THE IMPACT OF GLOBALISATION ON TODAY'S BUSINESS,
AND WHY INFORMATION SYSTEM SECURITY IS
STRATEGIC
Received: 7th November, 1994
PROFESSOR IAN O. ANGELL
PROFESSOR IAN O. ANGELL
HAS HELD THE CHAIR OK INFORMATION
SYSTEMS AT THE LONDON SCHOOL OF
ECONOMICS SINCE 1986. ALTHOUGH BEST
KNOWN FOR HIS WORK ON COMPUTER
GRAPHICS FOR THE LAST TEN YEARS HE HAS
CONCENTRATED ON STRATEGIC
INFORMATION SYSTEMS AND ON
ORGANISATIONAL AND NATIONAL IT
POLICIES. HE HAS ACTED AS A CONSULTANT
ON THE MANAGEMENT OF INFORMAI ION
SYSI EMS TO MANY NATIONAL AND
INTERNATIONAL ORGANISATIONS AND T O A
NUMBER OF GOVERNMENTS. HIS CURRENT
RESEARCH FOCUSES ON THE GLOBAL
CONSEQUENCES OF IT, AND PARTICULARLY
ON SECURITY ISSUES.
ABSTRACT
In this paper Professor Angell gives his pre-
dictions for the effect ofglobal communica-
tion networks on the world economy and in
particular on governmental and company
structures at both macro and micro levels.
He then relates this to the central position
of information systems within manage-
ment, in turn demonstrating the funda-
70
mental role of information systems (IS)
security in the running of every company.
In the light of these globalisation pres-
sures he stresses that companies can no
longer treat security issues as the poor rela-
tion —for that is merely trusting to luck in
the face of growing organisational com-
plexity. The basic message of the paper is
that the security of business systems, par-
ticularly of telecommunication applica-
tions, must be placed at the core of every
business. However, for this to happen he
says that the very concept of security must
be redefined, and the security community
must start preparing itself now for its
major new role in the future of manage-
ment.
INTRODUCTION
Information systems security is going
to play an increasingly important
role in the business of the future and
management in general, but organi-
sational security in particular, is
going to be a far more complex and
difficult task. The form that this
demanding new role for security will
take is being studied at the LSE
Computer Security Research Centre.
 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE · VOLUME THREE NUMBER ONE
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Society is undergoing funda-
mental global changes, changes just
as significant as those of the Refor-
mation or the Industrial Revolution.
These changes will either catapult
companies into a new prosperity or
relegate them to obscurity and
extinction. The development and
implementation of new systems by
businesses to meet these changes will
introduce unimaginable levels of
complexity that manifest wide rang-
ing opportunities for fraud and
systemic failure. The role of security
will have to be completely rein-
vented, not just re-engineered, in
order to deal with these emerging
problems.
THE SUPERHIGHWAYS
The new order is being led by
advances in telecommunications.1
Information superhighways will
enable everyone in the world to
'talk' to everyone else. A new cosmo-
politan age is upon us, stemming
from an information technolog)' that
brings together the telephone, com-
puters, consumer electronics, tele-
vision and radio. Information
technology (IT), together with
speedy international travel, is chang-
ing the whole nature of business and
political governance, management is
going to need totally new para-
digms.2
It is a time of great opportunity
as well as of risk, it is in such times
that new business empires are made.
If companies have a good under-
standing, both of the rapidly chang-
ing global commercial environment
and of their own capabilities, then
they can introduce good strategic
planning and hence good manage-
ment. With good leadership added
into the equation, businesses with
71
imagination and vision will succeed;
but those which seek to hold on to
the past are doomed.
Any credible vision of this new
order must consider social/political/
economic changes at a number of
different levels, all of which, ulti-
mately, will affect the security
manager: at the governmental and
corporate levels; at the level of
general management; at the level of
office management; and at the level
of the individual employee.
GLOBALISATION AND
LOCALISATION
One major aspect of the new order
is the globalisation of organisations,
and not merely their internationali-
sation.3 The necessity for secure
transferable systems in this situation
is self-evident. Individuals and com-
panies are setting up large trans-
national networks that cross national
boundaries and barriers. The organi-
sation of the future will be truly
global, it will relocate (physically or
electronically) to where the profit is
greatest and the regulation least.
