Project EE/06/B/FPP-169000 

Learning Materials for Information Technology Professionals (EUCIP-Mat)

THE GLOBAL NETWORKED ECONOMY 1. Number of study hours 15 2. Short description of the course In current chapter are discussed tremendous changes in information delivery during late decades. Using examples from different fields both fundamental and every-day implications to online world are explained. 3. Target groups The employers of IT core level professionals are the target sector here. The first target group consists of IT students (vocational school basic level IT training and the first courses in colleges and universities) in the field of technology, and IT practitioners not having vocational certificates yet 4. Prerequisites There are no prerequisites for this course.

5. Aim of the course - learning outcomes After this course reader has basic knowledge about possibilities in modern networked world.

6. Content of the learning materials

A4 THE GLOBAL NETWORKED ECONOMY A 4.1. Opportunities from Global Networks Globalisation impact to organization. The development of communication channels – including the internet- has opened up several services and business models that were not available few decades ago. The fast transportation of information with automated data processing helps to offer several services through a PC, which required people to visit the service provider themselves in the beginning of 1990. In addition to digital data transmissions, the developed postal service used to transport goods; it is possible to arrange most of the bigger and time consuming tasks without leaving home or office. It just takes a good idea and venturous enterprise from a service provider. Modern internet impact to business value. The Web 2.0 ideology has been a subject for several years. Actually it is not another program or a new solution as it might seem at a first glance. Rather a way or a custom how web environments are used. One of the main traits of characters of Web 2.0 is the fact that the authors and readers do not differentiate. Everyone has the possibility to speak one’s mind, add own facts and share opinions. Either the technical solution is a newspapers commentarial, forum, Wiki or something else – it has no difference. This partially self organizing environment takes care, that any kind of information could be backed up with quick and supervising feedback. Data about good and bad travels quickly and through networks, triangulation i.e. the comparison of different sources presents the opportunity to get enough reliable background for most of what is happening. Information about a good doctor or a craftsman travels fast. Also the information about the ones, who have pulled off something negative, is quickly available. The fact that there is more than one writer reduces the possibility that someone deliberately tries to make something up or starts disparaging for no truthful reason.

Article of the zither in Wikipedia

The creation and revisions of the zither article through time Different searching tools have become important assistants in the web. A lot more benefit, than the expensive advertisements on the front pages of newspapers, can be produced by a webpage that opens up from the search result. The search engines have developed to be more intelligent and the attempts to seduce users to a website with meaningless keywords might bring more harm rather than benefit. The search engines can evaluate the trustworthiness of websites through the references made from other web pages and thereby recommending the users appropriate results. Also it is beneficial to use appropriate keywords and a clear heading for the web page in order that others can find it easily later.

HTML source with keywords

  • Business and marketing trends in the new economy

The price of similar products and services may vary a lot. The products that are better priced than the competitors or are with higher quality or are more appropriate will survive on the market. How to attain the advantages; there are several possibilities. One of the methods is to design as grand systems as possible. That results in optimal use of equipment and allocation of know-how. There are often a lot of specific tools and materials at the work place, that are rarely used, but without them the required result is not attainable. For example lathe, driller and milling machines are essential for carpentry and they require a substantial sum of money to purchase and enough space to use them. At the same time the craftsman of musical instruments or a restorer uses these machines rarely as they spend most of the time working with smaller tools. All the equipment would be available for use simultaneously all the time. When producing by himself, he would really have to consider the purchase of the equipment. In a bigger shop all the equipment would find constant usage and by considering the cost of the machines, their designed lifespan and the rent of the shop, the machines’ cost per working hour is several times lower than with the situation of the small shop with same equipment. With this approach (economies of scale) companies have reduced the costs of different products significantly and hence the reason why the products can be directed to bigger amounts of crowds.

When an organization expands, several expenses that seemed to be nothing in the beginning also increase. If a programmer or a composer works at home, then there are almost no additional costs. Desk, computer or a piano are anyway present at the homes of the people with conforming interests and they use the instruments just for the work assignments. A self-employer can keep his own schedule, think about the ideas and tasks in one’s mind and that diminishes the necessity for work related communications. With a separate work place there will be an additional working environment besides home environment. Also direct communication with the customer will be replaced by an intermediary. The use of a mediator enables the company to offer more services and divide the tasks between experts, but at the same time the information may lose its original content. Also delays of communicating information will occur. A good example would be a situation where there is a big conference held with dinner and live music. The organizer orders the food and performers from a catering company. They again order the artists from an agency who acts between musicians. The latter signs the contract with the musicians. As every intermediary desires a service fee, a situation arises where a cheap artist becomes an expensive one to the initial organizer. If it happens that the dinner time is changed to take place earlier, then the musicians often find it out when they arrive and see the guests leaving.

