KCA UNIVERSITY

MIS NOTES
INTERNET
The Internet is a public network that allows access to a number of users globally with no time and location
limitations. It’s commonly referred to as information superhighway because it is assumed that any
information can be acquired from the Internet and can be added to the internet websites. It can also be
defined as a wide area network (WAN) that enables organizations and individuals to communicate globally.
Certain protocols like SMTP for e-mail, FTP for a file transfer and HTTP for accessing/transferring web
pages are important when describing the internet.

Internet governance
No one “owns” the Internet, and it has no formal management organization per say. However, worldwide
Internet policies are established by a number of different organizations and government bodies including the
following:
 The Internet Architecture Board (IAB), which helps define the overall structure of the Internet
 The Internet Corporation for Assigned Names and Numbers (ICANN), which assigns IP addresses
 The Internet Network Information Center (InterNIC), which was created by the U.S. Department of
Commerce, and assigns domain names
 The Internet Engineering Steering Group (IESG), which oversees standards setting with respect to the
Internet
 The Internet Engineering Task Force (IETF), which forecasts the next step in the growth of the Internet,
keeping watch over its evolution and operation
 The Internet Society (ISOC), which is a consortium of corporations, government agencies, and nonprofit
organizations that monitors Internet policies and practices
 The World Wide Web Consortium (W3C), which sets Hypertext Markup Language (HTML) and other
programming standards for the Web. A consortium is an association of two or more individuals,
companies, organizations or governments (or any combination of these entities) with the objective of
participating in a common activity
Although none of these organizations has actual control over the Internet and how it functions, they can and
do influence government agencies, major network owners, ISPs. In addition to these professional bodies, the
Internet must also conform to the laws of the sovereign nation-states in which it operates, as well as the
technical infrastructures that exist within the nation-state. Although in the early years of the Internet and the
Web very little legislative or executive interference occurred, this situation is changing as Internet plays a
growing role in the distribution of information and knowledge, including content that some find
objectionable.

Internet Technology and the Digital Firm

 A digital firm is defined as an organization that uses digital networks to have core business relationships
with employees, suppliers, customers and other external partners.
 For a number of years, companies used proprietary systems to integrate information from their internal
systems and to link to their customers and trading partners. Such systems were expensive and based on
technology standards that only a few companies could follow.
 The Internet is rapidly becoming the infrastructure of choice for electronic commerce because it offers
businesses an easier way to link with other businesses and individuals at a very low cost. It provides a
universal and easy-to-use set of technologies and technology standards for all organizations, no matter
which computer system or information technology platform the organizations are using.
 Trading partners can directly communicate with each other, bypassing intermediaries and inefficient
multi-layered procedures. Web sites are available to consumers 24 hours a day. Some information-based
products, such as software, music, and videos, can actually be physically distributed over the Internet.
 Vendors of other types of products and services use the Internet to distribute the information surrounding
their wares, such as product pricing, options, availability, and delivery time. The Internet can replace
existing distribution channels or extend them, creating outlets for attracting and serving customers who
otherwise would not patronize the company. For example, Web-based discount brokerages have attracted
new customers who could not afford paying the high commissions and fees charged by conventional
brokerage and financial services firms.
 Internet technology is helping companies radically reduce their transaction costs such as the costs of
searching for buyers and sellers, collecting information on products, negotiating terms, writing and
enforcing contracts, and transporting merchandise. Information on buyers, sellers, and prices for many
products is immediately available on the Web.

INTERNET TERMINOLOGY
World Wide Web (www)
 Commonly called the Web, it’s the heart of the explosion in the business use of the internet. The web is
a system with universally accepted standards for storing, retrieving, formatting and displaying
information using the client server architecture. It combines text video, graphics and sound. It can handle
all types of digital communication while making it easy to link resources that are far apart.
 The web uses the GUI for easy viewing hence it is based on the standard hypertext markup language
(HTML) which formats documents and incorporates dynamic links to other documents and pictures that
are stored on the same web page. A web page is a screen that contains information which is usually
uploaded onto the website.

Website
A website is a collection of screens/web pages that provide information in text or graphics format. In order to
access information in the web, a web browser software. Web browser is the software that allows internet
users to navigate or surf the web. It uses the hypertext’s point and click ability to navigate (move from page
to page on the web). The browser includes an arrow or back button to enable the user to retrace his steps
backwards.

Home page
It is a text and graphical screen display that welcomes the user and explains or describes the organization that
established the website.

