EVALUATING AND SELECTING E-COMMERCE SOFTWARE SOLUTIONS
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1 INFORMATION MANAGEMENT: STRATEGY, SYSTEMS, AND TECHNOLOGIES EVALUATING AND SELECTING E-COMMERCE SOFTWARE SOLUTIONS Duane E. Sharp INSIDE Challenges to E-business; Designing and Maintaining; Online Storefront Web Sites; IBM; Oracle; SpaceWorks; Transaction Security; Software for Transaction Security; Entrust Technologies; Verifone Inc; (vpos); Rating E-commerce Vendors Although businesses have used EDI (electronic data interchange) for years, the growth of Internet-based electronic commerce presents new challenges. This article outlines the primary challenges and introduces several vendors solutions. The value and extent of commerce on the World Wide Web E-commerce are increasing dramatically, and the systems and software that make business transactions possible are proliferating. The Internet is proving to be an important element in many business operations, and in future years will become a major business resource for both buyers and sellers across a broad spectrum of business sectors. E-commerce covers an entire spectrum of business activities, ranging from merchandising and marketing of products and services, to electronic data interchange (EDI), involving electronic payment systems and order management. According to a report published by the emarketer The 1998 ecommerce Report consumers will buy 14 times more goods in 2002 than they did in 1997, for a total estimated value of $26 billion. The report points out that the world of E-commerce is growing into a rapidly evolving market that will turn business as we know it upside down, particularly since the business-to-business segment of E-commerce is outpacing the consumer sector of E-commerce worldwide by a significant factor. In fact, business-to-business E- commerce will account for the ma- PAYOFF IDEA In order to survive in the rapidly changing environment of the late 1990s, companies need to be familiar with the concepts of hyper-competition and strategic advantage. This article provides a framework for understanding dynamic competitive markets. Auerbach Publications 1999 CRC Press LLC
2 jority of Web-based revenues through 2002, which is estimated by one industry analyst to reach $268 billion by In 1997, business-to-business E-commerce was at $5.6 billion, and was forecast to be $16 billion in Fortune 500 companies continue to dominate the online world and the top 10 percent of E-commerce businesses among these companies will account for the majority of Internet business volumes. The emarketer report also notes that business can gain an economic advantage in conducting business online, because the cost of reaching additional customers is dramatically reduced once companies are linked to the Internet. The Web will provide opportunities for new value chains, distribution systems, and pricing structures with the capability for sales and customer support, maintaining contact with suppliers and partners via extranets, as well as communication and coordination resources. With these statistics as background, it is important for information systems professionals to be able to evaluate and select the systems that will maximize the benefits to be achieved through E-commerce. The focus of this analysis is business-to-business E-commerce. One of the trading concepts that is a catalyst for the rapid growth of business-to-business E-commerce is the trading hub concept. Trading hubs are venues that bring together thousands of buyers and sellers on a global basis, to trade freely with virtually perfect information flow on price, product, distribution, and delivery terms. While many business sectors will undoubtedly adopt E-commerce sooner or later, those sectors with a strong stake in electronic commerce, and which may already have experience with certain elements such as electronic funds transfer are moving quickly to E-commerce. One recent survey of chief executives indicated that the financial sector will see the most change, with over 70 percent of companies in this sector expected to adopt some form of E-commerce over the next two years. Banks are at the center of E-commerce and have a vested interest in it; and while some financial institutions still do not trust the Internet, many of them are satisfied with the security systems now available and are actively promoting E-commerce transactions. Ironically, the move to E-commerce by financial institutions, and possibly by other major business organizations, is being delayed because corporate resources that might be used to accelerate the move to E-commerce are being diverted to resolve Year 2000 issues. CHALLENGES TO E-BUSINESS In the primary area of E-commerce under consideration for this article business-to-business online transactions have been used by many businesses for several years. This has been the result of prevailing market forces and the increasing use of technology in business transactions. Several years ago, major retailers began requiring suppliers to adopt EDI,
3 which allowed the suppliers to access online inventories through private networks, check current status of items, automatically replenish inventories, and receive payment directly to their bank accounts. Probably the three biggest challenges for organizations that want to implement Internet-based e-business, are: security, privacy, and universal access. Every organization needs to properly present and position its company and its products and services. Also of significant concern to companies is the security of transactions, protection from viruses, and the protection of business systems from hackers. As well, access to services offered need to be provided on as wide a basis as possible. Several core systems need to be implemented within a network architecture to conduct business on the Internet, and to satisfy an organization s concerns about the primary aspects of E-commerce. These include the following major application categories, which will be reviewed in this article: Designing and maintaining online storefront Web sites Providing transaction security DESIGNING AND MAINTAINING ONLINE STOREFRONT WEB SITES The first category designing and maintaining online storefronts involves developing graphic concepts for the storefront Web site and laying out the site in the way a storefront designer