Module 0

E-Learning
Book
 SECTION 2: CONTENTS
CHAPTER 1: INTRODUCTION TO COMPUTER
HARDWARE AND SOFTWARE
PART 1: COMPUTER HARDWARE
Learning Objectives
 To gain understanding of components of Information Systems (IS) Infrastructure
 To understand working of computer and peripheral devices
 To understand Data Representation in memory and storage
 To gain understanding of Hardware Asset Management
 To understand Auditing Hardware

Overview of the e-Learning Material

Module 1 of updated ISA course 2 has two parts: eLearning of 12 hours and facilitated eLearning
of 6 hours. This reference material covering chapters 1 to 3 is an aid to understanding the
eLearning presentations. CAs who take up the ISA course may already have understanding of IT.
However, the level of understanding may vary. The objective of the material is to cover all the
fundamental concepts. Hence, CAs who already have good understanding of these concepts may
do a quick review of the reading material and then take up the eLearning module directly. It is
important for DISAs to read this reference material before taking up the eLearning as this
complements and provides a more detailed coverage of eLearning topics. This material has been
prepared as a reference guide to the eLearning and follows the same presentation style and
structure of the presentations covered in the eLearning. This material is not written in the style
of text book material but is written in simple style to enable quick and easy understanding.
The primary purpose of the material is to be supplementary reading material for the
eLearning presentation. Hence, the content closely follows the presentations and is
provided as bullet points and further explained as required. Further, the focus is on
windows environment as it is most prevalent.
DISAs are advised to refer this material before eLearning and also after completing the eLearning
presentations to get more clarity on the topics discussed. However, this material is not expected to
be comprehensive but is prepared as a starting point for understanding IT. Readers are advised to
refer to the references provided here to get clarifications on specific areas as required. IT is a
dynamic field and is continuously evolving. The material covers IT environment prevalent and
Module 1: e-Learning

relevant at the time of its preparation. However, it is expected to be updated on regular basis.
Please visit the CIT portal of ICAI (http://cit.icai.org) for the latest updated material.

1.1 Introduction
We cannot think of any enterprise today without Information systems and the critical infrastructure
for developing and maintaining Information Systems is provided by Information Technology (IT). IT
is a key enabler for increasing operational excellence, customer and supplier relations, better
decision making and competitive advantage. In short, IT is required not only to thrive but to survive
in the modern IT age. When IT is integrated with organisation and management, it can provide
better ways of conducting business that empower organisations with a strategic advantage.
Business today is growing exponentially and this growth of business is propelled by information.
The more information a business acquires, the more difficult it becomes to make decisions. In the
past, people could rely on manual processes to make decisions because they had limited amount
of information to process. Today, with massive volumes of available information, it is almost
impossible for management to take decisions without the aid of information systems. Highly
complex decisions must be made in increasingly shorter time frames. All this and more has made
adoption of IT an imperative for running any enterprise.

1.2 Overview of components of IS Infrastructure/ IS layers

Any information system will have interaction amongst Hardware, System Software, Application
Software, Database Management systems (DBMS), Network links and People. These are the key
components of IT Infrastructure in Information system. The components of IS Infrastructure are
given here:
In deploying IT, management has to determine what types of hardware and software will satisfy
their current and future business needs, the right time to buy the equipment, and how to protect
their IT investments. Auditors also have to understand how the management has deployed IT for
their business and whether it helps them meet their business objectives. This does not imply that
auditors need to be experts in all areas of technology; however, a working knowledge of IT
hardware and software in terms of features and functionalities can help auditors to review and
evaluate whether IT is meeting business needs and is implemented with right level of security at
optimum cost. In the following sections we will understand these various layers of IS. A good
understanding of how technology works and how this can be deployed in organisations to meet
business objectives will enable auditors to offer new IT enabled services. List of sample services
which can be provided by a CA in the IT areas are covered in the second part of this module
(overview of eLearning and IT Enabled services).

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PEOPLE (USERS)

APPLICATIONS

DBMS

SYSTEM SOFTWARE

NETWORK

HARDWARE

Components of IS Infrastructure

1.2.1 People -Users

People are the most important element in most computer-based information systems. The people
involved include users of the system and information systems personnel, including all the people
who manage, run, program, and maintain the systems.

1.2.2 Application Software

Application software is the software that causes a computer to perform useful tasks beyond the
running of the computer itself. It is a collection of programs which address a real life problem,
business, scientific or any other, for its end users. The various types of application software are:
 Application Suite: e.g. MS Office 2013 etc.
 Enterprise Software: e.g. ERP Applications like SAP, etc.
 Enterprise Infrastructure Software: e.g. email servers, Security software.
 Information Worker Software: e.g. CAAT (Computer assisted audit tools), etc.
 Content Access Software: e.g. Media Players etc.
 Educational Software: e.g. eLearning, Examination Test CDs
 Media Development Software: e.g. Desktop Publishing, Video Editing etc.

1.2.3 Database Management Systems (DBMS)

 Every organisation has to manage its information.
 DBMS are software that aid in organizing, controlling and using the data needed by the
application programs. They provide the facility to create and maintain a well-organized
database. Applications access the DBMS, which then accesses the data. Commercially
available Data Base Management Systems are Oracle, MySQL, SQL Servers, MS Access
and DB2 etc.

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 Data bases are being used at Front end (A front end to a database usually refers to the
user interface that is working with that database). A back end database is the database
"behind" an application. Most of web based applications would be having some or the
other database at back end.
 We are these days in learning revolution and Databases provide life blood to information
economy.

1.2.4 System Software -Operating Systems

System software is computer software that is designed to operate the computer hardware and to
provide and maintain a platform for running application software. One of the most important and
widely used system software is computer operating systems like Windows, UNIX and Linux.
System Software coordinates instructions between applications and hardware
 Enables computer to work
 Controls computer’s working
 Enables connecting I/O devices
 Includes:
o Operating system
o Utility programs

1.2.5 Network
 In today’s high speed world, we cannot imagine an information system without an effective
communication system. Effective and efficient communication is a valuable resource
which helps in good management. To enable this communication, we need
communication networks.
 Computer Network is a collection of computers and other hardware interconnected by
communication channels that allow sharing of resources and information. Where at least
one process in one device is able to send/receive data to/from at least one process
residing in a remote device, then the two devices are said to be in a network. Physically
it would be devices which are connected but logically it would be a process in one device
transmitting data to another process in another device. A network is a group of devices
connected to each other.

1.2.6 Hardware
 Hardware is the tangible portion of our computer systems, something we can touch and
see and it consists of devices that perform the functions of input, processing, data storage
and output activities of the computer.
 The keyboard, monitor, CPU, HDD (Hard Disk drive) etc. are all hardware components of
a computer.

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1.3 Components of a Computer

Hardware is the tangible portion of our computer systems, something we can touch and see and
consist of devices that perform the functions of input, processing, data storage and output activities
of the computer.

Control Arithmetic
Unit Logic Unit
ALU
Output
Input
Devices
Devices
Memory
Registers Cache

Primary Memory

Functional Diagram of CPU

Secondary Memory

1.3.1 Computer Peripherals

Input devices are peripheral devices which are used to interact with the computer systems and
include devices such as:
 Keyboard (helps us with text based input)
 Mouse and other pointing devices (helps us in position based input)
 Scanners and webcams (helps us in image based input)
 Bar Code, MICR readers (helps us in automatic input)
 Microphone (helps us in voice based input)
 Stylus/ Touch Screen (helps us in touch based input)
Output devices are devices through which system responds.
Computers systems provide output to decision makers at all levels in an organisation to solve
business problems, the desired output may be in visual, audio or digital forms.
Visual output devices like, a display device visually conveys text, graphics, and video information.

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 Cathode-ray tube (CRT)

A vacuum tube that uses an electron gun (cathode) to emit a beam of electrons that
illuminates phosphors on a screen as the beam sweeps across the screen repeatedly. A
monitor is often called a CRT.
 Liquid crystal display (LCDs)
A low-powered display technology used in laptop computers where rod-shaped crystal
molecules change their orientation when an electrical current flows through them.
 Laser printer
A printer that forms images using an electrostatic process, the same way a photocopier
works.
 Ink-jet Printer
A printer that makes images by forcing ink droplets through nozzles.
 Plotter
A printer that uses computer-directed pens for creating high-quality images, blueprints,
schematics, etc.
 Speaker
Gives an audio output
Processing devices include computer chips that contain the central processing unit and main
memory. Processing caters to the desire of users and displays results. It consists of CPU and Main
Memory.
Storage Devices are available in huge sizes. Programs and data can be stored on storage
devices.
Secondary storage differs from primary storage in that it is not directly accessible by the CPU.
Examples of secondary storage are,
 Hard drive
 Flash drive
 CD-ROM drive (mostly outdated) or DVD-ROM drive

1.3.2 What is inside the Computer?

Central Processing Unit (CPU)

The central processing unit (CPU) (or microprocessor) is the actual hardware that interprets and
executes the program (software) instructions and coordinates how all the other hardware devices
work together. The CPU is built on a small flake of silicon and can contain the equivalent of several

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million transistors. We can think of transistors as electronic switches that allow a current to pass
through i.e. “on” or “off “i.e. taking a value of 1 or 0.
The processor or Central processing Unit (CPU) is the brain of the computer. The main function
of CPU is to execute programs stored in memory. It consists of three functional units:
1. Control Unit (CU)
Fetches Program from the memory and determines their type
o Controls the flow of data and instruction to and from memory
o Interprets the instructions
o It simply controls which ones to execute and when

2. Arithmetic and Logical Unit

Performs Mathematical and Logical operations
o Performs arithmetic operations such as addition, subtraction, multiplication,
logical comparison of numbers equal to, greater than, less than, etc.

3. Registers
Small High Speed Memories that store temporary results
o High-speed memory units within CPU for storing small amount of data(Mostly 32
or 64 Bits)
o Registers could be
 Accumulators: they can keep running totals of arithmetic values.
 Address Registers: they can store memory addresses which tell the
CPU where in memory an instruction is located.
 Storage Registers: they can temporarily store data that is being sent
to or coming from the system memory.
 Miscellaneous: general purpose used for several functions

Bus Lines
The CPU is connected through Bus lines with main memory and I/O Devices. The computer buses
of one form or another move data between all of these devices. The basic job of Bus is to move
data from one location to other within the computer.

Instructions within processor

The CPU -- the centrepiece of the computer’s architecture -- is in charge of executing the
instructions of the currently loaded program. These instructions tell the CPU to carry out various
calculations, to read and write values from and into the memory, and to conditionally jump to
execute other instructions in the program.
Machine Cycle: is the steps performed by the CPU for executing an instruction. The steps are
Fetch-Decode-Execute and store which gets executed within CPU.

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Fetch Decode

Store Execute

These phases, fetch and decode are done by CU or Control Unit whose job is explaining to ALU
or Arithmetic Logic Unit whose job is to execute and the results are stored in Register

1.3.3 Memory

Virtual
Memory -
Register Cache Primary ------------
Secondary
Memory

Memory Hierarchy
Memory is where data and programs are stored. Various types of memory devices are

Internal memory
Registers are internal memory within CPU, very fast and very small

Primary Memory
These are devices in which any location can be accessed in any order (in contrast with
sequential order). These are of primarily two types:
 Random access memory (RAM)
It is a Read write memory.
Information can be read as well as modified.
Volatile in nature, means Information is lost as soon as power is turned off.
 Read Only Memory (ROM)
It is a Non Volatile in nature (Contents remain even in the absence of power).Usually
these are used to store small amount of information for quick reference by CPU.
Information can be read not modified.

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ROM is generally used by manufacturers to store data and programs.

 PROM (Programmable Read only memory) Non-volatile, Desired data and program
must first be programmed e.g. used by video game manufacturers for game
instructions.
 EPROM(Erasable Programmable Read only memory)-can be erased using UV light
and reprogrammed e.g. used in Industrial Robots by car Manufacturers, can be
changed with change of car model
 EEPROMS( Electrically Erasable Programmable Read only memory)-where chip is
erasable electrically by using higher electric current e.g. used in pen drives

Cache Memory
There is a huge speed difference between Registers and Primary Memory, to bridge these
speed differences we have cache memory. Cache (Pronounced kăsh) is a smaller, faster
memory which stores copies of the data from the most frequently used main memory locations
and processor/registers can access it more rapidly than main memory.
Cache memory is something like, we record frequently used telephone numbers in our mobile
which we can access quickly otherwise we have to go to telephone directory which takes a
longer time. Cache memory works on the same principle frequently used data is stored in
easily accessible cache memory instead of slower memory like RAM. Because, there is less
data in cache, processor can access it more quickly. There are two types of Cache memory
 Level 1 (L1) cache which is available in CPU
 Level 2 (L2) cache which is available on mother board of most systems
Now with multi-core chips, Level 3 (L3) cache has also been introduced.

Virtual Memory
Virtual Memory is in fact not a separate device but an imaginary memory area supported by
some operating systems (for example, Windows) in conjunction with the hardware. If a
computer lacks the random access memory (RAM) needed to run a program or operation, the
OS uses a predefined space on hard disk as an extension of RAM. Virtual memory combines
computer’s RAM with temporary space on the hard disk. When RAM runs low, virtual memory
moves data from RAM to a space called a paging file or swap file. Moving data to and from
the paging file frees up RAM to complete its work.
Thus, Virtual memory is an allocation of hard disk space to help RAM. With virtual memory,
the computer can look for areas of RAM that have not been used recently and copy them onto
the hard disk. This frees up space in RAM to load the new applications. Area of the space on
hard disk which acts as an extension to RAM is called a page file or swap file. In some
operating systems an entire disk or partition can be devoted to virtual memory.

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Secondary Memory
CPU refers to the main memory for execution of programs, but these main memories are
volatile in nature and hence cannot be used to store data on a permanent basis. Moreover,
they are very small in sizes. The secondary memories are available in huge sizes. Thus
programs and data can be stored on secondary memories.
Secondary storage differs from primary storage in that it is not directly accessible by the CPU.
The computer usually uses its input/output channels to access secondary storage and
transfers the desired data using intermediate area in primary storage. Secondary storage does
not lose the data when the device is powered down—it is non-volatile.
The features of secondary memory devices are
 Non-volatility: Contents are permanent in nature
 Greater capacity: These are available in large size
 Greater economy: The cost per unit information of these is lesser compared to RAM.
 Slow: Slower in speed compared to registers or primary storage
Storage devices could differ amongst each other in terms of:
 Speed and access time
 Cost / Portability
 Capacity
 Type of access
Based on these parameters most common forms of secondary storage are:
 Hard Drive
 DAT Tapes
 Pen Drives
 CD, DVD and Blue ray Disks
 Smart card
The kind of storage we need would depend on our information system objectives.

1.4 Data representation in Memory- Bits and Bytes

The computer has switches to represent data and switches have only two states: ON and OFF.
Binary has two digits to do the counting: 0 and 1 - a natural fit to the two states of a switch (0 =
OFF, 1 = ON). Everything (instructions, numeric and character data) in memory is stored in binary
form. How it is interpreted is determined by the data or instruction format.
 This Binary Digit has been abbreviated to Bit. And a combination of 8 bits is called a Byte.
 Some other Binary Units are:
o Kilobyte (KB) = 1024 bytes,
o Megabyte(MB) =1024 KB

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o Gigabyte (GB) =1024 MB

o Terabyte (TB) =1024 GB
ROM and RAM are composed of electronic components that can be in one of two states "on" and
"off". So the memory chips are divided into small compartments containing bits, each bit is either
"on" or "off” i.e. a 0 or 1.
Memory consists of consecutive bytes it can be more considered like a spreadsheet format. We
have columns and rows. They are 8 bits across and could be millions of rows long depending on
how much memory we have. The CPU tells the memory controller what column and row it wants
for data and the Memory Controller can find it in RAM
Character encoding
To represent numeric, alphabetic, and special characters in a computer's internal storage and on
magnetic media, a coding system has to be used. With 8 bits there are 2 8 or 256 possible
combinations of "on" or "off" in a byte.
 ASCII (American Standard Code for Information Interchange) is essentially a 7-bit code
which allows the 8th most significant bit (MSB) to be used for error checking.
 ANSI (American National Standard Institute) Character set was used by windows.
ANSI is a modified ASCII
 UNICODE has replaced all major coding schemes and used 16 bits for character
encoding.

Data storage media

Semiconductor
Semiconductor memory uses semiconductor-based integrated circuits to store information, could
be volatile or non-volatile. Primary storage like RAM is volatile semiconductor memory. Secondary
memory like Flash memory (Pen drives) and now flash-based solid-state drives (SSDs) are Non-
Volatile semiconductor memories. Data is represented with switches.

Magnetic
Magnetic storage uses different microscopic magnets of different polarities to store information.
Magnetic storage is non-volatile. Hard Disks, Tape Drives provide Magnetic Storage. In Magnetic
Storage, data (0 or 1) is represented with polarity of Magnetic field.

Optical storage
Optical storage stores information by creating microscopic pits on the surface of a circular disc and
reads this information by illuminating the surface with a laser diode and observing the reflection.
Optical disc storage is non-volatile CDs, DVDs and Blue-ray all use optical means to store Data.

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1.5 Hardware Asset Management

Information systems acquisition, development, and maintenance should be considered in the
context of the organisation’s IT long- and short-range plans. COBIT* (Control Objectives for
Information and Related Technology) framework provides best practices for hardware policy areas
for IT functions. Some key factors to consider are:
 Acquisition: How is hardware acquired from outside vendors?
 Standards: What are the hardware compatibility standards?
 Performance: How computing capabilities should be tested?
 Configuration: Where client/servers, personal computers, and others are be used?
 Capacity Monitoring: Is capacity monitored for efficient operations?
 Service providers: Should third-party service providers be used?
* COBIT is a business framework created by ISACA (Information System and Control Association)
for the governance and management of enterprise Information Technology. ISACA provides
globally accepted principles, practices, analytical tools and models to help increase the trust in,
and value from, information systems.) COBIT is available as a free download at www.isaca.org.

1.5.1 Hardware Acquisition

Acquisition of Hardware might be necessitated due to: initial deployment or expansion of existing
capacities or in response to demands of a new Application like ERP or could even be a replacement
for retired computer systems. Hardware acquisition is not only limited to computers but also to all
equipment and peripherals associated with the entire computer system, such as printers, scanners,
modems, routers, and DVD-ROMs. Before providing specifications on what is needed to vendors
in the form of an Invitation to Tender (ITT), it is essential to prepare a checklist based on the
following evaluation criteria.

Evaluation Criteria
 Compatibility and Industry Standards
o Is the hardware to be procured compatible with the existing one and does it take
care of future applications?
o Have the workload and performance requirements been calculated and is the
hardware suggested capable of fulfilling them?
o Are there any industry standards for the same, and do the hardware components
comply with them?
 Ease of Operations
o Can the hardware be installed and maintained by locally available engineers?
o Can the hardware be serviced, maintained, and upgraded locally?
o Does the hardware need any special training for its operation or will the users be
able to access/use it with minimal additional technological competence?

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 Support
o What type of technical support will be provided by the vendor?
o Are appropriate manuals for various operations available?
o If so, are they available in a variety of media?
o Can the manuals be understood by intended users?
o Does the vendor have a strong Research and Development Division with
adequate staff?
o Will the vendor help in the smooth transition from the existing application to the
new one?
o What is the quantum of training that the vendor will provide?
o What is the backup facility that the vendor will provide?
 Cost
o Is the cost quoted competitive and comprehensive?
o Are all the requested components included in the purchase price?
o Are there any hidden costs?
o Will the vendor provide support at an affordable cost?
 For acquiring Hardware any organisation would issue, an ITT (Invitation to Tender) or
RFP (Request for Proposal).

ITT or RFP
The ITT or RFP documents the requirements of organisation. It has to inter alia include the
following:
 Information processing requirements: In terms of workload and performance
requirements in accordance with applications which are proposed to be implemented.
 Hardware requirements: In terms of Processing Speed, peripheral Devices and
Network capability required as per business need.
 System software applications: In terms of Operating System, Database
management Software and other system software requirements.
 Support requirements: In terms of post implementation support and training.
 Adaptability requirements: In terms of Compatibility with existing infrastructure and
up gradation capabilities.
 Constraints: In terms of Delivery dates
 Conversion requirements: In terms of testing, pricing, structure and schedule.

ITT or RFP evaluation

The bids received from vendor in response to ITT/ RFP have to be analysed based on defined
evaluation criteria for:
 Existing User Satisfaction
 Vendor Financial condition
 Maintenance facilities
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 Delivery schedules
 Up gradation capabilities
 Benchmarking
 Contract terms (Right to audit)
 Price

Metrics for selecting Hardware

Some of the key metrics which are considered in selecting hardware are:
 Turnaround Time: Length of time for submission of the job and receipt of completed
output.
 Response Time: Length of time between submission of transaction and first character of
output.
 Throughput: The amount of work done over the period of time.
 Compatibility: Hardware to be procured compatible with the existing one.
 Capacity: In accordance with workload and performance requirements.
 Utilisation: Fit for the purpose it is to be acquired.

1.5.2 Hardware Maintenance Program

It is common for organisations to outsource the maintenance of computer hardware, which
includes any or all of desktops, servers, networks, cabling, etc. One of the important criteria
that need to be considered before finalizing the vendor is the issue of maintenance.
The organisation must have a hardware maintenance program that takes into consideration
the following:
 Which company takes care of what IT resource? For example, computers may be
serviced by one company and printers by another.
 How many times during a year does the vendor provide preventive maintenance and
when?
 Was any problem reported in the past, and what corrective steps were suggested? This
has to be documented.
 What is the cost of maintenance? Has, at any time during the year, the amount spent on
maintenance exceeded the budgeted amount? If yes, the details have to be documented.
 Apart from the preventive maintenance schedule, how many times during the year did the
vendor come for servicing the equipment because of some snag failure?
 What is the MTBF (Mean-Time-Between-Failure) and MTTR (Mean-Time-To-Repair)
value? Typically, MTBF value must be high and MTTR value must be low.

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1.5.3 Hardware Monitoring Procedures

Hardware monitoring procedures help in the hardware maintenance program. Malfunctioned
hardware causes server downtime. It is Important to employ tools for hardware monitoring. A good
monitoring solution leverages investment in existing hardware and monitoring agents.
 Benefits of hardware Monitoring:
o Flexible monitoring options
o Enhanced server uptime and proactive alerting
o Accurate root-cause diagnosis
o Reduce time to investigate and resolve
o Lower Total Cost of Ownership (TCO)
o Fast Return On Investment (ROI)
o Higher Quality of Service
 The following are the typical reports that are generated:
o Hardware Error Reports: These reports provide details of failures, if any, of
hardware resources in an organisation.
o Availability Reports: These reports provide details on the availability of the
hardware, software and all associated systems. Being the life-line of the
organisation, the availability of IT division must be as per business requirement.
If there is any break-down, this report provides details on the same.
o Utilisation Report: All IT resources must be optimally used. If there is excessive
utilisation of a resource, steps have to be taken to correct it. Details on utilisation
parameters are automatically provided by tools used for monitoring utilisation.
These reports not only help in maintenance but also in effective planning for the future.

1.5.4 Data and Capacity Management

Capacity requirements for a Chartered Accountant’s firm are very different from that of a stock
broking firm or a retail grocery store. Capacity monitoring is essential to ensure that the challenge
of selecting the right size or capacity of the computing architecture (capacity of the various
computer systems and components) are appropriate to meet the business requirements. Capacity
planning also ensures that the expansion or reduction of resources takes place in line with the
overall organisational growth or reduction. Some of the key factors that influence the requirements
of each of the key components such as the input devices, RAM, CPU architecture and speed, HDD,
output devices, networking capability and capacity are:
 Volume of transactions,
 Complexity of computations, and
 Mode of input and output delivery.
For example, the choice of inappropriate and inadequate software can significantly reduce the
operational efficiency of a business and its productivity, which in turn can affect the achievement
of its objectives. In the present age, one of the main issues an organisation has to face is the

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constant and never-ending growth of data and requirement for greater storage capacity along with
the problem of data safety, security and integrity. In modern day enterprises, which employ large
scale database applications or multimedia applications, the requirements for disk storage run from
gigabytes to terabytes. If a proper data and storage management mechanism is in place, problems
of downtime, business loss on account of lost data and insufficient storage space can be avoided.
The key issues in data and capacity management are:
 How to effectively manage rapidly growing volume of data?
 How to leverage data and storage technology to support business needs?
 What is the best data and storage management framework for an enterprising
business environment?
 How to optimize the performance of the data storage hardware and software to
ensure high availability?
 What is the best way to achieve greater storage capacity?
 How effective is the current data backup and storage management system?
Capacity Planning is planning and monitoring of the computer resources to ensure that the
available resources are being used efficiently and effectively, in terms of
 CPU utilisation
 Computer Storage Utilisation
 Telecommunication and Wide Area Network bandwidth utilisation
 Terminal utilisation
 I/O channel utilisation etc.
Like every other investment in an organisation, IT investment too has to be justified on the basis of
Returns on Investment (ROI). The capacity of IT resources required, such as processor power,
CPU clock speed, hard disk capacity and number of terminals have to be planned meticulously
keeping the business requirements of the current and the near future and also the rate of
technology obsolescence so that the benefits from IT investments are realised.
Proper capacity planning has the following advantages:
 It assures appropriate infrastructure capacity levels to support existing and future
business functions.
 It reduces resource expenditures and IT operating costs.
 It improves application infrastructure availability.
 It enables prioritization and reallocation of existing applications, systems, and network
components.
 It projects future resource needs, protecting the infrastructure from slow-downs as
capacity demands increase.
 It facilitates improved support of new and existing applications.

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1.5.5 Hardware Retirement

Computer Systems have a functional life. They should be replaced at the end of their useful
life or when the hardware becomes a barrier to the user. This occurs primarily when the
Applications, or the software required for business activity will not run effectively on the existing
hardware; or when the existing hardware has begun to malfunction on a repeated basis. Some
of the key issues to be addressed in hardware retirement are:
 What to do with the older assets as newer systems come online.
o Retiring IT equipment possesses data that may be sources of significant
economic return; Need to be recycled according to regulations.
 Improper disposing of data and other IT assets
o Can cause embarrassing security breaches
o Increase costs
o Pose the risk of regulatory penalties.
 Policy is needed for
o Designating a system to be retired
o Establishing Data Archiving Requirements (data, code, etc.)
o Establishing Security Requirements (disposal, disposition, sensitive data, etc.)
o Removal of Data from System Hardware
o Removal of end-user devices or other equipment (racks, cradles, scanners, etc.)
o Closure of licensing and/or contracts
o Reallocation of resources (hardware, memory, support staff, etc.)
o Finalizing program budget
o Taking care of e-waste regulations
o Minimizing Environmental impact.

1.6 Auditing Hardware

 Review the hardware acquisition plan to determine:
o Whether the hardware acquisition plan is compared to business plan.
o Whether the environment is adequate for the current installed hardware and
provision made for new hardware to be added under the approved acquisition
plan.
o Whether the acquisition plan has taken into consideration deficiencies noted in
the former.
o Whether the acquisition plan has taken into consideration technological
obsolescence of the installed equipment, as well as the new equipment in the
plan.
o The adequacy of documentation for hardware and software specifications,
installation requirements and the likely lead-time associated with planned
acquisitions.

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 Review the Microcomputer (PC) Acquisition Criteria to determine:

o Whether Management has issued written policy statements regarding the
acquisition and use of PC’s and that these statements have been communicated
to the users.
o Criteria for acquisition of PC’s have been developed and that procedures have
been established to facilitate the acquisition approval process.
o Requests for acquisition of PC’s are supported by cost benefit analysis.
o All PC’s are purchased through the IS purchasing department to take advantage
of volume discounts and standardization.
 Review of the Capacity Management Policy and Procedures for hardware
o Whether the procedure in place will ensure continuous review of hardware and
system software performance and capacity.
o Whether the criteria issued in the performance monitoring plan are based on
historical data obtained from problem logs, processing schedules, accounting
system reports, preventive maintenance schedules and reports.
 Review Hardware performance-monitoring plan to determine, whether it
o Includes a review of problem logs, processing schedules, system reports, and
job accounting reports.
 Problem log review
o The problem log assists in identifying hardware malfunctions, operator actions,
or system resets that negatively affect the performance of the IT infrastructure.
The IT organisation should regularly monitor the problem log to detect potential
IT resource capacity issues.
 Review Hardware availability and performance reports
o Review and ensure that the services required by the organisation (CPU
utilisation, storage utilisation, bandwidth utilisation, and system uptime) are
available when needed and that maintenance procedures do not negatively
impact the organisation’s operations.

1.7 Summary
Modern organisations are heavily dependent on automated information systems for performing
processing of transactions whether it is related to delivery of product or services. The basic
infrastructure required to develop, maintain and sustain Information Systems is IT. Hardware is
one of the important components and includes the input, output, processing and storage devices.
It is important to understand functionality of various components of hardware as hardware is the
important resource in managing capacities for effective and efficient working of an enterprise.
Investment in IT hardware is a major investment and its maintenance is a major component of
expenditure. Hence, effective and optimum utilisation of IT asset is important function in in any
organisation to ensure organisational goals are achieved.

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1.8 References
 http://www.cio.in
 Ralph M. Stair, George W. Reynolds, ‘Principles of Information Systems’, Cengage
Learning
 www.whatis.com
 www.howstuffworks.com
 www.google.com
 www.wikipedia.com
 www.youtube.com

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 PART 2: SYSTEMS SOFTWARE
Learning Objectives
 To gain understanding of system software and application software
 To understand operating systems
 To understand various types of system software
 To gain understanding of software asset management
 To understand how to audit software

2.1 Introduction
Computer hardware constitutes the physical components and works based on the instruction input
given by the users and other programs. These set of instruction input are called software. The term
software in its broad sense refers to the program that the machine executes. Software is an
intangible portion whereas hardware is tangible part which we can touch and see. Computer
Software is the collection of computer programs, procedures and documentation that perform
different tasks on a computer system. Program software performs the function of the program it
implements, either by directly providing instructions to the computer hardware or by serving as
input to another piece of software.

2.1.1 Software
Software consists of clearly-defined instruction sets that upon execution, tell a computer what to
do. It is a set of instructions which when executed in a specified sequence accomplishes desired
task. The most critical function of software is to direct the working of computer hardware. This
causes a computer to perform useful tasks. There are two broad categories of software:
1. System Software
2. Application Software

1. System Software
System software is a collection of computer programs used in design, processing and control
of application software. System software coordinates instructions between applications and
hardware. It is the low-level software required to manage computer resources and support the
production or execution of application programs but is not specific to any particular application.
 These refer to the set of programs that -
o Enable a computer to work.
o Control the working of a computer.
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o Provide facilities for programmers to develop applications.

o Enable various I/O devices to be connected
o Help in the efficient use of computer resources.
o Includes:
 Operating System
 Data communication
 Data Base management software (DBMS)
 Access control
 Tape and disk management systems
 Program library management systems
 Network management software
 Program Development Software
 Job scheduling
 Middleware
 Utility programs

2. Application Software
Users interact with Application Software. It refers to the set of software that performs a specific
function directly for the end-user. It is a collection of programs which address a real life problem
for its end users, may be business or scientific or any other problem. There are varieties of
application software for different needs of users. Some of the Application Programs could be
o Application Suite: E.g. MS Office etc.
o Enterprise Software: E.g. ERP Applications like SAP, etc.
o Enterprise Infrastructure Software: E.g. email servers, Security software.
o Information Worker Software: E.g. CAAT (Computer assisted audit tools), etc.
o Content Access Software: E.g. Media Players etc.
o Educational Software: E.g. ELearning, Examination Test CDs
o Media Development Software: E.g. Desktop Publishing, Video Editing etc.

2.2 Operating System

One of the prominent System Software is Operating System. Operating system is a set of
programs implemented in software, hardware and firmware that permits sharing and use of
resources. It is a set of programs which act as intermediary agent between the user and the
computer hardware. It controls and manages the computer hardware resources among various
processes. Also called a Resource Manager, an Operating System helps in the efficient
management of the important resources of RAM, CPU, and various I/O devices (which include
secondary storage devices also) and the information that is held in the machine.
The Operating System also enables users to interact with the machine and takes care of technical
aspects of a computer’s operation. It shields the user of the machine from low-level details of the
machine’s operation and provides frequently needed facilities.

