US Census Bureau

According to the US Census Bureau in 2006, there were 5,913,496 establishments in the United States with less than 100 employees and 12,008,112 establishments with less than 500 employees. (Appendix: Chart 2) An establishment is defined as a single physical location where business is conducted or where services or industrial operations are performed. And of the 12 million businesses with less than 500 people, they employ over 120 million people. As you can see, a large portion of our US economy relies on and revolves around our small businesses. With the globalization of our economies and accessing those worldwide customers through the Internet, these businesses are being forced to rely on a e-business and e-commerce setup to reach out and maintain a healthy business.

Many issues will hinder their ability to grow and may also help to shut them down. For one, Internet security is probably the most important issue that will plague small businesses, individuals and other Internet users. When the web started growing and rapidly expanding to millions and millions of users, some of those users started to exploit the weaknesses in the design of applications. There never seemed to be a strong priority until the last 2-5 years to really start securing the way we do transactions, store our data files and basic lines of communication. This lag in understanding the potential pitfalls within Internet security really put millions of small businesses in risk of losing vital business information and control over things they hold dear to them from a business standpoint. Attackers are looking for all sorts of ways to gather this information, but specifically between the user's computer and the servers he is looking to contact. This information can include credit card information, personnel files and other confidential information pertinent to that small business' existence. As more and more people are doing business online, private information is in jeopardy. But this shouldn't deter small businesses from using the Internet. The Internet is the greatest leverage for any small business for pushing their information, product and ideas to millions of potential customers. Having the computer applications, servers, keystrokes, web pages and other related items for eCommerce encrypted and secure, will help to ensure their private information is kept out of the hands of those looking to do harm.

A sound management plan needs to be in place to help ensure that the small business is ready and capable to attack and diminish issues and problems that are most certainly going to happen.

This paper is going to provide a little insight into the definition of the electronic business world, planning for your electronic business/commerce, some electronic issues plaguing many of the businesses today and some guidelines built around an engineering management structure to help with a company to achieve its objectives. Granted, even with a sound management structure and clear objectives in place, today's recession is taking its toll on small businesses in the US regardless how well organized and managed they may be.

Definition of eTerminology:

The terms electronic commerce (e-commerce) and electronic business (e-business) have been used almost interchangeably in the past several years. For clarity, e-commerce is that portion of e-business involving the buying and selling of goods and services on the Internet. E-business includes not only the associated financial transactions but also the servicing of customers and collaboration with business partners. Network security for e-business, is commonly referred to as e-security.

E-business applications encompass most Information Technology applications that are used in running a business. E-commerce is the use of the applications to allow buyers and sellers to complete financial transactions over networks. Because of the Internet, there are new rules for this new kind of business. Today, business is based on several performance factors to include: Instant access; Speed of execution; 24/7 service; Global competition.

E-security is the complex interaction of multiple computer environments, protocols, system infrastructures, policies, and procedures that together comprise a trusted means of communicating over public and private networks. Security is dependent on infrastructure solution software that enables scalable and secure e-commerce. Infrastructure solution software consists of a number of interrelated components.

Security is one of the most important issues in e-commerce. Most information systems managers continue to be more concerned with profitability than security, although the balance has been shifting. As the use of e-commerce increases ever so rapidly, continuing concerns are raised by consumers over the security of internet transactions. Although the internet was designed as an open system, a non-encrypted credit card transaction is arguably more secure than the average retail store transaction, however, the risk of automated schemes for fund diversion is potentially much greater.

(Hassler 2001)

Planning for your e-Business

The internet has already fundamentally changed the way many individuals and organizations think about and perform their work. E-commerce is now part of everyday business. And despite the bursting of the dot.com bubble of the early 2000s, e-commerce will likely have a lasting impact on most forms of economic activities. This is true for the interactions of businesses both with consumers and with other businesses. On the business-to-business side, web-based procurement systems, online business auctions and electronic negotiations are already commonplace in the interactions with large and medium-sized businesses with their suppliers and clients. On the consumer side, the internet is emerging as a significant medium for buying and selling certain goods. Advances in web-based technologies further support the growth of e-commerce. (Vulkan 2003)

There are thousands of companies that are around today that weren't around even 5 years ago, that are aggressively pursuing the e-commerce opportunity. Companies are looking at their core competency, and utilizing the internet to expand on those. First step is getting your internet presence started and then clearly focusing on your financial and strategic objectives through the internet. (Columbus 1999)

While establishing your strategic objectives your engineers helping to outline the strategic approach needs to understand the basic principles of Engineering Management. With a proper plan in place, your team will be able to setup the objectives, analyze how the business is moving toward an e-commerce/e-business financial and security plan and how to take that analysis and make the company better (take market share). From the IMSE 605 lecture notes, here are some guidelines that the company needs to follow to help achieve their strategic direction.

