1.

1 HİSTORY OF INTERNET
The Internet had its roots during the 1960's as a project of the United States
government's Department of Defense, to create a non-centralized network. This
project was called ARPANET (Advanced Research Projects Agency Network),
created by the Pentagon's Advanced Research Projects Agency established in 1969
to provide a secure and survivable communications network for organizations
engaged in defense-related research.

In order to make the network more global a new sophisticated and standard
protocol was needed. They developed IP (Internet Protocol) technology which
defined how electronic messages were packaged, addressed, and sent over the
network. The standard protocol was invented in 1977 and was called TCP/IP
(Transmission Control Protocol/Internet Protocol). TCP/IP allowed users to link
various branches of other complex networks directly to the ARPANET, which soon
came to be called the Internet.

Researchers and academics in other fields began to make use of the network, and
eventually the National Science Foundation (NSF), which had created a similar and
parallel network, called NSFNet, took over much of the TCP/IP technology from
ARPANET and established a distributed network of networks capable of handling
far greater traffic. In 1985, NSF began a program to establish Internet access
across the United States. They created a backbone called the NSFNET and opened
their doors to all educational facilities, academic researchers, government
agencies, and international research organizations. By the 1990's the Internet
experienced explosive growth. It is estimated that the number of computers
connected to the Internet was doubling every year.

Businesses rapidly realized that, by making effective use of the Internet they
could tune their operations and offer new and better services to their customers,
so they started spending vast amounts of money to develop and enhance the
Internet. This generated violent competition among the communications carriers
and hardware and software suppliers to meet this demand. The result is that
bandwidth (i.e., the information carrying capacity of communications lines) on the
Internet has increased tremendously and costs have dropped. It is widely believed
that the Internet has played a significant role in the economic success.

1.2 HİSTORY OF WORLD

WİDE WEB
The World Wide Web (WWW) allows computer users to position and view
multimedia-based documents (i.e., documents with text, graphics, animations,
audios and/or videos) on almost any subject. Even though the Internet was
developed more than three decades ago, the introduction of the WWW was a
relatively recent event. In 1990, Tim Berners-Lee of CERN (the European
Laboratory for Particle Physics) developed the World Wide Web and several
 communication protocols that form the backbone of the WWW.
The Internet and the World Wide Web will surely be listed among the most
significant and profound creations of humankind. In the past, most computer
applications ran on stand alone computers. (i.e., computers that were not
connected to one another) Today’s applications can be written to communicate
among the world’s hundreds of millions of computers. The Internet makes our
work easier by mixing computing and communications technologies. It makes
information immediately and conveniently accessible worldwide. It makes it
possible for individuals and small businesses to get worldwide contact.

In the last decade, the Internet and World Wide Web have altered the way people
communicate, conduct business and manage their daily lives. They are changing
the nature of the way business is done.

1.3 WHAT İS “ELECTRONİC

BUSİNESS”?
Electronic business (e-business) is comprised of e-marketing, e-commerce, and
e-operations. Let’s look at brief definitions of them, respectively, to begin this
course with the top summary view.

E-business: The application of Internet technology to streamline all aspects of

business processes.

E-marketing: Building an online presence, showcasing a company, and providing

detailed information. (The majority of small businesses on the Internet today are
actively doing e-marketing.)

E-commerce: Selling products and services online, conducting payment, handling

transaction details, and supporting automated customer inquiries.

E-operations: Streamlining of business processes and steps to enhance business

efficiencies between functional departments of a company. (This also includes
streamlining the supply chain between your company and key suppliers.)

Taken together,
 The companies that want to enter to e-business world
generally start with e-marketing. The next level is e-
commerce. And, the third aspect of e-business is e-
operations. The Yankee Group, one of the leading
research providers tracking small business adoption of
the Internet, has completed surveys of very small
businesses (2–19 employees), small businesses (20–99
employees), and medium-size businesses (100–499
employees) to find out how they are using their Web
sites. The results are shown in the following figure.
(Figure 1.1)
1.4 THE FUTURE OF
E-BUSİNESS
Each year, more and more people get connected to
the Internet. In 2000, 330 million people were online.
In 2003, that number was 650 million. In 2006, that
number hit to 1,1 milliard.

