CFO Characteristics and Real Earnings Management
In: European Accounting Review (Forthcoming)
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In: European Accounting Review (Forthcoming)
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In: Journal of Management Accounting Research (http://aaapubs.org/)
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In: Accounting & Finance, Band 59, Heft 4, S. 2705-2734
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This study aims to synthesize the literature on the top management team (TMT) characteristics influence on environmental disclosures of public organizations and identify recent trends, key themes, influential journals, and authors. Our study recruited 88 research articles on the relationship of TMT characteristics and environmental disclosures from 54 academic journals published from 2010 to 2021 for bibliometric analysis. Our study has identified three influential streams: (1) Role of Politically connections of TMT, good governance in environmental disclosures; (2) Significance of environmental disclosures and performance; and (3) institutional investors and environmental disclosures. Thematic map classifies the TMT characteristics and environmental disclosures relationship themes into four categories: Niche theme (e.g., financial expertise, CFO characteristics, CEO tenure, and board backgrounds); motor themes (e.g., environmental sustainability and climate change); emerging/declining themes (e.g., Environmental disclosure, managerial ownership, and CEO tenure); and basic/transversal themes (e.g., CEO characteristics, upper echelon theory, corporate governance). This study assists academicians, policymakers, managers, and consultants in the corporate sector to understand the role of different dimensions of TMT characteristics regarding environmental disclosures. Our study concludes with important practical implications and future research directions.
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This study aims to synthesize the literature on the top management team (TMT) characteristics influence on environmental disclosures of public organizations and identify recent trends, key themes, influential journals, and authors. Our study recruited 88 research articles on the relationship of TMT characteristics and environmental disclosures from 54 academic journals published from 2010 to 2021 for bibliometric analysis. Our study has identified three influential streams: (1) Role of Politically connections of TMT, good governance in environmental disclosures; (2) Significance of environmental disclosures and performance; and (3) institutional investors and environmental disclosures. Thematic map classifies the TMT characteristics and environmental disclosures relationship themes into four categories: Niche theme (e.g., financial expertise, CFO characteristics, CEO tenure, and board backgrounds); motor themes (e.g., environmental sustainability and climate change); emerging/declining themes (e.g., Environmental disclosure, managerial ownership, and CEO tenure); and basic/transversal themes (e.g., CEO characteristics, upper echelon theory, corporate governance). This study assists academicians, policymakers, managers, and consultants in the corporate sector to understand the role of different dimensions of TMT characteristics regarding environmental disclosures. Our study concludes with important practical implications and future research directions.
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Working paper
In: Corporate social responsibility and environmental management, Band 32, Heft 1, S. 1147-1160
ISSN: 1535-3966
AbstractThis study analyses the link between chief financial officer (CFO) gender and environmental decoupling. Moreover, the moderator effect of sustainability board committees is tested. Based on upper echelons theory, a sample of listed firms headquartered in the European Union (2312 firm‐year observations) from the business years 2017–22 is used. In line with the theoretical framework and based on correlation and regression analyses, CFO gender is significantly and negatively linked with environmental decoupling. The existence of sustainability board committees strengthens this relationship. The results are robust to various robustness tests and endogeneity checks. This study contributes to the increasing research activity on the influence of corporate governance on environmental decoupling. Future research should analyze specific environmental decoupling dimensions and the impact of other CFO characteristics (e.g., expertise) on environmental decoupling. Regarding the stakeholder concerns on corporate environmental decoupling in recent years, firms should increase the quality of their environmental reports to build up increased stakeholder relations. To the best of our knowledge, this is the first empirical study on the relationship between CFO gender and corporate environmental decoupling. Moreover, the moderator effect of sustainability board committees is included as an innovative complementary driver.
In: Journal of public administration research and theory, Band 30, Heft 3, S. 465-484
ISSN: 1477-9803
AbstractDrawing on upper echelons theory, the article investigates the potential impact of top managers' background and demographic characteristics and personality traits on organizational decisions in the public sector. The top-management figure being investigated is the municipal chief financial officer (CFO) and the specific organizational decision under analysis is the extent of revenue misrepresentation during both budget formulation and execution. The empirical setting is provided by the CFOs of Italian municipalities with populations above 15,000 over a 3-year period (2012–14). Financial data are drawn from existing databases. Non-financial data are collected through an online survey. The results show that top managers' individual characteristics and traits do influence the extent of accounting manipulation. In particular, revenue misrepresentation was found to be smaller in the presence of female managers, managers with degrees in business administration, and managers describing themselves as "conscientious". These effects on accounting manipulation were moderated by auditors' and opposition councilors' oversight, managers' experience, and the presence of local elections. The article extends upper echelons theory and its applications in several directions: from the private to the public context, from CEOs to CFOs, from managerial decisions in general to accounting choices, and from background and demographic variables to personality traits.
In: GE-International Journal of Management Research, 4(10), 23-33.
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In: Journal of Economics and Finance (IOSR-JEF), 10(5), 6-13. DOI:10.9790/5933-1005020613
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In: Corporate governance: an international review, Band 25, Heft 2, S. 116-133
ISSN: 1467-8683
AbstractManuscript Type:ReviewResearch Question/Issue:Research on how boards govern individual top management team (TMT) members, i.e., senior executives aside from the CEO, is still scarce and fragmented. In this study, we review extant research on board monitoring of the Chief Financial Officer (CFO) – an increasingly influential actor at the top of the firm – synthesize it, and propose an integrative future research agenda on board governing of the CFO.Research Findings/Insights:Our review of the accounting, finance, and management literatures reveals that extant research emphasizes the board's need to monitor the CFO as a major strategic actor in the firm. However, studies have frequently focused on selective aspects of board monitoring activities, neglecting how central board attributes influence effective governance of the CFO. We therefore develop a comprehensive model of board monitoring and advising of the CFO that addresses the role of board attributes in governance activities.Theoretical/Academic Implications:Our future research program on board governance of the CFO contributes to developing a better understanding of how board composition, structure, characteristics, and processes influence different board monitoring and advising activities.Practitioner/Policy Implications:We offer a framework for boards of directors responsible for governing CFOs, highlighting the factors they have to take into consideration when selecting, dismissing, and compensating the CFO and when ratifying her decisions and rendering advice on her proposals. We also provide CFOs with insights into the factors that influence their dismissal, compensation, and collaboration with the board.
Many companies fall into the trap of paying an excessively large premium to close an acquisition. The authors analyzed nearly 2,000 acquisitions by U.S. companies over a period of more than 20 years and found that companies were less likely to overpay if their CFO had certain characteristics that allowed them to wield greater influence in strategic decision-making. Those common characteristics are markers of informal power based on a CFO's breadth of skills, relationships, and status.
In: Applied research, Band 3, Heft 5
ISSN: 2702-4288
AbstractThe present study focuses on the modification induced by 200 MeV Ag15+ and 100 MeV O7+ ion irradiations on the structural, surface morphological, and magnetic properties of radio frequency sputtered CoFe2O4 (CFO) thin films grown on SiO2/Si (100) substrates. X‐ray diffraction shows amorphization of the CFO thin films when irradiated with Ag ions and varies with fluences. This effect is absent in the case of O ion irradiated CFO films. These results are consistent with the measurements from the Raman spectroscopy, where the intensities of Eg and T2g modes are significantly reduced and further disappear in the high fluence. The surface morphology of the O ion irradiated films is dramatically different from the pristine and Ag ion irradiated films where the surfaces appear in nanopillars‐like patterns. The topography of the O ion irradiated films appears to be like hill and valley structures, the roughness first increases (from 10.11 to 24.39 nm). Then it decreases to 18.93 nm on further increasing ion fluence. The coercivity, remnant magnetization, and saturation magnetization increase upon irradiation at low fluence 5 × 1011 ions/cm2 for both the ion beams and then downturn with the increase of fluence 5 × 1012 ions/cm2. The changes in the magnetic and structural characteristics are ascribed to the defects induced by ion irradiation. These results are understood based on the structural and surface modifications induced by the electronic excitation of Ag and O ions. The study depicts that a controlled selection of ions and beam fluence can tailor the structure, morphology, and magnetic properties of ferrite films.
