Building E-Commerce Applications and Infrastructure

Building E-Commerce Applications and Infrastructure

Loading
Loading Social Plug-ins...
Language: English
Save to myLibrary Download PDF
Go to Page # Page of 53

Description: This case demonstrates that there is more to building an EC application than choosing a development technique and creating content. Once Campmor initiated its EC application project, it selected an outsourcer to build a custom-made application. Critical to the project was the need to make the site easily navigable by customers so they can easily purchase products.

To achieve this, it was necessary for the company—an early adopter of e-commerce—to obtain the continued cooperation from the external developer of the EC application. This case also demonstrates that developing a good EC application often requires an ongoing relationship with a development partner that offers a diverse set of services. All these issues and a few related ones are the subject of this chapter.

 
Author: Pearson Education (Fellow) | Visits: 1008 | Page Views: 1155
Domain:  Business Category: Management 
Upload Date:
Link Back:
Short URL: https://www.wesrch.com/business/pdfBU1H5H000YKNU
Loading
Loading...



px *        px *

* Default width and height in pixels. Change it to your required dimensions.

 
Contents:
CHAPTER

Part 7: Application Development

19

BUILDING E-COMMERCE
APPLICATIONS AND
INFRASTRUCTURE
Learning Objectives

Content
Helping Customers Navigate the Web Site
and Increase Sales at Campmor
19.1 Major E-Commerce Applications
and Their Functionalities
19.2 A Five-Step Approach to Developing
an E-Commerce Landscape
19.3 Development Options for E-Commerce
Applications
19.4 Criteria for Selecting a Development
Approach
19.5 E-Commerce Software Packages
and Suites
19.6 Connecting to Databases and Other
Enterprise Systems
19.7 Vendor and Software Selection
19.8 Usage Analysis and Site Management
Managerial Issues
Real-World Case: Molding a New Vision for
E-Commerce at D-M-E

Upon completion of this chapter, you will be
able to:
1. Discuss the major steps in developing an EC
application.
2. Describe the major EC applications and list
their major functionalities.
3. List the major EC application development
options along with their benefits and limitations.
4. Discuss various EC application outsourcing
options, including application service
providers (ASPs), software as a service (SaaS),
and utility computing.
5. Discuss the major EC software packages and EC
application suites.
6. Describe various methods for connecting an EC
application to back-end systems and databases.
7. Discuss the value and technical foundation of
Web Services and their evolution into secondgeneration tools in EC applications.
8. Understand service-oriented architecture
(SOA) and virtualization and their relationship
to EC application development.
9. Describe the criteria used in selecting an
outsourcing vendor and package.
10. Understand the value and uses of EC
application log files.
11. Discuss the importance of usage analysis
and site management.
19-1

EC Application

HELPING CUSTOMERS NAVIGATE THE WEB SITE
AND INCREASE SALES AT CAMPMOR
The Problem
Nature enthusiasts no longer have to make a major hike to take advantage of the vast array of camping, fishing, rock-climbing, and
canoeing supplies housed within Campmor’s walls. Since discovering—and then tapping—the possibilities of a well-designed e-commerce
site, the Paramus, New Jersey, retailer has expanded to the four corners of the earth. But doing so was no walk in the park. Having struck
out on its own, Campmor eventually realized it needed a guide or two who were familiar with the daunting wilderness that the Internet
can be. Although an early adopter of e-commerce, Campmor realized that its Web site could be much more effective. The company turned
to its long-time systems integrator, Tachyon Solutions, to use site analytics to redesign the site.
Tachyon tracked a variety of factors associated with the site, such as who visited, how long they stayed, and which visitors were
converted to customers. Tachyon determined that visitors frequently abandoned their carts prior to making a purchase—a clear indicator
they were having trouble finding their way on the site. What was needed, Tachyon determined, was enhanced search capabilities that
could be tied closely with the IBM solutions already in use.
“[Campmor] had invested a lot in their data catalog, but the embedded search in WebSphere didn’t really fully take advantage of it,”
said Tony Frazier, program director of content discovery marketing at IBM, which was the vendor of choice for the site. The Campmor site
uses IBM’s DB2, eServer iSeries, and WebSphere Commerce products. “Information about size, color, etc. was there but not well seen,”
noted Frazier.

The Solution
After some consultation, Tachyon and Campmor decided that
enhanced search capabilities would help customers find things
more quickly and reduce shopping cart abandonment rates. An
exhaustive evaluation of a number of search companies brought
Tachyon and Campmor to iPhrase Technologies and its iPhrase
Onestep solution, which was renamed WebSphere Content
Discovery Server when iPhrase was acquired by IBM in November
2005. According to Marian Lewis, CEO of Tachyon, the search
technology was selected for its robustness and its ability to be
readily linked to IBM’s WebSphere.
To optimize the search technology for the specific needs
of an outdoor gear retailer, iPhrase and Tachyon worked

The Results
Customers can find products quickly using the new searchand-discovery tools, which led to a 35 percent increase in
online sales in 2005. Today, the Web site generates 70 percent
of the company’s revenue.
Campmor found that the number of orders placed from
searches increased 10 percent and the average size of a

together closely. Tachyon and iPhrase readily split the searchdefining job to enable each partner to focus on its particular
area of expertise.
WebSphere Content Discovery Server also enables Campmor
to cross-sell related items and to customize the shopping experience. A customer searching for tents, for example, can be
directed to information on products such as sleeping bags,
lanterns, or other camping-related equipment.
The solution also includes apparel ontology, with synonyms
and acronyms for various terms a customer might enter, as well
as likely misspellings, which are automatically corrected.
Because site visitors can conduct detailed searches in less than
a second, sales have gone up.

search-based order increased 15 percent within a year. In
2006, 50 percent of the company’s orders went directly from
the Web to the warehouse without human interaction; only
about 3 percent of orders need to be entered by hand.
The initial engagement between Tachyon and iPhrase has
blossomed into a variety of new opportunities.
Sources: Compiled from McKeefry (2006) and Tachyon Solutions (2007).

WHAT WE CAN LEARN . . .
This case demonstrates that there is more to building an EC application than choosing a development technique and creating content.
Once Campmor initiated its EC application project, it selected an outsourcer to build a custom-made application. Critical to the project
was the need to make the site easily navigable by customers so they can easily purchase products. To achieve this, it was necessary for
the company—an early adopter of e-commerce—to obtain the continued cooperation from the external developer of the EC application.
This case also demonstrates that developing a good EC application often requires an ongoing relationship with a development partner
that offers a diverse set of services. All these issues and a few related ones are the subject of this chapter.

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

19.1 MAJOR E-COMMERCE APPLICATIONS AND THEIR
FUNCTIONALITIES
Once it has been determined that a business can benefit from an online presence, the business
type, the product line, the business’s organization, and the budget dictate what functionality the
Web site should have and how the Web site should be developed. Companies can choose from a
number of different types of Web sites, including B2C, B2B, exchanges, and the like. Sites of a
particular type (e.g., retailer, provider of business services, manufacturer, distributor/wholesaler,
media, travel/entertainment) usually use the same underlying applications and provide similar
sorts of functionality. Although this simplifies the task of creating the underlying application
architecture, the site requirements must still be considered carefully. Before discussing the best
approach to developing the site, it is useful to consider the major characteristics, functionalities,
and requirements of an EC system. The following discussion focuses on these considerations for
some of the more common EC applications.

B2C STOREFRONTS
An electronic storefront must support the same tasks that a physical store supports. In
particular, an electronic storefront (a seller’s Web site where purchases can be made) needs to
offer certain capabilities to buyers and to the merchant. These are shown in Exhibit 19.1.
In order to provide these capabilities, an electronic storefront should have the following
functions (Nickerson 2002):
◗ A product presentation function provides the customer with information about the product

through the user interface (browser). The information presented can include product
advertisements, detailed product specifications, product views, and sample product

EXHIBIT 19.1

Capabilities Needed by Users
of Electronic Storefronts

Buyers need the ability to:

Sellers need the ability to:

• Discover, search for, evaluate, and compare
products for purchase using e-catalogs.

• Provide access to a current catalog of
product offerings, allowing prospective buyers
to analyze and evaluate the offerings.

• Select products to purchase and negotiate
or determine their total price.
• Place an order for desired products
using a shopping cart.
• Pay for the ordered products, usually
through some form of credit.
• Confirm an order, ensuring that the
desired product is available.
• Track orders once they are shipped.

• Provide an electronic shopping cart in
which buyers can assemble their purchases.
• Verify a customer’s credit and approve
the customer’s purchase.
• Process orders (back-end services).
• Arrange for product delivery.
• Track shipments to ensure that they are
delivered.
• Provide the means for buyers and visitors to
register at the site, to make comments, or to
request additional information.
• Answer customers’ questions or pass queries
and requests to a Web-based call center.
• Analyze purchases in order to customize
buyers’ experiences.
• Provide Web-based post-sale support.
• Create the capability for cross-sell and up-sell.
• Provide language translation if needed.
• Measure and analyze the traffic at the site to
modify and maintain the various applications.

19-3

19-4

Part 7: Application Development











presentations. This function can include additional features such as language selection,
product search, and customization for customer preferences.
An order entry function allows a customer to place an order for selected products.
Information about each product ordered is added to the electronic shopping cart, which
is a database of orders in process. This function is linked to the enterprise’s inventory
system in order to check product availability. It also requires access to the enterprise’s
customer database to update and use customer data.
An electronic payment function enables the customer to pay for the order and, thus, complete the transaction. Payment options may include credit card, debit card, COD, check
(before delivery), and invoice (after delivery). Security is very important in the electronic
payment function. The function should provide the necessary security through Secure
Socket Layer (SSL), Secure Electronic Transactions (SET), or some other protocol, and
customers should be apprised of the security provisions.
An order fulfillment function provides for the delivery of the product to the customer. The
delivery can be digital for products such as music, software, and information. This function
is linked to the enterprise’s inventory system so that the inventory database can be updated
when the order is fulfilled.
A customer service function provides assistance to customers who have problems or questions
related to the purchasing process. Options for providing customer service include FAQs,
toll-free telephone numbers, e-mail, and chat rooms.
The product support function provides assistance to the customer after the product has been
received. This support may include initial setup and installation, regular operation,
troubleshooting, return policy, ongoing maintenance, and warranty or nonwarranty repair
or replacement.

For a comparison of various software packages that support the creation of a B2C storefront, see ecommerce-guide.com/solutions. For more on storefront construction, tools, and
vendors, see Chapter 16 and Section 19.5.

SUPPLIER SELL-SIDE B2B SITES
A sell-side B2B site is similar to a B2C storefront, enabling one business to purchase goods
and services from another. However, a B2B site also has additional features (see Chapter 5),
including:
◗ Personalized catalogs and Web pages for all major buyers
◗ A B2B payment gate
◗ Electronic contract negotiation features
◗ Product configuration by customers (e.g., Cisco or Dell)
◗ Affiliate program capabilities
◗ Business alerts (e.g., to special sales, to news)

E-PROCUREMENT
An e-procurement site is an online intermediary that offers businesses access to hundreds of
parts and services provided by suppliers. E-procurement systems come in several variations, each
with its own specialized capabilities. See more discussion about e-procurement in Chapter 5.

Aggregating Catalogs
In large organizations, multiple buyers are involved in making purchases from a large number
of suppliers. One way to reduce costs and other inefficiencies in the purchase process is to
aggregate the items from approved suppliers into a single online catalog (see Chapter 5).
Some of the specialized requirements for this type of site include:
◗ Search engine for locating items with particular characteristics
◗ Comparison engine for alternative vendors
◗ Ordering mechanism
◗ Budget and authorization feature

Chapter Nineteen: Building E-Commerce Applications and Infrastructure
◗ Usage comparison (among various departments)
◗ Payment mechanism (e.g., use of a purchasing card)

Aggregated catalogs are used by many large companies and government agencies.

Reverse Auctions and Tendering Systems
In a reverse auction, buyers list the items they wish to purchase, and sellers bid to provide those
items at the lowest price (see Chapter 5). Sites of this sort provide the following capabilities:
◗ Catalog of items to be tendered and their content management
◗ Search engine (if the site has many items)
◗ Personalized pages for potential large bidders
◗ Reverse auction mechanisms, sometimes in real time
◗ Facility to help prepare, issue, manage, and respond to a buyer’s request for quotes (RFQs)
◗ Ability to bid dynamically
◗ Automatic vendor approval and workflow (e.g., SmartMatch’s supplier identification









technology)
Electronic collaboration with trading partners
Standardization of RFQ writing
Site map
Mechanism for selecting suppliers
Automatic matching of suppliers with RFQs
Automatic business process workflow
Ability for bidders to use m-commerce for bidding
Automated language translation

Forward Auctions
Forward auctions enable selling companies to post items they want to sell, and buying companies to compete for the best prices acceptable to the selling companies for those items. In
forward auctions, winning bidders (buyers) are obligated to buy items (see Chapters 5 and 10
and docs.sun.com/source/816–5981–10/auctions/auc_deffwrdaucs.htm). A typical forward
auction consists of the following steps:
1. Both the seller and the buyer complete the online registration process, including providing
shipping points and regulatory and banking information.
2. The seller starts an auction by listing the product, the asking price, and the quantity on
a form.
3. The buyer chooses a bid product and indicates a bid price and quantity. The buyer may
also set the maximum price and bid increments.
4. Sophisticated software determines the auction winner, based on price, volume, and timing.
5. A funds transfer from the bidder takes place immediately.
6. Upon successful funds transfer, a freight company is dispatched to the seller’s location;
the product is loaded and delivered to buyer’s location.
7. The buyer inspects and accepts the product.
8. Funds are released to the seller.

The capabilities of forward auctions can be best viewed at ebay.com.

Exchanges
An exchange is an e-marketplace that connects many buyers with many suppliers (see
Chapter 6). In addition to combining the functionalities of buy-side, e-procurement, and
auction sites, they also have a number of other capabilities:
◗ Collaboration services (including multichannel services)
◗ Community services

19-5

19-6

Part 7: Application Development
◗ Web-automated workflow
◗ Integrated business process solutions
◗ Central coordination of global logistics for members, including warehousing and

shipping services
◗ Integration services (systems/process integration into e-marketplace, trading partners,






and service providers)
Data mining, customized analysis and reporting, real-time transactions, trend and customer
behavior tracking
Transaction-flow managers
Negotiation mechanisms
Language translation
Comprehensive links to related resources

These lists of major characteristics and functionalities can be used by application developers as outlines or checklists from which to develop plans for specific EC applications. For
a listing of software packages that support the various capabilities of B2B sites, see
Business.com (2007).

Portals
A portal is a single Web interface that provides personalized access to information, applications, business processes, and much more. With portal technology, an organization can lower
development and deployment costs and significantly increase productivity. Using a portal,
information can be aggregated and integrated within a particular working environment,
application, or service, or a single interface can be used to target an individual user’s needs
and interests. Portals help to harmonize content, commerce, and collaboration with business
goals. A list of different types of portals and their capabilities follows:
◗ Line-of-business portals provide easy access to applications that serve a specific area, such

as procurement or human resources.
◗ A corporate intranet portal often acts as a gateway to other portals and Web sites operated






by an organization.
Extranet portals act as an interface between companies, customers, and suppliers, revealing
subsets of information to specific audiences.
Customer service and self-service portals are often seen as subsets of a corporate extranet.
Team or divisional portals are used by groups or communities that want to share specific
content or business functions.
A personal portal is geared to assist individuals who access information and resources.
An enterprise portal is the central portal for an entire organization. It comprises all other
portals deployed.
See Microsoft.com (2007) for more features and capabilities of portals.

Other EC Systems
Several EC systems exist, each with its own set of required capabilities. For example, e-learning
sites may have a student part and an instructor part, each with its own set of requirements.
Collaboration EC sites require several collaboration capabilities and tools.

Section 19.1 ◗ REVIEW QUESTIONS
1. Examine 15 different Web sites and choose your 5 favorites. Are these the kinds of Web
sites that you would choose to visit or use as a template if you had a business? Explain why
or why not.
2. List the major functions of an electronic storefront.
3. Describe some of the major functions required by an aggregating catalog.
4. Describe some of the major functions needed to build a reverse auction.
5. Describe the basic steps of a forward auction.

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

19-7

6. List some of the functional requirements of an online exchange.
7. Name the different types of portals and describe their basic features.

19.2 A FIVE-STEP APPROACH TO DEVELOPING
AN E-COMMERCE LANDSCAPE
A well-developed Web site not only adds to the value of the product or service being offered;
it also enhances the worth of the company. Therefore, it is important that a firm choose the
correct development strategy in order to obtain the greatest return on its investment. The
diversity of e-business models and applications, which vary in size from small stores to global
exchanges, requires a variety of development methodologies and approaches.
For example, small storefronts with a few key components can be developed with
HTML, Java, or another programming language. They also can be implemented with commercial packages, leased from an application service provider (ASP), or purchased from a site
builder. Larger or special EC applications can be developed in-house or outsourced (see the
opening case). Building medium to large applications requires extensive integration with
existing information systems, such as corporate databases, intranets, enterprise resource
planning (ERP), and other application programs. Therefore, although the process of building
EC systems can vary, in many cases, it tends to follow a fairly standard format.
The traditional systems development life cycle (SDLC) systematically leads developers
through six analysis and design stages: problem identification, analysis, logical design, physical design, implementation, and maintenance. The SDLC is the basis for development of the
majority of traditional business systems (see Whitten and Bentley 2007 for more details on this
approach). However, innovative new software and hardware are enabling a move to a more
streamlined approach to e-commerce development, as discussed in Case 19.1.
Exhibit 19.2 (p. 9) shows the five major steps needed to develop a typical e-commerce
application.

STEP 1: IDENTIFYING, JUSTIFYING, AND PLANNING EC SYSTEMS
EC applications, like all other information systems, are usually built to enable one or more
business processes. Consequently, their planning must be aligned with that of the organization’s overall business plan and the specific processes involved. Always remember that
existing processes may need to be restructured to take full advantage of the benefits of the
supporting IT. Furthermore, each application must be carefully analyzed, using different
methods, such as the methodology discussed in the opening case, to ensure that it will have
the needed functionality to meet the requirements of the business processes and the users
and that its benefits will justify its cost (see Chapter 5). Both of these activities may be complex, but they are necessary, especially for systems that require high investment to acquire,
operate, and maintain. The output of this step is a decision to go with a specific application,
with a timetable, budget, and assigned responsibility. This first step is typically performed
in-house (with consultants if needed). All other steps can be completed either in-house or
outsourced.

STEP 2: CREATING AN EC ARCHITECTURE
An EC architecture is a plan for organizing the underlying infrastructure and applications of
a site. The plan specifies the following:
◗ Information and data required to fulfill the business goals and vision
◗ Application modules that will deliver and manage the information and data
◗ Specific hardware and software on which the application modules will run
◗ Necessary security, scalability, and reliability required by the applications
◗ Human resources and procedures for implementing the architecture

Various IT tools and methodologies can be used to support the creation of an application
architecture (e.g., see Kendall and Kendall 2005). Because the creation of an architecture is
an iterative process, collaborative methodologies, such as joint application development
( JAD), are especially useful in identifying and modifying system requirements.

EC architecture
A plan for organizing the
underlying infrastructure
and applications of a site.

19-8

Part 7: Application Development

CASE 19.1

EC Application

TD BANKNORTH—ONLINE CUSTOMER SERVICE RIGHTNOW
As a community bank that uses service as a selling point,
TD Banknorth Inc., a leading banking and financial services
company headquartered in Portland, Maine, and a majorityowned subsidiary of TD Bank Financial Group with banking
divisions in eight Northeastern states, was not satisfied with
a 90 percent response rate within 24 hours to its customer
e-mails. So, it decided to overhaul its online customer service system to improve its record.
With the help of RightNow’s on-demand solutions and
professional services, TD Banknorth increased its response rate
to an impressive 97 percent for nonconfidential e-mails within
24 hours and more than 50 percent within just .6 hours after
receipt. The company also found that making information
easier to find on its Web site lowered e-mail volume by
55 percent, to about 35 messages a day. Mark Ellis, Senior Vice
President of eCommerce at TD Banknorth, credits the decline
to the new customer resource center, which provides Web site
visitors information more efficiently by integrating e-mail and
Internet capabilities. This lower volume has freed service representatives to handle other duties, such as answering phones
and handling secure e-mails.
In 2004, when the company, then called Banknorth
Group Inc., set out to upgrade its online customer service,
its aim was to provide information fast enough that customers would not have to send e-mails or make phone calls.
The company saw an opportunity to improve e-mail service
levels and provide customers with easily accessible answers
to their banking questions. TD Banknorth also sought to
improve the efficiency of its service operations across the
board, maintain cost control, and accomplish all this while
its technology resources supported an aggressive acquisition
strategy. To optimize the online self-service facilities it
planned to provide to its customers, TD Banknorth decided
on a true knowledge base system that recognizes natural
language rather than the hodgepodge of quotation marks
and connectors that Web portals such as Google and Yahoo!
expect. For example, it wanted its customers to be able to
simply type, “How can I reset my online banking password?”
or enter a few keywords from that phrase so that the answer
appears courtesy of the FAQ mechanism. If TD Banknorth
customers failed to find satisfactory answers, they
could alternatively e-mail the bank. They also wanted the
knowledge-base tool to allow contact-center representatives
to tweak the technology. For example, drawing on their
interactions with customers, the reps could propose
question-and-answer pairs for the knowledge base.

