WINTER 2017 SESSION 7 E-COMMERCE

E-commerce today

Metcalfes Law is a theoretical explanation for continued e-business growth

Metcalfes Law: The value of a network to each of its members is proportional to

the number of other connected users in the network

By this law, the network on the right has a value that is 15 times that of the network
on the left

Disruptive Technology

How can a company like Polaroid go bankrupt?

Digital Darwinism
o Implies that organizations which cannot adapt to the new demands placed on
them for surviving in the information age are doomed to extinction
Disruptive Technology
o A new way of doing things that opens new markets and destroys old ones
Sustaining Technologies
o Provides improved products in an established market

Digital Markets

Information Asymmetry

Lower Menu Costs

Dynamic Pricing

Disintermediation

Digital Goods
Digital Markets Vs. Traditional Markets

E-Business and E-Commerce: Key Concepts

Social Commerce: Social commerce is a type of electronic commerce that uses
social media to assist in the on-line buying and selling of products and services.
Electronic commerce (e-commerce, EC) describes the process of buying, selling,
transferring or exchanging of products, services or information via computer
networks, including the Internet.
E-business is a somewhat broader definition of EC, In addition to the buying and
selling of goods and services, e-business also refers to servicing customers,
collaborating with business partners, and performing electronic transactions within
 an organization.
Degree of digitization is the extent to which the commerce has been transformed
from physical to digital.

E-Business and E-Commerce: Key Concepts

Pure versus Partial Electronic Commerce depends on the degree of digitization
involved.
Pure vs. Partial EC
o The product can be physical or digital.
o The process can be physical or digital.
o The delivery agent can be physical or digital.
Brick-and-mortar organizations are purely physical organizations.
Virtual organizations are companies that are engaged only in EC. (Also called pure
play)
Click-and-mortar (clicks-and-bricks) organizations are those that conduct some e-
commerce activities, yet their business is primarily done in the physical world. i.e.
partial EC.
All other combinations that include a mix of digital and physical dimensions are
considered partial EC (but not pure EC).

Bricks and Mortar, Partial EC and Pure EC

Example Buy books at university bookstore:

o bricks and mortar
Use Internet to order physical book from Amazon:
o partial EC
Order and download book from Amazon: pure EC

E-Commerce Business Models

Major E-Commerce Mechanisms

On-line Auctions

Forward Auctions

Reverse Auctions

Advantages of E-Business
 Information Reach
o Expand the number of people a business can target

Information Richness
o Increase the depth and breadth of details in communications

Mass Customization
o Provide a range of features in standard products that can be altered to
customer specifics

Personalization
o Understand customers sufficiently to provide not only products but ways of
doing business specifically suited to them

Long Tail
Because E-businesses are not limited by shelf space, they can offer a far wider
selection of products that may suit only a few customers.

Reducing Costs
o Business processes that take less time and human effort.

Improving Operations
o Communications customized to meet consumer needs and available 24/7.

Improving Effectiveness
o Web sites must increase revenue and new customers and reduce service calls
o Interactivity metrics measure E-business success: number of repeat visits,
times spent on site and number of pages viewed among other activities.

Opening New Markets

Intermediaries
o Agents, business or software which provides an infrastructure to bring buyers
and sellers together
Disintermediation
o Occurs when business use the Web to connect directly to customers and by-
pass intermediaries
o Reduces costs & often improves responsiveness
Reintermediation
o The addition of entities into the value chain to improve the business process
 Cybermediation
o The creation of new types of intermediation as a result of the Internet and the
World Wide Web

Limitations of e-Commerce

Technological Limitations
o Lack of universally accepted security standards
o Insufficient telecommunications bandwidth
o Expensive accessibility
Non-technological Limitations
o Perception that EC is unsecure
o Unresolved legal issues
o Lacks a critical mass of sellers and buyers

E-Commerce Revenue Models

Advertising

Sales

Subscription

Free/Freemium

Transaction Fee

Affiliate

B2C e-Commerce

Electronic storefronts

Electronic malls
Online Service Industries

Cyberbanking

Online securities trading

Online job market

 Travel services

Online advertising

Issues in e-Tailing

Channel conflict: occurs when clicks-and-mortar companies may face a conflict

with their regular distributors when they sell directly to customers on-line.

Multichannelling: a process many companies use to integrate their on-line and off-
line channels

Order fulfillment: involves finding the product to be shipped; packaging the

product; arrange for speedy delivery to the customer; and handle the return of
unwanted or defective products.
B2B E-Commerce

In B2B e-commerce, the buyers and sellers are organizations.

Sell-Side
Key mechanisms: electronic catalogs and forward auctions
Click on the Dell Auction link to access a Sell-Side Marketplace:
Dell Auction
Buy-Side
Key mechanism: reverse auctions
Click on the link below to access a Buy-Side Marketplace:
United Sourcing Alliance is a common Sell-Side Marketplace

Electronic Exchanges
Electronic Payments

Electronic checks (e-checks)

Electronic credit cards

Purchasing cards

Electronic cash
o Stored-value money cards
 o Smart cards
o Person-to-person payments

Digital Wallets

B2B Commerce: New Efficiencies and Relationships

EDI

Private Industrial Network

New Marketplace
 Electronic Exchanges

There are three basic types of public exchanges: vertical, horizontal, and functional
o Vertical Exchanges
o Horizontal Exchanges
o Functional Exchanges

E-Government Models
Uses strategies & technologies to improve services and communication with the citizen-
consumer

Extended E-Business Models

Social Commerce

Social Networking and the Wisdom of Crowds

 Most popular Web 2.0 service: social networking
Social networking sites sell banner ads, user preference information, and
music, videos and e-books

Social shopping sites

Swap shopping ideas with friends (Kaboodle, Pinterest)

Wisdom of crowds/crowdsourcing
Large numbers of people can make better decisions about topics and products
than a single person

Prediction markets:
Peer-to-peer betting markets on specific outcomes (elections, sales figures,
designs for new products

Mobile Computing and Mobile Commerce

Mobile computing has two major characteristics that differentiate it from other
forms of computing:
o Mobility
o Broad reach
Mobile Commerce

The development of m-commerce is driven by the following factors:

o Widespread availability of mobile devices
o No need for a PC
o The cell phone culture
o Declining prices
o Bandwidth improvement

m-Commerce Applications
Location-based Services
Banking and Financial Services
Telemetry Applications
Intrbusiness Applications
Accessing Information

Mobile Computing
 Five value-added attributes of mobile computing:
o Ubiquity
o Convenience
o Instant connectivity
o Personalization
o Localization of products and services

WINTER 2016 SESSION 8 ACQUIRING INFORMATION SYSTEMS

Introduction

IS solutions allow companies to:

o Improve cost structure, manage people better, bring new products to market
faster, solve complex problems

Effective systems development processes can:

o Transform an organization as its business transforms
o Make an organization more responsive to customers and competition

Poor processes
o Can damage productivity and morale
o Cause a business to fail

Global Information Systems Development

Unlike domestic systems, global IS must support a diverse base of customers, users, products, languages,
currencies, laws, etc.
1. Transform domestic system for global use. Established business processes and end-users will be supported.

2. Set up multi-national development team to articulate the needs of local sites.

3. Assign system development to the particular subsidiary which is the centre of excellence for the required business or tech

4. Outsource to global or offshore development countries that have the required skills and experience.
 Systems as Planned Organizational Change
Degrees of organizational change
Automation: Mechanizing procedures to speed up the performance of existing
tasks
o Increases efficiency
o Replaces manual tasks
Rationalization of procedures: The streamlining of standard operating procedures
o Often found in programs for making continuous quality improvements;
e.g. TQM, Six Sigma
Business process redesign: Redesign of business processes to reorganize
workflows and reduce waste and repetitive tasks
o Analyze, simplify, and redesign business processes
o Reorganize workflow, combine steps, eliminate repetition
Paradigm shift: Radical reconceptualization of the nature of the both the business
and the organization

The Make Vs. Buy Decision

. In large companies today, application software is typically both custom
developed and purchased.
 In small businesses, software is typically purchased.
Why?

