Microsoft Internet Commerce Strategy: A Foundation for Doing Business on the Internet
Summary: Dramatic opportunities exist today on the Internet for forward-thinking businesses. Businesses have an opportunity to create close working relationships with business partners on the Internet, automating and increasing the efficiencies of trade. Businesses can take advantage of a growing Internet channel for marketing directly to consumers, allowing development of closer relationships with consumers. The Microsoft Internet Commerce Strategy—a comprehensive offering of server and tools, payment, and partners—provides a commerce platform upon which businesses can take advantage of these opportunities.
Electronic commerce is not a new concept. Companies and consumers have been using electronic media to conduct commercial transactions for years. To date, electronic commerce has been inhibited by high cost and complexity. The complexity arises in establishing lines of communication and even more by the lack of standard applications for viewing and sharing information once connected. The Internet, specifically the World Wide Web, has changed this scenario radically. Connectivity over the Internet is cheap, increasingly secure, and built on standards that make communicating with anyone a straightforward task. Now, Internet commerce—the exchange of goods and services for value on the Internet—is evolving into a more cost-effective and powerful way to do business.
Internet commerce represents a market worth potentially hundreds of billions of dollars in just a few years. It presents tremendous opportunities for businesses. First, a growing standard means for businesses to automate and streamline how they trade with other businesses: business-to-business commerce. Business-to-business commerce includes online wholesaling, where businesses sell goods and services to other businesses on the Web. In Internet-based corporate purchasing, wholesaling merges into a system where individual employees make purchases of office materials and supplies using a corporate intranet. With Internet-based supply chain trading, businesses work closely together via the Internet to automate and streamline the supply of goods for production and distribution.
Figure 1. Internet commerce opportunities
Internet commerce also provides businesses a growing, dynamic channel for efficient delivery of goods and services to consumers: business-to-consumer commerce. In business-to-consumer commerce, companies market physical goods to consumers online in a more personalized, dynamic environment. Businesses-to-consumer commerce will increasingly include the delivery of digital goods—software, electronic media, and information. Consumers will also look more frequently to the Internet for the delivery of services, including ticketing, reservations, and financial services. In short, Internet commerce—business-to-business and business-to-consumer—will dramatically impact the way goods and services are managed, bought, and sold from manufacturer to consumer.
Overview of the Microsoft Internet Commerce Strategy
Commerce will soon underlie a significant portion of the majority of corporate Web sites. As such, Microsoft has moved rapidly to commerce-enable its software offerings on the desktop and server. The result is a comprehensive desktop and server Internet commerce offering that enables business-to-consumer and business-to-business commerce applications.
Commerce functionality has been integrated into the Microsoft® BackOffice® family to provide a commerce-enabled server. Microsoft Site Server, Enterprise Edition, a new BackOffice product, provides a comprehensive Web-site environment for enhancement, deployment, and the advanced management of commerce-enabled Web sites. Site Server, Enterprise Edition includes Commerce Server, the new name for the follow-on release of Microsoft Merchant Server 1.0. Commerce Server is a leading Internet-selling software product, adopted by hundreds of customers worldwide since its availability in December of 1996.
Support for commerce has also been integrated into Microsoft Internet Explorer and the Microsoft Windows® operating system, creating a commerce-enabled desktop offering. The Microsoft Wallet provides secure, convenient purchasing on the Internet. The Microsoft Wallet, available now for download from the Web, will ship as a part of Microsoft Internet Explorer 4.0 and the next release of the Windows operating system.
The Microsoft desktop and server commerce offering provides significant opportunity for horizontal and vertical integration by independent companies. Interfaces in Site Server and the Microsoft Wallet allow software companies and customers to extend the commerce platform and integrate with existing systems.
The Microsoft Internet Commerce Strategy is based on the following three components (described in detail below):
- Server Foundation
- Solutions with Commerce Partners
Figure 2. Microsoft Internet Commerce Strategy
Server Foundation. A server and tools commerce foundation based on Site Server, Enterprise Edition. This foundation includes BackOffice server components and tools for rapidly deploying and managing commerce applications—business-to-consumer and business-to-business—that extend the Microsoft Web platform, Active Server Pages, and Microsoft Transaction Server, and integrates Microsoft Windows NT® Server security.
Site Server provides comprehensive functionality for commerce-enabling Web sites. The product supports electronic catalog management, online order processing, and the creation of dynamic product and price promotions. The Order Processing Pipeline provides an extensible data structure for managing orders. Its broad application programming interface (API) allows any developer to create components to extend order-processing functionality or integrate with existing systems. Site Server employs new tools, such as the StoreBuilder Wizard, that dramatically simplify the process of creating and managing online commerce sites. Site Server also introduces a new capability called Buy Now. Buy Now allows the embedding of product information and order forms inline within most any context—such as an online ad banner—allowing businesses to promote and sell without the need for complete online stores.
Future versions of Site Server will help business commerce solution developers dramatically lower the cost of development with a number of new built-in functions, including the Business Document Pipeline. The Business Document Pipeline is a workflow system that supports the exchange of EDI and other business document types over multiple transports, including the Internet.
Payment. An open payment architecture based on Site Server and the Microsoft Wallet. The Wallet is simple-to-use client software that will enable consumers to conveniently and securely make purchases over the Internet. The Microsoft Wallet has an open design that allows Wallet Payment Modules created by independent-payment technology companies to be plugged in dynamically. This open payment architecture gives consumers freedom of choice in how they choose to pay for goods and services online. This architecture also establishes a framework for interoperability between banks, merchants, and consumers. Microsoft will support standards for next-generation payment protocols, such as Secure Electronic Transaction (SET), by distributing the Wallet with Internet Explorer 4.0 and the next version of the Microsoft Windows operating system.
Solutions with Commerce Partners. The creation of complete solutions with Microsoft Commerce Partners. The Microsoft Internet commerce offering is a commerce platform; hundreds of companies worldwide are extending the Microsoft offering to create complete solutions. Commerce partners include solution providers, hosting Internet service providers, independent software companies, payment software companies, and banks and financial Institutions. Industry leaders in these categories are working closely with Microsoft to create new kinds of business-to-business and business-to-consumer commerce solutions on the Internet.