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2.2.1 Types of Operating Systems

 Single User OS
o One user uses system at a time. It could do single or multiple tasks.
o Single task operating system e.g.: MS-DOS (now outdated)
o Multi Task system e.g.: MS Windows 7 or 8
 Multi User OS
o Several users use System at a time.
o Example: Unix, Windows 7 or 8
 Multi-Processing OS
o OS operates on system with more than one processor.
o Multiprocessor systems, also known as Parallel systems or Tightly-coupled
systems have more than one processor in close communication, sharing the
computer bus, the clock, and sometimes memory and peripheral devices.
o The main advantages of multiprocessor systems are:
 Increased throughput: By increasing the number of processors, more
work can be done in lesser time.
 Economies of scale: Multiprocessor systems save more money than
multiple single-processor systems, because they can share
peripherals, mass storage, and power supplies.
 Increased reliability: If functions can be distributed properly among
several processors, then the failure of one processor will not halt the
system, only slow it down.
 Real time OS
o Used in embedded systems with only small set of tasks.
o In these systems time is very critical and has to operate in real time.
o A real time system is used when rigid requirements are placed on the operation
of a processor or the flow of data; thus, it is often used as a control device in a
dedicated application.
o Some automobile-engine fuel-injection systems, home-appliance controllers and
weapon systems are also real time systems.
o A real time system has well-defined, fixed time constraints. Programs must be
done within the defined constraints, or the system will fail.
o Micro C/OS-II is a typical example of RTOS
Some major OS capabilities are:
 Multi-tasking
o Refers to multiple tasks running simultaneously by sharing the CPU time.
o Allows computing systems to run two or more tasks, applications concurrently.
o At any point in time the CPU is executing one task only while other tasks wait for
their turn.
o The illusion of parallelism is achieved when the CPU switching of tasks takes
place.
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 Multi-processing
o Links more than one processor (CPU)
o If the underlying hardware provides more than one processor then that is
multiprocessing.
 Multi-threading
o It is an execution model that allows a single process to have multiple code
(threads) run concurrently within the context of that process
o Runs several processes or threads of a program simultaneously.
o Threads can be imagined as child processes that share the parent process
resources but execute independently.

2.2.2 Functions of Operating Systems

 Processor management
 Memory management
 Device management
 File management
 Secondary storage management
 Networking
 Application programme interface
 User interfaces with system

Processor Management
In multitasking environment, OS decides which task (process) gets the processor when and for
how much time. This function is called process scheduling.
Operating System does the following activities for processor management.
 Keeps tracks of processor and status of process.
 Allocates and de-allocates the processor (CPU) to a process.
 Creating and deleting both user and system processes by suspending and resuming
processes.
 Providing mechanisms for process synchronization.
 Providing mechanisms for process communication.
 Providing mechanism for deadlock handling.

Memory Management
Memory management refers to management of Primary Memory or Main Memory. Main memory
is a large array of words or bytes where each word or byte has its own address. Main memory
provides a fast storage that can be accessed directly by the CPU. So, for a program to be
executed, it must be in the main memory.

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 Operating System does the following activities for memory management.

o Keeping track of the parts of memory that are currently being used and by whom.
o Deciding the processes that are to be loaded into memory when memory space
becomes available.
o Allocating and de-allocating memory space as per need.
 Operating systems also supports virtual memory which carves an area out of hard disk
to supplement the functional memory capacity of RAM i.e. it augments memory or RAM.

Device Management
One of the purposes of an operating system is to hide the peculiarities of specific hardware devices
from users, which is done by I/O subsystem itself.
 The I/O subsystem consists of:
o A memory management component that includes buffering, caching and
spooling.
o A general device called driver interface.
o Drivers for specific hardware devices
 OS manages device communication via their respective drivers.
 Operating System does the following activities for device management.
o Keeps tracks of all devices. Program responsible for this task is known as the
I/O controller.
o Decides which process gets the device when and for how much time.
o Allocates and de-allocates the device in the efficient way.

File Management
A file system is normally organized into directories for easy navigation and usage. These directories
may contain files and other directories.
 Operating System does the following activities for file management.
o Keeps track of information, location, uses, status etc. The collective facilities are
often known as file system.
o Decides who gets the resources.
o Allocates and De-allocates the resources.
o Creating and deleting files.
o Creating and deleting directories.
o Mapping files onto secondary storage.
o Backing up files on stable storage media.

Secondary Storage Management

The operating system is responsible for the following activities in connection with the disk
management:

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 Free space management.

 Storage allocation.
 Disk scheduling.

Networking
The processors in the system are connected through a communication network, configured in a
number of different ways. Different protocols are used to communicate between different
computers.

Protection System
Protection is a mechanism for controlling the access of programs, processes or users to the
resources defined by a computer system. This is achieved by means of password and similar other
techniques, preventing unauthorised access to programs and data. This mechanism provides
means for specification of controls to be imposed and means for enforcement. Protection
mechanism improves reliability by detecting latent errors at the interfaces between computer
subsystems.

Other tasks of an Operating System

 Control over system performance: Recording delays between request for a service and
response from the system.
 Job accounting: Keeping track of time and resources used by various jobs and users.
 Error detecting aids: Production of dumps, traces, error messages and other debugging
and error detecting aids.
 Coordination between other software and users: Coordination and assignment of
compilers, interpreters, assemblers and other software to the various users of the
computer systems.
 Providing user interfaces: An important job of any operating system is to provide user
interface. If we remember DOS days, it had a Command based User Interface (UI) i.e.
text commands were given to computer to execute any command. But today we are more
used to Graphic User Interface (GUI) which uses icons and menus like in the case of
Windows. So, how we interface with our system will be provided by operating system.
 Hardware independence: Every computer could have different specifications and
configurations of hardware. If application developer would have to rewrite code for every
configuration he would be in a big trouble. Fortunately, we have operating system which
provides Application Program Interfaces (API) which can be used by application
developers to create application software, thus obviating the need to understand the inner
workings of OS and hardware. Thus, OS gives us hardware independence.

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Kernel and Shell

Operating System is like Glue which holds a computer together. If we think of it one side of
operating system is Hardware and on other side is Application. We can primarily divide operating
system into two layers.
 Kernel Layer
o Controls access to hardware
o Schedules system resources, memory, CPU.
o Enforces security to system resources
o Responds to service calls(How program accesses services from OS) e.g.
Accessing hard disk, let’s say that a program wants to access hard disk, it will
call Kernel of OS for the same and kernel will facilitate it.
 Shell Layer
o Surrounds kernel
o Provides Interface for applications
o Creates environment for application execution and user interface

2.3 Other Type of System Software

2.3.1 Program Development Software
Programming software usually provides tools to assist a programmer in writing computer programs
and software by using different programming languages in a convenient way. Software tells
computer what to do, and then obviously this program has to be written. This program is written in
some programming languages. There have been various generations of programming languages.

First-generation language 1GL: Machine Language

 First-generation language is machine language or the level of instructions and data that
the processor is actually given to work on (which in conventional computers is a string of
0s and 1s).
 The first generation program language is pure machine code, that is just ones and zeroes,
 Long Instructions
 Machine dependent.

Second-generation language 2GL: Assembly Language

 Second-generation language is assembly language.
 By using codes resembling English programming becomes much easier.
 Use of mnemonic codes such as LDA for load and STA for store means the code is easier
to read and write.
 Machine dependent.

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Third-generation language 3GL

 High Level language and English like.
 Problem oriented, for scientific problems we had FORTRAN, for business Problems-
COBOL
 Third-generation programming languages brought many programmer-friendly features.
 It has to be told what to do and how to do.
 Can be platform independent

Fourth-generation language 4GL

 Still more English like.
 Easier to use
 Many pre-programmed functions
 It uses declarative language i.e. it has only to be told what to do, not how to do.
 Includes Data Management features

Fifth-generation language 5GL

 Used mainly in Artificial Intelligence (AI)
 Designed to make the computer solve a given problem without the programmer.
 Programmer only has to bother about problems to be solved and conditions to be met.
 It primarily ended as hype due to expectation mismatch.
 Subsequently vendors tried to use the term to sell their packaged 4GL products.
 Languages like PROLOG, LISP, KL-1, Mercury etc.

Program development tools

Assembler: A computer will not understand any program written in a language, other than its
machine language. The programs written in other languages must be translated into the machine
language. Such translation is performed with the help of software. A program which translates an
Assembly language (2GL) program into a Machine language (1GL) program is called an
assembler.
Compiler: It is a program which translates a high level language program into a machine language
program. A compiler is a computer program (or a set of programs) that transforms the source code
written in a High level language (the source language) into Machine language (Binary language)
called Object Code. In a compiler debugging is difficult, because a compiler goes through the entire
program and then translates the entire program into machine codes. The machine codes generated
by compiler are saved permanently for future reference.
Interpreter: An interpreter is a computer program that executes instructions line by line, i.e.
performs instructions written in a programming language. An interpreter is a program which
translates statements of a program into machine code. It reads only one statement of program,

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translates it and executes it, thus Debugging is easier. It occupies less memory space. The
machine codes produced by interpreter are not saved.
SQL Engine: It converts SQL statement to Machine Code.
Debugger: A debugger is a utility that helps in identifying any problem occurring during execution.
By using the debugger utility, one can pinpoint when and where a program terminates abnormally,
indicates the value of the variables used, and in general provides information so that the
programmer can locate bugs.
Linker: Linking is the process of combining various pieces of code and data together to form a
single executable unit that can be loaded in memory. The process of linking is generally done
during compilation of the program. After linking, the loading process takes place by using loader
software.
Loader: A loader is a program which loads the code and data of the executable object file into the
main memory, goes to the very first instruction and then executes the program.
Editor: An editor program is a system software utility that allows the user to create and edit files.
During the editing process, no special characters are added. On account of this, the editor utility is
used to create the source code.

2.3.2 Access Control Software

Access control software is now generally embedded as functions in Operating Systems and DBMS.
Access Control Software is used for:
 Analysing who is accessing and using data.
 Who is controlling the data,
 Secure access to data, files, system resources
 Assign ownership of all data for accountability
 Logging access activity

2.3.3 Data Communications Software

Communications software is generally embedded in the computer operating system.
 Communications software assists Operating System in managing local and remote
terminal access
o to host resources,
o to manage security
 E.g. terminal emulators, file transfer programs

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2.3.4 Utility Programs

Utility software is a computer software designed to help manage and tune the computer
hardware, operating system or application software by performing a single task or a small
range of tasks. Some types of utility software are integrated into the major operating systems.
The functions of Utility software are:
 To manage a computer's functioning
 To improve operational efficiency e.g. Defragmenters
 To understand application systems.
 To facilitate assessing or testing data quality.
 To test a program’s ability to function correctly and maintain data integrity.
 To assist in fast program development.
Some utility software are:
 Disk Storage Utilities including Disk defragmenters, Disk checkers, Disk cleaners,
Disk partitioners, Backup, Disk compression, file managers and Archive.
 Data Compression Utilities
 Cryptographic Utilities
 Network managers
 Registry cleaners

2.4 Security and Controls in Operating System

Operating System should be robust, reliable, and free of Integrity flaws. Operating system's
processes and kernel do the designated task as instructed. A malicious program could make these
process do malicious tasks. OS can be secured through proper user access and it has to be
protected through anti-virus, firewalls, anti-spyware and patch management.

2.4.1 Access Controls in OS

Access control is the process of authorizing users, groups, and computers to access objects which
could be files, directories etc. on the computer. Operating system access controls is the first layer
of access controls which mainly rely on hardware features of processor which control which
memory addresses a process can access. The access controls provided with an operating system
typically authenticate users using some mechanism such as passwords etc. then mediate their
access to files, communications ports, and other system resources.
Access Control in most of operating systems is operated through Access Control Lists (ACL). ACL
is a list of “who” has “what” access to an Object. An access control list (ACL) is a table that tells a
computer operating system which access rights each user has to a particular system object, such
as a file directory or individual file. As the operating system works with files, this will usually be the
smallest object with which its access control mechanisms can deal. ACLs are widely used in

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environments where users manage their own file security. ACL is a matrix of access permissions,
with columns for files, objects and rows for users and related capabilities.

File A File B Prog. X

Role A Read Write

Write
Role B Read Read
Write
Role C Execute

Access control lists are widely used, often with Roles. Where Role = set of users, which could be
Administrator, User, Guest. In a Role Based access Control, permissions are given based on roles
and through roles each user gets permissions based on Roles they are assigned to.

2.4.2 Access Control in Windows

Implementing right level of access is most critical to ensure that access to information is provided
to employees and other users as per organisation needs and based on the organisation structure.
The principle of ensuring proper segregation of duties is also implemented through access controls.
As operating system software is the first entry point for the user, the key functions of OS relating
to user management has to be properly implemented as per security policy of the organisation.
Auditors have to review whether these are as per policy outlined by the senior management. It is
highly advisable that auditors become familiar with the whole process of user management right
from user creation to deletion. How to create users, how to define specific roles, grant access to
specific modules and functions, how to grant permissions and how to review and enable security
auditing are covered here for Windows OS. Similar functions would be available in other operating
systems but the way functionality works would vary from one OS to another:
 User creation
 Assign roles
 User rights and privilege
 Permissions
 Security auditing
The topic of Access Controls is covered in more detail in Chapter-5: Logical Access
Controls in Module-4: Protection of Information assets of ISA 2 course. This is also covered
in hands on training of Module-4.

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User Creation
In Windows 7 we can create a user by going to Control Panel > User Accounts > Manage accounts
as shown in the next page.

Assign Roles
In Windows 7 we can assign roles by going to Control Panel > User Accounts > Manage accounts.
The default Roles could be Standard User or Administrator

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Assign Password
In Windows 7, we can assign password by: Control Panel > User Accounts > Manage accounts

User rights and permissions

User Rights apply to user accounts, and Permissions are attached to objects. For assigning User
Rights we go to Start> Control Panel>System and security>Administrative Tools> Local Security
Policy
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Click on User Rights assignment

Permissions
Permissions are attached to objects. Right Click on Properties > Security Tab > Advanced or Edit

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Security Auditing: User Access

Audit access to Object, Logon, System events. For Logging User Events: Go to Start> Control
Panel>System and security> Administrative Tools>Local Security Policy>Local Policies> Audit
Policy

2.5 Software Acquisition

The software (operating systems, applications, database-management systems, and utilities) must
meet the needs of the organisation. With a wide variety of software products available, their
acquisition, implementation, maintenance, and integration is a challenge for any organisation.
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Some of the critical factors to be considered by an organisation would be considering during

software acquisition are discussed here. This topic is covered in more detail in chapters 1 and
5 of Module-5: Software development, acquisition and maintenance.

Requirements Definition
The key tasks that should be considered for requirement definitions:
 Establish the scope, objectives background and project charter.
 Establish business requirements.
 Develop a conceptual model of the base computer environment that will support the efficient
application development and processing required to meet the business needs and structure.
 Develop security, control and performance requirements.
 Consolidate the definition of all requirements.
 Analyse and evaluate alternative solutions.

Software Alternatives
The key tasks that should be considered in evaluating software alternatives are:
 Criteria for selecting or rejecting alternatives.
 Cost factors in development vs. purchase decision.
 Software cost.
 Initial and continuing support availability.
 Delivery schedule including lead time requirements.
 Requirements and constraints in order to use the software.
 Capabilities and limitations of the software.
 Potential risk of using a package in terms of future costs and vendor access to the
organisation.
 Selection advice from vendors, comparable installations and consultants.
 Compatibility with existing in-house system software.
 Financial stability of the software suppliers.
 Technical expertise of the software suppliers.
 Cost/Benefit Analysis

2.5.1 System Software Acquisition

When acquiring system software, we have to consider the following:
 Business, functional and technical needs and specifications
 Cost and benefit(s)
 Obsolescence
 Compatibility with existing systems
 Security
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 Demands on existing staff

 Training and hiring requirements
 Future growth needs
 Impact on system and the network performance

System Software Implementation

It has to be ensured that all appropriate levels of software have been implemented. Any
patches or service packs have been implemented and any predecessor updates have taken
place.

System Software Change Control Procedures

 All software must follow a formal change-control process.
 System software changes are scheduled when they least impact transaction
processing.
 A written plan is in place for testing changes to system software.
 Tests are completed as planned.
 Problems encountered during testing are resolved and the changes are re-tested.
 Test procedures are adequate to provide reasonable assurance that changes applied
to the system correct known problems and do not create new problems.
 Software will be identified before it is placed into the production environment.
 Fall-back or restoration procedures are in place in case of production failure.

Software Licensing Issues

Organisations need to ensure that all software used are licensed to ensure compliance. Proof
of ownership should be supplemented with following documents::
 Software License Terms -End User License Agreement (EULA)
 Certificate of Authenticity (COA)
 Original media and manuals
 Purchase invoice and/or receipt

2.5.2 Application System Acquisition

Application software could be off the shelf purchase or could involve Software Developments.
Off the Shelf Purchase
Some of the factors to be considered when making off the shelf purchase are:
 Compatibility
 Reliability
 Benchmarks
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 Cost
 Functionality
 Vendor support
 Viability of vendor
 Flexibility
 Documentation
 Response time
 Ease of installation

Software Development
If we have planned for Software development the steps involved are:
 Requirement Definition- Business requirements are gathered in this phase.
Questions answered are: Who is going to use the system? How will they use the
system? What data should be input into the system? What data should be output by
the system?
 Requirement Analysis- These requirements are analysed for their validity and the
possibility of incorporating the requirements in the Application and a Requirement
Specification document is created
 Design- software design is prepared from the requirement specifications
 Coding- Based on the Design, code is produced by the developer and is the longest
phase.
 Testing- Code produced is tested against the requirements to make sure that the
product is actually solving the needs addressed and gathered during the
requirements phase
 Changeover and Implementation- After successful testing the product is deployed
in the live environment.
 Post Implementation Review: Once the user starts using the developed system
then the actual problems crop up and these have to be solved from time to time.
 Maintenance-The process where the corrections and up gradations for the
developed product is known as maintenance.

2.6 Software Asset Management (SAM)

ITIL (Information Technology Infrastructure Library) defines Software Asset Management as: “the
entire infrastructure and processes necessary for the effective management, control and protection
of the software assets within an organisation, throughout all stages of their lifecycle.” In simple
terms it means
 Purchasing,
 Deploying,
 Managing, and Tracking of software from purchase to retirement of the software
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Software Asset Management (SAM) is the business practice of using people, processes, and
technology to systematically track, evaluate, and manage software licenses and software usage.
SAM is a key process for any organisation to meet its legal, financial and reputational
responsibilities. SAM answers the following key questions:
 What is installed in the environment?
 What is supposed to be installed?
 Who is using the Software?
 How much are they using it?
 Are they supposed to be using it?
 How are they using it?
 Can they prove they’re allowed to use it?

Benefits of SAM
Software is a critical and valuable asset and needs effective management. Key benefits of
implementing SAM are:
 Cost Savings
o With SAM we can control cost through Standardisation.
o Get volume discounts by going in for volume licensing
o We might be having redundant programs but once we analyse our programs we
might reduce Redundancy.
o With awareness we have a more streamlined operations
 Risk Management
o Reduce business, reputational and legal risks.
o When we go for genuine software is used then the reputational and legal risk is
reduced.
o With updated programs, chances of malware also reduce, reducing the business
risk.
 Streamlined Operations
o Proper software deployment makes software trouble free, leading to better
productivity.
o With genuine software we’ll have peace of mind and infrastructure optimisations
are possible.
 Good Governance
o With better compliance with responsibility under regulations will lead to better
Governance
 Disaster Protection
o Updated inventory lets us know what we have.
o We could also organise offsite backups of the software media that we have.
o Faster restoration is possible.

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Steps to software asset management:

 Take Inventory
o First, we need to know what we already have.
o Could be done manually or through tools.
 Get Organized
o We would also need to build inventory of software assets we have
 Create Policies, procedures and standards for software Life Cycle.
o Software acquisition
o Software storage
o Software implementation and use
o Software retirement
 Maintain The Plan
o The SAM plan should be maintained through regular software inventories
and regular updates.

2.6.1 Endpoint Management

What is an Endpoint?
An endpoint device is an Internet-capable computer hardware device on a TCP/IP network. Where
an information stream is generated or ends. This could be a:
 Computer
 Laptops
 smart phones
 Thin clients,
 POS terminals etc.
In any Distributed environment endpoints need to be deployed, configured, patched, secured and
supported.
Endpoint Management solutions encompass
 Patch delivery,
 inventory,
 software distribution,
 OS deployment,
 remote control capabilities, and
 near real-time visibility into the state of endpoints Including advanced capabilities to
support server endpoints
Issues
 Difficult to manually identifying systems that require OS migrations, upgrades, or
replacements
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 Information is not easily available to track hardware and software assets to verify software
and hardware contracts
 Managing remote offices with high on-site IT support costs

Why Endpoint Management

 Analyse vulnerabilities (patched or insecure configurations)
 Easily and automatically remediate all the networked endpoints
 Establish and enforce configuration policies across the endpoints
 Distribute and update software packages
 View, modify, and audit properties of the endpoints

Key Benefits of endpoint management

 Cross platform support- handle windows, Unix etc.
 Centralised management for greater control
 Standardised systems to drive consistency
 Streamlined software management to simplify compliance
 Leveraged asset management to improve service levels
 Managed change using best practices,
 Quickly responds to end user needs
 Understanding what you have and where it is
 Optimised client and server software assets
 Simplified software license audits
 Creates detailed asset reports
 Measured and improved IT performance
 Easily created advanced analytics
 Automated IT processes-increased end user satisfaction and better service levels
 Enabled end user self-service
 Empowers the end user

2.6.2 Digital Rights Management

Digital Rights Management refers to technologies and systems that prevent users from doing thing
with content that the content provider does not wish them to do. This means ensuring controlled
access to information as defined.
We borrow a book from a library for two days, we can’t read it in two days, what we can do is get
a photocopy of the book but the quality would be poor, would need spiralling to hold the pages
together and perhaps cost more than the cost of book itself. But if the book is in digital form i.e. it’s
an eBook would not cost us a paisa to create a perfect copy. This is where Digital Rights

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Management (DRM) comes into play, what is there to protect the Intellectual Property Rights (IPR)
relating to the digital content.
DRM removes usage control from the person in possession of digital content and puts it in the
hands of a computer program. It refers to any scheme that controls access to copyrighted material
using technological means. This is also associated with concept of Data leak prevention (DLP),
which is a strategy for making sure that end users do not send sensitive or critical information
outside of the corporate network.

Scope of DRM
Digital Rights management consists of all activity conducted in relation to the rights governing the:
 Digital content creation
 Distribution
 Storage
 Retrieval
 Use
 Disposal

Why DRM
 To protect the property rights of an enterprise’s assets
 Primarily for protecting data from leak
 To establish the awareness of Intellectual Property Rights (IPR) in society.

Examples of DRM and DLP

 A company sets its servers to block the forwarding of sensitive e-mail.
 An e-book server restricts access to, copying of and printing of material based on
constraints set by the copyright holder of the content.
 Software on DVDs that limits the number of copies a user can make.
 A music label releases titles on a type of CD that includes bits of information intended to
confuse ripping software.

2.7 Auditing Software

2.7.1 Auditing Operating System Software
When auditing operating system software procurement and implementation procedures, review of
configuration, patch management, change control and the documentation, the following approach
may be adopted:
 Review system software selection procedures to determine that they:

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o Address both, the Information System (IS) requirements and business plans.
o Include an overview of the capabilities of the software and control options.
o Same selection criteria are applied to all proposals.
 Review cost/benefit analysis of system software procedures to determine the following:
o Total cost of ownership has been considered while deciding for System software
o Hardware requirements
o Training and technical support requirements.
o Impact on data security.
o Financial stability of the vendor’s operations.
 Review controls over the installation of changed system software to determine the
following:
o System software changes are scheduled when they least impact transaction
processing.
o A written plan is in place for testing changes to system software.
o Tests are being completed as planned.
o Problems encountered during testing were resolved and the changes were re-
tested.
o Fall-back or restoration procedures are in place in case of failure.
 Review Configuration Management and OS Hardening would involve:
o A review of the pre-defined/default user accounts,
o Whether the multi-boot option is required, if not whether disabled or not
o Whether services enabled are as per organisation's business requirements,
o What devices to be allowed/disallowed
o What resources are accessible by default by all users?
o What are the procedures for controlling application of patches?
o Are the user accounts and particularly the Admin/Super User accounts accessed
through a secured access control mechanism?
o At a PC level, is a personal firewall enabled or not?
 Review system software maintenance activities to determine the following:
o Changes made to the system software are documented.
o Current versions of the software are supported by the vendor.
o Vendor’s maintenance activities are logged.
 Review systems documentation specifically in the areas of:
o Parameter tables.
o Activity logs/reports.
 Review and test systems software implementation to determine the adequacy of controls
in:
o Change procedures.
o Authorisation procedures.
o Access security features.
o Documentation requirements.
o Documentation of system testing.
o Audit trails.
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o Access controls over the software in production.

 Review authorisation documentation to determine whether:
o Additions, deletions or changes to access authorisation have been documented.
o Attempted violation reporting and follow-up have been documented.
 Review system software security for the following:
o Procedures have been established to restrict the ability to circumvent logical
security access control.
o Security provided by the system software.
o Existing physical and logical security provisions are adequate to restrict access
to the master consoles.
o Vendor-supplied installation passwords were changed at the time of installation.

2.7.2 Auditing Software Asset Management (SAM)

The steps involved in auditing SAM include identifying the application to audit, using a tool to
generate current usage report followed by analysing the report to:
 Identify non-usage of application – recommendation to remove application.
 Identify any users that haven’t used the application for 60+ days –
recommendation: Enquire if user needs else remove.
 Ensure users are using the correct version/suite of the application –
recommendation: If full suite is not required then buy single application.
 Update audit report.
 Run a new install report and obtain updated compliance figures
 Recommendation for rectifying any non-compliance by purchasing new licenses.
The topics of auditing SDLC and Software are covered in more detail in chapter 8 of
Module-5: Software development, acquisition and maintenance and Chapter-6: Auditing
Logical Access controls of Module-4 respectively. The hand on training of Module-4
provides practical training on auditing software.

2.8 Summary
Hardware becomes functional only with the software which runs on it. The cost and complexity of
software has been continuously increasing over the years. The two most important types of
software for any organisation are System Software and Application software. System software
includes both operating systems and utility programs. System software controls how various
technology tools work with application software. Operating system is one of the important system
software as it controls how hardware devices work together and interfaces with applications
software. Utility Software provides additional functionality to operating systems. Application
Software fulfils the specific information processing needs of an organisation. Software is crucial to
the success of any organisation and hence has to be effectively and constantly managed.

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Understanding how software works in terms of various features and functionality helps us in
optimally managing all the software assets throughout the economic lifecycle.

2.9 References
 Ralph M. Stair, George W. Reynolds, ‘Principles of Information Systems’, Cengage
Learning
 ITAssetManagement.Net
 BSA.org
 http://www.gcflearnfree.org/computerbasics/2

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MANAGEMENT SYSTEMS
Learning Objectives
 To gain understanding of Data Base Management Systems
 To understand Database Models
 To understand Database Languages
 To gain understanding of People involved with DBMS
 To understand Controls features in Database Management Systems
 To understand how to audit DBMS

3.1 Introduction
Every organisation has to manage its information i.e. any organisation should know what it needs
in terms of information, acquire that information, organize that information in a meaningful way,
assure information quality and provide software tools so that users in the organisation can access
information they require. To achieve the above objectives, the organisation has to use Data Base
Management Systems (DBMS)

3.2 Data Management

3.2.1 DIKW
For any organisation to survive today the crucial need is to have data and ability to process it.
• The word Data is derived from Latin for “to give”, thus “Data” in really gives facts from
which additional facts can be inferred.
• Information is the data that has been processed within a context into a form to give it
meaning or useful for user
• Knowledge is the information that has been analysed, assimilated.
• Wisdom is the application of knowledge
Data Management involved managing the process of data conversion in various states from right
from data origination to its conversion as knowledge:
Data > Information > Knowledge > Wisdom.
Data management includes all aspects of data planning, handling, analysis, documentation and
storage, i.e. development, execution and supervision of plans, policies, programs and practices
that control, protect, deliver and enhance the value of data and information assets. Let us
understand the hierarchy of data base.
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3.2.2 Hierarchy of Data

• Database: is a collection of related files. For example: accounting database could be a
collection of master account file, opening balance file, etc.
• File: is a collection of related records
• Record: is a collection of related data fields. A record describes an entity, e.g. PAN
Number, Name, Gross Salary, Tax Payable are the attributes of the IT Return.
• Field: is a collection of characters
• Characters: are collection of bits.

3.2.3 Why do we need Databases?

In a traditional file system, the Applications make reference to specific files containing relevant
data, e.g. invoicing application would have its invoicing file and accounting application would have
its accounting file. But this leads to whole lot of problems:
 High Redundancy- Customer details would be recorded in invoicing file as well as accounting
file.
 Limited Data Sharing- Each application would reference its own file.
 Low Data Integrity – Let’s say a customer changes address, data might have been updated
in invoicing file but not accounting file.
 High Dependence between Data and Application- If any change in the data structure or
format is made in the data file, a corresponding change has to be made in the application
program and vice-versa.
The problems with file systems led to database approach to data management.

3.2.4 What is a Database?

A database is a collection of data, typically describing the activities of one or more related functions
of an organisation(s). Database is just like an electronic filing cabinet i.e. a collection of
computerised data files. Some databases appear a single file to the OS, the database file then
becomes a container for entire file structure.

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The Database system helps us do various operations on these files such as:
 Adding new files to database
 Deleting existing files from database
 Inserting data in existing files
 Modifying data in existing files
 Deleting data in existing files
 Retrieving or querying data from existing files.

3.2.5 What is Database Management System?

Data Base Management Systems are software that aid in organizing, controlling and using the data
needed by the application programmes. A Database Management System is a software system for
creation and control of a database and manipulation of the data in the database. They provide the
facility to create and maintain a well-organized database. DBMS can mean Data repository or the
application bundled with the data repository to act as front-end. Applications access the DBMS,
which then accesses the data. Commercially available Data Base Management Systems are
Oracle, MySQL, SQL Servers and DB2, etc.

Invoicing
Application
Database
Database Management
Systems
Accounting
Application

With this Database approach, applications would access a common database through Database
Management Systems.

Advantages of a DBMS
 Permitting Data Sharing:
One of the main advantages of a DBMS is that the same information can be made
available to different users.
 Controlling Data Redundancy:
In a DBMS duplication of information or redundancy is, if not eliminated, carefully
controlled or reduced i.e. there is no need to repeat the same data over and over again.
Minimizing redundancy can, therefore, significantly reduce the cost of storing information
on hard drives and other storage devices, as also avoid data inconsistency.

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 Integrity can be maintained:

o Integrity constraints can be applied to database so that the correct data can be
entered and updated into database. The constraints may be applied to data item
within a single record to ensure domain and relational integrity or they may be
applied to relationships between records to ensure referential integrity. This also
ensures consistent data across the database.
o Data integrity is maintained by having accurate, consistent, and up-to-date data.
The chances of making a mistake increase if the same data has to be changed at several
different places than making the change in one place. Updates, in a database need to be
made only at one place.
 Program and file consistency:
Using a DBMS, file formats and programs are standardised. This makes the data files
easier to maintain because the same rules and guidelines apply across all types of data.
The level of consistency across files and programs also makes it easier to manage data
when multiple programmers are involved.
 User-friendliness:
DBMS makes the data access and manipulation easier for the user. DBMSs also reduce
the reliance of users on computer experts to meet their data needs.
 Improved security:
DBMSs allow multiple users to access the same data resources which could lead to risk
to an organisation if not controlled. Security constraints can be defined i.e. Rules can be
built to control access to sensitive data. Some sources of information need to be protected
or secured and only viewed by select individuals. Through the use of passwords,
database management systems can be used to restrict data access to only those who are
authorised.
 Achieving program/data independence:
In a DBMS, the data and the programs required to update and maintain those data items
are not coupled. Programs being independent of data files can be modified independently
of the data files, since In a DBMS data does not reside in applications but data bases
program and data are independent of each other.
 Faster application development
In the case of deployment of DBMS, as the data in a database is independent of the
applications, the latter can be developed to access the database through application
interface. Thus, Application development becomes fast. If any change in the data
structure or format is made in the data file, a corresponding change need not be required
in the application program and vice versa.