Dinosaur alike problems accompany even bigger organizations. Depending on the field of activity, but a coordinator or a supervisor is required for every 5 to 10 people and a manager for directing the tasks. Because of that the chain of command keeps to extend a lot when there are several thousands of employees. If there is a need to transfer information from one subunit to another, then the link may be twice as long as it could be. Similarly to dinosaurs whose reaction occurs several seconds after someone bites its tail, because the movement of information through the nerves takes its time. Dinosaurs are extinct, but today’s big enterprises operate quite successfully. At the same time new connection channels offer great competitive advantages to small and fast companies. E-commerce and e-mediation are divided into three directions. From the producer to customer is considered to be a relatively traditional sale. Simply with the assistance of a computer it is possible to turn many activities more flexible. The business to business transactions help companies to offer compound services by outsourcing some of the services/products and performing themselves only these tasks where they find them to be good at. Some threats with the transaction may appear but with flexible software it is possible to arrange the feedback in a way that changes in one place are compensated with another so the client can still be satisfied with the service. For example if a train is late a taxi instead of a bus is ordered to meet the client, so the client will be able to arrive at the destination on time.

Web has some extensions which use internet technology for corporate tasks. Extranet is defined as privately held internet service to customers but also to vendors and business partners. Classical view to the customer service embraces need to visit service representative in order to get after-sales support. Nowadays a lot of the technical discussion can be held online privately via extranet channels where customer besides the representative can have both content and history of the previous contacts. An example of extranet usage is car repair shop ordering contact with car spare part wholesale companies. Oppositely an intranet is solely inside used tool in a company although based also on public internet technology. Intranet main idea is to allow insiders access to documentation, software, even databases using fair security measures to keep outsiders away. Using same technology for intranet and extranet as to ordinary internet site keeps expenses low and user environment standardized.

A 4.2. Transforming processes to e-business . Location is important for traditional economy – a bakery in every county, officials in every parish, to greet the residents and solve their problems. Every official, doctor (G.P), musician has to possess a wide profile in order to satisfy the needs of the whole parish with only two or three people. There is a certain charm in the versatility of skills and it gives an opportunity to get a better overview of situations. Also it helps to react quickly to situations, when an urgent solution is needed. In the other hand, the “universals” cannot usually obtain specific and often quite expensive equipment for some particular and rarely occurring tasks. In the 1930’ies it was considered to be normal and natural that every farm grew everything that was possible, what was needed and what could be sold. 70 year later there are only a number of farmers like that. In the past it was essential to grow different sorts in order to reduce risks – when the grain did not grow then the potato did. Hedging is also necessary in today’s world, but in form of insurance and other possibilities. Specialization makes it feasible with appropriate conditions to produce occasionally in excess by covering the shortcomings of some other harvest. Even now it is natural for every county to produce their own grain, potatoes, cattle and sheep. After globalization the picture is about to change, the productions will be more specialized between countries or even between different territories of the world – sheep or potatoes will be grown where it is the most profitable, and in the division shall be made with all territories according to the profitability. Globalization is definitely accompanied with risks – for some reason the friendly trade between countries might not take place any more. This will result some territories to be in trouble as they have lost their own production in that branch. At the same time, the benefit arising from more suitable locations for production might be so grand, that it fosters to take a chance as the possible profits exceed the threats. A noticeable amount of web based solutions are available to us, thanks to the development of connection channels and data processing. Digital newspapers and news portals are probably the most recognizable. In the beginning of 1990’ies no one could even dream about having the possibility to read publications from a computer. Making forecasts for the following two decades seems to be unfruitful too.

Everybody can name a list of different communities that are accessed with a PC. There is a bunch of entertainment-and communication portals that are definitely part of the economy. Often it is not possible to clearly distinguish, where an entertainment related communication changes to a specialty/hobby conversation and where the computer network helps to settle tasks that otherwise would have taken hours or days. Specialty portals are a good example for showing how to combine pleasure with usefulness.

Dancing community in Orkut communication environment

One of the environments is the internal networks of companies’ – intranets. In some cases it stands for just one file, which everyone can read/write to. Another place it stands for a folder of files, where everyone can get an access to required files. The more there is used whole environments, where are time schedule, communications application, mutual database, reminders, calculation of work time etc. Such decently working environment would be the perfect data moderator for a company where data is transferred to each other in a digital format.

