ALLAMA IQBAL OPEN UNIVERSITY

ISLAMABAD

Management Information System

MBA (Banking and Finance)

(Assignment # 1)

Question # 1:
Part (a):
Challenges in studying MIS:
Some of the distinguishing challenges
that the people face while planning, using or approving management
information systems are:
• MIS requires a wide variety of knowledge areas including accounting,

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finance, marketing and manufacturing. Therefore having both technical
and practical experience in these subjects is very useful.
• Both technology and technology-related products are emerging at very
high pace. Consequently no one possibly be proficient in all new
technologies and compromises have to be taken.
• Many terms used in MIS are inaccurate and controversial because of
high pace of new hardware, software and communication technology.
• MIS problems are difficult to define. Some times a situation may be
seen as a problem but in fact it may be a symbol only.
• Not like other subjects like Physics, Chemistry that exists probably
from very beginning, MIS has only been recognized as a separate field of
study in 1960s.
• A large number of important areas of MIS are still not touched as said
by many professionals.
• There is a lack of sympathetic relationship between MIS personnel and
users and management and MIS personnel because employees are more
loyal to their profession rather than needs of the organizations.
• No universal standards have been established regarding how much to
spend on MIS.

When talking about the vast field of Information Systems there is not just
one pressing issue, there are three: Accuracy, Usability, and Time.
Without the combination of these three factors a business would go
under in the matter of months.
The first of these three and probably the most important of these is the
accuracy of the information. The information that you provide someone
with in order to make vital decisions must be precisely accurate. If one
piece of data is incorrect it could mean the difference between life and
death, literally. For example, if a doctor receives false information about
a patient’s allergies he may give that patient medicine that could
eventually kill them. Another recent instance where inaccurate
information caused a catastrophe is with Enron. They falsified financial

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information causing the company to collapse. If a news station were to
give a report that was invalid, they would lose their credibility and
respect from the people. Accuracy is a must when it comes to
information that is provided to make decisions of any kind.

Another major issue involving information systems is the information’s

usability. If the business uses software to access the information it has to
be easy to use and understand for the end-user as well as the
executives. The information needs to be easily accessible from the
hardware where it is stored. Also, if the information is generated into a
report form of some kind, the report must be made so that it can be
interpreted effortlessly in order to make precise decisions.
The information provided should have value to the decisions at hand.

The final of the three most significant challenges of the field of

Information Systems is the time factor. As time progresses everything is
built bigger and faster and people seem to be always operating at a
faster pace, therefore information needs to be received at a faster rate.
If a person or business does not get the information in time to make a
prompt decision they could lose out on many opportunities. This concept
all started when the phone was introduced and people could be
connected to each other in an instant, instead of waiting a week for a
letter in the mail. Now as the internet has evolved, people and
businesses can send documents and other information to one another in
matter of seconds, causing decision-making times to decrease
dramatically. A good example of this high information transfer rate is a
cash register. At Sam’s Club, where I work, within one minute the
computer can check on the member’s status, scan the items decreasing
the inventory, calculate the total, send the transaction to the database,
verify the member’s credit card, check, or debit card, and even connect
to a bank and pre-approve them for another credit card. As people
remain to progressively become more frantically fast paced the

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challenge of information getting to them will need also to become
faster.
These three aspects of Information Systems must be used in conjunction
with one another. Information may be received quickly and easy to use,
but if it is inaccurate it is worthless. Just the same if the information is
either too slow or incomprehensible it is useless as well. “Being an
information services provider, we especially understand the importance
of speed, accuracy, flexibility, technology and the highest level of
customer service as being key components of a successful marketing
strategy in a competitive environment,” states Berkshire Information
Systems Inc. The biggest challenge of these three issues is combining
them together in an efficient effective manner.

Opportunities in studying MIS:

An information system is there to empower its users. A database simply
provides data, but an information system is all about providing the best
information the user needs to do their task more effectively. It also takes
into account that different users doing their own specific tasks may need
to see their information presented in differing ways. The benefits of an
information system follow when the user can quickly access, understand
and respond correctly to that information.

Information systems do not need to be a real-time to qualify for this

definition. The emphasis is more on providing useful information rather
than raw data from a database that still needs processing or analyzing to
become meaningful.

