E-Commerce and BUSINESS MODELS of the system

PROJECT MANAGEMENT COURSE
DAEYANG LUKE UNIVERSITY
FACULTY: Information and Communication Technology
DEPARTMENT: Information and Communication Technology
PROGRAMME: BSc in Information Communication and Technology
COURSE TITLE: Electronic Commerce
COURSE CODE: BUS 414
LEVEL: Four
LECTURER: CHRIS KULANGA

COURSE INFORMATION
AIM OF COURSE :
This course aims at enabling students understand basic tools, methodology and
technologies available for effective electronic commerce systems building.
COURSE DESCRIPTOR
This course is designed to establish solid understanding of E-commerce applications to
business environments with emphasis on cost benefit and marketing issues.
LEARNING OUTCOMES
Upon completion of the course, the learner shall be able to:
1. Understand the differences between e-Commerce and traditional commerce
2. List the various business models
3. Distinguish between traditional marketing and e-Marketing campaigns
4. Analyze and compare the different monetary transactions
5. Implement an e-Commerce site

COURSE INFORMATION CONTINUED….
4. Course material to be covered in 56 hours -4 Hours in a week
5. Assessment: 40% continuous assessment; 60% Final exam
• 2 Assignments and 1 Exam for Continuous Assessment.
• Prescribed Textbook:
Deitel, Deitel and Nieto. e-Business & e-Commerce: How to Program. Prentice Hall, 2001
Recommended Textbooks:
Jensen J. Zhao, Web Design and Development for E-business, 2003
Efraim Turban and David King. Electronic Commerce: Amanagerial Perspective, 2/E, 2002

E-Commerce: context
1. Definition of E-Commerce.
2. History of E-Commerce.
3. Advantages and Disadvantages of E-Commerce.
4. Types of E-Commerce.
5. E-Commerce Examples.
6. Some of E-Commerce Websites

E-Commerce: Definitions and concepts
• Definition: E-commerce consists of the buying and selling of products or services
over electronic systems such as the Internet and other computer networks.
• Electronic commerce commonly known as e-commerce or ecommerce.
• E-Commerce facilitates commercial transactions electronically, using technology
such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT).
• EDI is the structured transmission of data between organizations by electronic
means. It is used to transfer electronic documents or business data from one
computer system to another computer system. –provide examples
• EFT is the electronic exchange or transfer of money from one account to another. –
provide examples

History of ecommerce
• The growth and acceptance of credit cards, automated teller
machines (ATM) and telephone banking in the 1980s were also
forms of electronic commerce.
• Another form of E-Commerce was the airline reservation system,
for example Sabre in the USA and Travicom in the UK.
• By the end of 2000, many European and American business
companies offered their services through the World Wide Web.
• Since then people began to associate a word “E-Commerce" with
the ability of purchasing various goods through the Internet using
secure protocols and electronic payment services.

Ecommerce frameworks
Electronic commerce framework is comprised of three levels that this
framework is needed to for successful electronic commerce.
1. Infrastructure
2. Services
3. Products and Structures

1. Infrastructure
• The first part of the framework for electronic commerce is
including hardware, software, databases and communications.
• It is used in term of World Wide Web on the Internet or other
message switching methods on the Internet or other
telecommunication networks.

2. Services
The second part of the framework include a wide range of services
that provide the ability to find and present of information and are
including the search for trading partners, negotiation and
agreements

3. Products and Structures
This section of the electronic commerce frameworks consist of:
• Forecasts and direct provision of goods, services and trade-related
information to customers and business partners
• Cooperation and sharing of information within and outside the
organization
• Organizing of environment of electronic marketplace and chain of
supply and support.

Advantages of ecommerce
• Faster buying/selling procedure, as well as easy to find products.
• Buying/selling 24/7.
• Low operational costs and better quality of services.
• Easy to start and manage a business.
• No need of physical company set-ups.
• Customers can easily select products from different providers without
moving around physically. Easy comparison of prices.

Disadvantages of ecommerce
• There is no guarantee of product quality.
• Security: There are many hackers who look for opportunities, and
thus an ecommerce site, service, payment gateways, all are always
prone to attack.
• Social relationships are often lost or not made at all

Types/Models of ecommerce

B2B (Business-to-Business)

B2C (Business-to-Consumer)

C2B (Consumer-to-Business)

C2C (Consumer-to-Consumer)

M-Commerce

B2B -Business-to-Business
• B2B can be open to all
interested parties or
limited to specific, pre-
qualified participants
(private electronic market).
• Companies doing business
with each other such as
manufacturers selling to
distributors and
wholesalers selling to
retailers.
• Give local examples of B2B
ecommerce –students
exercise.

B2C -Consumer-to-Business
• Businesses selling to the general public typically through catalogs utilizing
shopping cart software.
• B2C is the indirect trade between the company and consumers.
• It provides direct selling through online.
• If you want to sell goods and services to customer so that anybody can
purchase any products directly from supplier’s website.

