E-Commerce, M-Commerce and Emerging Technologies: Learning Outcomes
E-Commerce, M-Commerce and Emerging Technologies: Learning Outcomes
E-COMMERCE, M-COMMERCE
AND EMERGING
TECHNOLOGIES
LEARNING OUTCOMES
After reading this chapter, you will be able to -
r Understand the meaning, components and architecture of
E-commerce.
r Grasp the knowledge about the process flows in
E-commerce transactions.
r Comprehend the various aspects of risks and controls in
E-commerce.
r Recognise applicable laws and guidance governing
E-Commerce.
r Acknowledge a basic understanding on the paradigms of
various Computing Technologies like Cloud Computing,
Grid Computing, Mobile Computing, Green Computing
and BYOD etc.
© The Institute of Chartered Accountants of India
4.2 ENTERPRISE INFORMATION SYSTEMS
CHAPTER OVERVIEW
Components
Architecture
• Virtualization
• Grid Computing
• Cloud Computing
• Mobile Computing
EMERGING TECHNOLOGIES • Green IT
• BYOD
• Web 3.0
• Artificial Intelligence
• Machine Learning
The explosion in the application of technologies and the delivery of these technologies
in to the hands of consumers has made the vision, the dream, the fantasy of conducting
business electronically, anywhere in the global community, a reality. E-commerce is
no longer just a concept; it is a market force to be reckoned with. As more and more
organizations launch Internet/ World Wide Web (WWW) home pages and intranets
to disseminate company/product information, and expand their customer base,
countless yet unnamed companies are just beginning to investigate this alternative.
These companies are realizing that business via the Internet is inevitable that they
will not be able to ignore. The lure of reaching additional customers, expanding
market shares, providing value-added services, advancing technological presence, and
increasing corporate profits is just too valuable to disregard, and will eventually attract
companies to electronic commerce like moths to a flame.
E-Commerce is the process of doing business electronically. It refers to the use of
technology to enhance the processing of commercial transactions between a company,
its customers and its business partners. It involves the automation of a variety of
Business-To-Business (B2B) and Business-To-Consumer (B2C) transactions through
reliable and secure connections.
A recent report on India’s e-Commerce growth forecasts that as a result of rising
internet penetration as roughly 350 million Indian citizens are already online and that
number is expected to nearly double to 600 million by 2020*. This number is more than
projected users in USA by that time. Above fact is an indicator that India’s e-business
shall be growing very fast as internet penetration increases.
4.1.1 Traditional Commerce and E-Commerce
The greatest change due to technology innovations in last five years has been the way
users perform their daily chores / activity of life. An illustrative Table 4.1.1 shows how
technology has entered every aspect of human life.
Table 4.1.1: Example of how Technology has entered every aspect of human life
S. No. Activity Then Now
1 Wake up Alarm clocks with Mobile alarms, multiple types.
snooze buttons.
Some forcing you to solve mathematical
quiz before you snooze them.
Ensuring you wake up.
© The
*Source Institute of Chartered
: www.indianexpress.com Accountants of India
4.4 ENTERPRISE INFORMATION SYSTEMS
3 Going to office In small towns in Now even in small towns you have a
India, there was mobile APP through which you can
AUTO RICKSHAW call a JUGNOO auto / bike, an OLA or
UBER auto / cab.
4 Office Admin All jobs to be Now you book through online APP,
done by assigned the courier agency picks up POST at
service provider. For designated time and place.
example: Courier’s
need to be sent to
courier agency
5 Procurements of Go shop by shop Now it is possible to search all products
all items: Items to check price and online, buyer can compare prices and
include Electronic, quality order online.
Furniture, Mobiles,
Few online sellers are giving facility of
Grocery, Cars and
delivery within 12 hours of ordering.
Bikes etc. all items
covered here.
Above is the way consumer / customers are buying products / services. This has forced
organization to change their product / service delivery channels. The previous product
delivery channel which was typically defined by the Fig. 4.1.1 has moved to the new
product delivery model Fig. 4.1.2.
Manufacturer 1
Whole Seller
(or Agent) 1
Manufacturer 2
RETAILER
Manufacturer 3
Value added:
Whole Seller
(or Agent) 2 • Breaking bulk
Products • Consolidating supplies
from other • Holding inventory
Manufacturers
STEP 3: From the products listed, user needs to select the correct product s/he needs
to buy.
STEP 4: User makes the final choice and goes for making payment online.
STEP 5: At the time of making payment, e-commerce vendor shows all details including
the product being bought and the final price of the same for review of the customer
and confirmation before final payment.
STEP 6: Once user goes for online payment, the e-commerce vendor displays the
payment options. Payment options can be cash on delivery, Payment by Debit/Credit
Cards, etc.
STEP 7: Once the user selects the payment option, he is directed to the payment
gateway where he enters the OTP or the password and the payment is made vide the
Credit Card. Once the payment is made, the confirmation email / SMS are received by
the user.
STEP 8: Based on the delivery terms, the product is delivered to the customer in
specified time.
The first e-commerce transaction vide mobile is supposed to have been done in
Norway in 1997, when a Coco-Cola vending machine were configured to respond to
mobile messages received from customers. The vending machine delivered products
on receiving text messages.
