Introduction to IT PDF

Introduction to Information Technology Study Material for IS-01 ALL INDIA MANAGEMENT ASSOCIATION CENTRE FOR MANAGEMENT EDUCATION SIM DEVELOPMENT TEAM Members Prof. Neeraj Rajbanshi Prof. Anuja Pandey Prof. Susmita Paul Prof. Amit Bhatnagar Prof. Gurbandini Kaur Prof. Richa Mishra Ms. Kow...

Introduction to Information Technology Study Material for IS-01 ALL INDIA MANAGEMENT ASSOCIATION CENTRE FOR MANAGEMENT EDUCATION SIM DEVELOPMENT TEAM Members Prof. Neeraj Rajbanshi Prof. Anuja Pandey Prof. Susmita Paul Prof. Amit Bhatnagar Prof. Gurbandini Kaur Prof. Richa Mishra Ms. Kowsalya G Author Dhiraj Sharma Produced by Excel Books Private Limited for AIMA-CME Management House, 14 Institutional Area, Lodhi Road, New Delhi-110003  CONTENTS BLOCK I – IT IN BUSINESS ENVIRONMENT Unit 1 Introduction 3 1.1 IT: Meaning and Nature 1.2 India: The IT Superpower 1.3 Reasons Behind IT Growth in India 1.4 Summary 1.5 Keywords 1.6 Review Questions 1.7 Further Readings Unit 2 Information Technologies in Organization 15 2.1 Role of IT in Various Sectors 2.2 Information Technology Management 2.3 Strategies for Gaining IT Advantage 2.4 Summary 2.5 Keywords 2.6 Review Questions 2.7 Further Readings BLOCK II – IT INFRASTRUCTURE Unit 3 Computer Hardware 35 3.1 Introduction 3.2 Definition of Hardware 3.3 Hardware Components 3.4 Registers 3.5 Instruction Cycle 3.6 Branch Instruction 3.7 Memory 3.8 Other Types of Memory 3.9 CISC and RISC 3.10 Peripheral Devices 3.11 Input Devices 3.12 Output Devices 3.13 Hard Copy Output Devices 3.14 Soft Copy Output Devices 3.15 Summary 3.16 Keywords 3.17 Review Questions 3.18 Further Readings Unit 4 Computer Software 60 4.1 Introduction 4.2 Components of Computers 4.3 System Software 4.4 Application Software 4.5 Software Licensing 4.6 Utility Software 4.7 Summary 4.8 Keywords 4.9 Review Questions 4.10 Further Readings Unit 5 Telecommunication System 68 5.1 Telecommunication systems 5.2 Networking Concepts and Terms 5.3 Summary 5.4 Keywords 5.5 Review Questions 5.6 Further Readings Unit 6 Data Management and Access 89 6.1 Introduction 6.2 Data Concepts 6.3 Data Hierarchy 6.4 Data Access Methods 6.5 Data Processing 6.6 Types of Data Processing 6.7 Data Representation 6.8 Introduction to Database 6.9 Applications of Database System 6.10 Purpose and Need 6.11 Disadvantages 6.12 Database Management Systems (DBMS) 6.13 View of Data 6.14 Data Abstraction 6.15 Database Language 6.16 Data Definition Language (DDL) 6.17 Data Manipulation Language (DML) 6.18 Database Schema 6.19 Database Instance 6.20 Meta-Data 6.21 Data Independence 6.22 Database Manager 6.23 Database Administrator 6.24 Database Users 6.25 Database System Architecture 6.26 Summary 6.27 Keywords 6.28 Review Questions 6.29 Further Readings Unit 7 Internet, Intranet and Extranet 102 7.1 Introduction 7.2 The Internet in India 7.3 Intranet 7.4 Extranet 7.5 Summary 7.6 Keywords 7.7 Review Questions 7.8 Further Readings BLOCK III – INFORMATION TECHNOLOGY FOR COMPETITIVE ADVANTAGE Unit 8 Electronic Commerce 115 8.1 E-Commerce 8.2 Major Features of E-Commerce 8.3 Generations of E-Shops 8.4 Summary 8.5 Keywords  8.6 Review Questions 8.7 Further Readings Unit 9 Computer based Supply Chain Management and Information Systems Integration 143 9.1 Supply chain management 9.2 Inventory Management 9.3 Summary 9.4 Keywords 9.5 Review Questions 9.6 Further Readings Unit 10 Data Knowledge and Decision Support System 146 10.1 Introduction 10.2 Decision-making 10.3 Decision-making Process 10.4 Simon’s Model of Decision-making 10.5 Mintzberg’s Model of Decision-making 10.6 Group Decision-making 10.7 Problems and Challenges in Decision-making 10.8 Organisational Levels and Information Needs 10.9 Types of Information 10.10 Data vs Information 10.11 Qualities of the Information 10.12 Information Overload 10.13 Role of Information Technology 10.14 Information System 10.15 Systems Concepts and Information Systems 10.16 Characteristics and Components of a System 10.17 Defining Information System 10.18 Components of an Information System 10.19 Types of Information System 10.20 Management Information System 10.21 Essentials of an Effective MIS 10.22 Transaction Processing System 10.23 Decision Support System 10.24 Summary 10.25 Keywords 10.26 Review Questions 10.27 Further Readings Unit 11 Artificial Intelligence and Expert Systems 161 11.1 Expert Systems 11.2 Artificial Neural Systems 11.3 Strategic Information System 11.4 Evaluation and Maintenance 11.5 Software Development Tools 11.6 Automation Models 11.7 Summary 11.8 Keywords 11.9 Review Questions 11.10 Further Readings BLOCK IV – MANAGING AND IMPLEMENTING ORGANIZATIONAL INFORMATION Unit 12 Strategic Information Systems and Reorganization 175 12.1 Strategic Information System 12.2 Development of Systems 12.3 Phases in the Development of Systems  12.4 Major issues in the implementation 12.5 Summary 12.6 Keywords 12.7 Review Questions 12.8 Further Readings Unit 13 Information Systems Development 182 13.1 Information System Development 13.2 Systems Investigation 13.3 Activity Modeling 13.4 Application Flowcharts 13.5 IS Plan 13.6 Summary 13.7 Keywords 13.8 Review Questions 13.9 Further Readings Unit 14 Implementation of IT 191 14.1 Implementing IT 14.2 Ethics 14.3 Privacy 14.4 Impact of IT 14.5 Defense Strategies 14.6 Summary 14.7 Keywords 14.8 Review Questions 14.9 Further Readings BLOCK V – APPLICATION OF INFORMATION SYSTEMS IN ORGANIZATION Unit 15 Functional, Enterprise and Interorganizational Systems 199 15.1 Implementation of IT 15.2 Education and R&D 15.3 Manufacturing and Engineering 15.4 Defence and National Security 15.5 Government Administration and Other Services 15.6 Medical Science 15.7 Transportation 15.8 Banking and Financial Sector 15.9 Digital Libraries and Multilingual Applications 15.10 Weather Forecasting 15.11 Remote Sensing 15.12 Foreign Trade 15.13 Economic Development 15.14 Information Technology Management 15.15 Summary 15.16 Keywords 15.17 Review Questions 15.18 Further Readings  Introduction BLOCK I IT IN BUSINESS ENVIRONMENT 1 UNIT 1 INTRODUCTION L E A R N I N G O B J E C T I V E S After studying this unit, you should be able to: l Understand and discuss the nature and meaning of IT l Analyse the growth of IT in India and the world U N I T S T R U C T U R E 1.1 IT: Meaning and Nature 1.2 India: The IT Superpower 1.3 Reasons Behind IT Growth in India 1.4 Summary 1.5 Keywords 1.6 Review Questions 1.7 Further Readings 1.1 IT: MEANING AND NATURE IT or Information Technology, in simple terms, is concerned with all forms of tools, techniques, and technology applied for transmitting, storing, processing and disseminating information. The Information Technology Association of America (ITAA) defines Information Technology as “the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware.” In short, IT deals with the use of electronic computers and computer software to convert, store, protect, process, transmit and retrieve information, securely. It refers to any combination of equipments and procedures that facilitate the acquisition, creation, retrieval, storage, searching, viewing, updating and transmission of information using electronic means. Usually, information technology is viewed as a synthesis of developments in the field of computer science and the developments in telecommunication technology. The term ‘Information Technology’ originated during the 1970s. Its basic concept, however, can be traced back even further. From the outset of the 20th century, an alliance between the military and various industries has existed in the development of electronics, computers, and information theory. The military has historically driven such research by providing funding and innovation in the field of technology and computing. The developments in the area of computer technology are not of recent origin; computer owes its roots to the ancient machines which could perform simple calculations. The oldest, perhaps is the adding machine developed by French scientist Pascal in 1642, then calculating machine of German scientist Liebnitz around 1700, after that the difference and analytical engines of Charles Babbage in early 1800, and then the tabulating machines developed by Dr. H. Hollerith around 1880 to process US census data. The first commercial computer developed for the US Census Bureau was UNIVAC-I designed by J. Presper Eckert and John Mauchly. The late 1970s saw the rise of microcomputers, followed by IBM’s Introduction to Information PC in 1981. After that within a short span of time the technology progressed remarkably Technology from the so-called First Generation computers that were bulky, unreliable, expensive and very difficult to operate, to the Fourth Generation computers that are ‘miniaturized’, with a very high speed and huge storage capacity, very economical, reliable and simple to use. Each generation has taken a further leap on the path of development and with each step the size of hardware has decreased and the capabilities have increased manifold. The real thrust to the development of computers came during the second half of the 20th century with limited use of computer for data processing. The rapid developments in all technologies making up different components of the computers led to unprecedented growth in computer industry. This development led to mass scale spread of powerful computing resources at a very affordable price to the users and trend in use of computers shifted from users approaching central computers for data processing to computers moving to the users desk for all the activities like word processing and note preparing, data processing, data analysis, trend and pattern analysis as well as scenario building. The developments in the telecommunication technology in the 20th century led to the installation of worldwide telephone systems, radio and television networks and later, the development of satellite-based telecommunication. The continuous research and development efforts in telecommunication have made communication more efficient, reliable, cost-effective and has also increased the coverage as the technology matured. Today, the