C2B -Consumer-to- Business
• A consumer posts his project with a set budget online and within hours companies review
the consumer's requirements and bid on the project.
• The consumer reviews the bids and selects the company that will complete the project.
• C2B empowers consumers around the world by providing the meeting ground and platform
for such transactions.

C2C -Consumer-to-Consumer
• It facilitates the online transaction of goods or services between two people.
• Though there is no visible intermediary involved but the parties cannot carry
out the transactions without the platform which is provided by the online
market maker such as eBay.

M-Commerce
M-Commerce
• The term of Mobile Commerce was invented in 1997 to aim “the buying
and selling of products, information and services” via wireless handheld
devices such as cellular phones, laptops and personal digital assistants.
• These wireless devices interact with computer networks that have the
ability to conduct online merchandise purchases.
• Mobile commerce allows to users access to Internet and shopping in it
without needing to find a place to plug in.
• Mobile Commerce transactions continue to improve and the phrase
includes the purchase and sale of a wide range of products and services,
online banking, bill payment, information delivery and so on.

Examples of ecommerce transactions
• An individual purchases a book on the Internet.
• A government employee reserves a hotel room over the Internet.
• A business buys office supplies on-line or through an electronic auction.
• A manufacturing plant orders electronic components from another plant within the
company using the company's intranet
• Uber and Taxify systems
• AirBnB

Traditional commerce
Definition of Traditional Commerce.
• Traditional commerce is the exchange of goods or services, in person or face to face.
• The most conventional method, and something we have all done — walk into a store, pick out an item for purchase,
stroll to the checkout and pay for the item.
• Traditional commerce involves the exchange of goods and services between two people face to face.
• It is one of the oldest modes of buying products and services. It is done by almost everyone all over the globe.
• For new and repeat business, traditional commerce thrives on word of mouth, customer referrals, and networking.
• For business success, personal communication is, therefore, a key factor when relying on traditional commerce.
• Many businesses that trade their goods and services like this network within the society establish relationships with
community leaders, chambers of commerce and also sponsor local sports teams and events to attract business and
develop relationships within the community.

Comparison
between ecommerce
and Traditional
commerce

BASIS FOR COMPARISON TRADITIONAL COMMERCE E-COMMERCE
1. Meaning Traditional commerce is a branch of business
which focuses on the exchange of products
and services, and includes all those activities
which encourages exchange, in some way or
the other.
e-Commerce means carrying out
commercial transactions or exchange
of information, electronically on the
internet.
2. Processing of
Transactions
Manual Automatic/automated
3. Accessibility Limited Time –only during working hours 24×7×365 (anytime)
4. Physical inspection Goods can be inspected physically before
purchase.
Goods cannot be inspected physically
before purchase.
5. Customer interaction Face-to-face Screen-to-face
6. Scope of business Limited to particular geographical area. Worldwide reach
7. Information exchange No uniform platform for exchange of
information.
Provides a uniform platform for
information exchange.
8. Resource focus Supply side –Supply more and wait for
customers
Demand side –supply as the customer
demands
9. Business Relationship Linear – (Often one item at a time) End-to-end (from beginning to end of
the solution)
10. Marketing One way marketing –Generic marketing One-to-one marketing –Customized.
online adverts
11. Payment Cash, cheque, credit card, etc. Credit card, fund transfer etc.
12. Delivery of goods Instantly Takes time

BASIS FOR COMPARISON TRADITIONAL COMMERCE E-COMMERCE
13. Cost effectiveness In traditional commerce, cost has to be
incurred for the role of middlemen to sell
the company’s product. Also in traditional
method, a head office with several
branches are required to cater to the needs
of customers situated in different places.
E-commerce is very cost effective when compared to
traditional commerce. The cost incurred on labor,
maintenance, office rent can be substituted by hosting a
website in e-business method. The cost incurred on
middlemen is eliminated in e-commerce as there is a direct
link between the business and the customer. The total
overhead cost required to run e-business is comparatively
less, compared to traditional business.
14. Time saving It takes a lot of time to complete a
transaction in traditional commerce
E-commerce saves a lot of valuable time for both the
consumers and business. A product can be ordered and the
transaction can be completed in few minutes through
internet
15. Convenience Does not offer convenience of doing
business from another location and at any
time.
E-commerce provides convenience to both the customers and
the business. Customers can browse through a whole
directories of catalogues, compare prices between products
and choose a desired product any time and anywhere in the
world without any necessity to move away from their home
or work place.
16.Introduction of new
products
In traditional commerce, it takes a lot of
time and money to introduce a new
product and analyze the response of the
customers. Initially, cost has to be incurred
to carry out pilot surveys to understand the
taste of the customers.
In e-commerce, it is easy to introduce a product on the
website and get the immediate feedback of the customers.
Based on the response, the products can be redefined and
modified for a successful launch.