Technical Report 2018-08-ECE-137 Technical Report 2002-09-ECE-006 Engineering of Enterprises a Transdisciplinary Activity Murat M. Tanik Ozgur Aktunc John Tanik This technical report is a reissue of a technical report issued September 2002 Department of Electrical and Computer Engineering University of Alabama at Birmingham August 2018 Technkal Report 2002-09-ECE-006 Engineering of Enter·prises A Transdisciplim•ry Activity Murat M. Tanik Ozgur Aktunc John Tanik TECHNICAL REPORT Department of Electrical and Computer Engineering University of Alabama at Birmingham September 2002 ENGINEERING OF ENTERPRISES A TRANSDISCIPLINARY ACTIVITY OVERVIEW Contributed by: Murat M. Tanik, Ozgur Aktunc, and John U. Tanik This module is composed of two parts: Part I surveys and defines Enterprise Engineering in the context of transdiscipline. Part II introduces Internet Enterprise and addresses engineering implementation consider ations. PART I ENTERPRISE ENGINEERING ESSENTIALS 1 INTRODUCTION When Henry Ford rolJed out his first automobile assembly during 1913, he created the archetype of single-discipline enterprise. Ford's adventure was a self-contained and efficient exercise in mechankal engineering. With no competition, no regulatory constraints, and no pressing need for cross-disciplinary partnerships, from design development to process development, all ideas primarily originated from Ford's own engineers. The world is a different place today. Automobiles are complicated hybrids of mechanical, electrical, electronic, chemicaJ, and software components. Modern 4 manufacturers must now pay dose attention to new technological developments in hardware (mechanisms associated with physical world), software (mechanisms associated with computational world), netware (mechanisms associated with communications), and peopleware (mechanisms associated with human element). The changes experienced in the automotive industry exemplify the needs of the ever increasingly complex nature of today's modern enterprise. In other words, the ubiqui tous existence of the ";computing element" forces us to take into account disciplinary notions, ranging from psychology to ecology. In one word, the world is becoming transdisciplinary. In this world of transdisciplinary needs, we need to approach designing of enterprises as engineers, moving away from the traditional ad hoc approach of the past. This module expl ai n~ the changes to be made to current enterprise organization in order to be successful in the networked economy. A brief definition of Enterprise Engineering is given as an introduction, foJJowed by a summary of Enterprise Engineering subtopics, namely modeling, analysis, design, and implementation. In the last section of Part I, the definition of an intelJigent enterprise is made with an emphasis on knowledge management and integration using Extensible Markup Language (XML) technology [1]. 2 DEFINITION The Society for Enterprise Engineering (SEE) defined Enterprise Engineering as ";the body of knowledge, principles, and practices having to do with the analysis, design, implementation and operation of an enterprise" [2]. Enterprise Engineering methods include modeling, cost analysis, simulation, workflow analysis, and bottleneck analysis. 5 In a continually changing and unpredictable competitive environment, the Enterprise Engineer addresses a fundamental challen ge: ";How to design and improve all elements associated with the total enterprise through the use of engineering and analysis methods and tools to more effectively achieve itsgoals and objectives" [3]. Enterpr.ise Engineering has been considered as a disdpline after its establishment in the last decade of the 20th Century. The discipline has a wor]dvicw that is substantial enough to be divided into sub-areas, with a foundation resting on several reference disciplines. In the Enterprise Engineering worldview, the enterprise is viewed as a complex system of processes that can be engineered to accompli sh specific organizational objectives. Enterprise Engineering has used several reference disciplines to develop its methods, technologies, and theories. These reference disciplines can be listed as the following: Industrial Engineering, Systems Engineering, Information Systems, Information Technology, Business Process Reengineeling, Organizational Design, and Human Systems [2]. 2.1 Understanding Enterprise Engineering Like most engineering profession als, Enterprise Engineers work on four main areas: modeling, analyzing, design, and implementation. One important issue facing Enterprise Engi neering is the development of tools and techniques to support the work of analyzing, designing, and imp1ementjng organizational systems. These tools must assist enterprise engineers in the initial transformation of functional, often disjoint, operations into a set of integrated business processes replete with supporting information and control systems [4]. To develop new models of enterprises, the enterprise should be analyzed 6 using process analysis, simulation, activity-based analysis, and other tools. Also an abstract representation of the enterprise and the processes should be modeled in a graphical, textual, or a mathematical representation. The . design issues in Enterprise Engineering consist of developing vision and strategy, integration and improvement of the enterprise, and developing technology solutions. Lastly, implementation deals with the transformation of the entetprise, integration of corporate culture, strategic goals, enterprise processes, and technology. We will take a look at these areas in the fol1owing section: • Enterprise Engineering Modeling (EEM), • Analyzing Enterprises, • Design of Enterprises, and • Implementation. 2.2 Enterprise Engineering Modeling Enterprise Engineering Modeling (EEM) is basically dealing with the abstraction of engineering aspects of enterprises and connecting them to other business systems. The model encompasses engineering organizations' products, processes, projects, and, ultimately, the ";engineered assets" to be operated and managed. EEM coordinates design and deployment of products and assets at the enterprise level. It integrates engineering information across many disciplines, allows engineering and business data to be shared through the combinatjon of enterprise IT (information technology) and engineering IT, and simulates the behavior of intelligent, componentbased models [5). 7 The selection and design of enterprise processes for effective cooperation is a prime objective of Enterprise Engineering. Enterprise models can assist the goal of Enterprise Engineering by helping to represent and analyze the structure of activities and their interactions. Models eliminate the irrelevant details and enable focusing on one or more aspects at a time. Effective models also facilitate the discussions among different stakeholders in the enterprise, helping them to reach agreement on the key fundamentals and to work toward common goals. Also it can be a basis for other models and for different information systems that support the enterprise and the business. The enterprise model will differ according to the perspective of the pers.on creating the model, including the visions of the enterprise, its efficiency, and other various elements. The importance of an enterprise model is that it wm provide a simplified view of the business structure that will act as a basis for communication, improvements, or innovations and define the Information Systems requirements that are \ necessary to support the business. The term business in this context is used as a broad term. The businesses or the activities that can be represented with Enterprise Engineering models do not have to be profit making. For example, it can be a research environment with the properties of an enterprise. Any type of ongoing operation that has or uses resomces and has one or more goals, with positive or negative cash flow, can be referred to as a business [6]. The ideal business model would be a single diagram representing all aspects of a business. However this is impossible for most of businesses. The business processes are so complex that one diagram cannot capture all the information. Instead, a business model is composed of different views, diagrams, objects, and processes: A business 8 model is illustrated with a number of different views, and each captu~cs infmmation about one or more specific aspects of the businesses. Each view consists of a number of diagrams, each of which shows a specific part of the business structure. A diagram can show a ~1ructure (e.g., the organization of the business) or some dynamic collaboration (a number of objects and their interaction to demonstrate a process). Concepts are related in the diagrams through the use of different objects and processes. The objects may be physical such as people, machines, and products or more abstract such as instructions and services. Processes are the functions in the business that consume, refine, or use objects to affect or produce other objects. There are cunently hundreds of modeling tools for enterprises, and many modeling techniques such as Integrated Definition Language (IDEF), Petri-Net, Unified Mode1ing Language (UML), and meta-modeling. Modeling involves a modeling language and the associated modeling tools. Different enterprises may need different modeling tools according to the nature of the enterprise. Before selecting the modeling tool, a detailed analysis should be made to select the most appropriate modeling language and the tool. For the software industry, UML has become the standard modeJjng language [7]. 2.3 Enterprise Analysis The increasing complexity of enterprises has stimulated the development of sophisticated methods and tools for modeling and analysis of today's modern enterprises. Recent advances in information teclu1ology along with significant progress in analytical and computational techniques have facilitated the use of such methods in industry. 9 Applying Enterprise Analysis methods results in a documentation that supports a number of programs, which are as follows: strategic information resource planning, information architecture, technology and services acquisition, systems design and development, and functional process redesign. Most organizations have a wealth of data that can be used to answer the basic questions supporting strategic planning: who, what, where, and bow much. By modeling with these data using an Enterprise Analysis toolset, the enterptise models can be built incrementally and in less time. The most important use of Enterprise Analysis is that it presents the organization's own business, demographic, and workload data in a compelling manner to tell the story. Whether they are used to support programs for acquisitions, information architectures, or systems development, Enterprise Analysis studies are rooted in the business of the organization and thus are easily understood and supported by executive management. 