Strategies for Acquiring IT Applications

Purchase a Prewritten Application

 Customize a Prewritten Application

Lease the Applications

Application Service Providers and Software-as-a-Service Vendors

Open-Source Software

Outsourcing

Custom Development

Advantages and Limitations of the Buy Option

Advantages:
o Many choices
o Test software
o Save time
o Familiar product
o Many users
o Eliminate need to hire specialized personnel

Disadvantages:
o May not meet needs
o Difficult to modify
o No control over content
o Difficult to integrate
o May be discontinued
o Controlled by another company

The Systems Development Life Cycle (SDLC)

The systems Development Life Cycle and Its Associated Activities
The overall process for developing an IS from planning to implementation and maintenance
Begins with the business needs and ends when the benefits of the system no longer outweighs its
maintenance costs
Referred to as a cycle as the final maintenance stage leads into planning for a new development
The Systems Development Life Cycle and Its Associated Activities

Systems Development Life Cycle (SDLC)

 Highly structured process for developing customized applications

Requires a lot of documentation and formal reviews at end of each major step

Output from one step = input to next step (Waterfall model)

SDLC Waterfall: 8 Steps in 3 phases

Systems Development Life Cycle

Four Approaches to Convert from an old System:

o Parallel: organization operates old system in parallel with new system until
new system is working sufficiently
o Pilot: new system is introduced to only one part of the organization first
Phased: new system is implemented one component at a time
Cutover: old system is totally abandoned as soon as the new system is
implemented

Comparison of User and Developer Involvement Over the SDLC

 Modified SDLC
Steps for purchasing application packages fit into the three SDLC phases (referred
to as the modified SDLC approach)

Systems Development Methodologies

 Methodology
o Set of policies, procedures, standards, processes, practices, tools, techniques,
and tasks applied to technical and management challenges.
o Method of managing the information systems deployment
o Formal methodology can include coding standards, code libraries,
development practices and much more

The Traditional Waterfall Methodology

A sequential, activity-based process in which each phase of the SDLC is performed.

Issues Related to the Waterfall Methodology

The Incremental Approach
The Spiral Model Evolutionary Development

Agile Software Development Methodologies

Agile Methodology
o Aims for customer satisfaction with early and continuous delivery of useful
system or software components meeting bare minimum requirements.

Iterative Development
o The basis for Agile Methodologies
o Consists of a series of fast, efficient, short, lower cost projects that achieve
rapid feedback and acceptance
o Speed, size and focus account for end user satisfaction
 The Agile Alliance Manifesto

Rapid Application Development Methodology (RAD)

Emphasizes extensive user involvement in the rapid and evolutionary construction of working prototypes
that accelerate systems development.
A prototype is a smaller-scale working model of the users requirements.

A common RAD technique is: JOINT APPPLICATION DEVELOPMENT (JAD)

Team of users and IS specialists engage in an intense and structured process in

order to minimize total time required for gathering information from multiple
participants
 Prototyping
Building experimental system rapidly and inexpensively for end users to evaluate
Prototype: A working, but preliminary, version of information system
Steps in prototyping
Identify user requirements
Develop initial prototype
Use prototype
Revise and enhance prototype

Participatory Design (PD)

Promotes the active involvement of users

Sees users as the experts

Tenets

The design process makes a difference for participants

Implementing the results from the design process is likely

Its fun to participate

Self-Sourcing (End-User Design)

Development is by people who use the system

 End users build and maintain the system without much support from IT
Ranges from simple Excel worksheet templates to complex systems including
prototypes

Advantages:
o Meeting user requirements
o Sense of ownership by users
o Faster development

Disadvantages
o Problems due to lack of development expertise
o Not consistent with organizational goals
o Lack of alternatives and documentation
End-User Development
Uses fourth-generation languages to allow end-users to develop systems with little
or no help from technical specialists
Fourth generation languages: Less procedural than conventional programming
languages
Advantages:
More rapid completion of projects
High-level of user involvement and satisfaction
Disadvantages:
Not designed for processing-intensive applications
Inadequate management and control, testing, documentation
Loss of control over data
Managing end-user development
Require cost-justification of end-user system projects
Establish hardware, software, and quality standards
Developing Successful Systems

Slash the Budget

o Focusses designers on essentials; easier to kill small projects
If it doesnt work, kill it
o Bring key stakeholders together at the beginning to eliminate anything that
wont meet expectations.
Keep Requirements to a Minimum
o Identify must haves and work to achieve these
o Feature Creep developers add new features as they go
o Scope Creep project gets bigger or broader
Test and deliver frequently
Assign Non-IT executives to software projects
o Liaise between user groups and IT
o Test iterations to ensure they work
 Project Management

Without an effective information system, companies lose competitiveness and fail

Designing and Implementing systems is a difficult and risky undertaking

o McKinsey/Oxford study in 2012 estimates that
17% of all large IT projects go so badly they threaten the existence of
the company
45% run over budget
56% provide less value than expected

Projects underachieve because:

o They are complex and rushed
o Unrealistic expectations and poor planning
Project Managements Triple Constraints
Project Management is the science of making intelligent trade-offs
between time, cost, and scope.

Managing Software Development Projects

 A successful project is one that is on time, within budget, meets business
requirements and fulfills the customers needs

Project Managements top 7 challenges:

o Poor project planning and direction
o Insufficient communications
o Ineffective management
o Failure to align with project constituents and stakeholders
o Ineffective involvement of executive management
o Lack of soft skills or ability to adapt
o Poor or missing methodology or tools
Project Stakeholders and Governance

Stakeholders: Individuals and organizations actively involved in a project or

whose interest might be affected by the project.
o Employees, managers, company executives
o Shareholders and lenders who invest in the company
o Customers and suppliers (supply chain)
o Governments who loan money or receive taxes

Governance
o Helps create value from projects by providing processes to align systems
development with organizational goals
o Responsibilities and authority is clearly assigned and defined
Managing Projects

People
o Hardest and most critical of IT planning efforts
o Resolving conflicts, balancing individual and team needs
o Project manager must be skilled in communication, negotiation, marketing
and salesmanship

Communications
o Communications Plan provides the basis for formal, regular, periodic status
reports
o Ad hoc messages of small wins, corrections, reminders and requirements

Change Management or Organizational Change Management

 o Set of techniques that aid in evolution, composition and policy management
of the design and implementation of a system
o By knowing how change works, organizations can implement a change
strategy
o View change as an opportunity not threat

Measuring Project Value

Difficult to measure success of IT projects. Start by comparing against metrics

developed in the project plan.

Additional considerations:
o Are IS operating performing satisfactorily?
o How is my IS outsource provider performing?
o What are the risk factors to consider in an IS project?
o What questions should be asked to ensure an IS project proposal is realistic?
o What are the characteristics of a healthy IT project?
o Which factors are most crucial to monitor to ensure an IS project remains on
track?

Outsourcing Projects

Insourcing (In-house development)

o Uses the professional expertise within the organization itself
Outsourcing
o An arrangement by which one organization provides a service or services for
another organization that chooses not to perform them in-house.

Primary Reasons Companies Outsource

 Outsourcing Models

Onshore outsourcing
o Engaging a company within the country
Nearshore outsourcing
o Engaging a company in a nearby country, example USA
Offshore outsourcing
o Engaging organizations from developing countries or countries far away
o Often used for code writing and systems development

Results of Outsourcing
 Companies concentrate on Core Competencies using outsourcing as a revenue
generation, not cost cutting strategy

Financial savings coupled with finding skilled workers

Rapid growth due to an enlarged, engaged workforce

Industry changes force companies to manage dynamic environment and send

structured work out

Internet has provided an effective channel to distribute systems work

Globalization has opened huge off shore labour markets

The Challenges of Outsourcing

Contract Length
o Long-term contracts due to high start up costs
o Difficulties in getting out of unsuitable contracts
o Problems in foreseeing business needs over the long term
o Problems in restructuring IS department after the contract is finished
Competitive Edge
o Competitive focus and edge can be lost if computer system is central to the
enterprises success and the functions are outsourced

Confidentiality
o Pricing policies, product mix information, formulas and sales analysis may
be less secure
o Requires additional investment in security and surveillance to ensure there
are no problems

Scope definition
o Affects outsourcing contracts as well as in-house development
o Problems arise from contractual misunderstandings especially dealing with
what is considered within the scope and outside of the scope of the
agreement

WINTER 2017 SESSION 9 INFORMATION SYSTEMS AND ORGANIZATION

 Organizational Strategy

Includes the organizations design, as well as the managerial choices that define, set
up, coordinate, and control its work processes.

Optimized organizational design and management control systems support

optimal business processes which reflect the firms values and culture.

Figure on the next slide summarizes complementary design variables from the
managerial levers framework.

Three types of managerial levers: organizational, control, cultural.

Variable Description

Organizational variables

Decision rights Authority to initiate, approve, implement, and control various types of decisions necessary to
plan and run the business.

Business processes The set of ordered tasks needed to complete key objectives of the business.