term Information Technology has extended to encompass many aspects of computing and technology, and the term is more popular than ever before. The Information Technology umbrella is quite large, covering many diverse fields. Thus, information technology is a logical development arising out of confluence of computing technologies and telecommunications which has narrowed down the difference between collecting, storing and processing information and transporting the information elsewhere thereby driving the geographical distances to irrelevance. Broadly, IT covers the following areas. (The below-mentioned components of information technology have been discussed in the subsequent chapters in detail). l Computer hardware and software l Information Management l Computer Networking l Database Systems Design l Software development and the tools used for developing applications l Information Systems Being knowledge-based industry, IT has the tremendous potential of becoming an engine of accelerated economic growth, productivity improvement for all sectors of the economy and means of efficient governance. It enhances access to information, protects consumers, provides access to government services, makes skill formation and training more effective, improves delivery health services, and promotes transparency. It provides tremendous employment potential and linkages between government and the people both at the rural and urban level. Investment in knowledge based industries will determine the level of the country’s dominant position in the world economy in the next decades. India’s IT industry ranks among the fastest growing sectors within the country’s economy. Driven primarily by software exports, the industry has been logging in extremely impressive year on year growth. The software industry in fact has been growing well over the 50% mark. India’s international-class manpower that creates high quality software and services solutions is finding favour among overseas customers. Indian technology products and solutions are accepted globally. Our country, India has emerged as the IT superpower. 4  Introduction 1.2 INDIA: THE IT SUPERPOWER India is a developing country that entered the IT revolution several years ago. From simple data entry type operations to Y2K solution providers, the IT business has converted itself into a US$ 6 billion industry. Today, the country is seeking to emerge as a major e- commerce powerhouse in Asia. India has established itself as a major global IT brand. This phenomenal growth has not been achieved overnight. The Compounded Annual Growth Rate (CAGR) for the Indian software industry revenues from 1995 to 2000 has been 56.3%. Even in the slowdown of 2001–2002, the Indian software exports have grown a decent 30%. And yet on several indicators the figures are contradictory to this success. In IT, India is a country of extremes. While on the one hand there is a booming software industry, on the other hand there exists an underdeveloped and unreliable communications infrastructure and low local Internet connectivity. India’s Limitations India has emerged as one of the powerhouses of the 21st century. India is home to 1.037 billion people who speak 18 official languages apart from 1,600 minor languages and dialects. It has a geographical area of about 3.3 million square kilometers, which is 7th largest in the world. India’s population which stands next only to China and is five times that of Brazil, lives on a land mass that is only 34% of China’s landmass and 38% of Brazil’s area. Of an estimated 191.9 million households, a whopping 72% or 138.2 million live in rural areas. The remaining 28% of 1.037 population live in the 3,700 cities and towns that constitute urban India. The economic liberalization policies of the Government of India have resulted in developing the services industry by leaps and bounds. However, the fruits of this growth are mostly enjoyed by an urban populace, with increased purchasing power and an array of goods and services to choose from. This has encouraged the migration of the rural populace which largely got left behind in this economic revival, resulting in a growth in the urban population from 26.6% in 1996 to 28.1% in 2002. World Bank’s Report of 2002 highlights that more than a quarter of the world’s poor live in India, its economic and social performance are critical to achieving the Millennium Development Goal of halving world poverty by 2015. India, which has become more open to the world economy and more receptive to external policy advice than in the past, has built strong foundations for development, but a large, unfinished agenda of federal and state reform remains a substantial challenge. India’s major socio-economic indicators unfortunately give a very sad picture. Out of the total population, 72% lives in villages and 27.1% of total population lives below the poverty line. The income distribution of Indian population is also pretty skewed. Disparity in income distribution is very high with 73% of the households languishing with annual household incomes below US$ 3,000. Only 11% of the Indian households are having high incomes i.e. above US$ 6,000. India has the 14th largest telecom network in the world, though 67% of its villages do not yet have telephones. PC penetration ratio is of 3 per thousand against 460 per thousand for developed countries. India has 25 million telephone connections and 1 million Internet connections for its 1 billion people with on-line population of 0.4% only (as on 2001). Perhaps this is the reason India has been ranked at 127 number among the 177 countries studied in the Human Development Index (HDI) published by the United Nations Development Program (UNDP) in July 2004. As per the report, India fares far worse than other developing countries like China (94) and Brazil (72). The economic growth since 2001 has not made much of an impact in improving India’s position in the HDI with India’s rank stagnating even now at the 2001 levels (127). 5 Introduction to Information India’s Strengths Technology After analyzing the pathetic indicators of Indian rural sector, India’s IT sector gives us quite the opposite picture – almost impossible to believe: l At the end of year 2003, 70 million Indians were on the Internet. l Led by export growth of over 50% over the last few years, the Indian software industry has emerged as a global leader. l Software exports increased from $ 15 million in 1987-88 to $5.7 billion in 1999- 2000. l Indians account for 34% of all Microsoft employees, 28% of IBM, and 17% of Intel employees. l The industry and government have set a target for 2008 to position India as a leading software force with $50 billion in revenue and an additional $20 billion from IT enabled services. l Many state governments in India are offering incentives and infrastructure for setting up IT enabled services. Incentives such as income tax holiday until the year 2010 have been provided for the export of IT enabled services. The government of India has announced a special policy for call centres. l NASSCOM predicted a $10 billion e-business by 2004. l Cable TV connections grew from zero in 1992 to about 40 million in 2000. l Today, the Indian software industry employs 280,000 people and every year over 60,000 professionals join. Despite these high growth rates, India’s share in the world software product market is still very low, though India still enjoys an advantage over many other nations in software development, services, and exports. This is partially due to the fact that India possesses the world’s second largest pool of scientific manpower, which is also English speaking. The country’s English speaking manpower rates high in areas such as qualifications, capabilities, quality of work, and work ethics. This places India ahead of competitors such as Singapore, Hong Kong, China, the Philippines, Mexico, Ireland, Australia, and the Netherlands, among others. Indian companies have unique capabilities and systems for setting, measuring, and monitoring quality targets. NASSCOM is working with international certification agencies to set standards. Moreover, the quality of Indian software is considered to be good at relatively low cost, which makes a definitive competitive advantage in the global software economy. IT Growth Rates The government incentives and liberalization policies relating to the IT sector have resulted in an impressive boost to IT industry. In the period from 1991 to 2000, the Indian IT industry recorded an average annual revenue growth of about 50%. In 1999-2000, the industry was estimated to have earned revenues of $8.6 billion, with the share of software amounting to $5.7 billion. In the first half of the 2000-2001 fiscal year, the domestic IT software and services market was up by 48%, while the total industry growth rate accounted for 58%. The Indian IT industry production is heavily concentrated. According to a NASSCOM survey, in 1999-2000, out of 1,250 Indian companies engaged in the business of software exports: l 37 companies exported more than $2.3 million of software. l 60 companies exported more than $1.15 million of software. 