4.1.4 Benefits of E-Business
E-business benefits individuals, businesses, government and society at large. The major
benefits from e-business are as follows:
A. Benefits to Customer / Individual / User
w Convenience: Every product at the tip of individual’s fingertips on internet.
w Time saving: No. of operations that can be performed both by potential buyers
and sellers increase.
w Various Options: There are several options available for customers which are
not only being easy to compare but are provided by different players in the
market.
w Easy to find reviews: There are often reviews about a particular site or product
from the previous customers which provides valuable feedback.
w Coupon and Deals: There are discount coupons and reward points available for
customers to encourage online transaction.
w Anytime Access: Even midnight access to the e commerce platforms is available
which brings in customer suitability.
© The Institute of Chartered Accountants of India
4.8 ENTERPRISE INFORMATION SYSTEMS
C. Benefits to Government
w Instrument to fight corruption:-In line with Government’s vision, e commerce
provides a pivotal hand to fight corruption.
w Reduction in use of ecologically damaging materials through electronic
coordination of activities and the movement of information rather than physical
objects).
Clearly, the benefits of corporate-wide implementation of e-business are many, and
this list is by no means complete. With the benefits, however, also come the risks.
An organization should be cautious not to leap blindly into e-business, but rather
first develop an e-business strategy, and then organize a corporate-wide team to
implement that strategy.
4.1.5 E-Commerce Future
From 1997, E-commerce has increased in leaps and bounds. Data by The Economist
magazine for 2013 as shown in Fig. 4.1.3 is a pointer that E-commerce vide mobiles
is not only limited to developed world. Looking to data, developing / third world
countries have adopted is faster.
Tanzania 65
Botswana 0.8
Zimbabwe 21
Cameroon 0.1
Philippines 1.9
Bangladesh 5.6
Congo 0.4
Pakistan 4.0
Malaysia 0.1
Afghanistan Value of 18
transactions
South Africa as% of GDP 0.1
Source : IMF
© The
*Source Institute of Chartered
: www.economist.com Accountants of India
4.10 ENTERPRISE INFORMATION SYSTEMS
Socket Layer). This guarantees that the data provided by customer will not fall
into the hand of a malicious hacker while transferring from his / her computer to
the web server.
Privacy Policy and Security are also gaining importance under the Information
Technology Act, 2000 (as amended 2008). The act specifically states that security
of such data (the one collected by e-commerce vendor from customer) shall be
responsibility of e-commerce vendor.
(iii) Technology Infrastructure: The computers, servers, database, mobile apps,
digital libraries, data interchange enabling the e-commerce transactions.
(a) Computers, Servers and Database
- These are the backbone for the success of the venture. Big e-commerce
organization invest huge amount of money / time in creating these
systems. They store the data / program used to run the whole operation of
the organization.
- As cloud computing is increasingly being used, many small / mid-sized
e-commerce originations have started using shared infrastructures.
(b) Mobile Apps
Just as with the personal computer, mobile devices such as tablet computers
and smart phones also have operating systems and application software.
In fact, these mobile devices are in many ways just smaller versions of
personal computers. A mobile app is a software application programmed
to run specifically on a mobile device.
Smartphone’s and tablets have become a dominant form of computing,
with many more smartphones being sold than personal computers. This
means that organizations will have to get smart about developing software
on mobile devices in order to stay relevant. These days, most mobile
devices run on one of two operating systems: Android or iOS. Android
is an open-source operating system supported by Google whereas iOS
is Apple’s mobile operating system. There are other mobile Operating
systems like BlackBerry OS, Windows Mobile, Tizen and FireFox OS.
As organizations consider making their digital presence compatible with
mobile devices, they will have to decide whether to build a mobile app. A
mobile app is an expensive proposition, and it will only run on one type of
mobile device at a time. For example, if an organization creates an iPhone
app, those with Android phones cannot run the application. Each app takes
several thousand dollars to create, so this is not a trivial decision for many
companies. One option many companies have is to create a website that
© The Institute of Chartered Accountants of India
E-COMMERCE, M-COMMERCE AND EMERGING TECHNOLOGIES 4.13
Laptop Workstation
Desktop
Application
Tier
Server
Database
Tier Database
Database Database
Database
the persistence mechanisms and exposes the data. The data access layer should
provide an Application Programming Interface (API) to the application tier that
exposes methods of managing the stored data without exposing or creating
dependencies on the data storage mechanisms. Avoiding dependencies on the
storage mechanisms allows for updates or changes without the application tier
clients being affected by or even aware of the change.
To conclude, in Three Tier Architecture three layers like Client, Server and Database
are involved. In this, the Client sends a request to Server, where the Server sends
the request to Database for data, based on that request the Database sends back
the data to Server and from Server the data is forwarded to Client.
The following are the Advantages of Three-Tier Systems:
w Clear separation of user-interface-control and data presentation from
application-logic: Through this separation more clients can have access
to a wide variety of server applications. The two main advantages for client-
applications are quicker development through the reuse of pre-built business-
logic components and a shorter test phase.
w Dynamic load balancing: If bottlenecks in terms of performance occur, the
server process can be moved to other servers at runtime.
w Change management: It is easy and faster to exchange a component on the
server than to furnish numerous PCs with new program versions.
The Disadvantages of Three-Tier Systems are as follows:
w It creates an increased need for network traffic management, server load
balancing, and fault tolerance.
w Current tools are relatively immature and are more complex.
w Maintenance tools are currently inadequate for maintaining server libraries. This
is a potential obstacle for simplifying maintenance and promoting code reuse
throughout the organization.