Formal reporting The structure set up to ensure coordination among all units within the organization.
relationships

Informal networks Mechanism, such as ad hoc groups, which work to coordinate and transfer information outside
the formal reporting relationships.

Control variables

Data The information collected, stored, and used by the organization.

Planning The processes by which future direction is established, communicated, and implemented.

Performance measurement The set of measures that are used to assess success in the execution of plans and the processes
and evaluation by which such measures are used to improve the quality of work.

Incentives The monetary and non-monetary devices used to motivate behavior within an organization.
Cultural variables

Values The set of implicit and explicit beliefs that underlie decisions made and actions taken.

IS and Organizational Design

IS in the organizational designs:

o Defines the flow of information throughout the organization.
o Facilitate management control at the organizational and individual levels.
Culture impacts IS and organizational performance.

IS in the organizations physical structure is designed to facilitate the

communication and work processes necessary to accomplish the organizations
goals.
Decision Rights

Who in the organization has the responsibility to initiate, supply information,

approve, implement, and control various types of decisions.

Ideally the person with the most information and in the best position should have
these rights. (i.e. senior leaders).

Organizational design focus on making sure that decision rights are properly
allocated.

Zara - decision rights moved to the store managers, providing for quicker
responses to their local customer base.

Formal Reporting Relationships and Organization Structures

Organization structure is the way of designing an organization so that decision

rights are correctly allocated.

The structure of reporting relationships typically reflects the flow of

communication and decision making throughout the organization.

Traditional organizations are hierarchical, flat or matrix.

The networked structure is a newer organizational form.

Social networks and virtual communities.

 Hierarchical Organizational Structure

Hierarchical organization structure - an organizational form based on the concepts

of division of labor, specialization, spans of control, and unity of command.
Key decisions are made at the top and filter down through the organization.
Middle managers do the primary information processing and communication.
Unity of command - each person has a single supervisor, who in turn has a
supervisor.
Rules are established to handle the routine work performed by employees of the
organization. Workers turn to rules for guidance, or to the supervisor.
Key decisions are made at the top and filter down through the organization in a
centralized fashion.
Appropriate for stable organization, where the top-level executives are in command
of the information needed to make critical decisions quickly.

Hierarchical Organizational Structure and IS

IS are typically used to store and communicate information along the lines of the
hierarchy in a centralized structure.

IS facilitates the decisions of top managers downward and provide a hierarchy of

reports to support organizational operations.

Data from the operations is sent upward through the hierarchy using IS.

Data from operations that have been captured at lower levels need to be
consolidated, managed and made secure at a higher level.

The data is integrated into databases that are designed to enable employees at all
levels of the organization can see the information that they need when they need it.

Flat Organization Structure

Horizontal, less well-defined chain of command.

Fewer employees, everyone does whatever needs to be done in order to complete

business.

Respond quickly to dynamic, uncertain environments.

Appropriate for entrepreneurial and smaller organizations.

 Teamwork is important to increase flexibility and innovation.

Decision rights may not be clearly defined, often decentralized.

IS is utilized to off-load certain routine work in order to avoid hiring additional

workers and supports intra-firm communications.

Matrix Organization Structure

Work is organized into small work groups and integrated regionally and
nationally/globally.

Each supervisor directs a different aspect of the employees work.

Difficult for managers to achieve their business strategies

Managers are flooded with more information than they can process.

Decision rights are shared between the managers.

Appropriate for complex decision making and dynamic and uncertain

environments.

IS reduces operating complexities and expenses by allowing information to be

easily shared among different managerial functions.

Networked Organization Structure

Feel flat and hierarchical at the same time.

Appropriate for dynamic, unstable environments.

Highly decentralized decision rights.

Utilize distributed information and communication systems to replace inflexible

hierarchical controls with controls based in IS.

Employees share their knowledge and experience, and participate in making key
organizational decisions.

IS are fundamental to process design, improve process efficiency, effectiveness,

and flexibility.

Networked Organization Structure and IS

 Data are gathered and stored in centralized data warehouses for use in analysis
and decision making.

Decision making is more timely and accurate because data are collected and stored
instantly.

Extensive use of communication technologies and networks.

IT is used primarily as a communication vehicle.

IT ties together people, processes, and units.

Technological leveling - technology enables individuals from all parts of the

organization to reach all other parts of the organization.

Hierarchical Flat Matrix Networked

Description Bureaucratic/defined Decision-making Workers assigned to 2 or Formal/informal

Characteristics levels of management pushed down to more supervisors communication
Type of Division of labor lowest level Dual reporting based on networks that connect
Environment specialization, unity of Informal roles, function/purpose all
Best command planning and control; Unstable Known for flexibility
Supported Stable often sm.,young orgs. Uncertain and adaptability
Basis of Certain Unstable Functions and purpose Unstable
Structuring Primary function Uncertain Distributed Uncertain
Power Centralized Primary function Networks Networks
Structure Mainframe, centralized Centralized Distributed
Key Tech. data and processing Personal computers Intranets and Internet
Supporting
this
 Management Control and IS

Concerned with how planning is performed in organizations and how people and
processes are monitored, evaluated, and compensated or rewarded.

Senior leaders ensure the things that are supposed to happen actually happen.

Management control systems must respond to goals established through planning,

periodically adjusted.

IS plays three important roles in management control processes:

o Data collection, Evaluation, and Communication.
IS collect, evaluate, and communicate information, leaving managers with more
time to make decisions.

Planning and IS

Information technology can play a role in planning in three ways:

o IS can provide the necessary data to develop the strategic plan.
Collecting data from organizational units and integrating the it into
information for the strategic decision makers.
o Provide scenario and sensitivity analysis through simulation and data
analysis.
o Automate the planning process where appropriate.
o IS can lie at the heart of a strategic initiative.
o IS can be used to gain strategic advantage.

Data Collection and IS

Monitoring work using information technologies:

IS make it possible to collect data by:

o Number of keystrokes.
o Precise time spent on a task.
o Exactly who was contacted.
o Specific data that passed through the process.
 Organizational design challenge in data collection :
o Embed monitoring tasks within everyday work.
o Reduce the negative impacts to workers being monitored.

Monitoring and IS

Software collecting monitoring data directly from work tasks, or embedding the
creation and storage of performance information into software used to perform
work is more reliable.

Monitor cyberslacking and cyberslouching.

Monitoring is ethical and in the best interest of business.

Employees must be informed about monitoring software.

Reward increase in productivity derived from monitoring information.

Balance employees right to privacy against the needs of the business to have
surveillance mechanisms in place.

Performance Measurement and IS

IS make it possible to evaluate actual performance data against reams of standard or

historical data.
Use models and simulations.
Managers can easily understand work progress and performance.
Analysis paralysis - analyzing too much or too long
How the information is has significant organizational consequences.
Information collected for evaluation may be used to provide feedback
o Worker can improve personal performance.
o Determine rewards and compensation.
How feedback is communicated in the organization plays a role in affecting
behavior.
Many companies do a 360-degree feedback, into which the individuals
supervisors, subordinates, and coworkers all provide input.
IS enables soliciting feedback from anyone who has access to the system and report
it anonymously.
Quick feedback enables faster improvements.
 Incentives and IT

Enables organizations to encourage good performance.

Done properly, can make employees feel good without paying them more money.

Organizations use their Web sites to recognize high performers.

o Using electronic badges that are displayed on the social network to identify
the award recipients.
o Reward with allocation of new technology.

IS makes it easy to design complex reward systems (shared or team based).

Managers must consider both the metrics and qualitative data in assigning
compensation and rewards.

Information Systems and Culture

Plays an increasingly important role in IS development and use.

Culture is defined as a shared set of values and beliefs that a group holds and
that determines how the group perceives, thinks about, and appropriately reacts to
its various environments.
Culture is a collective programming of the mind that distinguishes not only
societies (or nations) but also industries professions, and organizations.
Beliefs are the perceptions that people hold about how things are done in their
community.
Values reflect the communitys aspirations about the way things should be done.
Culture may change over time depending on the environment and internal
operations.
Assumptions are unobservable, reflect organizational values that have become so
taken for granted that they guide organizational behavior without any of the group
members thinking about them.

Levels of Culture and IT

Culture can be found in countries, organizations, or even within organizations.

IS development and use can be impacted by culture at all levels within the
organization.