6 l 6 major companies produced over 40% of the overall Indian software exports. Introduction l The top twenty software exporters accounted for 70% of the software exports revenues. The efforts of the government and entrepreneurs aimed at improving the quality of IT software and services have resulted in worldwide recognition of the Indian IT industry. By April 1, 2000, the number of quality certified companies with ISO 9000 and SEI CMM Level 3 (and higher) certificates amounted to 210, while another 70 were in the process of acquiring certification. In January 2001, 44 software companies around the globe had the unique distinction of an SEI CMM Level 5 certification, and 24 of them were Indian. In the period from 1996 to 2000, venture capital in the Indian IT industry grew from $20 million to $370 million. Currently, 28 venture capital funds are registered in India. According to NASSCOM, the venture capital growth rate was 100%, with the total investment capital going up to $700 million in 2000-2001. With Indian government and NASSCOM’s initiatives aimed at protecting property rights in software, the share of the copyright software is steadily increasing. In 1986, according to NASSCOM, pirated software in the Indian market amounted to 98%, while by the year 1999, the share of copyright software had grown up to 40%. India’s Internet subscribers’ base is expected to cross 35 million by the end of 2007 from the present level of 4 million. The IT industry is projected to generate seven million jobs by 2008. The hardware sector is expected to provide employment to 4.8 million persons while the software sector and IT enabled services would account for the remaining 2.2 million jobs. PC penetration is expected to become 20 per thousand by 2008 against 5.8 at present. Also, in the next fifteen years, more than 400 million people from the rural areas will be released from the agricultural sector. IT-enabled services have great promise, provided our people are sufficiently educated and become computer-literate. The total size of the call centre services market in Asia Pacific has grown over US$4 billion by 2005 from US$1.2 billion in 2000. Out of this, the India-based call centre services market was pegged at US$200 million and is expected to cross US$1 billion in around five years. More than 100 call centres have been granted licences by the Department of Telecommunications. The same is also predicted by a McKinsey study undertaken for NASSCOM, call centres and animation are currently the largest opportunities, accounting for 85% of all IT-enabled services. By 2008, the overall turnover of IT-enabled service opportunities for India is expected to amount to approximately $140 billion. It should be clear that so long as the necessary infrastructure in the form of high-speed data-communication links are available, entry into the IT-enabled services sector requires relatively low levels of investment. In addition, a country like India has definite advantages given the adequate supply of English-educated and computer-literate workers at its disposal. IT Exports The Indian IT software and services industry is distinctly export-oriented. India has refuted the common belief that IT exports are impossible without a strong national IT industry and a well-developed domestic market. Developing countries such as India export IT software and services in the following different ways – l Export of labour (body-shopping), l Export of Software Services (offshore software development), and l Export of Software Products (in the form of packages) The major surge in Indian IT exports is due to many factors, such as a high percentage of the English speaking population and low average standard of living of people. Currently, 50% of India’s software export development takes place at the client’s site overseas (onsite), about 45% accounts to offshore software development, and around 5% of 7 Introduction to Information exports come from packages. Before the late 1980s, India’s largest software importer Technology was the US. Even now the US market continues to dominate Indian software exports, however, since 1990, India has been exporting software to other countries as well. As per a NASSCOM survey, in 1999-2000, India exported software and IT services to 95 countries around the world, with almost 62% of exports to North America (the USA and Canada), 23.5% to Europe, 3.5% to Japan, 5% to other Asian countries, 1.5% to Australia and New Zealand, and 4.5% to the rest of the world. The Indian software export industry continues to show dramatic growth rates. Over the past two decades (1980–2000), a compounded annual growth rate was as high as 40%. According to the Indian National Association of Software and Services Companies (NASSCOM) report, in 1999-2000, a total export of $4 billion was achieved, and during 2000-2001, software exports were $6.24 billion. As per NASSCOM, in 1999-2000, the Y2K (the Year 2000 problem) solutions yielded about 12% of the Indian overall software exports revenues and amounted to $480 million. During 1996-1999, the Y2K solutions earned export revenues of $2.5 billion. The Indian software industry has been experiencing tangible transformations that have resulted in extending its operations to cover new areas relating to e-commerce and IT enabled services, as well as offering new IT services to more customers. There is a distinct shift taking place in India today in the form of the industry response to the digital economy. As mentioned earlier, from the low end and back end software projects and body-shopping services provided to US companies, the three major areas of IT services export that are emerging now are e-commerce software and services, Web-enabled services, and e-business and e-trade transactions and services. Therefore, now, the trends are changing. With the trend towards more high-technology projects, the number of companies capable of implementing a full life-cycle development is increasing. The quantitative and qualitative growth of Indian software firms has led to favourable opportunities for developing their own products and new technologies and for promoting them in the global market. Thus, the IT sector promises a new set of employment avenues for a surplus labour economy like India where employment in the traditional sectors like agriculture and manufacturing is declining every year. Moreover, the industry and government expectations for output, exports and employment in these areas are also lucrative. According to a recent study by McKinsey for NASSCOM, India can increase its export revenues from software and IT-enabled services from $4 billion mark in 1999-00 to $50 billion in 2008. This would expand the size of the industry from $3.3 billion in 1998 to $87 billion in 2008, with a compound annual rate of growth of 40%. The software and IT-enabled services exports are also projected to cross the current level of $8 billion to $87 billion by 2008. Also, the export of hardware is also expected to be around $10 billion by 2008. This way, India’s share in the global software market will increase from 2% at present to 6% at the end of the Tenth Plan. This trend will yield a share of 35% for IT exports in India’s total exports by 2008 against the present level of 14% and the software and IT services industry will, as per projections, contribute 7.7% of India’s gross domestic product (GDP) in 2008 against the present level of 1.7%. This makes the projected increase in employment in the software sector greater than the increase in total organised public and private sector employment of 181,300 between 1990 and 1998. If the McKinsey projections are realised employment in the software sector in 2008 would be around 8% of India’s organised sector employment in 1998. 1.3 REASONS BEHIND IT GROWTH IN INDIA India, a vast economy, is full of contradictions. It entered the new millennium with almost one-third of the world’s software engineers and one-fourth of the world’s poor people. Out of more than a billion population, only 2% people in India have personal computers 8 and there are only 12 phones and 10 TV sets per 100 citizens. The number of computers Introduction per 1000 persons is 6 and Internet cafés/telecentres per 10,000 inhabitants are 0.1. Despite this, India has emerged as IT Superpower. It is interesting to analyse some of the major initiatives and experiences in India that has led to its emergence as a major global IT Superpower. India’s successful experience in Information Technology (IT) is definitely worth studying. Within a short period of time, this vast and rather poor developing country has managed to build a powerful IT industry with a dramatically growing software export sector. It has become possible because of the Indian government’s policies that have strongly supported IT development, as well as the activities of entrepreneurs, and due to certain advantages that this country enjoys. In India, software companies are mainly located around a few major cities. The IT industry began in Mumbai, which remained the national software development centre till the mid 1980s. In the late 1980s, IT firms started to locate in Bangalore, which has grown ever since and has now become India’s Silicon Valley. In 1999-2000, about 400 companies located in Bangalore exported IT software and services worth over $1.1 billion to the world market. In the IT sector, software production is less capital-intensive and more labour-intensive, which offers favourable opportunities for developing countries like India. The recent decades have witnessed high growth rates in the software industries of such developing countries as India, China, Brazil, Mexico, Singapore, Hong Kong, Taiwan, South Korea and the Philippines. India stands apart in the list as its software history is one of the longest established, and, secondly, because for the last 30 years the Indian government has pursued a well-defined IT software and services policy. The current boom in India’s software industry is the result of the government policies aimed at encouraging high technology export in general, and IT software and services export in particular. In 1998, the Indian government set up a National Task Force on Information Technology and Software Development (IT Task Force) to define the draft of a National Informatics Policy. The IT Task Force has submitted the Information Technology Action Plan for the following years (till the year 2008) which is aimed at accomplishing the following three basic objectives: Info-Infrastructure Drive: Accelerate the drive for setting up a world class Info- Infrastructure. Target ITEX – 50: Target for a $50 billion annual export of India’s IT Software and IT Services. IT for all by 2008: Accelerate the process of IT penetration into every walk of economic and social life. Let us analyse the India’s major initiatives and the key factors that has led to this growth and development in the IT sector. IT Professionals According to NASSCOM, as on March 31, 2000, the number of IT software professionals employed stood at 340,000, with