After an in-depth search process for the best solution
provider, TD Banknorth whittled the list of candidates down
to three finalists. At this point TD Banknorth began looking
more closely at specific features and functionality and
applying a weighted scorecard to appropriately compare the
respective solutions. TD Banknorth evaluated everything from
incident management tools and knowledge base search functions to ease of customization and management. At the end
of the day, RightNow was the clear choice. It turned out to be
the right decision, and TD Banknorth succeeded in addressing
its customer service concerns on all counts with the help of
RightNow’s on demand solutions and professional services.
Part way through the project, the bank consolidated its
six regional holdings into a single brand, which required a
parallel consolidation of the corporate Web site. This pushed
the target implementation date out but created another
opportunity. A soft launch was introduced into the plan,
which allowed TD Banknorth to comprehensively test and
refine the knowledge base content prior to the go-live date.
Despite the scope and complexity of the system TD
Banknorth required, RightNow was able to go live in just
90 days. In 2006, when TD Banknorth bought Hudson United
Bancorp of Mahwah, New Jersey, for $1.9 billion. Hudson
United’s customers also started using the new site. Having
RightNow host the knowledge base allowed for a quick
90-day rollout.
Although responsiveness generally is not a make-or-break
issue, unlike onerous fees or failure to post a deposit, sometimes a bad experience—for example, an unanswered e-mail—
can cost a bank a customer. “RightNow has improved our
response times and enabled us to support the bank’s growth
without driving up our overhead,” declares Ellis. “Our returnon-investment is definitely going to be well beyond our initial
projections.”
Sources: Compiled from Duvall (2006) and RightNow Technologies
Inc. (2007).

Questions
1. Do you agree that RightNow was the best choice for TD
Banknorth? Why or Why not?
2. Why is the bank’s customer service record so important
to TD Banknorth?
3. What roles does Web Services play at TD Banknorth?

The results obtained from step 2 are routed to the strategic planning level (e.g., to a
steering committee). Based on the results of step 2, the application portfolio may be changed.
For example, the steering committee may discourage or scale down the specific project
because it is too risky. Once the architecture is determined and the project gets final approval,
a decision about how to develop the specific EC application must be made and a development option chosen.

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

EXHIBIT 19.2

The EC Applications Development Process
Project Identification, Justification, and Planning (Step 1)
IT as enabler
From business goals to information needs
System-required functionalities
Need to solve problems

Business
process
restructuring,
redesign

Identify EC projects
Justify EC investments

EC Architecture (Step 2)
Information architecture
Data architecture
Application architecture

Technical architecture
Organization architecture
Feasibility

Development (Acquisition) Options (Step 3)
Build
Buy

What, from whom

Lease

Which partner, how to partner

Join an exchange,
marketplace

Which one (ones)

Testing, Installation, and Integration (Step 4)
Business
Partners

Management

What, from whom

Partner

Business
Partners

How, which methodology

EC
Infrastructure

Testing, installation, integration, training, security,
conversation, deployment, etc.

Operations, Maintenance, and Updating (Step 5)
Operations
Maintenance and updating
Replacement

STEP 3: SELECTING A DEVELOPMENT OPTION
EC applications can be developed through several alternative approaches that will be discussed in detail in Section 19.3. The major options are:
◗ Build the system in-house.
◗ Have a vendor build a customized system.
◗ Buy an existing application and install it, with or without modifications, by yourself or

through a vendor.
◗ Lease standard software from an application service provider (ASP), lease as a service

(SaaS), or lease via utility computing.
◗ Enter into a partnership or alliance that will enable the company to use someone else’s
application.
◗ Join a third-party e-marketplace, such as an auction site, a bidding (reverse auction) site,
or an exchange, that provides needed capabilities to participants (e.g., Yahoo! Store).
◗ Use a combination of approaches.
The criteria for selecting from among the various options are presented in Section 19.4.
Once an option is chosen, the system can be developed. At the end of this step, an application is ready to be installed and made available. No matter what option is chosen, there is a
strong possibility that the firm will work with vendor(s) and/or software provider(s). In this
case, the firm will need to manage its vendor relationships (see Section 19.8).

Vendor management
Project management
Evaluation

Business
Partners

19-9

19-10

Part 7: Application Development

STEP 4: INSTALLING, TESTING, INTEGRATION,
AND DEPLOYING EC APPLICATIONS
Once a system has been developed, the next step involves getting the application up and running in the selected hardware and network environment. One of the steps in installing an
application is connecting it to back-end databases, to other applications, and often to other
Web sites. For example, if a prospective customer orders a product from a site, it would be
helpful if the site could determine if the product is in stock. To do this, the ordering system
would need to be connected to the inventory system. Details of the connection process are
supplied in Section 19.6. This step can be done in-house or outsourced.
At this point, the modules that have been installed need to be tested. Sommerville
(2004) recommends a series of different tests:
unit testing
Testing application
software modules one
at a time.
integration testing
Testing the combination
of application modules
acting in concert.
usability testing
Testing the quality of
the user’s experience
when interacting with
a Web site.
acceptance testing
Determining whether
a Web site meets the
original business
objectives and vision.

◗ Unit testing. Test each module one at a time.
◗ Integration testing. Test the combination of modules acting in concert.
◗ Usability testing. Test the quality of the user’s experience when interacting with the site.
◗ Acceptance testing. Determine whether the site meets the firm’s original business

objectives and vision.
Once all the Web site applications pass all of the tests, they can be made available to the
end users. At this stage, issues such as conversion strategies, training, and resistance to
change may need to be addressed.

STEP 5: OPERATIONS, MAINTENANCE, AND UPDATING
It usually takes as much time, effort, and money to operate and maintain a site as it does to
build and install it in the first place. To enjoy continual usage, a site needs to be updated continually. For example, at a B2C site new products need to be added to the catalog, prices need
to be changed, and new promotions need to be run. These changes and updates need to
undergo the same testing procedures used during the installation process. Additionally, usage
patterns and performance need to be studied to determine which parts of the underlying
applications should be modified or eliminated from the site. See Reynolds (2004) for more
about the operation and maintenance of an EC site.

MANAGING THE DEVELOPMENT PROCESS
The development process can be fairly complex and must be managed properly (Xia and Lee
2004). For medium-to-large applications, a project team is usually created to manage the
process and the vendors. Collaboration with business partners also is critical. As shown in
various chapters of this book, some e-business failures are the result of a lack of cooperation
by business partners. For example, a firm can install a superb e-procurement system, but if
their vendors will not use it properly the system will collapse. Projects can be managed with
project management software (see examples of various project management software at
office.microsoft.com/project and primavera.com). Best practice management also includes
periodic evaluations of system performance. Standard project management techniques and
tools are useful for this task. For a review of project management techniques, see Schwalbe
(2006). Finally, do not rule out the possibility that implementing an EC project may require
restructuring one or more business processes. See Kanter and Walsh (2004) for further
discussion of this topic.

Section 19.2 ◗ REVIEW QUESTIONS
1. Go to the Web site of the developers of each of your five favorite Web sites (chosen
in answer to Section 19.1, Review Question #1). What expertise do they profess to
have? What projects have they completed? Would you feel comfortable hiring their
services?
2. List the major steps in developing an EC application.
3. Define the various types of testing used during the EC development process.

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

19-11

19.3 DEVELOPMENT OPTIONS FOR E-COMMERCE
APPLICATIONS
If the desired Web site is relatively simple, a firm may decide to build the Web site itself.
However, the firm must ask a few questions: Is the firm capable of developing the site?
Does the firm have access to the proper tools to create the pages? If the firm does not
have these capabilities, it is usually best to turn over the task to a professional developer.
The ideal developer is one who can design a site with the correct look and feel, who
has an in-depth knowledge of search engine optimization, and who is able to correctly
handle any complex coding that may be required. Resources on building a Web site
are available at Internet Marketing Singapore (internetmarketingsingapore.com), Sell IT!
(sellitontheweb.com/ezine/help.shtml), and the Microsoft Small Business Center
(microsoft.com/smallbusiness/resources/technology/ecommerce/5_common_e_commerc
e_site_mistakes.mspx). A useful site for finding an experienced Web site designer is
Supplier-Match.com (supplier-match.com/categories/e-commerce_services.jsp).
Regardless of the complexity of the site, three basic options for developing an EC Web
site are available: (1) develop the site in-house, either from scratch or with off-the-shelf components; (2) buy a packaged application designed for a particular type of EC site; or (3) lease
the application from a third party. Each of these approaches has its benefits and limitations.

IN-HOUSE DEVELOPMENT: INSOURCING
The first generation of EC development was accomplished largely through proprietary programming and in-house development (see Zhao et al. 1998). Using this approach, the Internet
browser serves as the development platform. The programmers write EC systems using a
combination of HTML and script languages such as HTX, CGI, IDC, and JavaScript.
Databases developed on top of a database management system (DBMS) usually serve as the
information repository to store EC data. Although this first generation of EC development
has built up valuable experience and achieved industrial momentum, the lack of reusability
(i.e., the likelihood a segment of source code can be used again to add new functionalities with
slight or no modification) in current EC applications and the lack of interoperability (i.e., the
ability to connect people, data and diverse systems, standards) created a great barrier to widespread application of EC.
Although in-house development—insourcing—can be time consuming and costly, it
may lead to EC applications that better fit an organization’s strategy and vision and differentiate it from the competition. Companies that have the resources to develop their e-business
application in-house may follow this approach in order to differentiate themselves from the
competition, which may be using standard applications that can be bought or leased. The
in-house development of EC applications, however, is a challenging task, because most
applications are novel, have users from outside the organization, and involve multiple organizations. Shurville and Williams (2005) demonstrate how a combination of hard and soft
project and change management methodologies guided successful in-house development of a
campuswide information system.

Development Options
Developers have three major options for developing an application:
◗ Build from scratch. This option is used rarely. It should be considered only for special-

ized applications for which components are not available. It is expensive and slow, but it
may provide the best fit.
◗ Build from components. The required applications are often constructed from standard components (e.g., Web servers such as Apache or Microsoft’s IIS) using Web
scripting languages, such as PHP, Microsoft’s Active Server Pages (ASP), JavaServer
Pages ( JSP), or ColdFusion. These scripting languages make it easier to integrate
application functionality with back-end databases and other back-office systems
(e.g., order entry). For a methodology of evaluating component-based systems, see
Dahanayake et al. (2003).

reusability
The likelihood a segment
of source code can be
used again to add new
functionalities with slight
or no modification.
interoperability
Connecting people, data,
and diverse systems. The
term can be defined in a
technical way or in a
broad way, taking into
account social, political,
and organizational factors.
insourcing
In-house development
of applications.

19-12

Part 7: Application Development
◗ Enterprise application integration. The enterprise application integration (EAI)

option is similar to the build from components option, but instead of using components,
an entire application is employed. This is an especially attractive option when applications from several business partners need to be integrated.
Insourcing is a challenging task that requires specialized IT resources. For this reason,
most organizations usually rely on packaged applications or completely outsource the development and maintenance of their EC sites.

BUY THE APPLICATIONS
turnkey approach
Ready to use without
further assembly or testing; supplied in a state
that is ready to turn on
and operate.

A number of commercial packages provide standard features required by EC applications.
These packages are ready to turn on and operate. This option is also known as a turnkey
approach; the package is ready to use without further assembly or testing.
The turnkey approach involves buying a commercial package, installing it as is, and
starting it up. Buying a commercial package requires much less time and money than inhouse development. When selecting a particular package, the package should not only satisfy
current needs, it must also be flexible enough to handle future ones; otherwise the package
may quickly become obsolete. Additionally, because one package can rarely meet all of an
organization’s requirements, it is sometimes necessary to acquire multiple packages. In this
case, the packages need to be integrated with each other and with other software and data.
This option has several major advantages:
◗ Many different types of off-the-shelf software packages are available.
◗ It saves time and money (compared to in-house development).
◗ The company need not hire programmers specifically dedicated to an EC project.
◗ The company knows what it is getting before it invests in the product.
◗ The company is neither the first nor the only user.
◗ The price is usually much lower than the in-house option.
◗ The vendor updates the software frequently.

This option also has some major disadvantages:
◗ Software may not exactly meet the company’s needs.
◗ Software may be difficult or impossible to modify, or it may require huge process changes.
◗ The company may experience loss of control over improvements and new versions.
◗ Off-the-shelf applications can be difficult to integrate with existing systems.
◗ Vendors may drop a product or go out of business.

See softwaresearch.us/search.aspx?keywords=E+commerce+turnkey for a directory of
vendors of EC turnkey systems. The buy option is especially attractive if the software
vendor allows for modifications. However, the option may not be as attractive in cases of
high obsolescence rates or high software cost. In such cases, leasing may be a more
appealing option.

OUTSOURCING/LEASING EC APPLICATIONS
outsourcing
A method of transferring
the management and/or
day-to-day execution of
an entire business function to a third-party
service provider.

The use of outside contractors or external organizations (often software vendors) to acquire
EC applications is called outsourcing. It is a method of transferring the management and/or
day-to-day execution of an entire business function to a third-party service provider.
Outsourcing is a valuable option that more and more companies are using. In many cases,
systems need to be built quickly, and the special expertise of outside contractors and software
vendors is necessary.
Large companies may choose outsourcing when they want to experiment with new EC
technologies without a great deal of up-front investment. Outsourcing also allows large firms
to protect their internal networks and to gain expert advice. Small firms with limited IT
expertise and tight budgets also find outsourcing advantageous.
Outsourcers can perform any or all tasks in EC applications development. For example,
they can plan, program, and build applications and integrate, operate, and maintain them. It
is useful for firms to develop good relationships with outsourcers (see Kishore et al. 2003).

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

19-13

Several types of vendors offer services for creating and operating EC applications:
◗ Software houses. Many software companies, from IBM to Oracle, offer a range of

outsourcing services for developing, operating, and maintaining EC applications.
◗ Outsourcers and others. IT outsourcers, such as EDS, offer a variety of services. Also,
the large CPA companies and management consultants (e.g., Accenture) offer some
outsourcing services.
◗ Telecommunications companies. Increasingly, the large telecommunications companies are expanding their hosting services to include the full range of IT and EC solutions. MCI, for example, offers Web Commerce services for a monthly fee.
Although the trend to outsource is rising, so is the trend to conduct outsourcing offshore—
mainly in India and China. This approach is not without risks. For example, although
outsourcing offshore may lead to substantial dollar savings, offshore labor skills may be inferior
to those found onshore, and the resultant quality of the Web site development may be unacceptable. For more discussion about the drivers, effects, and risks of outsourcing, see Dutta and
Roy (2005), Aron et al. (2005), and Overby (2003).
To accommodate the increasingly popular move to EC development by vendors, a less
risky outsourcing option known as software on demand has emerged as a development
method. Initially, this leasing option was provided through utility computing, then through
ASPs, and more recently, through firms that provide software as a service (SaaS). Large and
small firms alike will often choose the lease option to experiment with new software before
making a large up-front investment or as an ongoing method of acquiring and supporting
EC software. Another benefit is that it enables firms to protect their internal networks.
Through leasing, new entrants into e-business (usually smaller firms) are able to establish a
market presence in a much shorter period of time. Each of these alternative sources of software acquisition is discussed in the following sections

UTILITY COMPUTING
Utility computing is a business model whereby computer resources are provided on an
on-demand and pay-per-use basis. This contrasts sharply with the traditional SDLC model
of purchasing physical systems, configuring them, and devoting them to one application for
their useful life. With utility computing, customers do not own the expensive computer
resources but are billed only for their actual use of the resources. Because the utility computing provider can spread customers’ variance in resource needs, resource utilization can be
optimized. Because the utility computing service is based on usage, computing resources are
metered and the user charged on that basis. This is comparable to the use of electricity, gas,
and most other utilities; hence the name utility computing. Utility computing is sometimes
also called on demand computing.
Utility computing has a long history. It was first described by John McCarthy in 1961 at
the MIT Centennial (en.wikipedia.org/wiki/Utility_computing):
If computers of the kind I have advocated become the computers of the future, then computing may someday be organized as a public utility just as the telephone system is a public
utility . . . The computer utility could become the basis of a new and important industry.
HP was the original leader of the utility computing concept, recognizing that computing
power and resources can be delivered as a service, flowing on demand as and where needed.
Subsequently, IBM offered this type of flexible delivery of computing power and database
storage to big banks from its worldwide data centers. In 2000, Sun offered utility computing
to consumers through its Sun Grid service. HP introduced the Utility Data Center in 2001.
Since 2000, many companies have entered the utility computing market. Some of these organizations use utility computing to help offset hardware costs, others use it to share the cost of
resources within organizations. In December 2005, Alexa launched Alexa Web Search
Platform, a Web search building tool, for which the underlying power is utility computing;
Alexa charges users for storage, utilization, and so on. SoftLayer Technologies is continuing
to develop utility services aimed at meeting the needs of the emerging Web 2.0 market.
Lance Crosby, President and Chief Executive Officer at SoftLayer said, “As a company, we
recognize the importance of IT scalability. With the needs of businesses changing as rapidly

utility (on-demand)
computing
Unlimited computing
power and storage capacity that can be used
and reallocated for any
application—and billed
on a pay-per-use basis.

19-14

Part 7: Application Development

as the technology that powers them, we understand that the ability to expand on demand is
paramount” (Utilitycomputing.com 2006).
As shown in Exhibit 19.3, the utility-computing value proposition consists of three layers
of tools and two types of value-added services. Each tool must be seamlessly integrated to create a comprehensive solution but will usually be implemented separately. These three tools are:
policy-based servicelevel-management tools
Coordinate, monitor, and
report on the ways in
which multiple infrastructure components
come together to deliver
a business service.

◗ Policy-based service-level-management tools coordinate, monitor, and report on the ways

policy-based resourcemanagement tools
Automate and standardize
all types of IT management best practices, from
initial configuration to
ongoing fault management and asset tracking.

These tools share multisourcing delivery and financing services (left side of Exhibit 19.3)
and provide for customer access and management services (right side of Exhibit 19.3).

APPLICATION SERVICE PROVIDERS (ASP)
An application service provider (ASP) manages application servers in a centrally controlled
location rather than on a customer’s site. Applications are then accessed via the Internet or
VANs through a standard Web browser interface. Such an arrangement provides a full range of
services for the company using the ASP: Applications can be scaled, upgrades and maintenance
can be centralized, physical security over the applications and servers can be guaranteed; and
the necessary critical mass of human resources can be efficiently utilized. The determinants of
ASP adoption as an innovation are discussed by Daylami et al. (2005).
The end user businesses pay a licensing fee. Monthly fees are separate and are paid to the
maker of the software and to the ASP “host” of the software. In general, these fees include
payment for the application software, hardware, service and support, maintenance, and
upgrades. The fee can be fixed or may be based on utilization.
Leasing from an ASP is a particularly desirable option for SMEs, for which in-house
development and operation of IT applications can be time consuming and expensive.
Leasing from ASPs saves various expenses (e.g., labor costs) in the initial development stage.
It also helps reduce software maintenance, upgrading, and user training costs in the long run.
A company can select other software products from the same ASP to meet its changing
needs and does not have to invest further in upgrading the existing one. Thus, overall business competitiveness can be strengthened through reducing time-to-market and enhancing
the firm’s ability to adapt to changing market conditions. ASPs are particularly effective for
IT applications for which timing, flexibility, and agility are crucial.

EXHIBIT 19.3

The Five Elements of a Successful
Utility-Computing Value Proposition

Business-based and
eventually, ROI-based management

Policy-Based Resource-Management Tools
Fault, performance,
operations management, etc.

Virtualized Infrastructures
Virtualized servers, storage
and networks, and dynamic provisioning

Customer Access
and Management Services

Policy-Based Service-Level-Management Tools
Multisourcing Delivery
and Financing Services

application service
provider (ASP)
A company that provides
business applications
to users for a small
monthly fee.

in which multiple infrastructure components come together to deliver a business service.
◗ Policy-based resource-management tools coordinate, monitor, and report on the ways
in which multiple infrastructure components come together to deliver a business service.
They automate and standardize all types of IT management best practices, from initial
configuration to ongoing fault management and asset tracking.
◗ Virtualization tools enable server, storage, and network resources to be deployed and
managed as giant pools and seamlessly changed as needs change.

Source: Kucharvy, T. The Five Rules for Jump-Starting the Utility-Computing Market. Boston, MA: Summit
Strategies, Inc., January 2003.