Global companies no longer feel the
need to support the national aspira-
tions of their countries of origin.4,5
This new business paradigm was
expressed very forcibly by Akio
Morita, causing uproar in Japan,
when he announced that Sony was a
global company and not Japanese.
Global organisations are looking
throughout the world for talent and
profit; in the information age this
pairing is indivisible. Paradoxically,
globalisation is resulting in a trend
towards localisation or, as Morita
calls it, 'global localisation'.6,7Global
companies are setting themselves up
within virtual organisations, at the
hub of loosely knit alliances of local
 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE · VOLUME THREE NUMBER ONE
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companies, all linked together by
global networks, both electronic and
human. These companies assemble
to take advantage of any temporary
business opportunity; and then
separate, searching for the next
major deal. Apart from local
products, local companies also
deliver local expertise and access to
home markets for other products
created within the wider alliance.
Companies that are part of virtual
organisations have enormous poten-
tial, while those outside such
networks have no future. Such
project-based virtual organisations
will be developed around a complex
IS infrastructure that will require
substantial security input in order to
maintain coherence and cohesion of
the organisation, to protect intellec-
tual property and to keep the dis-
covery of new business opportunities
secret for as long as possible.
Run by an international élite,
global organisations are searching
for the intellectual products that will
drive the information age. Inter-
national trading (particularly of
knowledge) now includes new forms
of barter and exchange. Money,
which is merely a means of facilitat-
ing economic transactions, has itself
become electronic information, and
what constitutes money cannot be
monopolised by national govern-
ments any longer. This inevitably
lowers the transaction costs of
money and makes taxation of profits
and regulation of the process almost
impossible, a real competitive advan-
tage for any virtual organisation
with movable operations. According
to Geoff Mulgan, 'the main produ-
cers and repositories of wealth —
multinational companies — have
increasingly been able to adjust their
accounts and the prices of their
72
internal international transactions so
that their profits are declared in low
tax countries, while they continue to
operate in high tax ones'.8 Further-
more, a recent estimate from Karl
Ziegler of the Centre for Account-
ability and Debt Relief claims that 60
per cent of the world's private bank-
ing is held in trust in offshore un-
supervised tax havens.8 Through its
secrecy laws and minimal regulation,
Grand Cayman has become the fifth
largest banking centre in the world,
with 500 banks; this year US$600bn
will pass through the island. The dis-
advantage of these electronically-run
international bank accounts is that
the potential for fraud is so much
greater.
KNOWLEDGE WORKERS VERSUS
SERVICE WORKERS
Peter Drucker says that all of
humanity is polarising into two
employment categories: the intellec-
tual, cultural and business élite (the
mobile knowledge workers), and the
rest (the immobile service workers).9
In a similar vein, Robert Reich
believes there will be three cate-
gories: symbolic-analytic services (the
knowledge workers who are prob-
lem identifiers, solvers and brokers),
in-person services and route produc-
tion services.10 The latter two groups
roughly correspond to Drucker's ser-
vice workers. Routine production
services can be exported anywhere
on the globe, and wages in this
sector are already beginning to con-
verge worldwide to third world
levels; this is having the (slightly less
extreme) knock-on effect of dragging
down the wages of in-person service
workers. And at the very bottom of
the heap we are already witnessing
the emergence of an underclass in
 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE · VOLUME THREE NUMBER ONE
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western societies.11 With this devel-
oping scenario in mind, every com-
pany must rethink its human
resources policy, and incorporate a
major security component within it.
Now it can be seen that know-
ledge workers are the real genera-
tors of wealth. These owners of
intellectual and Financial wealth will
be made welcome anywhere in the
world; and more so, both companies
and countries will be competing
with each other to attract and keep
them. From October 1994, foreign
'entrepreneurial investors' with £1m
at their disposal can bypass usual
entry rules into Britain as long as
they invest £750,000 in government
bonds, shares or corporate bonds
and intend to make their main home
there.12 In the United States, there is
a fast track immigration policy for
businesspeople who can offer
£660,000 and guarantee to employ
ten people. Six hundred millionaires
emigrated to America in 1993.
