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94 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
INTERNET AND OTHER TECHNOLOGIES
Internet
Internet is the short form of International Network. It is an
interconnection of numerous computers from
various parts of the world. Though it has a very short history
almost 40% of the world population makes uses
of the benefits of Internet. No other mode of communication has
in fact attracted man as fast as Internet.
The History of Internet
The Internet grew out of funding by the U.S. Advanced Research
Projects (ARPA), later renamed as
Defense Research Projects Agency (DARPA), to develop a
communication system among government
and academic computer- research laboratories. The first network
component, ARPANET, became
operational in October 1969. With only 15 nongovernmental
(university) sites included in ARPANET,
the US National Science Foundation decided to fund the
construction and initial maintenance cost of a
supplementary network, the Computer science Network (CSNET).
Objectives of ARPANET:
The network should continue to work even if one or many of the
computers or connections
in the network fail.
The network should be usable in different hardware/ software
platforms.
The network had to automatically re-route the traffic around non
functioning paths of
network.
The network has to be a network of networks and not network of
computers.
In 1990, Tim burners- Lee and others at CERN (European
organization for nuclear research) developed
a protocol based on hyper text to make information distribution
easier. In 1991 this protocol enabled
the creation of the World Wide Web and its system links among
user- created pages. A team of
programmers at the US national center for supercomputing
applications, Urbana, Illinois developed a
program called a browser that made it easier to use the WWW, and
a spin-off company named
Netscape Communications Corp. was founded to commercialize that
technology.
Netscape was an enormous success. The web grew exponentially,
doubling the number of users and
the number of sites every few months. URL became part of daily
life and use of Email became common
place. Increasingly, business took advantage of the Internet and
adopted new forms of buying and
selling in CYBERSPACE (Science fiction Author William Gibson
popularized this term in the early
1980s). With Netscape so successful, Microsoft and other firms
developed alternative web browsers.
Originally created as a closed network for researchers, the
Internet was suddenly a new public medium
for information. It became the home of virtual shopping malls,
bookstores, stock brokers, newspapers
and entertainment.
It soon became apparent that new software was necessary to take
advantage of the opportunities
created by the Internet. Sun Microsystems, maker of powerful
desktop computers known as
workstations, invented a new object oriented programming
language called JAVA. Meeting the design
needs of embedded and networked devices, this new language was
aimed at making it possible to
build applications that could be stored in different locations
and moved to run in a single device.
JAVA is one of the more effective ways to develop software for
smart cards, plastic debit cards with
embedded computer chips that could store and transfer electronic
funds in place of cash.
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95 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
IP addresses
Since computer processes numbers more efficiently and quickly
than characters each machine directly
connected to the Internet is given an IP address.
An IP address is a 32- bit address comprised of four 8 bit
numbers (28) separated by periods. Each of
the four numbers has a value between 0 and 255.
Example of an IP address: http://134.68.140.1/
IP addresses Vs URL
While numeric IP addresses work very well for computers, most
humans find it difficult to remember
long patterns of numbers.
Instead, humans identify computers using UNIFORM RESOURCE
LOCATOR a.k.a Web Addresses.
When a human types a URL into a browser, the request is sent to
a DOMAIN NAME SERVER (DNS)
which then translates the URL to an IP address understood by
computers.
The DNS acts like a phone book.
Anatomy of a URL
http:// www. cs. Iupui. Edu/ index. Html
Protocol machine name sub-sub domain sub domain domain name file
name
How TCP/ IP work?
1. TCP breaks data into small pieces of number bigger than 1500
characters each. These pieces are
called packets.
2. Each packet is inserted into different IP Envelopes. Each
contains the address of the intended
recipient and has the exact same header as all other
envelopes.
10101101010
10010101010
10101010101
1010101
1010101 1010101
1100110
1
1100001
0101010
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134.68.140.247 134.68.140.247 134.68.140.247
3. A router receives the packets and then determines the most
efficient way to send the packets to the
recipient. After travelling along a series of routers, the
packets arrive at their destination.
4. Upon arrival at their destination, TCP checks the data for
corruption against the header included in each
packet.
If TCP finds a bad packet, it sends a request that packet be
retransmitted.
Types of Internet servers
1. File Server: It manages requests from clients for files
stored on the servers local disk. A central file
server permits groups and users to share and access data in
multiple ways. Central file servers are
backed up regularly and administrators may implement disk space
quotas for each user or group of
users.
2. Mail Server: Mail server is the most efficient way to receive
and store electronic mail messages for a
community of users. A central mail server runs 24 hours a day.
It provides a global mail directory for all
community and school users as well as e-mail gateway and relay
services for all other mail servers in
the district.
3. Domain Name Service (DNS) server: It is an internet wide
distributed database system that
documents and distributes network-specific information.
4. Gopher server: Gopher is an internet application that uses
multiple gopher servers to locate images,
applications and files stored on various servers on the
internet. Gopher offers menu choices to prompt
users for information that interests them, and then establishes
the necessary network connections to
obtain the resource.
5. Web server: A web server serves static content to a web
browser by loading a file from a disk and
serving it across the network to the users web browser. Web
browsers present information to the
user in hypertext format.
6. File Transfer Protocol (FTP) server: It is an internet wide
standard for distribution of files from one
computer to another. The two most common ways to transfer files
are with anonymous FTP, where
anyone can retrieve files from or place files on a specific site
and log file transfers, where an individual
must login into the FTP server with an ID and Password.
7. New server: This server acts as a distribution and delivery
source for thousands of public news groups
currently accessible over the USENET news network. USENET is a
worldwide bulletin board system that
can be accessed through the internet or many online services.
USENET contains more than 1400
1010101
0101010
1
10101010
1010101
10101010
1010101
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forums which is called newsgroup that cover every imaginable
interest group. This is used by millions
of people around the globe daily.