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

Leasing from ASPs does have its disadvantages. ASP applications are typically hosted by
third parties, who ordinarily do not have application expertise but merely manage the servers;
they serve up traditional client-server applications with front-ends added as an afterthought.
ASPs generally do not build the application themselves but instead take an off-the-shelf
application (such as a messaging platform, an enterprise requirements planning tool, or a
salesforce automation package) and run it for customers. For example, an ASP might make
the latest version of Microsoft Office available across the Web to customers who pay a fee per
month for access to the software
In addition, many companies are concerned with the adequacy of protection offered by
ASPs against hackers, theft of confidential information, and virus attacks. Also, leased software
often does not provide the perfect fit for the desired application. It is also important to ensure
that the speed of the Internet connection is compatible with that of the application to avoid
distortions in its performance. For example, it is not advisable to run heavy-duty applications on
a modem link below a T1 line or high-speed DSL.
From the ASP vendor’s point of view, the benefits presented by the ASP model are many.
For one, in the long-distance carrier and Internet service providers (ISP) markets, revenues are
squeezed due to heavy competition. These companies are looking to generate revenues from
sources other than connectivity and transport, and ASP services offer a new outlet. The ASP
Industry Consortium, has emerged to support the ASP concept; its founding members
include AT&T, Cisco, Citrix Systems, Ernst & Young, Verizon, IBM, Marimba, Sharp
Electronic, Sun Microsystems, UUNET, and Verio.
A detailed list of the benefits and risks associated with ASPs is provided in Exhibit 19.4.
Information about the general state of the ASP marketspace can be obtained from
the Computing Technology Industry Association’s (CompTIA) Software Services
(comptia.org/certification/a/default.aspx). Major ASPs for enterprise EC systems include
SAP, Oracle, and IBM. A comprehensive list of ASPs for EC can be found at the DMOZ
Open Directory Project (softwaresearch.us/search.aspx?keywords=E+commerce+turnkey).
Because most applications typically provided by ASPs are not written as Internetnative applications, performance can be poor and application updates are often no better
than self-managed applications. Consequently, a need to supplement ASP offerings
emerged. The latest innovation in on-demand computing is software as a service (SaaS).

SOFTWARE AS A SERVICE (SAAS)
Software as a Service (SaaS) is a new model of software delivery whereby the software is
specifically designed for delivery in an online environment. It is essentially “leased” from a
software company that provides maintenance, daily technical operation, and support for the
software provided to the client. “Leading the charge” into this software delivery paradigm

EXHIBIT 19.4

19-15

software as a
service (SaaS)
A model of software
delivery where the
software company
provides maintenance,
daily technical operation,
and support for the
software provided to their
client. SaaS is a model of
software delivery rather
than a market segment.

Benefits and Risks of Using an ASP

Type

Benefits

Potential Risks

Business

Reduces the need to attract and retain skilled IT professionals
Enables companies to concentrate on lack of strategic use of IT
Enables SMEs to use tier-1 applications (e.g., ERP, SCM, and CRM)
Application scalability enables rapid growth of companies

Loss of control and high level of dependence
on ASP
Inability of ASP to deliver quality of service;
skills and experience

Technical

Fast and easy application deployment
Higher degree of application standardization
Access to wide range of applications
Application maintenance simplified and performed by ASP
Simplified user support and training

Level of customization and legacy application
integration offered by ASP is insufficient
Low reliability and speed of delivery due
to bandwidth limitations
Low capability of ASP to deal with security
and confidentiality issues

Economic

Low total cost of ownership
Low up-front investments in hardware and software
Improved cost control as result of predictable subscription costs

Pricing changes by ASP unpredictable for
application updates and services

Source: Kern, T. and J. Kreijger. "An Exploration of the ASP Outsourcing Option" Proceedings, 34th HICSS, Hawaii, January 2001. ©2001 IEEE.

19-16

Part 7: Application Development

EXHIBIT 19.5












List of SaaS Vendors
and Applications

Business Objects (Crystal Reports) (business intelligence)
CollabNet (collaboration)
Google (Google Maps, Google Docs, Google Spreadsheets, JotSpot)
NetSuite (for small firms)
Oracle (PeopleSoft on Demand; E-Business Suite on Demand)
Replicon (Timesheets)
RightNow Technologies (CRM and Customer Experience)
Salesforce.com (CRM)
SPS Commerce (EDI for retailers, distributors, manufacturers)
WebEx (Web conferencing, video conferencing)
YouSendIt (Web-based file hosting; large e-mail attachments)

shift is Google (Beer 2006). Exhibit 19.5 lists software developers who are now offering
some of their products as SaaSs and the diverse applications they address.
To engage in SaaS, the user pays the software provider for the user’s actual usage or a
fixed monthly/quarterly/annual fee instead of the one-time large fee plus support, as with the
traditional software licensing model. SaaS is particularly advantageous when a company
wants to experiment with a package before making a heavy up-front investment. This solution also enables a firm to protect its internal networks and quickly establish a presence in the
market. With SaaS, software can be delivered to any market segment, including home office
users, small businesses, medium and large businesses. It can result in substantial cost and time
savings. Although SaaS is useful to any size company, it is particularly appealing for SMEs,
who often have limited IT resources and tight budgets.
SaaS allows organizations to access business functionality from a central location over
the Web at a cost typically less than that for licensed applications because SaaS pricing is
based on a monthly fee. Also, because the software is hosted remotely, users do not need to
invest in additional hardware or software support. SaaS removes the need for organizations
to handle installation, set up, and daily upkeep and maintenance. SaaS may also be referred to
as hosted applications.
An important factor in the shift to SaaS is the need to integrate or combine software
components. According to some ( Jakovljevic 2006), SaaS at its most sophisticated must be
delivered using a service-oriented architecture (SOA) with Web Services.

RISE OF WEB SERVICES AND SERVICE-ORIENTED ARCHITECTURE
Interrelated technologies that can greatly facilitate the development of complex EC applications
are Web Services and service-oriented architecture (SOA).
Except in the simplest of cases, EC sites require the integration of software applications
written in different programming languages and residing on different computer hardware
distributed across the Internet. For example, on many B2C sites order entry is handled by one
software application or module, payment authorization by another application or module, and
shipping by yet another application or module. In these cases, there is a good chance that the
order entry, payment authorization, and shipping software modules all reside on separate
application servers linked through a Web server. Even when packaged applications are used, a
substantial amount of the implementation effort revolves around the task of tying together
these disparate applications or modules in such a way that the underlying connections are
transparent to the end users.
Existing technologies make integration a difficult task for a number of reasons (Tabor
2002; Erl 2004):
◗ Platform-specific objects. Existing EC software applications consist of a series of soft-

ware objects. Software objects have properties (attributes) and methods (actions that can be
performed on or by the object). For example, an order-entry application might have an
“order” object that has a property specifying the “quantity” being ordered and a method
called “set” that allows the quantity to be updated. In a distributed application, such as an

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

19-17

EC storefront, the application objects residing on different computers must have a way
to communicate with one another across the network.
Two main technologies are available for accomplishing this task: Microsoft’s
Distributed Component Object Model (DCOM) for Microsoft’s Windows operating systems and the Object Management Group’s (OMG) Common Object Request Broker
Architecture (CORBA) for Unix-based systems. The problem is that there is limited interoperability between these two technologies. If one component or application is based on
DCOM and another component or application is based on CORBA, then they cannot
communicate easily with one another. Special software called a DCOM/CORBA bridge
must be used to accomplish the task.
◗ Dynamic environment. In today’s rapidly changing business environment, business
partners come and go, and so do software vendors and their applications. If a software
component or application is no longer available because the vendor is no longer in business or has dropped a particular product line, then an existing EC application has to be
flexible enough to substitute a new component or application for the old one. If a new
business partner requires additional functionality, then an existing EC application has to
be flexible enough to incorporate new features, functions, or applications. Again, existing
EC application architectures make it difficult to accommodate these types of changes.
◗ Security barriers. Companies use firewalls to protect their networks against security
risks. Firewalls are designed to limit the types of communications and requests that can
be made from one computer to another. In most cases, only the simplest sorts of Web
requests using standard communication protocols (such as HTTP) are allowed. This
makes it very difficult for one component or application residing on one computer to
communicate with another component or application residing on another computer.
For these reasons, there is a need for universal standards, and this is where Web Services,
XML, and service-oriented architecture enter the picture.

THE ROLES OF XML AND WEB SERVICES
What is required to address these problems is a technology that can be integrated across different hardware and operating systems, that can interface with both new and legacy systems,
and that minimizes network security risks. This is where Web Services come into play.
According to the World Wide Web Consortium (W3C), a Web Service is a software system
identified by a URI (uniform resource indicator) whose public interfaces and bindings can be
defined and described using XML.
As the definition indicates, Web Services are based on XML (see Online Appendix B).
The operations (or methods) that a Web Service can perform are “defined and described”
using XML. Likewise, when another program or application wants to invoke the operations
or methods of a Web Service, the request is sent as an XML message. An XML document or
message is a text file with a set of tags and content (or values). The tags within an XML
document (denoted by “ ”) describe the content. For instance, the following XML document
might be used to represent an order placed by a customer for a digital camera:

123
Digital Camera ABC
1

Because XML messages are text based, they can be sent over the Web using standard
Web communication protocols (e.g., HTTP). This makes it easy for programs or applications
written in different program languages and running on different hardware to interoperate. It
also means that the messages sent from one program or application to another can pass easily
through firewalls.

WEB SERVICES
Web Services are self-contained, self-describing business and consumer modular applications, delivered over the Internet that users can select and combine through almost any
device, ranging from personal computers to mobile phones. By using a set of shared protocols

Web Service
A software system identified by a URI (uniform
resource indicator),
whose public interfaces
and bindings are defined
and described using XML.

19-18

Part 7: Application Development

and standards, these applications permit disparate systems to “talk” with one another—that
is, to share data and services—without requiring people to translate the conversation. The
result promises to provide on-the-fly and in-real-time links among the online processes of
different systems and companies. These links could shrink corporate IT departments, foster
new interactions among businesses, and create a more user-friendly Web for consumers. Web
Services provide for inexpensive and rapid solutions for application integration, access to
information, and application development. Web Services can be extremely useful for EC,
especially B2B structures.

Key Technologies in Web Services
In addition to XML, three other technologies are also instrumental in providing Web
Services (for examples, see Iverson 2004 and Birman 2005). These include:
Simple Object Access
Protocol (SOAP)
Protocol or message
framework for exchanging XML data across the
Internet.

◗ Simple Object Access Protocol (SOAP). SOAP is the most frequently used protocol or

message framework for exchanging XML data across the Internet. A SOAP message,
which is written as XML, consists of three parts: an envelope, an optional header, and a
body. The envelope encapsulates the message; the header provides optional information
about the message; and the body is the XML data being exchanged. For example, the
following SOAP message might be used to request the number of items in inventory
available for purchase:



Digital Camera ABC




Web Services
Description Language
(WSDL)
An XML document that
defines the programmatic interface—
operations, methods,
and parameters—for
Web Services.
Universal Description,
Discovery, and
Integration (UDDI)
An XML framework for
businesses to publish
and find Web Services
online.
security protocol
A communication protocol
that encrypts and decrypts
a message for online
transmission; security
protocols generally provide
authentication.

When a program wants to invoke a process or method performed by a specific Web
Service (e.g., getInventoryQuantity in the example), it simply sends a SOAP message to
the service over the Web. In turn, the Web Service sends a SOAP message in response.
◗ Web Services Description Language (WSDL). WSDL is an XML document that defines
the programmatic interface for a Web Service. The document specifies the operations
or methods that the Web Service can perform, along with the parameters that the service
needs to carry out the operations and the values that the service will return in response to a
particular request.
◗ Universal Description, Discovery, and Integration (UDDI). UDDI is a general business registry that originally was used as a way for the participants in a B2B exchange to
share information about their business and business processes (Deitel et al. 2003). More
recently, UDDI has been used as an XML framework for businesses to publish and find
Web Services online. The Web Service entries in a UDDI typically point to the Web
address (URL) of the WSDL file associated with the Web Service.
◗ Security protocols. A security protocol is a communication protocol that encrypts and
decrypts a message for online transmission; security protocols generally provide authentication. Several security standards are in development, including Security Assertion
Markup Language (SAML), which is a standard for authentication and authorization.
Other security standards are XML signature, XML encryption, XKMS, and XACML.
Exhibit 19.6 describes the interaction of the key components in a Web Service. Web
Services are based on XML, as detailed in Online Appendix B.

Web Services Platforms
A number of the major hardware and software vendors have created software development
environments that help programmers create and deploy Web Services. The development
environments provided by three of the leaders in this arena—Microsoft, IBM, and Sun—are
described briefly here. For a more extensive list of Web Services platforms, see Newcomer
and Lomow (2005).

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

Key Components of Web Services

EXHIBIT 19.6

WSDL
Document
2
UDDI
Registry

1

3
4

5

6
Client
Web
Service

1. Client queries
registry to
locate service.
2. Registry refers
client to WSDL
document.
3. Client
accesses
WSDL
document.
4. WSDL
provides data
to interact with
Web Service.
5. Client sends
SOAPmessage
request.
6. Web Service
sends
SOAPmessage
response.

Source: Web Services: A Technical Introduction by Dietel, H., et al. ©2003 Pearson Education. Reprinted by
permission of Pearson Education.

◗ Microsoft .NET. Microsoft has been a leader in the Web Services marketplace

(Rammer and Szpuszta 2005). Microsoft’s .NET framework provides the foundation
for Web Services that can be created and deployed on Windows 2000 and XP. The
development environment for the .NET framework is Visual Studio .NET. Visual
Studio .NET enables software developers to design, develop, and deploy Web
Services with the major Windows programming languages—C++, C# (C Sharp), and
Visual Basic .NET.
◗ IBM WebSphere. The foundation of IBM’s Web-based applications, including their
EC offerings, is the WebSphere Application Server. Over the past couple of years, IBM
has integrated various Web Services technologies (e.g., SOAP and WSDL) into its
application server. To assist software and application developers with the design, development, and deployment of Web Services on the WebSphere platform, IBM has
enhanced its existing development environment—the WebSphere Studio Application
Developer—to support Web Services and has created a new development environment
called the Emerging Technologies Toolkit (see Rodriguez et al. 2004). Section 19.5 provides a comprehensive discussion of the IBM WebSphere EC suite.
◗ J2EE Architecture. With J2EE Architecture (java.sun.com/j2ee), developers have
access to a complete development platform specifically designed to meet the needs of
enterprise application development. J2EE makes all Java enterprise functionality
available and accessible in a well-integrated fashion, simplifying complex problems
in the development, deployment, and management of multitier server-centric enterprise solutions.

The Notion of Web Services as Components
People generally view information systems, including the Web, as relating to information
(data) processing. Web Services enable the Web to become a platform for applying business services as components in IT applications. For example, user authentication, currency
conversion, and shipping arrangement are components of broad business processes or
applications, such as e-commerce ordering or e-procurement systems. (For further discussion, see Stal 2002.)

19-19

19-20

Part 7: Application Development

The idea of taking elementary services and joining them together to create new applications is not new. As described earlier, this is the approach of component-based development. The problem is that earlier approaches were cumbersome and expensive. According
to Tabor (2002), early component-integration technologies exhibited problems with data
format, data transmission, interoperability, flexibility (they are platform specific), and security. Web Services offer a fresh approach to integration. Furthermore, business processes
that are composed of Web Services are much easier to adapt to changing customer needs
and business climates than are “home-grown” or purchased applications.

A Web Services Example
As a simple example of how Web Services operate, consider an airline Web site that provides
consumers the opportunity to purchase tickets online. The airline recognizes that customers
also might want to rent a car and reserve a hotel as part of their travel plans. The consumer
would like the convenience of logging onto only one system rather than three, saving time
and effort. Also, the same consumer would like to input personal information only once.
The airline does not have car rental or hotel reservation systems in place. Instead, the airline relies on car rental and hotel partners to provide Web Service access to their systems. The
specific services the partners provide are defined by a series of WSDL documents. When a customer makes a reservation for a car or hotel on the airline’s Web site, SOAP messages are sent
back and forth in the background between the airline’s and the partners’ servers. In setting up
their systems, there is no need for the partners to worry about the hardware or operating systems each is running. Web Services overcome the barriers imposed by these differences. An
additional advantage for the hotel and car reservation systems is that their Web Services can be
published in a UDDI so that other businesses can take advantage of their services.

Web Services Entering the Mainstream
Popular sites on the Web also are turning to Web Services as a way of providing access to
their internal systems. In this way, the content and operations supported by these systems can
be transparently integrated with applications developed by other companies or individuals;
Google’s and Amazon.com’s services have received the most publicity.
Google’s Web Services API (application programming interface) enables programmers
and application developers to issue SOAP-based search requests to Google’s index of more
than 3 billion Web pages and to receive results as XML data. Google’s Web Services provide
a range of possibilities, including issuing regularly scheduled search requests to monitor the
Web for new information on a subject; performing market research by analyzing differences
in the amount of information available on different subjects over time; and searching via
non-HTML interfaces, such as the command line, pagers, or visualization applications.
Amazon.com also offers an extensive set of Web Services that can be used by its
“Associates” and other product sellers and vendors. The Amazon.com Associates program
enables Web sites to link to Amazon.com’s site and to earn money for sales generated through
the link. For Associates, Web Services provide a way to make their Web sites fresher and more
dynamic. For example, Associates can use Amazon.com’s Web Services to dynamically retrieve
prices, generate lists of products, display search results, produce recommendation lists, and
even add items to the Amazon.com shopping cart directly on their Web sites (Amazon.com
2007). Other companies use Amazon.com’s development platform to sell their products on
Amazon.com’s Web site. In this case, Amazon.com’s new Web Services enable these companies to do things such as manage their inventory, generate orders, and produce competitive
pricing information. For an application in a large bank, see Case 19.1 (p. 8).

Advantages of and Barriers to Implementing Web Services
Web Services offer a number of distinct advantages over previous programming initiatives that
have attempted to solve the problem of interoperability (i.e., getting software and applications
from different vendors running on different hardware and operating systems to communicate
with one another in a transparent fashion). According to Deitel et al. (2003) and Shirky (2002),
these advantages include the following:
◗ Web Services rely on universal, open, text-based standards that greatly simplify the

problems posed by interoperability and that lower the IT costs of collaborating with
external partners, vendors, and clients.

Chapter Nineteen: Building E-Commerce Applications and Infrastructure
◗ Web Services enable software running on different platforms to communicate, reducing

the cost and headaches of multiple platforms running on everything from mainframes to
servers to desktops to PDAs.
◗ Web Services promote modular programming, which enables reuse by multiple
organizations.
◗ Web Services are easy and inexpensive to implement because they operate on the existing
Internet infrastructure. They also offer a way to maintain and integrate legacy IT systems
at a lower cost than typical EAI efforts.
◗ Web Services can be implemented incrementally rather than all at once.
However, Web Services are not a panacea. Among the current barriers inhibiting widespread adoption of the technology are:
◗ The standards underlying Web Services are still being defined; thus, interoperability is

not automatic. Even in those instances where the standards are relatively stable, it still
requires programming skill and effort to implement and deploy Web Services.
◗ One area where the Web Services standards are not well defined is security. In terms of
interoperability, the good news is that Web Services enable distributed applications to
communicate with ease. The bad news is that Web Services also enable applications to
bypass security barriers (such as firewalls) with ease. Standards such as XML, SOAP,
WSDL, and UDDI say nothing about privacy, authentication, integrity, or nonrepudiation.
In an effort to bridge the gap between these standards and existing security standards
(such as public key encryption), several vendors and organizations have proposed and
are currently debating a number of Web Service security standards. One of these is
WS-Security, which is being proposed by Microsoft, IBM, and VeriSign.
◗ Although Web Services rely on XML as the mechanism for encoding data, higher-level
standards are still required, especially in B2B applications. For example, if two banks
want to communicate, they still need standards to define the specific content that is
being communicated. This is where standards such as OFX (Open Financial Exchange),
which defines the content of transactions between financial institutions, come into play.
The lack of coordination among all interested parties for high-level standards is why
Web Services will be adopted first within organizations and later across organizations.

SECOND-GENERATION WEB SERVICES
As the Internet matures and Web software becomes more sophisticated, an exciting second
generation of Web Services is leading to less programming and more assembly, putting the
power of the programmer into the hands of the user. A number of innovative products that
provide a drag-and-drop interface to weave Web Services together to build small applications
are making their way onto the market (Malik 2006). Essentially, all that is needed is an
Internet connection, a browser, and a good imagination. A representative sample of userfriendly software tools that take the programmer out of building custom business applications is shown in Exhibit 19.7. A number of techniques supporting this move to empower
the user-developer are discussed in the following sections.

