E-BUSINESS ARCHITECTURE

• Developing an e-business architecture.

 Three layered approach.
 Six step process.
• Electronic Payment Systems.
Developing an e-business architecture

Architecture is both the process as well as the product of planning ,

designing, and constructing buildings and other physical structures.
The drawn design or the blue print helps the builder to be sure that
every element of the intended structure fits together properly.
In the information technology context, architecture is simply a guiding
framework, or blue print for delivering the applications and
information required by an organisation in order to serve its
stakeholders.
Developing an e-business architecture
An E-business architecture is a blueprint that is used to guide the
delivery of applications and data related to an organization's E-business
activities.
An e-business blueprint will therefore guide decisions on how the
business will use its technology to deliver results.
For example, a simple decision to make a video demonstration of a
product will result in many other decisions for example the format and
medium of storage compatibility.
Developing an e-business architecture
Defining an adequate e-business architecture is vital to all companies
adopting e-business as it affects directly the quality of service
experienced by users of the system in terms of speed and level of
overall quality of service delivery.
An e-business architecture should be able to:
Provide a plan for the structure and integration of resources and
applications.
Define how the various components of the business environment
(both internal and external) fit together.
Help and guide IT decisions.
Be flexible enough to consider new technologies to support changes
required by the business.
Developing an e-business architecture
• The Simplified three layered approach
Information Layer
This layer comprises of the guidelines that direct information creation,
distribution and access.
It involves information modelling, standardisation, control, and ownership.
The main purpose of this layer is to determine the type and format of
information that will be accessible to the stakeholders as well as determining
which information should be accessed by who.
Examples of business information in this layer is customer information, work
force information, finance and accounting statements, suppliers’
information, etc.
Developing an e-business architecture
Basically, the information layer represents:
Organisation of the data used.
Individual data models for each application.
Connection between applications.
Data-oriented business rules.
Specifications for various data warehouses and data
marts associated with e-business.
Information discovery tools (data mining software, data retrieval
software, and search technology).
Information security specifications
Developing an e-business architecture
Applications Layer
Applications are written programs which give a computer instructions
that provide the user with tools to accomplish a task.
This layer describes applications that will implement business logic
required by the organisation.
These applications are divided into business applications and web
applications.
Developing an e-business architecture
oBusiness Applications:
Supply Chain Management systems which helps in collaborating with
supply chain partners e.g. suppliers, third party logistics, marketing and
research firms, etc.
Customer Relationship Management Systems which help in organising
customer information.
Enterprise Resource Management Systems which help to connect the
various aspects or departments of the organisation so that relevant data
can be centralised and easily accessible to other related functions.
Groupware applications which help to facilitate communication and
information sharing among members of a group, e.g. Messaging systems,
Shared calendars, shared discussion database, etc.
Electronic catalogue software that enables provision of catalogues online,
product categorization, and product searching.
Developing an e-business architecture