would do for a traditional retail environment, using the wide range of graphics available with computer displays. The following products are a sampling of storefront design software available from several vendors. IBM Net.Commerce from IBM was first released in early 1997 and offers tools for building and maintaining online storefronts. The second version (2.0) of this software provided the capability to host multiple storefronts, each with its own URL (universal remote location), on the same server. Along with improved scalability, this version is built on open standards and offers considerable flexibility in operating platforms, allowing users to move from single to multiple Windows NT, AIX, Sun, Solaris, AS/400, and System/390. Net.Commerce lets end users browse, save, query, and order items in an interactive catalog, and the Net.Commerce Administrator tool lets Web storefront administrators create and manage online product templates. Oracle Oracle Internet Commerce Server (ICS) is designed for companies setting up their own Web storefronts, and runs only on Oracle databases. The
4 original version of this software was priced at $20,000 per processor and included the enterprise edition of Oracle 7 database software and the advanced edition of Web Application Server 3.0. Later versions of Internet Commerce Server offered a $5000 product for existing Oracle customers. Like other vendors, Oracle will bring together its business-to-business product and its consumer product in a single commerce platform, written in Java. Among the features of ICS are: customizable templates for creating catalog pages, order processing, and open interfaces for handing transactions off to back-end systems. Various versions are available, running on Windows NT and UNIX. Several plug-in cartridges are available for Oracle s ICS, including Verifone and Cybercash for payments, Taxware for tax calculation, TanData for shipping and handling, and Portland Software s secure packaging for delivering software online. SpaceWorks OrderManager provides VARS with a flexible self-service ordering utility for the Internet, a company intranet, an extranet, or a combination of all three. This product has the potential to reduce training cycles and clogged telephone lines. It is targeted at the business-to-business marketplace, primarily to manufacturers or wholesale distributors that sell to other businesses. SpaceWorks in-house staff creates sample E-commerce applications that link customers legacy systems to catalogs and process on the Web sites hosted by SpaceWorks service bureau. TRANSACTION SECURITY This aspect of E-commerce is one of the most contentious of technical issues concerning business on the Internet. The guaranteed security of business transactions is a vital component in the acceptance and success of conducting electronic business, whether it is an individual consumer buying a product or a company conducting a range of confidential business transactions. Information that is transmitted via the Internet must be kept confidential, whether it is credit card information, bank account numbers, or other sensitive data that an organization wishes to protect in the conduct of its business operations. To accomplish the required level of security, software developers use several encryption techniques, each of which has advantages and disadvantages. Encryption scrambles the original message to make it incomprehensible to those who do not have the key to decrypt or decipher it. There are two basic types of encryption systems: public key and private key. Private key uses the same key to encrypt and decrypt information, and is not secure across networks. Public key uses two different but
5 related keys for encryption and decryption a public key and a private key enabling much higher security across networks. Public key encryption takes much longer than private key encryption 10 times longer to provide similar security. Because of this public key characteristic, major Internet browsers, such as Netscape Navigator and Microsoft Internet Explorer, use a hybrid of public key encryption. Navigator uses secure sockets layer (SSL) cryptography, while Explorer uses both SSL and private communications technology (PCT) cryptography. Security issues on the Internet are one of the domains of the Internet Engineering Task Force (IETF), a body responsible for Internet standards. The IETF is supporting a new protocol similar to SSL, called transport security layer (TLS), which provides host-to-host security across the Internet. Other security initiatives are being developed by financial institutions, including major credit card organizations such as Visa and Mastercard. The most popular is a standard called secure electronic transaction (SET), a technique that provides higher levels of confidentiality and authentication than either public or private key, and is being adopted by these organizations and financial institutions for consumer purchases. While credit card companies have been quick to realize and adopt this technology, it is still being tested throughout North America. SET adds another level of security to a heavy-duty encryption system for transaction messages. All parties in a SET transaction will have a digital certificate a numerical ID. The purchaser s certificate is stored on a hard drive, and when a purchase is made by credit card, the ID is transmitted along with the transaction. While SET has been slow to catch on with vendors and ISPs using other security technologies, it offers some enhanced security features that will benefit those organizations adopting it. Software for Transaction Security There are several vendor organizations with security software for the Internet, based on accepted or projected standards, such as SET. The following describes the products of some of these market leaders. Entrust Technologies. A subsidiary of Nortel, this company has developed software security solutions using public key technology for corporate networks, intranets, and the Internet. Security products developed and marketed by the company include: Entrust, Entrust/Lite and Entrust/WebCA, as well as the Entrust/Toolkit line of application programming interfaces. The company has also released an SET product, Entrust/CommerceCA, that provides a secure method for transmitting financial information over unsecured networks.