8. Chat server: It enables a large number of internet users to
exchange information in an environment
similar to internet newsgroups that offer real- time discussion
capabilities. Real time means occurring
immediately. Operating system that respond to input immediately
are real-time operating systems.
Most general purpose operating systems are not real- time
because they take few seconds or even
minutes to react.
9. Caching server: A caching server sits between the client
computer and the server that would normally
fulfill a clients request. Once the clients request is sent, it
is intercepted by the caching server. The
caching server maintains a library of information requested from
internet in recent past by users on
the network. If the same is desired again by any user, it is
provided from the caching server rather than
going to internet again. In this way, the overall traffic to and
from the internet is reduced.
10. Proxy server: A proxy server is designed to restrict access
to information on the internet. It operates on
a list of specific forbidden sites, while other proxy software
examines the content of a page before it is
served to the requester. If certain keywords are found in the
requested page, access to it is denied by
the proxy server.
World Wide Web (WWW)
WWW is a global hypertext system, which uses the Internet as its
transport mechanism. It can be defined as
collection of all the web pages all over the globe. It is a
component of the internet that provides access to large
amount of information and many services available on the
internet.
WWW is a hyper text system, which means that a web page contains
hyper links which allows the user to
navigate by clicking the hyperlinks, which displays another
document containing another hyperlink. The web
document or web page which is a text document contains links to
other web pages, graphic, audio files and
other Internet services. These web pages are created using
Hypertext Markup Language (HTML).
Internet surfing refers to hopping from one computer to another
computer for search of information. A server
on the internet provides information, specializing on a topic or
subject, which is required by users. User may be
looking for such information and for that he goes to many
servers until the desired information is reached.
WWW links the computers on the internet, like a spider web
facilitating users to go from one computer to
another directly. This search from one computer to another is
called surfing or internet surfing.
Tools available to protect information in network against
intrusion / misuse
1. Firewall :
Firewalls are system which control the flow of traffic between
the Internet and the firms
internal LANs and systems.
They are packaged as turnkey hardware/ software packages and are
set up to enforce the
specified security policies that are desired.
A firewall is a person and effect means of protecting the firms
internal resources from
unwanted intrusion.
2. Encryption: Encryption allows information to transmit to the
internet while being protected from
interpretation by eavesdroppers. The two approaches to
encryption are:-
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a. Hardware encryption devices: If the internet is being used to
exchange information among branch
offices for instance, use of hardware encryption can ensure that
all traffic between these offices is
secure.
b. Software Encryption devices: It is employed in conjunction
with specific application. For example,
certain electronic mail packages provide the facility of
encryption and decryption for message
security.
3. Message authentication:
a. Message authentication ensures that message is really from
whom it purports to be and
that it has not been tampered with.
b. Clearly defined internet security policies and procedures
should always be part of any
corporate internet security strategy.
4. Site Blocking:
a. Site blocking is a software based approach which prohibits
access to certain websites that are
deemed inappropriate by management.
In addition to blocking sites, companies can also log activities
and determine the amount of time spent on the
internet and identifies the sites visited.
Internet and Intranet
Basis Internet Intranet
Reach Internet is a global network of interconnected computer
networks formed by various educational, commercial, governmental,
and non- profit and military organizations.
Intranet is a network of computers within an organization. It
facilitates communication within the organization, among widely
spread departments, divisions and regional locations.
Ownership These networks are individually owned and operated
that are all interconnected.
Networks owned by organizations of companies.
Databases There are thousands of databases containing
information of all sorts in addition to facilities like e-mail,
chatting, games, message boards and free software.
There are only few databases and that too only for business use
and applications.
Browsers used Access to information on internet can be through
various browsers like Netscape navigator, Internet explorers,
etc.
Access to information on the Intranet can be through only one or
same browser.
Users Internet used for business, educational, governmental,
military, personal purposes.
Intranet used only for business purposes, like supplier
management, inventory distribution and channel management.
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Extranet: An extranet is an extension of an Intranet that makes
the later accessible to outside companies or
individuals with or without an intranet. It is also defined as
collaborative made available to customers, or
business partners or specific applications. The Extranet is thus
an extended Intranet, which isolates business
communication from the Internet through secure solution.
Extranet provides the privacy and security of an
Intranet while retaining the global reach of the Internet. An
Extranet extends the Intranet from one location to
another across the Internet by securing data flows using
cryptography and authorization procedures, to
another Intranet of a business partner.
Groupware
It is the name given to software used in a group DSS, in which
several people jointly solve a problem. Such
internet service vendors as Netware and such Groupware vendors
as IBM/ Lotus are adding features to their
products that are aimed at using the Net for collaborative
problem solving.
Types of Internet Connection
1. Analog (up to 56k): Also called dial-up access, it is both
economical and slow. Using a modem connected to
your PC, users connect to the Internet when the computer dials a
phone number (which is provided by your ISP) and connects to the
network.
Dial-up is an analog connection because data is sent over an
analog, public telephone network. The modem converts received
analog data to digital and vice versa. Because dial-up access uses
normal telephone lines the quality of the connection is not always
good and data rates are limited.
Typical Dial-up connection speeds range from 2400 bps to 56
Kbps. 2. ISDN:
Integrated services digital network (ISDN) is an international
communications standard for sending voice, video, and data over
digital telephone lines or normal telephone wires.
Typical ISDN speeds range from 64 Kbps to 128 Kbps.
3. B-ISDN: Broadband ISDN is similar in function to ISDN but it
transfers data over fiber optic
telephone lines, not normal telephone wires.
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SONET is the physical transport backbone of B-ISDN. Broadband
ISDN has not been widely implemented.
4. DSL: DSL is also called an always on connection because it
uses existing 2-wire copper
telephone line connected to the premise and will not tie up your
phone as a dial-up connection does.
