Chat with us, powered by LiveChat Review the attached IBM Case Study 5.2: IBM is in a fight to keep up with big spending rivals in the cloud. > What do you see as the challenges for the Internet of Things (IoT) movem | Wridemy

Review the attached IBM Case Study 5.2: IBM is in a fight to keep up with big spending rivals in the cloud. > What do you see as the challenges for the Internet of Things (IoT) movem

Review the attached IBM Case Study 5.2: IBM is in a fight to keep up with big spending rivals in the cloud.

> What do you see as the challenges for the Internet of Things (IoT) movement?

> How has IBM attempted to address these issues?

> Make a unique recommendation to integrate Watson into another Business Information Systems (BIS).

Need 2-3 pages answering the questions with peer-reviewed sources. No intro or conclusion needed.


5 Networks, telecommunications

and the Internet


After reading this chapter, you will be able to:

■ specify which components of a communications system are necessary to exchange information within and between businesses;

■ explain the basic components and terminology of networks, including the Internet;

■ identify the benefits available through the introduction of computer networks;

■ identify the advantages and disadvantages of the client/server architecture in comparison with traditional approaches;

■ explain the broad implications of the Internet on the marketplace.


As organisations become increasingly dependent on networking technologies, managers need to be aware of the business benefi ts of deploying and updating networks and the risks if they are mismanaged. A basic grasp of the terminology is required for discussing networks with solution providers. From a managerial perspective, this chapter addresses the following questions:

■ What are the business benefits of networks?

■ What are the basic concepts and terminology associated with the Internet and other networks?

■ How does the Internet change marketplace structures?

■ How are network components selected?



■ Computer networks 178

■ Network components 181

■ Network types 190

■ The Internet 194

FOCUS ON . . .

■ How the Internet works – Internet standards 203

■ Mobile or wireless access devices 206

■ EDI 208

■ Voice over IP (VoIP) 210


5.1 Death of a matchmaker 199

5.2 Americans turning off TV and on to digital devices 208

5.3 Asian apps challenge western dominance 211

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Part 1 IntroductIon to BusIness InformatIon systems178

For the modern organisation to operate effectively, the links connecting its people and their computers are vital. The network links provide the channels for information to flow continuously between people working in different departments of an organisation, or in different organisations. This allows people to collaborate much more efficiently than before the advent of networks when information flow was irregular and unreliable. These links also allow hardware such as printers and faxes to be shared more cost- effectively.

As with many aspects of technology, jargon is rife when describing the different parts of and types of network. As an example of the many three-letter acronyms (TLAs), networks of different scales are referred to as LAN, WAN, MAN, VAN, and VPN! Here, we will try to filter out the jargon to highlight the terms you need to know when understanding and specifying information systems for a business.

In this chapter, we trace the use of computer networks from the global network of the Internet through to small-scale networks. We look at the components that form a network and how to specify a suitable architecture for the modern business.

We will see here that most medium and large businesses already use internal company networks and the Internet – the business case is clear, but many smaller businesses are still considering the need for internal or external networks. For this reason, we start by examining the business case for implementing networks and some of the management problems involved with implementing and running networks. Selecting the right solutions for telecommunications becomes ever more important as businesses become more reliant on electronic communications. As new networking technologies become available, companies have to evaluate the benefits against the cost of implementation and running these new technologies. Some of the main telecommunications issues currently, which are highlighted in this chapter, are selecting higher-speed broadband communications to connect to the Internet and the use of wireless networking using technologies like ‘Wi-Fi’ and ‘4G’.



We can describe the links that transfer information between different parts of an information system on different scales. At the smallest scale, links are etched in silicon between the different components of a microchip. At a larger scale, all the components of a PC, such as the hard disk and main processor, are connected by internal cables. In this chapter, we consider links at a larger scale still, that is, between computers and other hardware devices such as printers, scanners and separate storage devices. These links between computers and other hardware form a computer network.