Ultimately, those people will make their way around to buying something or just
visiting a company's Web site. Once they get to the site, it is important that
something be there the people want to see and buy.
But the coverage of the business that can be picked up from the Internet is not
limited to people sitting in their living rooms surfing the Web. Businesses that sell
to other businesses are discovering just how useful the Internet is to reinforce
existing business partnerships and look after new, profitable relationships.

1.5 THE EXPLOSİON

OF E-BUSİNESS
E-business is still young and shaping, and the future looks nothing but bright for
companies that decide to perform business online. A business professional
generally asks the following question:

The answer comes from the level of involvement and willingness of a businessman
to make some hard business decisions. Some companies naturally bring their own
name recognition to the game, thus gaining instant customers.

[Link] is one of the good examples. In late 1998, just three months
before officially launching its Web site, Victoria’s Secret posted a display page at
the site’s address. The page requested that visitors leave their e-mail addresses.
Even without advertising the address, the company collected e-mall addresses
from more than 300,000 customers.

That is great for a company with such strong name recognition as Victoria’s
Secret, but they are not the only ones doing well. Think about all the e-business
sites you routinely visit—were they all well-known companies before the Internet?
If you frequently sites for like [Link], [Link], or [Link], then
you see the power of the Internet.

Other forward-thinking business professionals and

customers see the power of the Internet too, and that is why
it is becoming more and more powerful. There is to offer
everything in World Wide Web (including online stores)
that is why, customers are drawn to the WWW. This, in
turn, brings more businesses to the Web in search of the
customers, which brings more customers to the Web and so
forth.
1.6 THE BENEFİTS
OF E-BUSİNESS
By taking a business into the Internet’s kingdom, a businessman opens the
operation up to vistas a businessman would never encounter if he were limited to
a shop on Main Street. The benefits are great. If a businessman design and
implement the e-business correctly he will see great advantages. The benefits of
e-business can be summarized as:
• The opportunity to access new markets across
the globe
• The chance to target market segments more
effectively
• The greater speed in getting the product and
services to market
• Provide more accurate information and improve
customer service experience
• Provides convenience and comfort for customers
• Allowing 24/7 access to the firm's products and
services
• The opportunity to increase sales
• The opportunity to reduce costs of production by
reducing overheads - for example, not having a
retail outlet in a busy high street location with
high rents, reducing stock costs etc.
• Improves the efficiency of the supply chain
• Improve employee motivation through more
flexible working methods
• The opportunity to seem a big company even
you are a small one
 The above benefits mainly related to speed, financial issues, enlarging the
market, and appearing bigger. Let’s say a few more words about them.

Speed
In the past, if a businessman wanted to sell something, he had to:

• rent a storefront
• hire employees
• stock the shelves
• spend a few cash on advertising
• maybe mail out some catalogs and
• wait for customers to come in or mail in their order forms

However, by the help of the Internet, the time between developing your product
or service and having it ready for the consumer is cut down considerably.
Obviously, businessmen are more close to the potential customers. Once a product
is ordered, it has to work through the shipping and handling channels. In fact,
some e-sellers have collocated their warehouses with the post office, cargo firms
(ex. Federal Express, MNG, Aras, Yurtiçi) to cut down on shipping times.
In addition to speed, there’s more availability of products than in a conventional
store. As a customer, you could simply log onto a site like [Link], find
exactly which product you want, type in your credit card, and wait for the package
to arrive. Even if [Link] does not have the product in stock, there are
more sites out there where you can find what you are looking for.

Financial Issues
Whether it is a street vendor stand on the side of the
road or a multinational corporation with thousands of
employees, the whole reason businessmen want to
take their organization to the Internet is to make
money and lots of it if possible.

If the lessons of the past continue, there is money to

be made on the Internet. Consider the example of
[Link] founder Jeff Bezos. Starting with just
three Sun workstations and a dream, he turned his
garage in suburban Seattle into the biggest success
story of the Internet. Businesses know that “there’s
gold in the Web.” The fantastic growth and business
presence will continue and mean more money for e-
businesses that know what they’re doing.