Sometimes how an information system may benefit you is not initially

clear. Often information systems evolve as your business grows. You
may start with a simple database and as you identify areas where better
information may provide economic benefits, you add to your base
system. Information systems are rarely out-of-the-box solutions, they are
something that grows with you. It is therefore very important that your

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systems technology allows you to have this path to build upon. You must
be able to control the technology and not be locked into a standard
boxed solution that only its manufacturers control. You get no assurance
that their upgrades will be inline with your business needs of the future.

To get the greatest benefits from an information system, consider it an

adaptable tool that you progress as your business progresses. Don’t get
locked into inflexible technology, grow a system that delivers on what
you really need most today, knowing that when tomorrow’s new
challenges come, the system will have the flexibility to adapt. This is
where custom software development delivers strongly.

Learning about information systems will help you both personally and
professionally. An understanding of information systems can also help a
company. An effective information system can have a major impact on
corporate strategy and organizational success. This impact can benefit
the organization, users of the information system, and any individual or
group who will interact with the information system. Some of the
opportunities organizations seek to achieve through information systems
include:
 Added value to products (goods and services)
 Better safety
 Better service
 Competitive advantages
 Fewer errors
 Greater accuracy
 Higher-quality products
 Improved communications
 Increased efficiency
 Increased productivity
 More efficient administration
 More opportunities

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  Reduced labor requirements
 Reduced costs
 Superior financial decision making
 Superior control over operations
 Superior managerial decision making.

Part (b):

Components of information systems:

The main components of information systems are hardware and

software, databases, telecommunications systems, human resources,
and procedures.

Computer hardware
Today even the smallest firms, as well as many households, own or lease
computers. These are usually microcomputers, also called personal
computers. Large organizations typically employ multiple computer,
from a few powerful mainframe machines (or even more powerful
supercomputers) and minicomputers to widely deployed personal
computers. Together with computer peripheral equipment, such
as magnetic disks, input-output devices, and telecommunications gear,
these constitute the hardware of information systems. The cost of
hardware has steadily and rapidly decreased, while processing speed
and storage capacity have increased vastly.

Computer software
Computer software falls into two broad classes: system software and
application software. The principal system software is known as
the operating system. It manages the hardware, files, and other system
resources and provides a systematic and consistent means for
controlling the computer, most commonly via a graphical user
interface (GUI). Application software is programs designed to handle

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specialized tasks; many of these programs are sold as ready-to-use
packages. Examples include general-purpose spreadsheet and word
processing programs, as well as “vertical” applications that serve a
specific industry segment—for instance, an application that schedules,
routes, and tracks package deliveries. Larger firms often develop their
own application software or customize existing packages to meet
specific needs. Some companies, known as application service providers
(ASPs), have begun to rent specialized application software on a per-use
basis over the Web.

Databases
Many information systems are primarily delivery vehicles for databases.
A database is a collection of interrelated data (records) organized so that
individual records or groups of records can be retrieved that satisfy
various criteria. Typical examples of databases include employee records
and product catalogs. Particularly valuable are customer databases that
can be “mined” for information in order to design and market new
products more effectively. Anyone who has ever purchased something
with a credit card—in person, by mail order, or over the Web—is included
within some of the numerous customer databases.

Telecommunications
Telecommunications are used to connect, or network, computer systems
and transmit information. Various computer network configurations are
possible, depending on the needs of an organization. Local area
networks (LANs) join computers at a particular site, such as an office
building or an academic campus. Wide area networks (WANs) connect
machines located at different sites, and often within different
organizations. The Internet is a network of networks, connecting millions
of computers located on every continent. Through networking, personal
computer users gain access to information resources, such as large

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databases, and to human resources, such as coworkers and people who
share their professional or private interests.

Human resources and procedures

Qualified people are a vital component of any information system.
Technical personnel include development and operations managers,
systems analysts and designers, computer programmers, and
computer operators. In addition, workers in an organization must be
trained to utilize the capabilities of information systems. Hundreds of
millions of people around the world are learning about information
systems as they use the Web.
Procedures for using, operating, and maintaining an information system
are part of its documentation. For example, procedures need to be
established to run a payroll program, including when to run it, who is
authorized to run it, and who has access to the output.

