Information systems lecture notes:

Chapter 1:

 How information systems are transforming business?

 Globalization opportunities:

World is being changed by information systems and, as we expect, also

businesses are being changed, not only their structure but also the way we
should run it. Facts as the emerging mobile digital platforms, possibility of save
big data (related with the growth of online software as a service) and the growth
in the cloud computing industry where more and more business software runs
over internet, help managers and ordinary people in their quotidian. These 3
things are interrelated and have been change at the same time.
Businesses sought to sense and respond to rapidly changing costumer
demand, reduce inventories to the lowest possible levels (actually, there are
many companies that stop having a physical inventory and a physical space,
working only on internet), achieving higher levels of operational efficiency.
Moreover, supply chains have become more fast-paced, with companies of all
sizes depending on just-in-time inventory to reduce their overhead costs and get
to market faster. Another positive change is that businesses are starting to use
social networking tools to connect their employees, costumers and managers
worldwide.
So, summarizing, the improvement in the information systems provides
many globalization opportunities:
 Internet has drastically reduced costs of operating on global scale;
 Increases in foreign trade, allowing the possibility of outsourcing;
 Presents both challenges and opportunities, because managers must use
all these tools in a careless way.
Managers start using these technologies to contact with employees,
providing information for decision-making process. We can call these
developments “emerging mobile digital platform”. They also used the so-
called “Web 2.0” technologies, such ass social networking, collaboration tools,
and wikis in order to make better, faster decisions. All of these tools make

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manager’s behaviour changes, making also how work is organized, coordinated
and measured change.
Maybe, you are asking a question now “What does globalization have to
do with management of information systems?”; you will get a simple answer:
everything. In few words: information systems enable globalization.

 The emerging digital firm:

All of the changes we have describer have created the conditions for a
fully digital firm. A Digital Firm can be defined along several dimensions. It is
one in which nearly all of the organization’s significant business relationships
with costumers, suppliers, and employees are digitally enabled and mediated,
and in which core business processes are accomplished through digital networks
spanning the entire organization or linking multiple organizations.
Business processes refer to the set of logically related tasks and
behaviour that organizations develop over time to produce specific business
results and the unique manner in which these activities are organized and
coordinated (Eg. Developing a new product, creating a marketing plan). These
things are ways of organizations accomplish their business processes and can be
a source of competitive strength.
Key corporate assets (intellectual property, core competences and
financial and human assets) are managed through digital means. In a digital
firma, any piece of information required to support key business decisions is
available at any time and anywhere, which offer a greater flexibility in
organization and management. In digital firms both time shifting and space
shifting are the norm.
 Time shifting: refers to business being conducted continuously 24 hours
a day, 7 days a week, rather than in narrow work day (9am to 5pm).
 Space Shifting: means that work takes place in a global workshop,
wherever space in the world.

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  Strategic Business objectives of information systems:
Nowadays, there is no business operating without information systems
(Eg. Google, Walmart, GE, General motors). There is a growing interdependence
between a firm’s ability to implement corporate strategies and achieve corporate
goals.

Increasing market share, becoming the high-quality or low-cost producer,

developing new products, and increasing employee productivity depend more
and more on the kinds and quality of information systems in the organization.
Firms invest in information systems to achieve six strategic objectives:
 Operational excellence;
 New products, services and business models;
 Customer and supplier intimacy;
 Improved decision making;
 Survival.

Operational Excellence: Inf. Systems and technologies are some of the most
important tools available to managers for achieving higher profits or higher
levels of efficiency and productivity in a business, especially when coupled with
changes in business environment and management behaviour.