BASIS FOR
COMPARISON
TRADITIONAL COMMERCE E-COMMERCE
17. Fraud Fraud in traditional commerce is
comparatively less as there is personal
interaction between the buyer and the
seller.
Lot of cyber frauds take place in electronic
commerce transactions. People generally fear to
give credit card information. Lack of physical
presence in markets and unclear legal issues give
loopholes for frauds to take place in e-business
transactions.
18. Human resource Traditional commerce does not have such
problems associated with human resource
in non electronic environment.
To operate in electronic environment, an
organization requires technically qualified staff
with an aptitude to update themselves in the ever
changing world. E-business has difficulty in
recruiting and retaining talented people.
19. Product suitability Traditional commerce is suitable for
perishables and touch and feel items.
Purchasing software, music in traditional
commerce may appear expensive,
E-commerce is not suitable for perishable goods
and high valuable items such as jewelry and
antiques. It is mostly suitable for purchasing
tickets, books, music and software.
20.Profit The cost incurred on the middlemen,
overhead, inventory and limited sales pulls
down the profit of the organization in
traditional commerce.
E-commerce helps to increase the sales of the
organization. It helps the organization to enjoy
greater profits by increasing sales, cutting cost
and streamlining operating processes.

E-commerce core competencies
1. Writing, Content Marketing
2. Data Analysis, Analytics
3. Testing and Data Collection
4. Web Design
5. Software and web development
6. Advertising
7. Email Marketing
8. Marketing Automation
9. Search Engine Optimization

1. Writing, Content Marketing
• The ability to write is, essentially, the ability to communicate online.
• Every ecommerce product description, every blog post, every how-to article,
every about us page, every video script is an act of writing.
• Done well, writing will help drive your ecommerce marketing. Done poorly it
will bring laughter and embarrassment.

2. Data Analysis, Analytics
• Successful marketers examine facts and statistics to make good decisions about how to
invest in marketing and promotion.
• This ability to consider facts and understand the implications of statistics is called data
analysis.
• It is important for modern ecommerce marketing.
• In a November 2015 article about how challenging it can be to quantify the impact
marketing analytics is having on a business, Harvard Business Review reported three
observations:
• According to a survey, companies plan to increase their investment in marketing analytics 73 percent in
the next three years;
• Data analysis is impacting many areas of marketing, including customer acquisition, marketing mix,
customer retention, social media, segmentation, and promotion strategy;
• Marketing organizations are not as effective at processing data as they should be.
• Those ecommerce marketers that can more effectively use and understand data are more likely to
succeed.

3. Testing and Data Collection
• Closely related to interpreting and analyzing data is the ability to collect facts and statistics
about your company’s marketing performance.
• This marketing skill encompasses the ability to properly set up Google Analytics or similar
tools, optimizing it for your ecommerce business with specific, meaningful reports.
• It includes understanding how testing works and using testing platforms like Optimizely or
similar.
• It also includes the ability to glean/gather data from each software package your business
uses — such as sales data, email reports, or order management.
• If you can collect good information about how your marketing is performing, you are more
likely to make good decisions based on that information.

4. Graphics and Web Designing
• Graphic and website design are online marketing fundamentals.
• The way an ad, an article, or even a product detail page looks can have a significant impact on how the marketing
message or even the product is perceived.
• One of the critical elements of getting people to buy is trust. Brands are essentially the way that customers code
a specific offering in their minds: this brand represents quality and luxury, or this brand represents comfort and
value.
• Branding is often well represented with the presentation of the material on online web services and other
marketing tools.
• Regardless of what your target customers hold in highest esteem, a brand is shorthand for that.
• Every piece of creative you release — blog posts, brochures, Google PPC campaigns or Nimlok booths at trade
shows — says something about a brand.
• If the design is less than professional and aligned with the brand’s core messaging, it can undermine years of
work and good impressions.
• By contrast, good design speaks volumes to a company’s professionalism, quality and positioning in the market.
• How your website, your ads, and your brand materials look matters for ecommerce success.

5. Programming or web development
• The ability to write code can be a huge advantage for marketers.
• This ability may be as basic as understanding HTML and CSS so that you can do a better job of
posting articles in WordPress.
• Or it might be the ability to develop your own marketing tools and reports.
• By some estimates, half of all digital marketing jobs require at least some technical expertise.
• This is the case because so much of what is done online requires at least an understanding of
coding.
• Learn to code and you will have more control over your marketing. With more control, your
chances for success increase.

6. Advertising
• Ecommerce advertising must be planned, created, purchased, executed, and measured.
And it must be done in many channels, using many forms of media, including pay-per-click
advertising on search engines and on social media sites, display advertising, native
advertising, mobile advertising, video commercials, and more.
• The effective ecommerce marketer understands how advertising works and seeks to get the
very best possible return on investment.
• Advertisement management is a high-end marketing skill that can take a long time to learn
and even longer to master.
• But it is worth the effort. Advertising can drive sales and profits.

7. Email Marketing
• To paraphrase the Direct Marketing Association, an email address can define you online.
• It is, to an extent, your digital name, and email marketing may be one of the best ways to
reach ecommerce customers.
• You can communicate directly to consumers who know your business and are interested in
your products.
• In fact, a survey by the Direct Marketing Association of digital marketers found that many
believed that email marketing was, in fact, the most effective marketing tool.