Uniform resource locator (URL)

 To access a website the user must specify the uniform resource locator (URL) which puts the address
of specific resource on the web.
 The URL includes http (hypertext transfer protocol) and www e.g http://www.kasneb.co.ke where
http defines how messages are formatted and transmitted and the actions that web servers and web
browsers should take in response to various commands. The www identifies the website on the web.
Kasneb is the name of the organization that is hosting the website and .co.ke means that the organization
is a company in kenya

Search engine
It is a tool for locating specific sites or information on the internet or the web. Examples are Yahoo and
google

Hotspot
For users of portable computers equipped for wireless, a hot spot (or hotspot) is a wireless LAN (local area
network) node that provides Internet connection and virtual private network (VPN) access from a given
location. For example, a business traveller with a laptop equipped for Wi-Fi can look up a local hot spot,
contact it, and get connected through its network to reach the Internet and their own company remotely with
a secure connection. Increasingly, public places, such as airports, hotels, and coffee shops are providing free
wireless access for customers.

A virtual private network (VPN)

A virtual private network (VPN) is a network that uses a public telecommunication infrastructure, such as the
Internet, to provide remote offices or individual users with secure access to their organization's network. A
virtual private network can be contrasted with an expensive system of owned or leased lines that can only be
used by one organization. The goal of a VPN is to provide the organization with the same capabilities, but at
a much lower cost.

Proxy server
It is a server (a computer system or an application) that acts as an intermediary for requests from clients
seeking resources from other servers. A client connects to the proxy server, requesting some service, such as
a file, connection, web page, or other resource available from a different server. The proxy server evaluates
the request as a way to simplify and control their complexity.

Wi-Fi (Wireless-fidelity)
Wi-Fi refers to wireless networking technology that allows computers and other devices to communicate
over a wireless signal. Wi-Fi is the standard way computers connect to wireless networks. Nearly all
computers now have built-in Wi-Fi cards that allows users to search for and connect to wireless routers.
Many mobile devices, video game systems, and other standalone devices also include Wi-Fi capability,
enabling them to connect to wireless networks as well. These devices may be able to connect to the Internet
using a Wi-Fi signal. However, it is important to understand that the Wi-Fi connection only exists between
the device and the router.

Web Portal
Web portal or public portal refers to a Web site or service that offers a broad array of resources and services,
such as e-mail, forums, search engines, and online shopping malls.

INTERNET SERVICES
Electronic-Mail
This is the most widely used internet application and offers a cost effective mechanism for exchanging
information.
Electronic mail or e-mail (and mail) for short, is one of the most popular uses of the Internet. Once you have
an e-mail account you can send an electronic message (sort of like a letter) to just anyone else with an e-mail
account so long as you know their e-mail address.
Usenet Newsgroups
Usenet newsgroups are worldwide discussion groups in which people share information and ideas on a
defined topic. The discussion takes place in large electronic bulletin boards where anyone can post messages
for others to read. Many thousands of groups exist on the web and each is financed and administered
separately.
LISTSERV
Like the Usenet newsgroup, it is a public forum that allows discussions or messaging to be conducted
through predefined groups but uses e-mail, mailing list servers instead of the electronic bulletin boards for
communication.
If a user finds a LISTSERV topic that he is interested in then he may subscribe. After subscribing the user
will receive all messages sent by other subscribers concerning that topic through his e-mail
Chatting
It allows two or more people who are simultaneously connected to the internet to hold live, interactive
conversations. Chat groups are divided into channels and each is assigned its own topic of conversation. A
chatting software such as Yahoo! Messenger is used for initiating a chat process. An enhancement to chat
service called instant messaging allows participants to create their own private chat channels. It alerts a
person whenever someone on his private list is online so that the person can initiate a chat session
Internet telephony
A category of hardware and software that enables people to use the Internet as the transmission medium for
telephone calls. For users who have free, or fixed-price Internet access, Internet telephony software
essentially provides free telephone calls anywhere in the world. To date, however, Internet telephony does
not offer the same quality of telephone service as direct telephone connections.
Internet telephony products are sometimes called IP telephony, Voice over the Internet (VOI) or Voice over
IP (VOIP) products.
Telnet
A terminal emulation program for TCP/IP networks such as the Internet. The Telnet program runs on your
computer and connects your PC to a server on the network. You can then enter commands through the Telnet
program and they will be executed as if you were entering them directly on the server console. This enables
you to control the server and communicate with other servers on the network. To start a Telnet session, you
must log in to a server by entering a valid username and password.

Advantages of using the internet

1. It reduces communication costs e.g. use of e-mail has reduced the cost of data transmission when
compared to telephone and fax systems.
2. Companies can use the internet e-mail capabilities for intra-company correspondence as well as for
external communication with suppliers.
3. Web pages and websites are used by organizations for advertising purposes.
4. Internet facilitates sale of goods and services (e-commerce). This allows small organizations to compete
with established companies.
5. Internet enhances communication through the use of text and graphics over long distances. e.g. it can be
used to transfer business documents from one company to another.