EXHIBIT 19.7

Representative Products to Create
User-Generated Web Applications

Product Name

Company

URL

Coghead
Teqlo
Dabble DB
Project Runner

Coghead
Teqlo
Smallthought Systems
BEA Systems

Project Builder

BEA Systems

QEDWiki project

IBM

coghead.com
teqlo.com
dabbledb.com
bea.com/framework.jsp?CNT=index.htm&FP=/
content/products&WT.ac=topnav_products
bea.com/framework.jsp?CNT=index.htm&FP=/
content/products&WT.ac=topnav_products
ibm.com

19-21

19-22

Part 7: Application Development

Web 2.0
Web 2.0
A second generation of
Web Services that emphasizes online collaboration
and information sharing
among users.
social network
A social network is a
category of Internet
applications that help
connect friends, business partners, or other
individuals together
using a variety
of tools.
Ajax
A Web development technique for creating interactive Web applications.
Really Simple
Syndication (RSS)
A family of Web-feed
formats used to publish
frequently updated digital
content.

The latest generation of Web Services is Web 2.0. The term Web 2.0 was coined by O’Reilly
Media (O’Reilly 2005) to refer to a second generation of Web Services, which emphasizes
online collaboration and information sharing among users. Web 2.0 engages users on a
seemingly one-to-one basis in a way that first-generation Web tools were never able to
accomplish. The most popular Web 2.0 applications include social networks. A social network is a category of Internet applications that help connect friends, business partners, or
other individuals using a variety of tools, for example, Ajax, a Web development technique
for creating interactive Web applications, and Really Simple Syndication (RSS), a family
of Web-feed formats used to publish frequently updated digital content.
The earliest example of an Internet social network was Classmates (classmates.com). More
recently, Yahoo! Days (yahoo.com), MySpace (myspace.com), and Facebook (facebook.com) have
become increasingly popular tools to connect with and make friends. As these technologies
mature, a social marketplace is evolving. This move to an enterprise use of Web 2.0 that harnesses
the power of social networks and the marketplace to allow enterprises to expand their contact base
and/or advertise and sell their products and services has been termed Enterprise 2.0 (McAfee
2006). An example of an innovative social network is presented in Case 19.2.
Not surprisingly, new software tools, such as IBM’s WebSphere Community Edition
(Rauch 2007), Intel’s SuiteTwo (LaMonica 2006), Microsoft’s Expression Web (Rapoza
2006), and Oracle’s WebCenter (Hinchcliffe 2006), are being introduced to support the
Enterprise 2.0 environment as companies realize its potential to engage customers and
generate content for their Web sites in a way not previously possible. The potential to add
an additional dimension to a flat consumer Web site and to develop closer connections to a
company’s customer base is becoming very attractive to an increasing number of businesses.
The latest generation of the Web does not just link information, it links people. For example, a company can allow consumers who visit its Web site to create their own profiles and
rate and comment on products. Consumers can also create their own topic areas within
forums and build online communities around shared interests pertaining to the company’s
products. Those sites with streaming video capabilities can also encourage consumers to
provide user-supplied videos of customers using their products and solicit consumer feedback on beta versions of product commercials before final release. Just imagine the immeasurable value to small firms that are unable to afford large market research and advertising
campaigns; essentially, a Web 2.0 environment provides an ongoing 24/7 customer focus
group, supplying firms with an unending stream of data to analyze and act upon. In
February 2007, Patricia Seybold, founder and CEO of the Patricia Seybold Group, encouraged firms to consider the enhanced capabilities provided by Web 2.0 when she commented
that, “companies should be leveraging online tools and online communities to leverage
customer fragmentation and to address more customers’ needs, not fewer.” The move to the
development of Web 2.0 tools is shown in Exhibits 19.8 (p. 24) and 19.9 (p. 25).

Viral Video
viral video
Video clip that gains
widespread popularity
through the process of
Internet sharing, typically
through e-mail or IM messages, blogs, and other
media-sharing Web sites.
mashup
Combination of two or
more Web sites into a
single Web site that
provides the content of
both sites (whole or
partial) to deliver a novel
product to consumers.

The video dimension of Web 2.0 capabilities is referred to as viral video. The term viral
video refers to video clip content that gains widespread popularity through the process of
Internet sharing, typically through e-mail or IM messages, blogs, and other media-sharing
Web sites. Popular sites that embody this concept include YouTube (youtube.com), AOL
Comedy (comedy.aol.com/viralvideos), ifilm (ifilm.com) and VEOH (veoh.com). The marketing potential of viral video has yet to be fully explored, but companies that offer viral video
services to businesses are beginning to emerge, and companies are beginning to use preexisting social networks to produce exponential increases in brand awareness. See Wilson (2005)
for the six principles of viral marketing. Exhibit 19.10 diagrams the emergence of mass social
media combining Web Services, social networks, and viral video.

Mashups
Another novel approach to developing second-generation Web sites is the concept of a
mashup.
A mashup is essentially the combination of two or more Web sites into a single Web site
that provides the content of both sites (whole or partial) to deliver a novel product to

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

19-23

CASE 19.2

EC Application

A SOCIAL NETWORKING SLAM DUNK
BY PORTLAND TRAIL BLAZERS
When the Portland Trail Blazers launched the first social network for professional basketball fans on February 9, 2007,
fans quickly used the new Web site (iamatrailblazersfan.com),
to help Trail Blazers’ power forward Zach Randolph gain a slot
in the NBA All-Star game the following week.
The site, the purpose of which is to help Portland Trail
Blazers’ management better communicate with the team’s
fans and increase ticket sales, signed up an astounding 2,500
registered users in the first 3 days of operation. The
Portland, Oregon, NBA franchise partnered with Hands on
Portland to connect the team, the fans, and the Portland
community in an innovative way.
Utilizing Affinity Circles proven social networking
platform, the Trail Blazers created an online community so
fans could share their passion for the team. “Portland fans’
passion for the Trail Blazers is legendary, and many people
in our community share that same passion for technology,
so merging the two to create an official online community
to tap into those passions makes perfect sense,” said team
President and General Manager, Steve Patterson. “Our
network will further connect fans throughout the city,
across the country, and around the world. Partnering
with Affinity Circles allows us to deliver an authentic
experience for our fans with a proven trusted social
networking platform.”
On the site, fans can create profiles, join groups,
share photos, post comments, and much more. The site is
designed for easy and fast deployment, and because it is a
hosted solution, it can grow as fast as the fan base
requires.
The site gives fans the opportunity to use their online
connections with one another as a jumping off point for real
connections in the community and on the court. The online
community features a network for volunteerism via Portland’s
volunteer center and Trail Blazers’ community partner, Hands
On Portland. It also provides the opportunity for members to
form groups that can meet up to play games at local basketball courts or attend a Trail Blazers game, all with the comfort of knowing that personal communications are taking

place within an official setting sanctioned by the Trail
Blazers’ organization.
“Our partnership with the Trail Blazers allows us to
extend our track record of creating trusted social networking
community for well known affinity-based organizations while
demonstrating the application of this technology in the professional sports arena,” said Steve Loughlin, chief executive
officer of Affinity Circles. “The market response to our products has been tremendous, and we believe our growth opportunities are significant. We are excited about working closely
with the Trail Blazers to launch the first fan network for an
NBA team, an online experience that will serve the team, its
fans, and the city of Portland.”
The team joins a growing number of businesses that are
embracing Web 2.0 tools such as wikis, blogs, and podcasts
to create social networks to enable customers to add content
and create virtual communities around their brand. These
include General Motors Corp. (for their Pontiac and OldSpice
brands), American Society for Prevention of Cruelty to
Animals (ASPCA), and Travelocity’s Experience Finder, a new
site it launched to help customers choose travel destinations.
Sources: Compiled from Havenstein (2007), Sasse (2006), and
Portland Oregon Trail Blazers (2007).

Questions
1. What advantages, other than those discussed in the
case, might the Trail Blazers gain from the social network it has established?
2. Search the Web for other sports entities that have
established social networks to communicate with
their customers. How many did you find? In what
ways are they the same or different from
iamatrailblazersfan.com?
3. Make a list of other types of companies that you
think could benefit from a social networking site
and discuss why.

consumers. Mashups reach into the Application Program Interface (API) for a given application and extract information, including Web page elements, and use them to launch a new
application that adds value. The most popular type of mashup relates to maps (e.g., Google
Maps, Yahoo! Maps), which can be combined with other data sources to produce interesting
results (Hoff 2006). Examples of such value-adding mashups include chicagocrime.org, which
combines local crime stats with Google Maps to show crimes committed by geographical area,
and 1001Seafoods.com, which mashes up a database of fishing holes with Google Maps to
create a U.S. map that shows fishing sites and offers directions and information on the location and sources for bait and tackle. Combining Google Maps and real estate information,
Zillow (zillow.com) enables users to zoom in on a neighborhood of interest to see the environment and examine home values, home sales’ history, and so on. For those who prefer to
rent, HousingMaps (housingmaps.com) offers a combination of Craigslist rentals with

19-24

Part 7: Application Development

EXHIBIT 19.8

The Move to Product Development 2.0
Product Development 1.0

Primary customer
interaction channel
Source of innovation
Innovation cycle
Content creators
Feedback mechanisms
Customer engagement
style
Product development
process
Product architecture

Product development
culture
Product testing
Customer support
Product promotion

Business model

Customer relationship
Product ownership
Partnering process
Product development
and integration tools
Competitive advantage

Product Development 2.0

Telephone, mail, face-to-face, one-way
media (print, TV, radio, etc.), e-mail
Organizations
Months, years
Internal producers
Market research, satisfaction surveys,
complaints, focus groups
Controlled, well-defined process

World Wide Web, e-mail, IM
Customers
Minutes, hours, days, weeks
External producers
Analytics, online requests, user-contributed changes

Upfront design

Less upfront, much more emergent

Closed, not designed for easy extension
or reuse by others; walled garden

Open, very easy to extend, refine, change and add
on to, ecosystem friendly, designed (and legal) for
widespread remixing and mashups
Egalitarian, decentralized, remix instead of reinvent,
highly collaborative, wisdom of crowds

Hierarchical, centralized, not invented
here, somewhat collaborative, expert
driven
Internal, dedicated test groups,
hand-picked select customers
Customer service
One-way marketing and advertising

Product sales, customer service and
support fees, service access charges,
servicing high-demand products
External buyer (consumer)
Institution, particularly executive
management and shareholders
Formal, explicit, infrequent, mediated
Heavyweight, formal, complex, expensive,
time consuming, enterprise oriented
Superior products, legal barriers to entry
(IP protections), brand name
advantage, price, popularity,
distribution channel agreements

Spontaneous and chaotic

Users as testers
User community
Viral propagation, explicit leveraging of network
effects, word of mouth, user-generated and two-way
advertising
Advertising, subscriptions, product sales, Servicing all
product niches (the long tail), unintended uses
Partner and—increasingly remunerated—supplier
(consumers as producers)
Entire user community
Ad hoc, thousands of partners online, disintermediated
Lightweight, informal, simple, free, fast, consumer
oriented
Number one or two market leader, leveraging crowd
sourcing effectively, mass customization, control
over hard-to-create data, end user sense of
ownership, popularity, cost-effective customer
self-service, audience size, best-of-breed
architectures of participation

Google Maps to show rental opportunities in nearly 40 regions across the United States.
Other mashups combine travel, shopping, sports, news, video, and photo sites. An interesting
site that tracks the mashup phenomenon is ProgrammableWeb (programmableweb.com),
which offers a mashup dashboard showing all the latest mashup sites. One of its most powerful tools is its “mashup matrix” (programmableweb.com/matrix), which presents approximately 200 Web sites in a grid with dots that highlight the intersections where two sites have
been brought together in a mashup. At each intersection between sites, pop-up boxes list all
mashup that have been created using the sites; in many cases, there are multiple sites at each
intersection. As of March 2007, the ProgrammableWeb matrix recorded the existence of
nearly 1,600 mashups, with new mashups appearing at the rate of three new mashups per day.
The rapid increase of number of mashups is shown in Exhibit 19.10.
Current software available to assist in user development of mashups includes
Dapper (dapper.net), an add-on to the Firefox browser, and Yahoo! Widget Engine 3.1

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

EXHIBIT 19.9

19-25

Product Development 2.0: Using the Web to Put
Users in Control and Co-Create Better, Richer
Products Faster
Back-Office
Infrastructure

Web 2.0 App
I
AP

Reuse and
extension
(mashups, widgets,
add-ons, etc)

perience
user ex
ge
Web pa

User
community

online

rich

Partners,
suppliers,
customers

Products

Services

User-Controller
Elements

Open
control

Features and capabilities
User data and contributions
Customer community and support
Marketing and advertising
User feedback (Rating, Rankings,
Reviews, Comments)

Consumption
Control

Institutionally
Controlled Elements

Contributions

Architecture of participation
Governance and constraints
Monetization and revenue sharing

Continuous
refinement

Institution
Key Outcome
Control over
increasing mass of
hard to recreate
data (”collective
intelligence”)

Source: Dion Hinchcliffe Web 2.0 Blog at web2.wsj2.com.

(widgets.yahoo.com), a JavaScript runtime engine for Windows and Mac OS X that lets
users run small files called Widgets (e.g., alarm clocks, calculators, weather, stock reports, and
hundreds of other applications) to create a mashup Web site or desktop.
All of these new Web development tools and techniques require the support of an
integrative architecture, known as service-oriented architecture (SOA), which is
described next.

SERVICE-ORIENTED ARCHITECTURE (SOA)
Service-oriented architecture (SOA) is a term that has emerged to describe executable
components—such as Web Services—that can be invoked by other programs that act as
clients or consumers of those services (Finkelstein 2005). Exhibit 19.11 depicts the conceptual roles and operations of an SOA. The basic premise of SOA is to reuse and reconnect
existing IT assets (also called services) rather than more time consuming and costly reinvention of new systems. A growing number of firms are addressing the constraints of their
current IT architecture and infrastructure by moving to an SOA. In June 2005, a Gartner
Group report (Cantara 2005) named SOA as one of the five hottest technology topics of

EXHIBIT 19.10 The Rapid Increase of Mashups

on the Web
1,600
1,400
1,200

1,000
800

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Programmableweb.com 02 /19/07
Source: Dion Hinchcliffe Web 2.0 Blog at web2.wsj2.com.

service-oriented
architecture (SOA)
An application architecture in which executable
components, such as
Web Services, can be
invoked and executed by
client programs based on
business rules.

19-26

Part 7: Application Development

EXHIBIT 19.11 The Three Conceptual Roles and Operations

of a Service-Oriented Architecture
Service
Broker

Matches Web Service to
business rules of processes
(Business process management)

Discover

Register
service/contract;
use XML for

Use UDDI
Service
Contract
Transport

Service
Consumer

Service
Provider

and Bind: Use SOAP
Client

Description

Service

= Basic roles
= Functional activities

2005 and predicted that 80 percent of all software development projects will be SOA driven
by the year 2008. The benefits of SOA adoption are shown in Exhibit 19.12.
The three basic SOA roles are the service provider, the service consumer, and the
service broker. A service provider makes the service available and publishes the contract
that describes its interface. It then registers the service with a service broker. A service
consumer queries the service broker and finds a compatible service. The service broker
gives the service consumer directions on where to find the service and its service
contract. The service consumer uses the contract to bind the client to the service. For the
three conceptual roles to accomplish the three conceptual operations, an SOA system
must supply four core functional architecture components:
◗ Transport. The transport component represents the formats and protocols used to com-

municate with a service.
◗ Description. The description component represents the language used to describe a service.

The description provides the information needed to tie it to a service.
◗ Discovery. The discovery component represents the mechanism used to register or
advertise a service and to find a service and its description.
◗ Registration. The registration component registers the services of a service provider
with a service broker.
With SOA and Web Services, functions within existing programs and suites, as well as
functions within ERP (enterprise resource planning), CRM (customer relationship management), SCM (supply chain management), and other packages, can be invoked automatically and
executed anywhere in the world based on business rules. A developer does not need to know how
the programs work, only the input that they require, the output they provide, and how to invoke
them for execution. Developers can also swap out one service and replace it with another service

EXHIBIT 19.12 Benefits of Service Oriented

Architecture






Reduced integration cost
Improved business/IT alignment
Extension of leveraging of existing IT investments
Faster time to assemble new applications
Lowest IT maintenance cost

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

that is designed to achieve the same or an enhanced result without having to worry about the
inner workings of the services. SOA and Web Services are expected to totally transform the way
EC systems are built, moving from slow, error-prone manual coding to automation.
According to Then (2005), the essence of an SOA is reusable services and the ability to link
disparate applications. EC service components (such as credit card processing or bills payment) can
be created once and then reused to drive better cost-efficiency from EC and IT investments. What
an SOA aims to achieve is to align IT with real business requirements. Hence, if a business user has
a requirement, it can be translated into services in an SOA environment. A number of software
vendors are currently competing in the SOA environment, including IBM, with its award winning
WebSphere Portal V6, which offers improved efficiency and productivity through a “significantly
enhanced user experience and additional personalization capabilities” (IBM 2007a). A list of other
SOA products can be found at en.wikipedia.org/wiki/List_of_SOA_related_products. For a
comprehensive discussion on the usability of SOA, see Bieberstein et al. (2005), Tyler (2005), and
en.wikipedia.org/wiki/Service-oriented_architecture. An up-and-coming subset of SOA that
provides business partners with a way to connect, integrate, and mashup is Web-oriented architecture.
The term Web-oriented architecture (WOA) was coined by Nick Gall of the Gartner Group and
is used to describe a set of Web protocols (e.g., HTTP and plain XML) as the most dynamic,
scalable, and interoperable Web Services approach. According to Hinchcliffe (2006), the main
difference between a traditional SOA and a WOA is that a WOA advocates REST, an increasingly
popular, powerful, and simple method of leveraging HTTP as a Web Service. Representational
State Transfer (REST) refers to a collection of architectural principles. The term also is used in
a loose sense to describe any simple interface that transmits domain-specific data over HTTP
without an additional messaging layer. Hinchcliffe is quick to note, however, that “WOA is
definitely not the hammer for every job.” He goes on to say that certain applications, particularly
in the high-end of the enterprise, require the more sophisticated component of SOA. However,
for the vast majority of uses, it would appear that WOA is the most interoperable, easiest to
implement, and most highly scalable technique for building open Web Services that anyone
can use.
To demonstrate the integration of Web Services and SOA, Application Case 19.3
provides an example of a Web-based service provider.
Another concept in IT infrastructure that has matured to enable the development of
e-commerce applications is virtualization.

19-27

Web-oriented
architecture (WOA)
A set of Web protocols
(e.g., HTTP and plain
XML) as the most
dynamic, scalable, and
interoperable Web Service
approach.
Representational State
Transfer (REST)
Refers to a collection of
architectural principles.

VIRTUALIZATION
Virtualization enables the sharing and/or aggregation of physical resources, such as operating systems, software, and IT services, in a way that hides the technical detail from the end
users and reduces the per unit service cost. Because the virtualization system sits between the
guest and the hardware, it can control the guest’s use of CPU, memory, and storage, even
allowing a guest OS to migrate from one machine to another.
Originally developed in the 1960s to partition mainframe hardware, virtualization declined
in popularity as minicomputers and PCs provided a more efficient, affordable way to distribute
processing power. Recently, decreasing hardware costs, underutilization of resources, escalating
maintenance costs, and security issues have caused IT professionals to take another look at virtualization as a way to help businesses address issues of scalability, security, and management of
their IT infrastructure. The benefits of virtualization are shown in Exhibit 19.13.

Virtualization Products
Not surprisingly, there has been a visible surge in virtualization-related startups, acquisitions,
and partnerships, as well as related academic research. Dozens of virtualization products are
available, offered by a number of small and large companies. Some examples in the operating
systems and software applications space are VMware (vmware.com), Xen (xensource.com), and
Microsoft Virtual Server (microsoft.com/windowsserversystem/virtualserver/default.mspx).
Major IT players also have shown a renewed interest in the technology. For example, IBM—
a long-time pioneer in the area of virtual machines—has not only strengthened its own
virtualization-related products but has forged a relationship with VMware. Sun and HP also are
improving their virtualization offerings (IBM 2007b). Both Intel and AMD now make processors that explicitly support virtualization. Microsoft acquired Connectix Corporation, a developer

virtualization
A technique for hiding
the physical characteristics of computing
resources from the way
in which other systems,
applications, or end
users interact with those
resources.

19-28

Part 7: Application Development

EXHIBIT 19.13 Benefits of Virtualization
Partitioning
• Multiple applications and operating systems can be supported within a single physical system.
• Servers can be consolidated into virtual machines on either a scale-up or scale-out architecture.
• Computing resources are treated as a uniform pool to be allocated to virtual machines in a controlled manner.
Isolation
• Virtual machines are completely isolated from the host machine and other virtual machines. If a virtual machine crashes,
all others are unaffected.
• Data do not leak across virtual machines, and applications can only communicate over configured network connections.
Encapsulation
• Complete virtual machine environment is saved as a single file; easy to back up, move, and copy.
• Standardized virtualized hardware is presented to the application, guaranteeing compatibility.

of virtualization software for Windows and Macintosh platforms, and Softricity, an application
streaming developer. EMC acquired VMware, and Cisco acquired several companies that
develop products in the storage, file, and network virtualization spaces. Some interesting insights
into the new virtualization phenomenon are provided by Dr. Mladen Vouk of North Carolina
State University in Insights and Additions 19.1. Dr. Vouk is one of the principals of the development and operation of the Virtual Computing Laboratory in Raleigh, North Carolina.