8. Marketing Automation
• Marketing automation can reduce marketing expenses, increase conversion rates, boost
average order value, and, in some cases, even improve shopper experience.
• As a skill, marketing automation is about managing the processes and workflows in an
automation platform like Marketo, Infusionsoft, or even MailChimp.
• For your ecommerce marketing, find the automation tools that work for your business and
master them.

9. Search Engine Optimization
• Search engine optimization is the process of making your web pages easy for web crawlers
to access and index.
• The idea is that if Google, Bing, and other search engines can easily find and catalog what is
on your page, it can more easily list your site on the appropriate results pages.
• The SEO aim is not to trick search engines with fake content or keyword stuffing, but rather
to help search engines locate and understand your content.
• Done well, SEO will help make your site easy to find, which can lead to marketing success.

ECOMMERCE ARCHTECTURE
• Every day more and more business transactions are conducted in the Internet under the
umbrella of Ecommerce. The main feature that distinguishes E-Commerce from traditional
commerce is the ability to conduct business with spatially distributed partners and products,
and achieves considerable reduction in human effort and latency time.
• The size and complexity of E-Commerce systems make the architecture level of design and
specification of the overall system a significant issue.
• From a good design it is possible to assess the quality and performance of the system before
the system is implemented and deployed. Some of the important properties that can be
assessed from a design specification include correctness, service availability, and security of

Types of ecommerce architecture
There are four types of E-commerce Architecture
1. Client Server Architecture
2. Two-Tier Architectures
3. Three-Tier Architectures
4. Distributed Enterprise Architecture

Client–server architecture:
• The client–server architecture is a computing model that acts as a distributed
application which partitions tasks or workloads between the providers of a resource or
service, called servers, and service requesters, called clients.
• Often clients and servers communicate over a computer network on separate
hardware, but both client and server may reside in the same system.
• A server machine is a host that is running one or more server programs which share
their resources with clients.
• A client does not share any of its resources, but requests a server's content or service
function.
• Clients therefore initiate communication sessions with servers which await incoming
requests.
• A network architecture in which each computer or process on the network is either a
client or a server.

Components of a Client–server architecture:
1. Clients (Clients are Applications): Applications that run on computers and Rely on servers for Files, Devices,
Processing power. Make requests, Format data on the desktop. Example: E-mail client an application that enables
you to send and receive e-mail.
2. Servers (Servers Manage Resources): Computers or processes that manage network resources, Disk drives (file
servers), Printers (print servers), Network traffic (network servers).Store and protect data, Process requests from
clients. Example: Database Server -A computer system that processes database queries.
3. Communication Networks: Networks Connect Clients and Servers
• The client/ server model improves multi-user updating through a graphical user interface (GUI) front end to the
shared database.
• In client/ server architectures client and server typically communicate through statements made in structured
query language (SQL).

Advantages of a Client–server architecture:
1) Centralization: In Client Server Networks there is no central administration, here in this
architecture there is a centralized control. Servers help in administering the whole set-up.
Access rights and resource allocation is done by Servers. Centralized Server Advantage Having a
single server hosting the database of user names and passwords and, at the same time,
managing what levels of access individual users and computers can have to specific network
resources is a distinct advantage of client server architecture. Fewer support staff are needed to
manage centralized security accounts than would be needed if security and resource access had
to be configured on each individual computer on the network. This advantage is even greater in
networks where users typically access resources from a number of computers, as resource
access and log-on permissions would have to be configured for each user, on each computer
that they use.
2) Proper Management: All the files are stored at the same place. In this way, management of files

3) Back-up and Recovery possible: As all the data is stored on server its easy to make a back-up of
it. Also, in case of some break-down if data is lost, it can be recovered easily and efficiently. While in
peer computing we have to take backup at every workstation.
4) Up grade and Scalability in Client-server set-up: A client server system allows the network to
easily adapt to upgrades and new technologies. A new operating system or a software upgrade can
be implemented from the server across the network without much downtime or inconvenience to
users. Computers and servers to a client server network without major interruptions to the network
Changes can be made easily by just upgrading the server. Also new resources and systems can be
added by making necessary changes in server.

5) Accessibility: From various platforms in the network, server can be accessed remotely. Accessible
client server system can be set up with a remote access. It means users can access the network
securely from the outside. Servers that allow remote access offer different type of secure
connection like wireless, virtual private network (VPN), or dial-up remote access. While maintaining
the security of the network, a client server system provides the users the comfort and convenience
of accessing the network from the outside, whether a quick access to check emails or a work from
home privilege.
6) As new information is uploaded in database, each workstation need not have its own storage
capacities increased (as may be the case in peer-to-peer systems). All the changes are made only in
central computer on which server database exists.

7) Security: Rules defining security and access rights can be defined at the time of set-up of server.
Client-server arrangements aid security efforts because there are fewer servers, limiting the
number of people with access to them and increasing security features of the servers.
8) Servers can play different roles for different clients.