Disadvantages
1. There is a risk of unauthorized access, fraud or abuse of data through the internet. This is because
electronic data is susceptible to fraud than manual data.
2. The IT field is very dynamic hence the internet facilities must frequently be updated or improved. This
leads to increased costs
3. There is lack of clarity on the legal issues concerning internet transactions.
4. Not all internet users are properly trained hence may misuse the internet information.

INTRANET
 It refers to an organization’s private or internal network designed using web standards and is protected
from public visits by firewalls.
 Access rights are only given to the employees or member within an organization.
 Firewalls are security systems that consist of hardware and software placed between an organization’s
internal network and an external network including the internet. They are programmed to intercept each
message packet passing between the two networks, examine the characteristics of the message and reject
unauthorized messages or access attempts.
 Intranets require no special hardware and can run over any existing network infrastructure.

Benefits of intranets
1. Better internal communications - corporate information can be stored centrally and accessed at any time
2. Sharing of resources and best practice - a virtual community can be created to facilitate information
sharing and collaborative working
3. Improved customer service - better access to accurate and consistent information by your staff leads to
enhanced levels of customer service
4. Reduction in paperwork - forms can be accessed and completed on the desktop, and then forwarded as
appropriate for approval, without ever having to be printed out, and with the benefit of an audit trail
5. Improved data security because of limited accessibility

EXTRANET
An extranet is similar to an intranet but it is made accessible to selected external partners such as business
partners, suppliers, key customers, etc for exchanging data and applications and sharing information.
Benefits of extranets
1. More integrated supply chains through the use of online ordering, order tracking and inventory
management
2. Reduced costs by making manuals and technical documentation available online to trading partners and
customers
3. More effective collaboration between business partners - perhaps members of a project team by enabling
them to work online on common documentation
4. Improved customer service by giving customers direct access to information and enabling them to
resolve their own queries
5. Improving the security of communications between you and your business partners, since exchanges can
take place under a controlled and secure environment
6. Shared news of product development exclusively with partner companies
7. Flexible working for your own staff, as an extranet allows remote and mobile staff to access core
business information 24 hours a day, irrespective of location

CLOUD COMPUTING
In cloud computing, the word cloud (also phrased as "the cloud") is used as a metaphor for "the Internet," so
the phrase cloud computing means "a type of Internet-based computing," where different services such as
servers, storage and applications are delivered to an organization's computers and devices through the
Internet.

Cloud computing is taking services ("cloud services") and moving them outside an organizations firewall on
shared systems. Applications and services are accessed via the Web, instead of your hard drive. In cloud
computing, the services are delivered and used over the Internet and are paid for by cloud customer (your
business) typically on an "as-needed, pay-per-use" business model. The cloud infrastructure is maintained
by the cloud provider, not the individual cloud customer.

Cloud computing networks are large groups of servers and cloud service providers that usually take
advantage of low-cost computing technology, with specialized connections to spread data-processing chores
across them. This shared IT infrastructure contains large pools of systems that are linked together.

CLOUD COMPUTING SERVICE MODELS

Infrastructure as a Service (IaaS):
This is the most basic cloud-service model, which provides the user with virtual infrastructure, for example
servers and data storage space. Virtualization plays a major role in this mode, by allowing IaaS cloud
providers to supply resources on-demand extracting them from their large pools installed in data centers.

Platform as a Service (PaaS):

In this model, cloud providers deliver to the user development environment services where the user can
develop and run in-house built applications. The services might include an operating system, a programming
language execution environment, databases and web servers.
Software as a Service (SaaS):
In this model, the cloud provides the user with access to already developed applications that are running in
the cloud. The access is achieved by cloud clients and the cloud users do not manage the infrastructure where
the application resides, eliminating with this the way the need to install and run the application on the cloud
user’s own computers.
Network as a Service (NaaS):
The least common model, where the user is provided with network connectivity services, such as VPN and
bandwidth on demand.