Disadvantages of a DBMS
There are two major downsides to using DBMSs. These are Cost and Threat to data security.

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 Expensive
o Implementing a DBMS system can be expensive and time-consuming.,
especially in large organisations.
o Training requirements alone can be quite costly.
o Other disadvantage could be cost of data conversion from legacy Non-DBMS
solutions, requirement of specific skill sets to manage the DBMS (need for a
DBA).
o DBA is required to fine tune the DBMS from time to time with increased volumes
and changing requirements.
 Security:
o In the absence of proper safeguards in place, it may be possible for some
unauthorised users to access the database. If one gets access to database then
it could be an all or nothing proposition.
 DBMS failure: Single point of failure
o As the whole data may be stored in the DBMS, it becomes a single point of
failure resulting in disruption of services/non-availability of data.

3.2.6 Database Models

A database should be designed to store all data relevant to business to facilitate quick
and easy modifications. A database model is a type of data model that determines the
logical structure of a database and fundamentally determines in which manner data can
be stored, organized, and manipulated.
Following are the database models,
 Hierarchical Database
 Network Database
 Relational Database (RDBMS)

Hierarchical Database Model

Data is organized in a tree structure. The records have a one-to-many relationship (1: n), one
record type is the root, all other record types is a child of one parent record type only.

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One typical Hierarchical structure could be your Directory (folders) in Windows OS.

Network Database Model

Records have a many-to-many relationship. For example many customers have multiple accounts.
The main disadvantage of this model is its complexity. Also, when the database is re-organized,
there is every possibility that data independence might be lost.

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Relational Database Model

The Relational Database Model is very simple and elegant; a relational database is a collection
of one or more relations, where each relation is a table with rows and columns which is a logical
equivalent of files. It permits the use of simple, high-level languages to query data.

This model represents the database as a collection of Relations and is governed by these rules:
• Data is represented in a two-dimensional table, in rows and columns.
• Columns describe the attributes.
• Each column in the table has a unique name.
• All the entries in any column are of the same type or same domain.
• Each column has a domain, a set of possible values that can appear in that column.
• All the entries in any column are of the same type or same domain.
• A row in the table is called Tuple.
• Ordering of rows and columns is insignificant.
• Duplicate rows are not allowed.
• All data items stored in the columns are atomic in nature, that is, they cannot be split
further without loss of information.
• In many tables, there is a column called the Key Column whose value is unique and
cannot be null.

3.3 Relational Data Integrity

In order to maintain integrity (accuracy) of data in the database, relational model specifies several
types of integrity constraints. Its major types are:
• Domain constraint: This means that all the values in the column of a table must be from
the same domain. Example: In Income Tax Assessee Database Column of First Name
would have all First names and Date of Birth would have all Date of Births in Date format.
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• Entity Constraint: This rule is to ensure and assure that the data values for the primary
key are valid and not null. Example: In Income Tax Assesse Database the primary key
would be PAN Number which is unique and never null.
• Referential Integrity: In a relational data model, associations between tables are defined
by using foreign keys. The referential integrity rule states that if there is a foreign key in
one table, either the foreign key must match the primary key of the other table or else the
foreign key value must be null.

In the above case SalesPersonID in Sales Order Table is foreign key but is primary Key in Sales
Person Table. This Constraint says that if in Sales Order Table for a transaction, SalesPersonId is
0033 then that value should exist as Primary key in Sales Person Table. There might also be a
case where there is direct order, in such a case SalesPersonID would be Null (in the Sales Order
table). Thus Referential Integrity Constraint would not allow someone to create an order booked
by a non-existent salesman.
People Associated With DBMS
• Data Owners: Owners of database
• Database Designers: Help in Database design and Structure
• Application Developers: Implement Database Design and application programs
• Database Administrators: Manage Database management systems(discussed later)
• End Users: Who query and update databases
Normalisation
“Norma” in Latin means Carpenter Square whose job is to set it at right angle.

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Similarly, normalization is used to set the table right. Database normalization is a conceptual
Database design technique which involves process of organizing the fields and tables of a
relational database to minimize redundancy and dependency on non-key elements. Objective is all
non-key items are related on key fields It is the process of Conceptual Database Design achieved
through - identification of relationships among various data items, Grouping data items and
establishing relationships and constraints. Normalization usually involves dividing large tables into
smaller and still smaller (and less redundant) tables and defining relationships between them in
order to improve storage efficiency, data integrity and scalability. The objective is to have data
Tables in such a way that additions, deletions, and modifications of a field can be made in just one
table and then propagated through the rest of the database using the defined relationships.

The advantages of the normalization are:

• Reduced redundancy.
• More efficient data structure.
• More flexible data structure i.e. we are able to add new rows and data values easily.
• Better understanding of data.

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3.3.1 Database Schemas

DBMS is responsible for access of Database; one of the initial steps would be “telling” the DBMS
the logical and physical structure of data and relationships among data for each user. This
Description of database is called Schema. The data in a DBMS is described at three levels of
abstraction or schemas:

External Schema
It is the user’s view of the database. This level describes that part of the database that is relevant
to each user.
External level is the one which is closest to the end users. Individual users are given different views
according to the user’s requirement.
Let’s say an HR person’s requirement in terms of data would be EmployeeID, EmployeeName,
DateofBirth, DateofJoining, Department, Designation, Basic Pay. Whereas Payroll Persons would
be interested in EmployeeID, EmployeeName, Department, Designation, Basic Pay, leave, TDS,
Deduction. These would be different user’s view of data or External Schema.

Conceptual Schema
This level describes what data is stored in the database and the relationships and constraints
among the data. This level contains the logical structure of the entire database. The conceptual
level represents all entities, their attributes and their relationships.
The conceptual schema in above case would consist of EmployeeID, EmployeeName, DateofBirth,
DateofJoining, Department, Designation, Basic Pay, Leave, TDS, Deduction and relationship
amongst them i.e. incorporates view of community of users HR as well as payroll.
All these data items would be in the form of Normalized small Tables with relationships and
constraints.

Internal Schema
It is the physical representation of database on the computer. This level describes how the data is
physically stored in the database. The internal level is concerned with storage space allocation,
Record descriptions, Records placement, Data Compression and Data Encryption Techniques.

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External Schema External Schema

HR View Payroll View

Logical
Structure Conceptual
Schema
Physical
Storage
Structure
Internal Schema

3.4 Database Languages

A DBMS provides a comprehensive set of facilities to perform the following actions:
• Creating, Modifying, Deleting database objects.
• Inserting, Updating and deleting data in the database.
• Performing the process of querying the database.
• Controlling access to the database.
• Providing facilities for data integrity and consistency.
These facilities are grouped under database languages. Structured Query Language or SQL is
a language that provides an interface to relational database systems. The three important
classifications of database languages are:
• Data Definition/Description Language (DDL);
• Data Manipulation Language (DML); and
• Data Control Language (DCL).

3.4.1 Data Definition Language (DDL)

The schemas discussed above need to be entered into the DBMS. This would be done using Data
Definition Language (DDL). It is a collection of instructions and commands used to define and
describe the data and relationships in a specific database.

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Data Definition Language (DDL) is used by the DBA (Database Administrator- explained later) and
by database designers to define both conceptual and internal schemas. DDL does not deal with
data.
It is a set of SQL commands used to create, modify and drop database structure. These commands
are not generally used by a common user.
Example: To create schema, SQL statement CREATE Table is used or to Modify Schema ALTER
Table is used. All these statements are used to define Database

In the above example: CREATE table isastudent (StudentID varchar (20), roll_no number (10))
This means that we want to create a table with the name ‘isastudent’ with two columns - StudentID
and roll_no. The name field will have attributes of type of: data: character, Maximum size of 20
characters. Similarly, roll no will be a number type with maximum length of 10.
Use of ALTER with RENAME for Renaming Table

Use of DROP for Deleting Table

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3.4.2 Data Manipulation Language (DML)

Subsequent to installation of DBMS, Users like managers would like to review reports and access
information.
To query the databases, the commands used to manipulate the databases are part of Data
Manipulation Language (DML). Typical manipulations include retrieval, insertion, deletion, and
modification of data. DML statements are used to maintain and query a database.
Applications access data through DML.
It is the area of SQL that allows changing data within the database i.e. enable users to manipulate
data in existing schemas’ objects.
Example: SQL statement like AVG (Average) MAX (find Largest Value) are used to query the
database

In the above example: SELECT StudentID, roll_No FROM isastudents WHERE StudentID ="1888“

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In the table name isastudents, StudentID and roll_No refer to two fields containing StudentID and
Roll number respectively in the table and we are trying to extract data relating to Student with ID
“1888”.

3.4.3 Data Control Language (DCL)

After Database has been setup and being able to manipulate data there is also a need to control a
database, including administering privileges and committing data this is done using statements
forming part of Data Control Language (DCL). DCL is a database language used to control access
to data in a database.
 Example: To give privileges and roles SQL statements like GRANT.
SQL>GRANT SELECT ON isastudents TO Pyare.Lal
To grant the user Pyare.Lal ability to retrieve information from the isastudents Table, we use
GRANT with SELECT

3.5 Key concepts of Database

3.5.1 Meta Data
Meta Data is critical to DBMS. It data is data about it provides data about:
o Where data came from
o How data were changed
o How data are stored
o How data are mapped
o Who owns data
o Who can access data
o Data usage history
o Data usage statistics

3.5.2 Data Dictionary

It is the documentation of database providing detailed description of every data in database. It
covers the following:
o Way data is defined
o Types of data that is present
o Relationship among data
o Keys for databases
o People Accessing data and Access rules

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The typical uses of a data dictionary are:

 Provide a standard definition of terms and data elements that can be referenced by
programmers, database administrators, and users to maintain data integrity
 Assist programmers in designing and writing programs
 Simplify database modification

3.5.3 Data Administrator and Database Administrator

 Data Administrator- Administrative and Policy Functions
 Data Base Administrator- Technical Functions
Database administrator (DBA) manages the DBMS for an organisation. As organisation Database
Systems are important and complex, the task of designing and maintaining the Database requires
a skilled Database Administrator who has a thorough knowledge of the business of the
organisation, is well versed in the use of DBMS and who keeps abreast with new emerging
technologies and methodologies. The DBA designs schemas, provides security, restores the
system after a failure, and periodically tunes the database to meet changing user needs.
Data management tasks
 Perform the process of liaising with management.
 Perform the process of liaising with database users for their needs.
 Perform the process of liaising with database vendors.
 Perform the process of liaising with the Data Administrator (DA).
 Acquire latest information on database technologies and tools.
 Prepare the project status report on the usage of databases.
Security tasks
 Monitoring and maintaining security of databases.
 Granting access rights and revoking them to users.
Technical Tasks
 Monitoring the databases, perform database tuning and optimizing database
performance.
 Maintaining availability (24 x 365) and ensuring integrity of databases.
 Installing any patch software, if necessary.
 Managing database backups and restorations.
 Guiding application programmers in their work.
 Performing the process of capacity planning.
 Performing the process of normalization, demoralization, indexing, and defining
views.
 Framing procedures for purging and archiving data.

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Some Enterprises have a separate position Data Administrator which is a non-technical position.
Job of Data Administrator relates to data rather than Database. All administrative and policy
matters rest with DA. Thus, the primary responsibility of defining External and Conceptual Schema
is jobs of DA, whereas the primary responsibility of defining internal schema rests with DBA.

3.6 Database Applications-Linking Databases to the Web

Front-end application: These directly interact with people or users.
Back-end application: Interacts with other programs or applications.
Web provides interactive interface (to the clients) to the business information stored in back-end
databases. Databases are the functional muscle of the web. System designers are increasingly
using the Web as the front end to database systems. Ability to produce useful information from the
underlying data is the strength of database applications. These could involve searching, filtering,
dicing, slicing and integrating data which is facilitated by Database Applications.
These Database Applications these days allow us to link company databases to internet help in
establishing data marts and warehouses, helping in remote access and manipulation of data, use
online processing to increase productivity for any organisation. One prominent example of
Database application could be ERP application SAP. Most retail store Web sites like EBay and
Amazon use database systems to store, update and present data about products for sale. The
popular Web-based "Facebook" application is essentially a database built upon the "MySQL"
database system and is an indication of the increasing usage of database applications as
foundations for Web-based applications. In short, one of the reasons of popularity of internet is the
ability to link databases. Today a large number of corporate databases are accessed over internet
through a standard web browser.

3.7 Database Security and Control

Database Controls could be in terms of:
 Database Roles and Permissions
o Segregation of duties
o Roles and Permissions allow control of operations that a user can perform on
database,
 Concurrency Control
o Addresses conflicts relating to simultaneous accesses
 Views
o Views enable data access limitations. A view is a content or context dependent
subset of one or more tables. e.g. – A view might be created to allow a sales
manager to view only the information in a customer table that is relevant to
customers of his own territory and restrict user from views of the database.

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 Stored Procedures
o Database servers offer developers the ability to create and reuse SQL code
through the use of objects called as Stored Procedures (Group of SQL
statements).
o These are available to applications accessing a database system and are
actually stored in database. Stored procedures reduce the long SQL queries to
a single line.
 Triggers
o These are designed to be automatically ‘fired’ when a specific action/event takes
place within a database. E.g. On execution of code to delete an employee from
Master File, a trigger would be executed (automatically) to scan the Employee
Liability Table to check whether any liability against this employee exists.

3.7.1 Database Security

The objective of Data base security would be Authorised people should be given Right access to
the Right data. In this context user management becomes very important. There could be different
types of database users
 Application programmers
 Specialized users
 Naive users
This user management is achieved through Authorisation and access control
Basic model for accessing control involves:
 Subjects ( Right People)
 Objects (Right data)
 Access Rights ( Right Access)
To access the database, a user must specify a valid database user account and successfully
authenticate as required by that user account
Normally, a database administrator first uses CREATE USER to create an account, then GRANT
to define its privileges and characteristics. For Example in Oracle, The SYS and SYSTEM accounts
have the database administrator (DBA) role granted to them by default. These are predefined all
other users have to be created. Thus there is a need to create user and assign some authentication
mechanism like a Password.

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Data base Administrator will then grant access rights or privileges to user as shown below.

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3.8 Auditing Databases

3.8.1 Need for Auditing Databases
 Cost of Breach
o The cost of data breach is very high.
o There is a huge risk of data stolen from the organisation and risk of identity theft.
o In a number of cases, records containing sensitive personal information are
involved in security breaches, raising huge privacy issues.
 Regulatory Compliance
o There are many regulations and Standards which provide for audit of Data Bases
like PCI-DSS HIPAA, ISO 27001 etc.
o Database monitoring is key requirement.
 Database Leak Prevention
o Sensitive data needs protection.
o There is an ever increasing number and type of threats which need to be
mitigated.
o Attackers are targeting databases where data can be captured in bulk.
 Open Accessibility
o Web applications have melted traditional perimeter controls.
o Databases become vulnerable to breaches.

Auditing Database
The databases may be Front End or Back end. It is important to audit application controls.
Applications facilitate access by customers, employees, and business partners. Many different
applications may be accessing the same database and be subject to differing sets of controls. It is
important to audit the management of controls and also segregation of duties relating to these
applications.
 Perimeter Controls: Data access is distributed in most organisations. Perimeter controls
(Firewalls, IDS etc.) protect the databases from malicious users. It is essential to audit
these perimeter controls.
 Database Controls: Segregation of duties, concurrency control and possibility of anybody
access data without going through application are some of the controls which need to be
examined.

Areas of review by IS Auditor

 Definition standards
 Separate test database and live database
 Access controls, Database user rights should be need based
o Changes in authorisation IDs

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o Changes to the structure of data (such as dropping a table)

o Changes to data values (such as updating or inserting data)
o Access attempts by unauthorised IDs
 Controls to handle concurrent access problems.
 Monitoring database performance
 All database logs should be periodically verified
 Documentation regarding database incidents
o What activities were performed in the database by both users and administrators
 Checkpoints to minimize data loss
 Data backup and recovery procedures
 Whether backups are tested

Step by step approach for auditing database

 Understand application system / network infrastructure
o While planning an audit it is important to understand how the architecture
components inter-relate.
o Need to understand application systems and network architecture in which it
operates.
 Identify database administrators
 Identify database environments and versions
o Operating system hosts
o Database configuration files / documentation
o Database schemas
 Arrange database access
o Access should be provided for system table and system views.
 Look at Logs
o System Access
 Logins – Success / Fail
 Account / Role / Permissions changes
 Password changes
o Data Access
 SELECT – Success / Fail
o Data Change
 INSERT, UPDATE, DELETE
o Schema / Object Changes
 CREATE, ALTER, DROP
o Privileged User Activity
 All

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3.8.2 Database Auditing Tools

The process of monitoring access to and modification of selected database objects and resources
within operational databases and retaining a detailed record of the access where said record can
be used to proactively trigger actions and can be retrieved and analysed as needed.
This can be accomplished using a database auditing tools. Database Management Systems
generally have integrated data base audit tools. These can be configured for the purpose of
continuous audit of all access to sensitive data by privileged and application users, and generation
of relevant reports. They can also provide information on any changes to data base objects.
Some of the commercial databases auditing tools have additional features to issue alert on
abnormal access requests and database attacks. These solutions generate audit reports that can
help in incident response and forensic investigation through centralised management of different
databases being used by an organisation and provide analytical reports. The audit reports can also
be configured to demonstrate compliance with regulatory requirements

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3.9 Summary
At the very heart of most of management information systems are a database and a database
management system. A database maintains information about various entities and a database
management system (DBMS) is software through which users and application programs interact
with a database. We can very well say that Databases and Database Management Systems form
the foundation of information economy. DBMS is crucial for any organisation and has to be
controlled, monitored and assessed.

3.10 References
1. C J Date, An Introduction to Database Systems (8th Edition), Addison-Wesley.
2. Raghu Ramakrishnan, Database Management Systems, 3rd Edition, McGraw-Hill
3. http://asktom.oracle.com
4. http://www.java2s.com/Code/SQLServer/CatalogSQLServer.htm

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STRATEGIES
Learning Objectives
 To gain understanding of deployment strategies for IS Infrastructure
 To understand Information Technology Components of a Data Centre in CBS
Environment
 To understand Configuration management of IS Components
 To gain understanding of Hardening of Systems
 To understand Auditing IS Infrastructure.

4.1 Introduction
Any business organisation would like to have its goals and objectives achieved. To meet these
business objectives it will have some business processes, these business processes would need
some IT Services. These IT Services would require IT infrastructure. After considering this top
down approach, the business organisations plan for its IT infrastructure, since only a well-designed
IT infrastructure can help an organisation achieve its objectives. After making an IT plan it is
imperative to implement the plan, the term which is used more often for this implementation is
“Deployment”. Deployments in this background involves acquiring new software and Hardware and
have it up and running including installation, configuration, running, testing and necessary
customisations and modifications.

4.2 Different Deployment Strategies

The strategy for deployment of IT infrastructure could involve different possibilities, centralised or
decentralised. Each has its own merits and demerits, the best approach would depend on the kind
of organisation as well as the tone at the top.

4.2.1 Centralised Approach

In Centralised approach decisions are taken at the most senior or central level. There is a central
database. Content that has to be globally shared are at the central level. Applications are deployed
on single hardware/ software platform. Servers are at the central level. There is requirement of a
single middleware to connect client server at the central level. All user communication and traffic
is directed to the central point. Centralisation might be appropriate wherever the system is critical
to the functioning of the organisation, system is used by more than one department, Data is drawn
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from several different sources, and/or there are particular technical issues such as the design of
the network. Example could be most of CBS banks.

Benefits:
 Resource Sharing
o Data used across organisation in one place,
o Easier to undertake organisation-wide activities.
o Exchange of hardware, software.
 Avoidance of duplication
 Better security
 Achieving economies of scale.
 All data is at central level so it can be fully replicated for higher availability and disaster
recovery purposes.
 Policy enforcements can be done at central level.
 Security like patch management anti-virus management etc. can be done at central level.

Disadvantages:
 Single Point of Failure
o Central server and databases could be single points of failure. Thus, there is a
need for proper controls in the form of database mirroring, back-up sites,
component redundancies, access controls etc.
 Inflexibility
o Less flexibility to cope with local internal or external changes
 Increased dependence and vulnerability
o Greater numbers of staff rely on single information systems,
o Greater reliance on a few key staff who plan, develop and run those systems,
o Greater technical complexity that makes problems harder to diagnose, and
o Greater potential impact of data security breaches.

4.2.2 Decentralised Approach

In Decentralised approach decision making is delegated. The database is localised for an
office/region/zone/country depending upon the business strategy. Content is of local relevance.
Applications can be implemented on different platforms. Middle-ware is required at each set-up.
There will not be a single point of failure. Policy administration is at decentralised level.
Decentralised set up might be appropriate for areas where the system is relevant only to the
individual user / department, Data is drawn only from an existing centrally-managed database or
from a proposed locally-managed database, and/or Processing or reporting requirements are
subject to frequent change. Example could be a Multi-National Company having operations in
different countries.

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Benefits:
 Greater fit between systems and local needs
o Proximity of user and developer helps meet the users’ real needs.
 Higher usage of computerised systems
o Fit local needs, users are motivated
 Faster system development
o less distance between system user and system developer
 No single point of Failure
o One unit can work as a back-up site for the other unit.
 Reduced CAPEX
o Deployment can be done in phases, and hence can be matched with budget
cycles since all deployment need not be at one go.
o Up gradations can be done in phases

Disadvantages:
 Barriers to sharing data
o Information systems could be mutually incompatible.
 Barriers to sharing other resources, including human resources
o Inability to share resources other than data
 Duplication of effort
o Databases replication would be required at all decentralised locations, could
consume more resources.
 Lack of Centralised Control like
o Patch management, version control, security implementation, Antivirus updates
etc.
 Latency
o Because of distributed architecture there may be latency, due to the amount of
routing involved between distributed setups.

4.3 IT Components in a CBS (Core Banking Solution) Data

Centre
A bank’s data centre or an IPF (Information Processing Facility) is a facility used to house computer
systems and associated components, to cater to its information processing needs. In addition to
the computers, the Data Centre (DC) has storage, security and communication links. The Data
Centre is equipped with redundant or backup power supplies, redundant data communications
connections, environmental controls (e.g., air conditioning, fire suppression) and security devices.
The IT components, in a Data Centre depend upon the corporate objectives of the bank, the type
of services it plans to offer, the risk management and control mechanism it wishes to embed into

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IT processes and meet compliance/regulatory requirements, as also to leverage upon technology

to act as a differentiator for maximizing business and profit.
In the context of CBS, the IT components will depend upon the type of services the solution offers,
the committed/expected response time for customer transactions and the availability requirements
of services. This also depends upon the layers of security implemented for securing IT assets and
the processes in place for building customer confidence through efficient and secure processes.
Therefore, other applications/solutions requiring interface to the CBS solution are also hosted at
the Data Centre. In addition to meeting availability requirements, the banks have a DR site and
may have near-site also. Usually near site is used for data replication only.
The IT components can be broadly listed under the following categories,
 Application Solutions and Services
 Hardware and OS Components
 Network and Security Components
 EMS Components
 Environmental Components

4.3.1 Application Solutions Components

The following applications/services are normally deployed in data centre of a bank
(i) CBS – including Internet Banking
(ii) RTGS/NEFT/Integrated Risk Management solution/Integrated Treasury
Solution/Anti-Money Laundering System/Asset Liability Management
Solution/Mobile Banking/ Automated Data Flow and MIS/ Data Archival System/New
Pension Scheme/Govt. Business/OLTAS etc.
(iii) Web Services
(iv) Customer Call Centre services
(v) Customer Relationship Management
(vi) Human Resources Management
(vii) Email System
(viii) Data Warehouse
(ix) Biometric Authentication of branch users in CBS
(x) Second factor Authentication (for Internet Banking Users)
(xi) Cheque Truncation System and MICR Clearing System
(xii) Financial Inclusion
The applications which are not a part of the Core Banking Solution have an interface built (through
middleware) with CBS. These applications may be housed in the same data centre or elsewhere.
Usually, the bank’s WAN is also interfaced with the following external networks for facilitating the
seamless integration of CBS with other applications.
 ATM (Automatic Teller Machine)Switch

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 Reserve Bank of India’s MPLS (Multi-Protocol label switching) network and NPCI(National
Payments Corporation of India)
 SWIFT (Society for Worldwide Interbank Financial Telecommunication)
 Master/VISA/American Exchange
 National Clearing Cell and Cheque truncation system
 Utility services networks like telephone companies, mobile companies, electricity companies,
water department etc.,
 Government Tax Departments
 Other Govt. agencies like Central Board of Excise and Customs, Director General Foreign
Trade.

4.3.2 Hardware Components and OS

In a Data Centre, we have Server Farm i.e. a number of servers connected together. These servers
would broadly fall into following categories:
 Core Banking Servers - in High Availability (HA) mode. Number of servers depends upon
transaction volume, response time requirement and these are clustered.
 Database Servers - in High Availability (HA) mode.
 Web Servers, Email, Anti-virus servers
 Application Servers for the other applications
All the servers normally have redundant power supply from different UPS system and high speed
Network interface cards. Some banks implement virtualization for the Web Servers, Database
Servers and other Application servers. This helps to achieve scalability, reliability and high
availability for these servers.
Storage: For storage of production, test/development, migration and training data at the Data
Centre. Usually, the DRC (Disaster Recovery Centre) storage is sized for just the production
environment. Tape Library is used for taking backups.

4.3.3 Network and Security Components

The network design in the DC (Data Centre) is such that there are two distinct zones; one of which
caters to the Private Segment (Core Banking Zone), and other - the Public Segment (Internet
Zone). The architect is such that each of the two zones has different sub-nets through VLANs
(Virtual Local area Networks). Following networking devices are installed,
 Core Routers – 2 numbers to connect (back to back) the DC to the (Edge Routers) WAN.
These are configured in a HA (High Availability) mode, and have IPsec implemented on
them.
 Core Switches – 2 nos. in each of the two zones to provide for VLANs.
 ISDN Routers – To connect to branch routers to ISDN back up line.
 Top of Rack Ethernet Switch – for each of the racks.
 Encryption Devices
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 ACS Server for Terminal Access Controller Access-Control System (TACACS) – For
authentication, authorisation and accounting services of all network devices including
branch routers.
 Firewalls – (Core and Segment) - Each of the 2 zones is protected by 2 separate clusters
of high performing firewalls
 Internet Router – To connect DC/DR to ISPs.
 Intrusion Detection and Protection Systems – Separate for each of the two zones.
 Two Factor Authentication – Hardware and software to provide second factor
authentication for internet banking users.
 Security Solutions for email, and web.
 End-Point Security solutions.

A generic DC/DR Architecture

4.3.4 Enterprises Management System Components

The EMS solution is deployed to act as an interface for the Network Operations Centre (NOC) and
is used to monitor the servers, network and security components at DC, DRC, Near Site, WAN
Links and branch Infrastructure. It is a set of hardware and software solution(s) for the purpose of:
 Application Monitoring
 Server Monitoring
 Network Monitoring
 Patch Management
 Asset Management
 SLA(Service Level Agreement) Management
 Change Management
 Interface to Helpdesk Module

The NOC (Network Operations Centre) is usually at a different location for carrying out above
activities. A generic depiction of EMS deployment is given below:

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4.3.5 Environmental Components

 Racks - to house all the servers and the network equipment like Switches. Routers etc.
 Power ducts, cables, LAN (structured cabling) usually running below false floor.
 Smoke Detection and Fire Suppression Systems
 Motion Sensors
 Biometric and proximity card readers
 Video Camera Surveillance and Security Breach Alarms systems
 UPS power conditioning devices – to protect the servers and other critical network and
system equipment from brownouts, spikes, blackouts, noise, and over-voltages.
 Power, Water and Optic Fiber cables – from two redundant sources.
 Redundant air conditioning equipment – to maintain a continuous temperature of 20 ±2
Centigrade.
 Humidity control equipment
 Diesel storage for power back-up.

4.4 Configuration Management of IS Components

For an enterprise (just like a bank) using technology, it is imperative to keep a track, at central
level, of all IS components i.e. Hardware, Software etc., their configurations, versions etc., so that
control could be exercised over their lifecycle. Configuration management refers to relative
management of parts or elements of IT components. Configuration management covers the

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identification of all significant components within the IT infrastructure and recording the details of
these components in the Configuration Management Database. The configuration management
system also records relationships between these components. It provides comprehensive
information about all components in the infrastructure that enable all other processes to function
more effectively and efficiently. In configuration management, we record functional and physical
characteristic of hardware and software. Configuration management is applied throughout lifecycle
of IS component (Hardware, Software etc.).
Configuration management defines Configuration Items (CI), Items that require change control and
process for controlling such change. It is concerned with the policies, processes and tools for
managing changing IS Components. Special configuration management software is available
commercially. When a system needs hardware or software upgrade, a computer technician can
access the configuration management program and database to see what is currently installed.
The technician can then make a more informed decision about the upgrade needed.
Configuration Management System has the following aspects
 Configuration identification
 Configuration control
 Configuration status reporting
 Configuration audit

4.4.1 Configuration Identification

It is impossible to control something we don’t know. Therefore, identification of IS components
is important. In a restaurant with 100 tables the captain takes an order for food and waiter
serves the food, if there are no table numbers imagine the mess waiter would be in. He would
not be able to correlate food to be served with table, so it is important to have some unique
way of identifying the tables with orders.
Configuration Identification (CI) is the identification of all IS Components and typically includes
the versions and updates that have been applied to installed software packages and the
locations and network addresses of hardware devices. It helps us to know:
 Items (HW/SW) which are under configuration management.
 Configuration of components of these Items.
 Configuration, version of these items, e.g. Track of all software (Name, Version,
Licence, Configuration, Related Documentation, etc.)
 Details of hardware (Type, CPU, Memory etc.)

4.4.2 Configuration Control

Products in any organisation need to be maintained due to evolution, or the changes in user
needs. As change in inevitable, controlling the changes in the CIs is necessary.
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Configuration control is the activity of managing configuration Items and their related
documentation throughout the life cycle of these products. This activity helps us understand:
 Items which are controlled
 Process of controlling these changes
 Version control
 Who controls these changes
 Ensures that latest approved version of items are used.

4.4.3 Configuration Status Reporting

This involves recording and reporting of all changes in IS components. This provides a complete
record of:
 Status of proposed changes.
 What changes were made and at what time.
 Effect of those changes on different components, e.g. if we have upgraded operating
system then it will need corresponding change in Antivirus Solutions or other software
or may require a hardware upgrade.

4.4.4 Configuration Audit

This involves verifying the correctness of the IS components to examine whether these are in
accordance with requirements as also verifying the configuration status reporting. It measures
effectiveness of configuration management and ensures that:
 All Items are correctly identified, and
 All changes are correctly registered, approved, tracked and implemented.
An advantage of a configuration management application is that the entire collection of systems
can be reviewed to make sure any changes made to one system do not adversely affect any of the
other systems.

4.5 Hardening of Systems

Hardening of systems is the process of securely configuring computer systems, to eliminate as
many security risks as possible. The objective is that the system architecture should be designed
to prevent attacks/intrusions. There are many default settings in systems which introduce much
vulnerability. Moreover, default settings may make operations easier but expose system to
vulnerabilities which could compromise the system. Hardening of system may involve, among other
measures, applying patches; disabling unnecessary services; closing open network ports; and
setting up intrusion-detection systems, firewalls and intrusion-prevention systems, etc.

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Some important steps to harden operating systems are:

 Latest patches, service packs and hotfixes should be installed.
 Automatic notification of patch availability should be ensured.
 For authentication: set minimum password length and complexity
 Configure event log settings: logging should be enabled to detect any un-desired events.
 Operating systems contain some privileged administrator, SuperUser or Root Accounts
which have ability to access any information and change it. Such Ids should be suitably
controlled with strong passwords and should be used only for reconfiguring and software
updating. Their activity should be logged.
 Disable the guest account.
 Disable or uninstall unused services.
 Use the Internet Connection Firewall or other methods to limit connections to the server.
 Configure file system permissions. For all important files, the permissions could be made
read only.
 Configure registry permissions.
 Install and enable Security Suite.(Like Microsoft has a Microsoft Security Essentials which
has to be activated and kept up-to-date)
 Secure Web Browsers like Google Chrome could be used which have a sandboxing
capability (Sandboxing helps prevent malware from installing itself on user computer, or
using what happens in one browser tab to affect what happens in another. The sandbox
adds an additional layer of protection against malicious web pages that try to leave
programs on computer)
 Some OS like Windows have capability of encrypting drives; this should be used
especially for laptops in an organisation.
 Configure a screen-saver to lock the console's screen automatically if the host is left
unattended.
 If the machine is not physically secured against unauthorised tampering, set a
BIOS/firmware password to prevent alterations in system start-up settings.
 Configure the device boot order to prevent unauthorised booting from alternate media.
Vulnerability assessment tools like Microsoft Baseline Security Analyser or Bastille Linux may be
used.