Disadvantages of a Client–server architecture:
1. Congestion in Network: Too many requests from the clients may lead to congestion, which rarely takes place in
P2P network. Overload can lead to breaking-down of servers. Wherever a single server is used to manage
resources
on a network, there is always the chance that a failure of the server will bring network business to a halt. For
example, if a single server hosts the user names and passwords database for a network, and the server suffers a
failure, no users will be able to log on to the network until the server is fixed or replaced. A network where log-on
information is configured and held on each computer does not have this problem, as the failure of a single
computer does not prevent users of other computers from logging on and accessing network resources. Only the
failed computer is affected.
2. Client-Server architecture is not as robust as a P2P and if the server fails, the whole network goes down. Also, if
you are downloading a file from server and it gets abandoned due to some error, download stops altogether.
However, if there would have been peers, they would have provided the broken parts of file.
3. Dependence: The client-server network model relies on a functioning and available centralized server. If the
centralized server is removed from the system or goes down due to problems, the entire network cannot function.
However, many client server networks now have backup servers to provide support when a server is lost.

4.Cost: It is very expensive to install and manage this type of computing. Typically, the central server computer
must be powerful enough to maintain and share resources with the other computers on the network. This entails a
substantial cost. A client/server network can be expensive to implement and maintain. First, at least one server is
required to create a client/server network. This requires server hardware and software, a server operating system
and appropriate licenses to allow the end users to use the network software. If data will be stored centrally, a
backup system is needed, which requires backup server software and backup media. Maintaining a client/server
network also requires at least one network administrator, which translates into an additional salary. For a smaller
network, cost alone may be the deciding factor in opting for a different type of network architecture.
5. Maintenance Client-server networks often requires a staff with at least a single network administrator to manage
and maintain the equipment and the network. Other network operating systems, such as peer-to-peer network
systems, do not require a network administrator to maintain machines, as this work is distributed among individual
clients and their related machines.
6. You need professional IT people to maintain the servers and other technical details of network. Personnel a
client/server network requires experienced network personnel to maintain the server, manage security and backup
systems, and recover quickly from unexpected outages. Depending on the size and complexity of the client/server
network, this could require network administrators, IT security professionals, and/or other IT professionals. A
smaller network may be able to combine several of these roles into one position, but additional training is often
required as a result.

7. Complexity: A client/server network is naturally more complex, which can be both an advantage and a
disadvantage. For instance, data stored remotely can be more secure than data stored locally, but more
configurations is required both to ensure the security of that data and to allow the appropriate users to have
appropriate access to that data. The very nature of a client/server environment creates challenges in the delivery
and accessibility of remote resource.
8. Downtime: When a computer in a simple peer-to-peer network goes down, the only users affected are the user
of that particular computer, and perhaps any users who are trying to access data stored on that computer. In
contrast, when a server in a client/server network goes down, all users are affected. If security is maintained
centrally on that server, workstations are unable to authenticate login information, and users are unable to gain
access to their own systems. If user data is stored centrally, users are unable to access their data. If applications are
managed centrally, users are unable to run their applications. Any of these scenarios can result in significant loss of
productivity and/or revenue.

Two-Tier Architectures
• A two-tier application generally includes a Java client that connects
directly to the database through TopLink (Oracle topLink). The two-tier
architecture is most common in complex user interfaces with limited
deployment. The database session provides TopLink support for two-
tier applications.
• Oracle TopLink delivers a proven standards based enterprise Java
solution for all of your relational and XML persistence needs based on
high performance and scalability, developer productivity, and flexibility
in architecture and design
• Although the two-tier architecture is the simplest TopLink application
pattern, it is also the most restrictive, because each client application
requires its own session. As a result, two-tier applications do not scale
as easily as other architectures. Two-tier applications are often
implemented as user interfaces that directly access the database They
can also be non-interface processing engines. In either case, the two-
tier model is not as common as the three-tier model.
• Two-tier architectures have 2 essential components:
· A Client PC and
· A Database Server

Two-tier Considerations:
• Client program accesses database directly
• Requires a code change to port to a different database
• Potential bottleneck for data requests
• High volume of traffic due to data shipping
Client program executes application logic
• Limited by processing capability of client workstation (memory, CPU)
• Requires application code to be distributed to each client workstation.
• The user system interface is usually located in the user’s desktop environment and the DBM
services are usually in a server that is a more powerful machine that services many clients.

It runs the client processes separately from the server processes, usually on a different computer:
1. The client processes provide an interface for the customer, and gather and present data usually on the
customer’s computer. This part of the application is the presentation layer
2. The server processes provide an interface with the data store of the business. This part of the application is the
data layer
3. The business logic that validates data, monitors security and permissions, and performs other business rules
can be housed on either the client or the server, or split between the two.
1. Fundamental units of work required to complete the business process
2. Business rules can be automated by an application program
• Typically used in e-commerce
1. Internet retrieval, decision support
• Used in distributed computing when there are fewer than 100 people simultaneously interacting on a LAN.
• Implementation of processing management services using vendor proprietary db procedures restricts flexibility
and choice of RDBMS for applications.
• Also lacks flexibility in moving program functionality from one server to another.

