The effects of the Internet on business

The whole topic of the Internet and the World Wide Web is developed in subsequent chapters. However, at this point it is important to acknowledge the massive changes that the Internet has brought about in businesses and in the way that business is car-ried out. The proliferation of computing power through business and home users has provided many more opportunities for interchange of information and for business trans-actions to be carried out. Using the five forces model introduced earlier it is clear that competitive advantage can be gained through the successful development of a com-pany website. Relations with suppliers (often referred to as business-to-business or B2B) can be greatly enhanced. Similarly, new opportunities for reducing the costs of goods and services to customers are introduced (reflected in the business-to-customer or B2C relationship).

The technology of the Internet can also be applied within the confines of an organ-ization. An intranet of locally devised and accessed pages distributed over the com-pany’s own local area network can improve information sharing and communications within the organization. All these topics are dealt with in more detail in following chapters.

Summary

The last decade has witnessed a dramatic increase in the extent of use of distributed systems. Distributed computing may be defined as occurring when hardware located at two or more geographically distinct sites is connected electronically by telecommun-ications so that processing/data storage may occur at more than one location. The network may involve many organizations or the connection of several remote sites within one organization. These wide area networks use transmission services provided by licensed third parties known as common carriers.

The benefits of distributed systems include increased user satisfaction and autonomy – users do not need to rely on a remote computer centre for the satisfaction of their needs. Telecommunications costs are lower, as local processing will not involve expens-ive remote links. Distributed computing also allows for flexible systems development in that computing power can be expanded incrementally to meet demand. Although there are substantial advantages, an organization needs to be aware that unbridled tribution may lead to problems of standard setting and loss of control. If data is dis-tributed then duplication of data may lead to inconsistency.

Although technological features will be operative in determining the extent of the use of distributed systems, it is important to remember that other features are also significant. In particular, the corporate culture and location of decision making need to be compatible with distribution, which, by its nature, involves devolution of resources and power. The type of activities undertaken by the organization must also be considered – distribution is more likely to be recommended the less dependent com-puterized activities are on each other.

There are several ways in which data may be treated in a distributed system. These range from electronic downloading of copies of data to various sites, to the develop-ment of a fully distributed database system with minimal duplication of data.

Although there are still problems in distributing data, advances in software and telecommunications make this an increasingly attractive option for organizations.

In order to understand issues related to the implementation of distributed comput-ing and the influence of networks, a basic understandcomput-ing of technical issues is required.

Transmission of data will be achieved through digital or analogue signalling, will involve parallel/serial and synchronous/asynchronous transmission, and may involve the use of high-bandwidth techniques and multiplexing. Media used are likely to be twisted-pair or coaxial cable, although, increasingly, fibre optics is being employed.

Transmission through the public network has traditionally required the leasing of special lines or the use of the public switched telephone network. Packet-switched net-works and integrated services digital network transmission systems are also now in oper-ation. These latter provide faster, more reliable services suitable for the transmission of large quantities of data and enabling the integrated transmission of image, data, voice and text.

Local links are usually via local area networks. These optimize the use of scarce resources. They are compatible with the implementation of a client–server approach in the satisfaction of user needs. Local area networks usually exhibit tree, bus or ring structures. They are used to provide commonly shared program and data files, printer services, communications with the corporate mainframe or the public networks, electronic mail, calendaring, and other facilities. Different topologies have different approaches to contention handling.

One of the major factors inhibiting the progress of networks and distributed com-puting is the difficulty in agreeing standards. The reasons for this largely reside in the variety of products and the commercial structure of the supplier market. Early attempts to set standards include SNA from IBM. Currently, an important influence on standard setting is the Open Systems Interconnection reference model for standards.

This identifies seven layers as requiring standards for full distributed cooperation.

Electronic data interchange (EDI) is one area where developments in telecommun-ications and networking are having an impact beyond that of merely passing messages between computer systems. EDI is understood as the exchange of formatted data cap-able of immediate computer processing. Various benefits derive from EDI, including cost

saving and speedy processing of transactions. In particular, though, EDI affects the nature of the trading relationships between organizations in a sector and, by way of influen-cing the supply chain, can considerably enhance the competitive advantage of a company.

Review questions

1. What important features need to be taken into account when considering introducing a distributed system?

2. What costs and benefits can an organization expect from using a distributed system for its information provision?

3. What benefits are likely to be gained by an organization if it uses a local area network to connect its separate computing devices?

4. Under what circumstances would it be desirable to distribute data and under what cir-cumstances would it be desirable to centralize it?

5. What are the advantages and disadvantages of using a leased line compared with the public circuit-switched telecommunications network? Under what circumstances would it be recommended?

6. How do packet-switched networks differ from circuit-switched networks?

7. Explain the difference between frequency modulation and amplitude modulation.

Exercises

1. The same features that led to the advent of distributed computing and wide area networks between sites operated a decade later to provide the need for local area networks. Discuss.

2. What is meant by saying that the structure for a distributed system mirrors the organiza-tional structure it is required to serve – and why should it?

3. Why has it been so difficult to obtain agreements on standards for interconnecting devices through networks?

4. What is EDI?

5. How can the effects of EDI be analysed within the terms of Porter’s competitive advant-age and competitive strategy approach?

6. Consider a large organization with which you are familiar (e.g. your college, your employer organization, your bank).

(a) To what extent does the distributed structure of its information systems mirror its organizational structure?

(b)How important have organizational characteristics such as corporate culture been in determining the extent of distribution?

7. ABC Co. is a medium-sized company manufacturing and installing office furniture.

Manufacturing and installation are located in seven sites spread throughout the UK.

Each site also runs its own sales team, which promotes and sells ABC office furniture by providing a concept design service for organizations wishing to refurbish their offices.

 Currently, all computerized information provision and transaction processing is by way of ABC’s mainframe computer located in London. Local sites possess terminals connected to the mainframe by public telecommunications. Local site managers are arguing for more autonomy in responding to the needs of local customers. They claim that the central computer services, for which they are charged internally, provide poor and non-targeted information. As a group, individual site managers have put a case for abandoning the company’s central mainframe system – which is due for review with respect to significant upgrading – and replacing this with local minicomputers that would communicate, if necessary, through the public carrier system. All functions appertaining to the local sites would be processed locally. Advise the managing director on this issue.

8. A large regional college is extending its network and IT infrastructure to support all its academic and administrative functions. Currently, the network infrastructure is used for internal personnel, payroll, accounting, student registration, administrative and financial functions. Academically, it is used by students following computing and engineering courses.

It is the long-term intention of the college to ensure that all staff have a PC connected into the college network and that all students have IT skills training, especially in the use of word-processing and spreadsheet packages. Laboratories are gradually being upgraded under the direction of the computer centre. For some years, the Computer Science and Engineering Departments have been unhappy with much of the service provided by the computer centre. These departments have already implemented their own laboratories of desktop computers separately, cabled and networked for students on their courses.

Staff in these departments have also been networked using a physically separate cabling system, as the respective department heads believe that with computing students there is a danger that their knowledge will allow them unauthorized access to staff data traffic.

The college principal is concerned that there is an absence of strategic planning and con-trol and is unhappy about the current situation. Advise the college principal on a course of action.