Canada's guidelines allow people
with C$500,000 (about £250,000) to
settle provided they have a proven
business track record. New Zealand's
strict measures for all potential
immigrants are waived if the immi-
grant invests £240,000.13 It is only a
matter of time before intellectual
capital such as scientific expertise
will be included on the balance
sheet in all these countries. At the
same time global organisations will
demand total loyalty from their
employees; customers will expect
loyalty from their suppliers. But will
they get it? Companies regularly use
headhunters and pay substantial
'golden hellos' and 'golden-hand-
cuffs' to symbolic-analysts, but how
far can a company trust them? It is
increasingly easy for knowledge
workers to walk away with corporate
73
knowledge — as in the recent 'Lopez
Affair' that set General Motors
against Volkswagen where it was
alleged that Lopez, Volkswagen's
controversial new purchasing and
production chief, took large quanti-
ties of confidential documents with
him when he moved to VW from
General Motors.14 . Inevitably, secur-
ity departments will be far more
involved in the appraisal and inspec-
tion of potential, existing and past
employees.
The situation is possibly even
more complex, because the
increased importance of the sym-
bolic-analysts to companies is inten-
sifying a power struggle with the
owners of equity in those companies,
that is likely to change funda-
mentally the very nature of capital-
ism itself. This battle is likely to be at
least as significant as that between
landowners and industrialists in the
early part of the nineteenth century
that was formative of today's capital-
ism.15
On the other side of the coin,
there is a growing realisation that
each service worker is a net loss both
to the state and to the company —
they cost far more than they gener-
ate. Consequently, companies will be
reducing the wages and staffing
levels of service workers, and it is no
accident that most western compan-
ies are instigating major downsizing
programmes. State barriers are being
thrown up everywhere to keep out
alien service workers; each state has
a surplus of its own to support.
However, in order to attract the
élite, with their knowledge and
money to enliven the economy, the
situation might arise where this
group will be expected to pay less
tax and not more. Eire already gives
writers and artists preferential tax
 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE · VOLUME THREE NUMBER ONE
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deals on foreign earnings. The great
majority of governments are lower-
ing top tax rates in line with declin-
ing global levels. 'Top income tax
rates fell an average of 1G.5 per cent
between 1975 and 1989.'16 The tax
burden is moving onto the im-
mobile; and away from income and
onto consumables. Very soon com-
panies will be negotiating preferen-
tial tax deals not only for themselves
but also for chosen employees.
When Leona Helmsley said 'only
the little people pay taxes', she was
unwittingly making a prediction. Of
course, this goes counter to every
notion of social justice that has been
prevalent over the past 200 years —
but in the new order of things it will
still happen. This will inevitably lead
to massive social unrest and dis-
order.
A ROLE FOR THE NATION
STATE?
The result of these forces is that
everywhere the nation state is in
retreat.17 The nation state is based
on the premise that the state owns
the individual and the leaders of the
state can dispose of the individual's
property as they see fit. But know-
ledge workers call it social injustice:
there is no justice in equality — all
taxation is theft to pay 'for equal
division of unequal earnings'.18 They
want the equality to make them-
selves unequal. 19 They say with deri-
sion that the common good isn't
good, it is merely common! Globali-
sation has shown the James Bond
myth, that the State is good and
global corporations (Spectre) are
bad, to be blatant propaganda on
behalf of the nation state.
Today's trend towards the grow-
ing power of knowledge workers is
74
undermining the centralised power
of the state and its ability to tax and
regulate. Companies must position
themselves in relation to the state
and to their knowledge workers, so
that they can jump in the right
direction. The very nature of the
nation state itself is changing; it will
be seen as merely another form of
organisation. The role of the state in
the new order is to produce people
as the raw material for the global
companies that profit from the
information age, to service these
companies, and to provide them
with an efficient infrastructure, a
market and a stable and comfortable
environment. If a state cannot pro-
duce a quality 'people product' in
sufficient quantities, then it must
buy them from abroad. If the state
can convince the commercially
attractive élite of knowledge workers
and local entrepreneurial companies
to stay, then a virtuous circle of
success is ensured. For then, migrat-
ing global players and their wealth
will also be attracted into that
country.
If, however, the state maintains a
greedy collectivist and populist
stance, under the defunct motto
'power to the people', then the
entrepreneurial élite will move on to
more lucrative and agreeable climes,
and, in the long term, leave that
country economically unviable, com-
posed solely of the unproductive
masses, sliding into a circle of
decline.
Governments will have no choice
other than to acquiesce if they want
to attract and keep employment.