  • Understand your e-business financial objectives
  • Develop action plan for implementation of your e-business and e-commerce structure
  • Define standards of economic performance
  • Select methodology/techniques to satisfy those financial objectives
  • Implement and execute those techniques
  • Generate results to analyze performance metrics
  • Report findings, emphasizing your strengths and building upon your weaknesses

The internet is a great tool and essential to companies maintaining a positive cash flow to stay ahead. Listed below are some key areas that the leadership of e-businesses need to be aware of to help mitigate problems that could hinder their ability to stay afloat. Careful planning, organizing your team and having constant oversight of the direction of the business is crucial to being successful. According to the Small Business Administration, 50% of all small businesses fail in their first 5 years. (SBA 2009)

E-Business Issues

False information flow

Misinformation on the Internet is, and will always be, a problem. With Internet and software tools available, everyone can post, edit and publish any sort of information on any topic out for the world to read. The Internet was intended for mass amounts of information flow and sharing. The envisioned environment that the Internet would soon become in the 80s of free information flow, allows for the false information to flow just as easy. There is no quality control for anything posted online. I'm not sure if this has been tested or not, but I would like to know the statistics of those that use the internet and how much they believe to be true. I wouldn't be surprised if a majority of the folks reading material online take that information for the truth, tell their friends and family about what they just read and viola, bad information flowing and spreading faster on a global environment. Without this quality control, viscous rumors about bad food, rats, bugs, rotten employees, terrible parking, horrendous service can all but kill small restaurants trying to make it. News organizations have been notorious for grabbing information off the internet, not vetting it and posting it to the world as fact. Small businesses need to be cognizant of the environment they market in and be aware of the pitfalls of the internet. Establishing measures to help mitigate false information, such as posting quality reviews, professional statements or whatever they deem necessary to help backup the service that small business intends to provide on their websites or through other media vehicles.

Employee Computer Skills:

A major issue that plagues small businesses is the fact they are run by only a few individuals. If the Internet is to be utilized properly to enhance this small business, a level of computer knowledge must be adequate or they will have to hire someone from outside to do this for him or her. Even though a business can hire someone to control the Internet applications needed, but until the owner himself develops the necessary skills in Internet trade then he may never truly analyze the performance of the business and have it properly run. This is major weakness as most small businesses that do not fully understand because of the lack of computer skills they will find it difficult to operate in the e-Commerce world.

Customer Privacy and Protection:

Protecting your customers and ensuring their transactions are secure is vital to bringing those and new customers back to shop again. The IT engineers and developers you hire to manage the networks, servers and software, need to understand the importance of this. As well as securing the transaction, you need to protect their identity. The Federal Trade Commission enforces how companies use the data that their customers provide. Structuring your data management plan and making sure your employees understands the criticality of this issue will be a key part in the small business success. (FTC 2009)

Copyright issues:

This is a major concern for companies that are trying to compete in a global market. With limited control of copyright infringement in the US over the Internet and virtually no rules for the rest of the world to follow, copyright infringement and stolen ideas will continue to plague small businesses worldwide. Having enforceable laws in place, I imagine, would be very difficult and therefore it would be very easy for someone to steal other small business plans, ideas and ways of doing eCommerce. Someone writes a special code on their website for a special inventory control or for online basket shopping (Amazon), another business reverse engineers that code or simply does the same thing on their website. Now Amazon may have come up with the idea, but if everyone uses this shopping cart tool, Amazon potentially loses out on this very good idea and someone else tries to get the credit for inventing it. With no end in sight as to how to police this, this will plague small businesses looking to utilize the Internet for commerce.

File Sharing Issues:

File sharing is a new way of using networks such as the internet or a local area network to share information, save resources, and speed up traffic flow by saving bandwidth. Today, the technology is changing rapidly. PCs are powerful and have gigabyte hard drives, enough to hold more than we ever imagined. The connections are increasingly broadband, able to send and receive rich media and large quantities of information in a flash. The technology just keeps getting better; it is only logical that it would pave the way for new and improved uses of the web and will immensely help e-businesses succeed.

What risks does file-sharing technology introduce?

  • Installation of malicious code - Using P2P applications, it is difficult, if not impossible, to verify that the source of the files is trustworthy. These applications are often used by attackers to transmit malicious code. Attackers may incorporate spyware, viruses, Trojan horses, or worms into the files.
  • Exposure of sensitive or personal information - By using P2P applications, you may be giving other users access to personal information. Whether it's because certain directories are accessible or because you provide personal information to what you believe to be a trusted person or organization, unauthorized people may be able to access your financial or medical data, personal documents, sensitive corporate information, or other personal information. Once information has been exposed to unauthorized people, it's difficult to know how many people have accessed it.
  • Susceptibility to attack - Some P2P applications may ask you to open certain ports on your firewall to transmit the files. However, opening some of these ports may give attackers access to your computer or enable them to attack your computer by taking advantage of any vulnerabilities that may exist in the P2P application. There are some P2P applications that can modify and penetrate firewalls themselves, without your knowledge.
  • Denial of service - Downloading files causes a significant amount of traffic over the network. This activity may reduce the availability of certain programs on your computer or may limit your access to the internet.
  • Prosecution - Files shared through P2P applications may include pirated software, copyrighted material, or pornography. (McDowell; Wrisley; Dormann. 2005)
  • When building your developmental team, make sure they understand all the issues, to include those just discussed. This will help to mitigate issues that will hinder the company's success.