Both national and organizational cultures can affect the IT issues and vice versa.
 Differences in national culture may affect IT in a variety of ways: impacting IS
development, technology adoption and diffusion, system use and outcomes, and
management and strategy.
Hofstede Dimensions and the GLOBE Dimensions
GLOBE DESCRIPTION RELATIONSHIP TO
DIMENSIONS HOFSTEDE DIMENSION

UNCERTAINTY EXTENT TO WHICH MEMBERS OF AN SAME AS UNCERTAINTY

AVOIDANCE ORGANIZATION OR
SOCIETY STRIVE TO AVOID
UNCERTAINTY BY RELIANCE ON
SOCIAL NORMS, RITUALS, AND
BUREAUCRATIC PRACTICES
TO ALLEVIATE THE
UNPREDICTABILITY OF FUTURE
EVENTS.
POWER DEGREE TO WHICH MEMBERS OF AN SAME AS POWER
DISTANCE ORGANIZATION OR DISTANCE
SOCIETY EXPECT AND AGREE THAT
POWER SHOULD BE
EQUALLY SHARED.
COLLECTIVIS DEGREE TO WHICH SAMES AS
M I: ORGANIZATIONAL AND INDIVIDUALISM/
SOCIETAL SOCIETAL COLLECTIVISM
COLLECTIVSI INSTITUTIONAL PRACTICES
M ENCOURAGE AND REWARD
COLLECTIVE DISTRIBUTION OF
RESOURCES AND
COLLECTIVE ACTION.
COLLECTIVIS DEGREE TO WHICH INDIVIDUALS TYPE OF COLLECTIVISM
M II: EXPRESS PRIDE, FOCUSED ON
IN-GROUP LOYALTY AND COHESIVENESS IN SMALL IN-GROUPS
COLLECTIVIS THEIR ORGANIZATIONS
M OR FAMILIES
GENERAL EXTENT TO WHICH AN MODIFIED VERSION OF
EGALITARIAN ORGANIZATION OR SOCIETY MASCULINITY/FEMINITY
SIM MINIMIZES GENDER ROLE
DIFFERENCES AND GENDER
DISCRIMINATION
ASSERTIVENES DEGREE TO WHICH INDIVIDUALS IN MODIFIED VERSION OF
S ORGANIZATIONS OR MASCULINITY/FEMINITY
SOCIETIES ARE ASSERTIVE,
CONFRONTATIONAL AND
AGGRESSIVE IN SOCIAL
RELATIONSHIPS
FUTURE DEGREE TO WHICH INDIVIDUALS IN SIMILAR TO CONFUCIAN
ORIENTATION ORGANIZATIONS OR WORK
SOCIEITES ENGAGE IN FUTURE- DYNAMISM BY
ORIENTED BEHAVIORS HOFSTEDE AND
 SUCH AS PLANNING, INVESTING IN BOND
THE FUTURE, AND (1988)
DELAYING GRATIFICATION

PERFORMANC EXTENT TO WHICH AN

E ORGANIZATION OR SOCIETY
ORIENTATION ENCOURAGES AND REWARDS GROUP
MEMBERS FOR
PERFORMANCE IMPROVEMENT AND
EXCELLENCE
HUMANE DEGREE TO WHICH INDIVIDUALS IN SIMILAR TO KIND
ORIENTATION ORGANIZATIONS OR HEAREDNESS BY
SOCIETIES ENCOURAGE AND HOFSTEDE AND BOND
REWARD INDIVIDUALS FOR (1988)
BEING FAIR, ALTRUISTC, FRIENDLY,
GENEROUS, CARING
AND KIND TO OTHERS.
Organizational Culture and
Information Technology Management

Differences in culture result in differences in the use and outcomes of IT.

At the organizational level, cultural values are often related to satisfied users,
successful IS implementations, or knowledge management success.

Culture affects planning, governance, and perceptions of service quality at the

national and organizational levels
o Having planning cultures at the top levels, signal that strategic systems
investment is important.

National Cultural Dimensions and Their Application

Hofstede originally identified four major dimensions of national culture:

o Power distance
o Uncertainty Avoidance
o Individualism-collectivism
o Masculinity-femininity
o Confusian Work Dynamism (a new dimension) or short-term vs. long-term
orientation.

The GLOBE (Global Leadership and Organizational Behavior Effectiveness)

research program uncovered nine cultural dimensions, six of which have their
 origins in Hofstedes pioneering work

Work Design Framework

Technology has now brought the approach to work full circle.

Time and place of work are increasingly blending with other aspects of living.

Employees can work at home via cyberspace and at times that accommodate home-
life and leisure activities.

Increasingly, places are being constructed in cyberspace using Web 2.0 tools that
encourage collaboration.

IS Effect on How the Work is Done

What work will be performed?

o An assessment of specific desired outcomes, inputs, and the transformation
needed to turn inputs into outcomes.

Who is going to do the work?

o Work can be automated.
o If a person is going to do the work, what skills are needed?
Where will the work be performed?
o Does the work need to be performed locally at a company office?
When will the work be performed?

How can IT increase the effectiveness of the workers doing the work?
o How can IT support collaboration?

Framework for Work Design

 How IT Supports Communication

Digital natives introduced the use of social networking and blogs into the
workplace.

Major technologies have affected communications in todays work environment

(Figure 4.2).

IT includes technologies such as:

o E-mail, intranets, instant messaging, VoIP, video teleconferencing, unified
communications, RSS, virtual private networks, and file transfer.

Collaboration is key in many work processes.

IT Supports Collaboration

Thomas Friedman, the author of the popular The World is Flat and other books,
argues that collaboration is the way that small companies can act big and
flourish in todays flat world.
 The key to success is for such companies to take advantage of all the new tools for
collaboration to reach farther, faster, wider, and deeper.

Collaboration tools include:

o Social networking sites, virtual worlds, web logs (blogs), wikis, and
groupware.

Creating New Types of Work

IT has created many new jobs and redefined existing ones.

New types of jobs:

o Knowledge managers - manage the firms knowledge systems (Chapter 11).
o Community managers - manage the firms online communities.
o Communications managers - manage the use of communication technologies
for the business.

IS departments also employ:

o Systems analysts, database administrators, network administrators, and
network security advisors.

Every department in every business has someone who knows the computer as
part of his or her job.
New Ways to Do Traditional Work

Many traditional jobs are now done by computers (i.e., using spell check instead of
an editor).

The introduction of IT into an organization can greatly change the day-to-day tasks
performed by the employees.

Data entry workflow is faster.

o Data is captured directly when it is entered by the user via:
web-based entry.
GPS signal.
RFID code.

The Internet enables changes in many types of work.

The cost and time required to access information has plummeted, increasing
personal productivity and giving workers new tools.

Changing Communication Patterns

 Cell phones and other portable communication devices have changed our
communication environment.
o Talking on the cell phone, texting, and using apps to search for information.
Applications (apps) such as Skype, Twitter, and Sina Weibo (Chinese Twitter) have
changed how people communicate.

IT is changing the communication patterns of workers.

Some workers do not need to communicate with their co-workers for the bulk of the
workday.

Some workers need access to up-to-date information and communications between

co-workers, customers, and suppliers.

Changing Collaboration

Teams work more fluidly despite an increasing workload.

Teams have learned to collaborate by continually structuring and re-structuring

their work.

IT helps make work more team-oriented and collaborative via:

o Blogs, virtual worlds, wikis, social networking, and video teleconferencing.
Workers can more easily share information with their teammates.

The Internet greatly enhances collaborationespecially through e-mail, instant

messaging, and Web 2.0 technologies.

Changing the Ways to Connect

New technologies enable people to be always connected.

The boundaries between work and play are being blurred, and people often struggle
with work-life balance.

Technology at home differs from that at work:

o Home: People use social media tools on tablets, laptops, and smart-phones.
o Work: Computers have limited Internet connectivity.

CIOs have the ability to drastically improve productivity by making directories of

knowledge-holders available through newer social media tools.

IS can greatly change day-to-day tasks, which in turn change the skills needed by
 workers.
IT Has Changed Hiring
Workers must know how to use the technology for their job or be trainable.
o Hiring procedures incorporate activities that determine the skills of
applicants.
IT utilization affects the array of non-technical skills needed in an organization.
o IT-savvy companies can eliminate clerical capabilities from their hiring
practices and focus resources on more targeted skills.
IT has become an essential part of the hiring process (online job postings, online
applications, etc.).
o Social networking also involves informal introductions and casual
conversations in cyberspace.
o Virtual interviews can be arranged to reduce recruiting costs.
Companies increasingly realize that hiring is changing.
o Recruiting efforts reflect the new approaches people are using to look for jobs.
o Tech-savvy job applicants are now using business-oriented social networks,
jobs, online job search engines, and a new Facebook app.
The design of the work needed by an organization is a function of:
o the skill mix required for the firms work processes.
o the flow of those processes themselves.
Employees who cannot keep pace are increasingly unemployable.

