Transcript 15 - 1 - Wiley

Information Technology:
Strategic Decision Making For
Managers
Henry C. Lucas Jr.
John Wiley & Sons, Inc
Dinesh Mirchandani
University of Missouri – St. Louis
Copyright 2004 John Wiley & Sons, Inc.
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Copyright 2004 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of
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from the use of the information herein.
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Chapter 15
The Third Component:
Powerful Networks
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The First Networks
• Used by businesses for
– electronic linking and communications
– electronic customer-supplier relationships
• Proprietary networks
• Electronic data interchange
• Until the advent of the Internet all data
networks were private
– The Internet provides an international network
that is available at low cost
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The Impact of Communications
Technology
• The telephone system is an example of a
large international network that has been
developed based on published standards
• Private networks
– EDI
– Proprietary data networks
• Private networks have greater security
than the Internet and can provide
guaranteed levels of service
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EDI
• Networks in which multiple parties agree to follow
a standard for exchanging data electronically
– National standard in the U.S. is ANSI X.12 and in Europe
is EDIFACT
• Most EDI takes place in batch mode
– E.g., orders are processed in a batch
• EDI networks can lower costs while increasing
accuracy and quality in purchasing goods
– Require expertise and resources
– Have no common telecommunications infrastructure
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The Virtual Private Network
• A company replaces leased lines with
interfaces to the Internet
• VPN communication equipment convert
user data to packets, encrypts the
packets, and send them to their desired
destination
– Secure
– To the user communications appear to be
traveling over a dedicated network
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Typology of a Network
• Internet Service Providers
• Backbone Service Providers
– Global fiber optic networks
• Metropolitan Area Exchange (MAE)
– Helps traffic from one backbone network get
onto another backbone network
• The Internet can create a revolution in the
telephone business
– Voice over IP
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An Example of a Global Backbone
Network
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A North American Backbone
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The Internet Transforms
Business and Commerce
• The Internet is a world wide connection of
networks
– Started in 1969 as the Arpanet
– Allows heterogeneous computers to connect using a
number of communication options
– Has grown steadily to nearly 200 million host computers
• Based on two core protocols
– TCP: Transmission control protocol
• Responsible for flow of packets and data accuracy
– IP: Internet protocol
• Responsible for getting packets from the sender to
the receiver in the shortest time
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The Internet
• Internet domain names identify the type of
organization
– Common suffixes
• edu: educational institutes
• com: a commercial firm
• gov: the government
• mil: the military
• The World Wide Web and graphical browsers
made the Internet easy to use
• The http protocol and client-server architecture
have enabled devices on the Internet to
communicate
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Internet Technologies
• Browsers and search engines help
navigate the Internet using uniform
resource locators (URLs)
• Interaction with the Web can be
– User initiative vs. push technology
• The Internet’s open, decentralized,
extendible architecture and open culture
encourages users and providers to
participate
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Intranets and Extranets
• Intranets are build on Internet protocols
but contain proprietary information
– Offers the potential to tie employees and
disparate information systems together
• Customers and others can also access the
company’s internal servers if given
permission to do so
– Such extranets use Internet technology to
provide online access to internal servers
– Utilizes the existing worldwide Internet
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A Variety of Ways to Access the
Internet
• Wireless (WiFi Networks)
– Based on IEEE 802.11x standards
• Cell phones, PDAs, and Refrigerators
• Other devices and applications
– Home security systems
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The Impact of the Internet
• Helped remove the constrain of time and space
on communications
• Leveled the playing field for small businesses
• Created new business models
• Established an open network infrastructure
• Enabled companies to dramatically reduce
transaction costs
• Provided the means for companies to more
closely integrate their supply chains
• Fostered information sharing among business
partners
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The Impact of the Internet
• Provided communication links encouraging
companies to outsource and create value
networks
• Encouraged the creation of alternative forms of
organizations such as the T-Form
• Created new businesses such as eBay as well as
network service providers
• Allowed businesses to open a new channel to
their customers
• Provided new convenience and service to
individuals
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The Impact of the Internet
• Created a virtual library of information on a host
of topics
• Widened the divide between industrialized and
developing countries
• Created a source of uncensored ideas that are
difficult for a government to control
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Summary
• Networks provide connectivity and help
transform the organization by connecting it to
its customers, suppliers, and alliance
partners
• The combination of computers, databases,
and networks enable new models for
business that offer many opportunities for
managers
• The Internet, EDI, Intranets, and Extranets have
added value to organizations
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