4.3.3 Which Architecture is used?
In two tier architecture, application performance will be degraded upon increasing
the users and it is cost in-effective whereas a three-tier architecture provides High
performance, lightweight persistent objects, flexibility, maintainability, reusability
and scalability, performance, high degree of flexibility in deployment, better Re-use,
improved data integrity, improved security wherein client does not have direct access
to database, easy to maintain and application performance is good. Apart from the
usual advantages of modular software with well-defined interfaces, the three-tier
architecture is intended to allow any of the three tiers to be upgraded or replaced
independently in response to changes in requirements or technology.
© The Institute of Chartered Accountants of India
4.18 ENTERPRISE INFORMATION SYSTEMS
Client End/User
Order is
completed
Shipment
sent to
Application Layers
Customer
2 Application Application Server and Back End Server. Through these application’s
Layer For example - In the same example, it customer logs to merchant
includes systems. This layer allows
- E-merchant customer to check the
- Reseller products available on
- Logistics partner merchant’s website.
3 Database The information store house, where all This layer is accessible to
Layer data relating to products, price it kept. user through application
layer.
Payment
Mobile
processing
Wallet
Merchant Bank
Fund Transfer
Processing Bank
1 Client / User Mobile Web Browser and Internet. This layer helps the
Interface For example: In example e-commerce customer connect
discussed above where user buys to e-commerce merchant.
a mobile phone from e-commerce
merchant it includes,
- Mobile APP (Application)
- User
Customer
Submit order
via phone
© :The
*Source Institute of Chartered
www.juanribon.com Accountants of India
E-COMMERCE, M-COMMERCE AND EMERGING TECHNOLOGIES 4.21
(iii) Delay in goods and Hidden Costs: When goods are ordered from another
country, there are hidden costs enforced by Companies.
(iv) Needs Access to internet and lack of personal touch: The e commerce
requires an internet connection which is extra expensive and lacks personal
touch.
(v) Security and credit card issues: There is cloning possible of credit cards
and debit cards which poses a security threat.
(vi) Infrastructure: There is a greater need of not only digital infrastructure but
also network expansion of roads and railways which remains a substantial
challenge in developing countries.
(vii) Problem of anonymity: There is need to identify and authenticate users
in the virtual global market where anyone can sell to or buy from anyone,
anything from anywhere.
(viii) Repudiation of contract: There is possibility that the electronic transaction
in the form of contract, sale order or purchase by the trading partner or
customer maybe denied.
(ix) Lack of authenticity of transactions: The electronic documents that are
produced during an e-Commerce transaction may not be authentic and
reliable.
(x) Data Loss or theft or duplication: The data transmitted over the Internet
may be lost, duplicated, tampered with or replayed.
(xi) Attack from hackers: Web servers used for e-Commerce maybe vulnerable
to hackers.
(xii) Denial of Service: Service to customers may be denied due to non-
availability of system as it may be affected by viruses, e-mail bombs and
floods.
(xiii) Non-recognition of electronic transactions: e-Commerce transactions,
as electronic records and digital signatures may not be recognized as
evidence in courts of law.
(xiv) Lack of audit trails: Audit trails in e-Commerce system may be lacking
and the logs may be incomplete, too voluminous or easily tampered with.
(xv) Problem of piracy: Intellectual property may not be adequately protected
when such property is transacted through e-Commerce.
4.5.2 Case Studies
Case 1: Return of Mobile
©AThe
person in Hyderabad
Institute of Charteredwas caught for
Accountants returning mobiles with defective parts.
of India
E-COMMERCE, M-COMMERCE AND EMERGING TECHNOLOGIES 4.23
Modus operandi:
- He used to buy new mobile online from India’s largest m-commerce
vendor.
- Return them with complaint that mobile purchased is defective.
- He used to replace the new mobiles internal components with defective
components.
- He kept on doing this for two years before being caught.
What control lapse lead to above fraud?
- Entities poor policy documentation regarding accepting mobile returns as
defective.
- Within the organization there must have been a person putting a red mark
when the same person was returning mobiles as defective. This reflects
poor audit mechanism.
Case 2: Purchase fake / inferior products online.
Certain websites allow anybody to sell products on, which creates a market
for fake and bootleg products. It is important to check the history of the seller
and read all the details to ensure the product is the brand name product you
originally intended to buy. A good rule of thumb is that if it’s too good to be true,
it usually is. Designer headphones, purses, and watches will always cost around
retail price online.
4.5.3 Control
Internal control, as defined in accounting and auditing, is a process for assuring
achievement of an organization’s objectives in operational effectiveness and efficiency,
reliable financial reporting, and compliance with laws, regulations and policies.
For example:
- Company may have a policy to force employees to change their passwords
every 30 days.
- A CA firm may not allow office staff access to social sites during office
hours.
In an e-business environment, controls are necessary for all persons in the chain,
including-
A. Users: This is important to ensure that the genuine user is using the e-commerce/
m-commerce platform. There is risk if user accounts are hacked and hackers buy
products / services.