Advantages of the two tier architecture
1. Development Issues: Fast application development time, Easy to setup and maintain
available tools are robust and lend themselves to fast prototyping to insure user needs a
met accurately and completely. Conducive to environments with homogeneous clients,
homogeneous applications, and static business rules.
2. Performance: Adequate performance for low to medium volume environments Business
logic and database are physically close, which provides higher performance.

Disadvantages of the two tier architecture
1. Scalability: key concern with the 2-tier model is scalability. Application performance can be
expected to degrade rapidly when the number of concurrent users reaches a threshold
between a few hundred and one thousand users. This is true even for large database
servers. The chief reason is that each client requires its own connection and each
connection requires CPU and memory. As the number of connections increases, the
database performance degrades.
2. Poor Logic Sharing: Traditional two-tier architectures keep business logic on the client.
When logic is in the client, it is usually more difficult to re-use logic between applications
and amongst tools.
3. Application Distribution: Application changes have to be distributed to each client. When
there are a large number of users, this entails considerable administrative overhead.

Disadvantages of the two tier architecture
4. Remote Usage: Remote users (e.g. customers), probably do not want to install your
application on their clients-they would prefer "thin“ clients where minimal (or no) client
software installation is required.
5. Database Structure: other applications that access your database will become dependent
on the existing database structure. This means that it is more difficult to redesign the
database since other applications are intimate with the actual database structure.
6. Development Issues: Complex application rules difficult to implement in database server –
requires more code for the client. Complex application rules difficult to implement in client
and have poor performance. Changes to business logic not automatically enforced by a
server – changes require new client side software to be distributed and installed. Not
portable to other database server platforms.
7. Performance: Inadequate performance for medium to high volume environments, since
database server is required to perform business logic. This slows down database
operations on database server.

Three-Tier Architecture (Multitier architecture )
• Multi-tier architecture (often referred to as n-tier architecture) is a client– server
architecture in which the presentation, the application processing, and the data
management are logically separate processes. For example, an application that uses
middleware to service data requests between a user and a database employs multi-tier
architecture.
• The most widespread use of multi-tier architecture is the three-tier architecture.
• Three-tier is a client–server architecture in which the user interface, functional process logic
("business rules"), computer data storage and data access are developed and maintained as
independent modules, most often on separate platforms. It was developed by John J.
Donovan in Open Environment Corporation (OEC), a tools company he founded in
Massachusetts.
• The three-tier model is software architecture and a pattern. Apart from the usual
advantages of modular software with well-defined interfaces, the three-tier architecture is
intended to allow any of the three tiers to be upgraded or replaced independently in
response to changes in requirements or technology.
• For example, a change of operating system in the presentation tier would only affect the

• Typically, the user interface runs on a desktop PC or workstation and uses a standard
graphical user interface, functional process logic may consist of one or more separate
modules running on a workstation or application server, and an RDBMS on a database server
or mainframe contains the computer data storage logic. The middle tier may be multi-tiered
itself (in which case the overall architecture is called an "n-tier architecture").
• N-tier application architecture provides a model for developers to create a flexible and
reusable application. By breaking up an application into tiers, developers only have to
modify or add a specific layer, rather than have to rewrite the entire application over. There
should be a presentation tier, a business or data access tier, and a data tier.
• The concepts of layer and tier are often used interchangeably. However, one fairly common
point of view is that there is indeed a difference, and that a layer is a logical structuring
mechanism for the elements that make up the software solution, while a tier is a physical
structuring mechanism for the system infrastructure.
• Three-tier (layer) is a client-server architecture in which the user interface, business process
(business rules) and data storage and data access are developed and maintained as
independent modules or most often on separate platforms.

• Basically, there are 3 layers :
Tier 1 (presentation tier, GUI tier), tier 2 (business objects, business logic tier) and tier 3 (data
access tier).
• Presentation tier Or Presentation Layer (UI):This is the topmost level of the application. The
presentation tier displays information related to such services as browsing merchandise,
purchasing, and shopping cart contents. It communicates with other tiers by outputting results
to the browser/client tier and all other tiers in the network. Presentation layer contains pages
like .aspx or windows form where data is presented to the user or input is taken from the
user. A local computer on which either a Web browser displays a Web page that can display
and manipulate data from a remote data source, or (in non-Web-based applications) a stand-
alone compiled front-end application

• Application tier (business logic, logic tier, data access tier, or middle tier): The logic tier is
pulled out from the presentation tier and, as its own layer; it controls an application’s
functionality by performing detailed processing. BAL contains business logic, validations or
calculations related with the data, if needed. I will call it Business Access Layer in my demo. A
Server computer that hosts components which encapsulate an organization's business rules.
Middle-tier components can either be Active Server Page scripts executed on Internet
Information Server, or (in non-Webbased applications) compiled executable.
• Data Access Layer (DAL) Or Data tier: This tier consists of database servers. Here information
is stored and retrieved. This tier keeps data neutral and independent from application servers
or business logic. Giving data its own tier also improves scalability and performance. DAL
contains methods that helps business layer to connect the data and perform required action,
might be returning data or manipulating data (insert, update, delete etc).A computer hosting a
database management system (DBMS), such as a Microsoft SQL Server database. (In a two-tier
application, the middle-tier and data source tier are combined.)