CLOUD COMPUTING DEPLOYMENT MODELS

The Private Cloud
This model doesn’t bring much in terms of cost efficiency: it is comparable to buying, building and
managing your own infrastructure. Still, it brings in tremendous value from a security point of view. During
their initial adaptation to the cloud, many organizations face challenges and have concerns related to data
security. These concerns are taken care of by this model, in which hosting is built and maintained for a
specific client. The infrastructure required for hosting can be on-premises or at a third-party location.
This model is adopted by organizations in cases where data or applications are required to conform to
various regulatory standards which may require data to be managed for privacy and audits that govern the
corporation.
The Public Cloud
The public cloud deployment model represents true cloud hosting. In this deployment model, services and
infrastructure are provided to various clients. Google drive is an example of a public cloud. This service can
be provided by a vendor free of charge or on the basis of a pay-per-user license policy. This model is best
suited for business requirements where it is required to host SaaS applications, utilize interim infrastructure
for developing and testing applications, and manage applications which are consumed by many users that
would otherwise require large investment in infrastructure from businesses. This model helps to reduce
capital expenditure and bring down operational IT costs.
The Hybrid Cloud
This deployment model helps businesses to take advantage of secured applications and data hosting on a
private cloud, while still enjoying cost benefits by keeping shared data and applications on the public cloud.
This model is also used for handling cloud bursting, which refers to a scenario where the existing private
cloud infrastructure is not able to handle load spikes and requires a fallback option to support the load.
Hence, the cloud migrates workloads between public and private hosting without any inconvenience to the
users.
The Community Cloud
In the community deployment model, the cloud infrastructure is shared by several organizations with the
same policy and compliance considerations. This helps to further reduce costs as compared to a private
cloud, as it is shared by larger group.
Various state-level government departments requiring access to the same data relating to the local population
or information related to infrastructure, such as hospitals, roads, electrical stations, etc., can utilize a
community cloud to manage applications and data.
NOTE
Investment in any cloud computing deployment model should be made based on business requirements, the
criticality of the application and the level of support required.
BENEFITS OF CLOUD COMPUTING
1. Cost Efficiency
This is the biggest advantage of cloud computing, achieved by the elimination of the investment in stand-
alone software or servers. By appreciating cloud’s capabilities, companies can save on licensing fees and
at the same time eliminate overhead charges such as the cost of data storage, software updates,
management etc.
The cloud is in general available at much cheaper rates than traditional approaches and can significantly
lower the overall IT expenses. At the same time, convenient and scalable charging models have emerged
(such as one-time-payment and pay-as-you-go), making the cloud even more attractive.
2. Convenience and continuous availability
Public clouds offer services that are available wherever the end user might be located. This approach
enables easy access to information and accommodates the needs of users in different time zones and
geographic locations. It is now easier than ever to access, view and modify shared documents and files.
Moreover, service uptime is in most cases guaranteed, providing in that way continuous availability of
resources. The various cloud vendors typically use multiple servers for maximum redundancy. In case of
system failure, alternative instances are automatically spawned on other machines.
3. Backup and Recovery
The process of backing up and recovering data is simplified since those now reside on the cloud and not
on a physical device. The various cloud providers offer reliable and flexible backup/recovery solutions.
In some cases, the cloud itself is used solely as a backup repository of the data located in local
computers.
4. Cloud is environmentally friendly
The cloud is in general more efficient than the typical IT infrastructure and it takes fewer resources to
compute, thus saving energy. For example, when servers are not used, the infrastructure normally scales
down, freeing up resources and consuming less power. At any moment, only the resources that are truly
needed are consumed by the system.
5. Scalability and Performance
Scalability is a built-in feature for cloud deployments. Cloud instances are deployed automatically only
when needed and as a result, you pay only for the applications and data storage you need. Hand in hand,
also comes elasticity, since clouds can be scaled to meet your changing IT system demands.
Regarding performance, the systems utilize distributed architectures which offer excellent speed of
computations. Again, it is the provider’s responsibility to ensure that your services run on cutting edge
machinery. Instances can be added instantly for improved performance and customers have access to the
total resources of the cloud’s core hardware via their dashboards.
6. Quick deployment and ease of integration
A cloud system can be up and running in a very short period, making quick deployment a key benefit. On
the same aspect, the introduction of a new user in the system happens instantaneously, eliminating
waiting periods.
Software integration occurs automatically and organically in cloud installations. A business is allowed to
choose the services and applications that best suit their preferences, while there is minimum effort in
customizing and integrating those applications.
7. Increased Storage Capacity
The cloud can accommodate and store much more data compared to a personal computer and in a way
offers almost unlimited storage capacity. It eliminates worries about running out of storage space and at
the same time It spares businesses the need to upgrade their computer hardware, further reducing the
overall IT cost.
DISADVANTAGES OF CLOUD COMPUTING
1. Security and privacy in the Cloud
Security is the biggest concern when it comes to cloud computing. By implementing a remote cloud
based infrastructure, a company essentially gives away private data and information, things that might be
sensitive and confidential. It is then up to the cloud service provider to manage, protect and retain them,
thus the provider’s reliability is very critical. A company’s existence might be put in jeopardy, so all
possible alternatives should be explored before a decision. On the same note, even end users might feel
uncomfortable surrendering their data to a third party.
Privacy in the cloud is another huge issue. Companies and users have to trust their cloud service vendors
that they will protect their data from unauthorized users. The various stories of data loss and password
leakage in the media does not help to reassure some of the most concerned users.
2. Dependency and vendor lock-in
One of the major disadvantages of cloud computing is the implicit dependency on the provider. This is
what the industry calls “vendor lock-in” since it is difficult, and sometimes impossible, to migrate from a
provider once you have rolled with him. If a user wishes to switch to some other provider, then it can be
really painful and cumbersome to transfer huge data from the old provider to the new one. This is another
reason why you should carefully and thoroughly contemplate all options when picking a vendor.
3. Technical Difficulties and Downtime
Certainly the smaller business will enjoy not having to deal with the daily technical issues and will prefer
handing those to an established IT company, however you should keep in mind that all systems might
face dysfunctions from time to time. Outage and downtime is possible even to the best cloud service
providers, as the past has shown.
4. Limited control and flexibility
Since the applications and services run on remote, third party virtual environments, companies and users
have limited control over the function and execution of the hardware and software. Moreover, since
remote software is being used, it usually lacks the features of an application running locally.