engineering graduates amounting to 80%. Currently, Indian universities train some 68,000 IT professionals a year. Within a relatively short period of time, India has managed to reform the higher education system in general, and the IT training in particular. The country has developed a comprehensive policy for human resource development that meets the world standards. Services and solutions provided by the Indian IT industry are of two types – On-site, where services are provided right on site by software professionals stationed there and Off-site where using high speed data communications line, programmers in India are able to develop software on any computer anywhere in the world. When working at the clients’ sites overseas, Indian software developers achieve productivity levels as high as 9 Introduction to Information those of their Western counterparts and sometimes higher by 20-50%. Within India, Technology productivity figures vary quite widely among different companies, but on an average they amount to 90-50% of those of Western companies. However, a lower labour productivity is partly compensated by longer working hours: Indian software companies work 45 hours a week, while those in the West workers 35 or 40 hours a week. Telecommunications Strategy Telecommunication is the backbone of e-commerce and the Internet. From 1980s, the Indian government has accorded priority to the development and funding of the telecommunications infrastructure. State investment in international telecommunications alone went up from $150 million in 1985-1990 to $200 million in 1990-1995. From 1990, overall government spending on international and domestic communications grew by 15% annually. Until recently, India possessed international telecommunications channels with a total capacity of 396 Mbit per second. The number of Internet users in India was 3.2 million people by March 31, 2000. The technology is available but its costs are very high — especially for a large country like India. Therefore, rather than attempting to provide Internet and satellite links across the country, India followed the strategy of providing Internet access initially to only important commercial centres. Satellite earth stations were set up by VSNL2 and STPI3 at key locations for providing 24 hour guaranteed access to software companies for export activities, much before the Internet was available on the existing telecom channels. This was the major strategy on which the software revolution was built and this has been one of the key reasons for India’s success in IT. Software exports and IT-enabled services like medical transcription and call centres, which were and are directly exported to specific partners or clients in the US or Europe, need just basic connectivity not even the Internet. This was provided through the VSNL and STPI satellite links. Therefore, bandwidth, legal e-commerce framework, and a payment gateway were not major issues in the last few years. Today, as the industry grows and e-commerce develops, bandwidth has become an issue as the number of companies and domestic Internet requirements have expanded. Similarly, legal framework and payment gateways were not needed as the transactions were via traditional methods between specific partners. Today, for e-commerce market places, digital products like music or videos etc., or large automated supply chains, all these are essential requirements and are only now coming into place. Software Technology Parks India’s experience provides clear evidence of the fact that government support is crucial for building a strong IT software and services industry. India has given priority to export- oriented IT development, IT-friendly regulations in investment, taxation, administrative management, and other policies. Apart from that, India has established Export Processing Zones, Export-Oriented Units, and Software Technology Parks. At present, there are 19 Software Technology Parks (STPs) controlled by the Ministry of Information Technology. They all form an autonomous unity called Software Technology Parks of India (STPI). STPI contributes 60% of the overall software exports from India. The basic characteristics of the Indian Software Technology Parks (STPs), Export Processing Zones (EPZs), and Export-Oriented Units (EOUs) are: l Simplified, duty free export-import procedures; l Single window for all bureaucratic dealings; l Subsidies on sales and excise taxes; l Five year corporate tax exemption for STPs and ten year tax exemption for EPZs 10 and EOUs; l Simplified foreign exchange operations; Introduction l Permission to establish companies with 100% foreign venture capital; l Developed telecommunications infrastructure, access to international telecommunications links; l Availability of office space and preferential terms for constructing new business premises; l Subsidies for and reduced rates of space rent and municipal services charges, e.g. electricity, water etc.; l Well developed infrastructure facilities, etc. The ‘English’ Factor Indians are not merely English-speaking, but are also capable to quickly adapting to the English or Western thinking. While a Chinese immigrant may take years to become ‘American’, an Indian software professional from one of the engineering colleges of India will probably do so in months. That is the key to their success not just in software but in several other business and cultural fields. We cannot forget the fact that India was the former British colony. Today, as English standards and business practices become the norm, English-speaking employees can be a tremendous asset. This accounts for the success of call centres and web-enabled services located in India, catering to the US market and manned by employees speaking English with an American accent. Government and Private Sector Collaboration Government and private sector collaboration in the field of IT and software export promotion represents a unique and momentous export success story. Such collaboration is unprecedented for most of the developing countries. Since the whole software production base was essentially built on and for exports, it won for itself tremendous support of the bureaucracy, which was keen to show success in the earning of valuable foreign exchange for the nation. Software exports occur mostly digitally, and exports in India have not been subject to customs duty while export earnings are exempted from income tax. This provided an environment having the least contact of businesses in this area with the lower echelons of officialdom. Coupled with a supportive policy regime, the result has been much higher levels of efficiency in delivery and production for the sector. Legal Framework A legal framework for e-commerce has been provided by the Information Technology Act, 2000, making India only the twelfth country worldwide which has such a comprehensive legislation for e-commerce in place. This Act also effects consequential amendments in the Indian Penal Code, the Indian Evidence Act, 1872, and the RBI Act, 1934 to bring them in line with the requirements of digital transactions. Similar amendments are being planned for the Companies Act, 1956 also to facilitate e-commerce and e-governance. Basically, the IT Act seeks to address the following areas: l to make possible e-commerce transactions—both business to business and business to consumer l to make possible e-governance transactions—both government to citizen and citizen to government l to curb cyber crime and regulate the Internet. Rules under the IT Act have been formulated and a national controller for enforcing the Act appointed. This controller will regulate the certifying authorities that will issue the 11 Introduction to Information digital signatures and the systems for authentication. These steps need to be matched by Technology sorting out the issues of security and payments. Security and authentication arrangements need to be recognised and accepted globally. Liberal Approach Liberal traditions and democratic environment have been a feature of the Indian philosophy. India’s welfare and social policies have given birth to a very strong private business environment. The introduction of the structural adjustment programme in 1991 resulted in the promotion of policies of liberalisation and trade reforms, strengthening the economy and export sector. Despite the democratic changes of governments with elections since then, the thrust towards liberalising the economy has not been given up which has resulted in favourable conditions of growth for the export sector in general and the software sector in particular. Other Factors Within a relatively short period of time, India has become an important player in the global IT market. The export orientation of India’s IT industry and a surge in software development has enabled the country to dream as an IT superpower. The rapid growth of India’s IT industry has become possible due to many factors as discussed earlier. The following initiatives by the government also proved to be the key factors responsible for the IT boom in India: l Gradual reduction of customs duties on import of IT software from 114% to nil in accordance with the 1999 Government Notification. l Zero import duty on books, magazines, periodicals on CD-ROM under the 1998 Customs Notification. l Step-by-step reduction of import duty on computers and peripherals. l Zero import duty on computers and peripherals that after two years of import and use are donated to public institutions, hospitals, schools and government establishments. l Liberalization of Internet e-commerce, etc. l Granting tax benefits for software companies; special favourable conditions for joint ventures and private educational institutions. l Allowing 100% foreign venture capital for IT companies. l Allowing 100% foreign capital share in e-commerce. l Granting tax benefits for those buying shares of large foreign companies. l Granting tax benefits for venture capital funds that invest in software companies. l Removing licensing for IT industry. l Simplification of registration procedures for IT software and services companies. l Establishing state structures to stimulate the growth of the IT industry. l Reforming IT education system at secondary and higher educational institutions. l Introducing certification schemes for skills. l Stimulating standardization of education and accreditation schemes for educational institutions. l Encouraging young people to major in computer science through subsidies, tax benefits, and other incentives. 