There is no need to dial-in to your ISP as DSL is always on. The
two main categories of DSL for home subscribers are called ADSL and
SDSL.
5. ADSL: ADSL is the most commonly deployed types of DSL in
North America. Short for
asymmetric digital subscriber line ADSL supports data rates of
from 1.5 to 9 Mbps when receiving data (known as the downstream
rate) and from 16 to 640 Kbps when sending data (known as the
upstream rate).
ADSL requires a special ADSL modem. 6. ADSL+2:
ADSL+2A is an extension to ADSL broadband technology that
provides subscribers with significantly faster download speeds when
compared to traditional ADSL connections.
ADSL+2 works in the same fashion as ADSL a special filter is
installed on a subscriber's telephone line to split existing copper
telephone lines (POTS) between regular telephone (voice) and
ADSL+2.
ADSL2+ service is most commonly offered in highly-populated
metropolitan areas and subscribers must be in close geographical
locations to the provider's central office to receive ADSL2+
service.
7. SDSL: SDSL is still more common in Europe. Short for
symmetric digital subscriber line, a
technology that allows more data to be sent over existing copper
telephone lines (POTS).
SDSL supports data rates up to 3 Mbps. SDSL works by sending
digital pulses in the high-frequency area of telephone wires and
cannot operate simultaneously with voice connections over the same
wires. SDSL requires a special SDSL modem.
SDSL is called symmetric because it supports the same data rates
for upstream and downstream traffic.
8. VDSL: Very High DSL (VDSL) is a DSL technology that offers
fast data rates over relatively
short distances the shorter the distance, the faster the
connection rate. All types of DSL technologies are collectively
referred to as xDSL. xDSL connection speeds range from 128 Kbps to
8 Mbps.
9. Cable: Through the use of a cable modem you can have a
broadband Internet connection that
is designed to operate over cable TV lines. Cable Internet works
by using TV channel space for data transmission, with certain
channels used for downstream transmission, and other channels
for upstream transmission. Because the coaxial cable used by cable
TV provides much greater bandwidth than telephone lines, a cable
modem can be used to achieve extremely fast access.
Cable speeds range from 512 Kbps to 20 Mbps.
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10. Wireless Internet Connections: Wireless Internet or wireless
broadband is one of the newest Internet connection
types. Instead of using telephone or cable networks for your
Internet connection, you use radio frequency bands.
Wireless Internet provides an always-on connection which can be
accessed from anywhere as long as you geographically within a
network coverage area.
Wireless access is still considered to be relatively new, and it
may be difficult to find a wireless service provider in some areas.
It is typically more expensive and mainly available in metropolitan
areas.
11. T-1 Lines: T-1 lines are a popular leased line option for
businesses connecting to the Internet and
for Internet Service Providers (ISPs) connecting to the Internet
backbone. It is a dedicated phone connection supporting data rates
of 1.544Mbps.
A T-1 line actually consists of 24 individual channels, each of
which supports 64Kbits per second. Each 64Kbit/second channel can
be configured to carry voice or data traffic.
Most telephone companies allow you to buy just one or some of
these individual channels. This is known as as fractional T-1
access.
12. Bonded T-1: A bonded T-1 is two or more T-1 lines that have
been joined (bonded) together to
increase bandwidth. Where a single T-1 provides approximately
1.5Mbps, two bonded T1s provide 3Mbps
or 46 channels for voice or data. Two bonded T-1s allow you to
use the full bandwidth of 3Mbps where two individual T-1s can still
only use a maximum of 1.5Mbps at one time.
To be bonded the T-1 must run into the same router at the end,
meaning they must run to the same ISP.
T-1 Lines support speeds of 1.544 Mbps Fractional T-1 speeds are
64 Kbps per channel (up to 1.544 Mbps), depending on
number of leased channels. Typical Bonded T-1 (two bonded T-1
lines) speed is around 3 Mbps.
13. T-3 Lines: T-3 lines are dedicated phone connections
supporting data rates of about 43 to 45
Mbps. It too is a popular leased line option. A T-3 line
actually consists of 672 individual channels, each of which
supports 64 Kbps T-3 lines are used mainly by Internet Service
Providers (ISPs) connecting to the Internet
backbone and for the backbone itself. Typical T-3 supports
speeds ranging from 43 to 45 Mbps.
14. OC3: Short for Optical Carrier, level 3 it is used to
specify the speed of fiber optic networks
conforming to the SONET standard. OC3 is typically used as a
fiber optic backbone for large networks with large voice,
data, video, and traffic needs. Speeds are 155.52 Mbps, or
roughly the speed of 100 T1 lines.
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15. Satellite: Internet over Satellite (IoS) allows a user to
access the Internet via a satellite that
orbits the earth. A satellite is placed at a static point above
the earth's surface, in a fixed position.
Because of the enormous distances signals must travel from the
earth up to the satellite and back again, IoS is slightly slower
than high-speed terrestrial connections over copper or fiber optic
cables.
Typical Internet over Satellite connection speeds (standard IP
services) average around 492 up to 512 Kbps.
Uses of Internet
1. Online interactive communication- It is the major facilitator
for any business. Business needs a lot of
interaction internally among their executives and externally
with business associates. When many
persons have to contribute to discussions. This is normally
achieved by arranging meetings and
conferences for which people travel from different locations to
meet at one place. This many to many
communications can be handled on the internet quite effectively
without any difficulty. At pre-defined
timing those have to communicate together can be online through
internet and have electronic
conferences.
2. Bulletin board- Through internet, many discussions can be
done through a forum where people post
messages for each other and respond to them periodically. This
is similar to having a bulletin board on
everyone posts messages.
3. Storehouse of information- It is a storehouse of information
and is able to cater to a very wide range of
information needs. Through databases information can be made
accessible to other users on the
internet. Users only have to search for information sites,
qualify and retrieve useful information.