INTERNET OF THINGS
The internet of things, or IoT, is a system of interrelated computing devices, mechanical and digital
machines, objects, animals or people that are provided with unique identifiers (UIDs) and the ability to
transfer data over a network without requiring human-to-human or human-to-computer interaction.
Broadband Internet is become more widely available, the cost of connecting is decreasing, more devices are
being created with Wi-Fi capabilities and sensors built into them, technology costs are going down, and
smartphone penetration is sky-rocketing. All of these things are creating a "perfect storm" for the IoT.

INTERNET OF EVERYTHING
The Internet of Everything (IoE) refers to bringing together people, process, data, and things to make
networked connections more relevant and valuable than ever before-turning information into actions that
create new capabilities, richer experiences, and unprecedented economic opportunity for businesses,
individuals, and countries.
The Internet of Everything (IoE) describes a world where billions of objects have sensors to detect measure
and assess their status all connected over public or private networks using standard and proprietary protocols.
KASNEB PAST PAPER QUESTIONS
Dec 2017 Q6d (i) & (ii), Q7d
May 2017 Q1a (i), Q6a
Nov 2016 Q2b (i)
Nov 2015 Q7b
Sept 2015 Q3a, Q7b
Dec 2014 Q3a
Dec 2013 Q4a, Q5a
June 2013 Q5d, Q7b
Dec 2012 Q7b
Nov 2011 Q1b, Q2a, Q6b
June 2011 Q1c
Dec 2008 Q2a, Q7

E-COMMERCE
DEFINITIONS
Electronic commerce is broadly defined as the use of computer networks to complete business transactions.
The networks involved include the internet, intranets, extranet and other private networks.
It is therefore the use of computer applications communicating over networks to enable buyers and seller to
complete transaction.
The transactions may include buying, selling and exchanging information.
Today many industry experts consider e-commerce to be a subset of e-business.
E-business refers to business activities beyond buying and selling and includes activities such as using the
internet to enhance customer service, co-ordinate activities with business partners and to facilitate
communication and knowledge management within organizations.
E-business deals with evaluating electronic market place to better serve the collective needs of entire
industries.

CATEGORIES OF E-COMMERCE
E-commerce transactions have been traditionally categorized in accordance with the networks and buyers or
sellers involved in the transactions. These categories include:
Business to business (B2B)
 This type of e-commerce includes transactions between businesses (such as between suppliers and
manufacturers or between wholesalers and retailers) over the internet or other networks.
 B2B is extranet based and is restricted to business partners.
 Firewalls, encryption techniques and authorization levels are used to protect business to business e-
commerce transactions.
Business to consumers (B2C)
 B2C includes internet based transactions between online merchants or organizations (e-tailers) and
individual consumers.
 B2C is internet based and access is not restricted.
Consumers to consumers (C2C)
 C2C includes internet based transactions between consumers such as the use of online auction sites.
 C2C is internet based hence access is not restricted
 C2C is facilitated by electronic brokers
Business - to - Government (B2G)
B2G model is a variant of B2B model. Such websites are used by government to trade and exchange
information with various business organizations. Such websites are accredited by the government and
provide a medium to businesses to submit application forms to the government.

Government - to - Business (G2B)

Government uses B2G model website to approach business organizations. Such websites support auctions,
tenders and application submission functionalities.

Government - to - Citizen (G2C)

Government uses G2C model website to approach citizen in general. Such websites support auctions of
vehicles, machinery or any other material. Such website also provides services like registration for birth,
marriage or death certificates. Main objectives of G2C website are to reduce average time for fulfilling
people requests for various government services.

E-COMMERCE REVENUE MODELS

In business, revenue typically consists of the total amount of money received by the company for goods sold
or services provided during a certain time period. Therefore, revenue models are a part of the business
model. Many online companies generate revenues from multiple income streams such as advertising,
subscription, affiliate marketing etc. Online models not only sell goods or services but also contacts (e.g.
banner) and information (e.g. user-data)
Advertising Revenue Model
Typically, fees are generated from advertisers in exchange for advertisements, which is ultimately the classic
principal among the revenue models besides sales. Even if representatives of major media companies
complain about earning less money with online advertising than with advertising in print or TV, the figures
indicate steadily rising revenues.