B. Sellers / Buyers / Merchants: These people need to proper framework in place
to ensure success of business. Many e-commerce businesses have lost huge
© The Institute of Chartered Accountants of India
4.24 ENTERPRISE INFORMATION SYSTEMS
amount of money as they did not have proper controls put in place. These
include controls on:
a. Product catalogues
b. Price catalogues
c. Discounts and promotional schemes
d. Product returns
e. Accounting for cash received through Cash on Delivery mode of sales.
C. Government: Governments across the world and in India have few critical
concerns vis-à-vis electronic transactions, namely:
a. Tax accounting of all products / services sold.
b. All products / services sold are legal. There have been instances where
narcotics drugs have found to be sold and bought through electronic
means.
D. Network Service Providers: They need to ensure availability and security of
network. Any downtime of network can be disastrous for business.
E. Technology Service Providers: These include all other service provider other
than network service provider, for example, cloud computing back-ends,
applications back-ends and like. They are also prone to risk of availability and
security.
F. Logistics Service Providers: Success or failure of any e-commerce / m-commerce
venture finally lies here. Logistics service providers are the ones who are finally
responsible for timely product deliveries.
G. Payment Gateways: E-commerce vendors’ business shall run only when their
payment gateways are efficient, effective and foolproof.
Each participant needs to put in place controls in an e-commerce environment. Any
lack of exercising controls by anyone can bring the risk to whole chain. All participants
as discussed above need to trained and educated for proper controls. Each participant
needs to put in place policies, practices and procedures in place to protect from
e-commerce / m-commerce related risks. These will include the following:
1. Educating the participant about the nature of risks.
Every participant needs to be educated / sensitized towards risk associated with
such transactions. Organizations need to put in place infrastructure / policy
guidelines for the same. These policies may include the following:
- Frequency and nature of education programs.
- The participants for such program.
© The Institute of Chartered Accountants of India
E-COMMERCE, M-COMMERCE AND EMERGING TECHNOLOGIES 4.25
For example: All bank in India, allowing on line payments put ads on their websites
“Dos and Don’ts for online payments.” The more informed your organisation is, the
easier it will be to combat online threats and to carry out risk mitigating measures.
2. Communication of organizational policies to its customers.
To avoid customer dissatisfaction and disputes, it is necessary to make the
following information clear throughout your website:
- Privacy Policies: These should be available through links on any website.
- Information security: Create a page that educates customers about any
security practices and controls.
- Shipping and billing policies: These should be clear, comprehensive and
available through a link on the home page during online purchase.
- Refund policies: Establish and display a clear, concise statement of a
customer’s refund and credit policy.
3. Ensure Compliance with Industry Body Standards.
All e-Commerce organisations are required to be complying with and adhere to
the rules outlined by the law of land. In India Reserve Bank of India, has been
releasing these standards from time to time.
4. Protect your e-Commerce business from intrusion.
a. Viruses: Check your website daily for viruses, the presence of which can
result in the loss of valuable data.
b. Hackers: Use software packages to carry out regular assessments of how
vulnerable your website is to hackers.
c. Passwords: Ensure employees change these regularly and that passwords
set by former employees of your organization are defunct.
d. Regular software updates: Your site should always be up to date with the
newest versions of security software. If you fail to do this, you leave your
website vulnerable to attack.
e. Sensitive data: Consider encrypting financial information and other
confidential data (using encryption software). Hackers or third parties will
not be able to access encrypted data without a key. This is particularly
relevant for any e-Commerce sites that use a shopping cart system.
f. Know the details of your payment service provider contract.
Application
Data
Operating System
Internal Network
Perimeter Network
1 Product ordered by ‘A’ 1. What if ‘B’ accepts the products and starts using?
delivered to ‘B’. (For 2. ‘A’ had ordered the product to gift to spouse on
example a DEO). ‘A’ had his/her birthday. What of the mental agony caused?
made payment online. 3. The product is a medicine necessary of treatment of
‘A’s dependent parents. In case of any complication
to ‘A’s parent due to delayed delivery who bears
the additional medical costs?
Above is only an illustrative list. Imagine numerous
possible combinations based on fact of in-correct
delivery.
2 Service ordered by ‘A’ not 1. Who bears the loss that may be incurred by ‘A’?
provided by online vendor.
For example: ‘A’ courier
company does not collect
an important document.
3 ‘A’ auction website sales in- 1. What is the legal liability if seller of products?
advertently sales products 2. What is legal liability of buyers of such products?
which cannot be sold at all, 3. What is the legal liability of auction web-site?
or sale of those products is
illegal. For example: Guns/
Narcotics Drugs.
o Debits Cards: A small plastic card issued by a bank. Allowing the holder to
purchase goods or services on credit. In this mode of payment, the buyer’s
cash flow is immediately affected that as soon as payment is authorized
buyers account is debited.
(iii) Net Banking: In this mode, the customers log to his / her bank account and
makes payments. All public sectors, large private sector banks allow net banking
facilities to their customers.
4.7.2 Advantages of Digital Payments
(i) Easy and convenient: Digital payments are easy and convenient. Person do not
need to take loads of cash with themselves.
(ii) Pay or send money from anywhere: With digital payment modes, one can pay
from anywhere anytime.
(iii) Discounts from taxes: Government has announced many discounts to
encourage digital payments. User get 0.75% discounts on fuels and 10% discount
on insurance premiums of government insurers.
(iv) Written record: User often forgets to note down his / her spending, or even
if nothing is done it takes a lot of time. These are automatically recorded in
passbook or inside E-Wallet app. This helps to maintain record, track spending
and budget planning.