4. Information about products & services- Business can set
up their own websites or home pages which
will facilitate information on their products and services
available to others (e.g. their clients).When
the potential clients and others visit the site or the home
pages they will have the option to send E-
mail immediately indicating their interests or queries.
i. A common location for information is an assembled manner on
business and services.
ii. Information access at reasonable costs.
iii. Feedback mechanism for users.
iv. Information delivery costs internally and externally
reduced.
v. Employees access to significant information enhanced.
vi. An efficient means of updating and discriminating current
information to customers and
internal staffs is provided.
vii. Customized information to consumers is delivered.
E-Commerce
E-Commerce refers to the use of Internet for business to-
business and business-to-customer transactions. It
is the process of doing business electronically. It automates
business-to-business and business-to-consumer
transactions through reliable and secure connections.
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103 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
E-Commerce is a composition of technologies, processes and
business strategies that foster the instant
exchange of information within and between organizations. It is
application of various technologies of
communication to provide the automated exchange of business
information with internal and external
customers, suppliers and financial institutions.
Reasons for Internets dramatic impact on the scope of E-Commerce
are:-
1. Universality Business to-Business interactions are possible
using internet. Any business can interact
with any other business.
2. Reach- Internet has global reach i.e. to cities and towns
throughout the modern and developing world.
3. Performance- the Internet provides its users with a high-
function window to the world, in addition to
handling every day networking tasks such as electronic mail,
visual images, audio clips, video clips and
other large electronic objects.
4. Reliability- Internet technology is highly robust, reliable
and secure way of communication.
5. Cost- Internet costs are lower than other alternative
electronic networking technologies.
6. Momentum- Millions of people are already connected to the
internet and business of it is increasing at
a dramatic rate.
Working of E-Commerce
Following is a step by step online transaction processing in an
e-commerce environment:
1. Order placed: Customer places order through secure connection
on website, or merchant manually
keys in transactions.
2. Authorization request: Payment gateway receives the
transaction through the secure internet
connection, encrypts it, and submits an authorization to the
credit card issuing bank.
3. Authorization response: Credit card issuing bank either
approves or declines the request and sends a
response back through the payment gateway to the website.
4. Order fulfilled: Once approved the merchant processes and
ships the customers order.
5. Settlement request: The payment gateway sends a settlement
request to the merchant account
provider each day that transactions are processed
6. Settlement deposited: The merchant account provider deposits
the amount for each settlement into
the merchants bank account. Usually takes 24- 48 hours.
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Benefits of E-Commerce
1. Reduced costs: Due to increased competition between suppliers
who compete in an electronically
open market place, the costs to buyers have reduced. Even
suppliers can electronically access on-line
databases of bid opportunities, on-line abilities to submit
bids, and on-line review of rewards, thereby
reducing their costs.
2. Reduced time for business transactions: There is a reduction
in time to complete a business
transaction, particularly from delivery to payment.
3. New Markets: It creates new markets through the ability to
easily and cheaply reach the potential
customers.
4. Errors and Overhead costs: Reduced errors, time and overhead
costs in information processing by
eliminating requirements for re-entering data.
5. Entry to New markets: There is an easier entry to new markets
especially geographically remote
markets, for companies of all sizes and locations.
6. Inventory control: There is reduced inventories and reduction
of risk of obsolete inventories as the
demand for goods are electronically linked through just-in-time
inventory and integrated
manufacturing techniques, hence providing better control over
inventory.
7. Overhead costs: Reduction in overhead costs through uniform
automation and large scale integration
of management process. There is also a reduction in advertising
costs.
8. Delivery, Design and Manufacturing costs: Reduction in
delivery cost especially of goods that can be
electronically delivered and also a reduction in design and
manufacturing costs.
9. Global Programs: Companies are able to undertake major global
programs in which the cost and
personnel needed to manage a non-automated system would be
unreasonable or prohibitive.
10. Access: Use of public network- based infrastructure can
level the playing field for both small and large
companies. This allows companies of all sizes to extend their
reaction to a broad customer sector.
The benefits of corporate wide implementation of E-Commerce are
many but with benefits also come
risks. Therefore, the companies should not leap blindly into
E-commerce, but rather first develop an E-
Commerce strategy and then organize a corporate wide team to
implement such strategy to gain the
best of results.
Types of E-Commerce
There are four general classes of e-commerce applications:
a. Business to-Business (B2B): Short for business-to-business,
the exchange of services,
information and/or products from one business to another, as
opposed to between a
business and a consumer
b. Business to-Consumer (B2C): Short for business-to-consumer,
the exchange of services,
information and/or products from a business to a consumer, as
opposed to between one
business and another
c. Consumer-to-Business (C2B): Consumer directly contact with
business vendors by posting
their project work with set budget online so that the needy
companies review it and
contact the customer directly with bid. The consumer reviews all
the bids and selects the
company for further processing. Some examples are guru.com,
freelancer.com
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105 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
d. Consumer- to- consumer ( C2C): It is an internet facilitated
form of commerce that has
existed for the span of history in the form of barter, flea
markets, swap meets, yard sales
and the like. Most of the highly successful C2C examples using
the internet take advantage
of some type of corporate intermediary and thus are not strictly
good examples of C2C.
B2b - Intel selling micro processors to Dell
- Heinz selling ketchup to Mc Donalds
B2C - Dell selling me a laptop
- Mc Donalds selling me a Big Mac
C2C - Mary buying an iPod from Tom on eBay
- Me selling a car to my neighbor
C2B - Me selling my old school books to a second hand book
shop
Different types of payment systems in E-Commerce
There can be various electronic payment systems proposed or
already in practice for E-commerce. But they
can be grouped into three categories, based on what information
is being transferred on- line:
1. Trusted third party payments- This third party maintains all
sensitive information (such as bank
account and credit card numbers) for its clients, which include
both buyers and sellers. When there is a
transaction, order information is transmitted along with
information about payment confirmation and
clearing, all of which do not include sensitive information. In
effect, no real financial transaction is
done on- line e.g., first virtual.