Subscription Revenue Model

Users are charged a periodic (daily, monthly or annual) fee to subscribe to a service. Many sites combine
free content with premium membership, i.e. subscriber- or member-only content. Subscription fees do not
depend on transactions. Subscribers use the content as long and often as they want.
Transaction Fee Revenue Model
A company receives commissions based on volume for enabling or executing transactions. The revenue is
generated through transaction fees by the customer paying a fee for a transaction to the operator of a
platform. The company is a market place operator providing the customer with a platform to place his
transactions.
Sales Revenue Model
Wholesalers and retailers of goods and services sell their products online. The main benefits for the customer
are the convenience, time savings, fast information etc. The prices are often more competitive. In terms of
online sales there are different models such as market places as common entry points for various products
from multiple vendors.
Affiliate Revenue Model
The affiliate program is an online distribution solution which is based on the principle of commission.
Merchants advertise and sell their products and services through links to partner-websites. It is a pay-for-
performance model: Commissions are only paid for actual revenue or measurable success. An affiliate-link
includes a code, which identifies the affiliate.

ELECTRONIC COMMERCE PAYMENT SYSTEMS

Special electronic commerce payment systems have been developed to pay for goods electronically on the
Internet. Electronic payment systems for the Internet include systems for credit card payments, digital cash,
digital wallets, accumulated balance digital payment systems, stored value payment systems, peer-to-peer
payment systems, electronic checks, and electronic billing presentment and payment systems.
Credit cards
 They account for 80 percent of online payments in the developed world and about 50 percent of online
purchases in the developing world. The more sophisticated electronic commerce software has capabilities
for processing credit card purchases on the Web. Businesses can also contract with services that extend
the functionality of existing credit card payment systems.
 Digital credit card payment systems extend the functionality of credit cards so they can be used for online
shopping payments. They make credit cards safer and more convenient for online merchants and
 consumers by providing mechanisms for authenticating the purchaser’s credit card to make sure it is
valid and arranging for the bank that issued the credit card to deposit money for the amount of the
purchase in the seller’s bank account.

Digital wallets
 They make paying for purchases over the Web more efficient by eliminating the need for shoppers to
enter their address and credit card information repeatedly each time they buy something.
 A digital wallet securely stores credit card and owner identification information and provides that
information at an electronic commerce site’s “checkout counter.” The digital wallet enters the shopper’s
name, credit card number, and shipping information automatically when invoked to complete the
purchase.
Accumulated balance digital payment systems
They enable users to make micropayments and purchases on the Web, accumulating a debit balance that they
must pay periodically on their credit card or telephone bills.
Stored value payment systems
They enable consumers to make instant online payments to merchants and other individuals based on value
stored in a digital account. Online value systems rely on the value stored in a consumer’s bank, checking, or
credit card account, and some of these systems require the use of a digital wallet.
Smart cards are a type of stored value system used for micropayments. A smart card is a plastic card the size
of a credit card that stores digital information. The smart card can store health records, identification data, or
telephone numbers, or it can serve as an “electronic purse” in place of cash. To pay for a Web purchase, the
user would swipe the smart card through the card reader.
Digital cash (also known as electronic cash or e-cash)
It can also be used for micropayments or larger purchases. Digital cash is currency represented in electronic
form that moves outside the normal network of money (paper currency, coins, cheques, credit cards).
Users are supplied with client software and can exchange money with another e-cash user over the Internet
or with a retailer accepting e-cash. Mpesa is an example of a digital cash service.
Peer-to-peer payment systems
They serve people who want to send money to vendors or individuals who are not set up to accept credit card
payments. The party sending money uses his or her credit card to create an account with the designated
payment at a Web site dedicated to peer-to-peer payments.
The recipient “picks up” the payment by visiting the Web site and supplying information about where to
send the payment (a bank account or a physical address). PayPal has become a popular peer-to-peer payment
system.
Electronic Fund Transfer
It is a very popular electronic payment method to transfer money from one bank account to another bank
account. Accounts can be in same bank or different bank. Fund transfer can be done using ATM (Automated
Teller Machine) or using computer.
Now a day, internet based EFT is getting popularity. In this case, customer uses website provided by the
bank. Customer logins to the bank's website and registers another bank account. He/she then places a request
to transfer certain amount to that account. Customer's bank transfers amount to other account if it is in same
bank otherwise transfer request is forwarded to ACH (Automated Clearing House) to transfer amount to
other account and amount is deducted from customer's account. Once amount is transferred to other account,
customer is notified of the fund transfer by the bank.

