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Chapter 15

The Third Component:

Powerful Networks

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The First Networks

• Internet - inexpensive web site - gives a small firm a global presence - hundreds of millions of people can access

• Used by businesses for – electronic linking and communications– electronic customer-supplier relationships

• Proprietary networks• Electronic data interchange -

customers and suppliers - agree on standards for exchanging information

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The First Networks

• Until the advent of the Internet all data networks were private– The Internet provides an international network that is

available at low cost - information superhighway– Tie together people and organizations– Remove constraints of time and place– ‘netcentric’ - understands potential of networks and

incorporate them into structure and operations– Model of the future

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The Impact of Communications Technology

• Ubiquitous computing - method of enhancing computer use by making many computers available throughout the physical environment, but making them effectively invisible to the user.

• Transparency - uses different networks or resources without user knowledge

• 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

• Most EDI takes place in batch mode• EDI networks can lower costs while increasing

accuracy and quality in purchasing goods– Require expertise and resources - expensive– Have no common telecommunications infrastructure– Proprietary - no industry standard– Will eventually move to the internet

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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

• Huge, global 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

• 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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•Assign #8: Ch 10: - Discussion Questions, pg. 206-207: #1, 6, 9, 12, 14, 17, 19; •Assign #9: Ch 11: - Discussion Questions, pg. #1, 5, 6, 11, 12, 19, 24, 25.