Tallinn University digital-timetable Company’s internal data management doesn’t have to be limited with the local network set up in the building. Often it happens that the buildings are scattered around the town and the branch offices even further away. With security protocols a VPN (Virtual Private Network) is created, which allows transferring data almost as securely as in the local area network. As all kinds of limitations tend to disappear, then it is not very distinguishable to tell off the just secure connection (https) from a technically enhanced separated intranet.

A special subject field is the digital study environments. Starting from being just a facility for distributing some study materials or finishing up with gathering students’ questions/home works and opening up small worlds, where one can discuss in groups and systemize the results. Where are simulation means for understanding equipments and their linkages; the possibility to collect automatically statistics from students’ behavior and to consider it over planning the following courses.

Discussion board on IVA study environment

During 1990 several study systems were developed that tried to solve as many problems of the target group students. These systems became quite perfect. The problems however emerged when the necessity to transfer study materials and other data from one system to another. This kind of demand arose when schools united, changes in license conditions (for example in the cases of upgrading/downgrading hardware possibilities. Also in cases where the already constructed courses were desired to be carried out in a different capacity. There were educational-technological standards for storing and transferring data; common features for describing study objects (book, chapter, figure, etc), storing and presenting tests and questionnaires. Presumably the future will hold environments that combine independent and separate services. The storage of study objects is separate, as well as creating the materials and combining a course out of these materials; the tool for rendering test questionnaires graphically etc. A specific environment will combine these tools with common standards and if someone has the need or reason to use their own blog or some other environment for dictating or presenting the materials, then they can be hopefully combined with these standards. As a 6mm bolt and screw usually match, several environments are planned to be compatible with each other. Although as there are different widths of threads, everything cannot be achieved. Nevertheless in every field there will be formulated a mutual standard or two, that will enable to exchange the corresponding data with minimal losses of data.

Example of XML-based standard

Well designed and programmed data helps to solve majority of the problems with machines that formerly required labor. Therefore a number of positions may disappear after some software install, and the left-over workforce has to find jobs in fields where the technology has no powers. The technological revolution more than a hundred years ago, where the development of technology left a lot of people without food and who started destroying machines, could not be compared with present – as there is hope to find a task for all the people. There are a lot of work hands required in different fields in the Western World’s aging populations, where the technology has not advanced enough (social welfare, trainings, cleaning service) Improved communication channels and data processing possibilities might help to find solutions to most of the problems deriving from the aging of the population and also offer additional ways for daily activities to make them more comfortable or to help to develop totally new services. A.4.3 Customer Centricity and virtual organisations It is considered to be normal that a small car service in a remote village might not be capable of doing electricity related tasks to a new car. With the “new economy” such limitations might not be a hurdle any more. When the village car services have a piece of equipment, which has a remotely guidable robot hand, then it is possible for the local mechanic to ask the help of an expert from the representative office of the brand in order to accomplish some more complicated tasks. A Virtual Organization is an organization that uses internet, leased lines, Wifi or other kind of telecommunication technique to allow efficient relationships in distributed environment of computers.

The independence from the location can quickly increase the number of customers. Specific services will be available with reasonable price. Yet, in 2008 it is unthinkable that some small company would let a computer to optimize the roadways and schedules of the company’s cars. The usual “farm boy knowledge” gives more or less appropriate solutions and that does it. When considering the researches of Great Britain’s Sunderland University, then it would be relatively easy to introduce to the market a new service, that calculates for free or for a symbolic sum the cheapest transportation schematics with some default inputs. If additional consultation or the preparation of the data and the adjustment of the results is required then a fee has to be paid. Whereby it is not necessary to travel to the insular state. Sometimes people don’t see the meaning of “almost free” services. If it would be free, then it would be used a lot. If it would be priced then it would be firstly taken under consideration and the analysis would be ordered just for the data that it is required. The new economy tries to promote especially those “almost free” ways. If the service could be made comfortable, cheap and safe (payment of the fees), then it gives a good ground for practical (semi-) automated services. There are stories of companies that offer their services for 1$/each. When developing the same logistics service to be web-based and to make it available that every enquiry cost 1$, then with enough credibility it shouldn’t be hard to earn a million dollars per year. That sum for optimizing the driving timetable wouldn’t be too big even if the result assures that the plan already in use is the best one. At the same time it might help to find out a lot better solution. There are thousands of companies in Estonia who compile their own driving plans. An average solution could be compiled easily with some default formula in similar traffic conditions. And special solutions for additional costs. If the main formulas are at hand then the previously mentioned web solution should cost a lot less than a million dollars. With the absence of competition this kind of amount would be easily made with enough credibility and marketing. Either through payments, ostensible or non-ostensible advertisement or just to get consultation fees for offering supporting service.