Benefits of e-commerce to organizations

1. It reduces cost of creating, processing, distributing and retrieving paper-based information e.g. by
introducing the e-procurement systems, the computer can cut the purchasing and administrating cost.
2. It allows for reduced inventories and overhead by facilitating supply chain management.
3. It lowers telecommunication costs because the internet is much cheaper than other means of
telecommunication.
4. It helps small businesses to compete with large companies.
5. It allows organizations to access customers globally.
Benefits to customers
1. It provides customers with a variety of choices especially for shopping purposes.
2. It enables customers to shop or do other transactions without time limitations
3. It enables consumers to get customized products and services.
4. It allows consumers or customers to interact with other customers globally.

Limitations of e-commerce
1. Since it uses the internet as the platform, data security and reliability cannot be guaranteed.
2. It is difficult to interface the internet or web and some e-commerce web pages.
3. There is need for specialized e-commerce and web servers in addition to the network servers. This
increase the set up cost or e-commerce.
4. The slow development tools that are still being used with the internet compromises e-commerce
activities.

MAJOR E-BUSINESS AND E-COMMERCE APPLICATIONS

Supply chain Management
 Supply chain encompasses all the business processes involved in creating and delivering products to
customers. This often involves a complex network of relationship among all the business partner
involved in the manufacturing and delivering of products to customers.
 Supply Chain Management (SCM) involves the coordination of materials (such as raw materials and
finished goods.) information (orders and delivery notices) and financial flows (such as credit
authorization and electronic funds transfers) between the business partners involved in the supply chain.
 The major aim of SCM is to enable all business partners to function as if they were a single company. In
order to achieve this goal, computer networks of the business partners must be integrated.
 To date, internet technologies are being used to enable information sharing and enhance communication
among supply chain business partners.
 E-commerce and e-business are also being used to support collaborative planning processes in order to
make the supply chain more efficient.
E-Procurement
 Internet enhanced procurement processes often play a key role in supply chain management.
 Procurement management is concerned with obtaining the supplies that an organization needs to carry
out its activities including raw material, goods from other companies e.t.c
 Many electronic procurement (e-procurement) applications are buy side or selling side application.
 E-procurement applications include the ability to browse integrated supplier catalogues to select
products, electronic ordering via fax or e-mail, facilitation of online approval for purchase orders by the
management, connectivity with suppliers/vendors, orders status tracking and the ability to identify
opportunities to further cost savings through the assessment of company wide purchasing patterns.
 Since e-procurement is based on the electronic market place, it’s usually supported by e-business and e-
commerce technologies.
Internet marketing
 The hardware or software platform that an organization uses to support e-commerce applications can also
be used to enhance customer demands for the computer products and services.
 Internet plays a significant marketing role in business to consumer applications.
 E-commerce makes the internet to be used by many manufacturers for marketing their products.
 Apart from the direct marketing channels, online aggregators may create electronic shopping malls (e-
malls or cyber malls) to show case the products and services of multiple manufacturers or vendors.
 Both electronic distributors and brokers are examples of using the internet as an indirect marketing
channels.
Customer relationship management system.
 Customer relationship management (CRM) system are being incorporated into the e-business
infrastructure of a number of firms. The primary goal of CRM is to increase an organizations ability to
retain its most profitable customers by enabling the organization to provide them with outstanding
customer service.
 E-commerce and e-business allows organizations to show the time for processing customer orders and to
provide automated response to customer enquires as the enquiries are being processed.
 CRM is becoming one of the foundation e-business applications in today’s networking infrastructure.
Internet banking and financial services
 Internet banking is usually through the electronic fund transfers. That allows business to transfer money
from one bank account to other in the same bank.
 After an order has been made online, the customer uses internet banking to pay for the service
 Financial services are usually provided by online financial companies through their websites
 Push technology enable account holders to instantly receive customized stock information (such as the
current prices of a prescribed set of stocks) which enable investors to stay on top of their investment and
initiate online trades.

DRIVERS OF E-COMMERCE GROWTH.

IT cost declines and IT Investments
Rapid growth in e-commerce has coincided with dramatic cost reduction for computers. Computers
components and other communication equipment. These price declines combined with sustained economic
growth in most developed countries has encouraged massive business investments in computers and
communication equipment.
Such investments have enabled organizations to build hardware and software infrastructure needed for e-
business and e-commerce.
Emergence of electronic markets
An increasing number of organizations are investing in applications that will enable them to more supply
networks and sales channels online and participate in new online market places.
Firms are therefore posting their web pages to common websites so that they are able to market their
products in the e-market.
Growing customer base
The growing number of consumer or customers with internet access is a drive to e-commerce expansion
because as the customers use the internet, they are able to come across e-commerce websites.
Expansion of the size and content of the web.
This means that the amount of information available online has increased rapidly. As a result many internet
users are able to browse business oriented websites before ordering for products and services.

