INTERNET, DATA BASES, AND CLIENT-SERVER: THE NEW COMMERCE MEDIUM

The growth of the Internet, improvements in data base technology, and widespread adoption of client-server computing is creating an entirely new model for commerce in the U.S. To understand this change requires an explanation of the evolution of computing in American business.

In the early 1960s, computers changed business by automating most batch operations a business performed: accounts receivable, accounts payable, payroll, etc. In the 1970s, with increased competition and the desire to cut costs, business moved gradually to a more transaction processing model.

Instead of collecting transactions and updating the company’s main database periodically, workers entered transactions as they occurred. An example is airline reservation systems. As a seat is sold, a worker updates the data base in real time, collects a fee for the seat, changes the receivables file if the passenger pays by credit or otherwise the cash account.

Initially, these data bases were maintained in massive disk farms on large mainframe. Workers accessed the computers via intelligent terminals. In the 1980s, the advent of lower-cost, client-server computing, relational data bases, and the PC changed information systems’ cost structure.

Data bases began proliferating outside of the corporation’s mainframe computers. They grew on department servers and workstations linked over local area networks. Data bases also proliferated on networked PCs.

In the 1980s, information systems managers within large corporations began tying departmental computers to the large mainframes via larger backbone networks. Regional offices and subsidiaries were linked to the larger mainframes via wide area network.

Tying the computing facilities together allowed information systems managers to preserve the large amounts of data a company created daily. The advent of supercomputers and robust relational data base management systems enabled one other capability: data mining.

High speed computers could run queries of the data bases within a company to detect opportunities for increased profitability. Retail giant WalMart, for example, keeps track of rapidly changing consumer preferences in its hundreds of retail stores.

Until now, businesses maintained information workers to control customers’ access to the company’s data base. This model exists everywhere today. A ticket agent interacts with an airline's data base to issue a ticket. Grocery and retail store clerks access the store's data base to complete the sales of goods.

Bank clerks interact with the bank’s data base to complete a customer's transaction. However, the ATM machine is an example of the bank allowing customers to access its data base directly. However, in this instance, the human teller is replaced by capital equipment.

The advent of the Internet provides U.S. business yet another opportunity to use computing power to boost productivity and reduce cost. The ultimate aim of business is to allow customers to interact with corporate data bases directly, thus greatly reducing transaction costs.

Finally, business can collect large amounts of data on consumer preferences by recording a buyers transactions over time. Thus, just as time lapse photography reveals the behavior of plants, data mining will reveal consumption behavior of buyers.

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