2.4 Enterprise Design The design of an enterprise deaJs with many issues, including development of a vision and a strategy, the establishment of a corporate cu.lture and identity, integration and improvement of the enterprise, and development of technology solutions. Optimization of several perspectives within an enterprise is the objective of Enterprise Design. Examples of enterprise perspectives include quality, cost, efficiency, and agility ,. and management perspectives s uch as motivation, culture, and incentives. For example, consider the efficiency perspective. The modeling task will provide ontologies (i.e., object libraries) that can be used to construct a model of the activities of a process, such as its resource usages, constraints, and time. Based on these models the efficiency 10 perspective will provide tools to design, analyze, and evaluate organizational activities, processes, and structures. These tools will also be capable to represent and model the current status of an enterprise and to analyze and assess potential changes. One issue is wbetber there exists sufficient knowledge of the process of designing and optimizing business activities/processes to incorporate in knowledge-based tools. The main goal of an Enterprise Design application is to deveJ~p a software tool that enables a manager to explore alternative Enterprise Designs that encompass both the stmcture and behavior of the enterprise over extended periods of time. lssues such as motivation, culture, and incentives are explored, along with other relevant parameters such as organizational structure, functions, activity, cost, quality, and information [8]. 3 STRATEGY FORMULATION FORE-BUSINESS Electronic commerce is becoming a growing part of industry and commerce. The speed of technological change is enabling corporations large and small to transact business in a variety of ways. Today, it is routine practice to transact some aspect of business electronically from e-mail to exchanging data via Electronic Data Interchange (EDI), World Wide Web (WWW), and various shades these technologies. Numerous benefits accrue to corporations when they use automated capabilities. In order to maximize such benefits, electronic enterprises must base their efforts on welJdeveloped strategies. In this manner, tbe probability of success is increased many folds. Embarking on electronic commerce or business should never be thought of as the sole quest of the information systems department. The following strategies are a synthesis of II best practices introduced to assist information systems departments to prepare the organization for the information age [9, 1 0]. 3.1 Strategy 1 - Improve Corporate System DeveJopment Skms In addition to developing technical skills, corporations must pay close attention to effective communication, eliminating cross-functional language barriers, and improving inadequate facilities in geographically dispersed systems. 3.2 Strategy 2 -Build a Proactive Infrastructure There must be a constant effort to keep up with technological changes. Frequently, these changes trickle down from the top as a result of various business strategies. For example, top managers may discover that they need video-conferencing capability, and the information technology people are under pressure to deliver it. This kind of approach will put the chief information officer(CIO) in a reactive posture, trying to put out fires as they appear. In putting out such fires, local resources may be used to satisfy higher level needs without any obvious benefits to local managers who may resent this fact and create barriers against success. CIOs should try to get the cooperation of all users in anticipating system needs. If users are not satisfied with an imposed system, they wiiJ try to build their bootleg systems for their own needs. Thus, project needs should be anticipated as far as possible and should be planned to meet both short-term goals of management and yield benefits for the development of the infrastmcture of the corporation in the Jong term. 12 3.3 Strategy 3 - Consolidate Data Centers A corporation embar1dng on developing an e-business system must realize that there do already exist semiautonomous data centers distributed throughout various geographical locations. There may have been a time when such data centers were desirable. Today, e-business demands integrated information systems, and the data centers must be consolidated. An integrated information system is far more effic ient in controlling corporate operations. Obviously, operating fewer facilities, maintaining minimum levels of inventory, and giving better service to customers will bring handsome returns to corporations. During the consolidation process, a number of problems of compatibility and standardization will occm, but tackling such problems is better than having semiautonomous data centers. 3.4 Strategy 4 - Standardize Data Structures As corporations grow, different data processing systems and data centers proliferate, especiaUy in transnational corporations. Consolidating data centers and systems as suggested in strategy 3 may not be sufficient. Corporations need to determine data needed at global levels and standarclize them. Standardization may not be possible for certain applications in an international setting since regulatory accounting of different countries may be a roadblock. However, this should not be taken as a signal for nonstandardization. Standardization will make useful information available throughout the corporation. For example, these days many corporations are adapting XML as part of data stmcture consolidation strategy. XML issues are addressed in the next section with more detail. 13 3.5 Strategy 5 - Accommodate Linkages with Cui-rent Strategic Allies and Provide Expansion for Future Str ategic Alliances Recent developments in globalization and Internet technology are spurring corporations to form sliategic alliances. Automobile manufacturers are, for example, forming alliances to influence prices and qualities of their raw materials and parts purchases. Similar alliances are growing at an accelerated pace in other industries. These alliances are designed to create not only purchasing power but also a variety of other mutual interests, from technological co-operation to joint production. 3.6 Strategy 6 - Globalize Human Resource Accounting As companies centralize their information systems through computerization, a global inventory of human skills should be developed. Frequent human resource problems arjse when Information Systems (IS) personnel focus locally rather than globally. Recmiting of specialists, for example, must be done not with a local perspective but with a global one. This will help eliminate possible redundancies with potential savings. 4 INTELLIGENT ENTERPRISES Enterprises competing in global markets assume complex organizational forms such as supply chain, virtual enterprise, Web-based enterprise, production network, e-business, and e manufacturing. Common traits of these organizations are willingness to cooperate, global distributed product development and manufacturing, and high coordination and communication. These traits have led the trend of transformation from 14 capital intensive to intelligence intensive entetprises [1 1]. Visions of the organization's future e-Business roles as an intelligent enterprise could be formulated as follows [12]: • Transparent - Intelligent enterprises will contain substantial amounts of information on capabilities, capacities, inventories, and plans that can be exchanged between tools, servers, and optimizing agents that will augment capabilities of their human masters. • Timely - Intelligent enterprises will be designed to meet a customer need exactly when the customer wants it. • Tuned - Through collaboration and sharing of knowledge, the intel1igent enterprise wiJl serve customer needs with a mjnimum of wasted effort or assets. 4.1 Knowledge Management and Integration with XML One important challenge for enterprises today is storing and reusing knowledge. For many organizations, up-to-dale knowledge of what is relevant and important to customers distinguishes their offerings. The challenge is to assimilate this rapidly changing knowledge about products and services quickly and distribute it rapidly to leverage it for improved performance and quality service. This means finding all knowledge that is embedded in and accessed through technologies and processes and stored in documents and external repositories and being able to share it quickly with the customers. The capital-based organization needs to transform into bigh-perforrn.ing, processbased, knowledge-based enterprises, characterized by agility, f lexibility, adaptability, and willingness to learn. To overcome the difficulties during the transformation, powetful tools are needed to manage the knowledge within the enterprise and to develop the 15 communication between the company and the customers. The key tool to be used within this process is XML, which will set the standards of communication and wm help to manage the knowledge [13]. To understand how XML will help us managing the knowledge, a def111ition of a knowledge-based business is needed. 4.2 Knowledge-Based Businesses The following six characteristics of knowledge-based business were defined in Davis and Botkin [14]. ~hese characteristics are actually guidelines for businesses to put their information to productive use. 4.2.1 The More You Use Knowledge-Based Offerings, The Smarter They Get This characteristic fits in the customer-defined offerings the companies give. For example, a credit card company can build a system that could understand the buying patterns of a customer that can protect the customer from fraud. A news agency can change the interface of its system to give the type of news that a newspaper or journal requests. Knowledge-based systems not only get smcuter but also enable their users to learn. For example, General Motors' computer-aided maintenance system not only helps novice mechanics to repair automobiles but also helps expe1t mechanics to refine their knowledge. As the technology advances, the amount of information that a mechanic needs to know expands rapidly. With tllis system a mechanic can leverage the knowledge of all mechanics using the system. As a result, the system continually improves, as does the service quality. 16 4.2.2 Knowledge-Based Products And Services Adjust To Changing Circumstances When knowledge is built into a product, the product may adjust itself in a smart manner to changing conditions. For example, a glass window that may reflect or transmit sunlight according to temperature is such a product. Producing tbese producl:s will not only be marketed well but also have important economical advantages. Tbe smart pr~ducts will guide their users as well. 4.2.3 Knowledge-Based Businesses Can Customize l1teir Offerings Knowledge-based products and servkes can determine customers' changing paltems, idiosyncrasies, and specific needs. For example, a smart telephony system can understand which language will be used on specific num bers~ also by using the voice recognition system, the need for telephone credit cards can be diminished. 