(v) Less Risk: Digital payments have less risk if used wisely. If user losses mobile
phone or debit/credit card or Aadhar card, no need to worry a lot. No one can
use anyone else’s money without MPIN, PIN or fingerprint in the case of Aadhar.
It is advised that user should get card blocked, if lost.
4.7.3 Drawbacks of Digital Payments
Every coin has two sides so as the digital payments. Despite many advantages, digital
payments have a few drawbacks also.
(i) Difficult for a Non-technical person: As most of the digital payment modes
are based on mobile phone, the internet and cards. These modes are somewhat
difficult for non-technical persons such as farmers, workers etc.
(ii) The risk of data theft: There is a big risk of data theft associated with the digital
payment. Hackers can hack the servers of the bank or the E-Wallet a customer is
using and easily get his/her personal information. They can use this information
to steal money from the customer’s account.
(iii) Overspending: One keeps limited cash in his/her physical wallet and hence
© The Institute of Chartered Accountants of India
4.38 ENTERPRISE INFORMATION SYSTEMS
thinks twice before buying anything. But if digital payment modes are used, one
has an access to all his/her money that can result in overspending.
4.8 COMPUTING TECHNOLOGIES
Recently, emerging technologies are seen to be having enormous potential to meet the
global challenges. One of the high-potential technologies is informatics. It is expected
to revolutionize the value-additions to the huge information component, which is
growing exponentially. Technological innovations in the field of storage, mining
and services may be the key to address emerging challenges. Though several other
advance technologies include synthetic biology, Nano-scale design, systems biology,
wireless networks, ICT (Information and Communications Technology) enhanced
educational systems etc. ICT appears to be spearheading all such developments at
one or the other levels. To add some flavour to address the challenges, some of the
technologies, which have recently emerged and are being rapidly adapted include
cloud, grid, mobile, and green computing.
4.8.1 Virtualization
In computing, Virtualization means to create a virtual version of a device or resource,
such as a server, storage device, network or even an operating system where the
framework divides the resource into one or more execution environments. Virtualization
refers to technologies designed to provide a layer of abstraction between computer
hardware systems and the software running on them. By providing a logical view of
computing resources, rather than a physical view; virtualization allows its’ users to
manipulate their systems’ operating systems into thinking that a group of servers is
a single pool of computing resources and conversely, allows its users to run multiple
operating systems simultaneously on a single machine.
I. Concept of Virtualization
The core concept of Virtualization lies in Partitioning, which divides a single physical
server into multiple logical servers. Once the physical server is divided, each logical
server can run an operating system and applications independently. For example -
Partitioning of a hard drive is considered virtualization because one drive is partitioned
in a way to create two separate hard drives. Devices, applications and human users are
able to interact with the virtual resource as if it were a real single logical resource.
II. Application Areas of Virtualization
w Server Consolidation: Virtual machines are used to consolidate many physical
servers into fewer servers, which in turn host virtual machines. Each physical
server is reflected as a virtual machine “guest” residing on a virtual machine host
system. This is also known as “Physical-to-Virtual” or ‘P2V’ transformation.
w Disaster Recovery: Virtual machines can be used as “hot standby” environments
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E-COMMERCE, M-COMMERCE AND EMERGING TECHNOLOGIES 4.39
Grid Node
Control Server
Task
o To use an application designed to split its work in such a way that the
separate parts can execute in parallel on different processors; and
o To run an application, that needs to be executed many times, on many
different machines in the grid.
w Storage: The second most common resource used in a grid is Data Storage. A
grid providing an integrated view of data storage is sometimes called a Data
Grid. Each machine on the grid usually provides some quantity of storage for
grid use, even if temporary. Storage can be memory attached to the processor or
it can be secondary storage, using hard disk drives or other permanent storage
media. More advanced file systems on a grid can automatically duplicate sets of
data, to provide redundancy for increased reliability and increased performance.
w Communications: Communications within the grid are important for sending
jobs and their required data to points within the grid. The bandwidth available
for such communications can often be a critical resource that can limit utilization
of the grid. Redundant communication paths are sometimes needed to better
handle potential network failures and excessive data traffic. In some cases, higher
speed networks must be provided to meet the demands of jobs transferring
larger amounts of data.
w Software and Licenses: The grid may have software installed that may be too
expensive to install on every grid machine. Some software licensing arrangements
permit the software to be installed on all of the machines of a grid but may limit
the number of installations that can be simultaneously used at any given instant.
License management software keeps track of how many concurrent copies of the
software are being used and prevents more than that number from executing at
any given time.
w Special equipment, capacities, architectures, and policies: Platforms on the
grid will often have different architectures, operating systems, devices, capacities,
and equipment. Each of these items represents a different kind of resource that
the grid can use as criteria for assigning jobs to machines. For example, some
machines may be designated to only be used for medical research. These would
be identified as having a medical research attribute and the scheduler could be
configured to only assign jobs that require machines of the medical research
resource.
III. Application Areas of Grid Computing
w Civil engineers collaborate to design, execute, & analyze shake table experiments.
w An insurance company mines data from partner hospitals for fraud detection.
w An application service provider offloads excess load to a compute cycle provider.