• Web applications
Web server software which store and deliver Web pages through
HTTP (HyperText Transfer Protocol). It defines what actions Web
servers and browsers should take in response to various commands,
e.g. directing a web server to fetch and transmit the requested web
page through the typing of a Uniform Resource Locator (URL).
Multimedia server softwares which stores and distributes various
types of digital media files such as audio and video and still images.
Developing an e-business architecture
• Infrastructure Layer
This layer is comprised of:
Hardware platform which include:
oNetwork access devices e.g. Personal computers, terminals, personal
digital assistants, network-enabled kiosks, and mobile access devices.
oServer hardware which help to utilize multiple processors and are
expandable to accommodate growing business capabilities.
oNetwork hardware e.g. Switches to send data between different
servers within a network, Routers to connect different networks and
enable packet transmission among the connected networks, network
repeaters, etc.
Developing an e-business architecture
Operating systems which make the hardware usable by providing
basic interfaces with the software environment e.g. Windows, Linux,
Mac, Ubuntu, etc.
Security services which include:
oFirewalls systems that act as a barrier between the internal network
and outside world. They screen both incoming and outgoing traffic.
oBackup and recovery systems which can entail backing up data
remotely, run parallel and duplicate systems at different locations,
etc.
oEncryption which is to scramble data into an unusable form to
prevent those who intercept the data in transit from being able to use
it.
Developing an e-business architecture
• The six step approach
Define business goals and vision
This first stage will have to articulate what the business wants to achieve.
The business that would want to embark on e-business needs to set goals and state its
mission that would form as a guidance in all its operations.
Goals can be as below:
Improving revenues and profit.
Going global.
Cost reduction.
Improving customer service.
Developing employee competence.
In this stage, there has to be collaboration among various professionals in defining
and reviewing the business goals and vision.
They have to describe how the stated goals can be achieved as well as determining
technologies that can be used to achieve such goals.
Developing an e-business architecture
Define information architecture
This stage involves analysing each business goal and determine what
information will be required to be gathered and used (information
need) in order to achieve the particular goal.
It also involves identifying the information already available and
compared with the need so that gaps can be identified.
Challenges on ow the information can be obtained have to identified
and ways on how to mitigate such challenges have to be discussed.
Developing an e-business architecture
Define data architecture
This stage articulates exactly how the information that will be flowing in the
system will be utilised as well as who will have access to such information.
It also defines on protocols that will be used to capture and analyse
information flow within the system.
Define application architecture.
This stage defines the components or modules of the applications that will
interface with the required data.
Important decisions at this stage will be whether to develop own
applications or use vendors who offer a diverse application platforms.
Some applications can be customised to suit business needs.
Developing an e-business architecture
Define technical architecture
This involves examining specific hardware and software that will be required
by the system.
It entails analysing existing IT systems and resources and evaluate required
upgrades or new acquisitions.
Define the organizational architecture
This stage addresses the human resources issue in order to realise steps 1 to
5.
There should be an analysis of existing and required organisational skills and
proper ways of addressing the gaps.
The stage also examines and addresses legal, administrative, and financial
constraints.
Electronic Payment Systems
As payment is an integral part in commerce, electronic payment system
is an integral part of e-commerce and e-business at large.
A payment system can simply be defined as a way in which a payer and
a payee agree to transfer value in a transaction.
This definition therefore is not limited to transfer of funds in exchange
of goods or services only as it is not always the case that value is
exchanged whenever payment is being made.
For example, donating money to a religious institution, providing funds
to a family member in need, and many other philanthropist or
otherwise payments.
Electronic Payment Systems
However, in the context of e-commerce and e-business, EPSs or online
payment systems enable customers to pay for the goods and services
online by using integrated hardware and software systems.
Historically, Electronic Payment Systems were developed initially to
process cheques between one bank and another, and then later used
to process various types of electronic transactions between consumers
and merchants.
They differ form the traditional way of making purchases where hard
cash is issued in exchange of goods or services.
Electronic Payment Systems
• Participants in EPSs
Basically, in addition to the payment systems (e.g. clearing houses, in case of
Malawi, the Malawi Interbank Transfers and Settlement System, Malswitch,
Natswitch), there are four participants in Electronic Payment Systems.
The customer or card holder
This is the one that initiates a purchase transaction by providing payment
credentials in form of card number and the secrete PIN.
This customer can be a person, a group, a business, or any institution.
The merchant
This is any regulated business that accepts online payments, holds an
account at a bank where transactions are paid into, and can either be
physical or online.
A merchant can also be an individual, group, business, institution.
Electronic Payment Systems