12 l Stimulating private and foreign investments in IT education and training. Introduction l Providing government support for and financing of educational institutions. l Encouraging private and foreign capital investments in telecommunications development. l Privatizing state telecommunications companies. l Eliminating the state monopoly on various types of services. l Providing government support for and financing of telecommunications development. l Financing and crediting high tech research and industrial projects. l Encouraging standardization and international certification (ISO 9000, SEI CMM). l Introducing the system of state orders that provides incentive to development and implementation of high-tech production and management processes. l Improving the legislation and stringent punishment measures for intellectual property rights infringement. l Economic incentives for use of licensed products for instance, zero import duty on IT software. l Introducing additional financial measures to regulate the activities of the IT companies. l Providing support for private IT education, and private IT research and development. l Ensuring industry oriented personnel training within the state education system. l Developing infrastructure and reducing its costs. l Expanding state marketing to promote IT companies in the global market. l Pursuing more aggressive anti-piracy policies. l Implementing the strategy of state contracts. l Speeding up and simplifying red-tape procedures. Future Vision According to the NASSCOM and the Indian IT Ministry estimates, by the year 2008, the IT software and services sector will play a key role in the Indian economy, provided the current trends and the favourable political and economic climate are retained. By 2008: l The exports of IT software and services sector is expected to earn revenues of $87 billion. l The overall IT industry revenues are expected to go up to $140 billion. l The IT software and services market capitalization will exceed $225 billion. l IT software and services are expected to contribute to over 7.5% of the overall GDP growth. l The software products market is expected to amount to around $18 billion, with the domestic product market as high as $10 billion. l Beginning from 2001, the IT software and services exports are expected to double every year and to reach an estimated high of $50 billion by 2008. l The software and services sector will create employment for over 2.2 million professionals. 13 Introduction to Information l The software and services sector is expected to attract foreign direct investment Technology of $4-$5 billion, more than the overall foreign direct investment in all Indian industries in 1998. 1.4 SUMMARY The information technology industry is a very important part of the modern world. It has revolutionised the way in which business and finances operate. In India, the IT boom has had far-reaching effects - new technologies and new job markets have been opened up by the exponential growth of IT. Companies in India export IT products and services all across the globe. 1.5 KEYWORDS Information management Information Systems Software Services Software products Telecommunications Strategy 1.6 REVIEW QUESTIONS 1. What are the reasons behind India’s success in the area of IT? How India has become an IT superpower? 2. What are Software Technology Parks (STPs)? What is their role? Discuss. 3. Why is the IT sector growing at such a rate? Give reasons. 1.7 FURTHER READINGS Deepak Bharihoke. Fundamentals of IT. Excel Books. Turban, Rainer, Potter, Introduction to Information Technology, John Wiley & Sons, Inc. 14 UNIT 2 INFORMATION TECHNOLOGIES IN ORGANIZATION L E A R N I N G O B J E C T I V E S After studying this unit, you should be able to: l Understand and discuss the function of IT in organizations l Analyse the importance of IT strategies U N I T S T R U C T U R E 2.1 Role of IT in Various Sectors 2.2 Information Technology Management 2.3 Strategies for Gaining IT Advantage 2.4 Summary 2.5 Keywords 2.6 Review Questions 2.7 Further Readings 2.1 ROLE OF IT IN VARIOUS SECTORS IT has improved the ability of human beings to process routine data, analyse the results and communicate the results as well as information. Collection, processing and analysis of data to form a judgment on the information is the essence of human thinking process; and communicating ideas and information with others for a common goal is the core of any social activity. As IT is essentially about these activities, there is hardly any sector of social activity where the importance of IT has not been felt. Organisations implementing IT are able to provide better services and thereby able to improve their businesses manifold. In earlier days, IT was used to a great degree in the manufacturing sector regarding product designing and development, product modification etc. The importance of IT has been strongly felt and applied in the services sector too. Education and R&D There has been a considerable shift in the learning paradigm due to the introduction of technology and newer methods of imparting education. New technologies are being gradually integrated into the learning environment. Perhaps, it is true that Information Technology (IT) is the greatest educational revolution since the invention of the printing press in the 15th century. As far as the IT revolution in education is concerned, the Internet allows virtual classrooms; digital libraries provide knowledge repositories; the Web offers up-to-date material for seminar discussions; computer simulation offers an alternative to labs. In spite of the fact that a majority of today’s college classrooms are still dominated by the traditional lecture/discussion method, more and more technological applications are gaining hold in the classrooms. They range from very basic use of technology (using e-mail for communication and feedback, course Web pages, and course chat rooms) to enhancements of the traditional classroom (using presentation software such as PowerPoint, and computer simulations) to virtual classrooms using one-way and Introduction to Information two-way audio-visual techniques, computer groupware conferencing, computer video Technology and asynchronous computer conferencing, and asynchronous/CD-ROM hybrids. Technology also provides an opportunity to cross inter-institutional barriers to allow for an open class discussion across the Internet with students from other campuses and from other countries. Networking and the Internet are being used as cost-effective tools for improving learning opportunities for students, faculty development, supporting professional development, increasing productivity of members of the learning community and improving the efficiency of schools, district and state administration. The power of the computers is used for complex mathematical and statistical calculations and number crunching which is crux of any scientific and technological research. IT is also used in wide ranging research activities ranging from astrophysics and space travel to nuclear science and microbiology for complex calculations, simulations and studying the patterns. It is being increasingly realized that the 21st century will be the century of Information Technology and medical sciences. Biotechnology is merger of IT with medical science. A number of entrepreneurs are looking to use India’s strength in Information Technology as leverage for entering in the field of biotechnology. BioTech/DNA parks are envisaged with a focus to provide the right infrastructure and space for R&D and to enhance the growth of the biotechnology sector in India. The government plans to set-up of Bio-Informatics parks, Genome Data Centre and Super Computing support in the country. With the help of IT, more and more students will be able to access courses or even entire academic programmes without ever setting foot inside a campus. The advocates of IT suggest that as time and space barriers to an education are removed, it is no longer necessary for students, faculty, and administrators to gather at the same time or in the same place for teaching and learning to occur. Accessibility to higher education will be expanded because, according to these advocates, any person who is qualified will no longer be excluded because of time and place constraints. Hardly any aspect of student support services remains untouched by technology. For example, it will be possible at some institutions for students to seek admissions information, apply for admission, and be admitted entirely on-line. Telephone, on-line, or web registration for courses will be commonplace on many campuses. Academic advising will be done using multiple technologies. IT has a more pronounced impact in the field of educational, scientific and technological research. The introduction of Educational and Research Network (ERNET) in India has enabled linking of computers of academic institutions like universities, educational and research institutions with each other thereby giving information on research activities undertaken around the world. The Government of India believes that Information Technology (IT) is India’s future. Hence, the educational institutions are using IT for educating and teaching the students. Educational institutions in India are using the latest hardware and software and the latest computer languages and packages are being taught to the students. IT education is not only imparted to the students of computer science, but also to the students of other disciplines at under-graduate and graduate level. Manufacturing and Engineering Information technologies (IT) in the form of computers and communications have been among the fastest growing innovations in both production and use during the past four decades, and the prospects for future growth appear equally bright. The IT is used in manufacturing industry for designing and process control besides other management related activities like inventory control, financial analysis, project management, development of MIS, etc. IT has altered the techniques of engineering by its tools called Computer Aided Designing. 