4.2.4 Knowledge-Based Products A11d Services Have Relatively Short Life Cycles Many knowledge-based products have short life cycles, because they depend on the existing market conditions; their viability is short-lived. For example, the foreign exchange advisory services offered by a commercial bank are highly specialized and customized for corporate clients. Such services should be constantly upgraded to keep the profits and the proprietary edge. 4.2.5 Knowledge-Based Businesses Enable Customers To Act In Real Time Information becomes more valuable when it can be acted on constantly. A system that will deliver the tour book information while you are driving the car will have a great 17 value. An interactivity. added to the system will make the product's value even higher. Knowledge-based products can also act in real time. For example, a copier machine that calJs the maintenance provider when an error occurs wiJJ have a great value in this sense. 4.3 XML's Role in Business Applications The smallest cluster of knowledge is data. These are basic building blocks of information that come in four particular forms: numbers, words, sounds, and images. Manipulation of the data determines its value. The arrangement of data into meaningful patterns is information. For example, numbers can be arranged in tables, which is information; a series of sounds, which is music, can also be considered as information. Today, an important challenge for Internet-based businesses is using the information efficiently and in a productive way that will upgrade the information to knowledge. Thus, we say that knowledge is the application and productive use of information. The shift from the information to knowledge age will be via technology. The new enabling technologies of software development such as XML, J2EE, and Visual Studio are forcing e-businesses to build knowledge-based businesses. Here we will explain the most important enabling technology, XML, within the development of e~businesses. XML can be used effecti~ely for exchanging of business documents and information over the Internet. XML is a standard language that simultaneously presents content for display on the Intemet and describes the content so that other software can understand and use the data. Therefore XML can be a medium through which any business application can share documents, transactions, and workload with any other 18 business application [15]. In other words, XML can become the common language of ebusi. ness and knowledge management. One impmtant property of XML is providing .information about the meaning of the data. Thus, an XML-Jonnatted document could trigger a software application at a receiving company to launch an activity such as shipment loading. But to provide that level of data integration, trading partners would have to agree on definiti ons for the various types of documents as well as standard ways of doing business. In addition to facilitating e-commerce, having common defini tions and uses for data also enable an enterprise to better leverage the .knowledge ctmenrly stored in information silos. XML supports the searching and browsing of such information sHos [16]. It structures documents for granularity, such as alJowing access to sections within documents and fine-tuning retrieval Also, it annotates documents, which enables users to not restrict themselves to what is in the document. XML organizes documents by classifying documents into groups and supports browsing them. AdditionaiJy, it has Hyper Text Markup Language (HTML)-like linking options that help the information users to find the documents they arc seeking. Fig. I shows the tools that are common in the organization of information through XML. XML is the next evolution in knowledge management, and organizations are beginning to understand the potential of this technology to develop enterprise-wide information architectures. As a technology, XML does not bring any value to an organization. The value of XML wHI depend on how it js used within a company. The agreement on data definitions within an enterprise has always been a hard task. At rn.inlmum, XML should be implemented strategically within the organization. Ideally, the 19 Annotate Documents I RDF I Schemas J:: I XML I (.---, X-Poin- ter--, Fig. 1. Organization of information through XML. implementation should include strategic partners and other organizations that have a need to share data and information. XML is a majm advance in the standardization of information sharing across traditional information boundaries, both internal and external Information security and privacy issues are major concerns revolving around customer and corporate data flowing across wires. Successful knowledge management in a company often depends on having access to information outside the enterprise walls. XML can also be of value here by helping to improve the functioning of supply chains and the extranet. In conclusion, it becomes obvious that managing knowledge requires better tools. We need to create systems that manage documents, as people would do, and we know that better tools need better documents. Thus by building on a solid knowledge management strategy using XML, we believe an organization can gain competitive differentiation in the near future. 20 PART II INTERNET ENTERPRISE IMPLEMENTATION CONSIDERATIONS 1 INTRODUCTION In the first section of this module we introduced essential elements of enterprise engineering in abstract and general terms. Building on the notions explored in the first section, we will address here, specifics concerning designing and implementation of Internet enterprises. In this section, a review is provided of the key concepts and concerns an Internet enterprise engineering (IEE) project would encounter and need to address. Business engineering fundamentals, technologies, and strategies for the lrlternet such as Unified Modeling Language, Cosmos Model, Enterprise Maturity Model, Web Business . Models, Methods of Electronic Transaction, Online Contracts, Security Protocols, selected integrated development tools, Next Generation Internet, and Internet2 arc covered. Over 20 occupational roles within IEE are identified and described separately. A technology implementation platform and strategy are introduced, along with marketing and customer retention technologies and strategies on the Internet A detailed overview is provided of the various Internet business tools, technologies, and terminology for the systematic construction of new ventures on the Internet l7]. For convenience, all these issues are summarized in table fmm at the end of this section. 2 BUSINESS ENGINEERING FUNDAMENTALS 2.1 UML: Officially introduced in November 1997, UML has quickly become the standard modeling language for software development [6]. It bas a business model approach that provides a plan for engineering an orchestrated set of business functions. It 21 provjdes a framework by which business is to be performed, allowing for changes and various improvements in the process. The model is designed to be able to anticipate changes in business function in order to maintain an edge on the competition. One of the advantages of modeling in UML is that it can visually depict functions, relationships, and paradigms. UML is a recommended tool for business analysts to break down a large-scale business operation into its constituent parts. Capturing a business model in one diagram is not realistic, so it should be noted that a business model is actually composed of a number of different views. Each view is designed to capture a separate purpose or function without losing any important overall understanding of the business operation. A view is composed of a set of diagrams, each of which shows a specific aspect of the business structure. A diagram can show a structure or a kind of dynamic collaboration. The diagrams contain objects, processes, rules, goals, and visions as defined in the business analysis. Objects contain information about mechanisms in the business, and processes are functions that use objects to affect or produce other objects. Objectoriented techniques can be used to describe a business. There are similar concepts in business functions that mn parallel to object-oriented techniques of designconceptualization. Another advantage of UML is derived from the ability of business modelers and software developers to use the same conceplualization tools and techniques to achieve a common business end. Additionally, the power of UML is derived :from its ability to transcend tbe standard organizational chart [ 17]. 22 2.2 Cosmos Model: A generic approach for a business to manage change is through a holistic framework as described by Yeh in his three-dimensional model called Cosmos (Fig. 1). One of the important aspects of this model is that three dimensions exist interdependently because each dimension behaves as an enabler and an inhibitor to the other dimensions. The ";activity structure" dimension covers how work is structured in an organization, factoring in the steps and tasks that are taken to achieve an appropriate level of workflow. The ";infrastructure dimension" covers how resources are allocated and factors in the assets of an enterprise. The ";coordination dimension" covers how information is created, shared, and distributed. The cultural aspects of the enterprise are factored in here. The Cosmos model provides a conceptual space bounded by concrete factors for successfully navigating from one point of an organizational situation to another. Infrastructure Long-term vs. short-term objectives Activity Structure Stability vs. Flexibility Target Coordination Structure Modu]arity vs. Interconnectedness Fig. l. Cosmos model--holistic framework for managing change. [13) 23 The Cosmos model is an abstract tool for managers to guide their company along the best possible path. The trade-offs between the three dimensions at each point in the journey along the path are what the manager must determine to be most effective and best for the organization as a whole. In the case of work structure, there is an inherent tradeoff between stability and flexibility. In the case of a coordination structure, there is a tradeoff between strictly aligning of human resources with company objectives and providing each operating unit with sufficient autonomy. More autonomous organizations are generally organized with a greater degree of modularity, allowing for the ability to make rapid decisions by adapting to changing market conditions. In the case of infrastlucture, there is a trade-off between seeking short-term gain versus long-term gain. Overall, the Cosmos mode] provides an executive or project manager with another technique to visualize the overaJJ situation and path of an organization by laking into account the three dimensions that correspond to the three main forces that affect its future [ 18]. 2.3 Enterprise Maturity Model: In order to characterize a business in terms of its level of maturity, focus, activity, coordination, and infrastructure, please refer to Table l, provided by Yeh [18]. The table provides an overview of the various levels of enterprise maturity. 