Telecommuting and Mobile Work

The terms telecommuting and mobile worker are often used to describe flexible
work arrangements.
Telecommuting (or teleworking) - work arrangements with employers that allow
employees to work from home, at a customer site, or from other convenient
locations instead of the corporate office.
Telecommuting is derived from combining telecommunications with
commuting.
o Workers use telecommunications instead of commuting to the office.
Mobile workers:
o work from wherever they are.
o utilize technology necessary to access coworkers, company computers,
intranets, and other information sources.
 Factors Driving Telecommuting and Mobile Work
Work is increasingly knowledge-based. Employees can create, assimilate, and
distribute knowledge at home as effectively as they can at an office.
Telecommuting enables workers to shift their work to accommodate their
lifestyles (e.g., parents, disability).
o Telecommuting enables geographic flexibility.
New technologies used by telecommuters are becoming better and cheaper (e.g.,
price of PC and back office applications).
The increasing reliance on web-based technologies by all generations (particularly
Generation Y and Millennials).
A mounting emphasis on conserving energy.
o As the cost of gasoline continues to skyrocket, employees are looking for
ways to save money.
o Companies can also experience lower energy costs from telecommuting.
Energy is no longer needed to heat or cool these office spaces.
o Companies seek to comply with the Clean Air Act and to be praised for their
green computing practices. At the same time, they are reaping considerable
cost savings.

Advantages and disadvantages

Employee Advantages of Telecommuting Potential Problems
Reduced stress due to increased ability to meet
schedules, heightened morale, and lower
absenteeism
Geographic flexibility
Higher personal productivity
Housebound individuals can join the workforce
Harder to evaluate performance, increased stress from inability to
separate work from home life
Employee may become disconnected
from company culture
Telecommuters are more easily replaced by electronic immigrants
Not suitable for all jobs or employees

Managerial Issues in Remote Work

Planning, business, and support tasks must be redesigned to support remote

workers.

Training should be offered so all workers can understand the new work
environment.

Managers must find new ways to evaluate and supervise those employees without
seeing them every day in the office.
o Work to coordinate schedules and ensure adequate communication among all
workers.
o Establish policies about using different technologies to support
communications.
o Help the organization adapt by building business processes to support remote
workers.
Security Issues in Remote Work

BYOD (Bring Your Own Device) - remote workers have their own computers in
the location where they work.

Remote workers pose a threat to office workers:

o Once an infected computer is connected to the network, perimeter security
 technology is unable protect all the other workers on the network.

It is impossible for organizations to make remote workers totally secure.

Managers need to get more involved:

o Assessing the areas and severity of risk.
o Taking appropriate steps via policies, education, and technology.
Virtual Teams

Two or more people who:

o Work together interdependently with mutual accountability for achieving
common goals.
o Do not work in the same place and/or at the same time.
o Use electronic communication technology to communicate, coordinate their
activities, and complete their teams tasks.

Virtual team members may be in different locations, organizations, time zones, or

time shifts.

Virtual teams are thought to have a life cycle (Figure 4.6).

Factors Driving Use of Virtual Teams

The same drivers for telecommuting can be applied to virtual teams.

Virtual teams offer advantages in terms of expanding the knowledge base through
team membership.

Managers can draw team members with needed skills or expertise from around the
globe without large travel expenses.

Virtual teams can benefit from following the sun.

o Teams in different parts of the world can cooperate to get work done faster
due to time zone differences.

Disadvantages and Challenges of Virtual Teams

Challenges Virtual Teams Traditional Teams
Communications Multiple zones can lead to greater efficiency and Teams are located in same time zone. Scheduling
communication difficulties. is less difficult.

Communication dynamics (e.g., non-verbal) are Teams may use richer communication media.
altered.

Technology Team members must have proficiency across a Technology is not critical, and tools are not
wide range of technologies. essential for communications.

Technology offers an electronic repository. Electronic repositories are not typically used.

Work group effectiveness may be more Task technology fit may not be as critical.
dependent on alignment of the group and
technologies used.

Team Diversity Members typically come from different Because members are more homogeneous, group
organizations and/or cultures which makes it: identity is easier to form.

-Harder to establish a group identity. Because of commonalities, communications are

-Necessary to have better communication skills. easier to complete successfully.
-More difficult to build trust, norms, etc.

Managerial Issues in Virtual Teams

Require different styles and types of management, particularly with management

control activities.

Observation is less likely to occur.

Performance is more likely to be based on output.

Providing feedback is important.

Compensation should be based heavily on the teams performance.

Align reward systems with the accomplishment of desired team goals.

Policies about the selection, evaluation, and compensation of virtual team members
may need to be enacted.
 Communication and Technology Challenges
Communication Challenges
o Managers must learn to keep the lines of communication open to allow team
members to get their work done.
o Frequent communication is essential to success.
o Need appropriate technological support (i.e., video teleconferencing, etc.).
o Face-to-face meetings are the heartbeat of successful global virtual teams.
o Well-managed synchronous meetings using video teleconferencingor
possibly in a virtual worldcan activate the heartbeat.
Technology Challenges
o All team members must have the same or compatible technologies at their
locations.
o Managers must ensure that remote workers have seamless telephone transfers
to the home office, desktop support, network connectivity, and security
support.
o Policies and norms (unwritten rules) must be established.
o Diversity challenges different cultures have different perceptions of time
and task importance.
o Providing the appropriate technologies for each culture is key.

WINTER 2017 SESSION 10 ETHICS, PRIVACY AND SECURITY

WHAT TO DO WITH WIKILEAKS
Problem: Whistleblowers can capture huge amounts of incriminating documents on
a laptop, memory stick, or portable hard drive. This information can be sent through
personal e-mail accounts or online drop sites, or they can simply submit it directly to
WikiLeaks (www.wikileaks.org). WikiLeaks receives approximately 10,000 new
documents every day. Since its inception, in December 2006, WikiLeaks has had
significant impacts on both businesses and governments; how can future disclosures
be prevented?
Result: How can organizations and governments respond to WikiLeaks? Lawsuits
will not work, because WikiLeaks, is a mere conduit for documents. Moreover, even
if a company or a government somehow won a judgment against WikiLeaks, that
would not shut down the company, because its assets are spread all over the world.
Governments may need to revise their practices to avoid being targeted.
IT Solution: Several cyber security measures from the DLP (data leak protection)
industry have been tried. However, none have been effective. Recently,
organizations have turned to network forensics, which is the process of constantly
collecting every digital fingerprint on an organizations servers to trace and
identify an intruder who has broken into the system. Although this software gathers
data and makes them easily available, it does not identify the culprit.
 ETHICAL ISSUES

Ethics refers to the principles of right and wrong that individuals use to make
choices that guide their behaviour.

ETHICAL FRAMEWORKS

Ethical Frameworks are standards used to develop general frameworks for ethics or
ethical decision making:
o Utilitarian
o Rights
o Fairness
o Common Good

For examples of standards used in Canada click here: www.csa.ca

TRADITIONAL AND GVV APPROACHES

Traditional GVV

1. Recognize an ethical issue 1. Identify an ethical issue

2. Get the facts 2. Purpose and choice

3. Evaluate alternative actions 3. Stakeholder analysis

4. Make a decision and test it 4. Powerful response

5. Scripting and coaching

ETHICS IN THE CORPORATE ENVIRONMENT

Code of ethics: a collection of principles that are intended to guide decision making
 by members of an organization.

Fundamental tenets of ethics include:

o Responsibility
o Accountability
o Liability

ETHICS IN THE CORPORATE ENVIRONMENT

Four general categories of ethical issues in IT applications:

o Privacy
o Accuracy
o Property
o Accessibility

AREAS OF MANAGERIAL CONTROLS

Area Critical Questions

Privacy What information must a person reveal about oneself to others?

What information should others be able to access about youwith or without your permission?
What safeguards exist for your protection?

Accuracy Who is responsible for the reliability and accuracy of information?

Who will be accountable for errors?

Property Who owns information?

Who owns the channels of distribution, and how should they be regulated?

Accessibility What information does a person or an organization have a right to obtain? Under what
conditions? With what safeguards?

THREE THEORIES OF BUSINESS ETHICS

 Theory Definition Metrics

Stockholder Maximize stockholder Will this action maximize

wealth in legal and stockholder value? Can
non-fraudulent goals be accomplished
manners. without compromising
company standards and
without breaking laws?