Learn what many industry leaders are doing in Internet commerce in the "Creation of Complete Solutions with Microsoft Commerce Partners" section of this article.
The Microsoft Internet Commerce Strategy provides businesses with a lower-cost means of deploying and managing Internet commerce sites and simpler integration with existing systems. It establishes an architecture for secure and multifaceted methods of payment as well as secure access to sites. Microsoft's strategy will simplify how companies create and distribute structured business documents for transactions, including the use of EDI. The management of complex catalogs of goods and services will be improved, including support for personalized delivery. Businesses will be able to market in new ways, merging commerce with community. Microsoft's Internet Commerce Strategy is based on open standards such as Transport Control Protocol/Internet Protocol (TCP/IP), Hypertext Markup Language (HTML), Hypertext Transfer Protocol (HTTP), Component Object Model (COM), Java, American National Standards Institute (ANSI) X.12, Secure Electronic Transaction (SET), and Secure Sockets Layer (SSL). This lowers risk for adopters and helps ensure interoperability of applications.
The Microsoft Internet Commerce Strategy will help create opportunities for consumers, businesses, software developers, and consultants. For consumers, Microsoft's efforts are aimed at increasing the offering of goods and services available on the Internet. Consumers will also enjoy increased convenience and security. More businesses will be able to afford Internet commerce sites and take advantage of improved customer service and efficiencies in transacting with other businesses. Microsoft's commerce platform gives developers an opportunity to create and market specific enhancements. Such software extensions will be interoperable with those from other developers. Finally, consultants will have an opportunity to assemble rich, complete solutions that meet customers' needs.
This paper explains the Microsoft Internet Commerce Strategy.
- The next chapter, "Internet Commerce Opportunity," describes Internet commerce opportunities and requirements for businesses today.
- The third chapter, "Microsoft Internet Commerce Strategy," is a more detailed and technical explanation of Microsoft's product strategy to meet business requirements for Internet commerce.
- The fourth chapter, "New Internet Commerce Scenarios," illustrates key new scenarios in business-to-business and business-to-consumer commerce that will become common in the near future.
- The final chapter provides a brief summary.
A related article, "Taking Business Web Sites to the Next Level," provides details about the Site Server product offering.
Phenomenal growth has occurred and is expected to continue for the World Wide Web. Estimates for the numbers of consumers and businesses online vary considerably for markets around the world. Still, experts believe that more than 36 million households will have access to the Web by the year 2000 in the United States alone (Find/SVP, December 1996). In Europe this number is lower, based on lower penetration of personal computers, but still approaches a dazzling figure of near 20 million households. In Japan approximately 12 million households will have access to the Web in the year 2000 (IDC Japan, March 1997).
The number of business Web sites is equally impressive, expected to reach more than 2 million by the year 2000 in the United States, and as many as 1 million each in Europe and Japan (Microsoft estimates).
This significant adoption of the World Wide Web by businesses and consumers presents two tremendous opportunities for businesses. First, a growing standard means for businesses to communicate transactional information with other businesses more cost-effectively. Second, a growing channel for efficient delivery of goods and services to consumers. In this section, we take a quick look at trends in these two areas of opportunity. Common requirements are then explored.
Business-to-Business Commerce Opportunity
EDI for all businesses
Businesses today transact with trading partners in one of two generalized fashions. First, the majority of businesses use a nonautomated means of communicating commerce-related information with trading partners: mail, telephone, and fax. Second, a small number of primarily the largest companies in the world—fewer than 50,000—conduct a significant portion of their transactions in an automated fashion such as Electronic Data Interchange (EDI). EDI—conducted either with leased lines or, more commonly, through Value Added Networks (VANs)—can be costly and complex. Large companies maintain a full-time EDI staff for the ongoing management of translation systems and auditing of the operation. EDI VAN-based systems, because of their complexity and ensuing cost, exclude small and medium-sized businesses from participation in automated trading communities.
The Internet will bring radical change to automation in trading. By providing a ubiquitous public network and standards for communication, the Internet will help businesses lower costs in EDI-like transactions. More importantly, the Internet will make it easier for small and medium-sized businesses to participate in automated commerce transactions. Many businesses—small, medium, and large—will soon send and receive the majority of their purchase orders and invoices over the Internet.
Formation of virtual enterprises
Increased ease of automating commerce will provide opportunities for businesses to increasingly work more closely with other businesses for the supply of goods and information, either for the direct manufacturing process or the indirect operation of the business. The impact on businesses of such improved commerce relationships is the formation of virtual enterprises.
Virtual enterprises are best described as business activities that span the business processes of more than one company. In the chapter "New Internet Commerce Scenarios," two examples are given of virtual enterprises that develop out of corporate purchasing and supply-chain trading activities. In the example of an application called MS Market, Microsoft employees purchase office supplies from a commerce Web site created and maintained by non-Microsoft vendors. In a second example, ByteComp, Inc. Order Entry System (based on a fictitious company), ByteComp resellers submit purchase orders for products using a Web-based application created and managed by ByteComp. Forecast information is used to help customize purchase orders for the resellers.
The formation of Virtual Enterprises represents an opportunity for businesses on the Internet. By establishing intimate business relationships with vendors and suppliers, companies can lower operational costs, improve customer service, and focus on their core contributions in the marketplace. The Internet provides a means for companies of all sizes to participate in virtual enterprises.
Business-to-Consumer Commerce Opportunity
Growth of a new direct channel
Every year, consumers spend more than $2.2 trillion on goods and services in the United States alone. About one-fifth of this astronomical amount, or $400 billion, is spent as a result of direct marketing—mail order, telephone order, catalogs, business reply card inserts, television, and online commerce. Within the online commerce category are included direct sale and marketing of physical goods, digital goods—such as software, media, and information—and services—ticketing, reservations, and financial services.
For many businesses, the Internet is a fast-growing channel of distribution. 1-800-FLOWERS, one of the world's largest florists, has seen their online business grow to 10% of their overall $300 million business; their Web site has grown faster than any other online venue. Not all businesses have seen this kind of success in early ventures into online selling. Critical mass of consumers on the Web is still accumulating. The adoption of new technology and corresponding change in consumer behavior will take time.