Enlarging Market Appearing Bigger

The Internet helps for pulling the world closer together and expanding business
contacts. When customers go to an e-business site, they do not have to physically
go to any store. Once they get online, their computer will link to the e-business,
where the customer can browse, shop, and make a purchase. Actually, the
physical store (if there is one) could be thousands of miles away from the server
 from the consumer. Internet is bringing your company with its products and
services to people anywhere in the world.

Appearing Bigger
The Internet is the great equalizer. Even if, you have a small company, you may
seem a big one. Everything comes across to the customer the same way—it comes
across on the customer’s computer however the company presents it. It does not
matter whether you, as a businessman, have a tiny little shop or a big company
having a giant store right off the interstate. On the internet, the only thing
limiting a small business’ presence is itself.
When you are developing a Web site, the only thing that limits your presence is
your ability to develop the Web page. To be sure, the big companies hire big shot
consultants, but with a little knowledge, a little effort, and the right software,
every one can develop an excellent Web site.

1.7 SUCCESS İN E-BUSİNESS

Up until early 2000, it seemed that in the kingdom of e-business, every company
that went online was successful. Then the bottom dropped out. From now on, it
seems clear that not every business’s online presence will be successful. So many
companies tried their own hand at online success. Some won; some lost. Let’s take
a look at two examples of e-business: [Link], [Link]

Case Studies:

1. What Works

2. What Doesn’t

Usually, managers, CEOs, and presidents think they can simply move their
businesses online and expect to conduct business as usual. But that is not the case
any more. Since e-business is a marriage of business and technology, it is infinitely
significant to understand the technological side of the union along with how
technology affects the existing business.

Reformation in Your Business

Technology is a major component of e-business. Therefore, business changes are

harder to manage because of the total amount of the changes. Value in an e-
business is different than value from conventional businesses. E-businesses value
is not found in tangible properties, like products, materials, surplus, furnishing
and so on. Rather, value is found in intangible ones like branding, customer
relationships, and supplier integration.

E-businesses should alter the environment and adapt to the changing marketplace
 in which they compete in order to modify the flow of information requires
companies to change. Changing only delivery of their products won’t be enough.
Unhappily, many businesses have not developed an information-based business
design to deal with the necessary business change. An enterprise must develop a
precise plan to accommodate the increased flow of information.

When managers are overconfident, not able to foresee change in the market
place and not able to implement changes; companies are failing to change at all
or not changing fast enough or effectively enough to hold off disaster. The
problem sits squarely on the shoulders of management. The managers can also
fail to manage properly once the changes have been made. They have to see the
changes before their competition does, make rapid changes, and be able to make
drastic changes to their business model. There are different customs for the
change in business models: Outsourcing, Tearing Down, Building up

1.8 Outsourcing, Tearing-Down, Building -Up

Outsourcing

Companies can get the help they need from third parties, as companies can not do
everything on their own. To manage the rapid change, many businesses have seen
outsourcing as a solution. Outsourcing comes in many sizes and shapes. At first,
outsourcing was focused on technology management. Recently, contract
manufacturing has become popular in the technological world. However, the two
parties must work closely together, even as the work is given out to another
company. In such cases, the job has to get done quickly, effectively, and
efficiently. That means that the outsourcing company must act almost as a
partition of the contracting company. The complex outsourcing alliances aren't
just a simple, fashionable way to do business. They are critical. As technology
develops and expands, outsourcing alliances become easier and easier to
implement, especially if both sides are using compatible business application
software.

Managers simply do not have the tools they need to stay on top of all the changes
in business, so they must find a helper who can assist them stay competitive.