2. Fund transfer It is an extension of notational fund transfer.
In credit card or cheque transactions,
sensitive information is exchanged online. Hence, the
information is encrypted because consumers are
familiar with this system and current payers have vested
interest in extending that system to the
internet. Cyber cash and VISA/ Master cards SET- based
transactions are examples of this system.
3. Digital cash, Electronic money, etc- This system includes
variation of digital cash, electronic payment,
coins, etc. What distinguishes these systems from other two is
not simply the animity they afford, but
the fact that what is being transferred is value or money
itself. With second type, someone can
commit fraud by lifting the message (e.g. credit card number) by
running up the charge on the users
account. With digital currency, intercepting a message is an
outright theft of users property, not just
information.
Supply Chain Management
In words of council of Supply Chain Management Professionals
(CSCMP) , supply chain
management (SCM) encompasses the planning and management of all
activities involved in
sourcing and procurement, conversion and all logistics
management activities.
It includes coordination and collaboration with channel
partners, which can be suppliers,
intermediaries, customers, etc.
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106 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
Thus SCM is a process of planning, implementing and controlling
the operations of supply chain
with a purpose to satisfy the needs of customers.
It integrates supply and demand management within and across
companies and spans all
movements and storage of raw material, work in progress
inventory and finished goods from point
of entry to point of consumption.
SCM addresses the following problems:
1. Information: It integrates systems and processes through the
supply chain to share valuable
information which includes demand, forecast, inventory, etc.
2. Inventory: It deals with the problem relating to inventory
management such as quantity and location
of raw material, work in progress and finished goods.
3. Distribution of network configuration: It includes problem
relating to number and location of suppliers,
production facilities, distribution centers, customers, etc.
4. Distribution Strategy: It address the various problems
relating to distribution strategy such as whether
the distribution system should be centralized or decentralized,
pull or push strategy, third party
logistics, cross docking or direct shipment.
Bull whip effect in SCM
Meaning: The Bullwhip Effect or Whiplash Effect is an observed
phenomenon in forecast driven distribution channels. Forecasting
demand: a. Customer demand is very unstable. So, organisation must
forecast demand in order to arrange for inventory and other
resources. b. Forecasts are based on statistics, and they are
rarely perfectly accurate. So, Companies generally maintain
additional inventory called safety stock. Safety stock: c. Moving
up the supply chain from end consumer to raw materials supplier,
each supply chain participant has greater observed variation in
demand and thus greater is the need for safety stock. d. During the
periods of rising demand, down-stream participants will increase
their orders. e. During the periods of falling demand, orders will
fall or stop in order to reduce inventory. f. Due to this the
variations in demand are further amplified. Forecast driven Vs.
demand driven supply chain: Supply chain experts have recognized
that the Bullwhip Effect is a problem in forecast driven supply
chains. g. The alternative is to establish a demand driven supply
chain which reacts to customer orders.
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h. The result is near-perfect visibility of customer demand and
inventory movement throughout the supply chain. i. Better
information leads to better inventory positioning and lower costs
throughout the supply chain. j. Barriers to implement a demand
driven supply chain include - investments in information technology
and creating a corporate culture of flexibility and focus on
customer demand. Factors contributing to the Bullwhip Effect: a.
Forecast Errors b. Lead Time Variability c. Batch Ordering d. Price
Fluctuations e. Product Promotions f. Inflated Orders g. Methods
intended to reduce uncertainty, variability, and lead time: h.
Vendor Managed Inventory (VMI) i. Just In Time replenishment (JIT)
j. Strategic partnership (SP)
Bluetooth Technology
1. Bluetooth is an industrial specification that describes how
mobile phones, computers and personal
digital assistants (PDAs) can be easily interconnected using
short- range wireless connection.
2. Bluetooth provides a way to connect and change information
between devices like mobile phones,
laptops, PCs, printers, digital cameras and video game consoles
over a secure, globally unlicensed short
range radio frequency.
3. Bluetooth specifications are developed and licensed by the
Bluetooth special interest group.
4. Bluetooth is based on low cost trans- receiver microchips in
each device.
5. It is a radio standard and communications protocol primarily
designed for low power consumption,
with a short range.
6. Bluetooth enables the devices to communicate with each other
when they are in range.
7. These devices use a radio communications system so that they
do not have to be in line of sight of
each other and even be in other rooms, so long as the received
transmission is powerful enough.
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Electronic Data Interchange (EDI)
Definition: The term EDI has many definitions. American National
Standards Institute (ANS) has defined it as: Electronic Data
Interchange is the transmission, in a standard syntax, of
unambiguous information of business or strategic significance
between computers of independent organizations. The users of EDI do
not have to change their internal database. However, users must
translate this information to or from their own computer system
formats, but this translation software has to be prepared only one
EDI refers to the electronic exchange of business documents and
paper like invoices; bills purchase orders,
shipping notices, etc.
It is a three- step process:
1. Data from the application is translated into a standard
format.
2. It is transmitted over communication lines to the trading
partner.
3. At last, it is re- translated by the trading partys
applications.
The process works in reverse when the trading party wishes to
send the EDI transactions.
The three components of EDI are:-
1. Communication To function the EDI, one should have a
communication software, translation
software and access to standards. Communication software moves
data from one point to another and
flag the start and end of the document. Translation software
helps the user to build a map and shows
him how the data fields from his application corresponds to the
elements of EDI standards. It also
converts data back and forth between the application format and
the EDI format.