The Marxist myth that labour
creates wealth has been buried once
and for all. A large population, par-
ticularly an uneducated and ageing
population, has now become the
 JOURNAL OK FINANCIAL REGULATION AND COMPLIANCE · VOLUME THREE NUMBER ONE
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major problem facing all western
governments. The masses themselves
will put employment and economic
well-being before the dubious privi-
lege of electing powerless represen-
tatives.
Because of the need to employ
the masses, the major social problem
for politicians in the coming decades
is going to be how to attract global
employers to partner local compan-
ies, and how to keep them. The need
to entice global companies and the
employment they bring, will not
only pit state against state, but also
area against area, town against town
and even suburb against suburb. Tax
holidays and reduced regulation will
be aimed at attracting employers.
This trend will undermine
national legislation and taxation
policies. Any area with independent
aspirations will use economic
weapons against its neighbours.
Staten Island recently voted to split
from New York. Quebec scrapped
local taxes on cigarettes, and people
from neighbouring Canadian states
such as New Brunswick bought their
tobacco across state lines. The result
was a collapse of tax revenues from
smokers in these neighbouring
states, whereas Quebec earned far
more from increased spending than
it lost in tax. To make matters worse,
a recent Toronto produced tele-
vision programme implied that
British Columbia resents what it sees
as its subsidy of the rest of Canada.
It hinted at independence for
Cascadia (British Columbia with the
American states of Washington and
Oregon), which has a combined GDP
of US$250bn and an economy
almost the size of Australia.20 So is
there a future for Canada? Some
futurologists, such as Heineken
(reported by John Naisbitt in his
75
book 'Global Paradox'21), expect that
early in the next century the number
of states in the United Nations will
increase from the present number of
184 to over 1,000. Perhaps the new
self-consciousness in Lombardy, and
with it the rise of the Northern
League in Italian politics, can be
seen as part of a global trend.
A new paradigm is upon us, in
which the nation state can be seen as
just another form of organisation,
which will delegate regulatory power
to continent/market-wide bodies
such as North American Free Trade
Agreement (NAFTA) or the Euro-
pean Union (EU). Nation states will
fragment: rich areas will dump the
poor areas.22 Such shakeout trends
can be interpreted as downsizing, a
strategy that is being considered by
most shrewd major corporations
these days.23 To protect their wealth,
rich areas will also undertake a
rightsizing strategy, ensuring a high
proportion of (wealth generating)
knowledge workers to (wealth
depleting) service workers.
To be successful, a geographical
region needs major cultural and
social attractions to entice the global
corporations, and it also has to be
safe for a company and its employ-
ees. Closer cooperation between
local police forces and company
security agencies can therefore be
expected, and the edges between the
two groupings will become increas-
ingly blurred. Today in the USA
there are nearly twice as many
private security guards as there are
official police.24 Furthermore, to
protect supportive companies, states
may impose draconian penalties on
the perpetrators of economic crimes
and those who betray commercial
secrecy, along the lines of the Swiss
system. For example, 20 years ago
 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE · VOLUME THREE NUMBER ONE
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Stanley Adams worked as a mole for
the European Commission within
Hoffman-La Roche to expose price-
fixing within the drugs industry and
was arrested under Swiss law for
espionage. Although Adams was
eventually given a suspended jail
sentence and was awarded £500,000
by the European Court ofJustice.25
The inevitable large-scale politi-
cal disruption will place an enor-
mous load on the security
departments of corporations that
trade in this unstable environment.
Given the fault-lines appearing
everywhere, businesses must be
ready to take advantage of weakened
governments and force them into
submission. But they must also have
the security systems to defend them-
selves from the inevitable predators
now looking for victims. They must
form a vision of their future, to posi-
tion themselves in order to take full
advantage of the technology, both in
attack and defence.
THE VIRTUAL OFFICE
As the line between information rich
and information poor (countries,
companies and individuals), and con-
sequently between rich and poor, is
being drawn, new paradigms must
be developed to profit from the
information age.26 But these new
interpretations of the human condi-
tion need not only be at the govern-
mental/corporate level as described
above, the new technology will have
a fundamental affect on the very
nature of work. For example, the
past failure of office automation was
caused in the main by trying to auto-
mate office procedures, while keep-
ing the nature of the office the same.