A computer network can be defined as: ‘a communications system that links two or more computers and peripheral devices and enables transfer of data between the components’.

As we shall see, computer networks are themselves constructed on different scales. Small-scale networks within a workgroup or single office are known as local-area networks (LANs). Larger-scale networks which are national or international are known as wide-area networks (WANs). The Internet is the best-known example of a wide-area network.

What are computer networks?

Computer network

a computer network can be defined as a communication system that links two or more computers and peripheral devices and enables transfer of data between the components.

Local-area network (LAN)

a computer network that spans a limited geographic area, typically a single office or building.

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179ChaPter 5 networks, telecommunIcatIons and the Internet

Wide-area networks (WANs)

networks covering a large area which connect businesses in different parts of the same city, different parts of a country or different countries.

On a national or global scale, communications technology such as satellite and micro-wave transmissions are important in linking businesses. To transfer information electronically, companies create telecommunications systems. These systems consist of both the hardware and the software necessary to set up these links. Telecommunications enable a business that operates from different locations to run as a single unit. This means that the same information and control structures do not need to be repeated at each company office. Instead, information can be managed centrally and control maintained from a central location. As well as improving internal communications in a company, telecommunications also allow companies to collaborate using electronic data interchange or web-based e-procurement with partners such as suppliers. Similarly, customers can transact with the company using the Internet.



the method by which data and information are transmitted between different locations.

Networks are vital to a business. They are important for the cost savings and improved communications that arise from an internal network. Beyond this, they are truly vital, because they help a business reach out and connect with its customers, suppliers and collaborators. Through doing this a company can order new raw materials more rapidly and cheaply from its suppliers and can keep in touch with the needs of its customers.

Figure 5.1 indicates the links that may exist between different partners. In some industries, such as the travel industry, travel agents and suppliers (such as the airlines) have made use of telecommunications links for over 25 years. In other sectors, however, most communications have been over the phone or in person, until more recently. The potential for e-business has been made possible by the use of the Internet technologies to reduce the cost and complexity of linking companies.

When computers and telecommunications are integrated, they can provide many advantages. Take the simple example of a humble e-mail sent to a customer or colleague. This costs only a few pence and can be sent to any location in the world immediately. As well as the low cost and fast delivery, it can be integrated to work with the users’ other information needs, perhaps by supplying a spreadsheet as an attachment.

What are the business benefits of networks?

Figure 5.1 Communications links between different stakeholders in an industry

WAN and Internet

Organisation boundary


Customer IS

Collaborator/ supplier IS

Online services

System users Site 2

System users Site 1

Organisation information


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We will now look at the benefits that networks provide in more detail.

1. Reduce cost compared to traditional communications. Costs can be reduced in various ways depending on the type of communication required. If information has to be sent to another location, the cost of sending is very low compared to using a letter or even a fax. If face-to-face communication is needed to exchange information or solve a problem, then the traditional approach would be to jump into a car or onto a plane. Telecommunications now make this less necessary. Meetings can be conducted by conferencing, which not only includes video conferencing, but also sharing ideas through writing on whiteboards or running shared software. Money is saved on transport and accommodation but, perhaps more significantly, the time it takes for people to travel to the meeting is also saved.

2. Reduce time for information transfer. The benefits of shorter times for messages to arrive are obvious, but more subtle benefits can also occur through the rapid transfer of information. It is now possible for the global company to operate 24 hours a day by taking advantage of people working in different time zones. If someone is working on a product design in New Zealand, for example, they can dispatch it for review in Europe at the end of their working day. The review can then be conducted in Europe while the other team members are asleep and will be ready for review the next morning. Using this simple method product designs could be accelerated significantly. Customer service queries can also be turned around more quickly through the use of telecommunications.

