item in competitive stores, depending on the
request, and the needs of the client.
2. Shopping services that are offered to cable television subscribers where
consumers can buy products (usually at a discount) that are displayed on
a special shopping services channel.
3. Shopping services are offered to subscribers of personal information
services for home computer use. For example, a company provides online
information to subscribers. Among the many services offered by this
company is one called products guides, from which consumers can shop
and select purchases right from their own computer terminals.

4.3.2 Information Services

Information service is also known as information systems. For several
organizations, information systems or information services are accountable for
IT and Management Information Systems. Different types of decisions are
supported by information systems at various levels of the organizational
hierarchy. Key information systems include information management software
and structural databases. They include the following:
Enterprise Collaboration System (ECS)
Transaction Process System (TPS)
Decision Support System (DSS)
Executive Support System (ESS)
Management Information System (MIS)

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Activity 1
Search on the Net for a model e-catalogue and prepare a list of the
information it carries. Suggest some other information you think it should
carry to be more effective.

Self-Assessment Questions
3. State whether the following statements are true or false.
(a) E-advertising is currently the largest commercial activity on the Web.
(b) Online banking is also referred to as cyber banking.
4. Fill in the blanks with the appropriate words.
(a) Web pages that offer information on products or services that a
company offers are available on an ________.
(b) Key information systems include information management software
and________.

4.4 E-Commerce Framework Architecture

E-commerce applications are built on the existing infrastructure for online
communication, network and connection software which frames the nascent
information superhighway.
E-Commerce Applications
E-commerce can be applied in:
1. Supply chain management
2. Online banking
3. Procurement and purchasing
4. Online marketing and advertisement
5. Home shopping
Figure 4.1 shows several e-commerce applications, including interorganizational
and customer-oriented examples. Without each of the building blocks in the
infrastructure, none of these uses will be possible.

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Common business services infrastructure/security/

authentication/electronic payment

The messaging and information distribution

infrastructure (EDI, e-mail)

Multimedia content and network publishing

infrastructure

The information superhighway infrastructure

(Telecommunication, cable TV, wireless network,
the internet)

Public Policy Legal and

Privacy Issues
(Cyber Law, IT Act 2000)

Technical Standard for

E-Documents, Multimedia and
Network Protocols

Figure 4.1 E-Commerce Applications

4.4.1 ClientServer Architecture in E-Commerce

The clientserver model is followed by the applications of e-commerce. The
model lets the client work together with the server with the help of a request
reply sequence governed by message passing. The server handles application
tasks, storage and security and gives scalability to increase clients.
Processed Result
Application Logic

Application Logic

Presentation Logic

Multimedia Content
Result
Server

Client

Figure 4.2 ClientServer Architecture

4.4.2 Building Blocks of E-Commerce

Enterprise applications, insights, functions and IT infrastructure form the building
blocks of e-commerce.
Enterprise application software refers to software that facilitates the
performance of business functions such as scheduling (of production/
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manufacturing processes, etc.), accounting, management of customer

databases/information, management of bank account/dealings, etc. It is common
to see such software hosted on servers. It is capable of serving multiple
enterprises concurrently, over a computer network. This gives enterprise software
an edge over the commonly used single-user applications which can only perform
on a users PC. These single-user applications can only serve one user at a
time. Enterprise software provides solutions to problems that concern the
enterprise as a whole and not individual departments. Only large enterprises
can afford to build such enterprise software. This software becomes the pillar of
the IT systems on which the entire enterprise functions and communicates.
Among other things, there are enterprise applications for various functions such
as:
Finance
HRM
Customer relationship management or CRM
Supply chain management or SCM
Product life cycle or PLC management
Enterprise commerce management
Enterprise resource planning or ERP
All these processes, such as SCM, CRM and ERP need to be integrated
properly for e-commerce to be successful. The IT infrastructure required for the
same may include the following:
Application servers
Web services
Wireless technology
Database software
XML
Storage systems
Server platform
Business intelligence would also be required for Web analysis, for
managing knowledge and content and for mining data, if required, depending
on the nature of e-commerce.
For todays growing e-commercees, it is very important to consider the
issues of security of information and the reliability and scalability of the systems
as well. This is taken care of by integration.
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The two indispensable pillars that support all e-commerce applications

and infrastructure are as follows:
(i) Public policy to govern universal access to privacy and information
pricing.
(ii) User interface and transport in the interest of compatibilities across
the entire network to dictate the nature of information publishing.
Information should be accessible by any device, which the consumer
chooses, and should be supported by any type of operating system.

Self-Assessment Questions
5. State whether the following statements are true or false.
(a) Enterprise application software can serve only one or two enterprises
simultaneously.
(b) All enterprises, irrespective of their size or volume of business can
support enterprise software.
6. Fill in the blanks with the appropriate word.
(a) The clientserver model lets the client work with the server with the
help of a requestreply sequence by______.
(b) _____provides solutions to problems that concern the enterprise as
a whole and not individual departments.