CASE 19.3

EC Application

VERIO SETS ITS SIGHTS ON ONLINE
SMALL-TO-MEDIUM FIRMS
On December 13, 2006, Verio (verio.com) announced the roll
out of its latest version of its Web-based shopping cart tool—
ShopSite 8.1. The software will help its Web hosting customers create and manage successful online stores without
complex installation or high cost. ShopSite 8.1 enables SMEs
to manage inventory, payments, and sales records on their
Web sites. It is compatible with multiple payment processing
services, including PayPal, Authorize.Net, and WorldPay.
Support for the new Google Checkout allows merchants
to accept credit card payments without having to obtain a
merchant account, and Verio customers who configure
ShopSite in accordance with Payment Card Industry Security
Practices guidelines can be confident that their credit card
and order information are safe and secure. “By incorporating
a direct e-commerce solution such as ShopSite into their Web
sites, Verio customers can help to increase customer loyalty
by improving the shopping experience on their sites,” said
Dennis Boyle, Verio’s chief operating officer in a statement.
ShopSite 8.1 is certified by VISA as a Payment
Application Best Practices applicant and will automatically
pass purchasing information by VeriSign’s Fraud Control system. Additionally, a new auction-integration function allows
customers with eBay Seller accounts to offer products for auction on eBay directly from the ShopSite back-office interface.
DY Home Décor, an online retail store that sells home
décor merchandise, selected Verio Web hosting with the
ShopSite tool, which integrated seamlessly with its site.
Through the ShopSite tool, DY Home Décor is able to provide
its customers with a high level of security and sophisticated

features, such as FedEx real-time quotes, which complements
the company’s global shipping capabilities.
ShopSite 8.1 Starter comes preinstalled with Verio’s
Hosting 2000 and Windows eStorefront hosting plans; it can
be added to other Verio hosting plans for $9 per month.
Customers can upgrade ShopSite to the Manager or Pro level
for an additional monthly fee.
Verio hosts Web sites at various service levels. At each
level, Verio offers state-of-the-art services, a tier-1 network,
and a team of experts to assist in selecting applications or
designing a system. It also promises availability (get started
quickly), reliability (99.9 percent uptime), confidentiality
(secure files), data integrity (daily backups are performed to
protect files from loss or corruption), throughput (pages
come up quickly), scalability (an account can be upgraded as
the client grows), support (24/7 access), control (easily
changed Web design), and information (Web site traffic statistics, etc.). Verio clients can acquire self-service accounts
or simple transactional functionality, or they can work closely
with Verio to design and build robust systems to be hosted
by Verio.
Sources: Compiled from WHIR News (2006) and Prince (2006).

Questions
1. Identify the major features of ShopSite 8.1.
2. What are the value-added services Verio offers?

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

Insights and Additions 19.1 A Virtualization Example: “The Next Big Thing”
At the computational-resource level, virtualization focuses on the delivery of operating system or
software application functions. This includes the virtual desktop infrastructure, traditional serverbased solutions, Web-based solutions, terminal server solutions, and more recently, application
streaming and “image”-level services. An underlying assumption of virtualization is that storage
and networking are available and may also be virtualized.

Virtualization Methods
Depending on how much and which parts of the resource(s) are shared, one can distinguish a
plethora of virtualization methods operating system-level virtualization and application virtualization (e.g., software as a service). These methods range from emulation (enables computer
programs to run on a platform other than the one for which they were originally written) and
simulation (attempts to gather a great deal of runtime information, as well as reproducing a
program’s behavior; emulation attempts to model to various degrees the state of the device being
emulated) to native virtualization (software that leverages hardware-assisted capabilities
available in the latest processors to provide near-native performance).
Typical virtualization categories are illustrated in Exhibit 19.14. Today, an operating system
typically runs on “bare metal,” or natively, on a computer (e.g., a desktop unit, a racked server).
During its operation, it has sole use of all the computer resources assigned to it (input/output
devices, memory, processor, etc.), but it may share storage and network resources. An advantage
is that the end user owns the equipment and uses it at will. The downside is that the end user
may be responsible for installation and maintenance; that as hardware ages its capabilities may
not match new software; and, if it breaks, another resource on which to work with one’s software
and data (provided it is backed-up) may not be available. Furthermore, the resource may be idle a
lot of time. Remote shared-server-based services may offer an alternative for improving utilization, functionality, and maintenance, but without virtualization the cost may not be justifiable.

Implementation

emulation
A software emulator
allows computer programs to run on a platform (computer architecture and/or operating
system) other than the
one for which they were
originally written.
simulation
Attempts to gather a
great deal of runtime
information as well as
reproducing a program’s
behavior.

native virtualization
Leverages hardwareassisted capabilities
available in the latest
processors to provide
near-native performance.

Individual virtualization products (e.g., VMware) can be installed and used on their own. However,
most enterprises typically have a range of resource needs—from single desktops to server-based
services to high-performance computing—and a single solution usually does not offer all the

EXHIBIT 19.14 An Illustration of Virtualization

Categories
...
OS
“Bare Metal”
H/W

Applications, services, middleware ...
Guest
OS 1

Applications, services, middleware ...

Guest
OS 2

...

Guest
OS N

OS-level Virtualization Layer
Base Operating System (e.g., Linux)

Guest
OS 1

Guest
OS 2

...

Guest
OS N

Hardware
Computers, storage, network

H/W Virtualization Layer (Hypervizer)
Operating system-level virtualization
Hardware
Computers, storage, network
Platform (Hardware) Virtualization
The VCL is supported in part by the IBM Shared University Program, NC State College of Engineering and
Information Technology Division and DOE SciDAC grant DE-FC02-01ER25484 (Used with permission of
Dr. Mladen Vouk, North Carolina State University - vouk@ncsu.edu).

(continued )

19-29

19-30

Part 7: Application Development

Insights and Additions 19.1 (continued)
options. One way to handle this is through a distributed resource integration and utilization and load-balancing solution that
can offer a wide variety of IT services.
To illustrate the concept, we focus on the NC State University Virtual Computing Laboratory (VCL). VCL is a secure, productionlevel, on-demand, broad capability utility computing architecture and technology for accessing solutions based on real and virtualized computational, storage, and software resources. The key differentiators of VCL are its simplicity; versatility, security, and
cost-effectiveness; broad resource-based approach to “virutalization”; and its flexible delivery of resource services through “images.”
A user accesses VCL through a Web interface to select a combination of applications, operating systems, and services from
a menu. If a specific combination is not already available as an “image,” an authorized user can construct one from the VCL
library components. This customization capability is very much in the spirit of what services engineering and management is all
about. VCL Manager software then maps the request onto available software application images and available hardware
resources; it then schedules it for immediate use (on demand) or for later use. VCL delivers a range of options—from single real
or virtual computer laboratory “seats” or desktops, to single applications on demand, to classroom-size groups, to enterprise
server solutions, to research clusters, to high-performance computing services.
NC STATE UNIVERSITY

VCL Manager Software
User accesses
Web interface
and requests
an application

Web
Interface

Scheduler

Schedule
DB

Scheduler finds
a server with the
requested application
or has management
node load requested
application on a server

Internet
North Carolina
State University
Virtual
Computing Lab
Model

Management
Node
Working
& Permanent
Net-based
Server with requested
Storage
application is made
available to user

Application
Image
Library
Servers

This work is supported in part by the IBM Shared University Program, NC State College of Engineering and information Technology Division, and DOE SciDAC grant DE-FC02-01ER25484.

Choosing the Platform
Computational hardware and storage can be any appropriate platform—from an IBM blade center, to a collection of diverse
desktop units or workstations, to an enterprise server, to a high-performance computing engine. Storage, communications, and
other hardware are subsumed. VCL Manager provides appropriate aggregation or disaggregation of the available hardware
resources before mapping the requested image(s) onto that hardware. The solution is deployed in VCL management, image, and
portal nodes. It allocates the appropriate number of server resources for the task at hand, automatically installing the images,
and distributing them across those resources to optimize performance.

Conclusion
VCL is a simple, but effective, virtualization tool that enables NC State University students and faculty to tap into the power of
high-end laboratories directly from their laptops or computers from anywhere on campus—or from anywhere in the world. From
the NC State perspective, the network of VCL nodes and services NC State operates is a grid that works. It is secure, and it has a
scalable, maintainable, and sustainable architecture for delivery of a variety of diverse service environments anytime and
anyplace on demand or by reservation. It has broadly adjustable server resources matched to service environment requirements
ranging from virtual servers, to single a physical server, to multiple physical servers for dedicated single users or shared multiple
users. Most importantly its architecture is SOA compliant.
Source: Dr. Mladen Vouk, North Carolina State University, Box 8206, Raleigh, NC 27695, vouk@ncsu.edu.

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

OTHER DEVELOPMENT OPTIONS
Besides the three major options for developing EC applications (buy, develop in-house, and
outsource/lease), several other options are currently available and are appropriate under certain
circumstances:
◗ Join an e-marketplace. With this option, the company “plugs” itself into an e-marketplace.









For example, a company can place its catalogs in Yahoo!’s marketplace. Visitors to Yahoo!’s
store will find the company’s products and will be able to make purchases. The company
pays Yahoo! monthly space-rental fees. In such a case, Yahoo! is a hosting service for the
company as well. As for development, the company will use templates to build its store, and
it can start to sell after only a few hours of preparation work.
Join an auction or reverse auction third-party site. Joining a third-party site is yet
another alternative. Again the plug-in can be done quickly. Many companies use this
option for certain e-procurement activities.
Joint ventures. Several different joint-venture partnerships may facilitate e-business
application development. For example, four banks in Hong Kong developed an e-banking
system. In some cases, a company can team up with another company that already has an
application in place.
Join a consortium. This option is similar to the previous one, except that the company
will be one of the e-market owners. Thus, the company may have more control over the
market architecture.
Hybrid approach. A hybrid approach combines the best of what the company does internally with an outsourced strategy to develop contracted partnerships. Hybrid models work
best when the outsourced partner offers a higher level of security, faster time-to-market,
and service-level agreements.

Section 19.3 ◗ REVIEW QUESTIONS
1. Define insourcing.
2. List some of the pros and cons of using packaged EC applications.
3. Consider the differences between utility computing, ASP, and SaaS. Compare and contrast the benefits and drawbacks of each of these outsourcing approaches.
4. Consider and describe other development options.
5. List some reasons why it is difficult for applications running in different environments
on different computers to communicate with one another.
6. Define Web Services.
7. What role does XML play in Web Services?
8. Describe the key technologies underlying Web Services.
9. What types of Web Services do Amazon.com and Google offer application developers?
10. What are some of the advantages of Web Services?
11. What are some of the factors limiting the adoption of Web Services?
12. Define service-oriented architecture (SOA) and list its advantages. Describe the relationship between SOA and Web Services EC.
13. Define virtualization and describe its relationship with SOA.
14. Discuss ways in which virtualization might assist a small manufacturing firm to offer an
e-commerce application to its customers.

19.4 CRITERIA FOR SELECTING A DEVELOPMENT
APPROACH
If a company decides to buy or lease an EC application, the following representative selection
criteria need to be considered:
◗ Flexibility. Commercial packages need to be modified or adapted to the specific

requirements of an application. Therefore, it is important to evaluate the extent to

19-31

19-32

Part 7: Application Development



















scalability
How big a system can
grow in various dimensions to provide more
service; measured by total
number of users, number
of simultaneous users, or
transaction volume.






latency
The time required to complete an operation, such as
downloading a Web page.

which a package can be adapted and the willingness of the vendor to perform or support the adaptation.
Information requirements. The selected package should satisfy the information
requirements of the EC application under development. Information collection, storage,
and retrieval capabilities and the database structure should be carefully examined.
User friendliness. User friendliness is especially important for B2C, G2C, and some
B2B sites. In these cases, if an application is difficult for the average visitor or customer
to use, then it will have an immediate impact on it use and subsequently the bottom line.
Hardware and software resources. The computer type (e.g., desktop, laptop, mainframe) and the operating system (e.g., Windows, LINUX, Mac) required by the package
must be compatible with the existing platform. The CPU and storage requirements must
also be compatible with existing specifications or easily accommodated.
Installation. The installation effort required to implement the package is another
important consideration. Some packages are complex and their installation requires
extensive consultation. The installation process may also take a considerable amount of
time and expertise.
Maintenance services. Because EC application requirements are changing constantly,
ongoing maintenance is required. It is important to consider how often the package
needs to be updated and whether the vendor provides assistance for its maintenance.
Vendor quality and track record. It is less risky to acquire an EC package from a vendor
who has a good reputation and track record than from one with a less-than-stellar or
unknown reputation. A vendor’s quality can be indicated by its experience in the particular
application and its sales and financial records, as well as its responsiveness to clients’
requests. Vendor support may include online help and CRM programs, as well as PRM
tools. To minimize risk, minor applications should be acquired first.
Estimating costs. The costs of EC projects are usually difficult to assess and often
underestimated. In addition to the obvious costs associated with EC development, it is
also important to factor in the costs of installation, integration, customization, training,
and maintenance.
Personnel. Staffing requirements should be planned for in advance to ensure that the organization has the appropriate human resources for systems development (in the case of inhouse development), implementation, operation, and maintenance. Currently, it is difficult
to recruit and retain IT personnel with appropriate knowledge and experience in EC application development. Special expertise acquired from external consultants can be expensive.
Technological evolution. Planning ahead for technological evolution facilitates the
upgrade of EC applications and enables the organization to adopt innovations more
quickly than the competition. It is, therefore, important to allow for flexibility in the
application design so that the chosen options do not impose major limitations on future
choices. Given the rapid pace of IT evolution, it is sometimes preferable to develop EC
applications incrementally to take advantage of the latest developments in the technology.
Scaling. System scalability refers to how big a system can grow in various dimensions to
provide more service. Scalability can be measured in several ways, including the total
number of users, the number of simultaneous users, and the transaction volume. These
dimensions are not independent because scaling up the size of the system in one dimension can affect the other dimensions. The growth of scale is facilitated or constrained by
the system architecture.
Sizing. The required size and performance of an application are also difficult to predict
because the growth of the user population of certain EC applications is hard to anticipate. Overloading the application decreases performance. For regular IT applications,
deterioration in performance may affect productivity and user satisfaction; for EC applications, it could result in a major loss of business.
Performance. System performance is a critical factor for business success, particularly
when the system is used for EC. In addition to convenience, good performance also
brings customers and competitive advantages. Performance is measured by two main
metrics: latency and throughput. Latency measures the time required to complete an
operation such as downloading a Web page. It is an indicator of the users’ experience with

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

the system. Throughput measures the number of operations completed in a given period
of time. It indicates the capacity or number of users that a system can handle. Throughput
and latency are interrelated. An increase in either measure directly affects the other.
◗ Reliability. Reliability is an essential requirement for a successful system. System failures
and downtime are costly. When an EC application fails, business is interrupted; at best
the company loses sales; at worst it loses customers. System reliability can be enhanced
through the use backup systems.
◗ Security. Security is critical to the adoption and diffusion of EC. Data and information
flow in EC, as well as stored data, may include private and/or proprietary information.
Thus, a selected package must meet strict security requirements. Systems, communication, and data security must be addressed early in the design of EC applications, not after
their implementation. In addition to technological solutions such as firewalls and
encryption, physical and procedural security measures must also be enforced.

19-33

throughput
The number of operations completed in a
given period of time;
indicates the number of
users that a system can
handle.

For additional information on selection criteria, see Whitten and Bentley (2007) and the
e-Security Toolkit at e-security-e-commerce-security.com/.

Section 19.4 ◗ REVIEW QUESTIONS
1. List some of the major criteria to consider when deciding whether to buy or lease an
EC application.
2. Define latency.
3. Define throughput.
4. Discuss the business implications of having inadequate security on an e-commerce site.

19.5 E-COMMERCE SOFTWARE PACKAGES AND SUITES
Whether a company opts to purchase or lease its EC applications, two basic categories of
software are available: functional packages, such as electronic catalogs, and merchant server
software, such as EC suites.

FUNCTIONAL SOFTWARE PACKAGES
Standard functional software packages are available from a large number of vendors specifically
for storefront construction (see Chapter 16). An example can be found at monstercommerce.
com/shopping_cart_features_new.asp. This site offers dozens of software packages in the
following areas: setting up your site, merchandising, inventory, payment options, hosting, shopping, tax, sales analysis, databases and systems, customer service, site design and layout, repeat
customer accommodation, and security. Each includes a wide variety of features.
MonsterCommerce (monstercommerce.com) offers software both for small businesses
and for large corporations (see demo at the site). The site also offers integrated solutions
that are offered by several other vendors (e.g., storefront.com). An up-to-date list of vendors
and the EC software packages they offer can be found at thesoftwarenetwork.com/
eCommerce%2DSoftware.
Electronic catalogs are the virtual version of traditional product catalogs (see Chapter 2).
Like its paper counterpart, an electronic catalog contains written descriptions and photos
of products, along with information about various promotions, discounts, payment methods, and methods of delivery. Electronic catalogs are included in merchant server software,
which includes features that make it simple and relatively inexpensive to develop (usually
less than $10,000). A catalog operation includes a straightforward pricing and product
configuration.

Merchant Server Software
Merchant server software commonly includes the following features:
◗ Templates or wizards for creating a storefront and catalog pages with pictures describing

products for sale
◗ Electronic shopping carts that enable consumers to gather items of interest until they are
ready for checkout

electronic catalog
The virtual-world equivalent of a traditional
product catalog; contains
product descriptions and
photos, along with information about various
promotions, discounts,
payment methods, and
methods of delivery.
merchant server
software
Software for selling over
the Internet that enables
companies to establish
selling sites relatively
easily and inexpensively.

19-34

Part 7: Application Development

EXHIBIT 19.15 Merchant Server Architecture
Store
HTML Pages

Third-Party
Applications
Merchant
Server

Internet

Financial
Network
Web
Browser

Web
Server

Database
Catalog
Order

◗ Web-based order forms for making secure purchases (either through SSL encryption or

the SET protocol)
◗ A database for maintaining product descriptions, pricing, and customer orders
◗ Integration with third-party software for calculating taxes and shipping costs and for

handling distribution and fulfillment
Exhibit 19.15 outlines the major components of merchant server software. As shown, a
single server is used to handle product presentation, order processing, and payment processing
(Treese and Stewart 2003). Likewise, a single database is used to store the catalog (i.e., product descriptions) and handle the details of customer orders. The pages of the electronic catalog are created dynamically from the product descriptions contained in the catalog database.
For those merchants with only a few products for sale, it is not necessary to store the product
descriptions in a database. Instead, the pages of the Web catalog can be created ahead of time.

EC SUITES
EC suite
A type of merchant server
software that consists of
an integrated collection
of a large number of EC
tools and components
that work together for EC
applications development.

An EC suite is a type of merchant server software that consists of an integrated collection of a large
number of EC tools and components that work together for EC applications development. EC
suites offer builders and users greater flexibility, specialization, customization, and integration in
supporting complete front- and back-office functionality. In an EC suite, the functionality is
distributed across a number of servers and databases instead of relying on a single server and database, as with less sophisticated merchant server systems. The elements displayed in Exhibit 19.16
are indicative of the components contained in a typical EC suite, the processes supported by an EC
suite, and the back-end databases and operational systems utilized by the processes.
Over the past few years, the EC suite marketspace has experienced a substantial amount of
consolidation. Among the major products that remain on the market are Microsoft’s Commerce

EXHIBIT 19.16 Major Components of an EC Suite
Process Supported

Back-end databases

Catalog Creation
and Update
Customer Management
Order Management
Accounts Receivable

Catalog
Customer
Order
Payment

Operational Systems Utilized

Fulfillment Systems
Financial Network

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

Server 2007 (microsoft.com/commerceserver/default.mspx), IBM’s WebSphere Commerce
suite (www-306.ibm.com/software/websphere/), and Oracle’s EC applications (downloadeast.oracle.com/docs/cd/B10501_01/rac.920/a96598/ebizapps.htm). Up-and-coming EC
suites include SalesPro (webbusconnect.com/serve.aspx?page=ec_ecomm_suite), OnLine Suites
(onlinesuites.com), and AIT, Inc.’s E-Commerce Suite (ait.com/ecommercesuite.php).