2.4 Web Business Models: Entrepreneurs who wish to start e-businesses need to be aware of e-business models and how to implement them effectively. The combination 24 of a company's policy, operations, technology, and ideology defines its business model. Table 2 describes in more detail the types of business models in existence today [6, 19]. 2.5 IVIethods of Elech·onic Transaction: There are various methods and mechanisms that merchants can collect income through electronic transactions. Table 3 provides the types of transactions covered such as credit card, e-walJets, debit cards, digital currency, peer-to-peer, smartcards, micro-payments, and e-billing [19]. 2.6 OnJine Contracts: An online contract can be accomplished throt1gh the use of a digital signature. Digital signatures are the electronic equivalent of written signatures. The Electronic Signatures in Global and National Commerce Act of 2000 (E-sign Bi11) recently passed into law were developed for use in public-key cryptography to solve the problems of authentication and integrity. The purpose of a digital signature is for electronic authorization. The U.S. government's digital authentication standard is called the Digital Signature Algorithm. The U.S. government also recently passed digitalsignature legislation that makes digital signatures as legally bindiqg as handwritten signatures. This legislation is designed to promote more activity in e-business by legitimizing online contractual agreements. 2.7 Security Protocols: Netscape Communkations developed the SSL protocol, developed as a non-proprietary protocol commonly used to secure communication on the Internet and the Web. SSL is designed to use public-key technology and digital 25 certificates to authenticate the server. in a transaction and to protect private information as it passes from one party to another over the Tnternet. SSL can effectively protect information as it is passes through the Internet but does not necessarily protect private information once stored on the merchant's server. An example of private information would be credit card numbers. When a merchant receives credit-card information with an order, the information is often decrypted and stored on the merchant's server until the order is placed. An insecure server wi th data that are not encrypted is vulnerable to unauthorized access by a third party to that information. SET protocol was developed by Visa International and MasterCard and was designed speci.tically to protect e-commerce payment transactions [20]. SET uses digital certificates to authenticate each party in an e-commerce transaction, including the customer, merchant, and the merchant's bank. In order for SET to work, merchants must have a digital certificate and special SET software to process transactions. Additionally, customers must have complementary digital certificate and digital walJet software. A digital wallet is similar to a real wallet to the extent that it stores credit (or debit) card information for multiple cards, as well as a digital certificate verifying the cardholder's identity. Digital wallets add convenience to online shopping because customers no longer need to re-enter their credit card information at each shopping site. 2.8 Integrated Tool Example: Drumbeat 2000: Macromedia Drumbeat 2000 is a tool capable of accepting and delivering complex infmmation and functionality through a web-interface [21]. The tool aids a visually skilled Web designer in competitively building a website without necessarily having to do any coding, which is useful in the 26 initial prolotyping phase. It is a tool that can interact with the back-end database with the ability to build a user-friendly client-side using Active Server Page (ASP) Web technology. ASP technology enables a real-time connection to the database, so any changes made to the database are immediately re flected on the client side. Macromedia D1umbeat 2000 claims to provide everything needed to build dynamic Web applications and online stores visually at a fraction of the typical development time and expense. The designers of Drumbeat 2000 also cl aim that the development environment can keep up with continuously evolving web technology, thus making it a future-oriented technology. 2.9 NGI: This initiatjve is a mulli-agency Federal research and development program began on October 1, 1997 with the participation of the following agencies: DARPA, DOE, NASA, NIH, NIST, and NSF (Table 4). These agencies arc charged with the responsibility of developing advanced networking technologies and revolutionary applications that require advanced networkjng. 2.10 Internet2: The Intemet2 is a consortium of over 180 uruversit ies leading the way towards a partnership with industry and government to develop advanced network applications and technologies in order to accelerate formation of a more advanced Internet. The primary goals of Internct2 are to create a leading edge network capability for the national research community, enable revolutionary Internet applications, and ensure the rapid transfer of new network services and applications to the broader Internet community. Through Intemet2 working groups and initiatives, Internet2 members are 27 collaborating on advanced app.lications, middleware, new networking capabilities, advanced network infrastructure, partnerships, and alliances [22). 3 OCCUPATIONAL ROLES IN illE In order to build, deploy, and maintain an Internet Enterprise, certain roles and positions most be filled for the organization to be effective. Table 5 lists and describes many of the relevant roles required within an enterprise initiative, such as Chief Privacy Officer (CPO), in addition to the more traditional organizational roles such as Chief Executive Ofilcer (CEO), Chief Technology Officer (CTO), and Chief Financial Officer (CFO) [20, 23]. 4 TECHNOLOGY IMPLEMENTATION AND STRATEGY 4.1 Microsoft Dotsmart Initiative: There are various approaches to imp.lementing strategic planning and technology implementations. For illustrative purposes, Microsoft is considered in this thesis to be one such approach for enterprise planning. Once the overall conceptualization and business pattern is created and a.ll the necessary occupational roles within the organization are identified, it is necessary to identify exactly which technology to utilize in order to build and implement the business venture. As the requirements of a business are analyzed, a useful guide is the Microsoft Dotsmarl Initiative. This mode of business analysis will help determine which business engineering concepts to use and what kinds of personnel are needed to 1un the operation. Additionally, the Microsoft Dotsmatt Initiative provides key points to address when building an Intemet operation from scratch. 28 4.2 Microsoft Technology Centers (MTCs): MTCs are areas designed for groups of entrepreneurs, Information Technology personnel, and businessmen for the rapid development. of robust e-commerce solutions. At these facilities, developers, entrepreneurs, and high-technology business persons use Microsoft Technology and the relevant knowledge to build enterprise solutions. The centers provide the essentials a team would need to develop an enterptise from the initial conception of the idea to launch. Microsoft provides essential equipment, support, and expe11ise, with an application of a ";best-practices" approach. These best practices have been tested before at MTCs, expediting the development progress and time to market. Laboratory sessions are designed to bring together an assortment of entrepreneurial individuals as they facilitate the development process using the latest Microsoft products. The MTCs offer customers wishing to capitalize on emerging Microsoft.NET technologies the service, infrastltlctme, and development environment to accelerate their projects and reduce thejr risk. The working laboratory is intended to help customers develop and test next-genera6on e-commerce technologies and demonstrate further the value of Windows platforms and other industry-standard systems for powering ebusiness. 4.3 Impact of XML: XML represents a more general way of defining text-based/ documents compared to Hypertext Markup Language (HTML). Both HTML and XML descend from Standard Generalized Markup Language (SGML). The greatest difference between HTML and XML is the flexibi lity of the allowable tag found in XML. An XMLbased document can define its own tags, in addition to including a set of tags defined by a 29 third-party. This ability may become very useful for those applications that need to deal with very complex data structures. An example of an XML-based language is the Wireless Markup Language (WML). WML essentially allows text pm1ions of Web pages to be displayed on wireless devices, such as cellular phones and personal digital assistants (PDAs). WML works with the Wireless AppHcation Protocol (W AP) to deliver this content. WML is similar to HTML but does not require input devi ces such as a keyboard or mouse for navigation. In the case of a PDA thal requests a Web page on the Intemet, a WAP gateway receives the request, translates it, and sends it to the appropriate Internet server. In response, the server replies by sending the requested WML document. The WAP gateway parses this document's WML and sends the proper text to the PDA. This introduces the element of device portability. 4.4 Microsoft.Net Initiative: Microsoft announced a new generation of software called Microsoft .NET. This software is intended to enable every developer, business, and consumer to benefit from the combination of a variety of new Internet devices and programmable Web services that characte1ize NGI. Microsoft is trying to create an advanced new generation of software that wiiJ drive NGI. This initiative is called Microsoft.NET and it.s key purpose is to make information available at any time, in any place, and on any device. 4.5 Microsoft BizTalk 0 1·chestration: For IEE purposes, BizTalk Server 2000 is the considered a nex t-generation software that plays an important role in forming the infrastructure and tools for building successful e-commerce communities. The core of 30 BizTalk Server offers business document routing, transformation, and tracking infras tructure that is mles based. BizTalk Server offers many services that allow for quickly building dynamic business processes for smooth integration of applications and business partners while utilizing pubJic standards to ensure interoperability. Essentially, BizTalk server provides a method to build dynamic business processes quickly. 4.6 Back-end Configurations Using Microsoft Technology: In the design of the backend of a website, special considerations must be given to security. This is done by providing a kind of safety buffer from the greater world of the Internet using a demiUtarized-zone (DMZ) strategy. The components of a DMZ such as the firewall, the front-end network, the back-end nelwork, and the secure network function as a security buffer from the outside world. 