4.6 Risks and Controls in Deployment of IS Infrastructure

Risks in deployment of IS Infrastructure could be:
 Improper design –
o Design of infrastructure has to be in accordance with business considerations.
 Disruption of services-
o System Failure,
o System damage,

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o Denial of Service (DOS) attacks,

 Security Breaches-
o Unauthorised access,
o Unrestricted insider access,
o Unnecessary services,
o Non-authentication of web contents,
 Poor response times-
o Inadequate capacity monitoring
o Misconfiguration,
Controls to mitigate the above risks could be in terms of:
 Proper site selection,
 Redundancy at each layer: network, servers, network segmentation/zoning.
 Replication of data,
 Backup procedures,
 Proper Network Operating Centres (NOC)for network monitoring and control
 Security solutions,
 Secured connections to extranets,
 Deployment of firewalls,
 Intrusion Detection Systems/ Intrusion Prevention Systems for monitoring network traffic
 Tested applications,
 EMS and monitoring

4.7 Auditing IS Infrastructure

Audit all hardware and software to assess
 Whether a Hardware list with configurations is available?
 Appropriateness of hardware in accordance with computational requirements,
performance, levels of redundancy
 Analysis of environmental controls for hardware
 Whether effective hardware maintenance is there, to reduce downtime?
 Test all infrastructure devices for compliance with all applicable policies.
 Whether operating system has been hardened?
 Whether proper access controls are operational for operating Systems
 Whether there are backup systems hardware, software and data sets for disaster
readiness?

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4.8 Summary
Information Technology forms the backbone of any organisation. For which, IT Infrastructure has
to be deployed, this could be centralised or decentralised depending on the needs of the
organisation. We have studied the relative advantages and dis-advantages of centralised and
decentralised approach. We also had an overview of IT infrastructure in a CBS Bank. Every
organisation has to keep a track and control changes in configurations through Configuration
Management (CM). We also understood how to harden our systems and risks and controls in
deployment of IT infrastructure and auditing thereof.

4.9 References
 http://www.nsa.gov/ia/mitigation_guidance/security_configuration_guides/operating_syst
ems.shtml
 http://www.configurationkit.com/index.htm
 http://www.sans.org/critical-security-controls

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NETWORKS
PART 1: NETWORK BASICS
Learning Objectives
 To gain understanding of basics of communication
 To understand transmission modes
 To understand different categories and classification of Networks
 To gain understanding of LAN topologies
 To gain understanding of WAN transmission technologies
 To understand factors impacting selection of a suitable topology.

1.1 Introduction
In today’s highly geographically dispersed organisations we cannot imagine an information system
without an effective communication system. Effective and efficient communication is a valuable
resource which helps the management in achieving its objectives. This communication is facilitated
with communication networks. Computer network is a collection of computers (Servers / Nodes),
communication medium, software that help them to communicate and the transmission methods
used in such communication, software and communication protocols. Where at least one process
in one device is able to send/receive data to/from at least one process residing in another device,
then the two devices are said to be in a network. Physically Devices are connected but logically it
is the processes which send or receive data. A network is a group of devices connected to each
other.
Each component, namely the computer, printer, etc. in a computer network is called a node.
Computer networks are used for exchange of data among different computers and also to share
the resources. The field of computer networks is one of the most interesting and rapidly growing
fields in computer science. With advantages of faster and better processing capabilities, existing
computer systems are connected to each other to form a computer network which allows them to
share CPU, I/O devices, storages, etc. without much of an impact on individual systems.
The main reason is resource sharing and communication. Other reasons for networking computers
could be:
 Users can save shared files and documents on a file server rather than storing them in
their individual computers.
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 Users can share resources like network printer, which costs much less than having a
locally attached printer for each user’s computer.
 Enables sharing of data stored in a central database.
 Users can share applications running on application servers, which enable users to share
data and documents, to send messages, and to collaborate.
 Better Security- The job of administering and securing a company’s computer resources
can be concentrated on a few centralised servers

Benefits of Computer Networks

The following are the important benefits of a computer network.
 Distributed nature of information: There would be many situations where information
has to be distributed geographically. E.g. In the case of Banking Company, Account
information of various customers could be distributed across various branches but to
make Consolidated Balance Sheet at the yearend it would need networking to access
information from all its branches.
 Resource Sharing: Data could be stored at a central location and can be shared across
different systems. Even resource sharing could be in terms of sharing peripherals like
printers, which are normally shared by many systems. E.g. In the case of a CBS bank
data is stored at a Central Data Centre and could be accessed by all branches as well as
ATMs.
 Computational Power: When working in a client server mode facilitated through
networking, the computation activity is shared amongst server and clients thus reducing
the load on one.
 Reliability: Many critical applications should be available 24X7, if such applications are
run across different systems which are distributed across network then the reliability of
the application would be high. E.g. In a city there could be multiple ATM machines so that
if one ATM fails one could withdraw money from another ATM, as ATMs are connected
to the ATM switch over network.
 User communication: Networks allow users to communicate using e-mail, newsgroups,
and video conferencing etc.

1.2 Basics of Communication

Any communication system needs:
1. Sender, who wants to transmit a message,
2. Receiver, for whom the message is intended,
3. Content or Message,
4. Medium used for sending the message, and
5. Protocol, that is, the set of rules for making communication possible.
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The main goal of a communication system is that the message

1. Must be accurately delivered only to the intended recipient(s),
2. Must be delivered always on time, and
3. The contents of the message must not change during transmission.
To communicate, message or content has to be transmitted. Data transmission or Digital
communications is the physical transfer of data (a digital bit stream) over a point-to-point or point-
to-multipoint communication channel. Examples of such channels are copper wires, optical fibre,
wireless communication channels, and storage media. The data is often represented as an electro-
magnetic signal, such as an electrical voltage signal, a radio wave or microwave signal or an infra-
red signal. Data transmitted may be a digital message originating from a data source, like a
computer or a keyboard. It may also be an analog signal such as a phone call or a video signal,
digitized into a bit- stream. Digital signals are discreet signals whereas analog signals have varying
frequencies.

1.3 Transmission Modes

A given transmission on a communications channel between two machines can occur in several
ways. The transmission is characterised by:
a) The direction of the exchanges.
b) The number of bits sent simultaneously.
c) Synchronisation between the transmitter and receiver.
Based upon the above, transmission modes could be:

Simplex
In Simplex communication, data transmission is always unidirectional; that is, the signal flows in
one direction from any node A to any node B. Example is keyboard to computer connections.

Advantages
This mode of channel is -
 Simple, (including software)
 Inexpensive, and easy to install.

Disadvantages
Simplex mode has restricted applications, for it is -
 Only a one-way communication.
 There is no possibility of sending back error or control signals to the transmitter.

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Half Duplex
In Half-Duplex communication, there are facilities to send and receive, but at a time, only one
activity can be performed at a time, either send or receive. Example can be Line between a desktop
workstation and a remote CPU. If another computer is transmitting to a workstation, the operator
cannot send new messages until the other computer finishes its message to acknowledge an
interruption.

Advantages
This mode of channel:
 Helps to detect errors and request the sender to retransmit information in case of
corruption of information.
 Is less costly than full duplex.

Disadvantages
 Only one device can transmit at a time.
 Costs more than simplex.

Full Duplex
In Full-Duplex, data can travel in both directions simultaneously, we can also think of duplex as
two simplexes, each travelling in a different direction. Example: Ethernet connections (The kind of
networks we have in our offices) work by making simultaneous use of two physical pairs of twisted
cable.

Advantage
 It enables two-way communication simultaneously.

Disadvantage
 It is the most expensive method in terms of equipment because two bandwidth channels
are needed.

Serial transmission
Serial transmission can be either Synchronous or Asynchronous on the basis of the
synchronisation between the receiver and sender. In Serial Transmission, as single wire transports
information, the problem is how to synchronise the sender and receiver.

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Asynchronous Transmission
Also termed as Start-Stop communication, an asynchronous communication technique is a
technique in which the timing of a signal is unimportant and is most widely used by computers to
provide connectivity to printers etc. Any communication between devices of dissimilar speeds will
be of asynchronous one. In asynchronous transmission, the transmitter sends 1 start bit (0) at the
beginning and 1 or more stop bits (1s) at the end of each byte. There may be a gap between each
byte. The basic characteristics of an Asynchronous Communication System are:
 Sender and receiver have independent transmit and receive clocks.
 Simple interface and inexpensive to implement.
 Limited data rate, typically < 64 kbps.
 Requires start and stop bits that provide byte timing.
 Increased overhead.
 Parity often used to validate correct reception.

gap
Advantages
 It is simple and does not require synchronisation of the two communication sides.
 Since timing is not critical for asynchronous transmission, hardware can be cheaper.
 Its set-up is fast and well suited for applications where messages are generated at
irregular intervals, like data entry from the keyboard.
Disadvantages
 Slower-Because of the insertion of start and stop bits into the bit stream, asynchronous
transmission is slower than other forms of transmission that operate without the addition
of control information.

Synchronous Transmission
In synchronous transmission, we send bits one after another without start/stop bits or gaps. It is
the responsibility of the receiver to group the bits. In synchronous communication, the clock of the
receiver is synchronised with the clock of the transmitter. On account of this, higher data
transmission rates are possible with no start-stop bits. The characteristics of synchronous
communication are:
 There is synchronisation between the clocks of the transmitter and receiver.
 It supports high data rates.
 It is used in communication between computer and telephony networks.

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Advantages
 The advantage of synchronous transmission is speed. With no extra bits or gaps to
introduce it is faster than asynchronous transmission.
Disadvantages
 In synchronous transmission, the data is to be recognized at the receiver’s end, as there
may be differences between the transmitter and receiver clocks. That is why each data
transmission must be sustained long enough for the receiver to distinguish it.
 Slightly more complex than the asynchronous one.
 It’s hardware is more expensive than that of asynchronous one.

1.4 Network Categories

1.4.1 Local Area Networks (LAN)
Local Area Networks (LAN) interconnects a variety of devices and provides a means for information
exchange among them. LAN interconnects devices within a single building or cluster of buildings
within a limited geographic area.
Some features of LAN are:
 Uses regular topology.
 Permanently connected.
 Security is high.
 Installation and maintenance which can be centralised or distributed is relatively easy.
 Low error rates.
 Owned and maintained by the organisation.
 Majority of the installations uses guided media like UTP, Optical fiber, etc.,
 Traditional LANs-provide data rates of 1 to 20 Mbps
 High-speed LANS-provide data rates of 100 Mbps to 1 Gbps

1.4.2 Metropolitan Area networks (MAN)

Traditional point-to-point and switched network techniques used in WANs are inadequate for
growing needs of organisations for high capacity and low costs over large area. These are met
through MANs. The key characteristics are:
 Service to customers in large areas.
 Generally include provisions for both voice and data transmissions.

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 Provides required capacity.

 Lower cost and greater efficiency than equivalent service from Telephone Company.

1.4.3 Wide Area Networks (WAN)

Wide Area Networks (WAN) covers large geographical areas. In WAN, circuits provided by a
common carrier and high-capacity backbones interconnect at various Network Access Points.
One simple example could be Internet. WAN consists of interconnected switching nodes.
Some other features of WAN are:
 It usually has an irregular topology.
 It can be connected on demand or be permanently connected.
 Most WANs are not owned by any one organisation
 WAN uses public or private networks.
 Higher-speed WANs use optical fibre and transmission technique known as
asynchronous transfer mode (ATM)-10s and 100s of Mbps are common.

Differences between LAN and WAN

 Scope of a LAN is smaller
LAN interconnects devices within a single building or cluster of buildings
 LAN is usually owned by organisation that owns the attached devices
For WANs, most of network assets are not owned by same organisation
 Internal data rate of LAN is much greater.
 All devices in a LAN will have same NetworkID.

1.5 Network types

Based on Node Relationships there are broadly two types of networks.
 Client Server Architecture: In this there is a dedicated file server that runs the network,
granting other nodes or clients access to resources.
 Peer - to - Peer Architecture: In this every node can act as a client and server; that is,
all nodes are treated on par.

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1.5.1 Client-Server Architecture

The Client-Server architecture separates an application into at least two processes. One process
plays the role of the client, the other plays the role of the server. In this architecture, the client
process requests services from server process. Client also shares the processing load of the
server. The application also has to be designed to work in Client Server mode. In this model there
is separation of computational logic from interface-oriented logic. This model is not about how
computers or nodes are connected but more about processes or computational logic being split.
i.e. there are client processes which typically request for information and there are server
processes which take request for information gather that information and send it to client. Thus it
is not about hardware it is about applications and their processes.

Functions of a Client
 Client process is implemented on hardware and software environments better suited for
humans
 A client can request services from one or more servers
 Client executes in a different address space from the server
 Usually manages the GUI
 Manages the display of data
 Performs data input and validation and all tasks that can be handled locally.
 Dispatches requests to server(s)
 Manages local environment, Display, Keyboard etc.

Functions of a Server
 A server is a supplier of services to clients

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 Serves one or more clients

 Each client can be on different platform
 A program that carries out client requests
 Usually manages some unique resources such as:
o RDBMS
o Business Logic and Files

Middleware
Middleware are a kind of programs that help in clients communicate with Server applications. This
is like plumbing which joins clients with server. It consists of all the software that supports
connectivity between clients and servers. Middleware controls communication, authentication and
message delivery.
Middleware does the job of Transporting, Queuing, and Scheduling. Let’s say that a client request
for information- Middleware does the job of conveying this request to server, when middleware
takes the request from client, client is in a way free to do other jobs, middleware then schedules
the request of client to server, maintain a queue of requests and after getting the required response
from server hands over the responses back to client.
Middleware has the capability to connect to diverse platforms thus providing platform
independence.

Characteristics of Client- Server Model

 Separation of service into client and server roles
 A server permits sharing of resources by many clients
 Clients always initiate the requests with the server
 One server serves many clients
 Server is independent of the client, such that it may reside on the same or different
machine
 Clients and servers are independent of hardware or operating systems.
 Better security
 Clients and servers are loosely coupled and communicate via messages
 Scalable architecture i.e. it can scale horizontally by adding more clients or vertically by
adding more server layers.
 Server code and data are centrally managed for better maintenance capabilities and
integrity of shared resources.
Advantage of Server Based Networks:
 Strong central security
 Central file storage
 Ability to pool available hardware and software
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 Less intrusive security

 Easy manageability of large no. of users
 Central organisation
Disadvantage of Server based networks:
 Expensive dedicated Hardware
 Expensive network operating system software and client licenses
 A dedicated network administrator (usually required)

1.5.2 Peer-To Peer Networks

Peer -to-Peer Networking is where two or more computers are connected and share resources
without going through a separate server computer. In this approach all computers share equivalent
responsibility for processing data.
Advantages of Peer-to-Peer Networks are:
 No extra investment in server hardware or software
 Easy setup
 No network administration required
 Ability of users to control resource sharing
 No reliance on other computers for their operation
 Lower cost for small networks
Disadvantages of Peer-to Peer Networks are
 Additional load on computers because of resource sharing
 Lack of central organisation
 No central point of storage for file archiving

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 Users own administration of their computers

 Weak and intrusive security
 Lack of central management
 Not meant for large networks

1.6 LAN Topologies and Network Components

1.6.1 Media Used In Communication
Medium through which data is transmitted is transmission media. For connecting devices in a
network some or the other transmission media would be required. Media used in computer
networks are broadly classified into Guided and Unguided.

Factors that influence the use of media

The main factors that influence the use of appropriate media include:
 Cost: initial, expansion and maintenance
 Quality: quality needed over some estimated distance
 Attenuation: weakening of signal
 Speed: data rate and response time
 Security: vulnerability to eaves dropping
 Immunity from Electromagnetic Interference (EMI)

Factors that degrade a signal

Three factors that degrade the quality of a signal are:
 Attenuation: In attenuation, as the signal travels through the medium, it loses its strength.
 Delay Distortion: This problem is of a composite signal (multiplexed signal), as it consists
of multiple signals of varying frequencies. When all of them arrive at the same time, there
is no distortion. But if they arrive at different times, then there is delay distortion.
 Noise: Any unwanted stray signal that is present in a signal is called noise. Sometimes
the noise signals interfere with the regular ones, making it difficult for the receiver to
interpret the signal correctly.

Guided Transmission Media

They are also known as Bound Media. They use a "cabling" system that guides the data signals
along a specific path.
 Coaxial Cable
 Twisted Pair Cable
 Fiber Optic Cable

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Coaxial Cable
Co-axial cable consists of a central core conductor of solid or stranded wires. The central core is
held inside a plastic cladding with outer wire mesh and an outer plastic Cladding providing a shield.
The axis of both the conductors is same hence the name; Co-Axial. This is the kind of Cable we
generally see being used for Cable TV.
 Thinnet- Flexible used for internal cabling
 Thicknet: Used for external cabling

Twister pair cable

A twisted pair cable is a type of cable made by putting two separate insulated wires together in a
twisted pattern and running them parallel to each other. Benefits - Reduced EMI

Unshielded Twisted Pair (UTP)

This is the most commonly used media used in networks. This consists of two wires twisted over
one another which reduce the interference in signals.

Shielded Twisted Pair

In case of shielded twisted pair (STP), there is a metallic shield either in the form of a foil or a braid
over the twisted pair. The shield reduces the penetration of electro-magnetic stray signals (noise),
to some extent.

Optical Fibre Cable

Optic Fibre Cable uses light based signalling. The significant benefits are low attenuation and very
high integrity over much longer distances than metallic options. In an optical fibre, the inner core

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consists of a pure glass material or plastic/polymer/acrylic about the diameter of a human hair. An
optical fibre has the following parts:

 Core: a thin glass centre of fibre through which light travels ;

 Cladding: the outer optical material surrounding the core that reflects the light back into
the core.
 Buffer coating: plastic coating that protects fibre from damage and moisture
Advantages of Optic Fibre are:
 Optical fibre can be drawn to smaller diameters than copper wires.
 Higher carrying capacity: Because optical fibre are thinner than copper wires, more fibre
can be bundled into a given diameter cable than copper wires. This allows more packing.
 Less signal degradation: The loss of signal in optical fibre is less than in copper wire.
 Low power: Because signals in optical fibre degrade less than in others like coaxial cables
lower power transmitters can be used.
Disadvantages of Optic Fibre are:
 Very fragile than wires.
 Costlier than other guided media.
 Difficult to splice (i.e., it is extremely difficult to join optical fibre cables).

Comparison among Guided Media

Factor UTP STP Co-axial Optical Fibre

Cost Lowest Moderate Moderate Highest

Installation Easy Fairly easy Fairly easy Difficult

Bandwidth Typically Typically Typically Typically 100Mbps

100Mbps 16Mbps 16Mbps

Attenuatio High High Lower Lowest

n

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EMI Most Less vulnerable Less vulnerable Not affected

vulnerable compared to compared to
UTP STP

Security Easy to Vulnerable to Vulnerable to Extremely difficult to

eavesdrop eavesdrop eavesdrop eavesdrop

Unguided Transmission Media

In Unguided Transmission Media, data signals travel without any guidance along a specific path.
These are not bound to a cabling media and do not take a fixed path. Signals are broadcasted by
transmitters and picked by receivers. A signal radiated from an antenna travels along one of three
routes: ground wave, lonospheric, or line of sight (LOS).
Ground Wave Propagation-more or less follows the contour of the earth and can propagate
considerable distances, well over the visual horizon.
Lonospheric Propagation, a signal from an earth-based antenna is reflected from the ionized
layer of the upper atmosphere (ionosphere) back down to earth. Ionospheric propagation can travel
through a number of hops, bouncing back and forth between the ionosphere and the earth’s
surface. A signal can be picked up thousands of kilo-meters from the transmitter.
Line of Sight (LOS) propagation: In this, the transmitter and the receiver face each other. This is
sometimes called space waves or tropospheric propagation.
 Radio Waves: Could be Ground Wave propagation, Ionospheric propagation, Line of
Sight (LOS) propagation
 Microwave: Line of Sight transmission with receiving Station
 Satellite: Signals are reflected from Geo-stationary Satellites
 Cellular Telephony: Uses radio waves

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Various types of Propagation

1.6.2 Network Devices

Network Interface Card (NIC)

Network Interface Card (NIC) is a device that enables computers to connect to the network. It
provides one or more ports for connection of the network cable. It transmits and receives data onto
the network cable. Each NIC Card has a unique hard coded 48 Bit physical address which is called
MAC (Media Access Control) Address. It is generally of the type e.g. 40-2C-F4-0B-24-9E, where it
is being represented in hexadecimals and each hexadecimal is represented with 4 bits thus a 48
Bit address. We can see MAC addresses of our computer by command C:\Ipconfig /all in command
prompt mode.

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Hub
Hub is a hardware device that contains multiple, independent ports that match the cable type
of the network. It provides multiport connectivity. Networks using a Star topology require a
central point for the devices to connect.
Some features of hubs are:
 Hubs offer an inexpensive option for transporting data between devices
 Don't offer any form of intelligence.
 Transmission is broadcast
 Hubs can be active or passive.
 Active hub amplifies and regenerates the incoming signals before sending the data on
to its destination.
 Passive hubs do nothing with the signal

Switches
Switches are a special type of hub that offers an additional layer of intelligence. Switch reads
the MAC address (described above, it is address of NIC Card) of each frame it receives. It
maintains its Switching Table. This information allows switches to transmit only to nodes to
which a frame is addressed. This speeds up the network and reduces congestion, reduces
collisions. Since this provides point to point connectivity multiple connections are possible.

Bridges
Bridges are used to extend or segment two networks. They sit between two physical network
segments and manage the flow of data between the two segments by looking at the MAC
address of the devices connected to each segment, Bridges can elect to forward the data or
block it from crossing.

Multi-station Access Unit (MAU)

Special type of hub used for token ring networks. On the outside, the MAU looks like a hub.
This performs the token circulation inside the device. It connects to multiple network devices,
each with a separate cable.

Routers
Routers are networking devices used to extend or segment networks by forwarding packets
from one logical network to another. A router can be a dedicated hardware device or a
computer system with more than one network interface and the appropriate routing software.
Routers contain internal tables of information called routing tables that keep track of all known
network addresses and possible paths throughout the internetwork, along with number of hops
of reaching each network. When a router receives a packet of data, it reads the header of the

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packet to determine the destination address. Once it has determined the address, it looks in
its routing table to determine whether it knows how to reach the destination and, if it does, it
forwards the packet to the next hop on the route.
Static routing, routes and route information are entered into the routing tables manually.
Dynamic routing: The router decides about the route based on the latest routing information
gathered from connected routers.

Gateway
Gateway is a device that translates one data format to another. It is used to connect networks
using different protocols. Key point about a gateway is that only the data format is translated,
not the data itself. Example could be Email Gateways.

1.6.3 Network Topologies

The term topology, or more specifically, network topology, refers to the arrangement or physical
layout of computers, cables, and other components on the network.
Physical topology refers to the placement of the network's various components, including device
location and cable installation, while logical topology shows how data flows within a network,
regardless of its physical design
Importance of Logical Topologies- The media access method, the way network access is
controlled and collisions prevented is based on the logical topology rather than the physical
topology. To effectively troubleshoot communications problems, it is important to know not only the
physical topology of a network but also the logical topology, so that we know what path the data
packets take as they travel from one computer to another.
All network designs stem from four basic topologies:
 Bus
 Star
 Ring
 Mesh

Bus Topology
The bus topology computers are connected on a single backbone cable.

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This is the simplest method of networking computers. The cable runs from device to device by
using “tee” connectors that plug into the network adapter cards. Terminator is used at the end
to stop the signal from bouncing. A device wishing to communicate with another device on the
network sends a broadcast message onto the wire that all other devices see, but only the
intended recipient actually accepts and processes the message. Because only one computer
at a time can send data on a bus network, the number of computers attached to the bus will
affect network performance.
Advantages
 Less expensive when compared to star topology due to less cabling and no network hubs.
 Good for smaller networks not requiring higher speeds.
 Networks can be extended by the use of repeaters.
 Easy to install.
Disadvantages
 Limited in size and speed.
 Attenuation
 One bad connector or failure of the backbone cable shuts down entire network.
 Difficult to troubleshoot.
 Addition of nodes negatively affects the performance of the whole network, and if there is
a lot of traffic throughput decreases rapidly.

Star Topology
Star topology contains a central hub or Switch to which each and every node is connected.

This necessitates drawing of a separate cable from each and every node to the central hub. All
inter-node data transmission has to pass through it.
Advantages
 Easy to troubleshoot.
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 Allows mixing of cabling types.

 Easy to install and wire.
 No disruptions to the network when nodes are down.
 No disruptions to the network while connecting or removing devices.
Disadvantages
 Hubs become a single point of failure.
 Cabling is expensive because individual cables have to be drawn from nodes to hubs.
 More expensive than bus topology because of the cable.
 The capacity of the hub determines the number of nodes that can be connected.

Ring Topology
The ring topology connects computers on a single circle of cable
In a ring network, every device has exactly two neighbours for communication purposes.

All messages travel through a ring in the same direction (effectively either "clockwise" or "anti-
clockwise").
A token, or small data packet, is continuously passed around the network. Whenever a device has
to transmit, it holds the token. Whosoever holds the token has the right to communicate.
The Token Ring is a network with different logical and physical topologies. Physical Topology is
wiring diagram and logical topology is the channel access method. Here, the physical topology is
a star bus; that is, there is a length of cable from each computer that connects it to a central hub
(called a Multi-Station Access Unit, or MAU).Inside the hub, however, the ports are wired together
sequentially in a ring, and they send data around the ring instead of sending it out to all ports
simultaneously as it would if the network were a logical star. The MAU makes a logical ring
connection between the devices internally.

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Advantages
 Every device gets an opportunity to transmit.
 No computer can monopolise
 Every node gets fair share of network resources.
 Performs better than the star topology under heavy network load.
 Caters to heavy network load
Disadvantages
 One malfunctioning workstation or bad port in the MAU can create problems for the entire
network.
 Moves, additions and change of devices can affect the network.
 Network adapter cards and MAUs are much more expensive than Ethernet cards and
hubs.

Mesh Topology
In this topology, every node is physically connected to every other node.

This is generally used in systems which require a high degree of fault tolerance, such as the
backbone of a telecommunications company or an ISP.
Advantages
 Highly fault tolerant
 When one node fails, traffic can easily be diverted to other nodes.
 Guaranteed communication channel capacity
 Easy to troubleshoot

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Disadvantages
 It requires maximum number of cables for connecting devices than any other topology.
 It is complex and difficult to set up and maintain.
 It is difficult to introduce or remove nodes from the system as it necessitates rewiring.
 Its maintenance is expensive.

Hybrids
Hybrid networks use a combination of any two or more topologies in such a way that the resulting
network does not exhibit any one of the standard topologies (e.g., bus, star, ring, etc.). For example
two star networks connected together create a hybrid network topology. A hybrid topology is always
produced when two different basic network topologies are connected.
Two common examples for Hybrid network are: Star Ring network and Star Bus network.
 Star Ring Network: A Star Ring network consists of two or more star topologies
connected by using a multi-station access unit (MAU) as a centralised hub.
 Star Bus Network: A Star Bus network consists of two or more star topologies connected
by using a bus trunk (the bus trunk serves as the network's backbone).

1.7 WAN Message Transmission Technologies

Some of the scenarios where you need a Wide Area Networks (WAN) could be:
 A bank with branches all over the world – gather transactions into central database.
 Regional sales representatives needing to submit sales files to their HQ in other
states/countries
 A clothing manufacturer selling products through Internet to their customers throughout
the world.

1.7.1 Switching
For data transfer across WAN, Switching Techniques are required, Switching implies sending on
a path.
Following are the switching techniques used for WAN:
 Circuit Switching
 Packet Switching
 Message Switching

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Circuit Switching
Circuit Switching is a type of communication in which a temporary physical connection is
established between two devices, such as computers or phones, for the entire duration of
transmission usually a session.
In circuit switching, the entire bandwidth of the circuit is available to the communicating parties.
The cost of the circuit is calculated on the basis of the time used. Circuit switching networks
are ideal for real-time data transmissions. Example: Telephone connections
How it works
 Communication via circuit switching networks involves 3 phases:
 Circuit establishment – an end-to-end connection must be established before any signal
can be transmitted via the channel.
 Data transfer – the transmission may be analog voice, digitalized voice or binary data
depending on the nature of the network.
 Circuit disconnection – once the transmission is complete, the connection will be
terminated by one of the end station.
Advantages Disadvantages
Compatible with voice No routing techniques, call subject to
blockage
No special training / protocols are needed to Devices at both ends must be
handle data traffic compatible in terms of protocols and
data flow.
Predictable, constant rate of data traffic Large processing and signal burden
on the network

Packet Switching
It is a Network technology that breaks up a message into smaller packets for transmission. Unlike
circuit switching which requires point to point connection establishment, each packet in the packet
switched network contains a destination address. Thus, packets in a single message do not have
to travel the same path and can arrive out of order. Destination computer reassembles them into
proper sequence. Example is internet communication and most computer networks.
How it works
 Data is transmitted in blocks, called packets
 Message is broken into a series of packets
 Packets consists of a portion of data plus a packet header that includes control information
 At each node en-route, packet is received, stored briefly and passed to the next node.

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Advantages Disadvantages
Provide speed conversion, Two devices of Complex Routing and control
different speed can communicate
Efficient path Utilisation Delay in data Flow during time of load
Packet switching networks support two kinds of services:
1. Datagram: In which each packet is treated independently and packet path is chosen
based on the information received from neighbouring nodes on traffic, line failures etc.
Each independent packet referred as a datagram.
2. Virtual circuit: Pre-planned route is established before sending any packets. Once the
route is stabled, all packets follow the route but it is logical connection for fix duration and
referred as virtual circuit.

Message Switching
Message switch is also known as store-and-forward switching. No physical path is established
in advance between the sender and the receiver. Data is sent which is concentrated at
switching point and whenever path is available it is sent forward.
Its cost is determined by the length of the message being transmitted.
Example: SMS (Short Message Service) on mobiles
How it Works
 Not necessary to establish circuit all over the network from source to destination
 When the sender sends a block of data, it is stored in the switching point
When the appropriate route is available, it is transferred to the next switching point, one
hop at a time until the message reaches its destination.
 Each block is received in its entirety, inspected for errors, and then retransmitted.

1.7.2 Multiplexing
Multiplexing is a set of techniques that permit the simultaneous transmission of multiple
signals on a single carrier. With increase in data-and-telecommunications usage, there is
increase in traffic and also the need to accommodate individual users. To achieve this, we
have to either increase individual lines each time a new channel is needed, or install higher
capacity links and use each to carry multiple signals. If the transmission capacity of a link is
greater than the transmission needs of the devices connected to it, the excess capacity is
wasted. Multiplexing is an efficient system that maximizes the utilities of all facilities.
A device that performs multiplexing is called a multiplexer (MUX), and a device that performs
the reverse process is called a de-multiplexer (DEMUX). Prominent kinds of multiplexing are:

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 Frequency Division Multiplexing (FDM)

 Time Division Multiplexing(TDM)
 Wave division Multiplexing(WDM)

Frequency Division Multiplexing (FDM)

This is a form of signal multiplexing which involves assigning non-overlapping frequency
ranges to different signals or to each “user” of a medium. FDM is an analog technique that can
be applied when the bandwidth of a link is greater than the combined bandwidths of the signals
to be transmitted.
Features of FDM are:
 All signals are transmitted at the same time.
 A multiplexer
o Accepts inputs and assigns frequencies to each device.
o Is attached to a high-speed communications line.
 A corresponding de-multiplexer
o Is at the end of the high-speed line.
o Separates the multiplexed signals into their constituent component signals.
 The channel bandwidth is allocated even when no data is to be transmitted.