Stakeholder Maximize benefits to all Does the proposed action

stakeholders while maximize collective benefits
weighing costs to to the company? Does this
competing interests. action treat one of the
corporate stakeholders
unfairly?

Social Create value for society in a Does this action create a net
contra manner that is just and benefit for society? Does the
ct nondiscriminatory. proposed action discriminate
against any group in
particular, and is its
implementation socially just?

PRIVACY

Court decisions have followed two rules for defining privacy:

o The right of privacy is not absolute. Your privacy must be balanced against
the needs of society.
o The publics right to know supersedes the individuals right of privacy.
IT TECHNOLOGIES

Data aggregators, digital dossiers, and profiling

Electronic Surveillance

Personal Information in Databases

Information on Internet Bulletin Boards, Newsgroups, and Social Networking Sites

DATA AGGREGATORS, DIGITAL DOSSIERS, AND PROFILING

 Data Aggregators collect public and non-public data then integrate these data to
form digital dossiers on most adults in North America.

Click on the following links to review examples of data aggregators:

o http://www.lexisnexis.ca/en-ca/home.page
o www.acxiom.com
o http://www.statcan.gc.ca/

ELECTRONIC SURVEILLANCE

The law supports the right of employers to read their employees e-mail and other
electronic documents and to monitor their employees Internet use.

See the Globe & Mail article regarding surveillance in Canada.

PERSONAL INFORMATION IN DATABASES

Banks and financial institutions

Utility companies

Employers

Government agencies

Credit reporting agencies

Hospitals

Schools and universities

Retail establishments

INFORMATION ON SOCIAL SITES

 Social Networking Sites often include electronic discussions such as chat rooms.
These sites appear on the Internet, within corporate intranets, and on blogs.

A blog (Weblog) is an informal, personal journal that is frequently updated and

intended for general public reading.

Clicking here will take you to the Government of Canada article on the Pros and
Cons of Social Networking in business

PRIVACY CODES AND POLICIES

Opt-in Model prohibits an organization from collecting any personal information

unless the customer specifically authorizes it.

Opt-out model permits the company to collect personal information until the
customer specifically requests that the data not be collected.

INTERNATIONAL ASPECTS OF PRIVACY

Approximately 50 countries have some form of data-protection laws.

Many of these laws conflict with those of other countries, or they require specific
security measures.

Some countries have no privacy laws at all

Whose laws have jurisdiction when records are stored in a different country for
reprocessing or retransmission purposes.

INFORMATION SECURITY

Information security refers to all of the processes and policies designed to protect an
organizations information and information systems (IS) from unauthorized access,
use, disclosure, disruption, modification, or destruction.

Five key factors that affect the vulnerability and security organizational information
resources:
o Todays interconnected, interdependent, wirelessly networked business
environment;
o Smaller, faster, cheaper computers and storage devices;
 o Decreasing skills necessary to be a computer hacker;
o International organized crime taking over cybercrime;
o Lack of management support.

SECURITY THREATS

UNINTENTIONAL THREATS
 Information systems are vulnerable to many potential hazards and threats.

There are two major categories of threats:

o unintentional threats
o deliberate threats

HUMAN ERROR

Human mistakes manifest themselves in many different ways:

o Carelessness with computing devices
o Opening questionable e-mails
o Careless Internet surfing
o Poor password selection and use
o Carelessness with ones office
o Carelessness using unmanaged devices
o Carelessness with discarded equipment
o Careless monitoring of environmental hazards

DELIBERATE THREATS

Espionage or trespass

Information extortion

Sabotage or vandalism

Theft of equipment or information

Identity theft

Compromises to intellectual property

Software attacks

Alien software

Supervisory control and data acquisition (SCADA) attacks

Cyberterrorism and cyberwarfare

CONTROLS
 The purpose of controls is to safeguard assets, optimize the use of the
organizations resources, and prevent or detect errors or fraud.
o General controls apply to more than one functional area. Example:
passwords
o Application controls are specific to one application. Example: approval of
payroll wage rates

CATEGORIES OF GENERAL CONTROLS

Physical: walls, doors, fencing, gates, locks, badges, guards, alarm systems,
pressure sensors, and motion detectors.
Access Controls: can be physical or logical
Communication: firewalls, anti-malware systems, whitelisting and blacklisting,
encryption, virtual private networks (VPNs), secure socket layer (SSL), and
employee monitoring systems.

AUTHENTICATION AND AUTHORIZATION

 To authenticate (identify) authorized personnel, an organization can use one or
more of the following types of methods:
o something the user is (biometrics)
o something the user has
o something the user does
o something the user knows

Authorization determines which actions, rights, or privileges the person has, based
on his or her verified identify.
o Privilege
o Least privilege

COMMUNICATIONS CONTROLS

Firewalls

Anti-malware systems

Whitelisting and blacklisting

Encryption

Virtual private networks (vpns)

Secure socket layer (SSL)

Employee monitoring systems

BUSINESS CONTINUITY PLANNING, BACKUP AND RECOVERY

In the event of a major disaster, organizations can employ several strategies for
business continuity including:
o hot sites
o warm sites
o cold sites
o off-site data storage

INFORMATION SYSTEMS AUDITING

 Types and examples of auditors:
o External: public accounting firm
o Government: Canada Revenue Agency
o Internal: work for specific organizations
o Specialist: IS auditors

INFORMATION POLICIES

E-Policies are guidelines and procedures that encourage ethical use of

computers and the Internet in business.

WHY SYSTEMS ARE VULNERABLE

Accessibility of networks
Hardware problems (breakdowns, configuration errors, damage from improper use or
crime)
Software problems (programming errors, installation errors, unauthorized changes)
Disasters
Use of networks/computers outside of firms control
Loss and theft of portable devices
 BUSINESS VALUE OF SECURITY & CONTROL

Failed computer systems can lead to significant or total loss of business function
Firms now more vulnerable than ever
o Confidential personal and financial data
o Trade secrets, new products, strategies
A security breach may cut into firms market value almost immediately
Inadequate security and controls also bring forth issues of liability

WINTER 2017 SESSION 11 Social and Collaboration IT

The Connected Generation Influences Banking Strategy

During the 2010s, the banking industry worldwide was in a serious trouble. In the
US, mortgage foreclosures, a soft economy, high unemployment, etc were just of
the problems facing retail banks.
In 2011 big retail banks were losing huge numbers of customers to credit unions
(CU) and small community banks.
Many were moving because of the high banking fees.
The seriousness of the situation led to an event called Bank Transfer Day, A
Facebook-organized protest against ridiculous fees and poor customers service
originally aimed at BoA, but expanded to include large banks in general. This is
an example of groundswell-organized group that came into existence via the
shared opinions of a large number of people on the social media.
 People were urged to close accounts at multinational banks and encouraged to
move your money to a neighbourhood banks and CU by Nov 5, 2011. Even
though Boa reversed its initial fees after mass outrage, the response was too late.
Over 650k customers had opened accounts at CUs, taking away $4.5 billion from
big banks.
The Connected Generation Influences Banking Strategy
Lessons Learned
o Banks, even the biggest ones, need to think in terms of consumer because
social media has given them a powerful voice.
o The most effective mechanisms for banks dealing with connected customers
(connected Generation, or Gen C) is to provide great service and to listen to
them when they are not happy.
o Unless you honestly engage customers and get rid of outdated processes that
harm customer service, you risk negatively impacting your brand image or
revenues.

Citibanks turnaround strategies involve using social outreach to better solve

customer issue sin real time, engage them for marketing purposes, and monitor
online comments to know what to fix.
Building a Social Business Strategy

A plan of how the firm will use social IT, aligned with organization strategy and
IS strategy
A vision of how the business would operate if it seamlessly and thoroughly
incorporated social and collaborative capabilities throughout the business model
Answers the same type of questions of what, how, and who, as any other business
strategy

Social Business Strategies

Collaboration
o Using social IT to extend the reach of stakeholders, both employees and
those outside the enterprise walls.
o Social networks enable individuals to find and connect with each other to
share ideas, information, and expertise.
Engagement
o Using social IT to involve stakeholders in the traditional business of the
enterprise.
o Communities and blogs provide a platform for individuals to join in
conversations, create new conversations, offer support to each other, and
other activities that create a deeper feeling of connection to the company,
brand, or enterprise
Innovation
o Using social IT to identify, describe, prioritize, and create new ideas for the
 enterprise
o Social IT offer the community members a super idea box where
individuals suggest new ideas, comment on other ideas, and vote for their
favorite idea, giving managers a new way to generate and decide on products
and services

The Constantly Changing Web

Web 2.0 (the social web): a term used to describe a phase of World Wide Web
evolution characterized by dynamic webpages, social media, mashup applications,
broadband connectivity and user-generated content.