Tearing Down
The customer needs being served specifies the businesses
value, not the products they sell. Businesses may try to
separate the resources (in this case, the product) from the
ends (the customers’ needs). This process calls for your
business to recognize, value, and care for what your business
is all about. Eventually, this will guide you to re-examine
what service you are providing to your customers and what
role your products play in that service. In this way, managers
take apart the business, rethink its core purpose, and spot
where new value can be developed and created.
 Building Up

Once a company has been tearing down and studied, it must be recombined.
Recombination allows a businessman to make more efficient the company’s value
chain, and it also serves for customer’s needs in significant and valuable new
ways. Recombination allows new and growing companies to serve a new niche.
Now, let's look at example of [Link].
There was no lack of travel companies operating on the Internet, before Priceline
set up virtual shop. The travel industry had not given up all its business to the
Internet, but there was a reasonably strong presence of online travel agents. The
Priceline founders analyzed an important need—lower price—and figured out how
they could deliver less expensive airline tickets, rather than looking for another
way to sell the same product.
The Priceline’s founders determined that customers would not only like less
expensive tickets but would actually enjoy make offering for them. This was the
result of tearing down the business and looking at it from the customer’s point of
view. While developing an e-business, using technology to recombination the value
chain is very important.
A businessman can go after the following steps to effectively tear down and
recombine his business:

1. Challenge the traditional ideals of value.

2. Define value in terms of your customers' needs.
3. Engineer the end-to-end value stream.
4. Create a new technology-based enterprise that is based on customer needs.
5. Make sure your company’s leaders understand how to continue the self-
examination process.

1.9 CHANGE YOUR

PARADİGM
In every business, especially while adapting a company to an
e-business environment, if a businessman want to make
customers happy he must deal with at least one (if not all) of
these four points:

• Price: No one will ever think they spent too little for
something and no one likes to think they got cheated.
Businesses that offer unique services and
products for a reasonable price will do well.

• Convenience: The efficiency is critical word in dot-com world. One-stop shopping is

pleasant, but customers also want the process to move smoothly and with few steps.
• Speed: To stay competitive, a businessman must deliver the products and services as
fast and efficiently as possible. No one likes to wait.
• Personalization: Treating your customer as individuals is what they want. The more
choices customers get for their products, and the fewer decisions made by the
 company, the happier they will be.

As you develop your company to compete in an e-business arena, you should be

thinking about how you can use technology to address these needs. If you can
shape it out, you will be a step ahead. Innovative businesses look at what new
things customers want, rather than the differences among the customers. Don't
focus ton much on market segmentation—that only works in a stable business
climate. In the promising world of e-business, “stable” is not a word that is used
very often.

Technological Changes

Technology can change your customers' view of value. All of the services that
mentioned above – price, convenience, speed, and personalization - have grown
critical in the high-tech world in which we live. Customers are now faced with
many companies offering the same goods and services. Because of this
information overload, customers find themselves making decisions based on:

• The cheapest: All the extra costs between the manufacturer and the
customer should have been minimized in order to be competitive.
• The most familiar: Brand recognition by customer is extremely important
especially in e-business environment as they can't touch, taste, or feel
what they are buying.
• The best quality: It means giving the customers what they want, when
they want it, and at a value they are pleased about. It is a moving target,
and one of the most critical issues for any business.

Changes for the Customer

Customers know that better technology should result in a better shopping

experience. In e-business, a businessman should find the services that they want in
order to attract customers and present something new and valuable.

Particularly in the case of e-business, customers generally provide data about their
shopping experience while entering the Web sites. Therefore, customers have
come to except a little something extra for their cyber practice. That extra value
is something that creative businesses understand their customers and what their
customers want will develop.

Just to push products into the market is not enough. Companies that realize the
value of using technological improvement to serve customers will be successful.
One of the problems that many e-businesses experience is that they simply build a
Web existence to have a Web existence. There has to be something that brings
customers to the business that they cannot get anywhere else.

1.10 INTEGRATİNG TECHNOLOGY İNTO YOUR BUSİNESS

Integrating technology into e-business is not as simple as it may seem. To make an
 effective, useful solution, you must make some complex technological changes.
The necessity for integrated applications is more important where e-business is
concerned, since; customers expect and want something more out of online
businesses. With the knowledge that shopping efficiency is a factor in business
design, the need for an integrated infrastructure should become very clear.