© The Institute of Chartered Accountants of India
4.44 ENTERPRISE INFORMATION SYSTEMS
Tablet Laptop
Documents Training
Finance Contacts
Spreadsheets Email Calendar
Database Presentations
Collaboration Storage
Smartphone
Desktop
Having secure access to all your application and
data from any network device
run a workload in a data center in another country based on time of day or power
requirements) or efficiency considerations (for example, network bandwidth). A
third reason could be regulatory considerations for certain types of workloads.
II. Advantages of Cloud Computing
w Achieve economies of scale: Volume output or productivity can be increased
even with fewer systems and thereby reduce the cost per unit of a project or
product.
w Reduce spending on technology infrastructure: Data and information can be
accessed with minimal upfront spending in a pay-as-you-go approach, which is
based on demand.
w Globalize the workforce: People worldwide can access the cloud with Internet
connection.
w Streamline business processes: Getting more work done in less time with less
resources are possible.
w Reduce capital costs: Not required to spend huge money on hardware, software,
or licensing fees.
w Pervasive accessibility: Data and applications can be accesses anytime,
anywhere, using any smart computing device, making our life so much easier.
w Monitor projects more effectively: It is feasible to confine within budgetary
allocations and can be ahead of completion cycle times.
w Less personnel training is needed: It takes fewer people to do more work on a
cloud, with a minimal learning curve on hardware and software issues.
w Minimize maintenance and licensing software: As there is no too much of
non-premise computing resources, maintenance becomes simple and updates
and renewals of software systems rely on the cloud vendor or provider.
w Improved flexibility: It is possible to make fast changes in our work environment
without serious issues at stake.
III. Drawbacks of Cloud Computing
w If Internet connection is lost, the link to the cloud and thereby to the data and
applications is lost.
w Security is a major concern as entire working with data and applications depend
on other cloud vendors or providers.
w Although Cloud computing supports scalability (ie. quickly scaling up and down
computing resources depending on the need), it does not permit the control on
these resources as these are not owned by the user or customer.
© The Institute of Chartered Accountants of India
4.48 ENTERPRISE INFORMATION SYSTEMS
w Depending on the cloud vendor or provide, customers may have to face restrictions
on the availability of applications, operating systems and infrastructure options.
w Interoperability (ability of two or more applications that are required to support
a business need to work together by sharing data and other business-related
resources) is an issue wherein all the applications may not reside with a single
cloud vendor and two vendors may have applications that do not cooperate with
each other.
IV. Cloud Computing Environment
The Cloud Computing environment can consist of multiple types of clouds based on
their deployment and usage. Such typical Cloud computing environments, catering to
special requirements, are briefly described as follows (given in Fig. 4.8.3).
Private / Internal
Public/
External
w Highly Available: It is highly available because anybody from any part of the
world can access the public cloud with proper permission, and this is not possible
in other models as geographical or other access restrictions might be there.
w Stringent SLAs: As the service provider’s business reputation and customer
strength are totally dependent on the cloud services, they follow the SLAs strictly
and violations are avoided.
Advantages of Public Cloud
w It is widely used in the development, deployment and management of enterprise
applications, at affordable costs.
w It allows the organizations to deliver highly scalable and reliable applications
rapidly and at more affordable costs.
w There is no need for establishing infrastructure for setting up and maintaining
the cloud.
w Strict SLAs are followed.
w There is no limit for the number of users.
Moreover, one of the limitation of Public cloud is security assurance and
thereby building trust among the clients is far from desired but slowly liable to
happen. Further, privacy and organizational autonomy are not possible.
(C) Hybrid Cloud: This is a combination of both at least one private (internal) and
at least one public (external) cloud computing environments - usually, consisting
of infrastructure, platforms and applications. The usual method of using the
hybrid cloud is to have a private cloud initially, and then for additional resources,
the public cloud is used. The hybrid cloud can be regarded as a private cloud
extended to the public cloud and aims at utilizing the power of the public cloud
by retaining the properties of the private cloud. It is typically offered in either of
two ways. A vendor has a private cloud and forms a partnership with a public
cloud provider or a public cloud provider forms a partnership/franchise with a
vendor that provides private cloud platforms. Fig. 4.8.4 depicts Hybrid Cloud.
Cloud
the utilization of computing capacities without having to own and manage their
own resources. The end-users or IT architects will use the infrastructure resources
in the form of Virtual machines (VMs) and design virtual infrastructure, network
load balancers etc., based on their needs. The IT architects need not maintain
the physical servers as it is maintained by the service providers. Examples of
IaaS providers include Amazon Web Services (AWS), Google Compute Engine,
OpenStack and Eucalyptus.
Software as
Service
Platform as
Service
Infrastructure as
Service
(B) Platform as a Service (PaaS): PaaS provides the users the ability to develop
and deploy an application on the development platform provided by the service
provider. In traditional application development, the application will be developed
locally and will be hosted in the central location. In stand-alone application
development, the application will be developed by traditional development
platforms result in licensing - based software, whereas PaaS changes the
application development from local machine to online. For example- Google
AppEngine, Windows Azure Compute etc.
Typical PaaS providers may provide programming languages, application
frameworks, databases, and testing tools apart from some build tools, deployment
tools and software load balancers as a service in some cases.
(C) Software as a Service (SaaS): SaaS provides ability to the end users to access an
application over the Internet that is hosted and managed by the service provider.