2. Mapping- To build a map the user first selects the EDI
standard for the kind of data he wants to
transmit. Usually the trading party tells about the kind of
standards to be used. Next, he edits out parts
of the standards which do not apply to his application. Next, he
imports a file that defines the fields in
his application and finally he makes the map to show where the
data required by the EDI standards is
located in his application. Once the map is built, the
translator will refer to it during EDI processing
every time a transaction of that type is sent or received.
3. Profile- The last step is to write a party profile that tells
the system where to send each transaction and
how to handle errors or exceptions. Whereas, the user needs a
unique map for every kind of
document to be exchanged with a party, he should only have to
define party information once.
For example, let us see how EDI works in a retail
environment
The retailer will initiate the process with an electronic
transmission of an electronic Purchase
Order (850). The supplier will receive the order, case it and
print UCC-128 labels. Then,
the order is packed and the UCC-128 labels are placed on the
cartons. The cartons are then
shipped to the retailer and the supplier electronically
transmits an Advanced Ship Notice
(856). After the shipment has been sent, the supplier transmits
an electronic Invoice (810) for
the goods. These electronic documents are sent in a standard
Electronic Data Interchange
(EDI) format.
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Advantages offered by EDI are enumerated below: -
1. Purchase orders: Most purchasing transactions are routine and
therefore they can be handled
automatically. Use of EDI for processing purchase orders frees
the operating staff that can be utilized
for more demanding and less routine tasks.
2. Increased sales: EDI ensures easy and efficient processing of
quotations, estimates, and order entry
and invoicing, which ensures that information is available
immediately. This facilitates faster sales
processing and increased sales order.
3. Faster Payments: Since invoices received electronically are
reconciled automatically, they are
earmarked for payment sooner. This in- turn strengthens the
position of the purchase department to
negotiate for better terms including faster payments.
4. Minimize locked up capital: For manufacturing organizations
with a just- in- time strategy, the right
balance is crucial but every organization stands to benefit from
reducing order lead times. There is also
a reduction in capital locked up in inventories.
5. Paperless office: Since letters and memos are handled by an
electronic mail system, and do not follow
rigid rules for formatting, they are easier to handle and the
organization can progress towards
paperless office.
6. Decreased Inquiries: Direct online inquiries on product
availability or other such non- sensitive
information can be handled quickly and efficiently by the
EDI.
7. Better business relationship: Data arrives much faster and
there is an automatic acknowledgement.
There is also strict discipline among users that facilitates
data transmission and enables more informed
decision- making. This finally improves the relation between the
trading partners.
Customer Relationship Management (CRM)
CRM is a corporate level strategy which focuses on creating and
maintaining good relationships for a long
period with its customers. There are software packages available
to support CRM strategy. Changes should
be made in the organizations at all levels including policies
and procedures. The CRM process needs to be
integrated end to end across the marketing, sales and customer
services. A good CRM program needs to:
1. Identify customer success factors
2. Create a customer based culture
3. Adapt customer based measures
4. Develop an end to end process to serve customers
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110 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
5. Recommend what questions to ask to help a customer solve a
problem
6. Recommend what to tell a customer with a complaint about
purchase.
7. Track all aspects of selling to customers and prospects as
well as customer support.
There are three parts of application architecture of CRM
1. Operational: Automation is provided to the basic business
processes like marketing, sales, services.
2. Analytical: Support to analyze customer behavior, implements
business intelligence alike technology.
3. Collaborative: Ensures the contact with customers like phone,
Email, Fax, web, SMS, post, in person.
Purposes of CRM
CRM means managing all interactions and business with customers.
A CRM program will allow a business
to acquire customers, services to customers increase the value
of the customers to the company retain
good customers and determine which customers can be retained or
given a high level of service. It can
improve customer service by facilitating communication in
several ways:
1. Provide product information, product use information and
technical assistance on web sites.
2. Identify how each individual thinks about the quality.
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3. Provide a fast mechanism for managing and scheduling follow
up sales.
4. Provide to track all points of contact between the customer
and the company.
5. Help to identify potential problems quickly before they
occur.
6. Provide a user friendly mechanism for registering customer
complaints.
7. Provide a fast mechanism for correcting service
deficiencies.
8. Use internet cookies to track customer interests and
personalize product offerings accordingly.
9. Use the internet to engage in collaborative customization or
real time customization.
10. Provide a fast mechanism for managing and scheduling
maintenance, repair and ongoing support
(improve efficiency and effectiveness)
11. The CRM can be integrated into other cross functional
systems and thereby provide accounting and
production information customers to customers when they need
it.
E- Mail
E-mail (electronic mail) on internet provides quick transfer of
messages, memos, and letters on computer
to other E-mail users worldwide. This is probably one of the
fastest and most convenient ways of
communication. At the present all internet subscribers in India
get the E-mail facility free with each
subscription. E-mail account can be accessed by the subscriber
from any part of the world. People use E-
mail because:
1. It is cheap: It is typically cheaper than faxing, postage,
long- distance telephone charges.
2. It is fast: Email messages are delivered within a few minutes
or even seconds.
3. Convenient to communicate: with E-Mail, people may write on
computer and then send the message
on its way with a few key strokes- no paper, no postage and no
problems.
4. It is confidential: for most practical purposes, email is
completely private and confidential.
Features of an E-mail:
1. Composing messages: Internet browser helps in composing
messages in an attractive way with the
help of various fonts.
2. Replying to the E-mail received: Reply facility on the
browser helps in replying to the mail received.
Same reply can be sent to all the recipients of the original
message.
3. Address book- this is an electronic form of address book
which contains the name, full name, e-mail
addresses, etc of the various persons.
4. Transfer of data files: An important use of the Email is the
ability to send/ receive data files from a
client.
5. Hard copy of message: It makes possible to keep hard copy of
any message. It facilitates the user to
read all the messages when the user is offline.