Integration means that your organization must have a solid, faultless set of
applications that must work fluidly. The process requires a major application
renovate so that you can develop a back-end infrastructure that permits your e-
business functions to work faultlessly.

Are You Ready to Integrate?

Frequently, managers put the responsibility for the e-

business squarely on the shoulders of their IT
managers. The responsibility for the technological
side of an e-business solution is the IT manager's
department; however, the business planning and
modeling behind the solution should not be delegated
to the technical department. A manager should
develop an e-business solution to identify how he can
deliver what th e customer wants via technology. In
many cases, it is found that integration is not simply
a technological barrier that must be discussed. Now,
let's consider Manna Freight Systems of Mendota
Heights, Minnesota [3].
To remain competitive, Manna developed a computerized system that links them
with airlines and trucking companies. Manna is linked via computer with their
subcontractors. Unlike other cargo companies, Manna is able to discover if there
is enough room in an airplane before it lifts off and before the customer's goods
are left behind, causing a late delivery (Figure 1.5). Once Manna discovers there
is a problem with a particular flight or transporter, they are able to check with
their online system and locate another mode of transportation. This system has
afforded the company a 95 percent on-time rate. This shows how application
integration enables Manna to serve its customers in a more effective way than the
competition can.

Getting It Together

To make an e-business strategy work, organizations must pay attention to new

architectures that support organizational liveliness in terms of business
applications. To be profitable, the company must be able to meet the needs of the
market without extreme costs, unnecessary delays, organizational interruption, or
loss of performance. The organizations must be level with your customers' needs:
diversity, price, quality, and fast delivery. The models becoming increasingly
popular are customer-centric and support a number of complex business designs. If
you have a static model with no room for change, none of these needs can be met.

When designing an integrated, lively e-business infrastructure, it is necessary to

 make well researched and tended decisions in many different disciplines.
Frequently, e-business infrastructures fail somewhere between the problem and
the solution execution slipped off the path; not because the technology was not
working. The main reasons e-businesses crash into trouble can be summarized as
following:

• Poorly linked solutions to an organizational plan

• Faulty strategies and tactics
• Improperly executed plans
• Failing to understand all the faces of organizational problem

1.11 SPECİFY YOUR

CUSTOMER
At first, one might think that there is only one type of customer out there—
someone at home surfing around for goods or services. This is an important
customer; however, the Internet is also suited for business-to-business (B2B) sales.
In actual fact, if you have a supply-chain partner with whom you need to be in
steady contact, the Internet can provide a low-cost connection between your
companies. Businessman should define who are their customers and why should
target them.

Public

Consumers account for about 10 percent of all online sales. It is actually most
often the smallest share of the e-business pie; even though it is the one we hear
about most often. It is important to recognize how to get at that 10 percent, if
your business provides to the public.

Consumers want good contract, efficient transactions, and honest customer

service. Almost certainly Consumers are the most inconsistent and the hardest to
sell to. You must ensure that you have something that they want—or at least you
have it cheaper than the competitor, if you want to attract consumers to your e-
business. Consumers expect a little more out of the Internet. They want it
cheaper, faster, or they want something special with it. There is sure to innovate
something new and exciting that the general public wants will take e-business to
the next level.

Business to Business ( B2B)

Supply chain management basically is the coordination of material, information,

and financial flows between and among supply chain partners. The explosion of
the Internet allowed the companies to combine their internal systems with its
suppliers, partners, and customers. This synthesis improves efficiency and
effectiveness especially in supply chain management by making companies
integrate systems they share with other organizations. With the Internet help to
assemble information between your company and your partner, you will cut costs
and overhead. Let's see an example: [Link] [3]
Atlas Services, one of PartMiner's partners, is a $300-million- a-year distributor of
electronic and computer components. When Atlas Services gets an invoice of
materials from a computer manufacturer, it goes to [Link] and finds out
which suppliers have the parts on hand. [Link] eases the buying and
selling of electronic components on the Internet. After switching to the Internet
to fill order, extremely time-consuming telephone-based effort was drastically
declined and Atlas has saved 15 percent on product-procurement costs.