16 The CAD tools enable the engineers to automating the design and drafting process and build different graphics. The tools are used for designing, modelling and proto-typing of Information Technologies in new products, graphics and architectural designs, studying impact of design changes on Organization overall design of product, material and cost estimation for new products, etc. This helps the design of most suitable engineering product with minimum manual efforts thereby maximize the human ingenuity in product development. Nano-technology is an emerging technology of manipulating matter at the atomic scale. It will make most products lighter, stronger, cleaner, less expensive and more precise. Nano-technology is expected to usher in the next industrial revolution. Nano-technology research is being strongly supported by the countries like USA, Japan, China etc. The research in this area would greatly depend upon availability of trained manpower and resources. The Indian government plans to develop this area in cooperation with leading academic and R&D institution in the country. IT also has played a great role in the area of manufacturing activity viz. the production and process control. This is known as Computer Aided Manufacturing or CAM. The microprocessor chips are used in wide ranging gadgets such as microwave ovens, automobiles, power plants, security systems, chemical industries for controlling the process. The abnormal behaviour or occurrence can be detected and pre-programmed decisions like switching off the plants can be taken with the help of these microprocessors based process controllers. Occurrence of an event such as reaching particular temperature level, next activity can be triggered automatically. The use of programmed devices like industrial robots have been used in hazardous industries where prolong exposure of any human being is not advisable. There is increasing trend towards automation of such processes which would improve the working conditions as well as reduce the cost of production. Defence and National Security IT is extensively used to gather geographical information, analyse the data, carry out operations research for the purpose of logistic support, and plan the movements. IT provides very essential navigational support for aircrafts and naval ships. The image- processing capabilities of IT along with satellite telecommunication are used for gathering information on geographical details and terrestrial movements such that almost all man made products like aircrafts, missiles, guns, ships can be identified by the surveillance system with their possible trajectories and paths. The role of IT has been instrumental in the development of powerful guided missiles which have completely altered the concept of defence and security. Missiles like Patriot, Agni or Trishul could only be developed using IT which enables the missiles to sense and lock their targets, scan the territory and change trajectory so as to hit the targets. IT is also used for encrypting and decrypting the strategic information for secured communication between defence agencies. IT also plays a very important role in training of the defence personnel with specialised simulators which can simulate the conditions in the sea or air. It can also simulate different war games so as to train the soldiers for actual combat conditions. IT is also used for storing data on the crime events and the modus operandi used in various crimes, processing the images of the criminals, the fingerprints, and handwriting so as to match the available records. Government Administration and Other Services Today, governments throughout the world are expected to provide a welfare state to their citizens and have a wide-ranging responsibility towards their citizens. States have responsibility towards the health, education, employment, security, and welfare of their citizens. For discharging these duties, governments need huge data on their citizens for planning for health services, education, transport facilities, etc. Weather forecast and 17 Introduction to Information early warning systems for calamities such as cyclones, floods etc., are some of the Technology essential social services which are heavily dependent on IT support. E-Governance enables use of Information Technology and communication technologies to improve efficiency, convenience, accessibility and transparency in government. The major emphasis today both at central and state government levels is to focus on these objectives from the perspective of the citizens and businesses. Various IT activities such as development of software applications packages, creation of e-governance infrastructure, National ID, Citizen Databases, GIS/GPS, Smart card and Digital/Educational Content, etc., in E- Governance domain are being taken up on pilot scale basis. The census data is the largest data which has direct bearing on the society and impact of IT on this is too evident. Today, the government and social services sector are the largest users of IT. Even where the IT is not widely used in government sector, there is pressure on the authorities to use IT for their activities and welfare schemes to improve the governance. Taxes being the main revenue, the government require huge data about the taxpayers, as well as need to watch the tax compliance. Similarly, governments are largest spenders in any country with expenditures on wide ranging activities. These activities of the government are dispersed all over the country requiring a good network of computers for speedy data compilation. E-mail has revolutionized our day-to-day work communications. Information needed for administrative functions that were once carefully secured and mostly unavailable are now only a keystroke away for most of us. Budgets are projected, administered, and accounted for by information technology. IT also paves way for online shopping. Websites like baazi.com, amazon.com, e-bay.com etc. provide online shopping facilities. Online hundi system has been introduced by some of the leading temples in India. With the help of online hundi system, those interested in donating amount to these temples can remit their amount with the help of credit card numbers through Internet. Medical Science In the last few years, we have seen not only the convergence of different technologies but also deep penetration of one technology into another. The information technology and life science have merged together into bio-informatics. IT is extensively used in medical research for developing new combinations of drugs. Genetic engineering and information technology are two tools which are set to bring very important changes in medical technology in coming decades. Now, it is possible to design new drugs using computers. The designed molecules can be then developed and tested in laboratory and then can be sent for ultimate testing on animal. The sequencing of human genome through Human Genome Project (HGP) and proteomics has opened new vistas for application of IT in life sciences. Now, detecting the root cause of certain diseases will be possible using gene sequence analysis and a permanent cure may be found through gene therapy. The modification of gene sequence of plants has yielded better crops in terms of nutrition value as well as water requirement, thus providing tremendous growth potential for bio-informatics. IT is also being applied in the hospital management. Beginning from the reception by recording a patient’s name, the information technology has been used everywhere in a hospital. It is increasingly used in hospital administration to keep information on patient’s health record for the doctors to trace case history. A patient’s record comprising his name, age, sex, disease, blood group, height, weight, blood pressure level, etc. can be maintained as database in a computer in the hospital. So, whenever the patient arrives his previous record can be verified. 18 In addition, the data on health symptoms and possible diseases is also stored so that the Information Technologies in computer can identify the health conditions with the different symptoms in the database Organization and help the doctor with possible cause and also suggest the treatment. Similarly, when the surgeries take place, the hospitals use computers and specialized software for judgement of diseases/problems and for curing the diseases. For billing purposes also the computers have been used widely in hospitals. Computers are also used for on line systems for monitoring patient’s health for any medical emergency. The microprocessor controlled devices are used for heart patients to control the working of heart and trigger timely action. Similarly, such devices are also used in the artificial limbs provided to physically handicapped persons. IT has also been applied in pharmaceutical and drug shops. Whenever any medicine enters the shop, all the information related to the medicine – its name, quantity, manufacturing date, expiry date, its content, price and other information can be entered into a computer system. Whenever the sales take place, computerized billing is provided to the customers. The bill usually carries plenty of information for the benefit of customers indicating the name of the medicine, quantity purchased by them, its price, manufacturing and expiry date. Whenever any medicine is sold the software created also provides indications to the supervisor of a pharmaceutical shop related to the quantity sold, quantity available in the shop and the computer also warns them regarding the date of expiry. Transportation The application of IT has provided various benefits for the transporters and