The information revolution : Applications

The last 20 years can be viewed as a sort of information revolution. Like the Industrial Revolution that radically changed the world a century ago, the computer age has also ushered in a new era. Computers have impacted business, industry, employment trends, and consumer behavior. Numerous jobs are now obsolete due to computers, and an increasing number of people spend their working hours sitting at a computer workstation. And, like the Industrial Revolution, the information revolution has produced numerous consumer benefits.

While the end user is happily sending and receiving data, behind the scenes, the telephone companies are investing millions of dollars building up these networks. They, in turn, bill their customers for all this data traffic. In 2000, telecom carriers billed their data networking customers more than $7 billion.

Commercial use of data networking falls into two categories: front-office applications and back-office applications. A dime store’s customers walk in the front door and its suppliers walk in the back door. Data networking applications are essentially the same. The front office handles customers, while the back office handles suppliers. Front-office applications concentrate on customer relationship management and include:

- Customer service;

- Point of sale systems;

- Call centers;

- Sales;

- E-commerce;

- Shipping.

Back-office applications concentrate on internal company business and external supplier relationships such as:

- Accounts payable;

- Inventory control;

- Accounts receivable;

- Logistics;

- Engineering;

- Manufacturing;

- General ledger accounting;

- Research and development;

- Human resources;

- Supply chain.

Distinguishing between front- and back-office applications is important to a network’s stability and security. Front-office applications are more “mission critical” to the success of the business. Consequently, the data network that handles front-office applications should be less prone to glitches, downtime, and security breaches.

Back-office applications also need to be secure and reliable, but the business suffers more when front-office applications crash, so they have priority. Just like the five-and-dime store, a company loses more business when its front door is broken than if its back door is broken.

What is data networking?

What is data networking?
Today, most companies, large and small, use data networking technology in their day-to-day business. An automobile parts manufacturer in Chicago sends electronic production reports to two separate manufacturing sites across two dedicated T-1 lines. A florist in San Diego uses an ISDN connection to the Internet to rapidly communicate with her suppliers and customers. The WAN of a Nebraska-based medical insurance company connects 29 different offices, uses 24 separate phone companies, and costs slightly more than $100,000 per month.

Each of these data networking examples requires both computer and telecom technology to work correctly. In all three cases, the companies use computer and telecommunications technicians to install and maintain the network. The expertise of these technicians is invaluable. They have spent years mastering leading-edge technologies that are perplexing to the average businessperson. In most organizations, however, it is a business- person who is responsible for the data network. The most efficient, cost-effective data networks rely on the expertise and savvy of technicians and businesspeople.

Numerous resources that explain the inner workings of the technological aspects of a data network are available. The purpose of this book is to provide businesses with strategic advice on managing the expenses of voice, data, and wireless telecommunications services.

In its simplest definition, data networking is “two or more computers communicating over a medium.” The communication may be considered local such as the connection of multiple computers across the inside wiring of a Chicago office building. Or the communication may be across a wide area such as a computer in Denver connecting to the Chicago office across telephone company lines. In the first example, the medium is the inside wiring in the Chicago office. In the second example, the medium is the telephone company phone lines.

LANs are normally wired with company-owned inside wiring. It costs the company nothing to transmit data across this medium because it owns the wiring. In the case of a WAN, a business transmits data across a long distance, or wide area, such as from Dallas to Chicago. WANs use the phone company’s network, so the phone company bills the customer each month for this service. Because this is a cost management book, we will deal with the telecommunications offerings and billing associated with WANs, not LANs. Within this context, our definition of data networking is “two or more computers communicating over a telephone line.”