Only recently has it become clear
76
that effective use of superhighways
now necessitates the integration of
IT across all aspects of office
management. The successful office
of the future will be changed into a
radically different animal, the virtual
office.
The producers of office equip-
ment are themselves facing up to
this profound change, and what it
means for their businesses. The
business consultant, Charles Handy,
predicts that the office of the future
will be structured like a club, where
most of the space is allocated for
employees to socialise with col-
leagues and thereby reinforce
organisational bonding.27 The work-
ing parts of the office will be nodes
in a telecommunications network.
Front office workers will spend
much of their time on the road actu-
ally visiting their customers, rather
than the reverse. Linked via the tele-
phone system, their cars will be
extensions of the office. Because of
this system, both front and back
office workers can cover their paper-
work from home or from anywhere
else for that matter. Now all the data
required for conducting business can
be communicated between the
employee's portable computer and a
file store. The file store itself may
even be outsourced, and so it need
not physically belong to the com-
pany.
Should office workers require
physical office space, for the odd
meetings, then they can timeshare
the space. On arrival they will be
given a key to an office, any appro-
priate office (the hot office), which
need not be the same on each visit.
What little paperwork they need,
which is not computerised, will be
brought to the office in containers
from a depository to their temporary
 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE · VOLUME THREE NUMBER ONE
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desk, just-in-time, to be returned
when they leave. There is no need
for even the physical location of the
office to be fixed or owned by the
company. The information system
will know the exact location of every
employee, and messages for a given
individual will be delivered directly
to that individual just-in-time, no
matter where in the building, no
matter where in the world.
An organisation can hire office
space on short time-scales — perhaps
just a few hours. Since the office/
desk is the place to plug into the
network it can be anywhere, it can
be shared with other companies.
These information systems (just-in-
timeshare) will keep track of every-
thing. The first signs of this trend
can be seen with railway stations and
airports supplying temporary office
space.
But this vision holds the potential
of systems disasters. The possibility
of bugging, the misdirection of infor-
mation or the delivery of misinfor-
mation is enormous. The system has
to work efficiently and effectively if
there is not to be substantial waste.
The virtual office can only work if a
major role for security is designed
into the system from the outset.
Innovations such as the virtual
office are only possible because the
paradigm 'that land is wealth' is
being undermined by the impact of
telecommunications. Today, know-
ledge workers and their intellectual
property are the wealth of a country
and an organisation.
Companies will simply desert a
factory or office if they see the
demands of service workers as exces-
sive — as Timex did when it aban-
doned the Dundee site. The value of
office/factory real estate will enter
freefall, as demand for space will
77
become a small fraction of stock of
supply.
NETWORKS AND ELECTRONIC
DATA INTERCHANGE
In this new era each company must
develop its own unique set of
policies towards IT — but certain
technologies are fundamental to all.
Every company must develop exper-
tise in databases and in networks,
both local area networks, and links
into global networks such as Inter-
net.28
Electronic Data Interchange (EDI)
connections will be critical for any
niche supplier to the global market.
Alfred Dunhill plc provides an excel-
lent example of a global company
that communicates with suppliers
and agents with the standard
EDIFACT system. Dunhill offers free
software, free installation and imple-
mentation support, documentation
and system supplied free in the local
language, and free e-mail with inter-
faces to standard word processing
packages. Dunhill's suppliers only
pay for the personal computers
(PCs), and the costs of a network
chosen from a list of recommended
third party network suppliers.
Dunhill does not pay the network
charges, since the package is an
industry standard, so the supplier
can use it to trade with anyone else
who uses the same system and there
need be no fears of being tied in to
Dunhill. And there are substantial
advantages: payment for correct
invoices is guaranteed within five
days; administration in support of
deals is substantially reduced and
work speeded up; there is much
more accuracy, coherence, integra-
tion and security in the processing of
orders; better payment terms are on
 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE · VOLUME THREE NUMBER ONE
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offer; there are reduced communica-
tion and transaction costs; and the
system includes direct computer
links to forwarding agents, and so
there is no need for couriers or fax.
Unfortunately, some suppliers are
not thinking strategically, and so do
not see the long-term advantages.
Consequently they will not put in
the necessary investments to inter-
face the EDI standard with their own
environment.