Thus, the end users are exempted from managing or controlling an application
the development platform, and the underlying infrastructure. SaaS changes the
way the software is delivered to the customers. SaaS provides users to access
large variety of applications over internets that are hosted on service provider’s
infrastructure. For example, one can make his/her own word document in Google
docs online, s/he can edit a photo online on pixlr.com so s/he need not install the
photo editing software on his/her system - thus Google is provisioning software
as a service. Different instances of SaaS are discussed in the Table 4.8.2.
Table 4.8.2: Instances of SaaS
Instance Description
Testing as a Service • Provides users with software testing capabilities such as generation
(TaaS) of test data, generation of test cases, execution of test cases and
test result evaluation on a pay-per-use basis.
the move i.e. mobility. A primitive scenario of mobile computing in practice is given in
the Fig. 4.8.7.
Radio Link
Mobile Communications
Path
Mobile Participant
Fixed Participant
immediately help the environment’. Green IT services present many benefits for
clients as well as providers, but knowing ‘how to evaluate a client’s infrastructure to
accommodate green technology is really a vital issue’.
Moreover, apart from the common security issues, the green security emphasizes the
role of security tools, methods and practices that reduce a company’s environmental
impact. But to estimate the scope, to cope with the lack of green security services in the
market and get advice on conserving power and purchasing switches is very important
and needs a high level of sensitivity. Learning about the challenges of implementing
green security and the best practices is a major hope, as the artifacts are still evolving.
4.8.6 Bring Your Own Device (BYOD)
BYOD (Bring Your Own Device) refers to business policy that allows employees to
use their preferred computing devices, like smart phones and laptops for business
purposes. It means employees are welcome to use personal devices (laptops, smart
phones, tablets etc.) to connect to the corporate network to access information and
application. The BYOD policy has rendered the workspaces flexible, empowering
employees to be mobile and giving them the right to work beyond their required hours.
The continuous influx of readily improving technological devices has led to the mass
adoption of smart phones, tablets and laptops, challenging the long-standing policy
of working on company-owned devices. Though it has led to an increase in employees’
satisfaction but also reduced IT desktop costs for organizations as employees are
willing to buy, maintain and update devices in return for a one-time investment cost to
be paid by the organization.
In the early 1990s, executing different tasks necessitated the use of different devices.
For instance, an mp3 player was needed to listen to music; whereas chores, tasks and
schedules were tracked by a PDA. An addition to this, list was a bulky laptop and a
camera and it seemed waiting till eternity that we would ever have a single device
to suit our different needs. However, remarkable advances in technology in the last
decade have made it possible to perform all the above mentioned tasks using a single
hi-tech device. Different technologies can work in synergy with each other, which
improves user productivity and convenience.
I. Advantages of BYOD
w Happy Employees: Employees love to use their own devices when at work. This
also reduces the number of devices an employee has to carry; otherwise he
would be carrying his personal as well as organization provided devices.
w Lower IT budgets: Could involve financial savings to the organization since
employees would be using the devices they already possess thus reducing the
outlay of the organization in providing devices to employees.
w IT reduces support requirement: IT department does not have to provide end
©user supportofand
The Institute maintenance
Chartered for allofthese
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E-COMMERCE, M-COMMERCE AND EMERGING TECHNOLOGIES 4.63
As technology evolves new application are coming into use. These applications are
further changing the way individuals / businesses / government interact with each
other and do business.
4.8.8 Internet of Things (IoT)
I. Definition: The Internet of Things (IoT) is a system of interrelated computing
devices, mechanical and digital machines, objects, animals or people that are
provided with unique identifiers and the ability to transfer data over a network
without requiring human-to-human or human-to-computer interaction. For
example:
(i) Washing machines with Wi-Fi networking capabilities can connect themselves
to home Wi-Fi. Once these machines are so connected, they can be controlled
through machine manufacturer mobile APP from anywhere in the world.
(ii) India’s living legend of cricket appearing in an Advertisement for water purifier
informs that, the water purifier is Wi-Fi enabled. When the purifying agents
deplete in the machine, it connects to home Wi-Fi and informs the service agents
of the company.
All above examples are from products being sold in India.
II. Future: Gartner, the technology researcher has projected that by 2020 the
IOT business across the world would increase to USD 1.9 Trillion. In rupee
terms at current exchange rate (INR::UDS=67.50::1) it comes to a staggering
` 1,34,0,00,00,00,00,000.00 or keeping it simple virtually equal to India’s GDP
today.
III. Applications: Some of the applications are as follows:
1. All home appliances to be connected and that shall create a virtual home.
a. Home owners can keep track of all activities in house through their hand
held devices.
b. Home security CCTV is also monitored through hand held devices.
2. Office machines shall be connected through net.
a. Human resource managers shall be able to see how many people have had
a cup of coffee from vending machine and how many are present.
b. How many printouts are being generated through office printer?
3. Governments can keep track of resource utilisations / extra support needed.
a. Under SWACHH mission government can tag all dustbins with IOT sensors.
They (dustbins) generate a message once they are full. Being connected to
wifi, they can intimate the cleaning supervisor of Municipal Corporation so
that BIN can be emptied.
© The Institute of Chartered Accountants of India
4.66 ENTERPRISE INFORMATION SYSTEMS
3. AI in long term may kill human skills of thinking the unthinkable. All data shall be
processed in a structured manner, where machines shall provide solution based
on their learning over a period of time. These machines shall not have capability
of thinking out of box.