Social media: a collection of Web applications, based on Web 2.0 technology and
culture that allows people to connect and collaborate with others by creating and
sharing digital content.

World Wide Web (the Internet): a network of documents on the Internet, called
webpages, constructed with HTML markup language that supports links to other
documents and media (e.g. graphics, video, audio, etc.).

Setting the Stage for Web 2.0

Broad bandwidth (broadband)

Sustainable business models
New Web programming technologies
Application programming interface (API)
Plug-Ins
 Why Managers Should Understand Web Technology

Social Media Applications and Services

Social Networking Service (SNS): an online platform or website that allows

subscribers to interact and form communities or networks based on real-life
relationships, shared interests, activities and so on.
Both YouTube and Facebook started as SNSs, but now span multiple application
categories.
Social Media Applications and Services

More than Facebook, YouTube, & Twitter

o Collaboration
o Communication and Engagement with Customers (Marketing)
o Image and Reputation Management (Public Relations)
o Communication and Engagement with Employees and Partners
(Management)
o Talent Acquisition and Recruiting (Human Resources)
o Research and Knowledge Management
o Productivity and Information Utilities
o Fund Raising
Elements of Social Media: What Makes it Different?

User-generated content (UGC).

 Content control.
Conversation.
Community (common values, culture).
Categorization by users (tagging).
Real people (profiles, usernames, and the human voice vs. the corporate we).
Connections (followers, friends, members, etc.).
Constant updating (real-time, dynamic).
Content separated from form.
Equipment independence.

Web 2.0 Attitude

Cluetrain Manifesto
o Understanding not only how people behave, but also the way they think
about things.
o Transforms Markets to conversations where successful companies will learn
to engage customers instead of traditional unidirectional or broadcast
communications.

Leverage the Groundswell

Listening
Talking
Energizing
Supporting
Embracing

Old Web versus New Web

Online or virtual communities parallel physical communities, but were primarily
user-to-user interactions.
Usenet and Newsgroups provided a static means of communicating messages.
Online communities have transformed to include:
o Selling goods and services
o Promoting products to prospective customers; for example, advertising
o Prospecting for customers
o Building relationships with customers and prospective customers
o Identifying customer perceptions by listening to conversations
Old Web versus New Web
 Social Network Analysis (SNA)

The mapping and measuring of relationships and flows between people, groups,
organizations, computers, or other information or knowledge-processing entities.
Social graph: to the global social network reflecting how we are all connected to
one another through relationships.
Giant global graph: illustrates the connections between people and/or documents
and pages online.
Leveraging the Power of the Crowd

Crowdsourcing: a model of problem solving and idea generation that marshals the
collective talents of a large group of people.

Crowdsourcing Websites
Tongal (online videos)
Amazons Mechanical Turk (marketplace solutions)
Eli Lilly (science)
Social Networks and Crowdfunding
The Problem
o All businesses at one point or another are faced with the problem of raising
money. This is definitely the case for new start-up businesses. Did you ever want
to become an entrepreneur? To start your own company, one of the first things
you will need is money. All businesses from small to large need to find the
necessary funds to turn business ideas into products and services.
The Solution
o One solution to finding the money that organizations need is the emerging area of
social media. Crowdfunding, such as Pursu.it (http://pursu.it), uses websites to
allow those in need of cash to raise funds small from a large pool of investors or
donors. Crowdfunding websites has links to popular social media networks such
as Facebook and Twitter and that helps them to reach a large population of
potential donors.
The Results
o As of mid-2012, there were more than 450 active crowdfunding sites around the
world, mostly in North America and Europe, including 17 in Canada. Through
these crowdfunding platforms, investors and donors gave almost US$1.5 billion in
2011 to support more than one million causes. It was expected that contributions
to crowdsourcing sites would double in 2013 from the previous year.
 Social Networking Services and Communities

Virtual Reality
o Second Life is a social network that uses avatars to represent their residents
(users). Users can develop their own apps.
o Avatars are an icon, figure, or visual representation of a person in a digital
environment.
Private Social Networking Services

Social communities with restricted membership used by many colleges and

universities.
Easier to monitor activities and track conversations.
Requires considerably more time, attention, and resources than using general
SNS.

Engaging Consumers

Blogs
o Websites were people regularly post a variety of content in various digital
formats.
o Blogs can establish reputations and promote business interests and/or share
viewpoints.
o Blogospheres are connected blogs.
o Microblogs are frequent, but brief posts such as Twitter.
o Blogging Platforms are software used to create and edit content with features
that make blogging relatively easy.
o Wordpress (51%) and Blogger (21%) are the most popular blogging
platforms.

Engaging Consumers

Twitter
o A valuable tool for activists engaged in organizing protests, debating political
viewpoints, and broadcasting real-time information through Tweets.
o Uses content tags called Hashtags (#) to allow users to follow conversations
and/or trends.

Growing Use of Twitter

o Twitterspheres are third-party apps to enhance functionality and experience.
o TweetDeck, Twitpie, Twitterfeed, and Twitterholic are essential Twitter
tools.
 Wikis

Wikis:
o harness the collective intelligence of Internet users, combining the input of
many individuals
o provide a central repository for capturing constantly updated product features
and specifications, tracking issues, resolving problems, and maintaining
project histories
o enable companies to collaborate with customers, suppliers, and other
business partners on projects.

Netcasting

Netcasting is the distribution of digital media, primarily audio files via

syndication feeds for playback on digital media players and personal computers.
o Podcasting
o Videocasting
Click here to listen to podcasts
Web 2.0 Media

Web 2.0 media provide a variety of content, including:

o video (Amazon Video on Demand, YouTube, Hulu, Facebook)
o music (Amazon MP3, Last.fm, Rhapsody, Pandora, Facebook, iTunes)
o photographs (Photobucket, Flickr, Shutterfly, Picasa, Facebook).
Click here to review an example of Web 2.0 media

Social Metrics and Monitoring Tools

Monitoring Service
o Conversation tracking on social media sites
Paid services: Radian 6, Alterian SM2, Hubspot.
Free services: Twitter Search, Social Mention
o Provides organizations a better understanding of brand, product, and even
executive perception from consumers.
o Brand advocates positively portray a brand or company online.
 Social Metrics and Monitoring Tools

Social analytics:
o Is a set of tools developed to measure the impact of the social IT investments
on the business.
o analyzes conversations, tweets, blogs, and other social IT data to create
meaningful, actionable facts.

Social analytics vendors include Google Analytics and Radian6 (Salesforce.com).

o Radian6s platform tools enable:
listening to the community.
learning who is in the community.
engaging people in the community.
tracking what is being said.
o Google Analytics is a set of social analytics tools that enables organizations
to analyze their website and include:
website testing and optimizing.
search optimization.
search term interest and insights.
advertising support and management.

WINTER 2017 SESSION 12 THE BUSINESS OF IT

Organizing to Respond to Business Demand: A Maturity Model

A misalignment between the demands on the business side and the IT offerings on
the supply side.

IT and the business are at different levels of maturity in their growth and
development.

Maturity Model framework is a useful tool for understanding the differences in

capabilities.

When the capabilities of the IT organization are in balance with the demand of the
business, both are at the same level.
 Business-IT Maturity Model

Level 1 The functional view predominates.

o The IT organization is focused on the basic services needed to:
generate cost savings.
provide operational information needed.

Level 2 Makes the business effective.

o The IT organization adopts a process view to provide services of an
integrated nature across the organization.
o Information delivered by IS supports managerial decision making.
o Enables business partnerships.

Level 3 - Focuses on innovation.

o Provides support for strategic initiatives.
o Helps spur innovation.
Understanding the IT Organization

IT organizations all provide services to their businesses at the right time and in the
right way based on:
o the skills and capabilities of their people.
o the organizational focus of management.
 Firms differ in their IT activities because of:
o their organizational goals.
o the firms size.
o the organizational structure.
o the level of maturity.

What a Manager Can Expect From the IT Organization

 Managing IT Activities Globally

Large global IT organizations:

o perform many of the same activities listed earlier.
o face many of the same organizational issues as any other global department,
including differences in:

time zones.
languages.
customs and holidays.
cultures.
The following figure summarizes how a global IT perspective affects six
information management issues.
 Global considerations for the IT organization

What the IT Organization Does Not Do

The IT organization does not directly perform core business functions (e.g. selling,
manufacturing, and accounting).