Time Division Multiplexing (TDM)

Time-Division Multiplexing (TDM) is a type of digital or rarely analog multiplexing in which two
or more signals or bit streams are transferred apparently simultaneously as sub-channels in
one communication channel, but take turns on the channel. The time domain is divided into
several concurrent timeslots of fixed length, one for each sub-channel. TDM is applied when
the data rate capacity of the transmission medium is greater than the data rate required by the
sending and receiving devices.
TDM is of two types:
1. Synchronous TDM: In this scheme, the multiplexer allocates exactly the same
time slot to each device at all times, no matter whether a device has anything to
transmit or not.
2. Asynchronous TDM: The disadvantage of Synchronous TDM is that it does not
assure use of the full capacity of a link, as the time slots are allotted to each of
the sending device irrespective of whether it has any data to send or not. In
Asynchronous TDM need based time is given to only those devices that have
data to transmit.

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Wavelength Division Multiplexing (WDM)

Wavelength Division Multiplexing (WDM) is conceptually like the FDM, which multiplexes
multiple optical carrier signals on a single optical fibre by using different wavelengths (colours)
of laser light to carry different signals.

1.8 Selecting a Suitable Network Topology

In real world we see lot of networks like Telephone/ mobile network, postal networks etc. If we look
at these systems we can analyse that networks could be of two types:
 Connection Oriented networks- wherein a connection is first established and then data
is exchanged like it happens in Telephone networks
 Connectionless Networks- where no prior connection is made before data exchanges.
Data which is being exchanged in fact has a complete contact information of recipient and
at each intermediate destination, it is decided how to proceed further- as happens in the
case of postal networks in real life.
These real world networks have helped model computer networks. Each of these networks is
modelled to address the following basic issues
 Routing: Refers to the process of deciding on how to communicate the data from source
to destination in a network.
 Bandwidth: refers to the amount of data which can be sent across a network in given
time.
 Resilience: The ability of a network to recover from any kind of error like connection
failure, loss of data etc.
 Contention: The situation that arises when there is a conflict for some common resource.
For example network contention could arise when two or more computer systems try to
communicate at the same time.
A network's topology affects its capabilities. The choice of one topology over another will have an
impact on the:
 Type of equipment the network needs.
 Capabilities of the equipment.
 Growth of the network.
 Way the network is managed.
Some Design Considerations to consider before deciding on Network
 Performance
 Cost Reduction
 Security/Auditing
 Availability/Reliability

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 Manageability and Monitoring

 Quality of Service/Class of Service
 Support for Business Recovery Planning
Before any network topology is designed, the network design engineer considers these goals:
 To provide maximum possible reliability by providing alternative routes if a node fails.
 To be able to pinpoint faults promptly.
 To give the end users the best possible response time and throughput. This is especially
important for interactive sessions between user applications.
 To route network traffic through the least cost path within the network. This is usually
provided in two ways:
1. By minimising the actual length of the channel between its components; it entails
routing the traffic through very few intermediate components.
2. By providing the least expensive channel option for a particular application; for
instance, transmitting low priority data over low cost dial up lines, in contrast to using
an expensive high speed satellite channel.

1.9 Summary
We can very well say that in today's competitive market, responsiveness to customer or supplier
demand is often a decisive factor in the success of an organisation. This market responsiveness
requires communication which is facilitated through computer networks. Computer networks are
considered one of the most critical resources in any organisation.
In this chapter we have learnt about communication which is facilitated through data transmission
over computer networks. We have also learnt about the network components which help in
constituting structure of networks or network topologies. We have also had an overview of some
WAN transmission technologies. Knowledge of these technologies helps us in selecting a suitable
network topology.

1.10 References
 Ralph M. Stair, George W. Reynolds, ‘Principles of Information Systems’, Cengage
Learning
 http://www.di.unisa.it/~vitsca/RC-0809I/ch04.pdf
 http://www.tutorialspoint.com/unix_sockets/client_server_model.htm
 http://magazine.redhat.com/2008/03/11/what-is-middleware-in-plain-english-please/
 http://pluto.ksi.edu/

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PROTOCOLS
Learning Objectives
 To gain understanding of network standards and networking protocols
 To gain an overview of OSI Layers and understand layering concept
 To understand TCP/IP Model
 To gain understanding of Wireless Networks

2.1 Introduction
A network may be described as a group or collection of computers connected together for sharing
resources and information. Where individual networks are connected by different types of network
devices, such as routers and switches, it is called Internetwork. Enabling effective and secure
communication of various systems with disparate technologies is a challenging task. Networks are
a complicated subject and when we talk of internetwork i.e. two different networks having different
technologies, problem is compounded. Understanding of these complicated systems was made
easier by splitting the communication process to small portions via a reference model called OSI.
The Open Systems Interconnection (OSI) model enables easy integration of various technologies
and provides solutions for managing the internetworking environment. A practical model or more
appropriate a suite of specific network protocols is TCP/IP, on which Internet has been built. We
would understand these concepts.

2.2 Network Standards and Protocols

Internet
The Internet is a worldwide system of interconnected computer networks. Its origins can be traced
to the creation of ARPANET (Advanced Research Projects Agency Network) as a network of
computers under the auspices of the U.S. Department of Defence in 1969. ARPA established a
packet-switching network of computers linked by point-to-point leased lines that provided a basis
for early research into networking. The conventions developed by ARPA to specify how individual
computers could communicate across that network became TCP/IP. As networking possibilities
grew to include other types of links and devices, ARPA adapted new TCP/IP to meet the demands
of the new technology. As involvement in TCP/IP grew, the scope of ARPANET expanded to
become what is now known as the Internet.
An internet under TCP/IP operates like a single network connecting many computers of any size,
type and shape. Internally, an Internet is an interconnection of independent physical networks
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linked together by internetworking devices. Initially NSF (National Science Foundation) created the
first backbone for Internet, but now there are many companies that operate their own high-capacity
backbones, and all of them interconnect at various Network Access Points (NAPs) around the
world. This ensures that anybody who is on Internet, irrespective of area they are in and the
company they use, are able to communicate through Internet with everybody else. The Internet is
thus a giant agreement between different companies to help communication between different
participants.
There is no governing body in control of Internet. But if anything has to function then some rules
and regulations need to be followed. Some organisations develop technical aspects of this network,
set standards for creating applications on it. Some bodies help in managing the Internet. These
are:
 The Internet Society (ISOC), (www.isoc.org) a non-governmental international
organisation providing coordination for the Internet, and its internetworking technologies
and applications.
 The Internet Architecture Board (IAB) (www.iab.org) governs administrative and
technical activities on the Internet.
 The Internet Engineering Task Force (IETF) (www.ietf.org) has the primary
responsibility for the technical activities of the Internet, including writing specifications and
protocols.
 The Forum of Incident Response and Security Teams (www.first.org) is the
coordinator of a number of Computer Emergency Response Teams (CERTs)
representing many countries, governmental agencies, and ISPs (Internet Service
Providers) throughout the world.
 The World Wide Web Consortium (W3C) (www.w3.org) takes a lead role in developing
common protocols for the World Wide Web to promote its evolution and ensure its
interoperability.
 The Internet Corporation for Assigned Names and Numbers (ICANN).
(www.icann.org)This body handles governance of generic Top Level Domain (gTLD),
registration of Domain names and anything relating to Names and Numbers on Internet.

2.2.1 Network Standards

Standards are documented agreements containing technical specifications or other precise criteria
to be used consistently as rules, guidelines, or definitions of characteristics, to ensure that
materials, products, processes and services are fit for their purpose. These provide a model for
development that makes it possible for a product to work regardless of the individual manufacturer.
These are essential for creating and maintaining an open and competitive market for manufacturers
and provide guidelines to vendors, government agencies and other service providers to ensure the
kind of interconnectivity necessary in today’s marketplace and in international communications.
To take a simple example, let us look at an electric plug and socket where there are no standard
specifications. In this case, the plugs of two manufacturers can never fit into each other’s socket.

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So there are standards which define the distance and angle between pins, diameter of pin etc. so
that one plug could fit into socket manufactured by the other manufacturer. The benefits of
standardisation are:
• Allows different computers to communicate.
• Increases the market for products adhering to the standard.

2.2.2 Protocols
A networking protocol is defined as a set of rules that governs data communication over a network
for:
 What is communicated,
 How it is communicated and
 When it is communicated.
To take a simple example, if we are speaking with somebody, for the other person to understand
it is important that we are speaking the same language governed by same grammar and the speed
of communication should be such that the other person can comprehend. Similarly, communication
in networks is facilitated by these common rules called protocols.
The key elements of protocol are:
 Syntax:
o Represents What is communicated
o It is the structure or format of the data, that is, the order in which they are
presented.
o In simple terms it means which portion of packet is address and which is content.
o As an analogy, in a Post Card it is pre-defined which part will carry address and
which part the content.
 Semantics:
o Represent how it is communicated.
o It means each section of bits, how a particular pattern is to be interpreted, and
based on that, what action to be taken.
o In simple terms it could represent even in address which portion is senders
address and which is receivers address
 Timing:
o Represents When it is communicated
o It indicates when the data is to be transmitted and how fast it can be sent.
Even though both these terms are interchangeable a bit of difference could be a protocol defines
a set of rules used by two or more parties to interact between themselves. A standard is a
formalised protocol accepted by most of the parties that implement it.

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2.2.3 Standards creation committees

Standards are developed through the cooperation of standards creation committees, forums, and
government regulatory services. Some prominent Standard setting Bodies are:
 International Organization for Standardization (ISO)
 Internet Engineering Task Force (IETF)
 Institute of Electrical and Electronics Engineers (IEEE)
 International Telecommunication Union (ITU)
 American National Standards Institute (ANSI)
 National Institute of Standards and Technology (NIST)
The Standard Setting process is a pretty democratic process with participation from users. Let’s
say IETF is to set a standard, the process in brief would be
 A protocol is proposed by a vendor.
 IETF working group studies the proposal.
 IETF issues a request for comment (RFC).
 IETF reviews the comments.
 IETF proposes an improved RFC.
 The RFC becomes a proposed standard.
 The proposed standard becomes a draft standard if two or more vendors adopt it.
That’s the reason all IETF Standards start with RFC.

2.2.4 The OSI Architecture

What is OSI Model?

Very simply this model attempts to explain how computers network. Open Systems refers to a
cooperative effort to have development of hardware and software among many vendors that could
be used together. Developed by ISO(International Organisation for Standardization), the Open
System Interconnection (OSI) Reference Model describes how information from a software
application in one computer moves through a network medium to a software application in another
computer. In other words, the model describes the concepts involved when the message or data
or instruction from the sender’s computer or device moves over a range of network environments
and reaches the receiver’s computer or device, as the sender sent it.

Why OSI Model?

OSI Model is a reference model used to understand data communication in networks. In today’s
complex computing environment, messages are sent across heterogeneous networks with a large
variety of hardware technologies, networking devices and protocols, device drivers, operating
systems, application software, and so on. So there is a need for resolving these complexities
universally, without causing worries to the users. The answer is the Open Systems Inter-connection
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Reference Model that makes inter-operability across heterogeneous technology environments

possible.

Concepts of layers
Internetwork is a network of networks, these networks might not be on same platforms,
technologies. Imagine windows based system communicating with Apple Macintosh or UNIX/Linux
based systems, where technologies are different and perhaps languages are different. In these
cases what becomes important is each side should have knowledge of steps taken for
communication so that it could do a reverse process irrespective of technologies. This is where
layering concepts come into play.
Imagine you want to send an audit report to your client in Berlin, Germany. The key steps are:
 First we will write a report.
 Then the dispatch department in our office will put the report in an envelope, seal the
envelope, write senders and receivers addresses, put a postage stamp on the envelope
and post it.
 Postal staff will take out all the letters from the letter box and sort them. Letter meant for
Berlin is put in a bag, which itself is put in another bag meant for Germany.
 The air cargo takes those bags to central postal hub in Frankfurt, Germany.
 The German postal office people open the bag and see the bag meant for Berlin.
 This bag goes to Berlin where it is opened and out comes an envelope meant for the client
address
 It is handed over to person delivering letters to that clients address.
 The administrative staff of the client opens the envelop takes out the report and delivers
to the client.
Sending our report to our Berlin client involves so many steps, lot of action has been done on it so
that it can reach the other end. Similarly when a message is sent from one computer to another
again lots of action and processes happen for it to reach other end. In our case there have been
various phases, report writing phase, envelopment phase, sorting phase, similarly at the other end
there have been sorting phase, de-envelopment phase and all. These different phases in network
terminology could be considered analogous to Layers.
Each phase consists of some actions to be taken, in envelopment phase, actions are to put the
report in an envelope, seal the envelope, write senders and receivers addresses, put a postage
stamp on the envelop and post it. Similarly, in each layer some actions are done on data after
which it passes to the next layer or phase. Each layer knows the form of data which it will get and
also knows the form of data it has to pass on to the next layer and the function the layer has to do.
A layer is not concerned about actions taken at previous layer or actions to be taken by next layer
so that there is a form of independence amongst different layers.
The dispatch section in our office knows the form of data it will get i.e. a report and functions it has
to perform, i.e. to put the report in an envelope, seal the envelope, write senders and receivers

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addresses, put a postage stamp on the envelop and post it . It also knows the format of data it has
to give to the next layer i.e. an Envelope. Our dispatch section is not bothered about actions we
have taken, whether we have written report by hand or using a printer, it only knows that a data in
the form of letter will be received by it. Neither is dispatch section bothered about the sorting
process adopted by postal staff, whether it is automated sorting or manual sorting, it just knows
the format of data in which it has to send.
Each layer talks to its upper layer, lower layer and there is also peer to peer communication with
corresponding layer. Layering concept is important so that the layers could be independent of each
other and technological advancements could take place at each layer independent of other layers.
Also irrespective of technology, if a layer understands the action taken by corresponding layer at
other end it could do a reverse job. If a layer knows encryption has happened at other end, then it
knows that it will have to decrypt. This information of action undertaken is passed on by use of
headers and trailers added to the data. Layers also help the process become technology
independent. At our end and at German end technologies could be different but what is important
is that phases are understood by the other end.
Our dispatch section is manual and letters are sealed manually whereas the German client could
have automated letter openers i.e. technologies are different. What is important is that clients’ staff
when they receive the envelope knows that if there is an envelope there is bound to be a letter in
the envelope provided they have understanding of the process. They will know that envelope has
to be opened to extract the letter. At our end, we have put the report in an envelope and have put
envelop in a bag i.e. performed encapsulation of the message. At the other end bag is opened and
envelop taken out, envelop is opened and report taken out i.e. de-capsulation of the message. So,
at one end encapsulation would be done and headers attached; at the other end de-capsulation
would be done, i.e. the headers have been removed.

OSI Model is a layered model.

The OSI reference model is a layered model of seven layers, each specifying particular network
functions. The model divides the tasks involved with moving information between networked
computers into seven smaller, more manageable task groups. A task or group of tasks is then
assigned to each of the seven OSI layers. Each layer is reasonably self-contained so that the tasks
assigned to it can be implemented independently. Two key Terminologies to know are:
Interfaces: describe (vertical) communication between adjacent layers.
Protocols: describe (horizontal) communication between layers,
The numbering of layers always starts from Physical Layer, i.e. layer no. 1 and ends at Application
Layer which is layer no. 7. Application Layer should not be confused with Applications but yes, it is
closest to Applications and the Physical Layer is closest to hardware.
OSI is a 7 Layered Model. The Layers are:

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The sequence of layers can be remembered by mnemonic “All people seem to need data
processing”
 All (Application)
 People (Presentation)
 Seem (Session)
 To (Transport)
 Need (Network)
 Data (Data Link)
 Processing (Physical)

Vertical (Adjacent Layer) Communication

Data is sent down from Application to Physical at sender’s end and up from Physical to Application
at recipient’s end every time something is transmitted across the network. To understand if we as
a user are working in an application that is sending information to another user who at this time is
also working in the same application, but on a different computer, data will get transmitted down
the layers all the way from the Application layer at the top (Layer 7) down to the Physical layer
(Layer 1) at the bottom, where the data can actually be transmitted. When it reaches the other
user, the process is reversed, and data transmits vertically upwards until it reaches its destination
in Application Layer (layer7).

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Horizontal (Corresponding Layer) Communication

Happens logically on the same layer (between hosts) e.g. when a web browser establishes
communication with a web server, a session (layer 5) between the two must be established.
Important point is that only layer 1 (physical) will actually allow the session layer on the host to
reach the session layer on the web server. This means that data must transfer vertically down to
layer 1 on the host, and up from layer 1 to layer 5 on the web server.
Thus, the layers are logically connected even though they don’t have a physical connection. That
is, they are connected via software (hence logical), which is the case for all layers with the
exception of layer 1. Let us now try to understand OSI Model. Continuing with the same Example,
we want to send an audit report to our client in Berlin, Germany. The key steps are:
OSI Report to be sent to Client in Functions
Layer Germany
7 The report has to be sent by mail Application Service to Application
so we use SMTP ( Simple Mail Interface to User/ application
Transfer protocol used by emails) File Transfer access
Decide on a service that Report is Management
to be sent by mail, courier Report Virtual Terminal
could be dictated on phone also but Mail Services
we decide on service i.e. courier
6 The client is in Germany so let’s Presentation Coding and Converting
translate it in German and format it Compression and
as a report. Decompression
Encryption and Decryption
Not interested in content –
Format and Syntax
5 Let’s call them first to ensure that Session Establishes, Maintains and
they are available. We will monitor Terminates Sessions,
the transmission and when the Synchronisation
message has reached will
terminate.
4 Message is big, so let’s segment it Transport Flow Control
into small segments and sequence Segmentation-De-
them. And also request the partner segmentation
at other end to acknowledge Error Handling
receipt. End to End Message Integrity
3 Let’s add our office address and Network Control Passage of packets
the clients address on these over Routes
packets. And decide on the Logical addresses
path(Courier) where to send Selects best path- Congestion
Control

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2 Courier will add its Local UniqueID Datalink Reliable transit of data
and the Local UniqueID of clients Data Framing
also lets add a seal to see packet is Add MAC Address
not tampered en route. Error Detection
1 Mail is urgent so it is sent by air Physical Deals with 0s and 1s
cargo Converts Bits to Voltages
Transmission rates
Contains physical components

1 Mail is received and unloaded by Physical

courier Company
2 Courier Ok, UniqueID is mine so Datalink
meant for me Check the seal which
its intact so no tampering
3 Delivered by couriers, Ok it’s from Network
India Auditors.
4 Will reorder all the different Transport
segments and also tell the Indian
auditor’s office that I received the
packet, but well the third segment
is missing will have to inform
auditor’s office to resend the
missing segment, Ok received a
replacement packet now de-
segment it have it as one report
5 The Report has been received so Session
let’s terminate the session
6 Admin Staff reads the letter and Presentation
formats it the way client CEO wants
i.e. an executive summary he
doesn’t have much time.
7 It’s a report so will use appropriate Application
services to give it to CEO.
This is only a simplistic example of how data gets across to different computers on network.
Although there is no exact mapping between the postal system and OSI layers but this comparison
provides a broad idea of steps involved. We had an over view of the working done at different
layers. OSI is theoretical model, a reference model which can be used only to understand how
different layers function and what happens to any communication through all these different Layers.

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2.2.5 Transmission Control Protocol / Internet Protocol (TCP /IP)

The practical model or the protocol suite which comes into play in data communication between
devices on a network is TCP/IP. The internet's technological success depends on its principal
communication tools, the Transmission Control Protocol (TCP) and the Internet Protocol (IP),
generally known as TCP/IP. TCP/IP is a set of protocols developed to allow cooperating computers
to share resources across the networks. It establishes the standards and rules by which messages
are sent through the networks.
TCP/IP (Transmission Control Protocol/Internet Protocol) is a Suite of communication protocol,
whose development began in the early 1970s by (D)ARPA, the United States Defence Advanced
Research Projects Agency. They called it Arpanet. By 1982, the DOD (Department of Defence)
declared TCP/IP the standard for all military computer networking. By the late ’80s, TCP/IP became
the dominant market player.
These standards are the protocol of the Internet and the global standard for local area networks
and wide area networks, the major exception being the traditional networks of the telephone
companies. However, telephone companies that deploy voice over IP (VoIP) networks are, in fact,
using TCP/IP as well. TCP/IP protocol suite is a bundle of protocols that are segmented into five
layers.
5. Application Layer
4. Transport layer
3. Internet Layer
2. Data link layer
1. Physical layer
These layers of TCP/IP can be mapped with layers of OSI as follows

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Application Layer
The Application layer is the topmost layer of the TCP/IP protocol suite and runs various applications
which provide them the ability to access the services of the other layers and define the protocols
that applications use to exchange data. There are many Application layer protocols, and new ones
are always being developed.

Protocols used in Application Layer

HTTP: Stands for Hyper Text Transfer Protocol and is used for Web browsing. For example, when
you enter a web address in our browser, this actually sends an HTTP command to the Web server
directing it to fetch and transmit the requested Web page. For example: when browsing, the internet
services are being provided by HTTP.
TELNET: It is an abbreviation of Terminal Network and with the help of this protocol user can logon
to a remote server. For example: when we logon to Income tax site, the protocol which is working
is TELNET
FTP (File Transfer Protocol): Helps in transferring files from one computer to another which is one
of the most common tasks performed in a networking or internetworking environment. E.g. FTP is
often used to upload or download files to remote systems
SMTP: It stands for Simple Mail Transfer Protocol which provides a mechanism for sending
messages to other computer users based on e-mail addresses. E.g. whenever we are sending a
mail the services is provided by SMTP Protocol.
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DNS: Domain Name System maps a name to an address and an address to a name. The
addressing system on the Internet uses IP addresses, which are usually indicated by numbers
such as 220.227.161.85. Since such numbers are difficult to remember, a user-friendly system that
has been created is known as the Domain Name System (DNS). It provides the mnemonic
equivalent of a numeric IP address and ensures that every site on the Internet has a unique
address. For example: http://www. icai.org. If this address is accessed through a Web browser, it
is resolved to 220.227.161.85.
TIP: As an experiment try going to the site of ICAI by just writing 220.227.161.85 in your browser.
SNMP: It stands for Simple Network Management Protocol, network administrators use SNMP to
monitor and map network availability, performance, and error rates.

E-mail protocols
MIME (Multipurpose Internet Mail Extensions)
Allows images, audio and non-ASCII formats to be included in email messages (any file format).It
enables use of non-ASCII character sets. It is also used by HTTP.
POP3 (Post Office Protocol)
POP3 is used for retrieving email. Downloads mail from the (mail) server and stores it locally, then
deletes it from the server.
IMAP (Internet Message Access Protocol)
IMAP is also for retrieving email. The difference is that unlike POP, IMAP supports (among other
things) synchronization across multiple devices. This means that if we reply to an email on our
smartphone, then IMAP checks email on your Laptop, our reply will show up there and vice versa.

Transport Layer
The Transport layer (also known as Host-to-Host Transport layer) is responsible for ensuring logical
connections between hosts, and transfer of data. In other words, it acts as the delivery service
used by the application layer above.
Protocol data unit (PDU) is segment.
Data can be delivered with or without reliability. The main protocols used are
 Transmission Control Protocol (TCP)
 User Datagram Protocol (UDP).
User Datagram Protocol (UDP): Example - letter dropped in letterbox, Unreliable delivery
UDP provides a one – to - one or one – to - many, connectionless, unreliable communications
service. It is used when the data to be transferred is small (such as the data that would fit into a
single packet), and the overhead of establishing a TCP connection is not desired or the applications
or upper layer protocols provide reliable delivery.
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UDP is connectionless, meaning that A doesn’t initiate a transport connection to B before it starts
sending data. If B detects an error, it simply ignores it (rather than acknowledge the error to A),
leaving any potential fix entirely up to A.
E.g. small queries, VOIP, Streaming data, etc.
Transmission Control Protocol (TCP): Example- Speed Post with POD
TCP provides a one to - one, connection-oriented, reliable communications service. It is
responsible for the establishment of a TCP connection, the sequencing and acknowledgment of
packets sent, and the recovery of packets lost during transmission. It is responsible also for
breaking up the message into datagrams, reassembling datagrams at the other end, resending
anything that gets lost, and putting things back in the right order.
If A is sending a stream of data to B, TCP will split it into smaller blocks called segments. Each
segment is checked for errors, and retransmitted if any are found. A knows whether a segmented
contains errors depending upon the acknowledgement it receives from B. TCP is reliable because
there is a mechanism in it called PAR (Positive Acknowledgment with Re-transmission), which
sends the data to the recipient again and again until it receives a Data OK signal from the recipient.

Network Layer
The Network layer enables us to find the best way from source to destination. The objective of
Network layer is to decide which physical path the information should follow from its source to its
destination (routing). This layer ensures routing of data between different networks and subnets.
Its key tasks are:
 Message addressing (Logical addressing, IP Addressing)
 Path determination between source and destination nodes on different networks
 Routing messages between networks
 Controlling congestion on the subnet
 Translating logical addresses into physical addresses
Protocol data unit (PDU) is Packet.
Protocols used in Network Layer IP, ARP, RARP, ICMP and IGMP.
Internetwork Protocol (IP):
Internet Protocol (IP) is an Internet layer protocol that uses unique addresses (called IP Addresses
which are discussed in next part) for the destination computer and for our computer. IP provides
the means for our computer to determine whether the destination Computer is a local computer or
a computer located somewhere on the Internet. To reach a destination computer on the Internet,
IP protocol also allows computer to figure out how to reach the Internet destination computer via
our default gateway.
It is an unreliable and connectionless datagram protocol which provides no error checking or
tracking. This is like the delivery service of a post office. The post office does its best to deliver mail

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but does not always succeed. If an unregistered letter is lost, it is up to the sender or would - be
recipient to discover the loss. The post office itself does not keep track of every letter and cannot
notify a sender of loss or damage. When the letter is delivered, the receiver mails the postcard
back to the sender to indicate that he got it. If the sender does not receive the postcard, he or she
assumes the letter has been lost and sends another one.
Address Resolution Protocol (ARP):
Address Resolution Protocol maps IP addresses to physical (MAC) addresses. It is used by hosts
to find MAC address of other hosts whose IP address is known.
Reverse Address Resolution Protocol (RARP)
RARP allows a host to discover its IP address if it knows its physical address (MAC).
Internet Control Message Protocol ICMP
ICMP is a mechanism used by hosts and routers to send notification of datagram problems back
to the sender. ICMP allows IP to inform a sender that a datagram is undeliverable. Many of us
would have at some time or other used PING command PING sends out ICMP (Internet Control
Message Protocol) messages to verify both the logical addresses and the physical connection,
Looks for any congestion on the route.
Internet Group Message Protocol (IGMP)
IGMP is a companion to the IP Protocol. IGMP helps a multicast router identify the hosts in a LAN
that are members of a multicast group.

Data Link Layer

Data Link Layer provides reliable transit of data over local networks. The Data Link Layer performs
the task of delivery over local networks and error detection. The protocol data unit (PDU) is called
Frame.
Main tasks of Data Link Layer
Framing: The DLL divides the stream of bits received from the network layer into manageable data
units called frames.
Physical Addressing: If frames are to be distributed to different systems on the network, the DLL
adds a header to the frame to define the physical address (MAC) of the sender (source address)
and/or receiver (destination address) of the frame.
Flow Control: If the rate at which the data are absorbed by the receiver is less than the rate
produced in the sender, the DLL imposes a flow control mechanism to prevent overwhelming the
receiver.
Error Detection Error detection is the process of detecting whether errors occurred during the
transmission of the bits across the media. The Data Link layer uses a calculated value called the
CRC (Cyclic Redundancy Check) that's placed into the Data Link trailer that's added to the
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message frame. The receiving computer recalculates the CRC and compares it to the one sent
with the data. If they match data received is error free.
Access Control: When two or more devices are connected to the same link, data link layer
protocols are necessary to determine which device has control over the link at any given time.

Physical Layer
The physical layer deals in zeroes and ones and voltages. Physical layer provides the path through
which data moves among devices on the network. The protocol data unit (PDU) is called a Bit.
The physical layer is concerned with the following:
Physical characteristics of interfaces and media: The physical layer defines characteristics of
the interface between the devices and the transmission medium and also defines the type of
transmission medium.
Representation of bits: The physical layer data consists of a stream of bits (0 and 1) without any
interpretation. To be transmitted, bits must be encoded into electrical or optical signals.
Data Rate: The transmission rate – the number of bits sent each second, is also defined by the
physical layer.
Synchronization of bits: The sender and receiver must be synchronized at the bit level.
Line Configuration: The physical layer is concerned with the connection of devices to the medium.
Transmission Mode: The physical layer also defines the direction of transmission between the
two devices: simplex, half-duplex and duplex.

2.3 Wireless Networks

The term wireless networking refers to technology that enables two or more computers to
communicate using standard network protocols, but without network cabling. Strictly speaking, any
technology that does this could be called wireless networking. The current buzzword however
generally refers to wireless LANs. However WANs could be also wireless WWAN (Wireless Wide
Area Networks).
Wireless Wide Area Networks (WWANs)
WWANs refer to technology that enables users to establish wireless connections over remote
private or public networks using radio, satellite and mobile phone technologies instead of traditional
cable networking solutions like telephone systems or cable modems. These connections can be
maintained over large geographical areas, such as cities or countries, through the use of satellite
systems or multiple antenna sites maintained by wireless service providers. Networks connected
over large Geographical areas using Radio/Satellite Technologies could be the only viable
alternative for rural or remote areas. E.g.: Banking networks, ATMs thru VSAT

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Wireless Local Area Networks (WLANs)

WLANs generally use Radio waves to connect devices to a business network. Example: when we
connect a laptop to a Wi-Fi hotspot at a cafe, hotel, airport, or other public place, we're connecting
to that business's wireless network.
Benefits
 Convenience: It allows accessing network resources from any location within wireless
network's coverage area or from any Wi-Fi hotspot.
 Mobility: User is no longer tied to desk, as compared to wired connections. He can even
be connected whilst in there is no tying with desk or wires.
 Productivity: Wireless access to the Internet and the organisations’ key applications and
resources helps the staff even when not in office and encourages collaboration.
 Easy setup: No need to install cables, so installation can be quick and cost-effective.
 Expandable: Wireless networks can be easily expanded with existing equipment, whereas
a wired network might require additional wiring.
 Security: Advances in wireless networking technologies couple with encryption all provide
security protections.
 Cost: With reduced wiring costs, they can cost less to operate than wired networks.

2.3.1 Wi-Fi
Wi-Fi is the name of a popular wireless networking technology that uses radio waves to provide
wireless high-speed Internet and network connections. Wi-Fi networks have limited range. A typical
wireless access point might have a range of 32 m (120 ft.). Security in Wi-Fi can be improved using
WEP (Wired Equivalent Privacy) or WPA (Wi-Fi Protected Access).

2.3.2 Blue Tooth

The name came from a Danish King, whose name was translated to Harold Bluetooth. King
Bluetooth had unified some warring factions and the idea behind Bluetooth is to unify different
platforms and devices.
Bluetooth technology was invented in 1994 by engineers at Ericsson, a Swedish company.
Bluetooth is a wireless technology standard for exchanging data over short distances up to 50
meters (164 feet) from fixed and mobile devices. It is a feature which is used every day through a
number of compatible devices. These include USB, handheld PDA, Phone headset and the most
popular, the mobile phone. Through the use of a mobile phone we can send pictures, videos,
exchange business cards and also transfer files to our PC. Both data and voice transmissions can
be sent and received through the use of short range networks. Bluetooth is really like a very low-
power, short-range radio signal. The system is fairly secure.
Few devices that utilise Bluetooth technology are:
 Keyboards and mice
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 Printers
 Cell phones and headsets
 PDAs (Personal Digital Assistants)
 Desktop and laptop computers
 Digital cameras

2.4 TCP/IP Security and Controls

TCP-IP, which are very widely used for Internet were built to facilitate communication. It has lots of
vulnerabilities inherent in the protocols, which could be exploited through different kinds of attacks.
Some of the Attacks are:
 Sniffing
 Denial of Service Attacks
 Spoofing, hijacking
Controls could be in the form of:
 Encryption,
 VPN IPSec
 Firewalls
 One Time Passwords
 Network Monitoring Tools, Port Scans
 Updated Security Patches

2.5 Summary
In this part we have learnt about Internet and technologies helping in working of Internet which is
a set of heterogeneous networks and to facilitate interoperability we have network standards and
protocols. Understanding OSI model helped us gain an insight into the different phases or layers
in network communication. We also gain an understanding on the main technology on which
internet is built TCP/IP and related protocols. Networking is increasingly becoming wireless, and s
we learnt about some wireless technologies in everyday use.