Personalization and the beginnings of mass customization
The Web offers a rare disconnect with traditional means of distribution, enabling forward-thinking businesses to create new value-added product and service offerings. Such additions will increasingly mean personalized, tailored service for the mass of buyers—mass customization. For example, visitors to @Tower, Tower Records' Web store, can click on the New Releases hyperlink and view the current week's releases for all genres—typically hundreds of CDs. Better yet, registered shoppers enjoy a personalized view of new releases when they click on the same hyperlink: they see a special call-out graphic that appears when their favorite artists have issued a new release in the last several weeks.
Web sites can also significantly improve a customer's experience. On the Web, buyers have direct access to sources of information and the opportunity for direct communication with the seller. Many sites have established communities allowing buyers to interact with other customers. Such examples of value added service to customers will help separate more successful businesses from less successful businesses.
A significant opportunity for consumer marketers exists in the marrying of informational content with transactions. The most successful selling sites provide all kinds of information around the sale of product—commerce and community merged. Many marketers will soon go even further. Rather than waiting for consumers to visit their selling sites, they will begin to embed product and service offers in other contexts, using a method known as contextual transactions (see the chapter "New Internet Commerce Scenarios"). Contextual transactions will be embedded in online banner ads, articles or stories, and even directly in a consumer's HTML desktop; they will be unobtrusive, leaving the content viewer in place once the transaction is complete. Contextual transactions will enable impulse buying, taking advantage of a consumer's peak moment of interest.
Mass customization and contextual transactions are just the beginning of what will be a radical new way of executing direct online marketing. In the future, the pull model of the Web site will be supplemented by the push model. In the push model, consumers will be actively sought out based on special interests that they willingly publish. Internet commerce will become a part of each consumer's everyday life.
Requirements for Commerce
Businesses need solutions to take advantage of the multitude of opportunities described above. To date, there has been a lack of comprehensive software, expertise, infrastructure, and mature standards to support Internet commerce applications. The following are critical requirements for customers creating commerce solutions.
- Lower cost deployment and management of custom Internet commerce sites. Until fairly recently, the average company spent hundreds of thousands of dollars implementing commerce-enabled sites. Part of this cost derives from fees for software packages. More so, it derives from the cost of consulting services to develop code from scratch in order to meet custom needs, making up for the lack of effective tools. Businesses need lower-cost software that also reduces the amount of custom development required. They need tools to improve deployment and support ongoing change and management of site content and data. Businesses need a low-cost investment that can scale as their Internet business grows.
In many cases, shared hosting scenarios will keep costs at their lowest. In such a scenario, a hosting Internet service provider (ISP) will manage multiple sites on one configuration. To help lower costs, support for shared hosting is needed.
- Simpler integration with existing systems. Internet commerce sites will often need to mirror and use data from companies' existing business processes. Businesses need simpler ways to set up systems that reflect inventory, write out to accounting systems, or track fulfillment.
- Flexible support for payment. Businesses and consumers need standards for secure, Internet-based payment. Solutions are needed to support payment between businesses, and between consumers and businesses.
- Secure access. A highly visible issue, security affects a number of aspects of Internet commerce solutions. Businesses need secure commerce sites to allow controlled access for consumers, business trading partners, and administrators.
- Simpler, lower-cost business document processing, EDI-compatible. Businesses need to manage and improve structured communications with other businesses. But the shift to the Internet can't mean an end to EDI. Businesses need backward compatibility with traditional EDI to ensure continuation of business that affects the bottom line.
- Dynamic, promotional, searchable content management. Businesses that sell need to manage electronic catalogs that display product and service offerings to customers in a clear, compelling, searchable fashion. In a consumer environment, such content needs to be highly promotional, supporting price and product promotions. Content must also support personalized service.
For businesses with complex offerings, customers need to make selections easily, sometimes configuring product options on the fly.
- Contextual transactions for online direct marketing. Consumer marketers need simple tools for embedding product information and order forms in any context.
- Standards-based solutions. Businesses need to make investments in open, standard platforms and protocols. This lowers risk and ensures maximum interoperability between various components of a complete system.
Microsoft is providing a comprehensive Internet commerce offering to meet the demanding needs of businesses creating commerce solutions. This includes the delivery of best-of-breed commerce products (components, tools, and APIs to enable extension), an open, secure-payment architecture, and complete solutions through partnerships with industry leaders.
Microsoft is currently delivering a server and tools commerce foundation based on Site Server, Enterprise Edition. Site Server runs on the Windows NT Server operating system, and extends Microsoft's Active Server platform—Internet Information Server, Microsoft Transaction Server, and the Component Object Model architecture. Site Server integrates with the Microsoft Internet Security Framework and Windows NT security to ensure support for secured access, authentication, and nonrepudiation. Microsoft's commerce foundation is secure, scalable, and reliable.
Figure 3. Microsoft Internet commerce products
To support secure and convenient Internet-based payment for consumers, Microsoft is currently delivering an open payment architecture based on Site Server and the Microsoft Wallet. The Wallet is available free on the Web and will be part of future releases of Microsoft Internet Explorer and Microsoft Windows. The Microsoft payment architecture enables exchange of products, information, and services for different forms of payment on the Internet. Microsoft will support standards, such as Secure Electronic Transaction (SET) and SSL, to ensure interoperability of secure payment systems between banks and financial institutions, businesses, and consumers.
The creation and ongoing management of Internet commerce sites involves the efforts of multiple participants and the combination of several software offerings for a complete solution. Microsoft is working together with leading software companies, banks and financial institutions, systems integrators, site developers, and hosting service providers to make it easier for customers to build and manage complete Internet commerce solutions.
Server and Tools Foundation for Commerce
Site Server, Enterprise Edition
Microsoft Site Server, Enterprise Edition is a comprehensive Web site environment for the enhancement, deployment and advanced management of commerce-enabled Web sites on Windows NT Server and Internet Information Server.
Site Server consists of tools and components to commerce-enable your site, deploy content reliably between staging and production environments, and manage and conduct data analysis of your site. Commerce Server, the follow-on release to Merchant Server 1.0, is a Site Server feature that provides horizontal commerce functionality.
Commerce Server provides the following key features:
- Server components for managing electronic catalogs, users, and orders.
- An Order Processing Pipeline feature to manage the order process workflow—more than 30 default components to allow price look-ups, product and price promotions, inventory look-up, and shipping and handling, among other functions.