Managers lack of involvement in the design of systems turns over control of

business operations.

The IT organization does not typically design business processes.

Partnerships between the general managers and IT professionals are important.

The IT organization does not set business strategy.

 Chief Information Officer (CIO)

The senior-most executive in the enterprise.

o Responsible for technology vision.
o Leadership for designing, developing, implementing, and managing IT
initiatives.
o Focus on operating effectively in a constantly changing and intensely
competitive marketplace.

Works with the executive team in strategy formulation processes.

A business technology strategist or strategic business leader.

Uses technology as the core tool in creating competitive advantage and aligning
business and IT strategies.

In the early days, the CIO was predominantly responsible for controlling costs and
reported to the CFO.
IT Portfolio Management

IT portfolio management refers to:

o evaluating new and existing applications collectively on an ongoing basis to
determine which applications provide value to the business in order to
support decisions to replace, retire, or further invest in applications across
the enterprise.

Continually deciding on the right mix of investments from funding, management,

and staffing perspectives.

The goal is for the company to fund and invest in the most valuable initiatives that,
taken together as a whole, generate maximum benefits to the business.

Asset Classes of IT Investments

Peter Weill and colleagues at MITs Center for Information Systems Research (CISR)
describe four asset classes of IT investments:

Transactional Systems
o Systems that streamline or cut costs.

Infrastructure Systems
o Shared IT services used for multiple applications such as servers, networks,
databases, or laptops.

Informational Systems
o Systems that provide information used to control, manage, communicate,
 analyze, or collaborate.

Strategic Systems
o Systems used to gain a competitive advantage in the marketplace.

Portfolio Management Perspective

New systems are evaluated on their own merits as well as their overall impact on
the portfolio.

Systems cant stand alone.

o Evaluated based on their ability to meet business demand as part of an
integrated web of applications.

Figure on the next slide shows a typical IT portfolio.

Weills study found that the average firm allocates:

o 46% of its total IT investment each year to infrastructure.
o 25% of its total IT investment in transactional systems.
Different industries allocate their IT resources differently.

Managers use a portfolio view of IT investments to manage IT resources.

o Shows where money is being spent on IT.
Average companys IT portfolio profile

Informational Strategic
20% 13%

Transactional
13%

Infrastructure
54%

IT Portfolio Business Strategies

Decision makers use the portfolio to analyze risk.

o Assess fit with business strategy.
o Identify opportunities for reducing IT spending.
Portfolio management helps prioritize IT investments across multiple decision
 criteria.
o Value to the business.
o Urgency.
o Financial return.
The IT portfolio must be aligned with the business strategy.

Weills work suggests that a different balance between IT investments is needed for
a cost-focused strategy compared to an agility-focused strategy.

Comparative IT portfolios for different business strategies

Valuing IT Investments
New IT investments are often justified in terms of monetary costs and benefits.
Soft benefits, such as the ability to make future decisions, make it difficult to
measure the payback of IT investment.
o The systems are complex, and calculating the costs is an artnot a science.
o Calculating a payback period may be more complex than other types of
capital investments.
o Many times the payback cannot be calculated because the investment is a
necessity rather than a choicewithout any tangible payback.

IT managers need to learn to express benefits in a business-like manner such as ROI

or increased customer satisfaction.

The next slide shows the valuation methods used.

 Valuation Methods

Valuation Method Description

Return on Investment (ROI) ROI= (Estimated lifetime benefits-Estimated lifetime costs)/Estimated lifetime costs.

Net Present Value (NPV) Calculated by discounting the costs and benefits for each year of systems lifetime
using present value.

Economic Value Added (EVA) EVA = net operating profit after taxes.

Payback Analysis Time that will lapse before accrued benefits overtake accrued and continuing costs.

Internal Rate of Return (IRR) Return on the IT investment compared to the corporate policy on rate of return.

Weighted Scoring Methods Costs and revenues/savings are weighted based on their strategic importance, etc.

Prototyping A scaled-down version of a system is tested for its costs and benefits.

Game Theory or Role-playing These approaches may surface behavioral changes or new tasks attributable to a new
system.

Simulation A model is used to test the impact of a new system or series of tasks; low-cost
method.

Analysis Pitfalls
Both IT and business managers may encounter a number of pitfalls when analyzing
return on investment:
o Not every situation calls for in-depth analysis.
o Not every evaluation method works in every case. Factors to consider
include:
the assets employed.
 the duration of the project.
any uncertainty about implementation.
o Circumstances may alter the way a particular valuation method is used.
Managers use an adjusting factor in their estimates.
o Managers can fall into analysis paralysis.
Experience and being mindful of the risks of incorrect valuation help
decide when to stop analyzing.
o Even when the numbers say a project is not worthwhile, the investment may
be necessary to remain competitive.

Monitoring IT Investments
Ensure that the money spent on IT results in benefits for the organization.
A common, accepted set of metrics must be created.
o Metrics must be monitored and communicated to senior management and
customers of the IT department.
o Metrics are often financial in nature (e.g., ROI, NPV).
o IT metrics include:
logs of errors encountered by users, end-user surveys, user turnaround
time, logs of computer and communication up/downtime, system
response time, and percentage of projects completed on time and/or
within budget.
o Business metrics include:
the number of contacts with external customers, sales revenue accrued
from web channels, and new business leads generated.

The Balanced Scorecard

Two methods for communicating metrics are scorecards and dashboards.

Robert Kaplan and David Norton developed the balanced scorecard.

o Focuses attention on the organizations value driverswhich include, but are
not limited to, financial performance.

Companies use it to assess the full impact of their corporate strategies on their
customers and workforce as well as their financial performance.

This methodology allows managers to look at the business from four perspectives:
o Customer, internal business, innovation/learning, and financial.
 Scorecard Applied to IT Departments

IT Dashboards

IT dashboards:
o summarize key metrics for senior managers in a way that provides quick
identification of the status of the organization.
o provide frequently-updated information on areas of interest within the IT
department.
The data focuses on project status or operational systems status.
In order to increase its transparency, the U.S. federal government created an IT
dashboard website in 2009.
o The increased transparency increased accountability for managing the
investments.
Types of IT Dashboards

Types of IT Dashboards:
Portfolio dashboards.
o Show senior IT leaders the status, problems, milestones, progress, expenses,
and other metrics related to specific projects.
Business-IT dashboards.
o Show relevant business metrics and link them to the IT systems that support
them.
 Service dashboards.
o Show the important metrics about the IS such as up-time, throughput, service
tickets, progress on bug fixes, help desk satisfaction, etc.
Improvement dashboards.
o Monitor the three to five key improvement goals for the IT group.

Classification Framework for Benefits

 Funding IT Resources

Who pays for IT?

The three main funding methods are chargeback, allocation, and corporate
budget.
o Both chargeback and allocation methods distribute the costs back to the
businesses, departments, or individuals within the company.
o In corporate budgeting, costs are not linked directly with any specific user or
business unit; costs are recovered using corporate coffers.
 Chargeback

IT costs are recovered by charging individuals, departments, or business units based

on actual usage and cost.
The IT organization collects usage data on each system it runs.
o Rates for usage are calculated based on the actual cost to run the system and
are billed out on a regular basis.
When the IT organization wants to recover administrative and overhead costs using
a chargeback system, costs are built into rates charged for each of the services.
Chargeback systems are popular and are:
o Viewed as the most equitable way to recover IT costs.
o Expensive to create and manage.
o Most appropriate when there is a wide variation in usage among users or
when actual costs need to be accounted for by the business units.

Allocation

Allocation funding method recovers costs based on something other than usage
such as revenues, login accounts, or number of employees.
Simpler to implement and apply each month compared to the chargeback
mechanism.
The rate charged is often fixed at the beginning of the year.
Two main advantages:
o The level of detail required to calculate the allocations is much less.
Leads to cost savings.
o Charges from the IT organization are predictable.
Generates far less frequent arguments from the business units.

Corporate Budget

With the corporate budget funding method, the costs fall to the corporate bottom
line rather than levying charges on specific users or business units
Corporate budget advantages:
o Relatively simple method for funding IT costs.
o Requires no calculation of prices of the IT systems.
o Bills are not generated on a regular cycle to the businesses.
o Concerns are raised less often.
o IT managers control the entire budget.
o Control the use of the funds.
Have more input into what systems are created, how they are
managed, and when they are retired.
o Encourages the use of new technologies because learners are not charged for
exploration and inefficient system use.

Comparison of IT funding methods