Component & Consideration of 3tier architecture:
Three Tier architectures have 3 essential components:
• A Client PC
• An Application Server
• A Database Server
Three-Tier Architecture Considerations:
Client program contains presentation logic only
• Less resources needed for client workstation
• No client modification if database location changes
• Less code to distribute to client workstations
• One server handles many client requests
• More resources available for server program
• Reduces data traffic on the network

Also called as multi-tier architecture. A middle tier is added between the client environment and the DBM
server environment.

Implementation of 3 Tier Architecture
Variety of ways to implement three tier architectures :
1. Transaction processing (TP) monitors
2. Message servers
3. Application servers

Three-Tier Architectures with TP Monitor :
· The most basic type
o Type of message queuing, transaction scheduling, prioritization service
· Client connects to TP instead of the DB server
· The transaction is accepted by the monitor which queues it and takes
responsibility to complete it by freeing up the client
· When a third part provides this service it is called TP heavy
· When it is embedded in the DBMS, it can be considered 2-tier and is referred to
as TP lite
· TP monitor provides:
o The ability to update multiple DBMSs in a single transaction
o Connectivity to a variety of data sources (flat files & non- RDBMSs)
o The ability to attach priorities to transactions
o Robust security
· More scalable than a 2-tier architecture
· Most suitable for e-commerce with many thousands of users

Three-Tier Architectures with Message Server :
· Messages are prioritized and processed asynchronously
Headers contain priority info, the address, the id no
• Message server connects to the RDBMS and other data sources
• The message server focuses on intelligent messages, whereas the TP
environment has the intelligence in the monitor and treats transactions as dumb
data packets
• They are sound business solutions for the wireless infrastructures of m-
commerce.

Three-Tier Architectures with an Application Server :
1. Allocates the main body of an application to run on a shared host
rather than in the user system interface client environment
2. The application server does not drive GUIs rather it shares business logic,
computations, and a data retrieval engine.
3. With less software on the client
1. There is less concern with security,
2. Applications are more scalable
3. Support and installation costs are less on a single server than maintaining each on a
desktop client.

Three-Tier Architectures with an Object Request Broker Standard:
Need for improving interoperability and object request broker (ORB) standards in
the client/ server model.
· ORB support in a network of clients and servers on different computers means
o A client program (object) can request services from a server program
o Object without having to understand where the server is in a distributed network or what the
interface to the server program looks like.
· ORB is the programming that acts as the mediary or as a broker between a client
request for a service from a distributed object or component and server
completion of that request.
· There are two prominent distributed object technologies:
o Common Object Request Broker Architecture (CORBA)
o Component Object Model (COM)
· The industry is working on operability between CORBA and COM

Advantages of 3 tier architecture
1. The advantage of a 3-tier system is that the contents of any of the tiers/layers
can be replaced without making any resultant changes in any of the others.
For example: A change from one DBMS to other will only involve a change to
the part in the data access layer. A change in the Use Interface (from desktop
to the web, will need only some changes in the components of the
presentation layer.
2. The benefit of writing the presentation and business layered architecture in
different languages is that it is an advantage of the presentation and business
layers is that it is feasible to use different developer teams to work on each. It
means that only PHP skills are required for data access layer and business
layer, and HTML, CSS and XLS skills for presentation layers. It is easier to find a
developer with skills in one of these rather having a kind of developer having
all of the skills.
3. Another main advantage of using XML/XLS in the presentation layer is that it
the output can be changed from HTML to WML or PDF or any other format
using a different XLS style sheet. XLS files can be used to change XML
documents into a number of formats and not only HTML.

4. It has better wait balancing system because the entire work load is divided.
5. Security polices can be imposed without effecting the clients.
6. Scalability: The key 3-tier benefit is improved scalability since the application
servers can be deployed on many machines. Also, the database no longer
requires a connection from every client -- it only requires connections from a
smaller number of application servers. In addition, TP monitors or ORBs can be
used to balance loads and dynamically manage the number of application
server(s) available.
7. Better Re-use: The same logic can be initiated from many clients or
applications. If an object standard like COM/DCOM or CORBA is employed (as
discussed in tool dependence), then the specific language implementation of
the middle tier can be made transparent.
8. Improved Data Integrity: since all updates go through the middle tier, the
middle tier can ensure that only valid data is allowed to be updated in the
database and the risk of a rogue client application corrupting data is removed.