3. Enable sharing and dissemination of company information. Opportunities to share information are lost when it is locked in a filing cabinet or stored on an individual’s PC. By placing information on a server, either as a file or within a database, it can be made accessible to all departments that need it and the flow of information in the company is improved. This has proved to be one of the big benefits of intranets. A company selling through agents worldwide can provide information such as prices or technical specifications over an intranet. This information is always up to date, as there is no delay while price lists are reproduced and transported to the agents. Of course, this approach also helps in reducing costs.

4. Enable sharing of hardware resources such as printers, backup, processing power. An obvious benefit of setting up a network is that it enables the cost of equipment such as printers, faxes, modems or scanners to be shared between members of a workgroup. Printers are the most obvious item that can be shared within a business. Workgroup printers may be shared between small teams of three or four or up to twenty or so people, but a more powerful printer would be required in the latter case. For a printer shared by many people, it is usual to use a print server to schedule the jobs and store them while they are pending. Through storing information on a server, the security of the users’ data can be increased by attaching a tape or optical backup device to the server and performing regular backups. Other administrative tasks are also made easier by centralising more complex equipment.

5. Promote new ways of working. As well as the tangible benefits, introducing networks can facilitate a different approach to running a business. Setting up an internal network makes it possible to use group-working tools. Setting up a wide- area network makes electronic data interchange with suppliers possible.

6. Operate geographically separate businesses as one. Through using wide-area communications technology, it is possible to rationalise the operations of a company that originally operated as separate business units in different geographic locations, perhaps with their own working practices, procedures and reporting mechanisms. Linked business units can use common ways of working facilitated by video conferencing as shown in the case study. Sharing of information on best practices can also occur.

7. Restructure relationships with partners. In the same way that different groups or businesses within a company can work more effectively together, different companies can also collaborate better. This may occur, for example, when new products are being designed or when a manufacturer is ordering goods from its suppliers.

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To balance against the many benefits, there are, of course, disadvantages with introducing networks. The main disadvantages are:

1. The initial setup cost may be high, and there may be a considerable period before the costs are paid off.

2. When implementing or updating the network there may be considerable practical difficulties. Deploying cabling can be very disruptive to staff doing their daily work.

3. In the long term, companies become reliant on networks, and breaks in service can be very disruptive. For this reason investment in network maintenance is vital.

4. Security is reduced through introducing a network, since there are more access points to sensitive data. Data may also be intercepted when they are transferred from one site to another.

Despite these disadvantages, most companies still proceed with implementation and take care to reduce the risks of disruption and security breaches. In doing so, further costs will be introduced. Table 5.1 summarises the advantages and disadvantages of networks.

advantages Disadvantages

1. Lower transaction costs due to less human input

1. Overreliance on networks for mission-critical applications

2. Cost of initial setup and administration 3. Disruption during initial setup and maintenance 4. Reduced security due to more external

access points to the network on wide-area networks and the Internet

2. Improved sharing of information and hardware resources

3. Reduced costs through sharing hardware and software

4. Reduced time for communication compared with traditional methods postal mail

5. Increased security of data which are backed up on file servers. Increased security through restricting access via user names and passwords

Table 5.1 A summary of the key advantages and disadvantages of network technology


In this section we examine how to specify the often confusingly named components that are necessary to setting up a network. We start by looking at the client/server architecture of the modern information system and why this has been adopted by businesses. We will then examine each of the components in turn and look at how they fit together and the important factors in their selection.

The client/server architecture consists of client computers such as PCs sharing resources such as a database stored on more powerful server computers. Processing can be shared between the clients and the servers.

The client/server model of computing


the client/server architecture consists of client computers such as Pcs sharing resources such as a database stored on more powerful server computers.

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Client/server architecture is significant since most modern networked information systems are based on this structure. The client/server model involves a series of clients, typically desktop PCs, which are the access points for end-user applications. As shown in Figure 5.2, the clients are connected to a more powerful PC or server computer via a local- area network within one site of a company, or a wide-area network connecting different sites and/or companies. The network is made up of both telecommunications processors to help route the information and the channels and media which carry the information.