Question # 2:
Management solutions for End-User resistance to the
implementation of new information system:

User resistance to information systems implementation has been

identified as a salient reason for the failure of new systems and hence
needs to be understood and managed. While previous research has
explored the reasons for user resistance, there are gaps in our
understanding of how users evaluate change related to a new
information system and decide to resist it. In particular, missing in the
explanation of user decision making is the concept of status quo bias,
that is, that user resistance can be due to the bias or preference to stay
with the current situation. Motivated thus, this study develops a model to
explain user resistance prior to a new IS implementation by integrating
the technology acceptance and resistance literatures with the status quo
bias perspective. The results of testing the model in the context of a new

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enterprise system implementation indicate the central role of switching
costs in increasing user resistance. Further, switching costs also mediate
the relationship between other antecedents (colleague opinion and self-
efficacy for change) and user resistance. Additionally, perceived value
and organizational support for change are found to reduce user
resistance. This research advances the theoretical understanding of user
acceptance and resistance prior to a new IS implementation and offers
organizations suggestions for managing such resistance.

Understanding the factors that contribute to the success of systems

implementation efforts is a central concern in the field of information
systems (IS). One key factor to which many implementation problems
have been attributed is user resistance to change. Different types of
systems tend to be associated with different organizational functions and
classes of users, and thus may be resisted for different reasons. This
paper reports the results of a study investigating the link between
resistance reasons and system types and assessing managerial
perceptions of the relative importance of various strategies for
promoting acceptance in the context of those types. Surveying 66
managers in a variety of organizations, our results suggest that decision
support systems (DSS) and transaction processing systems (TPS) are
resisted for different reasons, and that promotion strategy effectiveness
also differs. Additionally, our study attempts to make explicit, based on
system type, key reasons for user resistance and the remedies designed
to promote acceptance. This improves our overall understanding of the
resistance phenomenon and guides analysts in selecting an appropriate
strategy for a given system type.

End-user’s resistance to information technology (IT) is a common

occurrence when new information systems are implemented and can
greatly contribute to failure of newly implemented systems. IT systems
have become larger and more complex. They involve large sets of

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challenges that impact organizations and people on many levels.
Overcoming these challenges is not only essential but it is a must for a
successful IT project. Human factors contribute to some of the most
important issues that play a part in a project’s success or failure. One of
the indicators of a successful IT project is determined by how much it is
used by its users.

An end-user is any individual who interacts with a system. Resistance is

often identified as a response to change that can result in reluctance to
use a new system or technology. End-user resistance is a complex
phenomenon. It can have various forms such as sabotage of computer
equipment, employees being absent or late to work, "badmouthing" of
systems, not using the systems or continuing to use the old system. It
can introduce unexpected delays, costs and instabilities into a project.
Thus, resistance can become an ongoing problem at both individual and
organizational levels.

End-user resistance could be a result of various factors such as innate

resistance to change, lack of involvement in the development and
implementation processes, lack of management support, poor technical
quality which makes the system appear “unfriendly”, inadequate or
improper training, unclear benefits of the new system, lack of user
support and poor interaction between the designers and users/

The goal of this research was to identify strategies that could be used to
deal with end-user resistance on IT projects; investigate the
effectiveness of these strategies and whether or not they are used IT
project managers.

Among identified strategies were:

• End-user participation. Some examples of user participation include
leadership of project team, participating in cost and benefit

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 evaluation, defining requirements, evaluating system prototypes
and performing user acceptance testing.
• End-user training. Some examples of training include conceptual
training (presenting end-users with an overview of how the system
is organized and how it works), procedural training (involves
explaining to end-users how to use specific set of the system
functionality), self-taught (involves end-users learning a new
system by themselves by means of trial and discovery), just-in-
time (training occurs just prior to implementation of the new
information system) and staged training (involves breaking up
training into smaller training sessions).
• End-user support. Some examples of end-user support involve
helping users with internally developed or purchased applications,
helping them with hardware use or problems and providing support
for work performed on a computer.
• Communication. Communication can take place in several forms
such as oral, written and non-verbal. Some examples of
communication are newsletters, e-mails, notice boards, making
information available on the intranet and direct face-to-face
meetings.
• Consultant involvement. IT consultants serve as a catalyst for
change by influencing a client's IT decisions. They can help to
implement applications successfully and ensure that users adapt to
new changes