passengers. In India, with the issue of computerized railway tickets, the errors have been minimized. A passenger can book the train ticket from any part of the country. A passenger can also book the train ticket at his convenient place, as the online reservation system has been introduced in our country. In the same way, nowadays reservations for film shows take place through online ticket booking. The cinema theatres in order to avoid queues and unnecessary rush follow the system of online ticket booking so that through the Internet anyone can book tickets at their convenient places. In order to reduce queues, computerization takes place in petrol bunks also. Computerization ensures speedier billing and reduces the queue in petrol bunks. In the same way in Regional Transport Offices, computerization ensures prompt and quick delivery of service to the people. Let us discuss the application of IT in the two most important transports namely railways and air transport. Railways Indian Railways have the second largest railway network in the world. Indian Railways has the maximum number of employees and it is the largest employer in the public sector. For easy operations and management, Indian Railways has been divided into 15 zones and each zone manages its own local affairs. As compared to Western nations, nothing of note has been done to automate Indian railways. IT has been used extensively in the area of railway transport by the developed nations only. IT has led to the development of computerized wagons, locomotives and train reporting systems that tracks cargo and wagons throughout their movement. This has enhanced the efficiency and speed of freight operations, enabling railways to plan the movement of wagons much more effectively since they always know where the wagons are and whether they are empty, loaded and fit for running. IT has also improved considerably short-term train planning. Now, it is now possible to know when the empty wagons will be available for rolling stock and motive power can be maintained on the basis of up-to-date records of equipment use. It is also possible to monitor the fuel consumption of each and every locomotive in the railway system per driver and per issuing depot for a particular period. The system can also produce predefined 19 reports. These reports can either be viewed on the screen or printed on the printer. Introduction to Information When a person wants to travel from one place to another by train, he has to plan for the Technology shortest route, minimum traveling time or cost-effective route and must have the detailed information of trains operating on that route, for the comfort of his journey. Railways can now publish automated time tables giving details of trains operating between different stations, train-timings etc. IT has also enabled the railways to satisfy customers’ requests for information about the whereabouts of their goods at any given time. Railway customers can monitor the whereabouts of their consignments/goods by connecting to the rail tracker system from their homes using a modem and telephone line. The information, which the customer receives, is filtered so that he can see only his own consignments. The automated system enables the viewing on the Internet from anywhere in the world at any time. In addition, it can generate statistics and performance indicators for decision-making. Policy- makers can also use these indicators to formulate both short-term and long-term plans for the transport sector. Air Transport IT applications are also very useful to airport functions. Major developments through IT has been made in airport applications and management. Airports Authority of India is considering some of the applications discussed below. The business value of IT application in airport is in the form of cost cutting, increased operational efficiency and enhanced security among the benefits that IT offers. The pre-integrated solutions with IT eliminate the information overload. This reduces risk of integration of multiple different systems and improves the flow of passenger and baggage. The concept of e-tickets is also beneficial for both the customer and the carrier. There are vast opportunities of e-business in airport environment. The installation of proper Information and Communication Technology (ICT) base at airports, integrates the installed base of mobile phones as well as Internet access by the travellers. It is important to develop business solutions based on the SPT (Simplifying Passenger Travel) concepts and to tighten the customer relationship in order to improve non-aeronautical revenues. The old business model is being discarded and the key to improving the passenger logistic is to provide information ahead of the logistical flow. Wireless communication can enable airport processes to be effected earlier in the travel chain without any physical service desk. This increases the processing capacity of the terminal while reducing the costs of passenger processing. Though wireless systems are certainly important, they should be treated as utilities and not as revenue generators. The wireless systems should have common standards. At present, airports are focusing more on internal operations and less on providing public Internet access. IT applications in facilities management and construction programmes encourage financial saving in construction projects. One of the key factors is the use of extranets to exchange information and communication among all the parties involved in a project. The Geographical Information System (GIS) adds value and offers considerable cost benefits. The GIS is not just a computer system for map making but a set of tools for identifying spatial relationships or cross data themes. GIS is employed together with noise monitoring software and permanent noise monitors as well as a long-range radar. The Decision Support Systems (DSS) are essential tools of airport management. IT can help in planning airport capacity by analyzing planning of current and future schedules, improving productivity by better allocation of slots, runways, gates, stands, security check points, baggage systems etc. The knowledge management system also helps in the airport operations. The limited knowledge of what data was available and that such knowledge was often lost as people left or retired. The knowledge management system offers prompt decision-making, easy data accessibility and security. It also does not allow any unauthorized changes or deletion and offers a common data warehouse. The system offers a single access point to all official project data. The typical applications of knowledge 20 management system are building permits analysis, producing noise contours, space Information Technologies in management, key and access management, fire scenarios and cable management. Organization Banking and Financial Sector As the Internet and the information technology revolution sweeps across the old economy, the players in the Indian financial sector are increasingly realising the need to adapt to the changes taking place. In today’s competitive world, customer loyalty can no longer be taken for granted, and that forces banks to constantly seek innovative ways to attract and retain customers. Tremendous improvement has taken place in the Indian banking sector because of the IT revolution. All the private and foreign banks have gone for 100% computerization. At a rapid pace, the government owned nationalized banks are also improving their number of computerized branches. With the help of computerization, the transaction takes place at a faster rate and the waiting time of a customer in a queue is getting minimized. To adapt to the new business environment, Indian banks need to proactively harness technology to handle distributed operations, high-volume transactions and data management. This will allow banks to enhance profitability through tighter fiscal and operational control, and achieve customer delight - a critical requirement in today’s Internet driven market. E–Banking is emerging in the Indian banking sector. The banks provide the facility of Internet banking, phone and mobile banking with the help of IT. All the branches of a bank can be networked. The networking takes place between two or more branches in order to provide easy accessibility for a customer. The cost incurred on infrastructure, furniture and employees has got decreased because of the application of IT. Financial institutions today face competition from several fronts. New, non-traditional financial players are entering the market, often with huge cost advantages and wider delivery channel options. Traditional banks are, therefore, facing increased pressure on margins. Customers have a huge variety of options in terms of vendors, products, services and delivery channels. This means that banks need to bring down transactional and operational costs to retain customers, which has proven to be five times less expensive than getting new customers. The most effective way of doing this is by strategically investing in IT. Foreign and new private sector banks in the country have led the way in automating the financial services industry. Indian public sector banks, however, have been slow in following. The situation, however, is changing and the initial resistance to technology is fading as top management of several Indian banks are viewing IT as a business enabler and a vital part of their strategy. Various banks are now committing to substantial IT investments in core and Internet technologies. In the financial sector, other services such as Insurance, leasing companies, mortgage companies, investment consultancy, stock exchanges, share registry and custodial services like depositories process large volume of data. These services have got a big boost with the advent of Information Technology. The banking and insurance companies use the IT to keep track of their customers transactions and financial needs, stock markets use IT for on line trading with the help of computer-based terminals connected to ‘trading servers’, depositories and custodial