4.7 Rapid Economic Justification (RE.fl: The REJ framework makes it possible for IT and business executives to demonstrate how specific investments in IT will eventually benefit the business, ensuring in the process that the IT projects are aligned with the specific business strategies and priorities. IT investments play a critical role in Internet enterprises. Important decision-making at the early stages of any venture does require an effective methodology to identify the best strategic IT investments. Leaders in the upper echelon of organizations such as CEOs, CTOs, and CFOs are being overwhelmed with complex information. REJ may prove to be a reliable method to quickly evaluate the true value worth and potential of a company by taking into consideration its intangible IT assets. 31 In the past, companies developed metrics for the valuation of IT investments on the basis of cost improvements. Metric methodologies have focused on Total Cost of Ownership (TCO), whereas the strategic role of IT in boosting new opportunities for business has been largely ignored. Understandably, the benefits of IT can be traced to ways of measuring business value the traditional way. Unfortunately, current business practices are not necessarily adequately equipped to handle the complexities of the New Economy. Although the economic justification of IT projects has been researched extensively in the past decade, the problem is that these metiJods and techniques require too much data-crunching power and time to prepare. These unwieldy research techniques need to be replaced by a new and practical approach to quantify swiftly and accurately the true value of IT investments. 5 MARKETING AND CUSTOMER RETENTION 5.1 Online Marketing: The Internet provides marketers with new tools and convenience that can considerably increase the success of their marketing efforts. An Internet marketing campaign such as advertising, promotions, public relations, partnering and Customer Relationship Management (CRM) systems are all an integral prut of the marketing process. Table 6 describes the various techniques at the marketer's disposal when using the Internet as the medium of customer information delivery [19]. 5.2 CRM Systems: CRM is a general but systematic methodology using both business and technological techniques to maintain and grow a business's customer base. CRM systems enable a business to keep detaj led records on the activity of its c ustomers 32 by using new, sophisticated tracking systems on the Internet. Table 7 shows various areas where CRM technology and CRM business techniques can assist in managing a customer base [19]. 5.3 Web Design Technology Example: Dreamweaver Technology: Macromedia Dreamweaver is Web technology for building websites on the Internet without the need for programming directly in HTivlL [21]. Also, Web designers are easily able to create Web-based leaming content with Dreamweaver 4.0. A Web designer has the ability to create site maps of the website that can be easily maintained and enhanced. This is a very popular technology available on the market that can be used to make professional quality websites for marketing and promotional purposes. 5.4 Web Enhancement Technology Example: Flash Technology: Macromedia Flash is a multimedia technology for applications on the Web. This technology gives the user, especially one not artistically talented, the ability to develop interactive animations that can look quite impressive. A flash movie can be embedded into a Web site or run as a standalone program, and Flash is compatible with Dreamweaver. Flash movies can be made with sound and animation, so it is useful as a software tool to produce demonstrations at the user-interface. Flash can be used on CD-ROMs and allows for the construction of cross-platform audio/video animations and still jmages. 33 \ 6 SUMI\-IARY TABLES We would like to reiterate emphasis areas for Electronic Enterprise as listed in the introduction of this module. These are a) hardware (mechanisms associated with physical world), b) software (mechanisms associated with computational world), c) netware (mechanisms associated with communications), and d) peopleware (mechanisms associated with human element) [23, 24]. Following tables provide a useful Jist in all these areas. For convenience, we include all summary tables in following order: Table 1 Enterprise Maturity Levels Table 2 Web Business Models Table 3 Electronic Transactions Table 4 NGI Participating Agencies Table 5 Occupational Roles in lEE Table 6 Marketing Techniques on the Internet Table 7 Customer Relationship Management 34 Table 1 Enterprise Maturity Levels Levels Focus Activity Coordination Infrastructure 5. Whole Human-society Process Self-directed teams Long-term oriented; in engineering dominate orientation, harmony with methodology workplace; toLal personal mastery, nature, people institutionalized; alignment; open, heavy investments routinely do the Flexible and honest in IT, continuous right things: predictable communication improvement change is second process, right the channels institutionalized nature first time, value- throughout adderl activities only 4. Wise Stakeholders and Process monitored Organjzational Organi:z.ation community automatically for structure based on competency oriented in high performance; cross-trained case management; harmony with dominated by teams; vision continuing community; value-added al igned with the education; team-people routinely activities; high needs of the based structure; doing things right. degrl:e of society tenm-oriented HR Changes are concurrency; few policy planned and handoffs mannged 3. Mature Customer oriented; Process defined Vision defined Integrated customer's needs and is measured with extensive capacity, are anticipated; buy-ins, multi- con sol ida ted people are proud to functional project function; work here teams exist; investment in participatory training and work culture with force planning; managers as flattened coaches organization 2. Stable Competition- Process under Internal focus, Short-term focus, oriented reactive statistical control; control oriented, fragmented bench-marking as functional division capacity, little IT, a result of reaction, hierarchical, inflexible process, difficult to get has many information, no handoffs and a formal HR policy substantial number of non-value-added tasks I . Ignorant Disoriented- Fire-fighting Ad- No clear vision, Don' t know where chaotic hoc, unpredictable, resources exist fragmented Rumor mill rampant 35 e-Business Model Storefront Model Auction Model Portal Model Dynamic Pricing Model Comparison Pricing Model Demand-Sensitive Pricing Model Table 2 Web Business Models Description The~ storefront model is what many persons think of when they bear the word ebusiness. The storefront model combines transaction processing, security, online payment and information storage to enable merchants to sell their products on lhe web. This is a basic form of e-commcrce where the buyer and seller interact directly. To conduct storefront c-commerce, merchants need to organize an online catalog of products, take orders through their Web sites, accept pnyments in a secure envi ronment, send merchandise to customers, and manage customer data. One of the most commonly used e-commercc enablers is the shopping cart. This order-processing technology allows customers to accumulate items they wish to buy as they continue to shop. www.amazon.com is a good example. Forrester Research reveals that an estimated $3.8 billion will be spent on online person-to-person auctions in the year 2000 alone. This number is expected to rise to $52 billion for Business-to-Business (B2B) auctions. Usually auction sites act as forums through which Internet users can log-on and assume the role of either bidder or seller. As a seller, you are able to post an item you wish to sell, the minimum price you require to sell it, your item, and a deadline to close the auction. As a bidder, you may search the site for availability of the item you are seeking, view lhe current bidding activity and place a bid. They usually do not involve themselves in payment and delivery. www.ebay.com is a good example. Portal sites give visitors the chance to find almost everything they are looking for in one place. They often offer news, sports, and weather, as weU as the ability to search the Web. Search engines are h01i zontal portals, or portals that aggregate information on a broad range of topics. Yahoo! at www.yahoo.com is an example of a horizontal portal. America Online (AOL) www.aol.com is an example of a vertical portal because it is a community-based site. The Web has changed the way business is done and the way products are priced. Companies such as Priceline (www.pricelinc.com) and Imandi (www.imandi.com) have enabled customers to name their prices for travel, homes, automobiles, and consumer goods. The name-your-price model empowers customers by allowing them to choose their price for products and services. The comparison pricing model allows customers to polJ a variety of merchants and find a desired product or service at the lowest price (i.e. www.bottomdollar.com). The Web has enabled customers to demand bener, faster service at cheaper prices. It has also empowered buyers to shop in large groups to achieve a group rate (i.e., www.rnercata.com). Customers become loyal to Mercata because it helps them save money. 36 e-Business Model Bartering Model Advertising Model Procurement Model B2B Service Provider Model · Online Trading Model Online Lending Model Online Recruiting Model Online Travel Service Model TabJe 2 (Continued) Description A popular method of conducting e-business is bartering, offering one item in exchange for anotiier. If a business is looking to get rid of an overstocked product, iSolve ~isolve.com) can help sell it PotenHal customers send their pricing pre ferences to the merchant who evaluates the offer. Deals are often part barter and part cash. Examples of items typically bartered are overstocked inventory items, factory surplus, and unneeded assets. Forming business models around advertising-driven revenue streams is the advertising model. Television networks, radio stations, magazines, and print media usc advertising to fund their operations and make a profit. www.Iwon.com is a portal site that rewards users with raffle points as they browse the site's content. www.freemerchant.com offers free hosting, a free store builder, a free shopping cart, free traffic logs, free auction tools and all the necessary elements for running an e-commerce storefront. Frccmerchanl makes money from its strategic partnerships and referrals. The procurement model means acquiring goods and services with effective supply chain management via a B2B Exchange. ICG Commerce Systems (www.icgcommerce.com) is a site that enables businesses, customers, suppliers, purchasers, and any combination of these to interact and conduct transactions over the Internet. The system supports B2B, B2C, and all variations of these models. · B2B service providers make B2B transactions on the Internet easier. These e-businesscs help other businesses improve policies, procedures, customer service, and general operations. Ariba (www.ariba.com) is a B2B service provider. The online trading model is essentially securities trading on the Internet. Trading sites allow you to research securities and to buy, sell, and manage all of your investments from your desktop; they usually cost