Frequency of use of strategies

Strategy Frequency of Use

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 Often Sometimes/On Some Occasionally
Projects
Communicati Communication by means Communicating with end- Communication
on strategy of e-mail, face-to-face and users by means of by means of
phone; teleconferencing and making newsletters.
Meeting up with end-user to information available via a
discuss any issues or website;
concerns.
End-user End-user participation Building prototypes and
participation during any of the stages of involving end-users in
IT project; prototype assessment and
End-users performing user evaluation;
acceptance testing; Encouraging end-users to
Involving end-users in appoint a formal user-liaison
system testing. to the project team;
End-user Providing training before, Repetitive
training during and after system training sessions
implementation;
Providing one-off training to
end-users;
Providing stage-wise training
to end-users.
End-user Providing end-user support Giving end-users that were
support after system involved in the project
implementation; support during system
implementation;
Consultant Consultant involvement in the
involvement project;

These strategies were end-user support, participation, communication,

and training, learning culture and consultant involvement in a project.
These strategies either empower end-users to participate in the project
or give support and encourage end-users to learn about new the
application. IT project managers use all identified strategies on their IT
projects. The results also showed that participation and communication

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strategies were rated by IT project managers as the most effective
strategies for dealing with end-user resistance.

Question # 3:

System Software:
System software refers to the files and programs that make up your
computer's operating system. System files include libraries of functions,
system services, drivers for printers and other hardware, system
preferences, and other configuration files. The programs that are part of
the system software include assemblers, compilers, file management
tools, system utilites, and debuggers.
Application software:
Application software is software designed to help the user to perform a
singular or multiple related specific tasks. Such programs are also
called software applications or applications software. Typical examples
are word processors, media players and database applications.

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Role of System and Application Softwares for Business End User:
Computers and software are more tangible to most people than business
concepts such as marketing philosophy, competitive strategy and business
models. However, the business process that is built upon these fundamentals
provides the real key to success. Computers and software are essential tools
used to implement the business process, but they still are just tools in the
overall scheme of the business.

 Construction software
 Decision making software
 Dashboards
 Document Automation/Assembly
 Electronic business
 Electronic performance support systems
 Legal Matter Management
 Management information systems

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  Operational risk management
 Product lifecycle management
 Project management software
 Retail software
 Supply chain management
 Supply chain management software

A business process is "a collection of related, structured activities that

produce a service or product that meet the needs of a client. These
processes are critical to any organization as they generate revenue and
often represent a significant proportion of costs. As a managerial
approach, BPM considers processes to be strategic assets of an
organization that must be understood, managed, and improved to
deliver value added products and services to clients. This foundation is
very similar to otherTotal Quality Management or Continuous
Improvement Process methodologies or approaches. BPM goes a step
further by stating that this approach can be supported, or enabled,
through technology to ensure the viability of the managerial approach in
times of stress and change. In fact, BPM is an approach to integrate a
"change capability" to an organization - both human and technological.
As such, many BPM articles and pundits often discuss BPM from one of
two viewpoints: people and/or technology.

Roughly speaking, the idea of (business) process is as traditional as

concepts of tasks, department, production, outputs. The current
management and improvement approach, with formal definitions and
technical modeling, has been around since the early 1990s (see business
process modeling). Note that in the IT community, the term 'business
process' is often used as synonymous of management of
middleware processes; or integrating application software tasks. This
viewpoint may be overly restrictive. This should be kept in mind when

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reading software engineering papers that refer to 'business processes' or
'business process modeling.'

Although the initial focus of BPM was on the automation of mechanistic

business processes, it has since been extended to integrate human-
driven processes in which human interaction takes place in series or
parallel with the mechanistic processes. For example
(in workflow systems), when individual steps in the business process
require human intuition or judgment to be performed, these steps are
assigned to appropriate members within the organization.

More advanced forms such as human interaction management are in the

complex interaction between human workers in performing a workgroup
task. In this case, many people and systems interact in structured, ad-
hoc, and sometimes completely dynamic ways to complete one to many
transactions.

BPM can be used to understand organizations through expanded views

that would not otherwise be available to organize and present. These
views include the relationships of processes to each other which, when
included in the process model, provide for advanced reporting and
analysis that would not otherwise be available. BPM is regarded by some
as the backbone of enterprise content management.

BPM is a critical part of ITSM - IT Service Management. Without driving

good business process management your IT Service Management
initiatives would fail. All disciplined IT Service Management
implementations include well developed BPM processes.