2.6 References
• http://www.tcpipguide.com/free/t_TCPIPOverviewandHistory.htm
• http://www.garykessler.net/library/tcpip.html
• http://www.microsoft.com/resources/documentation/windows/xp/all/proddocs/en-
us/wireless_networking_overview.mspx?mfr=true

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Learning Objectives
 To gain understanding of IP Networks
 To gain an overview of IP Addressing Scheme
 To gain an understanding of Domain Name Services, Ports
 To understand Network Services
 To get an overview of Public Global Internet Infrastructure
 To understand Factors Impacting Quality of Service

3.1 Introduction
Imagine posting a letter with an address 16, Civil Lines, will it reach the address? Answer to this
question depends on whether we have posted the letter in the Green Letter boxes meant for local
delivery at GPO or Red letter boxes which are meant for general delivery across the world. If we
have posted in Green letter boxes, yes it will reach the address even if city is not specified. If we
are posting a letter in Red letter box which has to be delivered across the world, proper address
with City, Country need to be specified.
Communication between hosts (Devices) can happen only if they can identify each other on the
network. In a single network, hosts can communicate directly via MAC address (MAC address we
have already discussed, is a factory coded 48-bits hardware address which can uniquely identify
a host in the world). On the other hand, in case; if a host wants to communicate with a remote host
which is not on the same network, we require a means of addressing to identify the remote host
uniquely; i.e. we must know the address of the network as well the host.
A logical address is given to all hosts connected to Internet and this logical address is called
Internet Protocol Address (IP Address). In TCPIP Model; we have also understood that the network
layer is responsible for carrying data from one host to another. It facilitates providing logical
addresses to hosts and identifies them uniquely using the same.
The Internet layer takes data units from Transport Layer and cuts them in to smaller units called
Data Packets which are a PDU (Protocol Data Unit) for Network Layer. Internet layer defines IP
addressing also selects the path that the packets should follow to reach the destination. Routers
work on Internet layer and facilitate routing of data to its destination.
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3.2 IP Networks
An IP network is a communication network that uses Internet Protocol (IP) to send and receive
messages between one or more computers. An IP network is implemented in internet networks,
local area networks (LAN) and enterprise networks. All hosts or network nodes must be configured
with the TCP/IP suite and must have an IP address.

3.2.1 IP Addressing
Internet Protocol has the responsibility of identification of hosts based upon their logical addresses
and routing of data between these hosts over the underlying network. For identification of hosts
Internet Protocol Addressing Scheme gives the address of a device attached to an IP network
(TCP/IP network).
Every client, server and network device are assigned an IP address, and every IP packet traversing
an IP network contains a source IP address and a destination IP address.
IP encapsulates data unit received from above and adds its own header information

Layer 4 data I P Header

IP Encapsulation
IP header contains all the necessary information to deliver the packet at the other end like Version
of IP, Protocol, Source IP Address, Destination IP Address etc.

IP Version 4 (IPv4)
IP Address (IPv4) is an address which is 32-bits in length of the type
01110101 10010101 00011101 11101010
It is written in form of 4 Octets or Bytes separated by a dot. Using these 32 bits we can have 232
permutations and combinations i.e. in all 4,29,49,67,296 different and unique IP Addresses.
IP address can be a value from00000000.00000000.00000000.00000000
to 11111111.11111111.11111111.11111111
If thought of in binary terms 0 means 00000000 and 255 in binary is 11111111 and all permutation
and combination in between. Thus, each of these Octets can be any value from 0 to 255, both
inclusive i.e. in all 256.
. 0 . 0 . 0
0
to to to
to
. 255 . 255 . 255
255

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IPv4 addresses are usually represented in "dotted decimal" notation, separated by decimal points
like xxx.xxx.xxx.xxx or 117.149.29.234
IP Addressing Scheme-Classes
IP addressing system is designed in such a way that it contains information of three fields: class
type, netid, and hostid. IPv4 addressing Scheme is a classful addressing scheme
Classful network design allowed for a larger number of individual network assignments. There are
5 classes of Addresses
o Class A
o Class B
o Class C
o Class D
o Class E
The first three bits of the most significant octet of an IP address was defined as the class of the
address. Three classes (A, B, and C) were defined for universal Unicast Addressing.
Class D is reserved for Multicasting.
Class E is for reserved for experimental purposes only like for research and development or study.
Unicast Addressing Mode: In this mode, data is sent only to one destined host. The destination
address field contains 32- bit IP address of the destination host.
Broadcast Addressing Mode: In this mode the packet is addressed to all hosts in a network
segment. IP address having host bit all ones is the Broadcast IP, for example in class A, the
address XXX.255.255.255
Multicast Addressing Mode: This mode is a mix of previous two modes, i.e. the packet sent is
neither destined to a single host nor the entire hosts on the segment. In this packet, the destination
address contains special address. Example is online games.
Network IP and Broadcast IP
IP address having host bit all zeroes is the Network IP.
IP address having host bit all ones is the Broadcast IP.
Both these addresses cannot be physically used on any system. Given any IP address, a
network IP and broadcast IP can be associated with it.
Network and Host ID
Each of the IP address of Class A, B and C will have a Network and Host portion of the Address

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That is out of 32 Bit address some bits or more specifically Octets or Bytes will represent Network
Address and some octets will represent Host ID
Class A Address
Class A address is wherever the first octet of an IP address is any number ranging from 0-127.
XXX.XXX.XXX.XXX
-------
0-127
If we consider in binary then it means first octet is 00000000 (decimal equivalent 0) to
01111111(Decimal Equivalent 127) and all the permutations and combinations in between. It
means, when we move from 00000000 to 01111111 all the bits will keep on changing between 0
and 1 whereas 1st bit will remain constant at 0, which is called a Higher Order Bit.
Where ever it’s a class A address

First octet represents NetworkID and remaining 3 octets represent HostID. Earlier while discussing
Broad Cast and Network IP addresses we had discussed that in network and host portion of an IP
Address all changing Bits can never be all 0s or all 1s. Thus network portion of Class A address
can never be00000000 and never be 01111111, since in these cases all changing bits will be 0s
or 1s. Therefore in Class A the first octet ranges from 1 – 126, i.e. Class A addresses only include
IP starting from 1.x.x.x to 126.x.x.x only.
The IP range 127.x.x.x is reserved for loopback IP addresses. This implies that Class A addressing
can have 126 networks (27-2) and each network can have 16777214 hosts (224-2) since address
space for host ID is 24Bits and all changing bits can never be 0s or 1s.
Class A IP address format thus, is 0NNNNNNN.HHHHHHHH.HHHHHHHH.HHHHHHHH
This is meant for big networks needing huge number of hosts e.g. Microsoft
Class A address is wherever the first octet of an IP address is any number ranging from 128 to
191, i.e.

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XXX.XXX.XXX.XXX
-------
128-191
If we consider in Binary then it means first octet is 10000000 (decimal equivalent 128) to
10111111(Decimal Equivalent 191) and all the permutations and combinations in between.
It means, when we move from 10000000 to 10111111 all the bits will keep on changing between
0 and 1 whereas 1st two bits will remain constant at10, which are called a Higher Order Bits
Class B Address
Where ever it’s a class B address

First two octet represents NetworkID and remaining two octets represent HostID. Again in network
and host portion of an IP Address all changing Bits can never be all 0s or all 1s. Thus, network
portion of Class B address can never be10000000 00000000and never be 1011111111111111,
since in these cases all changing bits will be 0s or 1s. This implies that Class B addressing can
have 16384 networks (214-2)) since address space for NetworkID is 16Bits and only 14 bits are
changing Bits and all changing bits can never be 0s or 1s
Each network can have 65534 hosts (216-2) since address space for host ID is 16Bits and all
changing bits can never be 0s or 1s. Class B IP address format is,
10NNNNNN.NNNNNNNN.HHHHHHHH.HHHHHHHH
Class C Address
Class C address is wherever the first octet of an IP address is any number ranging from 192 to
223, i.e.
XXX.XXX.XXX.XXX
192
To
223
If we consider in Binary then it means first octet is 11000000 (decimal equivalent 192) to
11011111(Decimal Equivalent 223) and all the permutations and combinations in between.
It means, when we move from 11000000 to 11011111 all the bits will keep on changing
between 0 and 1 whereas 1st three bits will remain constant at110, which are called Higher
Order Bits
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Where ever it’s a class C address

First three octet represents NetworkID and remaining one octet represents HostID. Again in
network and host portion of an IP Address all changing Bits can never be all 0s or all 1s. Thus
network portion of Class C address can never be11000000 00000000 00000000 and never
be 101111111111111111111111, since in these cases all changing bits will be 0s or 1s. This
implies that Class C addressing can have 2097150 networks (221-2) ) since address space for
NetworkID is 24Bits and only 21 bits are changing Bits and all changing bits can never be 0s
or 1s .
Each network can have 254 hosts (28-2) since address space for host ID is 8Bits and all
changing bits can never be 0s or 1s
Class C IP address format is 110NNNNN.NNNNNNNN.NNNNNNNN.HHHHHHHH
Class D Address
Class D address is wherever the first octet of an IP address is any number ranging from
22i.e.to 239, i.e.
XXX.XXX.XXX.XXX
------- 224-239
Very first four bits of the first octet in Class D IP addresses are set to 1110 which are called
Higher Order Bits
Class D has IP address rage from 224.0.0.0 to 239.255.255.255.
Class D is reserved for Multicasting.
In multicasting data is not destined for a particular host, that's why there is no need to extract
host address from the IP address.
Class E Address
This IP Class is reserved for experimental purposes only like for research and development or
study. IP addresses in this class range from 240.0.0.0 to 255.255.255.254. To summarise

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st
1 Oc st Network/ Hosts per
tet 1 Octe Host ID Number Network
Deci t High Default
Class N=Networ of (Usable
mal Order Subnet Mask
k Networks Addresses
Rang Bits H=Host )
e

1– 126 1,67,77,21
A 0 N.H.H.H 255.0.0.0 7 24
126* (2 – 2) 4 (2 – 2)

128 – 16,382 65,534

B 10 N.N.H.H 255.255.0.0 14 16
191 (2 – 2) (2 – 2)
20,97,15
192 – 255.255.255. 21 254
C 110 N.N.N.H 0 (2 – 8
223 0 (2 – 2)
2)
224 –
D 1110 Reserved for Multicasting
239
240 –
E 1111 Experimental; used for research
254
Although people identify the class by the first number in the IP address, a computer identifies
class by the first three bits of the IP address (A=0; B=10; C=110).
More than twenty lacs Class C networks are possible, but have least number of hosts.
The fewest are Class A networks, which are reserved for government agencies and huge
companies.
Class division shows that class A networks can accommodate far more hosts than class B or
class C networks.
Thus the major purpose of Classful addressing scheme is to reduce inefficiency in address
allocation.

3.2.2 Public and Private Addresses

One of the steps taken to conserve the IP address was concept of Public and Private Addresses.
Every IP address that is exposed to the public Internet is unique. In contrast, IP addresses within
a local network can use the same private addresses.

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Thus a user's computer in company A can have the same address as a user in company B and
thousands of other companies. However, private IP addresses are not reachable from the outside
world.
An IP address is considered private if the IP number falls within one of the IP address ranges
reserved for private networks such as a Local Area Network (LAN). The Internet Assigned Numbers
Authority (IANA) has reserved the following three blocks of the IP address space for private
networks (local networks).These addresses cannot be routed on Internet so packets containing
these private addresses are dropped by the Routers. Most ISPs will block the attempt to address
these IP addresses. These IP addresses are used for internal use by companies that need to use
TCP/IP but do not want to be directly visible on the Internet.
Class Private Networks Private Network Finish Address No of Addresses
Start address
A 10.0.0.0 10.255.255.255 1, 67, 77,216
B 172.16.0.0 172.31.255.255 10, 48,576
C 192.168.0.0 192.168.255.255 65,536

In order to communicate with outside world, internet, these IP addresses must have to be
translated to some public IP addresses using NAT (Network Address Translation) process can
be used

Network Address Translation (NAT):

NAT works like a receptionist who transfers any external call to an internal intercom number
and vice versa.
Network address translation is a mechanism by which multiple PCs/hosts with private IP
addresses are enabled to access using one or few public IP addresses.
In other words, we operate with two sets of addresses: we would have our private addresses
configured on hosts throughout our network, and then a public routable block of addresses

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would be configured on our NAT device. NAT would be responsible for correlating the Private
and Public addresses and translating as needed to support communications.
NAT allows a single device, such as a router, to act as an agent between the Internet (or
"public network") and a local (or "private") network. This means that only a single, unique IP
address is required to represent an entire group of computers

Static and Dynamic Addresses

Network infrastructure devices such as servers, routers and firewalls are typically assigned
permanent "static" IP addresses. If we call a Radio Taxi for a Cab and it sends us a cab. Next
time if we call for a cab will it send the same cab as last time? Most likely answer would be
No. Radio Taxi is maintaining a pool of cabs out of which one cab is assigned to us as and
when it is released it is now available for assignment to some other customer. Similarly, ISPs
which allocate IP addresses to us, maintain a pool of IP addresses out of which one is assigned
to us. As soon as we disconnect it is released and assigned to perhaps some other customer.
These are Dynamic IP addresses.
When we E-file an Income Tax Return its acknowledgement shows IP Address on left hand
bottom. Next time we file a return, the IP address changes.
We can know our IP address at the site www.whatismyipaddress.com. The client machines
can also be assigned static IPs by a network administrator, but most often are automatically
assigned temporary "dynamic" IP addresses via software that uses the DHCP (Dynamic Host
Control Protocol).
DHCP allows us to define a range from which the server is allowed to give out IP’s. For
example, 192.168.1.100 – 150.Computers connecting to the network are assigned an IP with
a lease time.
Cable and DSL modems typically use dynamic IP with a new IP address assigned to the
modem each time it is rebooted.

Reserved addresses
The following are reserved addresses:
IP address 0.0.0.0 refers to the default network and is generally used for routing. The network
address 0.0.0.0 designates a default gateway. This is used in routing tables to represent "All
Other Network Addresses".
IP address 255.255.255.255 is called the Broadcast address.
IP address 127.0.0.1 is called the Loopback address. It is used to simplify programming,
testing, and troubleshooting. It allows applications to communicate with the local host in the
same manner as communicating with a remote host, without the need to look up the local
address

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In every network the host address which is all zeroes identifies the network itself. This is called
the Network IP Address and is used in routing tables to refer to the whole network.
A host address which is all ones is called the Broadcast Address or Announce Address for
that network. For example, on the Class C network 205.217.146.0, the address
205.217.146.255 is the broadcast address.
Packets addressed to the broadcast address will be received by all hosts on that network. The
network address and the broadcast address are not used as actual host addresses. These are
invalid addresses on the internet. Routers don't route them.

Subnet Mask
We are now moving towards classless addresses i.e. network and host portion of address can
be derived using IP Address with a subnet mask.
The 32-bit IP address contains information about the host and its network. It is very necessary
to distinguish both. For this, routers use Subnet Mask, which is as long as the size of the
network address in the IP address. Subnet Mask is also 32 bits long.
Subnet mask helps in creating subnets.
Internet Service Providers (ISP) may face a situation where they need to allocate IP subnets
of different sizes as per the requirement of customer, with the help of subnet mask; he may
want to subnet the subnets in such a way that results in minimum wastage of IP addresses.

3.2.3 Internet Protocol Version 6 (IPv6)

Traditional Dominant Version of IP addressing is IP version 4 which is a 32 Bit addressing
scheme i.e. it has 4,29,49,67,296 unique addresses, i.e. 232. But if we look at it the number
of devices and addresses required are far exceeding these, so we are moving from IP Version
4 to IP version 6, IPv6 which is a 128 Bit addressing scheme i.e. the number of possible
addresses are2128 which is huge number and supposed to last long.
IETF (Internet Engineering Task Force) has redesigned IP addresses and to mitigate the
drawbacks of IPv4.
IPv6 is written in form of hexadecimals like 2001:0db8:85a3:0000:0000:8a2e:0370:7334. It
also offers auto configuration, higher mobility, quality service, security and privacy
compatibility, efficient and capable of optimization.
Various countries, including India, are under migration to IPv.6. In India, the IPv.6 migration
is led by the Telecom Regulatory Authority of India. Today majority of devices running on
internet are using IPv4 and it is not possible to shift them to IPv6 in coming days. There are
mechanisms provided by IPv6, by which IPv4 and IPv6 can coexist unless the Internet entirely
shifts to IPv6.

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3.3 Ports
French word Porte really means ‘door’.
Ports can be readily explained with a simple real world example. We can think of IP addresses
as the street address of a building, and the port number as the number of a particular Flat
within that building. If a letter (a data packet is sent to the building (IP) without a flat number
(port number) on it, then nobody would know who it is for (which service it is for). In order for
the delivery to work, the sender has to include the flat number along with the address.
A port is a 16-bit number, which along with an IP address forms a socket. Since port numbers
are specified by 16-bit numbers, the total number of ports is given by 216 which are equal to
65536 (i.e. from 0 to 65535).

Service Ports
A number is assigned to user sessions and server applications in an IP network. The port
number resides in the TCP or UDP header of the packet.

Source Ports
The source port, which can be a random number, is assigned to the client and is used to keep
track of user sessions.

Destination Ports
The destination port is used to route packets on a server to the appropriate network
application. For example, port 80 is the standard port number for HTTP traffic, and port 80
packets are processed by a Web server. Destination ports are typically well-known ports (0-
1023) for common Internet applications such as HTTP, FTP and SMTP. It can also be a
registered port (1024-49151) that vendors use for proprietary applications.
In both TCP and UDP, each packet header will specify a source port and a destination port,
each of which is a 16-bit unsigned integer (i.e. ranging from 0 to 65535) and the source and
destination network addresses (IP-numbers), among other things.

3.4 The Domain Name System

DNS (Domain Name System) is a hierarchical, distributed database that contains mappings
of DNS domain names to various types of data, such as Internet Protocol (IP) addresses and
is an Internet Engineering Task Force (IETF) standard DNS allows the use of friendly names,
such as www.icai.org, to easily locate computers and other resources on a TCP/IP-based
network
Remembering names of our acquaintances is easy. But if we want to call them on cell phone,
cell phone will call them only based on their telephone Number. 10 digits telephone Numbers

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are very difficult to remember. So we feed the telephone Number in our cell phone and
associate it with the name of our acquaintance. When we need to call that person we dial that
person and our cell phone based on the contact list resolves it into a telephone number and
calls the number. The same process happens for internet.
All hosts in the Internet are addressed using IP Addresses. Since they are 32 bits in length,
almost all users find it difficult to memorize the numeric addresses. For example, it is easier to
remember www.icai.org rather than 220.227.161.85. The Domain Name System (DNS) was
created to overcome this problem. It is a distributed database that has the host name and IP
address information for all domains on the Internet.
For example, when a Web site address is given to the DNS either by typing a URL in a browser
or behind the scenes from one application to another, DNS servers return the IP address of
the server associated with that name.
In the above example, www. icai.org would be converted into the IP address 220.227.161.85.
Without DNS, we would have to type the four numbers and dots into our browser to retrieve
the Website.
When we want to obtain a host's IP address based upon the host's name, a DNS request is
made by the initial host to a local name server. If the information is available in the local name
server, it is returned else the local name server then forwards the request to one of the root
servers. The root server, then, returns the IP address.

Obtaining the numeric IP address

The DNS system is a hierarchy of database servers that start with the root servers for all the
top level domains (.com, .net, etc.). These servers point to authoritative servers residing within
ISPs and companies that resolve the host names to complete the name resolution.
DNS and Reverse DNS
DNS is resolving a Domain Name to its corresponding IP Address.
Reverse DNS is IP address to domain name mapping - the opposite of forward (normal) DNS
which maps domain names to IP addresses. Reverse DNS is maintained in a separate set of
data from forward DNS.
Reverse DNS is mostly used by humans for such things as tracking where a web-site visitor
came from, or where an e-mail message originated, etc.

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Generic top-level domain

A generic top-level domain (gTLD) is one of the categories of top-level domains (TLDs)
maintained by the Internet Assigned Numbers Authority (IANA) for use on the Internet.
Overall, IANA currently distinguishes the following groups of top-level domains:
 infrastructure top-level domain (.arpa)
 country - code top-level domains (ccTLD)
 sponsored top - level domains (sTLD)
 generic top - level domains (gTLD)
.aero .info .net .biz .jobs .pro .coop .mobi .travel .gov
.asia .int .org .com .mil .tel .edu .museum .xxx .name

3.5 Network Services

Network Service is an application running at the network application layer and above, that provides
data storage, manipulation, presentation, communication or other capability which is often
implemented using a client-server or peer-to-peer architecture.
For example
o Domain Name System (DNS) which translates domain names to Internet protocol
(IP) addresses and the
o Dynamic Host Configuration Protocol (DHCP) to assign networking configuration
information to network hosts.
o Network remote access services
o Directory services
o network management services
These are common services on local area networks. They require users to have permissions to
access the shared resources.
o Printing Services
o Network File Services
o Electronic Mail Services
o FTP Services
o Web Services

3.6 On Demand Computing

On-demand computing (ODC) is an enterprise-level model of technology and computing in which
resources are provided on an as-needed and when-needed basis. Generally used for outsourced
services. ODC make computing resources such as storage capacity, bandwidth, computational
speed and software applications available to users as and when needed for specific temporary
projects, known or unexpected workloads, routine work, or long-term technological and computing
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requirements. On-Demand is gaining tremendous corporate acceptance and adoption because it

overcomes many of the inadequacies and increasing costs of traditional, legacy/on premise
software products and support. ODC is about having our storage, our applications and our security
available to us when we need them shifting the burden and cost of maintaining on-site software
from us to the On-Demand vendor. The benefit of ODC is that organisation has to pay only for the
computing resources they utilise. The biggest concerns about ODC are security and privacy.

3.7 Public Global Internet Infrastructure

Networks distributed world-over and interconnected through communication channels allowing
exchange of information form the Internet. Users access Internet through LAN or dial-up to the
POP (Point of Presence) of an Internet Service Provider (ISP). This POP is a part of the network
of the ISP. These POPs of a service provider may be connected via optical fibre leased through a
telephone operator or may be owned by the ISP. Thus, when connected, the user logically
becomes a part of the network of the ISP.
These networks are connected to one-another through high speed backbones. Backbones are
typically fibre optic trunk lines. The converge point of these backbones are called Network Access
Points (NAP). These backbones, in fact, have multiple fibre optic cables combined together for
increased capacity, and afford speeds in the range of 155 Mbps to 2.488 Gbps. At NAP, the edge
routers divert data to the regional networks. Data travels from one regional network (ISP network),
to another via NAPs using backbones. At the destination regional network, data gets transmitted
to the specific network. Within this destination network, the data then travels to the specific
computer/device.

3.8 Factors Impacting Quality of Network Service

Today internet is being used for many real time services also where time is critical, like Voice over
IP, IP TV, Online Games, video-on-demand and other consumer service, Internet banking and all.
To achieve customer satisfaction, Quality of Service QoS becomes very important in these kinds
of Network Services. Quality of service is the ability to provide different priority to different
applications, users, or data flows, or to guarantee a certain level of performance to a data flow.
The goal of QoS is to provide guarantees on the ability of a network to deliver predictable results.
QoS involves prioritization of network traffic. QoS can be targeted at a network interface, toward a
given server or router's performance, or in terms of specific applications. A network monitoring
system must typically be deployed as part of QoS, to ensure that network is performing at the
desired level. QoS can be classified into three categories:
 Best Effort Basis Services: No guarantee on delivery or throughput. This is the least
priority traffic.
 Differentiated service: Here different type of traffic is differentiated according to the
performance requirements. The devices use different queuing strategies for different
priorities.

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 Guaranteed service: Services like VoIP and Video etc. are given top priority in
transmission at a guaranteed speed.
From user perspective, customer services like internet banking may have guaranteed services.
Organisation’s Email and access to intranet may be categorised under differentiated services and
internet browsing for internal users may be categorized under best effort basis. Some organisations
use least priority, priority and top priority for categorization of various services over the network for
implementing QoS.

3.9 Summary
In this part, we have learnt about IP Networks the main strength behind internet. We also learnt
about IP addressing scheme, concepts of Public and Private Addresses. Our use of internet is
enriched by browsing various sites reaching those sites are made easy by Domain Name system
as we don’t have to remember IP addresses. We also saw emerging concepts of Network Services
and On- Demand Computing. We also had an overview of Public Global Internet infrastructure.

3.10 References
• http://www.tcpipguide.com/free/t_TCPIPOverviewandHistory.htm
• http://www.garykessler.net/library/tcpip.html
• http://www.microsoft.com/resources/documentation/windows/xp/all/proddocs/en-
us/wireless_networking_overview.mspx?mfr=true

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PART 1: FIREWALLS
Learning Objectives
 To gain understanding of Firewalls
 To gain an overview of types of Firewalls
 To gain an understanding of Common Implementations of Firewalls
 To understand Limitations of Firewalls
 To get an overview of Unified Threat Management
 To understand Firewall Life Cycle
 To understand Baseline Configuration of Firewalls

1.1 Introduction
With the increased use of networked systems, the threat profile to organisations’ information assets
has increased manifold. Organisations’ information resources are accessed by users from different
access points. Further internal users also need to access Internet. However, while Internet access
provides benefits, it enables the outside world to reach and interact with local network assets,
creating a threat to the organisation. This exposes assets to attacks, both malicious and
unintentional.

1.2 Firewall
Firewall is a system or group of systems to enforce Control policy. Firewalls are an effective means
of protecting a local system or network of systems from network-based security threats while at the
same time affording access to the outside world via wide area networks and the Internet. Firewall
may be a hardware device or a software program running on a secure host computer, or a
combination of hardware and software. Firewalls and associated technical controls have become
fundamental security tools. Firewall is deployed at the perimeter of the network, i.e. the entry point.
(The term ‘Firewall’ is coined after the firewalls which are used to prevent the spread of Fire from
one area to another; in this case, they limit the damage that could spread from one subnet to
another).
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Firewall – at the perimeter of the organisation’s intranet

As an access control mechanism, the firewall enforces the security policy between an
organisation’s secured network and the unsecured environment. Based on the rules configured, it
filters the traffic both in-bound and outbound from the secured network and determines,
 Which inside machines, applications and services may be accessed from outside,
 Who outsiders are permitted access to internal and what resources, and
 Which outside services, the insiders may access.

In general, the design goals for a firewall are:

 All traffic from inside (secured) to outside (unsecured), and vice versa, must pass through
the firewall.
 Only authorised traffic, defined by the local security policy, will be allowed to pass the
firewall.

1.2.1 Firewall Functionalities

Fundamentally, firewalls perform the following tasks:
 Manage and control network traffic - Firewalls typically do so by inspecting the packets
and monitoring the connections that are being made, and then filtering connections based
on the packet-inspection results and connections that are observed.
 Authenticate access - if the authentication is not successful, the packet would be
dropped even though it was permitted based on inspection and the state of the
connection. Authentication can be carried through
o User name/ID and password of the user initiating the connection prior to allowing
the connection to be established. Once the connection has been authenticated
and authorised by the security policy, the user is no longer prompted for
authentication for that connection.
o The use of pubic keys and certificates under the PKI.
o The use of pre-shared keys among the hosts.

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 Act as an intermediary - firewall can be configured to act as an intermediary, i.e. proxy

in the communications process between two hosts.
 Protect resources - firewall can protect the internal resources and can be configured to
inspect the actual application data itself (for example, allowing it to differentiate between
legitimate HTTP traffic and malicious HTTP traffic) before presenting the data to the
protected resource.
 Record and report on events - the firewall can be configured to maintain logs that can
be examined on the happening of a security event. The firewall can also be configured to
issue notifications in form of alerts on firewall policy violation.

Access Control Techniques

The firewalls generally use following techniques to control access and enforce security policy.
 Service control: Determines the types of internet services that can be accessed. The
firewall may filter traffic on the basis of IP address and TCP port number.
 Direction control: Determines the direction in which particular services requests may be
initiated and allowed to go through the firewall.
 User control: Controls access to a service according to the user who is attempting to
access it. This is usually applied to inside users.
 Behaviour control: Controls how particular services are used. For example, it may
enable external access to only a portion of the information on a local Web server.

Access Control Policy

There are two approaches in configuring the firewall rules that are manifested through the firewall
policy
 Default Deny Policy or Mandatory Access Control Policy
Under this policy, the recommended approach is to deny everything and then selectively
allow certain traffic through the firewall.
This will block all traffic on all interfaces in either direction from anywhere to anywhere
unless explicitly permitted. This type of policy is normally implemented when dealing with
granting access from an untrusted source to a protected system.
 Allow All Policy or Discretionary Access Control Policy
This policy follows the opposite approach. It allows, by default, all access and denies only
the traffic that is explicitly configured to be denied. This type of security policy is frequently
implemented for granting access from a trusted network to external systems (e.g.
Internet).

NAT Technique in Firewalls

Network Address Translation (NAT) allows a network to use one set of network addresses
internally and a different set when dealing with external networks. NAT is a now a function of almost

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every firewall whether in a SOHO (small office home office) environment or implemented in an
enterprise. NAT firewalls automatically provide protection to systems behind the firewall because
they allow connections that originate from the systems inside of the firewall only. It conceals the
internal network.

1.2.2 Firewall types

Network Based Firewall

A network firewall is a device deployed between networks to restrict which types of traffic can pass
from one network to another. Organisations typically use one or more network firewalls at their
network perimeter to provide protection from external threats. Network-based firewall could be
implemented on a perimeter router, multi-layered switch or could be a dedicated firewall.
Network firewalls work by comparing network traffic to a set of rules, each of which typically
specifies a network or application protocol and the source and destination of the communication.
For example, a rule might permit e-mail to reach the organisation's e-mail server from external
hosts.

Host Based Firewalls

A host-based firewall is a piece of software running on a single host that can restrict incoming and
outgoing network activity for that host only. They can prevent a host from becoming infected and
stop infected hosts from spreading malware to other hosts. Host-based firewall runs on computer
running OS such as Windows 7 or UNIX. Host-resident firewalls filter and restrict the flow of
packets. These can be implemented on a server also.

Advantages of Host Based Firewall

 Filtering rules can be tailored to the host environment. Host-based firewalls are
particularly important for systems that are network-connected but are not protected by
network firewalls and other network-based security controls.
 They provide an additional layer of protection on the network. When a new server or host
is attached to the network, it can have its own firewall, without the need to change the
configuration of the network firewall.

Personal Firewalls
A personal firewall controls the traffic between a personal computer or workstation on one side and
the Internet or enterprise network on the other side. Personal firewall functionality can be used in
the home environment and on corporate intranets. Typically, the personal firewall is a software
module on the personal computer. Personal firewalls assume that outbound traffic from the system
is to be permitted and inbound traffic requires inspection.

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Personal firewall capabilities are normally built into operating system. In a SOHO environment
having multiple computers connected to the Internet, firewall functionality can also be housed in a
router that connects all of such computers to a DSL, cable modem, or other network interface.
Such a firewall is known as a Personal Firewall Appliance.

Some key terms related to Firewalls

Dual Homed
It simply means house with two doors. It is a computer that has at least two network interfaces
(NIC), one connected to secure side other unsecure side.
Demilitarized Zone (DMZ)
The name comes from Demilitarized zone between North and South Korea, where neither North
Korean nor South Korean military is present.
In Networks, Demilitarized Zone (DMZ) usually houses the IT components that require public
access such as a mail server, web server, etc.
Bastion Host
Bastions are highly fortified projections on the outer walls of forts. Bastions are exposed to outside
but are critical to a fort’s security and enemy’s primary effort is to break the bastions thus making
security weak.
Similarly Bastion Hosts are computer systems that have Hardened systems because they are
vulnerable to attack, as they are exposed to the Internet and are a main point of contact for users
of internal networks.
Common characteristics of a bastion host are as follows,
 Its Operating system is hardened, in the sense that only essential services are installed
on it.
 It may be configured to require additional authentication before a user is granted access
to proxy services.
 It is configured to access only specific hosts.
 It can maintain detailed logs of all traffic.
 It has each proxy independent of other proxies loaded on it.