Microsoft’s Commerce Server 2007
Microsoft’s Commerce Server 2007 (microsoft.com/commerceserver/default.mspx) offers a comprehensive framework for building tailored EC solutions. The framework consists of six main systems:
◗ Product Catalog System. Enables the creation, management, and syndication of cus-








tomer-specific and location-specific catalogs with specialized pricing and sophisticated
search capabilities.
Targeting System. Creates and deploys multilingual merchandising and advertising
campaigns that support advanced discounting, cross-selling, and customer profiling.
Profiling System. Enables catalog personalization, pricing, business processing, merchandising, and advertising to specific needs of customers, suppliers, and partners.
Business Processing Pipelines System. Enables firms to tailor order and merchandising
processes to handle currency conversions, multiple shipments, and complex discounting.
Business Analytics System. Offers businesses the ability to analyze, forecast, and mine
the business data resulting from EC activities and processes, including clickstream usage,
purchase histories, browsing behaviors, campaign effectiveness, and currency preferences,
so that they can make informed decisions about the success of their online business.
User Management Console: Business Desk. Enables business managers to respond
quickly to changing customer and business needs through a centralized intuitive console
for managing customer and partner profiles, personalization rules, product catalogs and
pricing, merchandising and advertising campaigns, and business analysis.

Microsoft’s Commerce Server comes in three editions—Standard, Developer, and
Enterprise—which are designed to handle medium, large, and extremely high-traffic sites,
respectively. All three editions are built on top of Microsoft’s Windows operating system, SQL
Server database, and the Visual Studio .NET development environment. All three editions also
operate seamlessly with Microsoft’s other .NET servers (e.g., Microsoft BizTalk Server and
Microsoft’s Content Management Server). The new version of Commerce Server, released in
late 2006 (Microsoft.com 2007a), enables enterprises to accelerate and automate the delivery of
online services and products to drive their revenue growth and reduce operational costs. An
example of a business portal built using Microsoft’s Commerce Server 2007 and BizTalk Server
2006 is described in Case 19.4.

IBM’s WebSphere Commerce Suite
IBM’s WebSphere Commerce suite (www-306.ibm.com/software/websphere/) is a comprehensive EC development platform designed to support B2C, B2B, or private exchange business
models. The suite provides the following functions:
◗ Order management that optimizes movement of products through the supply chain
◗ Collaborative filters that enable an enterprise to better understand customers’ buying

patterns and preferences
◗ Portal capabilities that provide customers with personalized access to multiple commerce

and noncommerce site applications
◗ Localization support that enables customized price, tax, and shipping calculations in the
currency format and language dictated by the shopper’s locale
◗ E-coupons that can be used by customers during online shopping
◗ Additional bundled products, including WebSphere Catalog Manager and WebSphere
Payment Manager
IBM’s suite is built on open industry standards such as Java, Java Servlets, JavaServer
Pages ( JSP), Enterprise JavaBeans (EJB), and XML. These standards make it easier to integrate new products with existing back-office transaction systems and databases.

19-35

19-36

Part 7: Application Development

CASE 19.4

EC Application

SEAL COMPANY EXPECTS $5 MILLION REVENUE BOOST
FROM INNOVATIVE INTERNET ORDERING SYSTEMS
Gulf Coast Seal distributes the O-rings, seals, and gaskets
that keep oil and gas pipelines secure and leak proof.
The company’s business is built on lots of low-cost parts,
some costing as little as 3 cents each. Some customers
routinely place $1 orders, with the average order size being
just $10. With orders bouncing between people, paper,
faxes, and phones, Gulf Coast Seal calculated that its
order-processing costs were between $50 and $75 per
order, so these small orders were hurting the company’s
profitability.
The problem was the lack of electronic links between
its customers’ ERP systems and its own. A customer would
create an order on its ERP and then phone or fax the order
to Gulf Coast Seal. The company’s small sales staff, who
doubled as order entry and customer service staff, took
the order, checked that the delivery date was possible,
and cleared up any ambiguities. The salesperson then
entered the order into Gulf Coast Seal’s character-based
ERP system. The whole process was laborious and required
3 to 5 days before an order hit Gulf Coast Seal’s ERP
system. The more orders, the bigger the backlog, and the
louder customers grumbled. The company tried hiring
more salespeople, but that only drove up operational
and training costs.
To address these problems, the 130-person company
in Houston, Texas, made a $37,000 investment in an
e-commerce system that it expects to yield up to
$5 million in additional revenue within 3 years by serving
more customers and serving current customers better.
Manual order processing had grown increasingly expensive
as the company’s order volume grew. Gulf Coast Seal
wanted to introduce electronic efficiencies to drive costs
down and increase customer satisfaction.

Using Microsoft Commerce Server 2007 and Microsoft
BizTalk Server 2006, Gulf Coast Seal created a full-service
e-ordering site that enables customers to place orders, check
order status, and self-service every aspect of their account.
Not only will the system enable Gulf Coast Seal to handle
more customers, but to do so without increasing staff.
Customers love the faster, easier ordering, and Gulf Coast
Seal has reduced order-processing costs from as much as $75
to just 3 cents per order. Today, Gulf Coast Seal customers
can visit the company’s Web site and sign in to a personalized site where they can place orders, view open invoices and
orders, review their account history, and even look at Gulf
Coast Seal’s inventory to see whether the company has
needed parts in stock. Customers can manage their own
account profiles, including account IDs, passwords, and
shipping addresses. They can view accounts receivable and
transaction summaries, as well as view or print invoices.
Sources: Compiled from gulfcoastseal.com/ (accessed January 2007)
and Microsoft (2006).

Questions
1. What business problems were addressed by Microsoft
Commerce Server 2007 and Microsoft BizTalk Server
2006?
2. What are the business benefits provided by the
Microsoft Commerce Server 2007 and Microsoft BizTalk
Server 2006?
3. Log on to the Internet and explore other software
options that Gulf Coast Seal might have considered and
compare them with the Microsoft solution chosen.

IBM WebSphere delivers application infrastructure and integration software that
helps companies address key priorities in an on-demand world. The suite offers a flexible
operating environment that can easily adapt to support companies’ efforts to drive business
growth. It provides tools to help companies streamline and extend business processes to
deliver the right information to the right people at the right time and enhance the productivity of their employees.

Oracle’s EC Products
Oracle E-Business Suite Release 12 (oracle.com/applications/e-business-suite-release.html and
oracle.com/applications/oracle-e-business-suite-release-12-brief.pdf) provides applications and
technology to assist companies to compete more effectively in the worldwide marketplace.
Oracle E-Business Suite Release 12 provides a vast array of applications aimed at supporting
marketing, selling, and servicing of customers, suppliers, and partners online and enables businesses to think globally to make better decisions, work globally to be more competitive, and
manage globally to lower costs and increase performance. With hundreds of cross-industry capabilities spanning enterprise resource planning, customer relationship management, and supply
chain planning, this new release helps companies manage the complexities of global business
environments. The following applications are aimed specifically at B2C and B2B operations:

Chapter Nineteen: Building E-Commerce Applications and Infrastructure
◗ Oracle iStore. Enables merchants to build, deploy, manage, and personalize online store-








fronts. iStore is one of Oracle’s key applications. It supports product catalog and content
management, interactive and complex selling, personalized pricing, flexible check and payment options, account and contract management, and postsales order and shipping services.
iStore integrates easily with Oracle’s online marketing and eMerchandising functionality.
Oracle Marketing. Provides automation and tools for the entire marketing process,
ranging from initial marketing analysis to determine what and who should be targeted,
campaign planning, budget and list maintenance, and multichannel execution, to campaign monitoring.
Oracle iPayment. Offers risk management capabilities, transaction routing features, and
a flexible payment architecture that supports every major online payment option.
Oracle Quoting. Automates the creation and management of quotes for customized
sales and service.
Oracle iSupport. Provides customers with the ability to service and assist themselves
over the Web.
Oracle Configurator. Interactively captures, configures, and validates specialized
manufacturing, sales, and service orders from customers, suppliers, and partners.

Like IBM’s EC suite, Oracle’s EC applications are built on open industry standards such
as Java, Java Servlets, JSP, EJB, and XML. As one would expect, Oracle’s applications rest on
the market-leading Oracle database.

OTHER EC SUITES
The following are some additional EC suites that enable an organization to quickly build an
e-business.

LiteCommerce 2.2
LiteCommerce 2.2 (litecommerce.com/products.html?designer) enables Web designers to
create EC stores without having to program. Users can download templates to a workstation
and then design their EC store in WYSIWYG HTML editors such as MS FrontPage and
Macromedia Dreamweaver.

Wireless E-Com Suite
Wireless E-Com Suite (wm-us.com/e-commerce.htm) is designed for small- and mediumsize Internet stores. With the Wireless E-Com Suite, a company can run one store with an
unlimited number of categories and products. Features include customer care, product catalogs, product details, merchandising and inventory tools, security features, shipping and tax
tools, sales analysis and tracking capabilities, and repeat-customer features.

ASPDotNetStoreFront
ASPDotNetStoreFront for Interprise Suite (IS) (aspdotnetstorefront.com/c-1-e-commercestorefronts.aspx) provides a complete state-of-the-art e-commerce storefront powered by the
Microsoft ASP.NET platform. Interprise Solutions and AspDotNetstorefront have partnered
to create AspDotNetStorefront for Interprise Suite (IS), a powerful “Web to warehouse” solution that combines both e-commerce and back-office operations in one real-time solution.
AspDotNetStorefront is fully integrated, so order, inventory and customer information
is shared by both the e-commerce Web site and Interprise Suite. In addition to providing
seamless interaction between the Web site and back-end operations, AspDotNetStorefront IS
contains hundreds of industry-leading e-commerce features and supports search engine keyword integration and optimization.

ATG Commerce
ATG’s (atg.com) comprehensive e-commerce product suite, rated number one by Forrester
Research in 2006 (Mendelsohn 2006), enables customers to implement, monitor, and continuously
improve personalized e-commerce applications. ATG helps keep customer interactions consistent across all contact channels and throughout the customer lifecycle. ATG Commerce is a

19-37

19-38

Part 7: Application Development

comprehensive, highly scalable solution to automate the complete lifecycle of online sales, marketing,
and service. Its f lexible, component-based architecture enables firms to personalize the online
buying experience for their customers, making it easy for them to find desired products, comparison
shop, register for gifts, preorder products, redeem coupons, and execute many other useful features.

Section 19.5 ◗ REVIEW QUESTIONS
1.
2.
3.
4.
5.

List the major features of an electronic catalog.
Describe the basic business systems in Microsoft’s Commerce Server 2007.
Describe the functions supported by IBM’s WebSphere Commerce suite.
Describe the key EC applications provided by Oracle for building B2C and B2B sites.
As the owner of a small- to medium-sized online business, which of the e-commerce
suites described in this section would you find most useful? Explain.

19.6 CONNECTING TO DATABASES AND OTHER
ENTERPRISE SYSTEMS
The major integration areas discussed in this chapter are connecting to databases and to
back-end systems.

CONNECTING TO DATABASES

multitiered application
architecture
EC architecture consisting of four tiers: Web
browsers, Web servers,
application servers, and
database servers.

Virtually every EC application requires database access. For example, when a customer
orders a product online, the product description, inventory count, and order information are
likely to be retrieved from and stored in one or more databases (see Exhibit 19.17). An EC
application can be connected to a back-end database in a variety of ways. Today, most of
these connections are accomplished via a multitiered application architecture, such as the
one depicted in Exhibit 19.17. This architecture has four tiers:
1. A Web browser that presents data and information to and collects data from the end user
2. A Web server that delivers Web pages, collects the data sent by the end user, and passes
data to and from the application server
3. An application server that executes business rules (e.g., user authorization), formulates
database queries based on the data passed by the Web server, sends the queries to the
back-end database, manipulates and formats the data resulting from the database query,
and sends the formatted response to the Web server
4. A database server in which the data are stored and managed and database requests are processed

This separation of functions makes it easier to change any tier (or layer) without impacting the
other layers. Thus, an application server can be designed to interface or communicate with a wide
variety of databases and database management systems (e.g., Oracle, MS SQL Server, DB2).

EXHIBIT 19.17 Example of Multitiered Application

Architecture Connected to Database
Web Browser

Web
Server

Application
Server

Database
Servers

Broker’s request
between client
and database

Data repository

Netscape API
CGI
Browse data source,
make transactions

Microsoft API

Gateway and
document delivery

Source: Systinet. Introduction to Web Services Architecture. Burlington, MA: Systinet Corp., 2002, p. 6.

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

19-39

In some cases, the data being accessed are stored in an existing (legacy) database (e.g.,
inventory or order databases). In these cases, it is better to tie the application server directly
to the legacy database rather than duplicating the data in a database established solely for the
EC application. This approach ensures that the data are up-to-date, that they are consistent
across the applications accessing the data, that a minimum of storage space is used, and that
there is only one database to create and maintain rather than two.

INTEGRATING EC APPLICATIONS AND BACK-END SYSTEMS
Several technologies can be used to integrate an EC application with a back-end database. Many
of the commercial electronic catalogs and EC suites have built-in integration capabilities. If a
company wants to build its own database interface, a couple of options are available. First, all of
the Web scripting languages (e.g., PHP, JSP, and Active Server Pages [ASP]) have commands
that simplify the process. More specifically, these scripting languages enable a programmer to
build Web pages that can issue queries to a back-end (relational) database and process the database’s response to the query. Second, a number of specialized application servers are available that
simplify the task of integrating an EC application with one or more back-end databases. Among
these specialized servers, BEA Inc.’s WebLogic Server 9.2 (bea.com) is a market leader.
In addition to connecting to back-end databases, most EC applications also require integration with a variety of other systems—ERP, CRM, SCM, EDI, data warehouses, and other
important internal systems—both inside and outside the company. Again, electronic catalogs
and EC suites usually have built-in modules for integration with these systems. The integration can also be handled with a class of software called enterprise application integration
(EAI). These products focus on the integration of large systems (see Schneider 2004).
TIBCO (tibco.com), webMethods (webmethods.com), and IBM’s WebSphere InterChange
Server (ibm.com) are examples of companies that have offerings in the EAI arena.

enterprise application
integration (EAI)
Class of software that
integrates large systems.

MIDDLEWARE
As discussed earlier, companies and organizations are now building enterprise-wide EC systems
by integrating previously independent applications together with new developments (see Coffee
2004). EC applications also must be connected to items such as the partners’ systems or to public exchanges. Such connections are referred to as integration. EC users interact with Internet
applications through a variety of devices whose characteristics and performance figures span an
increasingly wide range. Applications use communication protocols and intermediate software
that resides on top of the operating systems to perform the following functions:
◗ Hiding distribution (i.e., the fact that an application is usually made up of many inter-

connected parts running in distributed locations)
◗ Hiding the heterogeneity of the various hardware components, operating systems, and

communication protocols
◗ Providing uniform, standard, high-level interfaces to the application developers and integrators so that applications can be easily composed, reused, ported, and made to interoperate
◗ Supplying a set of common services to perform various general-purpose functions to
avoid duplicating efforts and to facilitate collaboration between applications
The intermediate software layers have come to be known under the generic name of
middleware. Middleware is essentially a separate program that provides an interface between
diverse client and server systems. Its main function is to mediate interaction between the parts of
an application or between applications. For more information, see middleware.objectweb.org.
IBM is the leading provider of middleware. The company offers a number of
on-demand solutions for communication, government, retail, banking, financial markets, and
many other industries. IBM Middleware (ibm.com/middleware) helps automate systems,
integrate operations, connect people, and develop software.

Section 19.6 ◗ REVIEW QUESTIONS
1. Describe the basic elements of a multitiered application architecture.
2. List the ways in which an EC application can be connected to back-end databases and
other transaction processing systems.
3. Define middleware and describe its attributes.

middleware
Separate products that
serve as the glue between
two applications; sometimes called plumbing
because it connects two
sides of an application
and passes data between
them.

19-40

Part 7: Application Development

19.7 VENDOR AND SOFTWARE SELECTION
Few organizations, especially SMEs, have the time, financial resources, or technical expertise
required to develop today’s complex e-business systems. This means that most EC applications
are built with hardware, software, hosting services, and development expertise provided by outside vendors. Thus, a major aspect of developing an EC application revolves around the selection
and management of these vendors and their software offerings. Martin et al. (2002) identified six
steps in selecting a software vendor and a package, as illustrated in Exhibit 19.18.

STEP 1: IDENTIFY POTENTIAL VENDORS
Potential vendors can be identified from software catalogs, lists provided by hardware
vendors, technical and trade journals, consultants experienced in the application area,
peers in other companies, and Web searches. These sources often yield so many vendors
and packages that one must use some preliminary evaluation criteria to eliminate all but a
few of the most promising ones from further consideration. For example, one can eliminate vendors that are too small or that have no track record or that have a questionable
reputation. Also, packages may be eliminated if they do not have the required features or
will not work with available hardware or the operating system, communications network,
or database management software.
request for proposal
(RFP)
Notice sent to potential
vendors inviting them to
submit a proposal
describing their software
package and how it would
meet the company’s
needs.

STEP 2: DETERMINE THE EVALUATION CRITERIA
The most difficult and crucial task in evaluating a vendor and a packaged system is to determine
a weighted set of detailed criteria for choosing the best vendor and package. Some areas in which
detailed criteria should be developed are vendor characteristics, functional requirements of the
system, technical requirements the software must satisfy, the amount and quality of documentation provided, and vendor support of the package.
These criteria should be documented in a request for proposal (RFP), which is sent
to potential vendors to invite them to submit a proposal describing their software package

EXHIBIT 19.18 The Process of Selecting a Software

Vendor and an EC Package
Step One: Identify
Potential Vendors

Responses to RFP

Step Two: Determine
the Evaluation Criteria

Evaluation Criteria

Step Three: Evaluate
Vendors and Packages

Step Four: Choose the
Vendor and Package

Step Five: Negotiate a
Contract

Step Six: Establish a
Service Level Agreement

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

19-41

and how it would meet the company’s needs. The RFP provides the vendors with information about the objectives and requirements of the system, the environment in which
the system will be used, the general criteria that will be used to evaluate the proposals, and
the conditions for submitting proposals. It may also request a list of current users of the
package who may be contacted, describe in detail the form of response that is desired, and
require that the package be demonstrated at the company’s facilities using specified inputs
and data files.

STEP 3: EVALUATE VENDORS AND PACKAGES
Vendor responses to an RFP generate massive volumes of information that must be evaluated
to determine the gaps between the company’s needs (as specified by the requirements) and
the capabilities of the vendors and their application packages. Often, the vendors and packages are given an overall score by assigning an importance weight to each of the criteria,
ranking the vendors on each of the weighted criteria (say 1 to 10) and then multiplying the
ranks by the associated weights. A short list of potential suppliers can be chosen from those
vendors and packages with the highest overall scores.

STEP 4: CHOOSE THE VENDOR AND PACKAGE
Once a short list has been prepared, negotiations can begin with vendors to determine how
their packages might be modified to remove any discrepancies with the company’s desired
EC application. Thus, one of the most important factors in the decision is the additional
development effort that may be required to tailor the system to the company’s needs or at
least to integrate it into the company’s environment. Additionally, the opinions of the users
who will work with the system and the IT personnel who will have to support the system
must be considered.

STEP 5: NEGOTIATE A CONTRACT
The contract with the software vendor is very important. Not only does it specify the price of
the software, but it also determines the type and amount of support to be provided by the
vendor. The contract will be the only recourse if the system or the vendor does not perform
as specified. Furthermore, if the vendor is modifying the software to tailor it to the company’s
needs, the contract must include detailed specifications (essentially the requirements) of the
modifications. Also, the contract should describe in detail the acceptance tests the software
package must pass.
Contracts are legal documents, and they can be quite tricky. Experienced contract
negotiators and legal assistance may be needed. Many organizations have software
purchasing specialists who assist in negotiations and write or approve the contract. They
should be involved in the selection process from the start. If an RFP is used, these
purchasing specialists may be very helpful in determining its form and in providing
boilerplate sections of the RFP.

STEP 6: ESTABLISH A SERVICE LEVEL AGREEMENT
Service level agreements (SLAs) are formal agreements regarding the division of work
between a company and its vendors. Such divisions are based on a set of agreed-upon
milestones, quality checks, “what-if ” situations, how checks will be made, and what is to
be done in case of disputes. If the vendor is to meet its objectives of installing EC applications, it must develop and deliver support services to meet these objectives. An effective
approach to managing SLAs must achieve both facilitation and coordination. SLAs do
this by (1) defining the partners’ responsibilities, (2) providing a framework for designing
support services, and (3) allowing the company to retain as much control as possible over
their own systems.

Section 19.7 ◗ REVIEW QUESTIONS
1. List the major steps in selecting an EC application vendor and package.
2. Describe a request for proposal (RFP).
3. Describe a service level agreement (SLA).

service-level agreement
(SLA)
A formal agreement
regarding the division of
work between a company
and a vendor.

19-42

Part 7: Application Development

19.8 USAGE ANALYSIS AND SITE MANAGEMENT
To improve EC Web sites, it is advisable to monitor what customers are doing there (usage
analysis). Both B2C and B2B Web sites require a thorough understanding of the usage and
patterns—the who, what, where, when, and how. This can be done by analyzing Web log files.

LOG FILES
access log
A record kept by a Web
server that shows when a
user accesses the server;
kept in a common log file
format, each line of this
text file details an individual access.