The server is a more powerful computer that is usually used to store the application and the data shared by the users. When a user wants to run a program on a PC in a client/server system, the applications, such as a word processor, will usually be stored on the hard disk of the server and then loaded into the memory of the client PC, running or ‘executing’ on the processor of the client. The document the user creates would be saved back to the hard disk of the server. This is only one alternative. One of the benefits of client/server is that there are many choices for sharing the workload between resources. The system designers can decide to distribute data and processing across both servers and client computers, as described in Chapter 11. There we also explain how different functions can be partitioned between client and server and the merits of using ‘thin’ or ‘fat’ clients, applications on the former being smaller and easier to maintain.

■ To summarise, the main components of a client/server system shown in Figure 5.2 can be defined as follows:

■ Client software is the interface by which the end-user accesses the software. It includes both the operating system, such as Windows 8, and the applications software, such as word processors. Increasingly, web-based browsers are being used as clients on a company intranet.

■ Server software is used to store information, administer the system and provide links to other company systems. Again, this may be a web server or a database server.

■ The application development environment provides interactive programming tools to develop applications through the application programming interface (API) of the package.

■ The infrastructure or plumbing of the system. This is based on local- and wide-area networking techniques and consists of the telecommunication processors and media.

Why use client/server?

The adoption of the client/server architecture was part of a trend to ‘downsize’ from large mainframes with arrays of user terminals which had limited functionality. This latter type

Figure 5.2 Components of a client/server system

Telecoms channels and media


Telecoms processor

Telecoms processor


Network server

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183ChaPter 5 networks, telecommunIcatIons and the Internet

of architecture was widespread in businesses during the 1970s and 1980s. The client/server model represented a radically new architecture compared to the traditional, centralised method of a mainframe, with its character-based ‘dumb terminals’ which dated back nearly to the birth of computers. Rather than all the tasks involved in program execution (other than display) occurring on the mainframe, client/server gives the opportunity for them to be shared between a central server and clients. This gives the potential for faster execution, as processing is distributed across many clients.

Cost savings were originally used to drive the introduction of client/server. PC-based servers were much cheaper than mainframes, although the client PCs were more expensive than dumb terminals. The overall savings were dramatic. These savings were coupled with additional benefits of ease of use of the new clients compared with the older terminals. The clients used new graphical user interfaces which were easier to use thanks to a mouse, and the graphics could improve analysis of business data. Customisation of the client is also possible – the end-user is empowered through being able to develop their own applications and view data to their preference. With queries occurring on the back end, this reduces the amount of network traffic that is required. Centralised control of the user administration and data security and archiving can still be retained.

With these advantages, there are also a host of system management problems which were not envisaged when client/server was first adopted. These have been partly responsible for the reduced costs promised with this ‘downsizing’ not materialising. To some extent there is now a backlash, in which the new ‘network-centric’ model is being suggested as a means of reducing these management problems. These disbenefits include:

1. High cost of ownership. Although the purchase price for a PC is relatively low, the extra potential for running different applications and modifications by end-users means that there is much more that can go wrong in comparison with a dumb terminal. More support staff are required to solve problems resulting from the complex hardware and software. The annual cost of ownership of a PC is estimated by the Gartner Group using their total cost of ownership (TCO) measure. The issue of reducing the ‘total cost of ownership’ is considered further in Chapter 16.

2. Instability. Client/server technology is often complex and involves integrating different hardware and software components from many different companies. Given this, client/ server systems may be less reliable than mainframe systems.

3. Performance. For some mission-critical applications, a smaller server cannot deliver the power required. In a travel agency business, for example, this will give rise to longer queues and poorer customer service. For this reason, many banks and travel agents have retained their mainframe-based systems where performance is critical. The use of a PC can also cause delays at the client end, as the screen takes a long time to redraw graphics compared to a teletext terminal.

4. Lack of worker focus. Although PCs can potentially empower end-users, the freedom of choice can also lead to non-productive time-wasting, as users rearrange the colours and wallpaper on their desktop rather than performing their regular tasks!

