SUMMARY OF STUDY OBJECTIVES

An introduction to e-commerce and e-business. E-business is the use of electronic means to enhance business processes. E-business encompasses all forms of online electronic trading, consumer-based e-commerce, business-to-business electronic trading and process integration, as well as the internal use of IT and related technologies for process integration inside organizations. There is an overlap between e-commerce and e-business, which leads some to confuse the two concepts. E-commerce is electronically enabled transactions between a business and its customers. E-business is a broader concept that includes e-commerce, as well as all forms of electronic means of servicing customers and vendors, trading information with customers and vendors, and recording and control of internal processes.

The history of the Internet. The Internet of today evolved from an early government research network called ARPANET. Many of the network standards were developed in the period of ARPANET. Routers, TCP/IP, and e-mail all came about during this time. ARPANET gradually evolved into a fully commercial network called the Internet. After the Internet became available for commercial transactions in 1994, it experienced tremendous and rapid growth.

The physical structure and standards of the Internet. Backbone providers, regional Internet service providers, and local Internet service providers make up the physical structure of the Internet that connects global users. The common standards that allow computers to communicate with each other over the Internet are TCP/IP, HTML, domain names, addresses based on uniform resource locater (URL), and SSL encryption.

E-commerce and its benefits. The most well-known form of e-commerce is business-to-consumer (B2C) transactions using the World Wide Web. B2C sales transactions offer many benefits to both the consumer and the business.

Privacy expectations in e-commerce. Businesses have an ethical obligation to establish systems and procedures to protect the privacy of customers. The AICPA Trust Services Principles establish nine privacy practices that companies should follow: notice, choice and consent, collection, use and retention, access, onward transfer and disclosure, security, integrity, and management and enforcement.

E-business and IT enablement. E-business is the use of IT to enable processes within the supply chain. The supply chain is the set of linked processes that take place from the acquisition and delivery of raw materials through the manufacturing, distribution, wholesale, and delivery of the product to the customer. There are many benefits to the IT enablement of processes within the supply chain. E-business includes business-to-business (B2B) electronic transactions.

E-business enablement examples. There are many forms of e-business. This section provides examples of ways that businesses streamline business processes, reduce operational costs, and enhance efficiency through e-business.

Intranets and extranets to enable e-business. An intranet is a private network accessible only to the employees of that company. The intranet uses the same common standards and protocols of the Internet. An intranet uses TCP/IP protocol and the same type of HTML Web pages as the Internet. However, the computer servers of the intranet are accessible only from internal computers within the company. An extranet is similar to an intranet, except that it offers access to selected outsiders, such as buyers, suppliers, distributors, or wholesalers in the supply chain. Extranets are the networks that allow business partners to exchange information. These business partners will be given limited access to company servers and data.

Internal controls for the Internet, intranets, and extranets. The Internet, intranets, and extranets are all networks that are intended to share information and conduct transactions. In all three networks, controls must be in place to allow the intended users access, but also limit access to unauthorized users. Therefore, proper user authentication and hacking controls must be implemented in these networks.

XML and XBRL as e-business tools. XML and XBRL are markup languages that allow designers to create customized tags for data that enable the definition, transmission, validation, and interpretation of data between applications and between organizations. XML is a rich language that facilitates the exchange of data between organizations via Web pages. XML is used in Internet EDI. XBRL is a business reporting language that allows businesses to provide dynamic financial statements to users over the World Wide Web.

Ethical issues related to e-business and e-commerce. The online privacy policies of the AICPA Trust Services Principles represent ethical obligations to customers. These are ethical, but not necessarily legal, obligations. However, if a company does choose to disclose privacy practices on its website, it is then legally obligated to follow those practices.

KEY TERMS