Every time a user accesses a Web server, the server logs the transaction in a special access log file.
Access logs are text files in which each line of the file details an individual access. Regardless of
the type of Web server, access logs use a common log file format. This makes them easy to analyze and compare. Because log files can become quite voluminous, it is hard to analyze the
accesses by hand. For this reason, most Web server EC software vendors provide free software
for analyzing access log files. Commercial products that provide more sophisticated log analyses
also are available (e.g., NetIQ’s WebTrends). For an example, see Application Case 19.5.
Access logs provide a variety of statistics that can be used for analyzing and improving
marketing and advertising strategies. Among the more valuable statistics are:
◗ Pageviews by time slot. Pageview statistics allow frequent review of the number of site

accesses. Grouping pageviews by “time bucket” (time slot) also enables a company to
ascertain the time slots, such as morning, afternoon, or evening, during which customers
visit the site.
◗ Pageviews by customers’ log-in status. This information helps determine whether
requiring customers to log in is worthwhile. For instance, if the number of pageviews of
customers who log in is substantially greater than those who do not, the company may
find the login requirement effective and worthwhile.

CASE 19.5

EC Application

PERSONAL CREATIONS BOOSTS ONLINE SALES
BY 31 PERCENT WITH A REVAMPED WEB SITE
Founded in 1989, Personal Creations is a top provider of
personalized gifts in the United States. It created its online
catalog (personalcreations.com) in 1996, and the Web site was
extended to an integrated order processing system in 1999.
Between 1999 and 2002, traffic to personalcreations.com
increased to a point where technical problems were hindering
Web site performance. The company required a more robust
and scalable Web site that would better meet its business
objectives by encouraging more visitors to click through the
site and helping more shoppers to complete their purchases.
To redesign its new site, Personal Creations adopted the
Fry Flagship framework, a quick-to-market EC solution from
the WebTrends Insight Network partner, Fry Inc. By analyzing
how visitors were navigating through the old site, Personal
Creations and Fry developed a new site that led visitors more
easily to the information and products they were looking for.
The revamped Web site highlights the personalization
image of Personal Creations and gives customers ideas for
how to use products (such as “Cherish Your Memories” and
“Start a Family Tradition”) instead of just promoting specific
products. Its homepage fits the screen without requiring
shoppers to scroll down or across. The new Web site includes
a breadcrumb trail indicating where a visitor has been and
some “top picks” pages so visitors can see the most popular

products for any given product category or occasion. Product
browsing is now easier, and visitors are more likely to click
through the site. Personal Creations also set up a system for
cross-selling products on the new site. The system is based
on cross-sale recommendations by way of product affinity
tables created with WebTrends analysis of customer purchasing behavior.
The combined effect of the changes, including the
improved homepage, navigation, and checkout, has been a
31 percent increase in online sales for Personal Creations
since the launch of the revamped Web site in October 2002.
Currently, the Web site is a critical business channel,
accounting for nearly 55 percent of the company’s overall
revenue.
Sources: Compiled from Webtrends.com (2004) and NetIQ.com (2004).

Questions
1. What are the technical and business requirements of
the new Personal Creations Web site?
2. Why is an in-depth analysis of Web site activity and Web
visitor behavior critical to the design of a Web site?

Chapter Nineteen: Building E-Commerce Applications and Infrastructure
◗ Pageviews by referrers. Some customers are drawn or referred to the site by clicking on

banners or links on other Web sites. Knowing the source of such referrers is useful for
assessing the effectiveness of the location of banners, and customers’ interests can also be
determined from the nature of the Web site with those banners.
◗ Pageviews by visitor’s hardware platform, operating system, browser, and/or browser
version. These types of pageviews enable a company to obtain information on the hardware platform (e.g., Mac or PC) and browser type (e.g., Internet Explorer or Netscape)
used by the viewer.
◗ Pageviews by visitor’s host. This type of pageview provides information on the customers’ host sites. Knowing where customers are coming from can enable the company to
target potential customers via popular hosts such as Yahoo!
Some of the marketing and business questions to which these statistics can be applied
are listed in Exhibit 19.19.

E-COMMERCE MANAGEMENT TOOLS
Managing the performance of a Web site is a time-consuming and tedious administrative
task. Several vendors offer suites of products or individual packages that can assist with
the management process. One of the more prominent vendors of IT and Web management tools is BMC Software, Inc. (bmc.com). Some of the products offered by BMC
include:
◗ Patrol for E-Business Management. This package includes Patrol for Internet

Services, which measures Web response time; Patrol for Firewalls, which provides firewall administration; and Patrol for Microsoft or Netscape application servers.
◗ MainView for E-Business Management. This package includes MainView for WebSphere, which aids in the management of mainframe-based EC applications; MainView
for Network Management, to monitor mainframe network connections; and MainView
for Systems Management, to provide systems administration.
Other EC management tools include site version control tools, combined utilities/tools,
server management and optimization tools, and authoring/publishing/deployment tools that
include significant site management or testing capabilities. A detailed list of vendors is
provided by Hower (2005). The following are some examples:
◗ COAST WebCentral. This site management tool from Coast Software, Inc.

(e-tamed.co.uk/products/coast4.html) monitors compliance standards related to privacy,
information assurance, accessibility, and Web governance. Capabilities include highlevel summary reports, site scores, and trend analyses using intuitive browser-based
reports; roll-up of results from different business units or global Web sites for overall
views of site compliance; complete inventory of Web sites; and comparison inventory
reports to compare different versions of a Web site.
◗ Maxamine Knowledge Platform. This integrated site management tool from
Maxamine Inc. (maxamine.com) combines site content, structure, and visitor traffic data
into one searchable database, enabling detailed analysis of what is going on behind the
scenes of Web operations.
◗ WebCEO. Companies can use this tool from Radiocom Ltd. (webceo.com) to maintain, promote, and analyze Web sites. It includes a link checker, a WYSIWYG editor,
and FTP/publishing, traffic analysis, and site monitoring capabilities.
◗ ManageEngine Applications Manager. This site management tool from AdventNet
(adventnet.com) works with a variety of Web servers, database servers, service types,
and OSs.

Section 19.8 ◗ REVIEW QUESTIONS
1.
2.
3.
4.

Define access log files.
List some of the types of statistics provided by an access log.
Describe some of the uses of an access log.
Describe EC site management activities and list some tasks.

19-43

19-44

Part 7: Application Development

EXHIBIT 19.19 Areas of Usage Analysis and Sample

Business Questions for Online Stores
Area of Analysis

Business Questions

Overall store performance






What is the sales value for a specific period of time, say, 1 week?
What is the number of customer visits for the day?
What is the store conversion rate for the week?
What is the sales value index for the week?

Advertising






Which banner ads are pulling in the most traffic?
How many sales are driven by each banner ad?
What products do shoppers select from a particular banner?
What is the conversion rate for each banner ad?

External referrals (from others to your site)






Which portal sites are pulling in the most traffic?
Which are generating the most sales?
How many sales are generated by each referral site/search engine?
What products do shoppers from a particular portal site purchase?

Shopper segmentation






How many visitors are from a specific domain?
What is the distribution of first-time vs. repeat shoppers?
What characterizes shoppers of a particular set of products?
What characterizes shoppers who abandon shopping baskets?

Product grouping

• How much do cross-sells/up-sells contribute to gross revenue?
• What are the best performing cross-sell pairs? Worst?
• What is the overall conversion rate for cross-sells/up-sells?

Promotions and recommendations







Shopping metaphor

• What generates the most sales value: searching or browsing?
• How much does searching contribute to gross revenue?
• What is the conversion rate for searching?

Design features






What are the features of links customers most frequently click?
What are the features of links from which customers most frequently buy?
What parts of pages do customers most frequently buy from?
Do products sell better in the upper-left corner?

Product assortment







What are the top sellers for the week?
What is the conversion rate for a particular department?
How is a product purchased: purchase frequency and quantity?
What characterizes the products that end up being abandoned?
How much of the sales of each product are driven by searching?

How much do promotions contribute to gross revenue?
Which promotions are generating the most sales?
What is the overall conversion rate for promotions?
What is the overall conversion rate for recommendations?
At what levels in the site hierarchy are the best promotions located?

MANAGERIAL ISSUES
A number of managerial issues relate to the concepts presented in this chapter. Some of these are as follows:
1. What is our business perspective? When one thinks
of the Web, one immediately thinks of the technology.
But some of the most successful sites on the Web rely
on basic technologies—freeware Web servers, simple
Web page design, and limited bells and whistles. What
makes these sites successful is not the technology but

their owners’ understanding of how to meet the needs
of their online customers.
2. Do we have a systematic development plan? The
cost of developing and maintaining even a small EC
site can be substantial. To ensure success, development and maintenance issues need to be approached

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

systematically, just like any other IT development
project. Within this plan, the specification of the EC
architecture is crucial. If the architecture is wrong, the
entire project is at risk.
3. Insource or outsource? Many large-scale enterprises
are capable of building and running their own EC Web
sites. However, EC Web sites may involve complex
integration, security, and performance issues. For those
companies venturing into the EC arena, a key issue is
whether the site should be built in-house (insourced),
thus providing more direct control, or outsourced to a
more experienced provider. Outsourcing services, which
enable companies to start small and evolve to fullfeatured functions, are available through many ASPs,
ISPs, telecommunication companies, Internet malls,
and software vendors that offer merchant server and
EC applications.
4. How should Web Services be deployed? Many organizations face problems of integrating systems, applications, and data. The IT costs associated with getting
applications and databases running on different hardware and operating systems to communicate with one
another are substantial. Web Services offer the means to
solve this interoperability problem in an open, straightforward, and efficient fashion without the need for new
hardware or application reprogramming. The key to
deploying Web Services is to create a stepped plan for
their introduction, concentrating on those systems
where integration needs are greatest.
5. How should we choose a vendor/software? Because
most EC applications are built from packaged applications and components or outsourced to a third party,
the success of the EC applications rests on choosing
the best vendor and package. Like any other part of

6.

7.

8.

9.

19-45

the development process, a detailed list of selection
criteria is needed for the selection process.
Have we analyzed the data? All EC sites provide the
means to gather data about system usage. These data
should be analyzed frequently to modify and redesign
an existing site to better meet the needs of current and
prospective customers and users. This analysis can
also be used to personalize the experience of these
same users.
Should users be involved? The direct and indirect
users of an EC system are likely to be the most knowledgeable individuals concerning requirements and
which alternatives will be the most effective. Users are
also the most affected by a new information system. IS
analysts and designers, however, are likely to be the
most knowledgeable individuals concerning technical
and data management issues. These professionals, too,
are likely the most experienced in arriving at viable EC
systems solutions. The right mixture of user involvement and information systems expertise is crucial.
How should we manage development risks? The
development of EC applications involves risk. Systems
may not be completed, completed too late, or require
more resources than planned. The risk is large in
enterprise systems. For information on how to manage
such risk, see Scott and Vessey (2002).
How shall we plan for service-oriented architecture
(SOA)? With SOA, an organization creates EC services components once and reuses these assets to drive
better cost-efficiency from its IT investments. It is
important that we define an enterprise approach to
SOA and align IT with real business requirements.
Also, Web Services may be acquired from other
sources, either public or private.

RESEARCH TOPICS
Here are some suggested topics related to this chapter. For details, references, and additional
topics, refer to the Online Appendix A “Current EC Research.”

1. Building an E-Commerce Application
◗ Compare software designed to assist in building an
E-commerce application
◗ Framework for E-Commerce development
◗ Barriers to developing E-Commerce applications
◗ Cultural issues in developing a global E-Commerce
application

2. Outsourcing
◗ Compare various outsourcing options
◗ Explore emerging new outsourcing options
◗ Pricing outsourcing options
3. Web Services
◗ Emerging software to support Web services
◗ New opportunities for Web service applications

19-46

Part 7: Application Development






Effects on various industry sectors of Web service
availability
Effects of entry of large software vendors into Web
service arena
Pricing Web services
Services management issues
Case studies of Web service applications

4. Technical Aspects of Building an E-Commerce
Application
◗ Compare hardware alternatives for e-commerce
applications
◗ Usage analysis
◗ Determining costs and benefits of different hardware configurations

SUMMARY
In this chapter, you learned about the following EC issues as they relate to the learning objectives.
1. The major steps in developing an EC application.
Because of their cost and complexity, EC sites need to
be developed in a systematic fashion. The development of an EC site should proceed in steps. First, an
EC application portfolio is defined based on an organization’s strategy. Second, the EC architecture is created. Next, a decision is made whether to build, buy, or
outsource the development. Third, the system is
installed, tested, and deployed. Finally, the system goes
into maintenance mode, with continual changes being
made to ensure the system’s continuing success.
2. The major EC applications and their major functionalities. Every type of EC application has a long
list of functional requirements. Fortunately, most of
these requirements can be met by packaged applications. Online storefronts can be developed with the aid
of electronic catalog or merchant server software.
Similarly, B2C, B2B, and exchange applications of all
sorts can be constructed from components that have
the listed functionalities.
3. The major EC application development options,
along with their benefits and limitations. EC sites
and applications are rarely built from scratch. Instead,
enterprises buy a packaged EC suite and customize it
to suit their needs, or they outsource the development
to a third party. A new generation of Web tools is taking the programmer out of the development process
and empowering more users to develop their own Web
sites. The selection of one option over another should
be based on a systematic comparison of a detailed list
of requirements that examines important considerations such as flexibility, information needs, user friendliness, hardware, and software resources.
4. EC application outsourcing options. Many enterprises elect to outsource the development and maintenance of their EC sites and applications. The most
common type of EC applications outsourcing is the
use of application service providers (ASPs). Utility
computing is an emerging option. An enterprise can
rely on an existing e-marketplace or exchange. An
online storefront can be hosted by an Internet mall. Or
an enterprise could enter into a joint development

agreement with a venture partner or a consortium.
Again, the choice depends on the functional requirements of the EC site or application, the costs involved,
the time frame, and the available IT resources.
5. The major components of software packages and
EC application suites. An online storefront has the
same requirements as a brick-and-mortar storefront.
Simple sites can be built from packaged electronic
catalog or merchant server software. More complex
online storefronts and other types of EC sites (e.g.,
B2B, exchanges, etc.) can be built from comprehensive
EC suites such as Microsoft’s Commerce Server or
IBM’s WebSphere Commerce suite. A payment gate
and a site search engine are useful.
6. Methods for connecting an EC application to backend systems and databases. Virtually every EC application requires access to back-end relational databases
and other transaction systems (e.g., ERP, SCM, CRM,
etc.). Integration can be accomplished in a variety of
ways, including using integration modules supplied
with electronic catalog or EC suite packages, customizing the integration with a Web scripting language (e.g.
PHP, Active Server Pages [ASP], or JSP), employing
specialized application servers, employing a full-blown
EAI tool, or using XML-based technologies.
7. The rise of Web Services and XML. Web Services 2.0
is the newest technology aimed at solving the integration and interoperability problems (getting applications
running in different computer environments to communicate with one another). Web Services generally
rely on open standards, including XML, SOAP,
WSDL, and UDDI, to overcome the problems.
WSDL defines the operations that a Web Service can
perform. To invoke a Web Service, an application sends
a SOAP or XML message to the service, which in turn
responds with a SOAP/XML message. Companies can
publish their Web Services in a UDDI registry, so that
any application can take advantage of the operations the
services perform. Although Web Services require minimal changes and reprogramming of existing systems
and applications, they still require advanced programming skills to implement and deploy them. Toward this

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

end, hardware and software vendors such as Microsoft
and IBM have provided software development environments to ease the task.
8. Understand service-oriented architecture and its
relationship to EC. With service-oriented architecture (SOA) and Web Services, functions within EC
applications such as order taking and billing can be
automatically invoked and executed anywhere in the
world based on business rules. Developers can swap
out one EC service and replace it with another service
without having to worry about the inner workings of
the two services. SOA is expected to transform the
way we build EC systems in the future from slow,
error-prone manual coding to an automated discipline.
9. Criteria used in selecting an outsourcing vendor and
package. A systematic process should be used in selecting a third-party tool or an outsourcing company. Among
the key steps in making the selection are: (1) identifying
potential vendors and packages, (2) detailing the evaluation criteria, (3) using the criteria to produce a short list of

19-47

possible vendors, (4) choosing a candidate from the short
list, (5) negotiating the deal and modifications needed to
meet overall application needs, and (6) establishing an
SLA to define who is responsible for specific aspects
of the development and maintenance and what quality
metrics will be used for the services to be rendered.
10. The value and uses of EC application log files. Most
EC applications produce log files of detailed system
usage. The data in these files can be analyzed with an
eye toward modifying the application’s content and
flow. In this way, the application can be better aligned
with the enterprise’s marketing and advertising strategies. In the same vein, the application can be adjusted
to meet users’ needs.
11. The importance of usage analysis and site management. Usage analysis is about monitoring customer
activities at EC Web sites. Web log files provide a variety of statistics about Web site usage patterns that can
be useful for analyzing and improving marketing and
business strategies.

KEY TERMS
Acceptance testing
Access logs
Ajax
Application service provider
(ASP)
EC architecture
EC Suite
Electronic catalog
Emulation
Enterprise application
integration (EAI)
Insourcing
Integration testing
Interoperability
Latency
Mashup
Merchant server software
Middleware
Multitiered application
architecture

10
42
22
14
7
34
33
29
39
11
10
11
32
22
33
39
38

Native virtualization
Outsourcing
Policy-based resource
management tools
Policy-based service-levelmanagement tools
Really Simple Syndication
(RSS)
Representational State
Transfer (REST)
Request for proposal (RFP)
Reusability
Scalability
Security protocols
Service level agreement
(SLA)
Service-oriented architecture
(SOA)
Simple Object Access
Protocol (SOAP)

29
12
14
14
22
27
40
11
32
18
41
25

Simulation
Social network
Software as a service (SaaS)
Throughput
Turnkey approach
Unit testing
Universal Description,
Discovery, and Integration
(UDDI)
Usability testing
Utility (on-demand) computing
Viral video
Virtualization
Web-oriented architecture
(WOA)
Web Service
Web Services Description
Language (WSDL)
Web 2.0

29
22
15
33
12
10
18
10
13
22
27
27
17
18
22

18

QUESTIONS FOR DISCUSSION
1. Discuss the advantages of leasing an application over
purchasing one.
2. A large company with a number of products wants to
start selling on the Web. Should it use a merchant server
or an EC application suite? Assuming it elects to use an
EC application suite, how would you determine

whether the company should outsource the site or run it
in-house?
3. A large chemical manufacturing company is interested
in starting an online exchange. What are some of the
ways it could achieve this goal?

19-48

Part 7: Application Development

4. A firm decides to make its EC Web site more dynamic
by tying its application to a back-end database. What
are some of the ways in which the firm could accomplish this task?
5. An online vendor wants to hook its shopping cart application to a credit card authorization Web site. How
could this be done with Web Services? How would
the authorization site advertise its services for other sites
to use?
6. An enterprise wants to modify its EC site so that it
conforms more closely with the company’s overall
business strategies. What sorts of online data are available for this purpose? What types of business strategy
questions can be addressed by these data?
7. Define Web Services. List the major areas of Web
Services applications. Discuss three major advantages and three major disadvantages of Web
Services.

8. In what ways do you think a Web site’s log files may
violate consumers’ privacy?
9. You have decided to use a third-party application to
develop and deploy a sell-side B2B site. Create a checklist for determining which third-party EC application
products will best meet your application requirements.
10. Identify the major reasons why utility computing tools
may become the next big thing in EC applications
development.
11. Do you think the technology has a lot of catching up
to do before utility computing will become a reality for
companies with many computing needs?
12. Discuss the relationship between service-oriented
architecture (SOA) and Web Services.
13. Discuss the relationship between Web 1.0 and Web
2.0. Consider the differences in delivery of EC applications under the two methods of delivery.

INTERNET EXERCISES
1. Access the Choice Mall Web site (choicemall.com).
Visit some of the online stores in the mall. What are
the functionalities of the mall? What are some of the
benefits of the online mall to the participating vendors? To shoppers? Do you think a shopper is better
off using an online mall or using a search engine
such as AltaVista to locate a store providing a
product of interest? In what ways could Choice
Mall improve the chances that buyers will make
return visits?
2. Visit a large online storefront of your choice. What
functions does it provide to shoppers? In what ways does it
make shopping easy? In what ways does it make shopping
more enjoyable? What support services does it provide?
3. Go to the WebTrends site (webtrends.com). What
types of information does its Analysis Suite provide?
How can this information be used to improve a Web
site? What types of tracking information are not provided by this suite? (See Internet Exercise #1.)
4. Visit IBM’s site (ibm.com). Find its WebSphere product. Read some recent customer success stories. What
makes this software so popular?