Despite these difficulties, the compelling arguments of ease of use and flexibility of client/ server still remain. The empowerment of the end-user to develop their own applications and to use and share the data as they see fit is now considered to be the main benefit of client/server.

Servers are vital to an information system, since they regulate the flow of information around the network in the way that a heart controls the flow of blood around the body. Network servers run the network operating system (NOS), the software that is used to



a server is a powerful computer used to control the management of a network. It may have a specific function such as storing user files or a database or managing a printer.

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manage the network, and are often used to store large volumes of data. The server and NOS together perform the following functions:

■ Maintain security – access to information in files is restricted according to the user name and password issued to users of the network.

■ Sharing of peripheral devices connected to the network, such as printers and tape drives. These are often attached directly to the server.

■ Sharing of applications such as word processors, which do not then need to be stored on the hard drive of the end-user’s computer. The cost of buying applications can be reduced through buying a ‘site licence’.

■ Sharing of information – access to this data is maintained by the NOS and it is stored within the hard drive of a server as files or as part of a database.

Both applications and data can be managed better when they are stored on a managed server. It is easier to audit who uses which applications and to ensure the security of the data. Data quality can also be managed more effectively.

For the larger network of perhaps 20 people or more, the functions described above may be split between several servers to share the load. There may be a separate file server, print server, password server and database server. In very large companies there will be many servers used for data storage. These will all be linked by the network to ensure that the data are accessible by everyone. They will also be responsible for ensuring through a process known as replication that the same version of data exists on different servers. With the use of many servers, an opportunity exists to spread the computing workload across these servers rather than overloading a single central machine, which is what happened in the days of the mainframe. The sharing of functions across several computers is known as ‘distributed computing’.

Computing blade servers are unique computers, often dedicated to a single application, and the facilities they lack are provided either within the chassis, or, particularly with storage, over a network. The chassis and included blade servers may require a substantial initial investment in hardware and implementation for a business but bring advantages in space, power consumption, cable reduction, reliability, and economy of scale that may offer considerable longer term benefits.

The different types of server are summarised in Table 5.2. When creating an information system, there are a number of critical functions which

must be designed in to the server. These are important requirements which must be checked with server vendors, database vendors and operating systems vendors. They are:

■ Performance. The server should be fast enough to handle all the requests from users attached to the network. A margin should be built in to accommodate future growth in users and network traffic. This means specifying a suitable amount of memory, a fast hard disk and, less importantly, a fast processor.

■ Capacity. When initially specified, the hard disk capacity should be large enough that it will not need to be upgraded in the near future.

■ Resilience/fault tolerance. If there is a problem affecting the hardware, such as a power surge or a problem with the hard disk, it is important that the whole network does not ‘crash’ because of this. Preventive measures should be taken, such as installing an uninterruptible power supply or running two disks in parallel (disk mirroring or RAID – redundant array of inexpensive disks).

■ Clustering is used to spread the load across different servers, so improving reliability and performance. It involves linking several servers together via a high-speed link such as fibre-optic cabling. This can enable parallel processing, where tasks are shared between processors, and also storage mirroring, where duplicate copies of data are stored on different servers to improve performance and reduce the risk of one server failing.


ensures that the versions of data stored on different servers are consistent. software is used to check changes made to data on each server. changes are transmitted to all other servers.

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185ChaPter 5 networks, telecommunIcatIons and the Internet

The access points for users of a network are known variously as clients, nodes, workstations or, most commonly, just PCs. It is best to use the term ‘client PC’, as this helps distinguish clients from servers which may also be PC-based. To work on the network each client must have networking software such as Novell Netware or TCP/IP installed (see later section). Of course, a physical connection to the network is also required. For a PC on an office LAN, this is provided by a network interface card in one of the PC’s slots. The card is then attached to the network cabling. For a PC at home which is linked to the Internet, the network card is replaced by a modem.

End-user computers or terminals

As well as the physic

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