services maintain computerised records of shares and securities held by them on behalf of their customers and investment consultancy services use computer based systems for analysis of the financial positions, investment opportunities available to their customers, risk factors Involved and so on. Gone are the days when stock brokers used to shout at the trading hall of a stock exchange quoting their prices. Now-a-days with the help of computer terminals and Internet connection, purchasing and selling of share takes place everywhere. A client can look at the transactions taking place through the computers. The volume of the shares traded and the turnover has got consistently improved because of the online 21 share trading. Introduction to Information The impact of IT on financial services has been most significant in payment services Technology wherein ATM, Credit cards, Debit cards, Smart cards and other modes of payment have revolutionised the payment mechanism. This has been made possible by making cash available anytime during twenty-four hours of the day at any place in the world and has also obviated the need for physical cash. IT is changing the very concept of cash and credit throughout the world. The following technological advancements have taken place in world of business payments: Electronic Fund Transfer (EFT) Electronic Fund Transfer, sometimes wrongly described as a ‘paperless payment’, is a system of transferring funds on request using a wide area network. Electronic funds transfer covers a wide range of transaction services, such as: l Banking services l Funds transfer between accounts at the same bank or at different banks l Stockbrokerage services like placement of orders for stocks l Retail ATM services l Business transactions involving funds transfer between accounts, investments and overdraft arrangements l EFT provides various advantages l Immediate or overnight transfer of funds from the consumer’s bank account to the service provider’s bank account l Online credit authorization, hence reducing bad-debt and cheque problems l Reduced need for customers to carry cash or cheque. Automatic Teller Machine (ATM) Banking organisations have been very quick to take the advantage of the EFT (Electronic Funds Transfer) environment, as evidenced from a growing number of ATM networks. The wide spread acceptance of ATMs by the public as a means of doing banking transactions provides a major indicator of what customers want. The success of EFT depends heavily on networks to provide reliable and efficient interconnections. ATMs are specialized terminals that dispense cash and require wide area network communication with the central banking computer. The volume of information flow is small; typically 20 to 40 characters each way are required to verify a customer’s identity and debit the account. ATM terminals are often connected to a concentrator which in turn is connected to the central banking computer. All these interconnections require a highly and secure data network. Electronic Cash This is another form of automation of cash into electronic form. It addresses circumstances in which the payer is not present at the point of sale or service, but has electronic communications facilities available, e.g., it is connected to the Internet, or to some other form of global information infrastructure, such as a cable-TV installation with enhanced capabilities. Electronic Cash or the Digital Cash is a system of transferring funds through a network such as the Internet. The digital equivalent form of cash is known as E-cash. In a digital cash system, cash exists in the form of validated tokens represented by a string of digits. E-cash can be purchased from online currency server usually a bank or Financial Institution (FI). This bank or FI uses a digital signature algorithm for its clients or customers. Clients or customers can use this e-cash to purchase items 22 over the Internet. Credit and Debit Cards Information Technologies in Organization Credit cards in their present form emerged in the United States in 1960s. However, it was not until more recently that credit card usage has expanded significantly throughout the world. Debit cards have been introduced more recently and together they represent the most rapidly growing method of payments in many countries. Credit and debit cards are rapidly growing in significance as the preferred method of settling small value payments associated with the purchase of specific goods and services. Separate electronic clearing and settlement systems have been established by the major credit card companies. Both MasterCard and Visa have established their own networks which are used for verifying transactions world-wide. Electronic point of sale terminals permit card details to be verified in less than 15 seconds with networks linking the merchant, the credit card processor and the card issuer worldwide. These networks are growing rapidly as the trend for consumers to make payments by credit card in place of writing a cheque continues to grow. Credit cards are distinguished from debit cards by having access to a line of credit made available to the cardholder by the card issuer. They generally require four separate parties to each transaction, the cardholder, the merchant selling the goods or services, the merchant acquirer processing the credit card payment and the card issuer. In certain cases the merchant acquirer and credit card issuer will be the same company although generally trading under a different legal entity. Smart Cards Smart cards are just like credit cards, same size and shape, and can be carried in pocket or in wallet but they serve different purpose. A smart card contains a chip which has a processor and memory unit. A smart card generates encrypted random numbers with a lifetime of around one minute. The user enables the card by entering a PIN and then it generates a response or one time password. The response or password is calculated using data encryption which is stored in the card. This provides a means for storing passwords, private keys or digital cash on the card. These cards have become popular due to the limitations of pure password-based systems. This is indicative of the move away from passwords (what the user can remember) to tokens (what the user can carry). These cards are also known as PCMCIA cards as they are also designed to fit in the PCMCIA slots of a computer. Electronic Data Interchange (EDI) Electronic Data Interchange (EDI) is the exchange of structured data between the computer systems of trading partners. It is predicted that this method of ‘paperless’ trading will change the existing pattern of doing business. So EDI or Electronic Data Interchange is defined as the interchange of standard formatted data between computer application systems of trading partners with minimal manual intervention. EDI communicates information relevant for business transactions between the computer systems of business organisations, government organisations, small business houses, banks and FIs. EDI covers interchange of business data like invoices, purchase orders, shipping notices, delivery instructions, and other standard business correspondence between trading partners. EDI can be used to electronically transmit documents such as purchase orders, invoices, shipping notices and other standard business correspondence between trading partners. EDI speeds up the trading cycle, enabling a faster response to customer orders and requests. In addition, by data interchange, EDI simplifies the customer’s data processing task by supplying only that desired amount of data that is required by the customer. In addition EDI also facilitates transmission of financial information and payments in electronic form. When used for making payments, EDI is referred to as Financial EDI (FEDI) and Electronic Funds Transfer (EFT). EDI is a way of substituting 23 Introduction to Information electronic transactions for paper transactions. However, it is much more than mere Technology substitution. It is a means to streamline procedures and improve efficiency and productivity. Business Management and Planning IT with its computer-based system for information processing has influenced the process of management in all the activities of the organisations like strategic planning, production planning, inventory control, finance and accounts, marketing and personnel management. The computer systems enable the management process of planning by identifying the problems and opportunities through analysing the trends from the data stored; supporting analysis, evaluation of options and selection of alternatives. It also supports decision implementation by watching the progress and identifying possible problems. The techniques such as Programme Evaluation and Review (PERT), Critical Path Method (CPM) simulations and linear programming enable the process of decision-making. The IT is mainly used for keeping track of inventory of raw material, semi-finished and finished goods. It is also used for distribution and marketing logistics, keeping information on branch plants, etc. The information is made use for planning the purchases, organizing the production schedule, and keeping track of the production process. The introduction of IT has enabled the industry to adopt management techniques like ‘Just in Time Management’ that can reduce cost of holding the inventory of raw material and finished goods. IT helps management in maintaining the personnel inventory for the skill levels available, training inputs imparted to the staff planning staff career planning including retirement planning, maintaining the staff records of salary and other payments, etc. IT has an impact on organisational structure since the processing capabilities enable the data dependent activities to be either automated or delegated. At the same time, centralisation of data and communication capabilities of IT can help in centralising the organisational structure for improved decision-making. In practice, both centralisation and decentralisation of activities are done with the help of IT depending on