Some of these fears are to do
with loss of control over their infor-
mation, and a worry that the chinese
walls within the EDI system will leak
data to competitors — as Virgin
Atlantic found to its cost when it
outsourced its flight reservations to
British Airways. It is the role of the
security department to guarantee
the integrity of all such data. EDI
and all other forms of communica-
tion, both machine to machine and
human to human, and the other
combinations in between, all require
the support of a good secure data-
base infrastructure; and security
issues must be at the forefront of
data collection, not just storage and
processing. Communication of these
data is the very nature of today's
business; the security department is
there to ensure that this resource is
not compromised.
Companies must develop a good
understanding of changes in their
external and internal environment,
over much of which they have little
influence, but of which, with tech-
nology, they can take advantage. At
the very least companies must have
the expertise to take the advantage
by effective use of IT, using data-
bases that describe these environ-
ments, and networks to access them,
not forgetting the ubiquitous appli-
cations like word processing and
spreadsheets.
78
Information systems can now be
seen as the very core of business;
they can no longer be seen as a
mere set of applications. Their
integrity is critical to economic sur-
vival; so security has come from the
margins to hold centre stage in every
business.
THE STRATEGY OF IT AS
PROJECT MANAGEMENT
Managing security in such a dynamic
infrastructure is not simple. The
information that flows around IT
systems is changeable, because the
environments they address are per-
petually changing. The information
driving both the database needs and
network needs are themselves
dynamic, as are the IT systems them-
selves. All are in flux. Consequently,
companies have no choice other
than to embark on a programme of
perpetual learning and retraining of
their staff. The whole situation has
become so fluid that management of
IT has to be distilled into a balance
between project management and
human resource management —
each containing an expanded secur-
ity role.
Project teams will be spontane-
ously generated to deal with particu-
lar situations, perhaps using
members of allied companies. Teams
are dissolved when the goals are
achieved. This involves a flatter
management structure and careful
distribution of, and link between,
responsibility and authority in the
virtual organisation. Flatter manage-
ment implies greater trust, and this
in turn requires a proper security
overview involving human resource
management, driven by the needs of
organisational learning and a disci-
pline of 'scenario planning', which is
why the present paper concentrates
 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE · VOLUME THREE NUMBER ONE
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so much on this aspect. Good under-
standing and good planning leads to
good management. It involves know-
ing the environment, knowing the
technology, but most importantly
knowing the company itself.
Unfortunately, it is common for
businesspeople to reject vague
visions of the future and demand
specific answers for immediate prob-
lems. But there are no right answers
in times of uncertainty — the busi-
ness world is far too fluid for that. IT
is expensive and painful — but not
as expensive and painful as the
alternative, bankruptcy. One thing
that can be guaranteed is businesses
will be forced to change their
systems over and over again. Devel-
oping a strategy is the means of min-
imising the damage and maximising
the gains caused by perpetual
change — it is not about choosing a
once and forever answer.
Strategy is about commitment to
using the technology, to educating
the whole company in the potential
and application of IT, and it is about
accepting a perpetual state of
change within a secure environment.
It is about the future and the par-
ticular company's role in it. It is
about developing a vision from the
evidence that is all around, but
which is overlooked in the panic of
uncertainty. Nowadays, companies
have no choice. They must develop
IT strategies. But strategy is not just
about manipulating strategic frame-
works: there can be no strategy with-
out vision. Companies must base
that vision in a good understanding
of the rapid changes being induced
in their competitive commercial
environment by telecommunica-
tions, so that they can then position
themselves to use IT in enhancing
their own organisational capabilities.
They cannot just follow the latest
79
fashionable strategy, or do nothing
— for that is suicide.
Given these huge global and
organisational changes caused by IT
there are some steps that can be
taken by companies. One is to form
an understanding of the broader
context, and then to use IT strategic-
ally so that it is far more than just
support for manufacturing and data
processing. But strategy is not a
unitary thing. It should be consid-
ered in terms of one strategy to-
wards IT production and
development, and one for IT utilisa-
tion. The two should then be unified
when focusing on each specific
application. But all the while, it
should be remembered that tech-
nology strategy is itself a social and
political process.
The main issue to address regard-
ing IT production strategy is the
extent to which software, telecom-
munications and information ser-
vices should be managed in-house or
be outsourced. In an increasingly
competitive and globalised world
economy, many companies are
increasingly marginalised and there-
fore have been forced to modify
their self-reliant policy of in-house
development. Once a strategy is in
place then the company can always
outsource the IT function and the
better a company's vision, the better
its negotiating position with the
chosen facilities management com-
pany will be. But there is a huge
security overhead in outsourcing of
information — as in the Virgin
Altantic case mentioned earlier.