4.5 I-way or Information Highway

Any e-commerce application will need the I-Way infrastructure in the same
manner as any normal business would require the interstate highway network
to carry goods from one place to the other.
I-Way is a network of interconnected data highways of several types:
Cable TV wires
Telephone wires
Cellular and satellite
Radio-based wireless
I-Way is an interactive two-way high-capacity method of transporting
information and services. I-Way is applicable in large volume e-commerce
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applications as it provides traffic-free telecommunication service. I-Way helps

organizations, firms and companies in upgrading their network infrastructure.
It also helps companies and organizations in recognizing the following:
1. Their infrastructure
2. Ways to change their business
3. Transaction strategies (marketing, advertising, etc.)
4. Ways to sell their products and services
5. Ways to change their relationship with the customer

4.5.1 Market Forces behind I-Way

The market forces behind I-way are divided into two categories:
1. Requirement of market participants
2. Strategic alliances and I-way infrastructure
1. Requirement of market participants
According to market-participant demands, I-Way is influenced by the user and
the organization. The I-way superhighway is based on the behaviour of the
consumer and the producer because they have multiple roles.
The following list plays an important role in the I-Way structure. The multiple
roles of the users that help in structuring the market are:
Numbers of users who use online services
Consumers who pay for information and products
Persons who provide services
Others include third-party brokers and intermediaries
Until recently, the marketplace was divided into the communication,
entertainment and information sectors. The boundaries between communication,
entertainment and information are not absolute. For example, video is a part of
information, entertainment and communication (via videoconferencing).
Television sets and PCs are now able to interact or exchange any sort of data.
2. Strategic Alliances and I-Way Infrastructure
The success of I-Way is based on market strategies. These strategies are built
according to needs that are based on market structure, i.e., communication,
entertainment and information.

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The resources required for building these three segments (communication,

entertainment and information) of I-Way are driving companies to make
maximum use of existing facilities. This is done through alliances to control
costs and create test markets.
Two aspects of these alliances are as follows:
(i) They cut across the industry line, a diversity suggesting that a number
of companies will perform different roles within alliances, for example,
telephone or cable companies deliver information whereas computer
hardware and software firms provide access hardware and
applications to use the data information.
(ii) Many alliances are international, signalling that I-Way will be global
from the start.

4.5.2 Components of I-Way

There are three major components that make up the I-Way infrastructure:
(i) Network Access Equipment or Component
(ii) Local Access Equipment or Component
(iii) Global Information Distribution
(i) Network access equipment or component
To access any network, specific equipment is required at the customers end
and this enables the consumer to access the network. It consists of hardware,
such as routers, switches and access devices, such as computers and set-top
boxes. Software platforms are browsers and operating systems.
(ii) Local access component
Local access component is the link between businesses, homes, schools and
organizations to the main communication point also referred to as the last mile.
Last mile connection represents a tremendous investment that cannot be easily
replaced or overlooked in any network strategy.
It provides the following types of connections:
(a) Telephone-based last mile
(b) Cable-based last mile
(c) Electrical-based last mile
(d) Wireless-based last mile

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(iii) Global access component

Nowadays, e-commerce activities are not limited to any country; and with the
world becoming a global village, a proper network infrastructure is required to
connect people and businesses across the world. These types of networks
include:
(a) Long distance networks (via coaxial cable or fibre optic cable)
(b) Satellite
I-Way Component

Network
Access
Component

Local
Access
Component

Global
Access
Component

Telephone-based

Hubs

Long distance network

Routers

Cable-based

Set-top boxes

Wireless-based

Satellite

Computer-based

Figure 4.3

Online Information Service

4.5.3 Public Policy Issues Shaping the I-Way

Governments are expected to play a crucial role in defining I-Way. However,
there are some major issues as follows:
(i) Cost
Who will pay for constructing the I-Way? Some favour the interstate-highway
model with government construction, ownership and maintenance. Others
support the current, regulated, telephone-system model.

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(ii) Subsidies
Subsidies include tax breaks, government, business or other forms of
encouragement. These raise an open question. What will these tax subsidies
actually subsidize?
Who will pay to extend the networks to non-profit institutions such as
schools, hospitals and the police and fire departments?
(iii) Regulation
Some enterprises argue that if a highway is built with private funds, there should
be no government regulation. The only regulation that should exist should be to
provide public access, privacy and reasonable tools.
Yet, there are still many issues that remain undecided:
What are the rules?
Who writes them?
Who enforces them?
(iv) Universal Access
Some economists argue that the market should decide who gets access to the
I-Way. Others insist that the highway operations must provide universal access,
however, at a reasonable cost.
If the I-Way is built and run by private interests without significant
government investment, these institutions may not be able to afford connecting
to the network.
Issues that may arise are:
How are firms encouraged to provide universal access?
How universal is universal? Is it just nationwide or international access?
Internet-Component of I-Way Network Infrastructure
The Internet is a well-known component of I-Way network infrastructure.
Its general infrastructure targets not only one e-commerce application,
such as video-on-demand or home shopping, but a wide range of
computer-based services, such as e-mail, EDI, information retrieval
and videoconferencing, online banking, game, music, movie and
chatting.
The Internet is a unique combination of postal services, telephone
systems, research libraries, super markets and talk show centres that
enable people to share and purchase information.
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The concept of the Internet is based on networking. The basic principle is