Because BPM allows organizations to abstract business process from

technology infrastructure, it goes far beyond automating business
processes (software) or solving business problems (suite). BPM enables
business to respond to changing consumer, market, and regulatory
demands faster than competitors - creating competitive advantage.

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Question # 4:
Part (a):
Database:
A database is an integrated collection of logically-related records or files
consolidated into a common pool that provides data for one or more
multiple uses. One way of classifying databases involves the type of
content, for example: bibliographic, full-text, numeric, and image. Other
classification methods start from examining database models or
database architectures: see below. Software organizes the data in a
database according to a database model. As of 2010 the relational
model occurs most commonly. Other models such as the hierarchical
model and the network model use a more explicit representation of
relationships.

Types of Database:
Relational Database

The standard of business computing as of 2009, relational databases are

the most commonly used database today. It uses the table to structure
information so that it can be readily and easily searched through.

Analytical database

These databases store data and information extracted from selected

operational and external databases. They consist of summarized data
and information most needed by an organization's management and
other end-users. Some people refer to analytical databases as
multidimensional databases, management databases, or information
databases.

End-user database

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These databases consist of a variety of data files developed by end-users
at their workstations. Examples of these are collections of documents in
spreadsheets, word processing and even downloaded files.

Data warehouse

A data warehouse stores data from current and previous years — data
extracted from the various operational databases of an organization. It
becomes the central source of data that has been screened, edited,
standardized and integrated so that it can be used by managers and
other end-user professionals throughout an organization. Data
warehouses are characterized by being slow to insert into but fast to
retrieve from. Recent developments in data warehousing have led to the
use of a Shared nothing architecture to facilitate extreme scaling.

Operational database

These databases store detailed data needed to support the operations of

an entire organization. They are also called subject-area databases
(SADB), transaction databases, and production databases. For example:

 customer databases
 personal database
 inventory databases
 accounting databases

Distributed database

These are databases of local work-groups and departments at regional

offices, branch offices, manufacturing plants and other work sites. These
databases can include segments of both common operational and
common user databases, as well as data generated and used only at a
user’s own site.

External database

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These databases provide access to external, privately-owned data online
— available for a fee to end-users and organizations from commercial
services. Access to a wealth of information from external database is
available for a fee from commercial online services and with or without
charge from many sources in the Internet.

Hypermedia databases on the web

These are a set of interconnected multimedia pages at a web-site. They

consist of a home page and other hyperlinked pages of multimedia or
mixed media such as text, graphic, photographic images, video clips,
audio etc.

Navigational database

In navigational databases, queries find objects primarily by following

references from other objects. Traditionally navigational interfaces are
procedural, though one could characterize some modern systems like
XPath as being simultaneously navigational and declarative.

In-memory databases

In-memory databases primarily rely on main memory for computer data

storage. This contrasts with database management systems which
employ a disk-based storage mechanism. Main memory databases are
faster than disk-optimized databases since the internal optimization
algorithms are simpler and execute fewer CPU instructions. Accessing
data in memory provides faster and more predictable performance than
disk. In applications where response time is critical, such as
telecommunications network equipment that operates emergency
systems, main memory databases are often used.

Document-oriented databases

Document-oriented databases are computer programs designed for

document-oriented applications. These systems may be implemented as
a layer above a relational database or an object database. As opposed to

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relational databases, document-based databases do not store data in
tables with uniform sized fields for each record. Instead, they store each
record as a document that has certain characteristics. Any number of
fields of any length can be added to a document. Fields can also contain
multiple pieces of data.

Real-time databases

A real-time database is a processing system designed to handle

workloads whose state may change constantly. This differs from
traditional databases containing persistent data, mostly unaffected by
time. For example, a stock market changes rapidly and dynamically.
Real-time processing means that a transaction is processed fast enough
for the result to come back and be acted on right away. Real-time
databases are useful for accounting, banking, law, medical records,
multi-media, process control, reservation systems, and scientific data
analysis. As computers increase in power and can store more data, real-
time databases become integrated into society and are employed in
many applications.

Part (b):
Types of Telecommunication Networks

In its most basic form a network is an interconnected system of things or

people. From a technical standpoint a network is a data communication
system that interconnects computer systems at different sites, or the
connection of two or more computers using a communications system

Most networks can be classified into one of five different types. These
include wide area networks (WAN), local area networks, (LAN), virtual
private networks (VPN), client/server networks, network computing, and
peer-to-peer networks.