Guidelines to stay ahead in your e-Business

Companies need to have a plan in place that will enable them to stay ahead of their competition and work through the ongoing and upcoming internet issues that plague them. Security of their property and data need to be the number 1 bullet in their plan. Without having a strategy in place to alleviate the threats, their eCommerce will suffer and could lead the collapse of their business.

To reiterate the importance, plans need to be established to help combat against false information about their company. Reducing rumors (if possible) will be essential in promoting growth to sustain the business. Employee hiring with computer skills should be another key bullet in their business plan. Having the proper employees in place will allow the business to expand and evolve their eCommerce strategy into a winning strategy. Bringing on employees with those skill sets will help save on resources that would be needed otherwise to satisfy the computer needs. Companies that go to their own custom development route are able to design and build pretty much anything they desire. This allows them to offer different services to their visitors, which translates into a competitive advantage. Each of these businesses may serve millions of visitors every day and the intention is to have a unique experience that will bring the customers back again and again. These developers need to understand the business model; use a structured development methodology; test the codes thoroughly and continue to worry about the firewalls that connect you to the Internet. (Anderson 2001)

E-commerce is growing on a yearly basis and growing in many different sectors as shown in the graph below (US Census Bureau 2009). Appendix 1 also shows another chart demonstrating the growth in e-commerce in the United States.

Figure 1. E-commerce as Percent of Total Value: 2002 - 2007

The Internet offers a very unique way to sell your ideas to millions and millions of customers and investors. But a strong strategy needs to be in place to ensure small businesses are minimizing their limited resources to achieve the maximum results possible.

Their strategy should include the usability of the customer will help to keep them coming back and new customers to quickly and easily make a transaction or browse through your products. Customer satisfaction needs to be surveyed, analyzed and maintained to expect at a minimum, keep your market share. According to a UK government agency, listed below are few of the factors when establishing your e-business that need to be understood to help in your success. (UK Business Link 2009)

  • Don't over-design the site make it easy for the customer to navigate through your site - intuitive
  • Consider download speeds your customers will all have different network connections and be using different computers to access your site. Having lots of large graphics, videos and other bandwidth hogging items will slow down the ability of the customer to browse around.
  • Support multiple browsers Again, your customer will be using different internet programs to move around and explore, to capture as many as possible your developers have to be cognizant of this fact.
  • Don't underestimate the importance of usability if the customers can't move around on your site very well, they will quickly move on to another competitor to get their products.
  • Get feedback on usability asking the customer for information is valuable in understanding the needs of those customers. This will help you to understand what needs to be done and designed to help those that keep you in business.

Conclusion:

Most of the problems facing online businesses are no different from those facing other organizations, and the network security risks are not much different from those facing traditional businesses. The real increased risks to an e-business have to do with ways in which traditional risk management mechanisms don't scale properly from a world of local physical transactions to one of worldwide, dematerialized ones. There are also significant risks to rapidly growing companies that have hired a lot of new staff but that don't have the traditional internal controls in place. Organizing your staff and properly resourcing the areas to which you benefit the most such as the Internet, you can become the most vulnerable to hackers exploiting your weaknesses.

With the globalization of our commerce and reaching to areas of the world that we haven't done before to sell a product, small businesses need to maintain their technology and business savvy to stay ahead of their competition. Market environment is rapidly evolving (changing marketplace complexities, web-based technologies, globalization).

Numerous issues are arising on a yearly basis that e-businesses need to be aware of and keep adjusting to protect themselves and most importantly, their customers. Proper structuring, resourcing, training and knowledgeable leadership are key to helping these companies succeed.

References:

  1. Anderson, Ross 2001. Security Engineering: A Guide to Building Dependable Distributed Systems.
  2. Columbus, Louis 1999. Administrator's Guide to E-Commerce.
  3. Federal Trade Commission. 2009. http://www.ftc.gov/privacy/privacyinitiatives/promises.html
  4. Hassler, Vesna 2001. Security Fundamentals for E-Commerce.
  5. McDowell, Mindi; Wrisley, Brent; Dormann, Will. 2005. United States Computer Emergency Readiness Team.
  6. Small Business Administration. 2009. http://www.sba.gov/smallbusinessplanner/plan/getready/SERV_SBPLANNER_ISENTFORU.html
  7. UK Business Link 2009. http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1075390228
  8. United States Census Bureau. 2009.
  9. http://www.census.gov/econ/estats/2007/2007reportfinal.pdf
  10. Vulkan, Nir 2003. The Economics of E-Commerce.
  11. Image on title page may be subject to copyright issues.
  12. Curt Hoelscher IMSE 605 Fall 2009

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