IV. Controls
The set of controls in AI will be extremely complex because of the nature of processing
of information and must be dealt with based on the nature of the AI tool and the
purpose, etc.
4.8.10 Machine Learning
I. Definition: Machine Learning is a type of Artificial Intelligence (AI) that provides
computers with the ability to learn without being explicitly programmed. Machine
learning focuses on the development of computer programs that can change
when exposed to new data. The process of machine learning is similar to that of
data mining. For example:
w Machine learning has been used for image, video, and text recognition, as well as
serving as the power behind recommendation engines. Apple SIRI is a good example.
w This technology is being is being used in autonomous vehicles, the google car.
II. Applications: Virtually all applications were in AI using Machine learning so that
some value is added. It includes specifically following application:
1. Autonomous vehicles (such as drones and self-driving cars),
2. Medical diagnosis, in cancer research. Predicting the chances of an individual
getting ill by a disease.
3. Playing games (such as Chess or Go), and predicting the outcomes. Say which
number on a lottery ticket may win.
4. Search engines (such as Google search),
5. Online assistants (such as Siri),
III. Risk: Machine learning being an application based on AI, the nature of risk to it
remain similar to those posed by AI systems.
left their jobs in Amazon to start their own business. One can easily
call that a risky move.
Flipkart began selling books to begin with. It soon expanded and
began offering a wide variety of goods. Innovating right from
the start, Flipkart has been home to few of the striking features
of Indian e-commerce. Flipkart success in the first few years of its existence. Flipkart
raised funds through venture capital funding. As the company grew in stature, more
funding arrived.
Flipkart addressed to major issues in online purchasing in India. Indians love to pay
after checking the products so Flipkart was the first to implement the popular ‘Cash
On Delivery’ facility, which every online shopping website in India offers as an option
today. Second major issue Flipkart addressed was timely delivery. It was more of a
cultural revolution to ensure the whole supply chain was revamped and sensitized to
issue of timely delivery.
II. Category: JUGNOO started as a m-commerce company.
Jugnoo is an auto-rickshaw aggregator, focused on doubling
the driver’s efficiency and earnings, and providing affordable
transportation to the masses on a tap. There are around 5 million
auto-rickshaws in our country, whereas the utilization is only 30%.
It started operation in October 2014 from Chandigarh.
Despite being one of the most popular and economical modes of public transportation
in India, auto-rickshaws have remained highly underutilized due to inefficiencies
prevalent in the conventional hailing procedure such as availability and fares. Jugnoo
was started with a vision to overcome these roadblocks by bringing structure into
this space, aggregating auto-rickshaws via technology, thereby, enabling optimum
utilization of resources.
III. Category: OYO started as a m-commerce company.
OYO MEANS “ON YOUR OWN”. OYO Rooms was nothing but an idea to create
India’s largest chain of efficient, young, standardized rooms with an intention to build
the coolest chain of no add-on rooms which might not have Spa, Gym etc. like the star
hotels but will live upto the basic standards & high expectations for prices like never
before. They have few basic amenities including, clean rooms, clean linen, AC, clean
bathroom, free wifi, free breakfast.
The teenage boy – Ritesh Agarwal is the young Founder & CEO of OYO Rooms – fastest
growing Branded network of hotels offline & online. OYO rooms does nothing out of
the box but provides travellers the coolest yet cheapest efficient, young, standardized
rooms with no add-ons attached to it!
© The Institute of Chartered Accountants of India
4.70 ENTERPRISE INFORMATION SYSTEMS
4.10 SUMMARY
Today electronic commerce is ruling the world. Every day there is a start-up in the
e-commerce / m-commerce space. This is forcing traditional businesses to adopt to
this new way of doing business. E-commerce / M-commerce both have related sets
of risks and necessary controls to be put in place. They are generating huge benefits
to society in terms of saving costs and time. E-commerce and M-commerce being
the new way doing business has its run ins with law also, The legality / implications
of such transactions are being tested in courts across the world including India. Laws
are being updated / amended to keep pace with these new business trends. Emerging
technology like Internet of Things, AI, Machine learning is changing the way humans
interact with technology. These technologies are automating human tasks and creating
options to carry those tasks which could not have done previously.
(ii) Now both systems (handheld and site’s computer) have the same
information and are in sync.
(iii) The process work the same way starting from the other direction.
(iv) Using one of several connecting technologies, the new data are transmitted
from handheld to site’s information system where files are updated and
the new data are accessible to other system user.
(a) (i), (ii), (iii), (iv)
(b) (iv), (iii), (ii), (i)
(c) (i), (ii), (iv), (iii)
(d) (i), (iv), (ii), (iii)
9. AEPS stands for _________________________.
(a) Aadhaar Enabled Payment Station
(b) Aadhaar Employed Payment Service
(c) Aadhaar Enabled Payment Service
(d) Aadhaar Enterprise Payment Service
10. Which instance of SaaS allows users to explore functionality of Web services
such as Google Maps, Payroll processing, and credit card processing services
etc.?
(a) Testing as a Service (TaaS)
(b) Communication as a Service (CaaS)
(c) Data as a Service (DaaS)
(d) API as a Service (APIaaS)
Answers
1 (d) 2 (a)
3 (b) 4 (c)
5 (a) 6 (d)
7 (b) 8 (d)
9 (c) 10 (d)