6. Storage: The message is stored in the auxiliary storage of
the receiving computer and a signal is
displayed on the screen of the receiving computer indicating the
receipt of the electronic mail. The
user then displays the message.
7. Notification: When message is displayed the communication
software notifies the sender that
message has been viewed.
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112 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
Voice messaging
Meaning: Voice messaging is similar to E- mail except that it is
an audio message that is processed.
Software: Computer should be equipped with the software to store
the audio messages in digital
form and then convert them back in an audio form upon retrieval
by the user.
Working of voice messages: A sender speaks into a telephone
rather than typing; giving the name
of the recipient and then message and that senders voice signal
is then digitized and stored. The
system can then either deliver the message at a specified time
in the future or it can be retrieved
from a database by the recipient. The message is reconverted
back into its analog format when it
is delivered or retrieved so that the recipient hears it as the
original senders voice on the
telephone.
Advantages:
Sender does not have to type.
Voice mail also makes it easy to include people in the firms
environment in a
communication network.
WiFi
Wifi means Wireless fidelity which describes the underlying
technology of wireless local area network based
on IEEE 802.11 specifications. WiFi is used for mobile computing
devices, Internet and VOIP phone access,
gaming applications, consumer electronics, public transports and
mobile commerce, etc.
Wi-Fi Certification
It means its safe to buy. The color coded standard Indicator
Icons (SII) on product packaging is the only
assurance that a product has met rigorous interoperability
testing requirements to ensure that compatible
products from different vendors work together.
Tele-conferencing
It is an electronic meeting of people who are at different
physical sites. Telecommunication technology system
allows meeting participants to interact with one another without
travelling to the same location.
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It enables people at remote to see and talk to each other and
share charts and other visual meeting materials,
without the need for time consuming and expensive travel. Three
different types of teleconferencing exist;
audio teleconferencing, video teleconferencing and computer
teleconferencing:-
1. Audio Teleconferencing It is the use of voice communication
equipment to establish an audio link
between geographically dispersed persons. The conference call
was the first form of audio
conferencing and is still in use.
2. Video Teleconferencing- It is the use of the television
equipment to link geographically dispersed
conference participants. The equipment provides both sound and
picture. Life audio conferencing,
Video conferencing also does not require a computer.
With video conferencing the participants can see each other and
also hear. There are three possible
video conferencing configurations:-
i. One way audio and Video
ii. One way Video and Two way audio
iii. Two way video and audio
3. Computer conferencing- Computer conferencing contemplates use
of a networked computer through
which participants with some same or similar interest exchange
information on any particular topic.
Computer conferencing can be called as a disciplined form of
email since both use the same hardware
and software. It can consist of large numbers of participants.
It differs from audio and video
conferencing because it can be used within a single geographical
site.
Multimedia
Multimedia is the combination of sound and image with text and
graphics. It is one of the most exciting
and appealing uses of computer today.
A computer with multimedia capabilities is composed of the
following components:
A PC with high capacity memory (at least 8 Mb) and a high
resolution monitor.
Compact Disk Read only memory (CD-ROM)
Built in sound card and speakers
Multimedia support software
Multimedia application software (usually recorded on the
CD-ROM)
Optionally: Micro phone and a Digital Video camera.
Multimedia applications allow the users to interact with the
system by text, high- resolution
graphics, motion video, animation and sound.
Multimedia is most commonly used in education, publication
music, movies, games, arts and other
entertainment. Multimedia is used in application development for
business involving:
a. Presentation
b. Directions and directories using touch screen to find
information about cities, company,
products, etc.
c. Tutorials, computer based training (CBT) and computer based
edition (CBE).
d. On-line references: Replacing manuals, product information
booklets, encyclopedia, etc.
e. Interactive publication; books, magazines, newspapers,
etc.
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Webcasting / Push Technology
Webcasting is a way of receiving broadcast information by the
users instead of searching the web
actively. Push technologies primarily relates to information
that is pushed to ones web page, as
opposed to ones computer getting the information from the
web.
This technology allows the users to choose from a menu of
sources, specifying what kind of
information they want to receive. Once selected, the information
is automatically forwarded to the
users. However, to use this service or technology requires
Webcasting software and an ISP that can
hose ones webcast server.
Push Technology differs from the traditional use of internet.
The internet, is for the most part a full
environment where a user open a browser application and searches
for information, this is time
consuming and frustrating. Push technology eliminates this
frustration.
An example of Push Technology is Internet news services, which
deliver the days activities to the
users desktop.
Electronic Fund Transfer (EFT)
EFT represents the way the business can receive direct deposits
of all payments from the financial
institution to the company bank account. Once the user signs-
up, money comes to him directly. It is fast,
safe and means that the money will be confirmed in users bank
account quicker than he had to wait for
the mail, deposit the cheque and wait for the funds to become
available. Following are some examples of
EFT systems in operation.
i. Automated Teller machines (ATMs): These machines are used
with a debit or EFT card and a code,
which is often called a personal identification number or
PIN.
ii. Point- of sale (POS) transactions: Some debit or EFT cards
(referred to as check card) can be used
when shopping, to allow the transfer of funds from the consumer
A/c to the merchants.
iii. Pre- authorized transfer: Under this method funds are
automatically deposited or withdrawn from
an individuals account, when the account holder authorizes the
bank or a third party to do so.
iv. Telephone transfers: Funds can be transferred from one
account to another from saving to
checking e.g. can order payments of specific bills by phone.
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115 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
Types of Electronic payments
Credit cards
In this transaction, the consumer presents preliminary proof of
his ability to pay by representing his credit card
number to the merchant. The merchant can verify this with
bankers and create a purchase slip for the
customers. The merchant then uses the purchase slip to collect
the amount from the bankers. Credit cards can
be handled in two ways-
1. Sending unencrypted credit card number over the internet.
2. Encrypting the credit card details before any transaction is
transmitted.