- An Order Processing Pipeline API to enable the integration of software from independent companies, such as commercial tax calculation, enterprise requirements planning, accounting, payment, shipping modules and applications. More than 30 independent companies have delivered or are planning to deliver compatible components.
- Site creation and management tools, including the StoreBuilder Wizard, that enable easy, custom creation of commerce sites; these tools support remote creation and management for Hosting Service Providers.
- Buy Now, a new online selling technology that allows companies to embed product information and order forms in most any online context, such as online banner ads.
Figure 4 illustrates the functional elements of Commerce Server.
Figure 4. Microsoft Internet commerce functional components
Commerce Server components
In conjunction with Active Server Pages, Commerce Server components provide the run-time environment for the presentation and operation of commerce Web sites. Commerce Server components are ActiveX™ Server components that supply the basic set of services for access to product information, access to user information, and creation of an order form for presentation to and processing by the Order Processing Pipeline. In addition, there are Commerce Server components for traffic collection, message management, and site debugging. The Commerce Server components allow developers to significantly shorten development time of sophisticated commerce sites.
Order Processing Pipeline
The Order Processing Pipeline (OPP) components are key to any commerce site. They allow businesses to enforce rules that direct the processing of orders through a specified sequence of stages and procedures. The OPP is a comprehensive data structure consisting of COM components that manage 14 stages of order processing.
Figure 5. Order Processing Pipeline
Pipeline components included with Site Server are optional and can be integrated with existing systems or replaced with components supplied by independent software companies that are created to work with OPP interfaces. The interfaces of the Order Processing Pipeline are described in the Commerce Server Software Development Kit (SDK). The Order Processing Pipeline, by enforcing rules for a specified processing sequence, ensures component interoperability; this lets customers create a multitude of custom solutions with off-the-shelf add-ons.
Tools and starter sites
Commerce Server tools in Site Server makes it easier to build and maintain online sites that use Commerce Server components and the Order Processing Pipeline. These tools (Store Foundation Wizard, StoreBuilder Wizard, Commerce Host Administrator, and the Pipeline Editor) integrate with other site-creation and management tools such as Microsoft FrontPage® Web authoring and management tool, Microsoft Visual InterDev™ Web development system, Microsoft Internet Information Server Service Manager, and Microsoft SQL Server™ Enterprise Manager. These combined tools make it simpler for site developers to create and manage site virtual directories, site structure, database schema, and the Order Processing Pipeline configuration.
Starter sites, Active Server Pages templates delivered with Site Server, demonstrate the capabilities of the product to serve the needs of different businesses. Starter sites are used as a tool for learning how to implement certain types of functionality in a commerce site. Future releases of Site Server will support new starter sites to enable quick development of additional applications such as corporate purchasing, supply-chain trading, and distribution of digital goods and services.
- Buy Now. Buy Now enables consumers to make quick purchases from any site on the Internet. When the shopper clicks an online banner ad, product name, or any other link, Buy Now opens a window within any browser window to facilitate purchasing. The user is left in the context of the current site or page to complete the purchasing process. Buy Now is integrated with the Microsoft Wallet on the client side and with the Site Server Commerce Server database and Order Processing Pipeline on the server side.
Businesses can include links that initiate Buy Now from within their Commerce Server–based store or catalog (for featured products, for example) or from sites or Web pages other than their own.
- Microsoft Wallet. Site Server integrates with and uses the Microsoft Wallet. By providing this support out of the box, users of Site Server can process transactions that are submitted by users of the Microsoft Wallet.
Site Server for business-to-business commerce
In order to meet the needs of businesses looking to lower the cost of creation of business-to-business commerce sites, Microsoft continues to invest heavily in developing enhanced business-to-business functionality. Future enhancements include:
- Corporate Purchasing and Supply-Chain Trading Starter Sites, to support rapid creation of solutions.
- Business Document Pipeline for managing the communication of structured business documents, such as ANSI x.12 transaction sets, between companies.
- Integration of business-to-business payment modules such as Electronic Funds Transfer (EFT) solutions, together with independent software companies, allowing businesses to execute payments through the Internet.
- Enhanced Enterprise Resource Planning (ERP) integration for tying in online commerce with existing ERP systems.
- Configuration and advanced search support for management of complex electronic catalogs as well as support for dedicated configuration management solutions from independent companies.
Business Document Pipeline
The Business Document Pipeline (BDP) is a workflow system similar in concept to the Order Processing Pipeline but designed to simplify the integration of structured business document communication into Internet commerce sites. The Business Document Pipeline is schema and transport independent. This gives developers of commerce sites a choice in the use of message formats (EDI or similar), and transports (S/MIME, Distributed Component Object Model [DCOM], EDI, or similar). BDP will support document translation, including a plug-in interface for independent company EDI translation software; data encryption for transmission over the Internet; document authentication via digital signatures; and transport independence to allow sending and receiving of documents over the Internet, VANs, or other networks.
The Business Document Pipeline, business-to-business starter sites, improved facilities for managing complex electronic catalogs, and simpler ERP integration will combine to form a powerful business-to-business commerce platform. Most important of all, businesses will develop sites more quickly and at less expense.
Microsoft Windows NT Server and Active Server
Internet Information Server and Active Server Pages
Microsoft Internet Information Server (IIS) is the only Web server integrated with the Microsoft Windows NT server operating system, providing a powerful platform for Web-based line of business applications. By optimizing around the Windows NT Server platform, IIS delivers high performance, excellent security, ease of management, and is up and running in minutes.
With IIS 3.0, Microsoft introduced Active Server Pages (ASP), an open, compile-free scripting environment in which you can combine HTML, scripts and server components to create dynamic HTML and to enable powerful Web-based business solutions. ASP supports virtually any scripting or component language, and provides the easiest way for Web developers to create powerful, dynamic Web sites on Windows NT Server.
Site Server runs on top of IIS and extends ASP. The starter sites that ship with Commerce Server are a collection of ASPs that call into commerce specific ActiveX server components.