1.2.3 Firewall Configurations

Packet Filtering Router Firewall

This is the simplest firewall, and is usually implemented on a screening router deployed between
the private network and the public network. A router is a device that receives packets from one
network and forwards them to another network. The screening router examines the header of every

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packet of data travelling between the Internet and the corporate network. Packet filtering firewalls
work at the network layer of the OSI model, or the Internet layer of TCP/IP model.
The header of a packet would contain:
 Type of packet i.e. TCP.UDP, ICMP, IP SEC
 IP Address of Source
 Port Number of Source
 IP Address of Destination
 Port Number of Destination
Firewall rule could be based on any of these.
In case, the rule is matched, and the rule permits, the packet is passed to the next server/device
as per the information in the Routing Table of the screening router. If match is found but the rule
disallows, the packet is dropped. However, if match is not found, the action to forward or drop the
packet is taken as per the default parameter.
Sample Access Control List (ACL)
Source Source Destination Destination Protocol Action
Address Port Address Port
Any Any 200.1.1.2 80 TCP Allow
Any TCP 200.1.1.3 53 UDP Allow
Any TCP 200.1.1.4 25 TCP Allow
Any Any Any other Any Any Deny

Packet Filtering Router

In the above example, the packet filtering router allows access from outside to the Web server (port
80), DNS Server (port 53) and the Email server (port 25). In case any traffic does not meet criteria

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as per the first three rules, then the last rule is followed and the packets are denied access. As per
the above rules, no traffic is permitted to secured servers 200.1.1.10 and 200.1.1.11.
Advantages of Packet Filtering Firewalls
Packet filtering firewalls have two main strengths: speed, and flexibility. They are not very costly
and have low impact on network performance.
Limitations of Packet Filtering Firewalls
 Configuring the packet filtering firewalls and defining the Access Criteria poses difficulty.
 Most packet filtering firewalls do not support advanced user authentication schemes.
 Many packet filtering firewalls lack robust logging facilities as only limited information is
available to the firewall.
The primary focus of Packet Filtering Firewalls is to limit inbound traffic while providing for outbound
and established traffic to flow unimpeded. Thus, packet filter firewalls are very suitable for high-
speed environments where logging and user authentication with network resources are not
important. Packet filtering firewalls are prone to following types of attacks,
IP Address Spoofing attack
In this type of attack, the attacker fakes the IP address of either an internal network host or a trusted
network (outside) host so that the packet will pass the access rules defined in the firewall. For
example using a TOR Browser which provides proxy services we can fake our IP address and
breach a Packet filtering firewall which has rule to restrict our IP Address.
Source routing attack: In this process, it is possible to define such a route that it bypasses the
firewall. To prevent such attacks, all packets wherein source routing specification is enabled may
be dropped. However, this control will not be effective where the topology permits a route to be
defined.
Tiny Fragment attack: Using this method, an attacker fragments the IP packet into smaller ones
and pushes it through the firewall in the hope that only the first of the sequence of fragmented
packets would be examined and the others would pass without review.

Stateful Inspection Packet Filtering Firewall

Stateful inspection firewalls are packet filters that incorporate added awareness of the OSI model
data. The Stateful Firewalls keep track of the current connection to ensure that only permitted traffic
is allowed to pass. Thus, these firewalls filter traffic based on both packet characteristics (like the
packet-filtering firewall) as also session checks to make sure that the specific session is allowed.
Stateful inspection firewalls create a directory of outbound TCP connections, along with each
session’s corresponding client port. This “State Table” is then used to validate any inbound traffic.
The Stateful inspection solution is more secure because the firewall tracks client ports individually
rather than opening all “high numbered” ports for external access.

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Source Address Source Destination Address Destination Action

Port Port
192.168.1.0 1035 200.12.39.201 80 Established

In this example, as a connection is established between the (source port 1035), with the remote
server having port 80, the Stateful inspection firewall makes an entry in the Connection Status
table. This state of a connection becomes one of the filtering criteria. If an incoming packet matches
an existing connection listed on the table, it will be permitted access without further checking.

Circuit Level Gateways

This type of firewall validates the connections before data is exchanged. It functions at the session
layer of the OSI model. A circuit-level gateway relays two TCP connections, one between itself and
an inside TCP user, and the other between itself and a TCP user on an outside host. Once the two
connections are established, it relays TCP data from one connection to the other without examining
its contents. The security function consists of determining which connections will be allowed.
It is typically used when internal users are trusted to decide what external services to access.
Circuit level gateways are relatively inexpensive and have the advantage of hiding information
about the private network they protect. On the other hand, they do not filter individual packets.

Disadvantage of a Circuit Level Gateway

A circuit-level gateway cannot examine the application-level content of the packets it relays
between a trusted network and an untrusted network.

Application Level Gateway Firewall

An application-level gateway acts as a relay of application-level traffic. It operates at the Application
Layer of OSI model. These are implemented on hardened operating systems. Application level
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gateways, also called proxies, are similar to circuit-level gateways except that they are application
specific. It forces both sides of the conversation to conduct the communication through the proxy.
Application level gateway firewalls are capable of permitting or rejecting requests based on the
content of the network traffic.
Examples of access control functions that the application-level gateway can process:
 Access control based on content - whether the request contains known exploits?
 Access control based on user authentication- whether the user is permitted to access the
resource requested?
 Access control based on source network zone - whether the access to the requested
resource from the source network is allowed? For example, certain intranet resources
from the Internet may be prohibited access to particular service(s).
 Access control based on source address - whether the sender address is allowed access
to the resource?
The working of an Application level gateway firewall is depicted here.

Fig: Application Level Gateway Firewall

Advantages of Application Level Gateway

 Application level gateway (and also the circuit level gateway) firewall systems employ the
concept of bastion hosting. Therefore, in the event of a break-in, only the firewall system
is compromised, not the entire network.
 Application-level gateways are more secure than packet filters and Stateful Inspection
Firewalls as they authenticate individuals and not the devices.
 They can provide auditing and logging functions so that the network traffic can be
monitored or analysed at a later time.
 Application level gateways provide complete control over type of service.
Limitations of Application Level Gateway Firewalls
 They are very process intensive and hence can cause performance issues. This can be
addressed by using proxy services for critical applications only.

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 They are vulnerable to bugs present in the operating system and any application running
on the system.

1.2.4 Common Implementation Structures of Firewalls

The deployment strategy for a firewall in an organisation depends upon the objective of the network
and the ability of the organisation to implement the architecture. Following are the most common
architectural implementations of firewalls:
 Packet filtering routers
 Screened host firewalls
 Dual-homed firewalls, and
 Screened subnet firewalls (DMZ).

Packet Filtering Routers

This is the simplest implementation of a firewall configuration, and is deployed at the perimeter of
the network having an untrusted (internet connection). The perimeter routers can be configured to
control the passage of packets as per filtering rules defined.

Single Homed Firewalls

This architecture combines the packet filtering router with a separate, dedicated firewall, a Bastion
Host acting as application proxy server. The packet filtering router screens the packets before
allowing the permitted packed to the proxy server, thus reducing the network traffic and load on
the proxy. The application proxy examines an application layer protocol and performs the proxy
services.

Fig: Single Homed Firewall

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Advantages of a Single-homed firewall

 This architecture ensures greater security than a single packet filtering router or an
application level gateway firewall alone:
 Its implementation scheme uses both packet-level and application-level filtering, allowing
for considerable flexibility in defining security policy.
 An intruder has to penetrate two separate systems before the security of the internal
network is compromised.
Limitations
 In this set-up, if the packet filtering router is completely compromised, traffic flows directly
through the router between the internet and other hosts on the private network.

Dual-Homed Host Firewalls

In this approach the bastion host is Dual Homed i.e. contains two NICs: one connected to the
external network, and one connected to the internal network providing an additional layer of
protection by requiring all traffic to go through the Bastion Host to move between the internal and
external networks.

Fig: Dual-homed Firewall

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Screened Subnet Firewalls (with DMZ)

The screened subnet firewall configuration is the most secured environment. It has two packet-
filtering routers, one between the bastion host and the Internet and the other between the bastion
host and the internal network, creating an isolated sub-net. For all incoming traffic, the outside
router (the router facing the internet) directs all the packets to the bastion host. The bastion host
together with the firewall does preliminary filtering and if the packet passes the test, directs the
packet to the less secure or DMZ, the demilitarized zone.
However, where the packet has to travel into the secure network, which is configured as a separate
segment, the inside router along with the second firewall provides a second line of defence,
managing DMZ access to the private network by accepting only traffic originating from the bastion
host. For outgoing traffic, the inside router manages private network access to the DMZ network.
It permits internal systems to access only the bastion host. The filtering rules on the outside router
require use of the proxy services by accepting outgoing traffic only from the bastion host.
It would be observed that in a screened sub-net firewall, the internal network (the private segment)
is highly secured. The external firewall provides a measure of access control and protection for the
DMZ systems consistent with their need for external connectivity.
The advantages of a screened subnet firewall system are explained here.
An intruder must penetrate three separate devices - the outside router, the bastion host, and the
inside router to infiltrate the private network.
 Since the outside router advertises the DMZ network only to the Internet, systems on the
Internet do not have routes to the protected private network. This ensures that the private
network is invisible.
 Since the inside router advertises the DMZ network only to the private network, its
systems do not have direct routes to the Internet. This ensures that inside users access
the Internet via the proxy services residing on the bastion host.
 Packet-filtering routers direct traffic to specific systems on the DMZ network, eliminating
the need for the bastion host to be dual-homed.
 Since the DMZ network is a different network than the private network, a Network Address
Translator (NAT) can be installed on the bastion host to eliminate the need to renumber
or re-subnet the private network.

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Fig: Screened subnet firewall

1.2.5 Limitations of Firewalls

A firewall is a critical component of network security. It is designed to address the issues of data
integrity or traffic authentication and confidentiality of internal network.
The firewalls do have the following limitations:
 A firewall cannot prevent users or attackers with modems from dialling in to or out of the
internal network, thus bypassing the firewall and its protection completely.
 Firewalls cannot enforce password policy or prevent misuse of passwords.
 Firewalls are ineffective against non-technical security risks such as social engineering.

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 Firewalls cannot stop internal users from accessing websites with malicious code.
 Firewall may not have been implemented on a secured Operating system/hardened
system.
 The access list configured in the firewall might not be properly defined, implemented or
adequate.
 Network segmentation might not be as per security requirements of the organisation.
 Firewalls cannot provide complete protection against viruses.
 Monitoring of firewall alerts may be inadequate.

1.2.6 Firewall Product Types

The firewall can be either a stand-alone appliance system or it can be implemented on top of a
commercial operating system. This depends largely upon the organisation’s requirements.

Appliance Based Firewall

The appliances have the firewall software embedded as firmware, making them more secure than
those implemented on top of commercial operating systems as appliance based firewalls do not
suffer from security vulnerabilities associated with underlying operating systems. These firewalls
are faster than firewalls implemented on top of commercial operating systems. However, these
firewalls suffer from the scalability issues.

Software Based Firewall

The main advantage of implementing firewalls on top of commercial operating systems is
scalability. If an environment requires improved performance, it is usually a simple matter to install
a larger system on which to run the firewall software. Most appliances do not offer this level of
flexibility or scalability.
The greatest disadvantage of implementing firewalls on top of commercial operating systems is
the potential presence of vulnerabilities that might undermine the security posture of the firewall
platform itself. In most cases, vulnerabilities in the underlying operating system are the cause of
firewalls’ compromise.

1.2.7 Unified Threat Management

Unified threat management (UTM) is the evolution of the traditional firewall into an all-inclusive
security product able to perform multiple security functions within one single appliance. To meet
new threats the organisations are required to add more security solutions or security appliances.
This poses the problem of increased complexity and cost, as each new technology means a new
device to deploy, a new set of policies to configure, and a new management console to monitor.
And, because each new stand-alone product is not integrated with the existing product set, it also
creates potential blind spots in an organisation’s security strategy, through which threats could
pass undetected.

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How UTM secures the network

A single UTM appliance simplifies security strategy, with just one device taking the place of multiple
layers of hardware and software. Also from one single centralised console, all the security solutions
can be monitored and configured. The UTM has a customised Operating System holding all the
security features at one place. This can lead to better integration and throughput than a collection
of disparate devices.

UTM Functionalities
Following functionalities are normally supported by the UTM.
 Firewall: performs stateful packet inspection
 VPN: enables secure remote access to networks
 Gateway anti-virus: prevents malicious payloads
 Gateway anti-spam: prevents unsolicited messages from entering the network
 Intrusion Prevention: detects and blocks intrusions and certain attacks
 Content filtering: stops access to malicious, inappropriate, or questionable websites and
online content.
 Bandwidth management: enables effective management of Bandwidth.
 Application control: provides visibility and control of application behaviour and content
 Centralised reporting as the basic features.
They can also support data-loss prevention by blocking accidental or intentional loss of confidential,
proprietary, or regulated data. For enterprises with remote networks or distantly located offices,
UTMs are a means to provide centralised security with complete control over their globally
distributed networks.
Key advantages
 Reduced complexity: It is a single security solution integrated together that reduces the
complexity.
 It makes the task of installation of various security products easier. Hence maintenance
and vendor issues become simpler.
 UTM facilitates easy management of the solution. Generally, it works on simple plug and
play architecture. It supports GUI interface for manageability.
 Reduced technical training requirements, one product to learn.
Key Disadvantages
 Becomes a Single point of failure (SPOF) for network traffic. In case of its failure, the
complete network is exposed. The vulnerabilities in the OS or the UTM can make it the
single point of compromise.
 Deployment of UTM may have impact on latency and bandwidth when the UTM cannot
keep up with the traffic

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Regulatory compliance: Identity-based UTMs deliver identity-based reports on individual users in

the network. This offers short audit and reporting cycles and facilitates the meeting of regulatory
compliance requirements in enterprises.

1.2.8 Firewall Life Cycle

The firewall life cycle can be defined in five phases. The firewall life cycle stems from the network
security policy of the organisation. This policy should be maintained and updated frequently as new
attacks or vulnerabilities arise or as the organisation’s needs in terms of network applications
change. Based on the Network Security policy, the firewall policy is developed. This policy should
make the process of creating the firewall rule base less error-prone and more verifiable. The rule
base should be properly mapped to the applications and the access matrix. The next phases relate
to selection of the solution, its implementation, and configuration and patch management. Phases
follow an iterative approach and at each stage the configuration is changed as per changing policy.
Changes are effected as per the documented and approved Change Management policy.

1.2.9 Baseline Configuration for Firewalls

Before deciding upon the baseline configuration for a firewall, a general risk assessment and cost-
benefits analysis should be performed on the network. This would provide a list of the network
applications and the methods that will be used to secure the applications.
In the context of a commercial organisation having offices/users at various locations, a border
router or other firewall should be used at the Internet connection point to create an internal DMZ.
Web servers and other publicly accessible servers should be placed on the DMZ so that these are
accessible as needed and still have some protections from the firewall. Internal users should be
protected with an additional firewall. The default policy for the firewall should be to block all traffic
and connections unless the traffic type and connections have been specifically permitted, as this
approach is more secure. Remote users should be allowed access through a VPN. Firewall should
be configured so that it itself is immune to penetration.

1.3 Summary
Firewall acts as security policy enforcement point for inbound and outbound access to the internal
networks as packets cross network boundaries. This is done by inspecting the data that is received
and tracking the connections that are made to determine what data should be permitted and what
data should be denied. Stateful packet filtering examines packet data with memory of connection
state between hosts. Network Address Translation (NAT) is the addressing method that hides
internal network addresses. Application layer gateways (proxy servers) control how internal
network applications access external networks by setting up proxy services.
For a firewall to be able to successfully protect resources, it is critical to implement a design that
lends itself to protecting those resources in the most efficient manner. From a simple packet filtering
to the screened sub-netting implementations, there are various implementation strategies.
Although a single firewall will do an adequate job of protecting most resources, certain high security
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environments may warrant using multi-firewall architecture to minimize exposure and risk. Like any
other security device firewalls have to be properly configured and monitored.

1.4 References
1. http://csce.uark.edu/~kal/info/private/Networking%20Bookshelf/fire/ch06_01.htm

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AND IDS
Learning Objectives
 To gain understanding of Personal Firewalls
 To gain an understanding on configuring Personal Firewalls
 To understand Intrusion Detection systems
 To understand General Controls in firewalls.

2.1 Introduction
The only way to make a personal computer connected over Internet, 100% secure is to turn it off
or disconnect it from the Internet. The real issue is how to make it secure when it is connected. At
a minimum, home computers need to have personal firewall and a Security suite having Anti-Virus,
Anti spyware etc. In our typical SOHO (Small Office Home Office) Environment, some protection
is needed which is provided by personal firewalls. Good personal firewall software is very important
because it stops unwanted visitors at the front door.

2.2 Personal Firewalls

Personal Firewalls provide the same methods and techniques as a robust enterprise firewall does,
but in a simplified way for the less technically savvy persons. An enterprise firewall has to be
constantly monitored whereas a personal firewall does not need much monitoring. Personal
firewalls are software installed in a user's computer that offers protection against unwanted
intrusion and attacks coming from the Internet. A personal firewall controls network traffic to and
from a computer, permitting or denying communications based on a security policy. Personal
firewalls are available from numerous security vendors, and Windows 7 includes its own firewall.
The main difference in personal and enterprise firewall is scale, whereas personal firewall focusses
on one computer, enterprise firewall’s focus is enterprise network and is generally installed at
perimeter of network. Personal firewall is based on Security policy of a computer whereas
enterprise firewall is based on security policy of the enterprise.

Common Features
 Protecting the computer from unwanted incoming connection attempts.
 Allows the user to control which programs can and cannot access the local network and/or
Internet and provide the user with information about an application that makes a
connection attempt.
 Block or alert the user about outgoing connection attempts.
 Monitor applications that are listening for incoming connections.
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 Monitor and regulate all incoming and outgoing Internet users.

 Prevent unwanted network traffic from locally installed applications.
 Provide information about the destination server with which an application is attempting
to communicate.

Limitations
 Many malwares can compromise the system and manipulate the firewall even to the
extent of shutting of Firewalls. Like Bagle worm that can disable Windows XP Firewall.
(Bagle worm is a Mass-mailing email worm with remote access capabilities).
 These firewalls could cause many false alerts which could irritate non tech savvy users.
 These firewalls could be impacted by vulnerabilities in OS.

2.2.1 Configuration of Personal Firewall in Windows Environment

Choice of Personal firewalls includes using the firewall built into Windows, using a third party
product, choosing an Internet security suite that includes a firewall. We would be discussing
configuration of a Windows 7 Firewall. The Windows 7 Firewall is a stateful, host-based firewall
that filters incoming and outgoing connections based on its configuration. While typical end-user
configuration of Windows Firewall still takes place through the Windows Firewall Control Panel,
advanced configuration now takes place in a Microsoft Management Control (MMC).
We have already understood that there are two types of firewalls - Network Based and Host based.
Windows Firewall with advanced security is a host based firewall; protects a host from unauthorised
access and attack. In addition to blocking unwanted incoming traffic, we can configure Windows
Firewall with Advanced Security to block specific types of outgoing traffic as well. We have already
studied that stateful firewalls operate by inspecting the state of all communications between hosts
and storing connection data in state tables. Windows is a stateful firewall.

Some Windows 7 Firewall features

 Inbound filtering
 Outbound filtering
 Firewall rules combined with IPsec rules
 Support for complex rules
 Support for logging
Network Location-Aware Host Firewall
Windows Firewall with Advanced Security is a network location aware application. Windows 7
identifies and remembers each of the networks to which they connect. Windows 7 stores the
firewall properties based on location types.
Configuration for each location type is called a profile. In each profile we can:
 Enable or disable Windows Firewall
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 Configure inbound and/or outbound connections

 Customize logging and other settings
There are three network location types in Windows Firewall with advanced security
1. Domain – Applicable when the connection is authenticated to a domain controller for the
domain of which it is a member. (Domain is a group of computers whose security is
managed as a unit. Domain Controller makes the security decisions for the computers in
the domain.)
2. Public: For use when in locations such as airports or coffee shops. This is the default
profile.
3. Private: It is a User assigned profile and is used to designate private or home networks.
By default, all other networks are initially classified as public networks. User can identify the
network as either public or private. To classify a network as a private network, the user must have
administrator credentials.
While a computer may be connected to multiple network locations at the same time, only one profile
can be active at a time. The active profile is determined as follows:
 If all interfaces are authenticated to the domain controller for the domain of which the
computer is a member, the domain profile is applied.
 If at least one interface is connected to a private network location and all other interfaces
are either authenticated to the domain controller or are connected to private network
locations, the private profile is applied.
 Otherwise, the public profile is applied.

Configuring Windows 7 Firewall

We can configure a Windows 7 firewall as follows, Windows help is available and can easily be
activated using function key F1
To manually Configure Firewall
 To manually allow a program through the firewall, open the Control Panel from the Start
menu.
 Select System and Security, and then select Windows Firewall.
 Click Allow a program or feature through Windows Firewall in the left column of the
window.

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 On the left pane, we can see various links like, Change notification settings, Turn
Windows Firewall on or off, Restore defaults and advanced settings etc.
 On the right pane, there are two types of networks link for which we can set firewall
settings. They are Home or Work (Private) networks and Public networks.
 By default the Firewall state is ON for both the networks.
 Click the Change Notification settings button in the Allowed Programs window.

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 Select the program or feature and whether we want to open it up to home/work (private),
public, or both for all networks.
 Click OK to save our changes.

Overview of Advanced Configuration Settings

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 Go to Control Panel > System and Security > Windows firewall

 On the left pane, Click on the Advance Settings link to view or change settings. The
Advanced settings for the Local Computer displays as below:

 We can see the options of Inbound Rules, Outbound Rules, Connection Security Rules
and Monitoring.
 Click on the Inbound Rules link in the left pane. A list of all Inbound Rules is displayed.
 On clicking an enabled rule, lists of actions are shown in the Actions Pane. Click on
Disable Rule to disable the selected rule. We can also Cut, Copy and Delete the rule.

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 The same procedure is applicable for enabling/disabling outbound rules.

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We can see the properties of a rule. In the following depicts, we see details of the rule allowing
Skype in our system.

Click Monitoring in the left pane to monitor the settings like Active Networks, Firewall State, General
Settings and Logging settings etc.

Create a rule to enable services.

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We can also create a rule. Create rule type:

 Click Advanced settings.
 Select Inbound Rules in the left column.
 Select New Rule on the right side of the window.

The new rule could be based on Program, Port, Predefined or Custom.

We will build a Custom rule: First it asks if it will apply to any specific Program or all Programs, we
select the appropriate option.

Then the wizard asks for parameters for three parts of header Type i.e. TCP etc., Local Port,
Remote Port.

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The wizard now requires parameters for two remaining parts of packet header, i.e. Local and
Remote IP addresses.

Based on the criteria stated, Action to be taken can, now be defined. Apart from allowing and
blocking the connection, we can make access rule based on Authentication mechanism.

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After specifying the rule, we can specify when this rule will apply i.e. based on Location.

Windows firewall thus has many features for advanced setup and is configurable according to our
needs.

2.2.2 General Controls Associated With Firewalls

A firewall is the first level of security at the perimeter of a network. A compromise of the firewall
can open the network to numerous exposures. As such, it is necessary that the controls associated
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with firewall implementation must be understood and followed properly. The general controls
associated with firewalls can be classified as,
 Physical Security Controls: The organisations are required to devise, implement and
periodically review policies related to the physical security of all network components, viz. the
servers, the devices, appliances etc.
 Operating System Security: A firewall, to be secure, has to be implemented on hardened
vulnerability free operating system. The OS patches must be examined and applied without
delay.
 Configuration of firewall policy: The firewall must be configured as per the organisation
policy for allowing/denying traffic both in-bound and out-bound.
 Change Control procedures: The access rules must be implemented as per the access
criteria defined in the firewall policy of the organisation. The configuration must be reviewed/
updated from time to time.
 Documentation: Network diagram and configuration must be documented and updated as
per changes. The documentation must be thoroughly examined to identify any lapses and
vulnerabilities.
 Log Monitoring: Log generation facility must be enabled and these logs/alerts must be
monitored as a part of regular activity. Attempted violations of the access criteria or the
vulnerabilities indicated in these logs should be examined promptly for remedial action.

2.2.3 Pitfalls with Firewalls

Problems faced by organisations where firewalls are implemented could be:
 Firewalls are not clearly understood
 Firewalls are not configured properly
 Activities are not monitored regularly
 Firewalls are circumvented through the use of modems
 If the hackers are inside a corporate network, their action cannot be controlled

2.3 Intrusion Detection Systems (IDS)

Firewalls are a preventive control, which prevent any attack from outside, but what if the enemy is
inside and many attacks are from inside. Another layer of control we use for monitoring traffic and
events inside our network are Intrusion Detection Systems (IDS), as the name suggests it is a
detective control. In simple words, IDS is more like an alarm system in the house, which will alert
us when somebody intrude our house, IDS will alarm us when there are intruders in our computer
(host) or across our network.
IDS monitors network traffic and host logs for signs of intrusion and by providing Alerts bring
potential intrusions to the attention of administrators. It only monitors and lets us know when an
event has happened, but does not itself reacts. It has no ability to prevent any intrusions. However,
nowadays, there is Intrusion Detection and Prevention System (IDPS) in the market which have

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the ability to prevent the intrusion. IDS can detect network scans, packet-spoofing, Denial of
Service (DoS), unauthorised attempts to connect to services and improper activity on a system.

Types of IDS
There are two types of IDS which are explained below.
1. Network Intrusion Detection Systems (NIDS): NIDS are placed at various choke points, i.e.
Routers, Switches etc. within the network and they monitor all traffic to and from devices on
the network. Sensors capture all network traffic and analyze the content of individual packets
for malicious traffic. These do not create much system overhead. Some possible downsides
to network-based IDS include encrypted packet payloads and high-speed networks, both of
which inhibit the effectiveness of packet analysis.
2. Host Intrusion Detection Systems HIDS: HIDS are implemented on individual hosts or
devices on the network. It monitors all packets to and from the host only and alerts the
administrator if suspicious activity is detected. It monitors who accessed what. Downside is
that it has to be implemented on individual hosts so there is greater deployment and
maintenance cost.

Detection Methodologies
Detection methods which an IDS can use could be:
 Signature Based
A signature based IDS monitors packets on the network and compares them against large
databases of attack signatures. This is just like most antivirus software detects malware. The
downside is that it could fail against new attacks, because there won’t be a history or signature.

There will always be a lag between new attack being discovered and its signature added to
database; during this lag IDS will not be able to detect the new threat.

 Statistical Anomaly Based(Behaviour Based)

Behaviour-based intrusion-detection techniques assume that an intrusion can be detected by
observing a deviation from the normal or expected behaviour of the system or the users. An
IDS which is anomaly based will monitor network traffic and compare it against an established
baseline. The baseline will identify what is “normal” for that network- what sort of bandwidth is
generally used, what protocols are used, what ports and devices generally connect to each
other- and alert the administrator or user when traffic is detected which is anomalous, or
significantly different, than the baseline.
The advantages of behaviour-based approaches are that they can detect attempts to exploit
new and unforeseen Vulnerabilities. The downside is large number of false positives.
An Intrusion Detection system is only as good as the monitoring which happens, because it only
issues alerts, reacting to those alerts is the task of administrator.

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2.4 Summary
Personal Firewalls are an effective means of protecting personal computers and hosts. Apart from
many vendor products windows 7 has a configurable firewall, which offers lot of configuration
options. A firewall is like a doorkeeper protecting attacks from outside but hacker could already be
inside the system. To prevent these attacks we have Intrusion Detection Systems to provide alerts
while monitoring traffic and events.

2.5 References
 http://www.giac.org/paper/gsec/1377/host-vs-network-based-intrusion-detection-
systems/102574
 https://www.ischool.utexas.edu/~netsec/ids.html

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 PART 3: CRYPTOGRAPHY AND PKI
Learning Objectives
 To gain understanding of cryptography including need and types
 To understand digital signatures
 To gain an overview of Public Key Infrastructure
 To understand Cryptanalysis

3.1 Introduction
Cryptology is the science of hiding and Cryptography means the practice and study of hiding
information. Cryptography is the theory and practice of secure communication. It is the process of
transforming data into something that cannot be understood without some additional information.
It has been used since ages in military communications and purpose was, should the message fall
into the hands of unintended person, he should not be able to decipher the contents of message.
These days, in any network particularly the internet, systems are communicating over untrusted
medium, and cryptography becomes necessary. It provides mechanisms for authenticating users
on a network, ensuring the integrity of transmitted information and preventing users from
repudiating (i.e. rejecting ownership of) their transmitted messages.

3.2 Cryptography
Cryptography is the art of protecting information by transforming it into unintelligible form and the
process is called encryption. Many schemes used for encryption constitute the area of
Cryptography. These are called Cryptographic Systems or Ciphers. Techniques used for
deciphering a message without knowledge of enciphering details constitute cryptanalysis. A
cryptanalyst is one who analyses cryptographic mechanisms and decodes messages without
knowledge of the key employed in encryption. Most of Cryptanalyst are deployed in areas like
Military etc.

3.2.1 Need for Cryptography

Cryptography has gained prominence because of the need to safeguard information from falling
into wrong hands. It provides solutions to problems of protecting data and identity with regard to
data in transit. Some key issues to be addressed for all communications taking place over network
relate to:
 Confidentiality
 Integrity
 Authentication
 Non-repudiation
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Cryptography helps in addresses confidentiality related issues. Cryptography when used as an

element of PKI also addresses Integrity, Authentication and non-repudiation related issues.

3.2.2 Objectives of Cryptographic Systems

The main goals of any Cryptographic System are to ensure following in electronic communication:
 Authentication: The process of proving one’s identity. The system provides facilities to the
recipient of a message to convince him that the message he has received has originated only
from the sender and not from any unauthorised person.
 Privacy or Confidentiality: Ensuring that no one can read the message except the intended
receiver. Whatever is communicated between two parties should be known only to them. No
unauthorised person should get to know about it.
 Integrity: Assuring the receiver that the received message has not been altered in any way.
The system should provide facilities to the recipient that the message he has received has not
been altered.
 Non-Repudiation: A mechanism to prove that the sender really sent this message. The
system should provide facilities to the recipient to convince him that the message he has
received has originated only from the sender, and the sender at a later point of time does not
repudiate the same.

3.2.3 Elements of Cryptography

The following are the basic elements about messages and encryption.
 Any message that is intelligible is termed plaintext, also called as Cleartext.
 Encryption is the process of converting the given plaintext into a scrambled form.
 The encrypted message that is unintelligible is called Ciphertext.
 The process of turning cipher text back into plaintext is called Decryption.
To convert any plaintext into ciphertext we need an Algorithm (in plain speak some mathematical
formula or function) and Keys.
A Cryptographic Algorithm, also called a Cipher, is the mathematical function used for encryption
and decryption. This is used for two functions: one for encryption and the other for decryption. A
cryptographic algorithm must be easy to use, but extremely difficult to crack.
Keys are additional secret data which has to be Input to the algorithm for encryption or decryption.
These keys prevent the message from being decoded—even if the algorithm is publicly known.
Key must be long enough to break but short enough to use and transmit.
Example: Julius Caesar used a technique called Caesar cipher to transmit message to his army. It
was actually shift by 3 rule wherein alphabet A is replaced by D, B is replaced by E, and so on.
That means you can encrypt the message using a formula Original Letter +3= Encrypted Letter. In
this case the formula is Algorithm, but the formula will operate with a key which in this case is 3,
we change the key and result changes. To decrypt we need the algorithm and the key.

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Cryptography not only protects data from theft or alteration, but also ensures its authentication.
There are, in general, three types of cryptographic schemes to accomplish these goals:
Secret Key or Symmetric Cryptography (SKC): Uses a single key for both encryption and
decryption.
Public Key or Asymmetric Cryptography (PKC): Uses one key for encryption and another for
decryption.
Message Hash Functions: Reduce a message of variable length to a fixed and usually much
shorter length.