6 Verifone Inc. This company, a division of Hewlett-Packard, develops and markets merchant software (vpos) using the SET security protocol. This product handles highly encrypted, SET-based credit card messages, and the digital certificate that provides authentication of the consumer, as well as the merchant, and then transmits the message to the financial institution. Certicom Corp. This company uses an encryption technology called elliptic curve, a public key system that uses less bit space than conventional cryptography, with advantages of speed, bandwidth efficiency, and increased storage. This technology is used in Motorola s CipherNet security software, enabling rapid integration of security features into software applications. Security software is a rapidly evolving area, as software developers mix and match various encryption technologies and other security techniques, and strategic partnerships continue to be forged among developers of security software and vendor organizations with E-commerce systems and products. RATING E-COMMERCE VENDORS One of the innovative evaluation services offered to companies that want to move into E-commerce is WebTrust. Developed jointly by the Canadian Institute of Chartered Accountants (CICA) and the American Institute of Certified Public Accountants (AICPA), WebTrust is designed to make it easier for both business and consumers to evaluate Web sites and to use electronic commerce. Chartered accountants who have received WebTrust training audit Web sites to assess whether they meet WebTrust criteria for good electronic commerce practices and security. If a business entity meets the criteria, it can display the WebTrust logo a sign that will reduce the consumer s concerns about entering into a transaction with the site on the electronic commerce home page. WebTrust addresses three major E-commerce areas: 1. Business practices disclosure: confirming that the entity discloses its business practices for electronic commerce transactions and executes them in accordance with these practices, which include: a. descriptive information about the nature of the goods that will be shipped or the services that will be provided where customers can obtain warranty, service, and support related to the goods and services purchased on its Web site b. information to enable customers to file claims, ask questions, and register complaints
7 2. Transaction integrity: maintaining effective controls and practices to ensure that E-commerce orders are completed and billed as agreed, including: a. controls to ensure that each order is checked for accuracy and completeness, and acknowledgement is received from the customer before the order is processed b. ensuring correct goods are shipped in the correct quantities in the time frame agreed, back order and other exceptions are communicated to the customer, and prices and other costs are displayed before requesting acknowledgement of the order c. orders are billed and electronically settled as agreed, and errors are promptly corrected To meet the WebTrust criteria summarized above, the entity would likely have a combination of automated and manual control procedures in place. The impact of wizards and built-in tools also needs to be addressed. 3. Information protection: implementing and maintaining effective controls and practices to ensure that private customer information is protected from uses that are not related to the electronic commerce transaction, which include: a. the protection of private customer information, such as credit card number and other personal or corporate confidential information, during transmission over the Internet and while it is stored in its electronic commerce system b. the business entity s access to the customer s computer c. protection of the customer s computer files To meet these criteria, the business entity being evaluated would utilize an acceptable encryption protocol and have a firewall in place. In addition, employees or contractors with access to the system would be governed by security policies and tools. The initial WebTrust audit would generally address a two- to threemonth period. In order to maintain the logo, an update would be conducted at least every three months. IT professionals can help their organizations succeed in E-commerce by promoting the adoption of certification programs such as WebTrust and by facilitating the implementation of the technical infrastructure and controls that will help ensure that the businesses conducting electronic commerce meet the criteria. SUMMARY The Internet has opened up a whole new era of business interconnection, allowing many more companies to take advantage of the efficiencies of network commerce. By evaluating and selecting the software
8 solutions that are best configured for the organization s business requirements both for electronic presentation of products and/or services and for security of transaction the IS professional can ensure a viable, secure E-commerce environment. A GLOSSARY OF TERMS FOR E-COMMERCE SOFTWARE cookies: Snippets of information delivered from a Web site to the user s (client s) browser, and then stored on the hard drive. The information can be something like the time of one s last visit, or the pages one downloaded. Cookies can be read by that Web site the next item one visits. digital certificates: Digital IDs used to present credentials online. Digital certificates are issued by companies that act as trusted third parties. In the SET (secure electronic transaction) protocol, the buyer, the merchant, and banks for these parties all have digital certificates. EDI: An acronym for electronic data interchange. EDI provides electronic formats that allow for an exchange of business data between companies over networks. digital wallet: Software that stays resident on the hard drive of an online shopper. When the shopper is ready to make a purchase, the wallet pops open to reveal payment options. Some wallets hold credit cards with encrypted information; other wallets hold digital coins. firewall: A network firewall is a security system that controls access to a protected network. Firewalls are often used by organizations that want to connect to the Internet without compromising the security of proprietary systems and data. PCT encryption: Private communications technology, an encryption method developed by Microsoft and available on their Internet Explorer 3.0 and 4.0 browsers. Similar to SSL, with a combination of public and private key encryption. It appears to have some streamlining of features that may make it more efficient than SSL, but it is not widely accepted. RSA encryption: Based on a public key system, which means that every user has two digital keys a public key to encrypt information and a private key to decrypt. Authentication of both sender and recipient is provided. SET: Secure electronic transaction protocol is a means for authenticating credit card purchases on the Net. Digital signatures are used by all parties. Transaction information is encrypted using 1024-bit RSA encryption. SSL encryption: Secure sockets layer, developed by Netscape to provide data encryption and authentication of servers or clients. It can be used for any function on the Internet.
9 shopping cart: A piece of software that operates on an online storefront. The shopping cart keeps track of all the items that a buyer wants to purchase, allowing the shopper to pay for the entire order at once. TLS encryption: Transport layers security is a protocol for Internet hostto-host security proposed by the Internet Engineering Task Force. Duane E. Sharp is president of SharpTech Associates, a Canadian company specializing in the communication of technology. An electronic engineer with more than 25 years of experience in the IT field, he has authored numerous articles on technology and a textbook on interactive computer terminals, and chaired sessions at Comdex Canada. He can be reached at desharp@netcom.ca.
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