9. Improved Security: Security is improved since it can be implemented at
multiple levels (not just the database). Security can be granted on a service-by-
service basis. Since the client does not have direct access to the database, it is
more difficult for a client to obtain unauthorized data. Business logic is
generally more secure since it is placed on a more secure central server.
10. Reduced Distribution: Changes to business logic only need to be updated on
the application servers and do not have to be distributed to all the clients.
11.Improved Availability: mission-critical applications can make use of redundant
application servers and redundant database servers. With redundant servers,
it is possible to architect an application so that it can recover from network or
server failures.
12. Hidden Database Structure: since the actual structure of the database is
hidden from the caller, it is possible that many database changes can be made
transparently. Therefore, a service in the middle tier that exchanges
information/data with other applications could retain its original interface
while the underlying database structure was enhanced during a new
application release.

13. Hidden Database Structure: since the actual structure of the database is
hidden from the caller, it is possible that many database changes can be made
transparently. Therefore, a service in the middle tier that exchanges
information/data with other applications could retain its original interface
while the underlying database structure was enhanced during a new
application release.
14.Development Issues: Complex application rules easy to implement in
application server. Business logic off-loaded from database server and client,
which improves performance. Changes to business logic automatically
enforced by server – changes require only new application server software to
be installed. Application server logic is portable to other database server
platforms by virtue of the application software .
15.Performance: Superior performance for medium to high volume environments

Disadvantages of 3 tier architecture
1. Increased Complexity/Effort: In general, it is more difficult to build a 3-tier
application compared to a 2-tier application. The points of communication are
doubled (client to middle tier to server, instead of simply client to server) and
many handy productivity enhancements provided by client tools (e.g. Visual
Basic, PowerBuilder, Delphi) will be foregone or their benefit will be reduced
with a 3-tier architecture.
2. Fewer Tools: There are many more tools available for a 2-tier model (e.g. most
reporting tools). It is likely that additional programming effort will be required
to manage tasks that an automated tool might handle in a 2-tier environment.
Creates an increased need for network traffic management, server load
balancing, and fault tolerance. Current tools are relatively immature and are
more complex. Maintenance tools are currently inadequate for maintaining
server libraries. This is a potential obstacle for simplifying maintenance and
promoting code reuse throughout the organization. There is more processing
on the web server, It does not interact with the WMS server directly.

Disadvantages of 3 tier architecture
3. More complex structure more difficult to setup and maintain the physical
separation of application servers containing business logic functions and
database servers containing databases may moderately affect performance.
4. Development Issues: For More complex structure it is more difficult to setup
and maintain.
5. Performance: The physical separation of application servers containing
business logic functions and database servers containing databases may
moderately affect performance.

Distributed Enterprise Architecture
The Distributed Enterprise Architecture has been designed to support distribution
of key components.
For instance, the Data Adapters can be and in fact were distributed to other
machines to support the Distributed Enterprise Architecture effort on IL’03.
The notion here is that it is easy to use different devices on the network to do data
collection so that a) we can avoid overloading any given device and b) we can
place bandwidth intensive Data Adapters on the same LAN (and even the same
virtual LAN) as other important devices to minimize ill effects of highly distributed
systems.
Because the system is web-based, anyone anywhere on the network (connected
via WAN or LAN and possessing the appropriate privileges) can log onto the
Distributed Enterprise Architecture Portal (described below), run interactive
queries against Distributed Enterprise Architecture databases and view, refresh,
or publish analysis products.

• The design has further been guided by the need for the Data Collection
component to be real-time and for the analysis component to at least be near
real-time.
• The Data Adapter framework incorporates real-time control and exception
management.
• The multiple layers (e.g. separating the data layer from the integration/services
layer) allow the analysis component to be able to yield limited results in real time
or more complete results at near real time or after action.
• Currently, a complete Distributed Enterprise Architecture system can be run on a
single high-end laptop.
• As the load placed on the Distributed Enterprise Architecture system increases,
either through the expansion of the collection requirements or through
increased user traffic supported by the Distributed Enterprise Architecture
Portal, additional servers are needed to distribute the load so that the Data
Adaptors do not fall behind and the Portal remains responsive A guiding
principle in the design of the Distributed Enterprise Architecture system is to

Basic Properties of Distributed Enterprise Architecture
• Distributed Enterprise Architecture collection parameters are typically specified
in collection strategies, and system parameters are stored in name-value pairs,
all of which is stored in a central database.
• Distributed Enterprise Architecture based on ORB technology.
• Distributed Enterprise Architecture uses shared, reusable business models on a
business enterprise-wide scale.
• Distributed Enterprise Architecture is standardized business object models and
distributed object computing are combined to give greater flexibility to the
business
• Distributed Enterprise Architecture with the emergence and popularity of ERP
software, distributed enterprise architecture promises to enable e-commerce to

E-Commerce and BUSINESS MODELS of the system

The advantages of the Distributed Enterprise
Architecture
1. Allows significant modification of DCA deployment without code
changes.
2. Non-developers can configure the DCA and the Data Adapters.
3. Collection Strategies and system parameters can be configuration
managed separately from the code base.

The disadvantages of the Distributed Enterprise Architecture
1. Software implementation is difficult.
2. Network setup is complicated.
3. More components to fail because of so many components are used.
4. Security issue is low to maintain.

E-Commerce and BUSINESS MODELS of the system

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