Issuing bank
This is a regulated financial institution which owns the account of the
customer (either credit or debit), and is responsible for marketing,
issuing the actual plastic card, authorizing and settling transactions, and
providing ongoing customer service.
Acquiring bank
Acquiring Bank is ultimately responsible for the merchant’s account. It
has overall responsibility for marketing (i.e., acquiring) the merchant,
installing the necessary hardware (such as a Point-of-Sale terminal),
software, and branding at the merchant site, processing and settling
transactions, and providing ongoing merchant service.
Electronic Payment Systems
• Types of Electronic Payment Instruments
oElectronic Funds Transfer
EFT is used for transferring money from one bank account directly to another
without any physical paper money changing hands.
It is one of the oldest and most used form of EPSs which brought about the
payment revolution that seeks advocate for cash-less and cheque-less
culture, I which use of coins, paper bills, cheques, envelopes, stamps, are all
eliminated.
With this type of system, a customer issues instructions to a financial
institution holding his or her account to debit his or her account and directly
transfer the funds into a merchant’s bank account.
An example is the use of Telegraphic Transfer used mostly when transferring
funds oversees using the SWIFT network (Society for Worldwide Interbank
Financial Telecommunication).
Another local example is the use of MO626 service offered by the National
Bank of Malawi.
Electronic Payment Systems
oDebit card
A debit card is basically a prepaid card, also known as an Auto-teller
Machine card (ATM).
An individual has to open an account with the issuing bank which gives
debit card with a Personal identification Number.
When the card holder makes a purchase, he swipes the card and enters
his PIN on the merchant’s swiping device (dial pad).
The electronic terminal dials the acquiring banking system to validate
the PIN and finds out from the issuing bank whether to accept or
decline the transaction.
The decision to accept or decline will depend on the availability of
funds in the card holder’s account.
Electronic Payment Systems
oCredit card
This is a physical card just like a debit card. It carries information that
allows the card holder to make purchases at any particular time, and
make payment to the issuing bank or institutions later at an agreed
period of time.
Credit card companies like visa, master card, and other financial
institutions allow the card holders to pay for purchases or services by
borrowing from the credit card companies.
In order to purchase goods or services using the credit cards, the
merchants have to have a credit card reader.
Credit cards are issued based on the customer's income level, credit
history, and total wealth.
Electronic Payment Systems
o Smart cards
A smart card is just as a credit or debit card. Whilst ATM cards use a magnetic stripe to
store data, smartcards use micro chips that securely store encrypted personal and financial
information.
An example can be fuel cards.
The card is connected to their programmed computer systems through compatible card
readers.
There are two types of smart cards;
Contact smart cards must be swiped or inserted into a special card reader to be read and
updated.
It contains a microprocessor chip that makes contact with electrical connectors to transfer
the data.
Contact-less smart cards can be read from a short distance using radio frequency e.g. Near
Field Technology (NFC), or electromagnetic radiation e.g. infrared.
Smartcards that are used for commercial purposes contain financial or monitory
information downloaded into the chip, which can be used to make specific purchases.
Once a purchase is made, the card holder’s account is debited if it is a prepaid arrangement
by the issuing authority.
Electronic Payment Systems
 Card Network Fees
The two most important fees in card networks are Merchant Discount
Rate (MDR) and interchange.
Merchant Discount Rate:
The MDR is fees that a merchant pays to their card network financial
institutions in order to be accepting card payment transactions.
Often this is a percentage based on the purchase price of the good or
service being sold; or a fixed fee for every transaction, depending on
agreed conditions.
Usually, the MDR will depend on volume of merchant’s sales, such that
the higher the volume of sales, the lower the MDR should be
negotiated.
Electronic Payment Systems
Interchange:
This is a fee that an acquiring bank pays an issuing bank.
The rationale is that the issuing bank, particularly for credit card
transactions, takes the risk of not getting repaid by the cardholder in
case of loan default; since debit card transactions do not have this risk,
interchange rates are substantially lower.
Note that other than the above fees, there are other several fees that
are paid, for example in the case of merchants; for registration fees and
POS terminal rental fees).
Electronic Payment Systems
• Characteristics of a good EPSs
Whatever instrument is used in making electronic payments in e-commerce, the EPSs must
ensure efficiency, effectiveness, and importantly, security.
To achieve this, EPSs must poses these attributes:
Confidentiality: Information and systems must not be disclosed to unauthorized persons,
processes or devices.
Authentication: This ensures that parties to a transaction are not impostors and can be
trusted.
Integrity: Information and systems must not be altered or corrupted. All transaction data
must be transmitted and received unchanged and as intended.
Authorization: Parties to a transaction are established and recognized as entitled to
receive, send or view transactions. Procedures must be provided to verify that the user
can make the requested purchases.
Reliability: Authorized users must have timely, reliable access to information in order to
perform e-commerce transactions.
Non-repudiation: This ensures that users cannot deny they performed a transaction.
Users are provided with proof of the transaction and the recipients are assured of the
user’s identity.