to share information between or among computers.
The Internet is the network of various small networks.
The Internet includes standalone computers, local area networks or LANs,
metropolitan area networks or MANs and wide area networks or WANs.
The Internet can be differentiated by the language spoken. It is divided
into two parts:
(a) Academic Internet
(b) Business Internet
(a) Academic Internet
The characteristics of academic Internet are:
(i) All the host computers speak the same language (TCP/IP).
(ii) It consists of various government networks, regional networks, campus
networks and some international networks.
(iii) It includes (a) NSFNET-US group of research IP network. (b) EBONEEuropean group of IP network.
(b) Business Internet
(i) The computer can speak a variety of languages other than TCP/IP. These
include:
(a) ISO/OSI x.25- based packet switching networks
(b) SNA-based BITNET
(c) Other languages for networks run by commercials
(ii) The business Internet consists of online services, value-added networks
and other e-mail only services.
The academic and business networks can talk to each other through
language (protocols) transitions called gateways, stationed at the network border.
More recently, business Internet providers have begun to adopt TCP/IP
as the standard protocol on their own networks, thus allowing smooth linkage
with the academic Internet.
I-Way includes both the academic and business Internet categories and
extends the boundaries further to encapsulate non-IP based networks such as
telecom carriers network, cable TV, mobile and cellular networks.

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Internet

Academic

Business

Figure 4.4 Part of the Internet

Activity 2
Research on the Internet and write about the role of the Government of
India in enabling academic Internet.

Self-Assessment Questions
7. State whether the statements are true or false.
(a) I-way is a non-interactive one-way method of transporting information
and services.
(b) I-way is based on the behaviour of the consumer and the producer
because they have multiple roles.
8. Fill in the blanks with the appropriate word.
(a) _____is a network of interconnected data highways of several types.
(b) The three major components of I-Way are the network access
equipment, local access equipment and_____.

4.6 Summary
Let us recapitulate the important concepts discussed in this unit:
Improved customer service, new business opportunities, enhanced speed
and accuracy of product and product cost saving are the requirements of
e-commerce.
E-advertising, e-publishing, e-banking and e-catalogues are some of the
important functions of e-commerce. Besides these, e-commerce also
enables shopping services and information services.

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An existing infrastructure for online communication, network and

connection software forms the foundation upon which an e-commerce
set-up can be built.
Information Highway or I-Way enables the two-way communication
between business and client in business transactions.

4.7 Glossary
E-advertising: Advertising information on the Web
E-banking: Enables users to make online purchases and make payments
using an online banking facility
Enterprise application software: Refers to software that facilitates the
performance of business functions such as scheduling, accounting,
management of customer databases and so on
I-Way: A network of interconnected data highways of various types
Network access equipment: Specific equipment required at the
customers end that enables access to a network
Software: The Program, etc. used to operate a computer
Browsing/Browse: To look for information on computer, especially on
the Internet

4.8 Terminal Questions

1. List the various prerequisites of e-commerce
2. Explain the various functions of e-commerce. Also, add a note on the
types of shopping service and information services.
3. Formulate a model of the architecture of e-commerce framework. What
are the building blocks of e-commerce?
4. Identify the role of I-Way in e-commerce transactions.
5. Prepare the list of the various market forces that operate in the I-Way.
6. What are the various components of I-Way.

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4.9 Answers
Answers to Self-Assessment Questions
1. (a) True; (b) True
2. (a) innovative business; (b) socket layer
3. (a) True; (b) True;
4. (a) e-catalogue; (b) structural databases
5. (a) False; (b) False
6. (a) message passing; (b) Enterprise software
7. (a) False; (b) True
8. (a) I-Way; (b) global information distribution

Answers to Terminal Questions

1. Refer to Section 4.2.1
2. Refer to Section 4.3
3. Refer to Section 4.4
4. Refer to Section 4.5
5. Refer to Section 4.5.1
6. Refer to Section 4.5.2

References
1. Turban, Efraim, Jae Kuy Lee and Michael Chung. Electronic Commerce:
A Managerial Perspective. Prentice-Hall, 1999.
2. Whitley, David. E-Commerce: Strategy, Technologies and Applications.
Tata McGraw-Hill, 1998.

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