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Wide Area Network (WAN)

Any network that encompasses a large geographic area is referred to as

a WAN or Wide Area Network. Many large businesses and government
agencies use WANs to keep their employees and citizens connected as
well as provide a quick and effective way to send and receive
information.

Metropolitan Area Network (MAN)

A MAN or Metropolitan Area Network is a network that covers a region,

often a metropolitan area that is bigger than a Local Area Network and
smaller than a Wide Area Network and consists of several interconnected
LANs. This network often serves regional businesses that have several
locations throughout the region or entire cities. With this configuration, a
MAN often is then connected to larger WAN networks.

There are three features that differentiate MANs from LANs or WANs:

1. The area of the network size is between LANs and WANs. The MAN will
have a physical area between 5 and 50 km in diameter.

2. MANs do not generally belong to a single organization. The equipment

that interconnects the network, the links, and the MAN itself are often
owned by an association or a network provider that provides or leases
the service to others.

3. A MAN is a means for sharing resources at high speeds within the

network. It often provides connections to WAN networks for access to
resources outside the scope of the MAN.

Campus Area Network (CAN)

A CAN or Campus Area Network is a network that is restricted to a small

geographic area such as a building complex or a college campus. It is
smaller than a Metropolitan Area Network but larger than a Local Area
Network. The CAN incorporates several LANs and usually has
connections to a MAN or WAN.

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Local Area Network (LAN)

Similar in many ways to WANs; Local Area Networks or LANs are

responsible for connecting computers in a much smaller limited physical
area. A good example of a LAN would be a hotel's wireless Internet
offering which is self-contained within their own facility.

There are multiple standards for Local Area Networks. Examples

include IEEE 802.3 (Ethernet), IEEE 802.11 (Wi-Fi) or ITU-T G.hn (using
existing home wires, such as power lines, phone lines and coaxial
cables).

Personal Area Network (PAN)

A Personal Area Network (PAN) is a network that is restricted to the area

of a person's body. It is much smaller than Local Area Network. It
typically incorporates ad hoc connections to other PANs or directly to
BlueTooth devices.

Virtual Private Network (VPN)

Virtual Private Networks or VPNs are a type of network that builds on the
concept of a WAN however relies upon the internet and an encrypted
connection mechanism to establish a secure environment for internal or
external employees or customers.

Client/Server Network

The Client-Server network architecture continues to be the main

architectural choice for most enterprise network computing. In a
client/server environment the client (i.e. PC) relies on a LAN to connect
with a back office network server that is responsible for the connection,
retrieval, and storage of data and other critical company or personal
information.

Network Computing

Network computing is a network architecture that has grown with the

Internet and resulting connection speeds. In a network computing

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architecture a computer uses its web browser to connect to another
network computer that actually is running the application. A good
example of this architecture in use is Google Docs or Microsoft Office
online. Both services allow users the ability to login to Google or
Microsoft servers respectively and work similarly to how it would be
performed on their own computing environment.

Peer-to-Peer Network

Peer to peer networks are now beginning to be realized for the positive
benefits they provide and not as only used for the sharing of copyrighted
material. Peer-to-peer networks can be separated into two major types:
Central Server and Pure.

In a central server environment one host server maintains all active

connections and shared information. When information is requested the
central server informs the user where they can receive the file and
allows the connection directly to the other PC to download. The best
example of this type was the original Napster file sharing service.

A pure peer-to-peer network type has no central server to maintain an

active user relies instead on the individual computers to seek out all
other computers offering the same information being requested. A good
example of this type would be BitTorrent software which allows small
parts of information to be pulled from many sources which once
completed compiles into the one file that is being downloaded.

Question # 5:
Part (a):
Electronic payment Processes:

A. Systems Based on Virtual Credit Cards

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1.
What is a virtual credit card?
This kind of card does not rely on any hardware, that is to say, they are
solely a number lodged in the server of the emitting organization.
2.
How is a virtual credit card used?
This kind of card is used of the following way:
The user will load the virtual card with a determined amount; this will be
done through
the Internet, automatic tellers or branch of a bank. This upload is made
against any account that the user arranges in the issuing bank, one to
make the purchase of the empty card and in case a loaded card has not
been drained completely the rest could be "download" in the account
that the user chooses.
3.
What advantages does the use of the virtual credit cards offer?
The main advantages offered by this kind of card are that they do not
have to be necessarily associated to a certain account and also are free
of the costs of discharge or maintenance. In addition, many financial
organizations that commercialize this kind of card include an insurance
against fraud in purchases made on the Internet.
B. The E-cash Model
1.
What is an E-cash model?
This is a system that provides security and privacy through a scheme of
cryptography with public keys, and validity as much for open networks
(Internet) as for private networks. The system associates an application
of software online that allows the accomplishment of payments in
exchange for information, goods or services.
2.
Once the funds are bought from emitting organizations, the client uses
the funds to pay a salesman. At the moment of the purchase, the

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salesman must resend the funds to the bank of issuance to make sure
that those funds have still not been spent. If the funds are valid, they will
be deposited in the account of the salesman. Then, the salesman can
send the merchandise and the invoice corresponding to the client.
3.
What is the disadvantage to the use of the E-cash model?
The main problem of E-cash is that, unlike credit cards with a world-wide
diffusion, it is necessary that the commercial establishment accept it as
payment method. Another problem resides in that at the present time in
the development of this model, the client and the salesman have to have
accounts in the same bank of issue of the E-cash, that is at the moment
the funds emitted by a bank are not valid in other banks.
Nevertheless, it is possible that as the use of E-cash extends, there will
appear organizations who are dedicated to the interchange of these new
currencies between banks.
4.
What are the advantages the use of the E-cash model?
It offers the possibility of maintaining the absolute privacy of the client,
provided there is an agreement between the bank of issue and the
organization from which the goods or services have been acquired.
C. Systems Based on NetBill Checks.
1.
What is the systems based on NetBill checks and how does it work?
This is a system that was developed by the University of Carnegie
Mellon. Its operation is based on a protocol of transactions of NetBill and
the use of symmetrical keys for the return of the acquired data.
This kind of transaction receives the name NetBill checks because its
operation is similar to a payment with a check, so that the payment (and
the transference of funds between accounts) are carried out at the
moment in which the purchase is made. So that the NetBill system can
function, the clients and the commercial organizations must belong to
the system supported by a server of NetBill, that is in charge of

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maintaining the accounts of the clients and those of the commercial
organizations. These accounts can be associated with traditional
accounts in financial organizations. When a client buys information, it
loads the corresponding amount in its NetBill account, which is paid to
the NetBill account of the commercial organization.
2.
What are the advantages of the use of the systems based on NetBill
checks?
The advantages of this system are related to the possibility of paying
solely by the received information.
3.
What are the disadvantages of the use of the systems based on NetBill
checks?
Like the other systems analyzed previously, it has the disadvantage that
the clients and the commercial organizations must belong to the system
so that a transaction can be made.

Part (b):
E-commerce Business success:
Many small ecommerce businesses are one-to-five person shops whose
income is derived solely from their websites. As the ecommerce world
evolves and becomes more sophisticated, however, success for these
smaller merchants has become more challenging.
Through the past year, certainly a harrowing one economically, we have
seen quite a few smaller site owners thrive. We have also seen a
significant number succumb to the current economic conditions. Here
are six factors we see for those who are achieving success.
Product Line
A niche product line is a very good thing. If what you are selling is
available on Amazon, then you should ask yourself what you can offer as
a value-add, such as service, information, guarantees, or possibly even

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some entertainment. Successful ecommerce niches can include pet
supplies, hobbies, industry-specific tools/supplies, and specialized
business-to-business markets. If your product line naturally generates
repeat orders or if you can creatively build your business to encourage
repeat orders, you will be doing yourself a big favor.
Mindset
If your business is small, then you want to use your size to your
advantage. You are going to have a tough time going head-to-head
against the big players in the industry. Instead, develop your
personalized message and emphasize the human touch that you
provide. Build relationships with your customers after your initial product
sale with follow-up emails, requests for reviews, and email marketing
with specials. The successful owner is pulling out all the stops. Sell
yourself with your photo and your story on your website. People want to
do business with someone they can trust. If you are a sincere, helpful,
and trustworthy person, don't be shy about sharing that with the world,
or at least with your customers.
Abilities
You can build a successful web business, even if you don't possess a
wealth of technical knowledge. Be realistic about where your skills and
abilities are. Don't get bogged down in the technical minutiae of running
a web server. Go with an ecommerce platform that provides the tools
and resources you need to be successful. Unless you have some
computer expertise, going the bare bones route is probably not going to
serve your business for very long. Make sure your site is built on top of a
solid content management system that allows you to focus on your
marketing and customer service and not the mechanics of having a
website.
Website Presentation
Your website is at the center of your success. You will want to put a
priority on nurturing and improving your site over time. The simplest
step you can take is to update your home page regularly so the