Microsoft Internet Security Framework and Windows NT security
The Microsoft Internet Security Framework (MISF) is a comprehensive set of cross-platform, interoperable security technologies that support Internet security standards. Developers and Webmasters can use this set of technologies for a variety of applications, including secure communications, Internet commerce, and controlled access to information or resources. MISF technologies support existing Internet security standards. Applications using MISF technologies will be able to interoperate with other standards-based software. Microsoft is also actively participating in standards bodies to ensure continued interoperability.
MISF technologies implemented to date include: Authenticode™ technology, CryptoAPI 1.0 and CryptoAPI 2.0, support for client authentication, support for SSL 3.0, and Private Communication Technology–secure (PCT-secure) channel protocols. MISF technologies will soon include a certificate server and Personal Information Exchange (PFX) 1.0 protocol. Support will also be incorporated for Transport Layer Security (TLS), the follow-on specification of SSL, currently near final specification by the Internet Engineering Task Force (IETF).
Microsoft Windows NT Server offers excellent security services for account management and enterprise-wide network authentication. Large organizations need flexibility to delegate account administration and manage complex domains. Internet security concerns are driving the development of public, key security technology that must be integrated with Windows NT security. To meet these expanding needs, Microsoft is developing the Distributed Security Services Technology preview; a related article, "Microsoft Windows NT Distributed Security Services," (MSDN™ Library, PDC 97 Conference Papers) examines the components of the Windows NT Server Distributed Services Technology preview and provides details on its implementation.
For user authentication, Commerce Server integrates security mechanisms provided within Windows NT security and MISF:
- Windows NT Challenge/Response
- HTTP basic authentication
- Personal certificates
Commerce Server limits browser-based access to store management pages to users with Windows NT accounts that have been defined as administrators or store managers. In addition, Commerce Server has the capability of requiring account authentication for access to the store's file system, for users of the Windows NT file system (NTFS). It is recommended that customers use the Secure Sockets Layer support in IIS for the security of transactions between the client and the server.
Microsoft Transaction Server
Microsoft Transaction Server is designed to simplify the development of infrastructure needed to execute business logic. It provides services that make it easy for developers to handle security, directory, process and thread management, and database connection management. In addition, Microsoft Transaction Server provides a transaction monitor that enables transactional integrity across business components. Future versions of Site Server, Enterprise Edition will take advantage of Microsoft Transaction Server to enable transactional integrity as part of the Order Processing Pipeline.
Marble is the code name for commerce extensions for banks and financial institutions that need to create Web sites for the purpose of supporting financial transactions. Marble will enable financial institutions to execute and complete banking and brokerage transactions in a more secure manner through the support of Open Financial Exchange (OFX), a financial transaction protocol backed by Microsoft, Intuit, and CheckFree. Although the initial release of Marble is available separately, it is fully compatible with—and relies on—BackOffice and Site Server, Enterprise Edition components.
Open Payment Architecture
Microsoft provides an open and extensible payment architecture on the client and server. For the server, the Site Server APIs, or Order Processing Pipeline APIs, enable commerce site payment integration. For the client, the Microsoft Wallet and Wallet Payment Modules architecture serve as the point of integration. Leading payment software companies around the world are supporting this architecture with a diverse set of payment methods.
Support for SET and SSL
Microsoft's payment architecture not only supports multiple payment methods but multiple secure payment protocols as well, including SET and SSL. SET, a standard driven by a number of leading industry companies including Visa and Mastercard, is a powerful secure payment alternative. SET is a three-way protocol and manages the interfacing of consumer, merchant, and financial institution in one single message. A number of independent payment software companies are delivering SET payment solutions based on the Microsoft Wallet and Site Server API.
Microsoft Wallet Description
The Microsoft Wallet is a cross-server payment solution. It can be integrated into any commerce site, even sites that are not based on Site Server. The Microsoft Wallet is available as an ActiveX control for Internet Explorer users and as a Netscape plug-in.
The Microsoft Wallet consists of the Payment Selector control and the Address Selector control. The Payment Selector control provides for the entry, secure storage, and use of various types of payment methods for paying for online purchases. The Address Selector control provides for the entry, storage, and use of addresses that can be referenced for shipping and billing during online order entry. The Payment Selector control also provides a programmatic interface for Wallet Payment Modules, plug-in modules created by independent payment software companies. In addition to open credit card solutions, Payment Modules will be created to support digital cash, private-label credit cards, check payment, and other methods.
The creation and ongoing management of Internet commerce sites involves the efforts of multiple participants and the combination of several software offerings for a complete solution. Depending on the depth of any given solution, businesses may need to add order processing extensions, integrate with existing systems, and interface with payment systems and financial institutions. Microsoft's commerce partners enable customers to create custom solutions. They provide payment solutions, software extensions, hosting services, and integration and consulting expertise.
Payment solutions from independent software companies, banks, and financial institutions
Leading suppliers of payment software, credit processors, banks, and financial institutions from around the world are working with Microsoft to make it easy for customers to incorporate their payment solutions into the Microsoft Wallet and Site Server.
Payment and security technology companies
- CyberCash, Inc.
- First Virtual Holdings Inc.
- GCTech, Inc.
- GO Software, Inc.
- GTE CyberTrust
- IC Verify
- GlobeSet, Inc. (formerly Interval, Inc.)
- Merchant Technical Services
- Paylinx Corp.
- RSA Data Security, Inc.
- Tellan Software, Inc.
- Trintech, Inc.
- VeriFone, Inc.
- VeriSign, Inc.
Banks and financial institutions
- American Express
- Bank America Merchant Services
- Barnett Bank
- Cardservice International, Inc.
- First Data Corporation
- MasterCard International
- Old Kent Merchant Services
- Royal Bank of Canada
- SSB—Società per i Servizi Bancari
- Sumitomo Credit Service
- Unified Merchant Services, A FDC/Nations BankVenture
- Visa International
- Wells Fargo
Secure Electronic Transaction (SET) will enable consumers, businesses, and banks and financial institutions to conduct secure, reliable transactions over the Internet. We're glad to be working with an industry leader such as Microsoft to help establish SET as a true, interoperable standard worldwide.
—Steve Herz, Senior Vice President, Electronic Commerce, Visa International
We are delighted to see Microsoft, a major Internet player, commit to SET—the standard that secures credit card transactions over the Internet for consumers, merchants and banks. MasterCard has worked with Microsoft, Visa, IBM and others to make SET a reality. Microsoft's formal entrance into the market should ensure that consumers get full-strength SET capabilities on their computers sooner rather than later.