MOBILE COMPUTING
Mobile Computing is a technology that allows transmission of data, voice and video via a computer or any
other wireless enabled device without having to be connected to a fixed physical link. The main concept
involves −
1. Mobile communication
2. Mobile hardware
3. Mobile software
1. Mobile communication
The mobile communication refers to the infrastructure put in place to ensure that reliable communication
goes on. These would include devices such as protocols, services, bandwidth, and portals necessary to
facilitate and support the stated services.

2. Mobile Hardware
Mobile hardware includes mobile devices or device components that receive or access the service of
mobility. They would range from portable laptops, smartphones, tablet Pc's, Personal Digital Assistants.
These devices will have a receptor medium that is capable of sensing and receiving signals. These devices
are configured to operate in full- duplex, whereby they are capable of sending and receiving signals at the
same time.
Personal Digital Assistant (PDA)
The main purpose of this device is to act as an electronic organizer or day planner that is portable, easy to
use and capable of sharing information with your computer systems.
PDA is an extension of the PC, not a replacement. These systems are capable of sharing information with
a computer system through a process or service known as synchronization. Both devices will access each
other to check for changes or updates in the individual devices. The use of infrared and Bluetooth
connections enables these devices to always be synchronized. With PDA devices, a user can browse the
internet, listen to audio clips, watch video clips, edit and modify office documents, and many more
services. The device has a stylus and a touch sensitive screen for input and output purposes.
Smartphones
This kind of phone combines the features of a PDA with that of a mobile phone or camera phone. It has a
superior edge over other kinds of mobile phones.
Smartphones have the capability to run multiple programs concurrently. These phones include high-
resolution touch screens, web browsers that can access and properly display standard web pages rather
than just mobile-optimized sites, and high-speed data access via Wi-Fi and high speed cellular
broadband.
The most common mobile Operating Systems (OS) used by modern smartphones include Google's
Android, Apple's iOS, Nokia's Symbian, RIM's BlackBerry OS, Samsung's Bada, Microsoft's Windows
Phone
Tablet PC and iPads
This mobile device is larger than a mobile phone or a PDA and integrates into a touch screen and is
operated using touch sensitive motions on the screen. They are often controlled by a pen or by the touch
of a finger. They are usually in slate form and are light in weight. Examples would include ipads, Galaxy
Tabs, Blackberry Playbooks etc. They offer the same functionality as portable computers. They support
mobile computing in a far superior way and have enormous processing horsepower. Users can edit and
modify document files, access high speed internet, stream video and audio data, receive and send e-mails,
attend/give lectures and presentations among its very many other functions. They have excellent screen
resolution and clarity.
3. Mobile software
Mobile software is the actual program that runs on the mobile hardware. It deals with the characteristics
and requirements of mobile applications. This is the engine of the mobile device i.e it is the operating
system of the appliance.

Advantages of Mobile Computing

1. Location Flexibility
This has enabled users to work from anywhere as long as there is a connection established. A user can
work without being in a fixed position. Their mobility ensures that they are able to carry out numerous
tasks at the same time and perform their stated jobs.
2. Saves Time
 The time consumed or wasted while travelling from different locations or to the office and back, has been
slashed. One can now access all the important documents and files over a secure channel or portal and
work as if they were on their computer. It has enhanced telecommuting in many companies. It has also
reduced unnecessary incurred expenses.
3. Enhanced Productivity
Users can work efficiently and effectively from whichever location they find comfortable. This in turn
enhances their productivity level.
4. Ease of Research
Research has been made easier, since users earlier were required to go to the field and search for facts
and feed them back into the system. It has also made it easier for field officers and researchers to collect
and feed data from wherever they are without making unnecessary trips to and from the office to the
field.
5. Entertainment
Video and audio recordings can now be streamed on-the-go using mobile computing. It's easy to access a
wide variety of movies, educational and informative material. With the improvement and availability of
high speed data connections at considerable cost, one is able to get all the entertainment they want as
they browse the internet for streamed data. One is able to watch news, movies, and documentaries among
other entertainment offers over the internet. This was not possible before mobile computing dawned on
the computing world.

Disadvantages of Mobile Computing

1. Quality of connectivity
Mobile devices will need either Wi-Fi connectivity or mobile network connectivity such as GPRS, 3G
and in some countries even 4G connectivity that is why this is a disadvantage because if you are not near
any of these connections your access to the internet is very limited.
2. Security concerns
Mobile VPNs are unsafe to connect to, and also syncing devices might also lead to security concerns.
Accessing a Wi-Fi network can also be risky because WPA and WEP security can be bypassed easily.
3. Power Consumption
Due to the use of batteries in these devices, these do not tend to last long, if in a situation where there is
no source of power for charging then that will certainly be a let down.

Question
Define mobile commerce and discuss its advantages and disadvantages

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