Networks in Business
Networks are widely used in business today. Although many businesses use the Internet to market goods and services, an increasing number of businesses use an intranet, a smaller version of the Internet that is used by company employees to communicate with one another and to share data. Intranets are typically protected by firewalls that prevent unauthorized access and keep company propriety or sensitive data or information confidential. Businesses can also share information with partners, customers, or other parties through an extranet, a part of an intranet that is available to authorized parties. By using networks, businesses can communicate more quickly, update information more accurately, and coordinate all members of a supply chain in order to work more efficiently and bring products or services to the customer more expeditiously than is possible using traditional communications media.
Keywords: Business Model; Communications Network; Data Communications; E-Commerce; Enterprise; Extranet; Firewall; Information Technology; Intranet; Local Area Network (LAN); Network; Outsourcing; Supply Chain; Virtual Team
In many ways, the use of networks has changed our lives. For example, in many situations, e-mail has obviated the need for surface mail, fax transmissions, or even phone calls, and provides us with almost instant access to friends, family, and colleagues. Similarly, data — including documents, photos, and videos — can be easily shared as attachments to e-mails. Social networking allows us to keep track of friends and family. The World Wide Web allows us to easily find or share information, purchase or sell items, or perform a host of other tasks more quickly and easily than was possible before. Just as the Internet has transformed our lives, so, too, network technology has transformed the way that many organizations — large and small — do business.
Most organizations today have become "netcentric," relying heavily on the use of computers, databases, and telecommunications to conduct their day-to-day business activities (Lucas, 2005). At its most basic, a network is a set of computers that are electronically linked together through communications lines (e.g., telephone lines, fiber optic cables) or wireless technology (i.e., radio signals over the air or through space). Businesses use networks to share data, documents, and programs or to allow employees to communicate with one another or with providers or customers.
One common use of network technology is e-mail communication. Employees are able to send e-mails with or without attachments, just as they would have picked up the phone or used inter-office mail a few decades ago. Network technology allows organizations to take this a step further and actually set up virtual teams in which team members do not always meet face to face but conduct their activities over a distance. In virtual teams, the members are geographically or organizationally dispersed and interact primarily through communication technology. For example, large engineering programs can use experts from around the country — or around the world — who communicate via e-mail or secure networks, sharing documents, giving briefings, discussing problems, and making decisions all using network technology.
Similarly, individuals in different parts of the supply chain can communicate over networks without having to deal with the other members directly. For example, a retail clerk in a point of sale location can use a network to check supply quantity at a warehouse without ever talking directly to warehouse personnel. If the item he needs is available, he can place an order directly from her terminal. The warehouse manager, in turn, can order more stock over a network from her supplier who, in turn, arranges for transportation for the stock through a network.
The use of networks has changed the business model used by many organizations. Because network technology can speed or ease communications between individuals, departments, or business partners, it can be possible for management to eliminate functions from the organization and outsource them to other organizations that can do the task more cost-effectively. For example, a retailer may sell products directly to customers at a brick-and-mortar store, but may also sell to customers over the Internet. The retailer may also outsource the manufacturing of the products that it sells to other firms, and communicate with them over the Internet or other network. The retailer may outsource billing to yet another company and communicate with its bank through another network.
Types of Networks
In general, a network is a set of locations (or nodes) with concomitant hardware, software, and information that are linked together to form a system that transmits and receives information and data. There are three types of communications networks. Local area networks (LANs) connect multiple computers that are located near one another and linked into a network that allows the users to share files and peripheral devices such as printers, fax machines, and storage devices. LAN technology was developed after the utility of personal computers for business became recognized and organizations wanted to be able to share information and access data for the organization. For example, a LAN may be used to link multiple workstations within a department as well as control a common printer.
Another type of network used by businesses is the metropolitan area network (MAN). These networks are larger than LANs and transmit data and information citywide (typically around 30 miles) and at greater speeds than a LAN. In addition, MANs are capable of transmitting voice, data, image, and video data, although they are typically optimized for voice data transmission. Rather than using telephone lines, MANs typically use fiber optic cables. Another type of network used by businesses is the wide area network (WAN). These comprise multiple computers that are widely dispersed and that are linked into a network. WANs typically use high speed, long distance communications networks or satellites to connect the computers within the network.
Certainly, the Internet is one valuable network tool now widely used by businesses. Increasingly, a business needs to have a presence on the Web (e.g., a homepage) in order to be competitive. However, the Internet is only one type of network that is used by businesses. In addition, some organizations set up private networks to serve their needs. An intranet is a private network similar to the Internet, and is set up for a given enterprise. Intranets are used to share information and provide computing resources within an organization. Intranets may also be used to facilitate document sharing for workgroups and virtual teams. An intranet requires the installation of servers and clients using Internet protocols (e.g., TCP/IP, http), and a web browser. As with the Internet, an intranet may comprise several networked LANs or use the leased line of a WAN.
Typically, an intranet contains proprietary information. To prevent those outside the organization from gaining unauthorized access to information that the organization does not wish to disclose to the public, information on an intranet is blocked by a firewall so that the information is only available to employees, other stakeholders, or other parties whom the organization authorizes. A firewall is a special-purpose software program or piece of computer hardware that is designed to prevent authorized access to or from a private network. Next-Generation Firewalls (NGFWs) deliver more granular control than traditional firewalls but have their own set of challenges (Erdheim, 2013). However, not all parts of an intranet need to be kept private. Intranets also provide platforms that can be used to develop and distribute applications for use by anyone with a web browser.
When part of an intranet is made accessible to outside parties (e.g., customers, suppliers, partners), it is referred to as an...
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