less. Charles Schwab (www.schwab.com) is a notable example. Companies are now making loans online. E-loan (www.eloan.com) offers creditcard services, home equity loans, and the tools and calculators to help you make educated borrowing decisions. Recruiting and job searching can be done effectively on the Web whether you are an employer or a job seeker. Refer.com (www.refer.com) rewards visitors for successful job referrals. Web surfers can search for and arrange for all their travel and accommodations online, and can often save money doing so. Cheaptickets (www.cheaptic kets.com) .is a similar site that helps customers find discount fares for airl.ine tickets, hotel rooms, cruise vacations and rental cars. 37 e-Business Model Online Entertainment Model Energy Distribution Model Braintrust Model Online Learning Model Click-and-Mortar Model Table 2 (Continued) Description The entertainment industry has recognized this and has leveraged its power to sell movie tickets, albums and any other entertainment-related content they can fit on a Web page. ICast.corn (www.icast.com) is a multimedia-rich entertainment site. A number of companies have set up energy exchanges where buyers and sellers come together to corrununicate, buy, sell, and distribute energy. These companies sell crude oil, electricity, and the products and systems for distributing them. Altranet (_www.altranet.com) also sells energy commodities. Companies can buy patents and other intellectual property online. Yet2 (www.yct2.com) is an e-business designed to help companies raise capital by selling intellectuaJ property such as patents and trademarks. Universities and corporate-training companies offer high-quality distance education directly over the Web. Click2learn ~www.click2 1earn.com) has created a database of products and services to elp mdtvtdunls and companies fi.nd the education they need. Brick-and-mortar companies who wish to bring their businesses to the Web must determine the level of cooperation and integration the two separate entities will share. A company that can offer its services both offline and o nline is called click-and-mortar, such as Barnes & Noble (www.bn.com). 38 Electronic Transaction T e Credit Card Transactions E-wallets Debit cards Digital Currency Table 3 Electronic Transactions Descrjption Merchant must have a merchant. account with a bank. Specialized Internet merchant accounts have been established to handle online credit card transactions. These transactions are processed by banks or third-party services. To faci litate the credit card process, many companies are introducing electronic wallet services. E-wallets allow you to keep track of your billing and shipping information so it can be entered with one click. Banks and businesses are also creating options for online payment that do not involve credit cards. There are many forms of digital currency; digital cash is one example. It is stored electronically and can be used to make online electronic payments. Digjtal cash is often used with other payment technologies such as digital wallets. Digital cash allows people who do not have credit cards to shop online, and merchants accepting digital-cash payments avoid creditcard transaction fees. 39 Examples Companies like Cybercnsh (www.cybercash.com) and ICat (www.icat.com) enable merchants to accept credit card payments online like www.Charge.com. www. visa.com offers a variety of ewallets. Entrypoint.com offers a free, personalized desktop toolbar that includes an e-wallct to facltitate one click shopping at its affiliate stores. In order to standardize e-wallet technology and gain wider acceptance among vendors, Visa, Mastercard, and a group of e-wallet vendors have standardized the technology with the Electronic Commerce Modeling Language (ECML), unveiled in June 1999 and adopted by many online vendors. Companies such as AroeriNet allow merchants to accept a customer's checking-account number as a valid form of payment. AmeriNet provides authorization and account settlement, handles distribution and shipping (fulfi11ment), and manages customer service inquiries. E-Cash Technologies (www.ccas.b.com) is a secure digitalcash provider that allows you to withdraw funds from your traditional bank account. Gift cash is another form of digital currency that can be redeemed at leading shopping sites. Web. Flooz (www.Jlooz.wm) is an example of gift currency. Some companies offer points-based rewards. www.beenz.com is an international, points-based currency system. Electronic Transaction Peer-to-peer Smart Cards Micropaymenls Table 3 (Continued) Description Peer-to-peer transactions allow online monetary transfers between consumers. A card with a computer chip embedded on its face is able to hold more information than an ordinary credit card with a magnetic strip. There are contact and contactless smartcards. Similar to smart cards, ATM cards can be used to make purchases over the Internet. Merchants must pay for each credit card transaction that is processed. The cost of some items could be lower than the standard transaction fees, causing merchants to incur losses. Micropayments, or payments that generally do not exceed $10.00, offer a way for companies offering nominal.ly priced products and services to generate a profit. 40 Examples cCash runs a peer-to-peer payment services that allows the transfer of digital cash via email between two people who have accounts at eCashcnablcd banks. Pay Pal offers a digital payment system known as X payments. PayPal allows a user to send money to anyone with an email nddress, regardless of what bank either person uses or whether the recipient is pre-registered with the service. EConnect has technology in the form of a device that connects to your computer and scrambles financial data, making it secure to send the data over the Internet. EpocketPay is another product developed by eConnect that allows a consumer to make secure purchases from the ePocketPay portable device. This device acts as a cell phone with a card reader built into it and will allow you to make secure purchases anywhere. Millicent js a micropayment technology provider. Millicent handles all of the payment processing needed for the operation of an e-busi ness, customer support, and distribution services. Millicent's services are especially useful to companies that offer subscription fees and small pay-per-download fees for digjtal content. c-Billi ng Electronic llill Presentment and payment (EllPP) offers the ability to present a company's bill on multiple platforms online. Payments arc generally electronic transfers from consumer checking accounts. 41 The Automated Clearing House (ACH) is the current method for processing electronic monetary transfers. Table4 NGI Participating Agencies _A~c~ro~t~1Y~n_l_ _~ E_x~p_a_n_si~n --- ~ --- ~--~ --- DARPA Defense Advnnced Research Projects Agency DOE Department of Energy (beg inning in PY 1999) NASA National Aeronautics and Space Administration NIH National Insti tutes of Health NIST National Institute of Standards and Tec hnology NSF National Science Foundation 42 Occupation Entrepreneur e-Commerce Program Manager Enterprise Architect Business and Infonnation Architect Table 5 Occupational Roles in illE Descdptjon An entrepreneur on the Internet is usually the person with the initial idea for the entire business and is involved in its early stages of inception before official management takes over. e-Commerce Program Managers are involved in enterprise-wide ecommerce initiatives and projects, managing e-cornmerce integration and overall business and technology architecture and infrastn1cture. Usually, they arc senior-level line managers who are effective at uniting the business and technology front by coordinating units within an organization and across the extended enterprise. Enterprise Arc hitects are involved in the definition, alignment, and refinement of the overall ente rprise architecture. Their responsibilities include seeing to it that many of the tasks of program management are can·ied out properly. More important, they must provide guidance so individual projects can make optimal use of infrastructure resources for e-Cornmerce. A balancing act between business requirements and tcchnologicnl capabilities is accomplished through their efforts . Enterprise Architects have a duty to identify the requirements, goals, and constraints of the project. They allocate responsibilities for each of the architectural elements. They are also responsible for lhe coordination of the modeling and design activities for the overall enterprise architecture. They are the chief e-commerce architects because they coordinate the work information, infrastructure and application architects. All architects and modelers should be completely capable in design patterns common to the many facets of business and technology. The design pattern movement has affected all aspects of analysis, design, and implementation of componentbased systems. Design patterns are the reusable material of architecture and have an important role in the complex distributed information systems lhat are conceived and developed today. Business and Information Architects have business domain knowledge, including business processes and logical information structures. They coordinate the work of business and technology analysts and modelers who develop abstract representations or business object models of the subjects, rules, roles, events, tasks, activities, and policies of the business domain. Application-neutral models that are built enable the reuse of business engineering analysis and design patterns and artifacts 43 Occupation Infrastructure Architect Application Architect Humru1 Factors Engineer Business Manager Internet Commerce Architect Table 5 (Continued) Description Infrastructure Architects identify the technical services required of the technology infrastructure to empower and support the logical busi ness and information architecture. They evaluate existing infrastructure services, s\~l ect those appropriate to a given project and acquire (via build or buy) new components needed in the infrastructure. They oversee the work of technical specialists in modeling the service architecture of the technical infrastmcturc. They maintain the technical components of the development repository. Application Architects coordinate the business process modeling activities across multiple projects and business domains. They coordinate the work of domain modelers and maintain the repository of business and component models. They evaluate existing business component services, sclectthose appropriate to a given project and (via build or buy) new components needed in the evolving business model. They maintain the business application components of thC development repository. Most importantly. tl1ey guide solution developers in blending the business object model with the infrastruchJre services needed to implement the models in an e~com merce platform. Human Factors Engineers are needed to design the next generation of user interfaces. While the graphical user Interface (GUD is recognized as the enabler of wide-spread personnl computing, task centered user interfaces