Manual Credit Card transaction: In a credit card transaction,
the consumer presents preliminary proof of his ability to pay by
presenting his credit card number to the merchant. The merchant
verifies this with the bank and creates a purchase slip which is
endorsed by the consumer. The merchant then uses this purchase slip
to collect funds form the bank, and On the next billing cycle, the
consumer receives a statement form the bank with a record of the
transaction. Credit card transaction through internet: a. The same
procedure is followed to make purchases over the internet. b. But
on the Internet, additional steps must be taken to provide more
security to the transactions and for authentication of both buyer
and seller. c. Variety of systems are developed for using credit
cards over the Internet. d. 2 main distinguishing features of these
systems are: the level of security they provide for transactions,
and the software required on both the customer and business sides
of the transaction. e. Credit cards can be handled on line in two
different ways: Sending unencrypted credit card numbers over the
Internet, Encrypting credit card details before any transaction is
transmitted. Unencrypted credit card information: A customer
browsing the web might enter a credit card number in an order form
and click a submit button to transmit the information to the
merchants web server. Since the data is raw, anyone can intercept
the transmission. So, there is no security for this type of
transaction. On the other hand an unscrupulous merchant (or someone
posing as a merchant) can use such unencrypted numbers for illegal
charges.
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Encrypting credit card details: Encrypting credit card
transactions can also be subdivided according to what is encrypted.
If the entire transmission between buyer and merchant is encrypted,
the merchant has to decrypt at least the order details to complete
the purchase. But sensitive information like credit card numbers
will be visible to merchant and he/his employees may misuse such
information. To protect against this, a trusted third party can be
used to separately handle credit card and order data with a wallet
as helper application. Such third party decrypts the credit card
information for authorization of the purchase. Transaction Using
Third Party Verification The market for handling credit card
purchases on the Internet is yet to develop as a single way of
doing things, or a single standard that allows the software from
different vendors to work together. Due to lack of interoperability
it is likely to slow down both consumer and business acceptance of
using credit cards for making purchases on the Internet. However,
there are 2 significant standards that will make the
interoperability of electronic wallet and credit card transactions
simpler, both for consumers and businesses.
Secured Electronic Transactions (SET)
SET is Secured Electronic Transaction Protocol developed by
consortium led by Master card and VISA.
SET is a combination of protocol designed for use by other
applications such as web and a standard for
handling credit card transactions over the internet. SET uses
digital certificates to ensure the identities of all
parties involved in a purchase. SET also encrypts credit card
and purchase information before transmission on
the internet.
Joint Electronic Transaction
The second standard is Joint Electronic Payments, led by World
Wide Web Consortium and Commerce Net. JEPI is an attempt to
standardize payment negotiations. On the buyers side, it serves as
an interface that enables a Web browser and wallets to use a
variety of payment protocols. On the merchants side, it acts
between the network and transport layers to pass off the incoming
transactions to the proper transport protocol (for e.g. e-mail vs.
HTTP) and proper payment protocol (such as SET) Multiple protocols
will be around for payment, transport and wallets. JEPI makes it
easier for the buyer to use a single application and a single
interface, in a variety of commercial situations.
Electronic Cheques
An electronic cheque has all the features as a paper cheque.
It acts as a message to the senders bank to transfer funds.
Like a paper cheque, the message is first given to the receiver
who, in turn, endorses the cheque and presents it to the bank to
obtain funds.
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The electronic cheque can prove to be superior to the paper
cheque in one significant aspect. The sender can protect himself
against fraud by encoding the account number with the banks public
key. Thus it is not necessary to reveal the account number to the
merchant.
Similar to SET protocol, digital certificates can be used to
authenticate the payer, the payers bank, and the bank account.
Credit card payments will undoubtedly be popular for commerce on
the Internet. However, following 2 systems have been developed to
use electronic cheques to pay Web merchants directly. 1. FSTC: The
FSTC is a consortium of banks and clearing houses that has designed
an electronic cheque. Designed in the lines of traditional paper
cheque, this new cheque is initiated electronically. It uses
digital signature for signing and endorsing. 2. Cyber Cash: This is
an extension of wallet for credit cards, and it can be used in the
same way to make payments with participating vendors. Cyber Cash
will not serve as an intermediate party for processing the cheque.
That function will be handled directly by banks. Extending
electronic checks to existing payment systems: Electronic cheque
can be delivered either by direct transmission over a network or by
e-mail. In either case, existing banking channels can clear
payments over their networks. This has lead to a convenient
integration of the existing banking infrastructure and the
Internet.
Smart cards
Smart cards are embedded microchip instead of magnetic strip.
This chip contains all the information
a magnetic strip contains but offers the possibility of
manipulating the data and executing the
applications on the card. There are three types of smart cards:
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Contact cards - Smart cards that need to insert into a reader in
order to work, such as a smart card reader or automatic teller
machines.
Contact les cards - Contactless smart cards dont need to be
inserted into a reader. Just waving them near a reader is just
sufficient for the card to exchange data. This type of cards is
used for opening doors.
Combi cards- Combi cards contain both technologies and allow a
wider range of applications.
Mobile commerce
It is about the explosion of applications and services. These
are becoming accessible from Internet enabled
mobile devices. This involves new technologies, services and
business models. M-Commerce is the buying and
selling of goods and services through wireless handheld devices
such as cellular telephones and personal
digital assistances. These are known as next generation e-
commerce. This is based on wireless application
protocol. Mobile devices are equipped with Web ready micro
browsers. Using blue tooth technology smart
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phones offer fax, email and phone capabilities all in one,
giving the way for M-Commerce applications. The
industries affected by M-Commerce include:
1. Financial services
2. Telecommunications
3. Service and retail industry
4. Informational services
IBM and other companies are experimenting with speech
recognition software as a way to ensure security
for M-commerce transactions.