—Steve Mott, Senior Vice President, Electronic Commerce/New Ventures MasterCard International
The development and hosting of sites, that include integrated payment options, must become a mass production phenomenon for consumer Internet commerce to become mainstream; Microsoft's efforts, with capabilities like the new StoreBuilder Wizard, are clearly a major step in the right direction.
—Debra Rossi, Senior Vice President, Wells Fargo
VeriSign and Microsoft have a history of working closely to make certificate acquisition seamless to the user and payment certificates are a natural extension of our current efforts. By providing a commerce platform that supports open, secure payment, Microsoft is helping to establish infrastructure to make Internet commerce a reality.
—Stratton Sclavos, President and CEO, VeriSign Inc.
VeriFone, a world leader in retail payment solutions, is working with Microsoft to offer customers secure, reliable, Internet payment solutions based on the Secure Electronic Transaction (SET) protocol. The Microsoft Wallet, along with the SET-compliant payment modules VeriFone and Microsoft are collaborating on, will help us ensure widespread distribution of consumer software that works with our merchant payment and financial institution gateway systems.
—Hatim Tjabi, CEO, VeriFone, Inc.
Trintech offers a comprehensive Internet payment software solution that supports the full end-to-end Secure Electronic Transaction protocol established by Visa/MasterCard. Working with Microsoft, we will be able to offer consumers, merchants and financial institutions a complete Internet commerce solution that includes the security of SET for their payment transactions.
—John McGuire, CEO, Trintech, Inc.
RSA, the supplier of a leading SET enabling toolkit, supports Microsoft's open payment efforts. Microsoft's support of the SET initiative will add tremendous momentum to the payment industry's efforts to drive SET as a true interoperable payment standard. We are pleased to be offering the world's most widely used security technology as part of this payment infrastructure.
—Jim Bidzos, President, RSA Data Security, Inc.
GC Tech recognizes the need for consumer wallets to be deployed at the platform level and we strongly support Microsoft's efforts towards the development of a standard wallet interface. We plan to integrate our GlobeID Payment Module with the Microsoft Wallet to heighten consumer convenience and confidence in Internet commerce.
—Fabrice de Comarmond, Executive Vice President, GC Tech, Inc.
First Data Corporation, a leading global processor of credit cards, is working with Microsoft to offer Internet commerce solutions to merchant customers of some of the world's leading banks. First Data provides services to approximately 1.8 million merchant outlets and 1,400 financial institutions—and through our partnership with Microsoft we can provide these clients with industry-leading, high-impact Internet selling solutions that work.
—Allen Weinberg, Senior Vice President, First Data Corp.
Microsoft's open payment architecture will help us integrate our payment services—including CyberCoin and PayNow, the leading digital cash and Internet check alternatives, and SET—transparently with Internet Explorer and Microsoft Windows software. This will clearly be a significant step towards the adoption of innovative payment services by consumers and merchants.
—Denis Yaro, Executive Vice-President, Products and Operations, CyberCash Inc.
Microsoft's efforts in business-to-business commerce are naturally complementary to those of American Express. Customers will benefit from a complete solution including Microsoft's offering of tools and components beneath the commerce site, and Amex's back-end systems for payment processing, tracking, and reporting.
—Ed Gilligan, President, American Express Corporate Services
Internet commerce software extensions to Site Server
A number of companies are planning to offer product and service enhancements to Site Server allowing customers to obtain nearly customized solutions right out of the box.
- The Baan Company
- Belarc, Inc.
- Calico Technology
- CyberSource Corp.
- Dydacomp Development Corp.
- Elekom Corp.
- EveNTs Software Products, Inc.
- Great Plains Software, Inc.
- Harbinger Corp.
- Interactive Coupon Network
- Navision Software
- Net VR
- PeopleSoft, Inc.
- Portland Software, Inc.
- Release Software Corp
- SAP AG
- SAQQARA Systems, Inc.
- Sterling Commerce, Inc.
- TanData Corp.
- TAXWARE International, Inc.
- Technologies For Growth, International
- TSI International Software
- Vertex, Inc.
Sterling Commerce is working with Microsoft to help define the future of Electronic Commerce and EDI—a future that includes expanding integration of EDI compatible business messaging into Internet commerce applications.
—Brad Sharp, President, Interchange Software Group, Sterling Commerce, Inc.
Microsoft continues to be a leader in the delivery of horizontal online commerce functionality. SAP is working closely with Microsoft to simplify integration between Site Server, Enterprise Edition and R/3 for business-to-business and business-to-consumer commerce sites. Our goal is to make integration of leading online commerce technology with R/3 systems a near out-of-box experience for customers.
—Dr. Peter Zencke, Executive Board Member, SAP AG
Portland Software is integrating its ZipLock™ digital product distribution technology with Site Server, Enterprise Edition, to give Internet commerce customers an easy way to enable highly secure, automated electronic software distribution (ESD). Microsoft is providing Portland a commerce platform upon which to deliver this solution to the broadest possible audience.
—Charles Jennings, President, Portland Software, Inc.
The LitleNet DirectCommerce network provides a unique, integrated suite of services that remove the merchant's burden of building their own electronic commerce infrastructure. LitleNet offers secure Internet payment solutions together with order processing services for companies that need a just-in-time distributed fulfillment of both physical and digital goods. With integration in Site Server, Enterprise Edition, we can offer companies a true end-to-end turnkey commerce package.
—Tom Litle, President, LitleNet, LLC
To meet the growing demand for effective corporate purchasing solutions, we've been developing state-of-the-art technology for an Internet-based system. One of our biggest development challenges is the business-to-business supplier solution. Microsoft's underlying horizontal Internet commerce infrastructure allows Intelisys to integrate our business-to-business supplier solutions quickly and efficiently. Thanks to Site Server, Enterprise Edition, we can spend more time focusing on value-added Intranet applications development—our core competency.
—Robert Barnes, Vice President of Product Development and Marketing,
Intelisys Electronic Commerce, LLC
Hosting services, systems integration, vertical solutions, and site-development services supporting Microsoft Internet Commerce
A rapidly growing number of expert developers, integrators, consultants, and hosting service providers (HSPs) are at the disposal of customers around the world. They not only deploy Internet commerce sites, but also manage the successful operation of 24-hours-a-day, seven-days-a-week online businesses.