5. Go to the World Wide Web Consortium’s discussion of Web Services
architecture (w3.org/tr/ws-arch).
Based on this discussion, what role
does a UDDI play in Web Services?
If a company wants to publicize its Web Services, what
means are available?
6. Visit Sun Microsystems (sun.com). What type of development platform does Sun provide for creating and
deploying Web Services? What are the capabilities and
benefits of the platform?
7. Visit the Microsoft Web site (microsoft.com). Find its
BizTalk product. What kind of software is this? What
role could it play in an EC application?
8. Enter webservices.org and find material on Web Services
and EC. Prepare a report.
9. Enter monstercommerce.com and ecommerce-shoppingcart.biz and write a report comparing their products.
10. Search the Internet to find a mashup site that is not
mentioned in the text. Determine the components
that it has “mashed” and write a report on the value
added that the mashup provides.

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

19-49

TEAM ASSIGNMENTS AND ROLE PLAYING
1. Select a series of Web sites that cater to the same type
of buyer (e.g., several Web sites that offer CDs or
computer hardware). Divide the sites among several
teams and ask each team to prepare an analysis of the
different sorts of functions provided by the sites, along
with a comparison of the strong and weak points of
each site from the buyer’s perspective.
2. Several vendors offer products for creating online
stores. The Web sites of these vendors usually list
those online stores that currently use their software
(customer success stories). Assign each team a number
of vendors. Each team should prepare reports comparing the similarities and differences among the vendors’
sites and evaluating the customers’ success stories. Do
the customers take advantage of the functionality provided by the various products?
3. As a team, explore the desired capabilities of various
EC applications (B2B, B2C, auctions, portals, G2C,
etc.). Look at the capabilities of these applications
and at their functionalities, and then compare the
two (see Section 19.2 for a list of functionalities).
If the functionalities of the applications are not

sufficient, explain what additional functionalities
are needed.
4. Amazon.com provides Web Services for its Associates
(amazon.com/webservices), as well as other product
sellers and vendors. Assign one team to explore the
services for Associates and another to find out about
the services for sellers and vendors. Describe the services provided by each. What are the benefits of these
services? What companies are currently using these
services? Go to their sites and describe how they are
using these services.
5. Each team selects a software vendor that supports
integration (e.g., see oracle.com, intersystem.
com, icode.com, tibco.com, microsoft.com, or
webmethods.com). Prepare a report on how they
connect EC applications (such as ordering) to backoffice systems.
6. Each team brainstorms a new and innovative mashup
site. Discuss and document the value it would provide and define the market to which the site would
appeal. Present (sell) your site to the other teams and
take a vote on the best mashup created by all teams.

Real-World Case

MOLDING A NEW VISION FOR E-COMMERCE
AT D-M-E
D-M-E Company may not be a household name, but for
moldmakers, mold designers, and molders who make
parts for the plastics industry, D-M-E is one of the
world’s leading manufacturers and suppliers of mold base
assemblies and components, moldmaking equipment and
supplies, and other specialized systems. Offering the
industry’s broadest and deepest line of mold-tooling
technologies, D-M-E’s mission is to help its customers
produce better parts, reduce their costs, and accelerate
time-to-market, as well as enable moldmakers to devote
more time to refining their molds. D-M-E has five
machining facilities in North America and Europe and
direct and joint venture operations worldwide.

Web Site Grows in Stature
D-M-E’s current Web site plays an increasingly important
role as a greater number of customers go online to purchase products. Approximately 5 percent of D-M-E’s sales
come from the Web, a number that is growing at the rate
of 20 percent a year. To accommodate this growth and

encourage more customers to use the Web site, D-M-E
realized it needed a more robust online environment.
It decided to upgrade to IBM WebSphere Commerce
Professional Edition while leveraging the iSeries environment—providing the scalability and stability required to
support the business-to-business environment. The
solution includes IBM’s DB2 Universal Database,
WebSphere Application Server, and HTTP server.

Out-of-the-Box Functionality
Although D-M-E’s IT staff is small and has limited experience in Web development, it found IBM’s WebSphere
Commerce an easy-to-use, complete solution for the Web.
In configuring a new store for its Web site, D-M-E only
had to modify the sample store template to customize it
for its needs. D-M-E also was able to migrate its product
catalog, because WebSphere Commerce imports the necessary HTML and JavaServer Pages files, catalog information, payment and tax details, and shipper information to
build a complete store archive template that is ready for

19-50

Part 7: Application Development

customization. Todd Oliver, a system programmer for
D-M-E, pointed out that “WebSphere Commerce is a great
product for companies like ours because it didn’t require
that we have a lot of experience with Java technologies
and JavaServer Pages.”

Easy Administration, Better Customer Service
D-M-E has leveraged WebSphere Commerce catalog management tooling to simplify the management of its product catalog, the main feature of its Web site. Internally,
D-M-E’s business users can now make changes to catalog
products and pricing without requesting help from the IT
department, making both groups more productive. The
workload on the customer service department has also
decreased as more customers check product pricing and
order status online.
On the customer side, users have the assurance that
the D-M-E Web site will be available 24/7. This encourages more customers to use the site, in turn creating
greater efficiencies internally as customers and D-M-E
affiliates rely more upon the Internet to place orders.
D-M-E still has customers who place orders by phone and
fax, but now the stability and robustness of the site provides customers with another reliable sales channel.

Improvements Drive Incremental Sales
Customers can now easily order multiple products at a
time online. “With the old system, customers had to
know the SKU number for a product, type it in, click ‘go’
and repeat the same process for each product they
wanted,” explains Oliver. “With WebSphere Commerce, we
added a quick order page that allows customers to add
up to 10 products at a time.”
Order processing speed has also increased sevenfold,
and the search capabilities of WebSphere Commerce allow
customers to define and limit their searches for better
results. Also popular with customers is the automated
e-mail notification containing forgotten password information, a capability of WebSphere Commerce.
Since the introduction of the Web site, incremental
sales have increased 23 percent due to faster order processing and the capability for customers to order more
than one product at a time. One measure of success of
the new D-M-E Web site is the absence of customer
complaint calls fielded by the IT department. Instead of
three to four calls per week from customers with questions and/or concerns about the Web site, D-M-E now
rarely receives calls.

Application Development Environment
Gets Kudos
When D-M-E migrated its Web site to WebSphere
Commerce, it faced two hurdles: a small IT staff and limited experience in Web development. Working with IBM

Business Partner Dynamik Technologies, Stobbe and
Oliver designed, constructed, tested, and deployed the
new site using IBM Rational Application Developer for
WebSphere (formerly known as WebSphere Studio
Application Developer). Though the group faced some
development challenges, their work was simplified by the
Rational development environment.
As an integrated development tool, Rational
Application Developer for WebSphere accelerates
Java 2 Enterprise Edition (J2EE) technology-based
application development with a comprehensive set of
visual productivity tools, templates, and wizards.
D-M-E found the search capabilities, self-help,
debugging tools and built-in test environment to be
the most useful. Jay Stobbe, Manager of IT systems
and administration for D-M-E estimated that IBM
WebSphere Commerce cut D-M-E’s Web development
time by at least half.

The Future Looks Bright
In the near future, D-M-E plans to take advantage of
the marketing tools available in the IBM WebSphere
Commerce Professional Edition to increase revenues
and grow its customer base. “We have not even begun
to explore all the possibilities WebSphere Commerce
provides,” says Stobbe. The D-M-E marketing department is excited about leveraging capabilities, such as
support for running promotions and executing
special offers by automatically presenting targeted
cross-selling, up-selling, and advertisements to new
and existing customers, as well as the analytics and
business intelligence tools. Thanks to WebSphere
Commerce, D-M-E has the opportunity to explore areas
it had not even dreamed of and has the flexibility to
easily add new applications.
Sources: IBM (2005) and D-M-E (2007).

Questions
1. From D-M-E’s point of view, what kind of
e-commerce application is this: e-procurement,
sell-side, collaborative commerce, or other?
Justify your answer.
2. Why did D-M-E decide to utilize WebSphere for its
portal? Explain in detail.
3. Imagine you were in charge of selecting the
application to be used with the portal. What
criteria would you use in making your choice?
How does IBM’s WebSphere meet these criteria?
4. How can D-M-E leverage this application with
other e-commerce processes?

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

19-51

REFERENCES
Amazon.com. “Web Services FAQs.” amazon.com/gp/
browse.html/ref=sc_bb_l_0/103–7982286–7763064?n
o=3435361&me=a36l942tsj2aja&node=3434651
(accessed March 2007).
Aron, R., E. K. Clemons, and R. Reddi. “Just Right Outsourcing: Understanding and Managing Risk.”
Proceedings, 38th HICSS, Big Island, HI, January 3–6,
2005.
Beer, S. “Google Apps Begins Software as a Service
Paradigm Shift.” iTWire, November 14, 2006. itwire.
com.au/content/view/5439/983 (accessed February
2007).
Bieberstein, N., M. Fiammante, K. Jones, and R. Shah.
Service-Oriented Architecture Compass—Business Value,
Planning, and Enterprise Roadmap. Upper Saddle River,
NJ: Pearson Education, 2005.
Birman, K. Reliable Distributed Systems: Technologies, Web
Services, and Applications, 1st ed. New York: Springer
Publishing Company, 2005.
Business.com. “The Search Engine for Managing and
Growing your Business 2007.” business.com/
directory/internet_and_online/ecommerce/b2b_solu
tions/ (accessed February 2007).
Cantara, M. “Market Focus: Trends and Forecasts for IT
Professional Services for Web Services and SOA.”
Gartner, Inc., June 2005.
Coffee, P. “Data Integration Is IT’s Tricks.” eWeek,
February 2004.
Dahanayake, A., H. G. Sol, and Z. Stojanovic. “Methodology
Evaluation Framework for Component-Based System
Development.” Journal of Database Management, March
2003.
Daylami, N., T. Ryan, L. Olfman, and C. Shayo. “Determinants of Application Service Provider (ASP) Adoption
as an Innovation.” Proceedings of 38th HICSS, Big Island,
HI, January 3–6, 2005.
Deitel, H., et al. Web Services: A Technical Introduction.
Upper Saddle River, NJ: Prentice Hall, 2003.
D-M-E. “About D-M-E.” dme.net/wwwdme/1about.asp
(accessed March 2007).
Dutta, A., and R. Roy. “Offshore Outsourcing: Counteracting
Forces and Their Dynamic Effects.” Proceedings, 38th
HICSS, Big Island, HI, January 3–6, 2005.
Duvall, M.“SOA:TD Banknorth Is Banking on IT.” October 2,
2006. baselinemag.com/article2/0,1540,2022612,00.asp
(accessed March 2007).
Erl, T. Service-Oriented Architecture: A Field Guide to
Integrating XML and Web Services. Upper Saddle River,
NJ: Prentice Hall PTR, 2004.
Finkelstein, C. “The Enterprise: Service-Oriented Architecture
(SOA).” DMReview.com, January 2005. dmreview.com/
article_sub.cfm?articleid=1016488 (accessed February
2007).
Havenstein, H. “Customers Courted with Web 2.0: Social
Networking Inspires Marketers.” Computerworld,
Feburary 19, 2007.

Hinchcliffe, D. “The SOA with Reach: Web-Oriented
Architecture.” 2006. blogs.zdnet.com/Hinchcliffe/?p=27
(accessed February 2007).
Hoff, R. D. “Mix, Match and Mutate.” BusinessWeek
Online, 2006. businessweek.com/print/magazine/
content/05_30/b3944108_mz063.htm.
Hower, R. “Web Site Test Tools and Site Management
Tools.” softwareqatest.com/qatweb1.html (accessed
March 2007).
IBM. “D-M-E Molds New Vision for E-Commerce with
IBM Solution.” December 21, 2005. www-306.ibm.
com/sof t ware/success/cssdb.nsf/CS/HSAZ6KB34W?OpenDocument&Site= (accessed February
2007).
IBM. “IBM WebSphere Portal Express V6.0: A Portal,
Web Content Management, Document Management,
and Collaboration Solution for Small and Medium
Businesses.” January 2007a. www-306.ibm.com/
common/ssi/fcgi-bin/ssialias?infotype=an&subtype=ca&htmlfid=897/ENUS207–017&appname=is
ource (accessed March 2007).
IBM. “IBM Virtualization: Optimize Your Infrastructure.”
February 2007b. www-03.ibm.com/systems/virtualization/index.html?ca=vedemot&met=web&me=esc
allout (accessed February 2007).
Iverson, W. Real World Web Services, 1st ed. Cambridge,
MA: O’Reilly, 2004.
Jakovljevic, P. J. “Architecture Evolution: Service-Oriented
Architecture versus Web Services.” September 20, 2006.
technology-evaluation.com/Research/
ResearchHighlights/ERP/2006/09/research_notes/
TU_ER_PJ_09_20_06_1.asp (accessed March 2007).
Kanter, J., and J. J. Walsh. “Toward More Successful Project
Management.” Information Strategy: The Executive
Journal, Summer 2004.
Kendall, K. E., and J. E. Kendall. Systems Analysis and
Design, 6th ed. Upper Saddle River, NJ: Prentice Hall,
2005.
Kern, T., and J. Kreijger. “An Exploration of the ASP
Outsourcing Option.” Proceedings, 34th HICSS,
Hawaii, January 2001.
Kishore, R., H. R. Rao, K. Nam, S. Rajagopalan, and
A. Chaudhury. “A Relationship Perspective on IT Outsourcing.” Communications of the ACM, December
2003.
Kucharvy, T. The Five Rules for Jump-Starting the UtilityComputing Market. Boston, MA: Summit Strategies,
Inc., January 2003.
LaMonica, M. “Intel Unveils ‘Web 2.0’ Software Suite.”
CNETNews.com, November 7, 2006. news.com.com/
Intel+unveils+Web+2.0+software+suite/2100–1012_3–
6133294.html (accessed April 2007).
Malik, O. “Rolling Your Own Applications.” Business 2.0,
2006.
Martin, E. W., et al. Managing Information Technology,
4th ed. Upper Saddle River, NJ: Prentice Hall, 2002.

19-52

Part 7: Application Development

McAfee, A. “Enterprise 2.0: The Dawn of Emergent
Collaboration.” MIT Sloan Management Review 47,
no. 3 (2006).
McKeefry, H. L. “Mom and Pop Camping Shop Gets
E-Commerce Boost.” eWeek, May 1, 2006. eweek.com/
article2/0,1759,1955999,00.asp (accessed February
2007).
Mendelsohn, T. “ATG Ups the Ante for B2C Commerce
Platforms.” The Forrester WaveVendor Summary, Q3
2006.” September 14, 2006. forrester.com/rb/search/
results.jsp?Ntt=ATG&Ntk=MainSearch&Ntx=mod
e+matchallany&N=0+100010+100011+100012+10001
3+100020 (accessed March 2007).
Microsoft.com. “Case Study: Gulf Coast Seal.” June 20, 2006.
microsoft.com/casestudies/casestudy.aspx?casestudyid=
49807 (accessed February 2007).
Microsoft.com. “Introducing Commerce Server 2007.”
2007a microsoft.com/commerceserver/default.mspx
(accessed March 2007).
Microsoft.com. “ The Business Case for Portals.” 2007b.
microsoft.com/uk/windowsserversystem/portals/
business/case/default.mspx (accessed March 2007).
NetIQ.com. “ PersonalCreations.com Boosts Online Sales
Over 30 Percent with WebTrends Reporting Service.”
January 13, 2004. netiq.com/news/releases/release.
asp?cid=20040112175217TMIN (accessed March
2007).
Newcomer, E., and G. Lomow. Understanding SOA with
Web Services (Independent Technology Guides). Upper
Saddle River, NJ: Pearson Education, 2005.
Nickerson, R. “An E-Commerce System Model.” Eighth
Americas Conference on Information Systems, Dallas, TX,
August 9–11, 2002.
O’Reilly, T. “What Is Web 2.0? Design Patterns and
Business Models for the Next Generation of Software.”
2005. oreillynet.com/pub/a/oreilly/tim/news/2005/
09/30/what-is-web-20.html (accessed February 2007).
Overby, S. “Bringing I.T. Back Home.” CIO Magazine,
March 1, 2003.
Portland Oregon Trail Blazers. “Trail Blazers and Hands on
Greater Portland Launch First Social Networking Site for
Fans in Partnership with Affinity Circles.” February 24,
2007. nba.com/blazers/news/Trail_Blazers_and_Hands_
on_Gre-209896–1218.html (accessed February 2007).
Prince, B. “Verio Sets Sights on Online SMEs.” eWeek.com,
December 12, 2006. eweek.com/article2/0,1895,
2071648,00.asp (accessed December 2006).
Rammer, I., and M. Szpuszta. Advanced .Net Remoting.
Berkeley, CA: Apress, 2005.
Rapoza, J. “Microsoft Takes Web Development Leap.”
eWeek, 2006.
Rauch, M. “Virtuality: How IBM Uses Web 2.0 to Grow
Its Brand from Wikis to Viral Video to Second Life.”
Sales and Marketing Management, January–February
2007.
Reynolds, J. The Complete E-Commerce Book: Design, Build,
and Maintain a Successful Web-Based Business. Gilroy,
CA: CMP Books, 2004.

RightNow Technologies, Inc. “TD Banknorth Inc. Bolsters
Competitively Differentiated Customer Service, Supports
Business Growth, and Reduces Costs with RightNow.”
2007. rightnow.com/resource/casestudy.php?id=2062&
product=9 (accessed February 2007).
Rodriguez, J., S. Chan, B. Gonzalez, G. Kroner,
M. Parlangelo, S. Schwdler, and A. Vena. “IBM Websphere Portal V5: A Guide for Portlet Application
Development.” IBM International Technical Support
Organization, 2004.
Sasse, A. “Trail Blazers and Hands on Portland Team Up.”
Portland Trail Blazers Press Release, November 3, 2006,
affinitycircles.com/news/hop_blazer_rls_11_3_06.pdf
(accessed February 28 2007).
Schneider, G. P. Electronic Commerce: The Second Wave,
5th ed. Boston, MA: Course Technology, 2004.
Schwalbe, K. Information Technology Project Management,
4th ed. Boston, MA: Course Technology, 2006.
Scott, J. E., and I. Vessey. “Managing Risks in Enterprise
Systems Implementations.” Communications of the
ACM, April 2002.
Shirky, C. “Web Services: An Executive Summary.”
XML.com, April 12, 2002. webservices.xml.com/pub/a/
ws/2002/04/12/execreport.html (accessed March 2007).
Shurville, S., and J. Williams. “Managing In-House
Development of a Campus-Wide Information System.”
Campus-Wide Information Systems 22, no. 1 ( January
2005).
Sommerville, I. Software Engineering, 7th ed. Boston:
Addison Wesley, 2004.
Stal, M. “Web Services: Beyond Component-Based
Computing.” Communications of the ACM, October 2002.
Systinet. Introduction to Web Services Architecture. Burlington,
MA: Systinet Corp, 2002.
Tabor, R. Microsoft .NET XML Web Services. Indianapolis,
IN: Sams, 2002.
Tachyon Solutions. “Campmor, Inc.: An E-Business
Success by Any Measure.” tachyonsolutions.com/
c o m p a n y / r e s o u r c e s / c a m p m o r e c o m s t u d y. p d f
(accessed February 2007).
Then, J. “The SOA Puzzle.” Computerworld Malaysia,
April 2005. computerworld.com.my/ShowPage.aspx?
pagetype=2&articleid=506&pubid=4&issueid=34
(accessed March 2007).
Treese, G. W., and L. C. Stewart. Designing Systems for
Internet Commerce, 2d ed. Reading, MA: AddisonWesley, 2002.
Tyler, D. “SOA: Is It Right for You?” ITToolbox.com,
September 20, 2005. blogs.ittoolbox.com/emergingtech/
soa/archives/soa-is-it-right-for-you-part-i-5834
(accessed February 2007).
Utilitycomputing.com. “Softlayer Delivers Infrastructure for
Web 2.0.” utilitycomputing.com/print/857.asp (accessed
February 2007).
Webtrends.com. “Personal Creations Boosts Online Sales by
31 Percent with Webtrends.” 2004. webtrends.com/
upload/cs_personalcreations_001.pdf (accessed January
2007).

Chapter Nineteen: Building E-Commerce Applications and Infrastructure

WHIR News. “Web Host Verio Releases ShopSite 8.1.”
December 13, 2006. thewhir.com/marketwatch/121306_
Web_Host_Verio_Releases_ShopSite_8.1.cfm
(accessed February 2007).
Whitten, J., and Bentley, L. Systems Analysis and Design
Methods, 7th ed. New York: Irwin/McGraw-Hill, 2007.
Wilson, R. F. “The Six Simple Principles of Viral Marketing.” Web Marketing Today, February 1, 2005.
wilsonweb.com/wmt5/viral-principles-clean.htm
(accessed February 2007).

19-53

Xia, W., and G. Lee. “Grasping the Complexity of IS
Development Projects.” Communications of the ACM,
May 2004.
Zhao, J., H. Lu, and V. B. Misic. “Towards Electronic
Commerce Management Systems: Concepts and Architecture.” Proceedings of the First International Conference on
Telecommunications and Electronic Commerce, Nashville,
TN, November 19–22, 1998.