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information is accurate and timely. The site owners we see who are
successful are pretty obsessive about their sites. The most successful
sites are not necessarily the most beautiful. But they have well-
developed category and product presentation. The home page is always
displaying a timely message.
Relationship Building
Over the past year, the social aspect of the web has flourished. As a
small business owner, you need to pick your spots carefully and develop
a social media plan. If you have time to devote to a blog, Facebook, or
Twitter, that is fabulous. It will benefit you to explore all available
channels. But if your time is limited, focus on taking small steps to
develop your website as a social hub. Build strong bonds with your
customers by asking for their feedback, giving them incentives to refer
others, and genuinely listening to what they say.
The successful site owner responds to customers immediately, has the
ability to communicate via online formats, and is a phenomenal resource
for customers. If you have a knack for writing then take advantage of
that at every turn, whether it is via a blog or some featured relevant
articles on your site. Always be asking yourself how you can connect and
build trust with your customers.

Use of New Technology

You don't need to be a tech "whiz" to make your business work. But you
do need to embrace technology. In a rapidly changed online world, it is
hard to flourish by standing still. Whether it is your site's search engine
optimization, comparison shopping feeds, or on-site merchandising
features, you want to identify ways to keep moving forward. Many
elements like social bookmarking widgets are free and easy to add to
your website.
Video is a prime example where we have seen some small business
owners do great things. With an inexpensive setup, you can be posting

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your own videos to YouTube and develop a whole new channel of
potential customers. Be willing to try new technologies and see if you
can align yourself with vendors who responsibly role out new
functionality.
Key success factors in e-commerce
1. Providing value to customers. Vendors can achieve this by offering
a product or product-line that attracts potential customers at a
competitive price, as in non-electronic commerce.
2. Providing service and performance. Offering a responsive, user-
friendly purchasing experience, just like a flesh-and-blood retailer,
may go some way to achieving these goals.
3. Providing an attractive website. The tasteful use of colour,
graphics, animation, photographs, fonts, and white-space
percentage may aid success in this respect.
4. Providing an incentive for customers to buy and to return. Sales
promotions to this end can involve coupons, special offers, and
discounts. Cross-linked websites and advertising affiliate programs
can also help.
5. Providing personal attention. Personalized web sites, purchase
suggestions, and personalized special offers may go some of the
way to substituting for the face-to-face human interaction found at
a traditional point of sale.
6. Providing a sense of community. Chat rooms, discussion boards,
soliciting customer input, loyalty schemes and affinity programs
can help in this respect.
7. Providing reliability and security. Parallel servers, hardware
redundancy, fail-safe technology, information encryption, and
firewalls can enhance this requirement.
8. Providing a 360-degree view of the customer relationship, defined
as ensuring that all employees, suppliers, and partners have a
complete view, and the same view, of the customer. However,
customers may not appreciate the big brother experience.

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9. Owning the customer's total experience. E-tailers foster this by
treating any contacts with a customer as part of a total experience,
an experience that becomes synonymous with the brand.
10. Streamlining business processes, possibly through re-
engineering and information technologies.
11. Letting customers help themselves. Provision of a self-serve
site, easy to use without assistance, can help in this respect.
12. Helping customers do their job of consuming. E-tailers can
provide such help through ample comparative information and
good search facilities. Provision of component information and
safety-and-health comments may assist e-tailers to define the
customers' job.
13. Constructing a commercially sound business model. If this key
success factor had appeared in textbooks in 2000, many of the
dot.coms might not have gone bust.
14. Engineering an electronic value chain in which one focuses on
a "limited" number of core competencies -- the opposite of a one-
stop shop. (Electronic stores can appear either specialist or
generalist if properly programmed.)
15. Operating on or near the cutting edge of technology and
staying there as technology changes (but remembering that the
fundamentals of commerce remain indifferent to technology).
16. Setting up an organization of sufficient alertness and agility to
respond quickly to any changes in the economic, social and
physical environment.

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