In addition to hundreds of Microsoft Solution Providers worldwide, the following companies offer hosting, integration, and consulting services around Site Server, Enterprise Edition:
- BBN Planet
- Deloitte & Touche LLP
- Digital Equipment Corporation
- UUNET Technologies, Inc.
Web hosting is the future of Internet commerce. It provides high-performance, no hassle access to Internet commerce tools at an economical price. With Microsoft Windows NT Server and Site Server, Enterprise Edition, Web hosting can extend the Internet commerce capabilities of both small and large Web sites. Site Server, Enterprise Edition specifically addresses many of the commerce needs of UUNET's customers.
—Dave Foster, VP and General Manager, UUNET
As a leader in the industry, more businesses are looking to MCI in helping them move their Web sites beyond glorified billboards. Microsoft's Internet commerce products will allow more businesses to reap the benefits from 'Internet enabling' current business processes and applications like retailing, ordering, and transaction processing.
—John Scarborough, Director, Internet MCI Marketing
Microsoft's Internet commerce offering—including Site Server, Enterprise Edition—brings significant value to the market. We believe the extensibility, flexibility, and cost-effective scalability of Site Server, Enterprise Edition and [Windows] NT Server will be beneficial to many of our clients that require electronic commerce solutions.
—Robin Palmer, Partner, KPMG
Microsoft's Internet commerce offering will change the shape of the hosting business by helping to dramatically lower the cost of entry. We're offering customers a complete, robust turnkey dedicated hosting environment based on Windows NT Server and Site Server, Enterprise Edition.
—Earl Galleher, President, Web Site Management Group, Digex, Incorporated
Microsoft Internet Commerce Strategy Solutions
Microsoft's Internet Commerce Strategy meets the demanding needs of businesses creating commerce solutions. The following table provides a summary of solutions to critical requirements identified above.
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Customers adopting Microsoft Internet commerce solutions
Microsoft's Internet Commerce Strategy addresses the fundamental needs of companies that want to build business-to-business commerce solutions. You need a solid and comprehensive commerce environment that supports structured business transactions, flexible order processing, electronic catalog management, and integration with existing systems.
—Roger King, Vice President, Sales and Marketing, Software Spectrum
A number of industry-leading businesses around the world have adopted Microsoft Internet commerce products, including Merchant Server 1.0. Many more companies are evaluating beta versions of Site Server, Enterprise Edition.
Among hundreds of businesses worldwide that have adopted Microsoft Internet commerce products are the following:
- British Telecommunications PLC (BT)
- Club Dial
- Dell Computer
- Digital Equipment Corp.
- Eddie Bauer
- Galeries Lafayette
- Gateway 2000
- Kraft Jacobs Suchard
- Lauda Air
- Motley Fool
- Nautica International
- Software Spectrum
- Tower Records
- Unisys Corp.
There are a number of examples of Internet commerce taking place today. Scenarios that are becoming more common include online retail stores or catalogs, online business wholesaling, physical goods stores and catalogs, digital goods sites, services, and Web malls. Below are three scenarios that typify what will become common scenarios over the next several years for businesses around the world:
- Internet-based corporate purchasing
- Internet-based supply-chain trading
- Internet-based direct marketing with contextual transactions
Scenario 1: MS Market—A Corporate Purchasing Virtual Enterprise
Corporate purchasing is the procurement of "indirect" materials for use by company employees, materials that are not used in the manufacturing or production process. Corporate purchasing is typically executed today with paper forms and purchasing managers.
At Microsoft, a tool called MS Market is being implemented on top of Site Server, Enterprise Edition. MS Market allows any employee to visit a centrally managed Web "supplies mall." This virtual mall contains Web sites featuring Boise Cascade office supplies, Barnes & Noble books, a catering vendor, a computer and peripherals vendor, and so on. To obtain a new book about management techniques, an employee links to the MS Market home page. MS Market knows who she is and where she is located by her logon ID. The employee selects the books link and brings up a categorized catalog and order form where she can search for hundreds of books pre-selected by Microsoft purchasing agents who have negotiated the titles and prices with Barnes & Noble. The employee selects the right book and places it on her order form. She then completes the purchase, verifying her group's cost center and her manager's name. When she submits the order, MS Market generates an order tracking number for her reference, sends notification via e-mail to her manager that contains a Web shortcut to the order (should the manager wish to see more details about the purchase), and sends the order electronically to Barnes & Noble for fulfillment. In this case, since the purchase total is only $20.00, the manager's specific approval is not required. Two days later, the book arrives at the employee's office.
Figure 6. MS Market: employees buy from outside vendors.
Components and Functions of the MS Market System
- Web browser. Microsoft employees typically use Microsoft Internet Explorer, though any SSL-capable browser is sufficient.
- Purchasing server (Site Server, Enterprise Edition). The purchasing server resides inside Microsoft's firewall and serves a number of functions:
- Personalization: manages user information and facilities for creating group-specific logon forms.
- Authorization/notification: integrates with the Microsoft Exchange e-mail system supporting approval and notification.
- Order form: manages orders and serves as aserver-side receptacle for multiple order items.
- Purchasing requisition generator: creates purchase orders in Microsoft formats.
- Supplies mall: hosts internal presentation of available supply vendors.
- ERP interface: integrates with Microsoft's SAP R/3 system for tracking purchases and expenses.
- Supplying vendor server (Site Server, Enterprise Edition). The vendor server can reside either outside of Microsoft's firewall or on site at the supplier's site. The vendor server provides several functions:
- Catalog management: provides display, promotion, and management of potentially complex product offerings.
- Personalization: creates custom pages on a per company, per group/division, or even per individual basis.
- Business document communication: depending on invoicing relationship with specific supplier, may generate structured invoice messages (ANSI X.12 and UN/EDIFACT format EDI messages, or native Business Document Pipeline format).
Benefits to Microsoft and Suppliers
- MS Market is a virtual enterprise between Microsoft and select vendors that leads to increased efficiency in business transactions.