provide assistance to end-users and can be a boon to productivity in the world of e-commerce. E-commerce transactions can involve a multitude of complex steps and processes. Well-designed user interfaces can help navigate and guide the user through these tasks, keeping track of the progress, and picking up where users leave off when transactions span multiple sessions of work. The Business Manager is responsible for the business approach on the Internet, creating and operating the Internet presence for the business, deciding what products and services are sold online, determining pricing, and establishing the key business relationships needed lo make a venture successful. This is primarily a business role, with particular attention paid to the success of the online business and bottom line. The Internet Commerce Architect is generally a systems analyst who turns the business requirements into a system design that incorporates the creation and management of content, the tnmsaction processing, fulfillment, and technical aspects of customer service 44 Occupation Solution Developer Content Designer Content Author Implementor Database Administrator Internet Sales and Marketing Customer Service Representative T~lble 5 (Continued) Description Solution Developers are application developers. They develop the use cases for the specific application at hand, compose solutions through extensive use of business object models, and use repositories. They assemble application components to implement c-commercc application. Unlike conventional programmers or programmer/analysts, they do not build or pmgram components. Instead, they assemble or glue together business solut ions from prefabricated components. They use highly integrated development environments (IDEs) such as IBM's VisuaiAge, Symantec's Visual Caf6, Sybase's PowcrJ, and Inprise's Jbuilder. Emerging Computer Assisted Software Engineering (CASE) tools and related methods will likely appear that tighten the link between business modeling and software development. Tools for understanding and managing business processes, such as Inte11icorp's LiveModel allows solution developers to build logical business that can automate the configuration and management of the SAP/R3 ERP system. The Content Designer is responsible for the look and feel of an Internet commerce system, including the graphic design, page layout, and user experience. The Content Author creates or adapts product information into a form that can be used for internet commerce, working within the design laid out by the content designer. The Impleme::ntor is responsible for creating any programs or software extensions needed to make the Internet commerce system work. For example, an Implementor might write the software or construct an ASP page using Drumbeat 2000 that takes product information from a database and dynamically renders it into a Web page. In the case that a database is used in the back-end, the Database Administrator (DBA) manages the creation and operation of the database to ensure its reliability, integrity, and performance. The Sales and Marketing team is responsible for focused efforts in promoting Internet-based commerce. Customer Service Representatives answer questions about products, assist buyers with registration or the purchasing of goods and services. 45 Occupation Component Developer Operations Manager System Supervisor System Administrator Security Officer Fulfillment Agent CPO Internet Lawyer Internet Accountant Table 5 (Continued) Description Component Developers usually build components in the form of coding projects. They are masters of component technology and know the intricacies of composition, delegation, and object-oriented systems analysis and design. They are proficient in component development languages (such as Java and C++), modeling standards (such as UMLand XMI), and distributed computing platforms (such as CORBA, DCOM, EJB). They understand and think in terms of architectural design patterns. In the meanti me, they will close the gap between business requirements and available components. Component developers must be highly qualified software engineers since quality'components do not just happen. They are carefully constructed using quality soflware engineering disciplines. Component Developers, therefore, must be highly trained specialists and masters of software quality processes such as CMM and ISO, as well as masters of component-based development methods. The Operations Manager is responsible for managing all service activities for the Internet commerce system. The System Supervisor manages the system staff. The System Administrator is responsible for the technical operations of the computer systems and networks. The Security Officer ensures that appropriate security measures have been taken in the design and implementation of the Internet commerce system. The Fulfillment Agent is responsible for shipping and handling of physical goods or delivery of services. In the case of digital goods, the fulfillment agent is responsible for overseeing the operation of the fulfillment system. The Chief Privacy Officer is io charge of measures for ensuring the security of vital company information, such as customer credit card numbers remains secure within the company network. An Internet Lawyer is a legal expert for Internet fu nctions. The .importance of this position cannot be overstated, because new laws and regulations could ki ll a company without legal assistance, prevention, or intervention. The Internet Accountant is responsible for ensuring that the proper accounting procedures have been followed for Internet-based transactions. 46 Technique Domain name FAQ Forum Networking Faci litation Promotions c-Business advertising Pay-per-click Pay-per-lead Pay-per-sale Webcasting Interactive Advertising Public Relations and press releases Trade shows Table 6 Marketing Techniques on the Internet Description The Universal Resource Locator (URL) represents the address of the domain name, which must be chosen with care because it reflects the company's values immediately and connotes immediate meaning to customers with its first impression. One can purchose a domain name at www.networksolutions.com. A frequently asked questions (FAQ) section contributes to a userfiiendly site. An onli ne forum on the website enables customers to congregate at a pre-de~ign at cd place on the site to post comments and to share ideas. This promotes site activi ty. It is important to make it easy for the customer to recommend a site to a friend. This can be accomplished with a quick button that brings up an email exchange. c-Business promotions can attract visitors to your s ite and can influence purchasing. Netcenlives.com is a company that can provide your business with customer reward programs. P ublicizing through traditional channels such as television slots, movies, newspapers, and magazines is effective. Pay-per-click is a mode of operation that calls for paying the host according to the number of click-throughs to a site. Pay-per-lead is a mode of operation that pays the host for every lead generated from the advertisement. Pay-per-sale is a mode of operation that pays the host for every sale resulting from a click through. Webcasting is a broadcasting technique on the Web that uses streaming media to broadcast an event over the Web. Interactive Advertising involves consumers in the advertising campaign. An example is WebRIOT, a game show on MTV. The game is aired on television, and viewers can join in the game at the same time by playing online. Public Relations (PR) and press releases keep customers and your company's employees current on the latest information about products, services, and intemal and external issues such as company promotions and consumer reactions. Trade shows arc excellent opportunities to generate site interest by speaking at conferences, which increases brand awareness 47 Table 7 Customer Relationship Management CR.M:Area Handling Sales tracking Transaction support Data-mining Call center Log-file analysis Cookie Customer registrntion Personalization One-to-one marketing Onsite Search engine Registering with Internet search engines Partnering Afffiiate Programs Culture management Description Handling is essentially the maintenance of out-bound and in-bound calls from customers and service representatives. Sales tracking is the process of tracing and recording all sales made. Transaction support entails technology and personnel used for conducting transactions. Data-mini ng is a wny to analyze information collected from visitors. Data-mining uses algorithms and statistical tools to find patterns in data gathered from customer visits. A call center gathers customer-service representatives who can be reached by an 800 number or through email, online text chatting, or real-time voice communications. A log-file analysis is a useful way to keep track of your visitors in tenns of site visits, including each visitor's location, IP address, time of visit, frequency of visits, and other key indicators. A cookie is a technology that keeps a profile on each visitor. Customer registration is an excellent method to create customer profiles because visitors fi ll out a form with personal information. Personalization technology can help a company understand the needs of its customers and the effectiveness of its website, thereby catering to the whims of the customer. One-to-one marketing such as e-mails confirms purchases and offers new products, showing customers that the business appreciates their patronage. Onsite Search engines allow people to find information relative to a subject of interest amidst the large amounts of information available on a personal website. Registering with Internet search engines is important because there are reportedly over 400 se::arch engines in usc on the Internet. This process makes a website known to the world by submitting the website as a searchable domain name in a sea of domain names. Partncring is a way of forming a strategic union with another company. Generally, legal contracts are usually written to define the relationship in a wf'ly to help a company provide customers with complimentary services and product<;. An Affiliate Program is an agreement between two parties that one will pay the other a commission based on a designated consumer action. Affi liate programs establish new income streams for companies and individuals that host the advertising affili ate websites. Culture management is the ability to understand and cater lo a target audience's patronage and culture, especially in global enterprises. 48 LIST OF REFERENCES [1] 0. Aktunc, ";The Role of Component Technologies on Enterprise Engineering,"; Masters Thesis, Department of Electrical and Computer Engineering, University of Alabama at Birmingham, 2002. [2] D.H. Liles, M.E. Johnson, L.M. Meade, and D.R. Underdown, ";Enterprise Engineering: A Discipline?"; Society for Ente1prise Engineering Conference Proceedings, June 1995. [3] L. Whitman, Enterprise Engineeiing IE8801 class webpage, http://webs.twsu. edu/enteng, 2002. [4] W.D. Barnett and M.K. 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