3.2.4 Symmetric Key Cryptography

In Symmetric Key Cryptography, the sender uses the key (and some set of rules) to encrypt the
plaintext and sends the ciphertext to the receiver. The receiver applies the same key (and rule set)
to decrypt the message and recover the plaintext. Because a single key is used for both functions,
this cryptography is also called Symmetric Encryption.
The key must be known to both the sender and the receiver; that, in fact, is the secret, but the
difficulty with this system is the distribution of the key.
DES (Digital Encryption Standard) one of the most used Symmetric Key Algorithm which was
adopted by NIST (National Institute for Standards and Technology) used a 56 bit key i.e. it had 2 56
keys, which with brute force are difficult to crack, but due to advances in technology, current NIST
standard is AES (Advanced Encryption Standard) that uses a stronger key size of 128, 192 and
256 bits. Increase in number of bits increases the strength because the number of possible keys
increases.

Symmetric Key Cryptography (using the same key)

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3.2.5 Asymmetric or Public Key Cryptography

In symmetric key encryption system, a single key is used for both encryption and decryption. The
main problem in this method is that the sender and receiver must agree on the symmetric key
without anyone else finding out and the difficulty of sending the key to the recipient in a safe and
secured manner. Such a process of generation, transmission and storage of keys is termed as Key
Management. Where the number of users is more, the problem becomes huge.
Asymmetric Encryption uses a pair of keys generated in such a way that one key is used for
encryption and another for decryption. It does not matter which key is applied first, but both keys
are required. Since a pair of keys is used in this approach, the mechanism is also called asymmetric
cryptography. In this concept, each person gets a pair of keys, one called the public key and the
other called the private key. The public key of the individual is in public domain, while the private
key is never revealed. But, this process of encryption and decryption is thousands of times slower
than symmetric encryption.

Asymmetric Cryptography by using different keys

In this case if Ram sends a message to Rahim encrypted with Key 1 then Rahim can only decrypt
it using Key 2, the message can in no way be decrypted with Key 1.
This Asymmetric Encryption approach is used mainly for exchange of Symmetric Keys and Digital
Signatures.

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For example: RSA: The first, and still the most common PKC implementation, named after the
three MIT mathematicians who developed it - Ronald Rivest, Adi Shamir, and Leonard Adleman in
1977. RSA today is used in hundreds of software products and can be used for key exchange,
digital signatures, or encryption of small blocks of data. Key size used these days is 2048 bit i.e.
22048 Possible keys.
Comparison between Symmetric and Asymmetric Key Encryption Algorithms

Symmetric Key / Private Key Encryption Asymmetric Key / Public Key Encryption

Key Size is generally small as compared to Key Size is generally large when compared to
public key encryption private key encryption

Works fast Slow compared to symmetric key

Consumes less computer resources Uses more computer resources compared to

symmetric key method

Less secure when compared to Increased security because private keys are
asymmetric method because of key never revealed to anyone
management problem

Not intended for authentication Provides facilities for authentication through

digital signatures.

Efficient for encryption Provides facilities for efficient digital signatures

and key management through PKI

3.2.6 Message Hash Functions

Message Hash, also called Message Digests and One-way hash functions, are algorithms that, in
some sense, use no key. Instead, a fixed length hash value is computed based upon the plaintext
that makes it impossible to recover either the contents or length of the plaintext. The main purpose
of Hash function or message digest is Message integrity, since at receiver’s end Hash is
recalculated, if they match that ensures that message has not been altered during transmission.
For example: Secure Hash Algorithm (SHA): Algorithm for NIST’s Secure Hash Standard (SHS).
SHA-1 produces a 160-bit hash value.

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3.3 Digital Signatures

We are living in a digital world, where communications are happening on networks with the help of
computers. There comes the importance of trusted communication. A trusted communication
should have these attributes of trust:
 Confidentiality: Privacy from third person
 Integrity: Change in message during transit should be detected
 Authenticity: Identity of sender should be detected
 Non-repudiation: Denial by sender should not be possible
 Access Control: Only give the keys to those authorised to use.
Some of these attributes of trust are provided by digital signature. Digital signature may be defined
as a data string dependent on some secret known only to the signer, and additionally, on the
content of the message. The process involves use of Asymmetric Keys and Hash.
Taking the above example of communication from Ram to Rahim the process would be:
 Ram subjects the message to a hash function to obtain a message digest.
 Encrypts the message digest by using his private key (Sender’s Private Key). The
outcome is called the digital signature of the sender (digitally signs the message digest).
 Attaches the encrypted message digest (digital signature) to the message and sends it to
Rahim.
 Upon receiving the message and the encrypted message digest, Rahim decrypts the
encrypted message digest using Ram’s (Sender’s) public key and obtains the message
digest.
 Rahim subjects the message to the hash function and obtains a message digest.
 He then compares the computed message digest with the message digest he has
received from Ram (derived by decrypting the digital signature of Ram). If both of them
are same, the integrity of the message is established. If the integrity is suspect, then
Rahim can ask Ram to resend the message.

In this example the digital signatures have served the purpose of

 Authentication (establishing the identity of the person who has signed it);
 Integrity (that the document that has been signed is unchanged); and
 Non-repudiation (that the person who has signed it can't deny it later).

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3.4 Public Key Infrastructure (PKI)

Digital signatures achieved the objectives of authentication, integrity and non-repudiation (through
PKI or trusted third party), but two more objectives required for secure communication are
confidentiality and access control. These are achieved through Digital Envelopes and Public Key
Infrastructure (PKI).
Digital Envelope is an encrypted message that uses both secret key and public key cryptography
methods. A secret key is used to encrypt and decrypt the message, but the public key method is
used to send the secret key to the other party.

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PKI is a comprehensive system that provides public-key encryption and digital signature services
to ensure confidentiality, access control, data integrity, authentication and non-repudiation. So the
basic purpose of PKI is to help in maintaining the attributes of trust in any electronic transaction.
Today we are increasingly using electronic communication over internet for all forms of
transactions, from E- Commerce to E-Filing of documents. In all these transactions the
requirements are:
 Identify of users accessing sensitive information? (Authentication)
 Control who accesses information (Access Control)
 Be sure communication is private but carried over the Internet? (Privacy-Confidentiality)
 Ensure data has not been tampered with? (Integrity)
 Provide a digital method of signing information and transactions? (Non-repudiation)

3.4.1 Elements of PKI

Elements of PKI include:
 Public/private key pair –Asymmetric Keys
 Digital certificate-Contains identity and verification information
 Certificate authority-Trusted Third Parties (TTP) to verify and vouch for the identities of
entities in the electronic environment
 LDAP directory-Store certificates and publicly required information so applications can
retrieve them on behalf of users.
 Authentication device- to store the private key.
 In addition Time stamping, Cross certification, Arbitration mechanism, Verification
certificate, CRL, CPS are also part of PKI.
Let’s look at a typical trusted communication using PKI.
To explain this method, let us go back to the example of Ram trying to send a confidential message
to Rahim.
1. Ram subjects the message to a hashing function. The result is the message digest.
2. The message digest is then encrypted (signed) using the private key of Ram (Sender)
(the result is the digital signature), and attaches the encrypted message digest to the
message.
3. The plain-text signed message is encrypted using a randomly generated symmetric key
(encryption of the message). This key is independent of the private and public keys.
4. The symmetric key used for encryption is encrypted using the Public asymmetric key of
Rahim (Receiver). (Encryption of the key).
5. Then Encrypted Signed message and encrypted key (i.e. Electronic Envelope) are sent
to the receiver (Rahim).
6. On receipt of the above, Rahim first decrypts the encrypted symmetric key using his
(Receiver’s) private key (decryption of the key) and obtains the symmetric key.
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7. He uses the symmetric key so obtained to decrypt the Signed message to get the plain
text (decryption of the message).
8. He then uses Ram’s (Sender’s) public key to decrypt the digital signature (i.e. encrypted
message digest (decryption of the message digest).
9. The plain-text so obtained in step No.7 is subjected to the hash function and the message
digests are compared. If they are the same, the message is accepted. .
10. Hence he achieves message integrity, identity authentication, non-repudiation and
confidentiality.
At the senders end

At the receivers end:

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3.4.2 Digital Certificates

A Digital Certificate is a digitally signed document that associates a public key with a user. The
certificate can be used to verify that a public key belongs to an individual. In a typical public key
infrastructure (PKI) scheme, the signature will be of a certifying/ certification authority (CA). The
signatures on a certificate are attestations by the certificate signer that the identity information and
the public key belong together.
Contents of a Typical Digital Certificate
 Serial Number: Used to uniquely identify the certificate.
 Subject: The person or entity identified.
 Signature: The algorithm used to create the signature.
 Issuer: The entity that verified the information and issued the certificate.
 Valid-From: The date from which the certificate is valid.
 Valid-To: The expiration date.
 Public Key: The public key to encrypt a message to the named subject.
 Thumbprint Algorithm: The algorithm used to hash the certificate.
 Thumbprint: The hash itself to ensure that the certificate has not been tampered with.

3.4.3 Certifying Authority (CA)

Certifying Authorities are Trusted Third Parties (TTP) to verify and vouch for the identities of entities
in the electronic environment. The trust in the CA is the foundation of trust in the certificate as a
valid credential. In India, the IT Act (Information Technology Act) provides for the Controller of
Certifying Authorities (CCA), the body under Ministry of Communications and Information
Technology to license and regulate the working of Certifying Authorities and also to ensure that
none of the provisions of the IT Act are violated.
The main role of Certifying authority is to digitally sign and publish the public key bound to a given
user. Certifying Authority does this using its own private key. This brings a chain of trust i.e. trust
in user’s key relies on the trust in CA’s key. Some Roles and responsibilities of CA include:
 Establish Certificate Practice Statement (CPS) and Certificate Policies
 Verification of registration, suspension and revocation request
 Generation, issuance, suspension and revocation of digital certificates
 Publication and archival of certificates, suspension and revocation information
 Key management
 Compliance with security standards
 Utilisation of trustworthy systems in performing its services

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3.4.4 Registration Authority (RA)

A registration authority (RA) acts as the verifier for the certificate authority before a digital certificate
is issued to a subscriber. The registration process begins with RA, who authenticates identity of a
person based on which CA will issue Digital Certificate. Registration Authority (RA) interacts with
the subscribers for providing CA services. The RA is subsumed in the CA, which takes total
responsibility for all actions of the RA.

3.4.5 Certificate Revocation List (CRL)

CRL is a list of certificates (or more specifically, a list of serial numbers for certificates) that have
been revoked, and therefore entities presenting those certificates should no longer be trusted. The
list enumerates revoked certificates along with the reason(s) for revocation. The dates of certificate
issue, and the entities that issued them, are also included. The CRL file is itself signed by the CA
to prevent tampering. The CRL is always issued by the CA that issues the corresponding
certificates. When a potential user attempts to access a server, the server allows or denies access
based on the CRL entry for that particular user.

3.4.6 Certification Practice Statement

CPS (Certification Practice Statement): A statement of the practices, which a certification authority
employs in issuing and managing certificates. A CPS may take the form of a declaration by the CA
of the details of its trustworthy systems and the practices it employs in its operations and in support
of issuance of a certificate.
A CPS might include the following types of information:
 Certificate policies that are implemented by the CA and the certificate types that are issued
 Policies, procedures, and processes for issuing, renewing, and recovering certificates
 Cryptographic algorithms, cryptographic service providers (CSPs), and the key length that is
used for the CA certificate
 Physical, network, and procedural security for the CA
 The certificate lifetime of each certificate that is issued by the CA
 Policies for revoking certificates, including conditions for certificate revocation, such as
employee termination and misuse of security privileges
 Policies for certificate revocation lists (CRLs), including where to locate CRL distribution points
and how often CRLs are published
 A policy for renewing the CA's certificate before it expires.

3.4.7 Key Storage and Security

Key management includes dealing with the generation, exchange, storage, use, and replacement
of keys.

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Key storage and security is a huge challenge for any Certifying Authority and one of the biggest
challenges is CAs root private key, because compromise of a CA private key would allow cyber
criminals to start forging their own trusted certificates. Some of the measures adopted by CAs for
key management include:
 CA key is stored in a Hardware Security Module (HSM).
 The machines are locked and stored in steel vaults and all with heavy physical security.
 The HSM will log all signatures.
 The machine is under 24/7 video surveillance, with off-site recording.
For Public key of subscribers, Key repositories are used to store certificates and publicly required
information, so applications can retrieve them on behalf of users. LDAP (Lightweight Directory
Access Protocol) is one of the protocols used to access these repositories.

3.5 Cryptanalysis
Cryptanalysis mainly deals with methods of recovering the plaintext from ciphertext without using
the key. In other words, it is defined as the study of methods for obtaining the meaning of encrypted
information, without access to the secret information which is normally required to do so. It also
deals with identifying weakness in a cryptosystem. Cryptanalysis is also used to refer to any
attempt to circumvent the security of other types of cryptographic algorithms and protocols, and
not just encryption. There are many types of cryptanalytic attacks. The basic assumption is that
the cryptanalyst has complete knowledge of the encryption algorithm used.
For example Known-plaintext attack: In this case the cryptanalyst has access to not only the
ciphertext of several messages, but also to the plaintext of those messages. Using the ciphertext
and its corresponding plaintext, he deduces the key used to encrypt the messages.

3.6 Summary
Cryptography or the science and art of coding messages provide us a method to transmit
messages over open networks, like internet and still achieve the objectives of confidentiality,
integrity, authenticity and non-repudiation. Digital certificates provide a means to digitally sign the
message. PKI affords us the infrastructure to manage the Asymmetric keys, and a means of
certifying the authenticity of holder of key.

3.7 References
 http://www.garykessler.net/library/crypto.html
 http://en.wikibooks.org/wiki/Cryptography
 http://resources.infosecinstitute.com/role-of-cryptography/
 http://www.di-mgt.com.au/rsa_alg.html#simpleexample

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SYSTEMS
Learning Objectives
 To understand uses of cryptographic Systems
 To gain an overview of SSL/ TLS
 To gain an overview of cryptographic systems like IPSec, SSH, SET
 To gain an overview of generic Enterprise Network Architecture in a Bank.
 To understand risks and controls in Enterprise Network
 To understand auditing network security

4.1 Introduction
The need to send sensitive information over the Internet is increasing, and so is the necessity to
secure information in transit through the Internet as also Intranets. Cryptography is used for
securing transmission of messages, protection of data, authentication of sender and to provide
privacy and security in any situation where information is not intended for public.

4.2 Uses of Cryptographic Systems

Cryptographic systems are techniques which use one or more forms of cryptography and/or PKI to
secure electronic transmissions from threats relating to confidentiality, integrity, authentication and
non-repudiation. Ram and Rahim want to talk to each other, or Ram wants to log on to Rahim’s
website. But they're worried about security issues like:
 How do we know we're talking to the right person?
 How do we know people can't listen to our conversation?
 How do we know people can't change our conversation?
A system is needed that protects against these security concerns. To resolve these problems, we
have many applications of cryptographic systems like:
 Secure Socket Layer/Transport Layer Security
 Secure Hyper Text Transfer Protocol (HTTPS)
 IPsec
 SSH
 Secure Electronic Transaction
 Secure Multipurpose Internet Mail Extension (SMIME)
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4.2.1 Secure Socket Layer (SSL) / Transport Layer Security (TLS)

The Secure Socket Layer (SSL) and Transport Layer Security (TLS) is the most widely deployed
security protocol used today. SSL was first developed by Netscape and subsequently became
Internet standard known as TLS (Transport Layer Security).The main differences between SSL
and TLS are technical in terms of the generation of key material.
SSL/TLS are essentially protocols that provide a secure channel between two machines operating
over the Internet or an internal network. In today’s Internet focused world, the SSL protocol is
typically used when a web browser has to securely connect to a web server over the inherently
insecure Internet. SSL allows sensitive information such as credit card numbers, social security
numbers, and login credentials to be transmitted securely.
Any program using TCP can be modified to use SSL connection. SSL is flexible in choice of
symmetric encryption, message digest, and authentication mechanism that can be used. SSL
provides built in data compression.
The Process involved is:
1
2 11 1
3
4
1
5 1

1
Web Server
Web Browser

1. Browser connects to a web server (website) secured with SSL. Browser requests that the
server identify itself.
2. Server sends a copy of its SSL Certificate, including the server’s public key.
3. Browser checks the certificate root against a list of trusted CAs and to verify that the
certificate is unexpired, unrevoked, and that its common name is valid for the website that
it is connecting to. If the browser trusts the certificate, it creates, encrypts, and sends back
a symmetric session key using the server’s public key.
4. Server decrypts the symmetric session key using its private key and sends back an
acknowledgement encrypted with the session key to start the encrypted session.
5. Server and Browser now encrypt all transmitted data with the session key.
Technically, SSL is a transparent protocol which requires little interaction from the end user when
establishing a secure session. In the case of a browser for instance, users are alerted to the
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presence of SSL when the browser displays a padlock. This is the key to the success of SSL – it
is an incredibly simple experience for end users.

Almost any service on the Internet can be protected with SSL. SSL is being used for
 Secure online credit card transactions.
 Secure system logins and any sensitive information exchanged online e.g. secure Internet
Banking session
 Secure cloud-based computing platforms.
 Secure the connection between E-mail Client and E-mail Server.
 Secure the transfer of files over https and FTP(s) services.
 Secure intranet based traffic such as internal networks, file sharing, extranets, and
database connections.

4.2.2 Hyper Text Transfer Protocol Secure (Https)

As the use of web based content and applications grow, many of them mission critical and
confidential, the enterprises face mounting challenges to protect these web sites as well to provide
access to it in a secured mode. This is enabled through the use of an encrypted transport
mechanism, HTTPS. The secure access is required for applications ranging from database, ERP,
and finance to collaboration software, such as SharePoint and WebEx.
Hyper Text Transfer Protocol over Secure Sockets Layer (HTTPS) is a secure version of the Hyper
Text Transfer Protocol (http). It provides an encrypted transmission session between a Web Server
and a Browser Client. HTTPS allows secure ecommerce transactions, such as online banking.
Secure HTTPS URLs begin with "https://" and uses port 443 by default.
Server verification is accomplished by providing web servers with a digitally signed certificate from
a trusted Certificate Authority (CA) and then presented to the end user. Similarly, user
authentication is also provided by allocating digitally signed certificates to each user, and is
presented only when mutual authentication is required.

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One of the limitations of HTTPS is that it slows down the web services.

4.2.3 Internet Protocol Security (IPSEC)

Virtual Private Networks (VPN)
VPNs connect private networks through untrusted networks like the Internet; they establish a tunnel
and use strong encryption to provide privacy and strong authentication to guarantee identity, so
they are more secure than traditional networks. The VPN can link two networks or two individual
systems. It can link clients, servers, routers, firewalls, and switches. The individual networks could
be private networks or the Internet. VPN provides confidentiality and integrity over insecure or
untrusted intermediate networks. IPsec enables VPN and creates a virtual tunnel with encryption
to ensure secure communication.
IPSec
IPsec is encryption at IP (network layer); it protects any application data across IP Network. That
is the reason applications need not be specifically designed for use of IPsec. IPsec is a framework
for a set of protocols for security. IPsec is useful for implementing virtual private networks and for
remote user access through dial-up connection to private networks. A big advantage of IPsec is
that security arrangements can be handled without requiring changes to individual user computers.
IPsec is implemented at end routers/firewalls.

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Goals of IPSec are:

 To verify sources of IP packets--authentication
 To protect integrity and/or confidentiality of packets--data Integrity/Data Encryption
IPsec operates in two modes:
 Transport mode (for end-to-end) provides secure connection between two end points. In
this mode data is encrypted but the header of the packet is not encrypted
 Tunnel mode (for VPN): With tunnel mode, the entire IP packet is encrypted and a new
header is added to the packet for transmission through the VPN tunnel.

4.2.4 Secure Shell (SSH)

SSH is an end-to-end encryption technique. SSH is a protocol for secure remote login and to
execute commands over an insecure network.
When we sit at a computer, everything we type goes directly to the shell. Whenever logging to a
remote host telnet goes across the network to simulate the same thing. Whatever we type is picked
up, sent across the network, and sent to the shell on the remote machine. But Telnet is plaintext,
so anyone watching the network will see exactly what we type, including things that we don't even
see on the screen (like passwords).
SSH has the same basic concept as Telnet, it takes what we type and sends it across the network
to a shell on the remote computer. SSH is encrypted.
Secure Shell, SSH, is Telnet + SSL + other features.
SSH is usually used for UNIX systems and encrypts the commands getting transmitted. It works in
a client server mode and both ends of the client/server connection are authenticated using digital
certificates.

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4.2.5 Secure Electronic Transaction (SET)

SET was originally developed by Master and Visa cards for secured electronic transactions. SET
uses a system of Dual Signature. Purpose of the dual signature is to link two messages that are
intended for two different recipients. In this case, the customer wants to send the order information
(OI) to the merchant and the payment information (PI) to the bank. The merchant does not need to
know the customer's credit-card number, and the bank does not need to know the details of the
customer's order. The customer is afforded extra protection in terms of privacy by keeping these
two items separate. However, the two items must be linked in a way that can be used to resolve
disputes if necessary. The link is needed so that the customer can prove that this payment is
intended for this order and not for some other goods or service.
SET uses combination of RSA public key cryptography and DES private key cryptography and
digital certificates to secure electronic transactions. SET provides a secure communications
channel among all the parties involved in a transaction: Customer, Seller, Customer’s credit
provider, Seller’s bank. It provides trust by the use of X.509v3 certificates.
The SET process
1. Customer opens account with Credit Company or bank.
2. Bank issues Certificate to the Customer with RSA Keys.
3. Merchant has two certificates, signing and key exchange.
4. Customer places an order.
5. The Merchant sends the customer his public key and a copy of his certificate so that the
customer can verify that it's a valid store.
6. The Customer sends Order Information (OI) encrypted with Merchant’s public key so the
Merchant can read it, and Payment Information (PI) encrypted with Payment Gateway’s
Public Key so the Merchant cannot read it.
7. Merchant requests payment by sending PI to the “Payment Gateway” (who can decrypt
it) and verifies Customer’s credit.
8. Merchant confirms the order to the Customer.
9. Merchant ships goods to Customer.
10. Merchant sends request for payment to the Payment Gateway which handles transfer of
funds.
The Dual signature allows proof that:
 Merchant has received Order Information (OI).
 Bank has received Payment Information (PI) and verified the Customer Digital signature.
 Customer has linked OI and PI and can prove later that PI was not related to a different
purchase.

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4.2.6 Secure Multipurpose Internet Mail Extension (SMIME)

A conventional email message suffers various security issues, we cannot be sure that the sender
is who they claim to be; or that the message text has not been tampered with. Email text itself is
not generally encrypted, meaning that if someone hacks access to our inbox, they can view our
messages. S/MIME (Secure Multi-Purpose Internet Mail Extensions) is a secure method of sending
e-mail and attachments that uses the RSA encryption system.
The S/MIME standard is based on public-key cryptography. In this specification, an individual user
owns a digital certificate which contains a public key and a private key. The private key is held only
by its owner; the public key is shared with contacts. With the keys in place, we can use our email
client to attach a digital signature to outgoing emails, or to encrypt the content of an email, or both.
In Outlook Go to Message > Option > other options> Properties> Security Settings
In security settings, we have the option to add digital signatures which can be done through Change
settings and choosing a digital signature.

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4.3 Generic Enterprise-Wide Network Architecture in a Bank

The networking technologies have provided a platform to the banks to develop customer-centric
products and services. The absorption of technology has been a major differentiator among the
banks in positioning them as market leaders in meeting customer aspirations. Banks have been
toying with different deployment models of networking to work as an enabler for service delivery.
Any organisation-wide technology deployment strategy will depend upon the following factors
1. Business focus – the services, the committed delivery time and the point of service delivery.
In the case of a bank, the services would comprise of front end services supported with back-
end processes.
Front End Services
 Retail Banking Services,
 Portfolio Management and Investment Services
 Insurance Products
 Cash Management Services
 Foreign Trade Services.
Back-end processes - Reconciliation, Customer account management, clearing and
settlements, Treasury operations, Loans origination and sanction etc.

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2. Risk Management Requirements – Technological processes should adequately protect the

bank from
 Operational Risk
 Systemic Risk
 Credit Risk
 Liquidity Risk
 Market Risk etc.
3. Governance and Compliance requirements – Systems should meet regulatory
requirements pertaining to
 Financial Control
 Audit
 Reporting
The applications which are not a part of Core Banking solution are integrated to it. Once a network
is in place, it is also used for other products and services, like
 Hosting Web portal, Intranet portal, email services etc.
 Data Warehouse, HRM, CRM solutions etc.
 Bill payments, transacting govt. business etc.,
The network is also used for Mobile Banking, SMS delivery, Phone Banking, etc. which need to be
well integrated providing a seamless experience to customers of different segments and lines of
business. The network architectural design has to be such that from technology perspective – the
availability, scalability, resiliency and survivability issues are properly addressed. The network
should also deliver, as per the management commitments, well-performing applications and
services amongst varying network conditions and costs.
Layers of network architecture in a Bank: The architecture of an enterprise wide network in a
bank would have the following layers,
I. The WAN Network Topology
There are broad two types of WAN topologies,
(1) Centralised Aggregation of Network Traffic - All branches’ network connections converge
directly at the Data Centre/DR Centre.
(2) Decentralised Aggregation of Network Traffic - The branches’ network connections
converge at regional aggregation points and these intermediate aggregation points
converge at the DC and the DRC.

In view of difficulty in managing the de-centralised environment, most of the banks prefer the
centralised approach. As the networks are now being used more and more for data, voice and
video, the MPLS (multi-protocol label switching) technology supported networks set up by various
service providers are extensively being used as the back-bone. MPLS has the advantage of

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providing high availability, economics of scale and flexibility of implementing QoS (Quality of
Service) for managing different types of traffic.
The back-bone is provided by the service provider which is usually optical fiber with redundant
routes. These are central conduits designed to transfer network traffic at high speeds, and are
designed to maximize the reliability and performance of large-scale, long-distance data
communications.
The last mile primary links, in most cases, are the leased lines backed up with secondary link –
normally ISDN, Wi-Fi or satellite link. The last mile connects the branch/office to the nearby POP
(Point of Presence) of the Service Provider.
The DC and the DRC are in different seismic zones so that, in case of an earthquake, both of them
are not impacted simultaneously. The bank may have in addition to DC and DRC, a nearby DC.
This is to curtail the data loss for mission critical applications. Normally banks have separate
Nearby DC at a location within 20-30 KMs of the DC. The RPO (Recovery point objective) and the
RTO (Recovery time objective) determine the need for a nearby Data Centre. The Near-site DC is
connected over point to point redundant links with DC through two or more different service
providers for zero data loss. The DC and DR are connected to the WAN cloud (MPLS) through
primary (active) and the secondary (redundant) links by using different routers working in High
Availability mode. The DC and DR are connected through redundant replication links.
Therefore, when the production site fails, the nearby data center would contain all transactions that
were executed up to the time of the outage. The Near Data Center is linked to both the DC site and
the DR site through redundant links. In the event of a DC failure the backup site brings its database
up-to-date by establishing a session with the Near Data Center.
II. Security
The private and public domain servers and other assets are hosted in DC, DR and near-site DC in
different demilitarized zones (DMZ). The DMZs are created through sets of firewalls and VLANs
implemented over multiple layer 2 switches.
All data to and from the WAN to branches and DC, DRC and near DC site is encrypted. Similarly,
layers of security is implemented over all secured assets though firewalls, intrusion detection and
prevention systems, database activity monitoring tools, anti-virus solutions, end-point security
tools, access control systems etc. Application servers that need to be directly accessed from the
Internet are placed in the DMZ between the Internet and the internal enterprise network, which
allows internal hosts and Internet hosts to communicate with servers in the DMZ.
In order to have an access to internet, a minimum of two links from two different Internet Service
Providers (ISPs) are commissioned at DC. This ISP level redundancy is built at DC, so that in case
if one of the links/ISP is not available, then the Internet facing Servers at DC should be accessible
using the second link from the other ISP. Redundant internet links are also provided at the DR.
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III. Interface to service delivery Channels and Internet

All the banks’ WANs are connected to INFINET, the Indian Financial Network, which is the
communication backbone for the National Payments System, which caters mainly to inter-bank
applications like RTGS, Government Transactions, Automatic Clearing House, CTS etc.
The banks’ WAN networks are also interfaced with the following external networks where ever
required:
 NPCI(National Payments Corporation of India, ATM(Automatic Teller
Machine) Switch
 SWIFT (Society for Worldwide Interbank Financial Telecommunication)
 Credit and Debit Card Agency
 Utility service network like telephone companies, mobile companies,
electricity companies, water department etc.,
 Government Tax Departments and regulatory offices if required
A generic pictorial depiction of banking services over the WAN is given here.

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Also the WAN has a point to point connectivity

 Mobile operators’ network for SMS and phone banking services,
 Financial Inclusion service provider’s network. Normally, the bank officials using financial
inclusion application access the CBS from their endpoint through a VPN for authorisations
of account openings, loan sanctioning etc. in the financial inclusion.

4.4 Risks and Controls in Network Environment

Enterprise networks are subject to a number of risks in terms of loss of privacy, confidentiality,
integrity, availability and breaches of statutory or regulatory compliances. There could be a number
of risks. Hacked network devices could result in data interception which could be analysed, altered,
or deleted, User passwords can be compromised, Device configurations can be changed; Denial-
of-service attacks could be initiated; the list is endless.
To mitigate these risks we need controls to ensure:
 Controlled Access - knowing who is on the network (authentication), what resources they
are authorised to use, and applying these access controls to their traffic.
 Integrity - guaranteeing that the network itself is available as a business critical resource
and that threat can be identified and mitigated. Maintain integrity of important information
 Privacy - ensuring that traffic on the network is not accessible to unauthorised users.
 Keep assets available - operational and protected from vandalism and other outages

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4.5 Securing Enterprise Network

Components of Network Security include Firewalls, Intrusion Detection and Prevention Systems
(IDS/IPS), DMZ, Encryption, Hashing Passwords, VPN, Antivirus software, anti-spyware programs,
hierarchical passwords, and biometric verification, physical protection, Logging, Auditing and
comprehensive and ongoing personnel training. Network security should be multi-layered with
many different techniques used to protect the network. To limit damage, it is important to have
modular architecture and security has to be implemented at all levels:
 Securing Internet connections with Firewalls, Authentication, Authorisations, Physical
Security, Defining and hardening any egress or ingress points of Networks, using VPNs,
SSL
 Implementing Perimeter firewall - Proper configurations
 Securing Public servers and e-commerce servers with firewalls, placing in DMZs, using
reliable OS with updated patches, Anti-Virus, only required services should run on Front
end servers.
 Securing Remote access networks with VPN, Authentication, Encryption, One Time
Passwords.
 Securing Network devices, each device hardened against possible intrusions, Access
control to devices through Authentication, using secure protocols.
 Securing Server farms using authentication, Intrusion Detection Systems (IDS), patching
known OS Vulnerabilities, implementing Firewalls.
 Securing User services with security policy, personal firewalls, Anti-virus Software.
 Securing Wireless networks with firewalls, encrypted protocols and VPN.
Some key factors
 Create internal segregation to further compartmentalize traffic and access.
 Centralised network management with control and reporting facilities
 Network security policy definition and management for all software and devices

4.6 Auditing Networks

Review network security and infrastructure
 Assessing the Network design analysis and network diagram to verify that the
o Networks are secured.
o Access to Networks is in accordance with Network Policy of the organisation.
o Proper Segregation in networks is in place
Review firewall capabilities and reliability
 Auditing Network firewalls, whether properly configured
 Proper Routing controls are implemented for networks.

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 For monitoring internal network traffic, Intrusion Detection Systems are in place.
Please refer to Chapter-6 of Module-4 for understanding details of network security.

4.7 Summary
Cryptographic systems provide ability of secure communication over networks. Many Secure
protocols and frameworks have application of cryptographic techniques like SSL, HTTPS, IPsec,
SSH, SET and S-MIME to name a few. Generic Enterprise Network Architecture in a bank gave us
an understanding of how network is implemented in typical bank. To mitigate the risks in an
enterprise network, we need to secure networks by implementing adequate controls. Effectiveness
of controls can be gauged through Auditing.

4.8 References
 http://resources.infosecinstitute.com/role-of-cryptography/
 http://en.wikibooks.org/wiki/Cryptography
 http://www.moserware.com/2009/06/first-few-milliseconds-of-https.html
 http://www.di-mgt.com.au/rsa_alg.html#simpleexample

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