From previous examples concludes that modern organisation has its boundaries widespread over several real companies and even non-profit organisations and public sector. Essentially this cooperation takes time to develop wider and sometimes has its drawbacks but tendence stays.

A.4.4. Enterprise Applications .E-banking has greatly enlivened the economy. Monthly visits to bank offices to pay the invoices and stand in the queues wasted a lot of clients’ and bank officials’ time. A noticeable amount of routine tasks have been automated – manpower is needed only in case of complicated situations. Already in 2006 less than 1/20 of all the bank transfers needed a direct input from an official. The relative simplicity of cash transfers offers possibilities to some business model, where digital solutions have some monetary advantages before cash even when dealing with small sums. In addition to e-banking and debit cards there are many other additional or less specific (half) automated cash transfer possibilities. Mobile payments (by SMS or separate transfer), mobile parking, copying-machine cards, rechargeable public transportation tickets in Helsinki, Finland.

Hansapank‘s e-bank demo version

Estonian ID-card and digital signature opened opportunities to create several applications that would have otherwise hurdled behind legal constraints. As digital signature is a substitute to a regular signature in most cases – other situations require a visit to a notary – then there is less need to move in order to give a signature. X-tee – environment that enables the cross utilization of data- offers access to and to correct one’s own data, issue applications and carry out activities and communicate with several government departments. Once in a year majority of working people visit digital tax office in order to present their income statement. Revision and confirmation of the prefilled forms is considerably quicker and easier, than searching manually for all the necessary documents and data piece by piece, when even small transactions have been made.

The unified ID-card system in Estonia has done a lot of work for information systems’ designers and developers. Cards for gas station networks, shop networks etc. have been in use for a long time already. Although there might be some specific data on the cards, it is becoming less and less important, as usually all the data for each person is accessible in real time in the company’s database. This possibility is often available already then when the client doesn’t even have a card yet. To identify a customer any kind of identification document with social security number on it. If an automated customer identification system is required, then only ID-card reader is necessary on the hardware side and after that only necessary software is needed to be compiled. The dream, of getting rid of all the cards, has not yet (2008) become true, but for example: to use the Tallinn University library, ID-card is all that is needed, to register everything that is required. Also as a common benefit the ID-ticket, for using the public transportation in Tallinn, can be considered as part of the unifying.

Xtee login page

For centuries different clever machines have been invented. A number of activities have become more available and cheaper. The decline in PC prices to an affordable range for the most has made it possible to use automated data processing in most areas. Also a lot of different activities that have previously required special equipment have been made possible to carry them out on a computer, requiring only some additional gadgets. Years ago comparing fingerprints was serious and capacious task. Now again, several PC’s have fingerprint readers only for making it more comfortable to the user to log in. Other biometrical scanners (scanner for retina) will also become cheaper and more available for the public. Stealing biometric data is also lot harder task, compared to nicking usernames and passwords.

Fingerprint reader in a laptop

The development of speech recognition enables us to give oral commandments to computers. That makes some separate devices and facilities obsolete and replaceable by just a microphone and a piece of required software. That also increases the spread of the solutions that were previously available only for the upper-class to the majority. A number of software producers have started to implement a business model, where at least a part of the service is offered for free or very cheaply to the consumers; it reduces the limitations. The development of graphic data processing has made it possible to replace solutions that previously required special sensors, with just a web camera or two; again everyone can download a suitable software, adjust the camera to record the fingers and listen what sound would a guitar do as a result of certain movements – nevertheless the instrument is not in the hands or even at home of the person.

The development of different connection channels has made easily and broadly available a lot of different opportunities that have previously seemed to be only theoretical. With the development also new solutions, positions and traditions to find solutions have emerged. The unemployed labor (due to automated inputs) will find enough to do in places where the changes in population’s composition result in a lack of work force. 7. Questions 7.1. Globalization main impact to information technology field is Company’s physical location is not important X Synchronizing of different computer clocks are difficult Transportation importance declines in world economy Laptop computers usage rises significantly

7.2. Extranet is for Connection enterprise departments to each other Connection of enterprise clients and partners into separated network X Interconnection between colleges and universities Replacement of local area networks after 2010

7.3. Wide usage of e-business Is conditioned to computers usage in department stores Infers Customer Relationship Management systems obsolete Is conditioning e-money as currency equivalent Allows enterprises to focus on main field of activity X

7.4. Customer Relationship Management is needed for Avoiding routine informatrion collection for small amount of customers Maintaining continuing business relationship to customers X Using free licence attached to server procurement Allowing sales people to work from home