- Corporate purchasing is a process where a high percentage of overall procurement transactions occur encompassing a relatively low percentage of overall business expenditures. In other words, a lot of management overhead takes place in manually executed corporate purchasing—automating this reduces costs and headcount needed to support a paper-driven system.
- MS Market enables Microsoft to serve its employees in the most efficient way possible, leading to higher productivity among employees. It's more efficient and puts information directly at employees' fingertips. For example, a single tracking number allows all parties to check status of the order.
- The centralized, high-volume relationship with suppliers allows for economy of scale.
- MS Market allows the Finance department to track expenses with high accuracy reports.
Scenario 2: ByteComp, Inc. Order Entry System—A Supply Chain Virtual Enterprise
Supply-chain trading refers to the sale of "direct" product that is either raw material used in the manufacturing process of the demanding business or goods to be distributed by the demanding business. Supply-chain purchasing is typically executed today by phone, fax, or mail between most companies. Many large "hub" companies operate EDI systems. These systems are usually inaccessible to small and medium-sized businesses that cannot afford to maintain full-time EDI staff.
In the following fictitious scenario, a manufacturer of hundreds of office supply products, called "ByteComp, Inc.," employs a supply-chain trading system over the Internet. The system, ByteComp, Inc. Order Entry System, allows ByteComp, Inc. resellers who don't support EDI today to execute forecasts, distributed requisition planning, and orders using the Web.
A ByteComp, Inc. product reseller submits sales forecast data as part of the current order cycle to ByteComp, Inc. over the Internet. This data is then factored into a distributed requisition plan by ByteComp, Inc. The reseller buying agent accesses the ByteComp, Inc. Order Entry System over the Internet, using Windows NT Server authentication to access the site. The buying agent then reviews an order form based on an order template that was created from the distributed requisition plan. The order is submitted to ByteComp, Inc., who then generates an invoice and forwards this to the reseller. The office supplies shipment is then shipped from ByteComp, Inc.'s distribution center to the reseller location.
Figure 7. ByteCom, Inc. Order-Entry System: ByteComp partners are ordering from ByteComp across the Internet.
Components and Functions of the ByteComp, Inc. Order Entry System
- Web browser. Used by reseller to access Order Entry System, requires SSL.
- Supplying vendor server (Site Server, Enterprise Edition). Resides inside ByteComp, Inc.'s firewall to handle a number of functions:
- Catalog management: provides display, promotion, and management of an extensive product offering; provides prices based on ByteComp, Inc.'s pricing discount structure.
- Order form: manages the display of order forms based on distributed requisition plans.
- Data validation: validates that data submitted in the order form is correct, preventing problems later that might affect customer service.
- Purchasing requisition generator: creates purchase orders.
- Business document communication: depending on invoicing relationship with specific reseller, may generate structured invoice messages (ANSI X.12 and UN/EDIFACT format EDI messages, or native Business Document Pipeline format).
- Pre-ship and customs notification: forms can be generated and transmitted to shipping partners and customs agents.
Benefits to ByteComp, Inc. and Resellers
The ByteComp, Inc. Order Entry System, like MS Market, is a virtual enterprise between different companies, in this case between ByteComp, Inc. and select resellers. It provides several key advantages.
- Allows ByteComp, Inc. to extend the benefits of automated supply chain trading to a greater number of small and medium-sized trading partners.
- Improves customer service for resellers and customers of resellers.
- Provides more efficient forecasting for ByteComp, Inc. manufacturing.
- Decreases errors in order processing.
Scenario 3: 1-800-FLOWERS Mother's Day Campaign—Internet Direct Marketing
Direct marketing on the Web is nascent. Marketers have used the Web successfully to date as a survey tool. But direct marketing designed to capitalize on spontaneous purchase based on personal interest is just now becoming possible.
Two weeks before Mother's day, a frequent Web user is online and reading his favorite online magazine. Suddenly, he sees an ad from 1-800-FLOWERS, "Click and Order Now for Mother's Day. Get 10% off an already unbeatable price for a dozen premium roses." The consumer decides to take up the offer and clicks on the ad banner. To his delight, he doesn't leave the original online magazine site. A dialog box pops up that displays the roses, provides a description, tax, shipping and handling information, and includes a 10% discount. Using the Microsoft Wallet, the consumer chooses his mother's address—already entered in his Wallet—and selects his favorite frequent flier Visa card. He types a gift message into the gift message field and finishes with a quick click on the submit button. The whole process of purchasing the roses took 90 seconds from start to finish. The consumer is left to finish reading his article. Minutes later he receives e-mail confirmation from 1-800-FLOWERS for his order.
Components and functions of a Buy Now scenario
- Web browser. Any SSL supporting browser.
- MS Wallet. Manages the consumers' addresses and payment methods.
- Buy Now client software. A small client component.
- Site Server, Enterprise Edition. Used by direct marketer to manage the order processing for Buy Now transactions. Typically, Buy Now will be used by merchants who also run Site Server–based commerce sites.
Benefits of Buy Now
Buy Now allows online marketers to capitalize on spontaneous purchases by consumers based on personal interest. Consumers enjoy the benefits of executing quick, convenient transactions without leaving the context they are currently engaged in.
Dramatic opportunities exist today on the Internet for forward-thinking businesses.
Businesses have an opportunity to form virtual enterprises, incorporating close working relationships with other business trading partners. Virtual enterprises will take shape around multiple applications such as corporate purchasing and supply chain trading. The formation of virtual enterprises will separate businesses that compete well from those that don't.
Businesses can take advantage of a growing Internet channel for marketing directly to consumers. The Internet allows businesses to develop closer relationships with consumers. As consumers participate increasingly in online communities on the Internet, businesses will be able to reap the benefits of contextual transactions, merging commerce and community into a unified consumer experience.
The Microsoft Internet Commerce Strategy provides a commerce platform upon which businesses can take advantage of these opportunities. Microsoft's commerce platform is open, scalable, reliable, and based on standard protocols. This commerce platform provides low cost server, tools, and payment components along with a burgeoning set of interoperable solutions available from independent companies. The result is lower cost of secure deployment and ongoing management—a strong foundation for doing business on the Internet.
The information contained in this document represents the current view of Microsoft Corporation on the issues discussed as of the date of publication. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information presented after the date of publication.
This document is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS DOCUMENT.