The discussion of IT utilisation
strategies centres around the
demand for computer services
within the company. Strategy driven
policies towards education, training
and the provision of incentives for
information workers are as import-
 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE · VOLUME THREE NUMBER ONE
- ANGELL -
ant as decisions about what specific
business applications are needed.
Detailed prescriptions for IT utilisa-
tion by consultants and agencies are
of little practical value to companies
if they do not recognise that policy
outcomes are often determined by
unique social and political factors.
Security management must also take
a major role when these social and
political factors are being consid-
ered.
DEVELOPING A NEW PARADIGM
FOR SECURITY
Information systems (IS) now hold a
central place in management, in
turn demonstrating the fundamental
role of IS security in the running of
every company. Companies can no
longer trust to luck by treating
security management as a poor rela-
tion. Security, particularly of the
telecommunications and informa-
tion systems infrastructure, must be
at the core of every business. How-
ever, in its present form, the world
of IS security will not cope with the
increased pressures placed on it.
The methods of science so preva-
lent in business thinking are not
going to help the security com-
munity to cope with these pressures.
The idea of 'equilibrium' that under-
lies so much of the 'scientism' of
modern economics and management
theory has been shown to be a myth.
As George Soros so eloquently put
it, there is no such thing as a state of
equilibrium, only the question of
where we are in the perpetual move-
ment between 'near-equilibrium' and
'far from equilibrium'.29 People who
can succeed in this dynamic environ-
ment are today's alchemists, those
who can turn the base metal of
management chaos into the gold of
80
success. These alchemists will inhabit
the domain of security. They will be
pragmatists who do not promote
false theories of scientific truth, but
who base their actions on what they
believe to be 'procedurally success-
ful'.29
So the world of security, specific-
ally of IS security, must change. For
in the past security problems were
viewed after the event and managed
'scientifically', predominantly as
technical tasks, without adequate
strategic understanding of the socio-
economic context within which the
systems are embedded. Problems
were seen as a consequence of a sys-
tem's function, rather than as an
emergent property of reflexive inter-
action between system and context.
Failures are inevitable in that naïve
stance.
On the other hand, the alchemist
recognises the need to treat informa-
tion systems as social systems in
which technology is only one ele-
ment. In its required new form
security must be seen in holistic
terms, and the behaviour of systems
perceived as reflexive and non-
linear. The difference between
success and failure when dealing
with uncertainty will be the manage-
ment of the quality and integrity of a
company's people, procedures and
systems. More and more that differ-
ence will be the responsibility of
security chiefs and their redesig-
nated departments. The sheer com-
plexity and uncertainty of changes
necessitate corporate strategies,
whose effectiveness depends on the
vision of the leadership and the
integrity or wholeness, the sense of
identity and trust in the company,
and how it deals with change. The
concept of security itself will have to
be redefined to encompass these
 JOURNAL OF FINANCIAL REGULATION AND COMPLIANCE · VOLUME THREE NUMBER ONE
- ANGELL -
ideas, which will impact on all com-
pany systems. T h e security c o m m u n -
ity must see itself a m o n g the élite of
symbolic-analysts. T h e j o b of the
new-style security manager is to
broker the identification and solu-
tion of security problems. This com-
munity must develop its own
alchemy, which is not a science, and
which delivers organisational proce-
dures and technological applications
that can succeed in the midst of
social, political and economic u p -
heaval.
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2 Barker, J. (1993) 'Paradigms', Harper
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3 Wendt, H. (1993) 'Global Embrace',
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5 Reich, R. B. (1991) 'The Work of
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81
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19 Iain Macleod.
20 The Economist (1994) 'Welcome to
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21 Naisbitt (1994) ibid.
22 Reich (1991) ibid.
23 Turner and Hodges (1992) ibid.
24 McRae (1994) ibid.
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26 Barker (1993) ibid.
27 Handy, С (1994) 'The Empty Rain­
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29 Soros, G. (1994) 'The Alchemy of
Finance', Vintage, New York.
A talk given to the 1994 Annual Con­
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Hyatt Regency Hotel, Cologne, 10th
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