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New products, services, and business models: Inf. Systems and technologies
are a major enabling tool for firms to create new products and services, and also
entire business models (it describes how a company produces, delivers and sells
a product or a service to create wealth). (Eg. iTunes, Spotify, etc)
Costumer and Supplier Intimacy: When a business really knows its costumers,
and serves them well, the costumers generally respond by returning and
purchasing more, which raises revenues and profits. Moreover, the more a
business engage its suppliers can provide vital inputs, which lowers the costs.
Improved Decision Making: Without accurate information managers must use
forecast, best guesses, luck, which results in overproduction, underproduction,
and misallocation of resources and poor response times. These poor outcomes
raise costs and make firm lose costumers.
Competitive advantage: when firms achieve one or more of these strategic
objectives chances are they have already achieved a competitive advantage. This
competitive advantage translates in: deliver better performance and better
product or service to costumers, charging less for superior products and to a
answer to costumers and suppliers in real time (eg. Apple, walmart, UPS)
Survival: Information technologies should be seen as necessary thing for a
business. Moreover, since industries and business environments are always
changing, firms must use IS to survive to that changes. Another reason why firms
need IS is the governamental regulations requiring recordkeeping.

 Perspectives on Information System:

Information technology (IT) consists of all hardware and software that a firm
needs to use in order to achieve its business objectives. “Information systems”
are more complex and can be best understood by looking at them from both a
technology and a business perspective.

What is an information system?

Information system is a set of interrelated components that collect, process,
store, and distribute information to support decision-making and control in an
organization. It may also help managers and workers analyse problems, visualize
complex subjects, and create new products. It contains information about

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significant people, places and things within the organization or in the
environment surrounding.
Information: data that have been shaped into a form that is meaningful and
useful to human beings.
Data: are streams of raw facts representing events occurring in organizations or
the physical environment before they have been organized and arranged into a
form that people can understand and use.

There are 3 activities in an information system:

 Input: captures or collects raw data from within the organization of from
its external environment.
 Processing: converts this raw input into a meaningful form
 Output: transfers the processed information to the people who will use it
or to the activities for which it will be used.
Information system also require feedback which is output returned to
appropriate members of the organization to help evaluate or correct the input
stage.
Although computer-based information systems use computer technology, there 2
important distinctions: between computer and a computer program and
between an information system. Software programs are technical foundation, the
tools and materials, of modern information systems (like material and tools used

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to build a house). Computers are used to storage and process information.
Computers are only a part of information systems.

Dimensions of information systems:

To understand information systems we must understand the broader
organization, management, and information technology dimensions of systems
and their power to provide solutions to challenges and problems in the business
environment. We refer to this broader understanding of information systems,
which encompasses an understanding of the management and organizational
dimensions of systems as well as the technical dimensions of systems, as
information systems literacy. In other hand, computer literacy focuses
primarily on knowledge of information technology. Management information
systems (MIS) try to achieve this broader information systems literacy. This
type of system deals with behavioural issues as well as technical issues
surrounding the development, use, and impact of information systems used by
managers and employees in the firm.

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Organizations:
Key elements of an organization are its people, structure, business processes,
politics and culture. Organizations have a structure that is composed of different
levels and specialities. Authority and responsibility in a business firm are
organized as a hierarchy, where higher levels respect to managerial, professional
and technical employees.

Senior Management makes

long-range strategic decisions
about products and services as
well as ensures financial
performance of the firm.
Middle management carries out
the programs and plans of senior
management.
Operational Management is
responsible for monitoring the
daily activities of business.

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There are major business functions:
 Sales and marketing
 Manufacturing and production
 Human resources
 Finance and accounting
Each organization has a unique culture that has been accepted by most
of its members. Parts of an organization’s culture can always be found in it’s IS.
Different levels and specialities in an organization create different
interests and points of view. How company manage this conflicts shows that all
companies have also a unique organizational politics. As we have seen before,
they also have a unique business process.

Management: Management’s job is to make sense about the situations faced by

organizations, make decisions, and formulate action plans to solve problems.
Giving a inconstant environment managers set an organizational strategy to
respond to that challenges, by allocating human and financial resources in order
to achieve success. Throughout they must exercise responsible leadership. And
there is where IS appear. They reflect the hopes, dreams and realities of real-
world managers. Although they also must create new products and services and,
occasionally, re-creating the organization.

Information Technology:
1. Computer hardware: physical equipment used for input, processing and
output activities in information systems
2. Computer software which is detailed, preprogrammed instructions that
control and coordinate computer hardware components in an
information system.
3. Data management technology which consists of the software governing
by oganization of data and physical storage media.
4. Networking and telecommunications technology: consisting of both
physical devices and software, links the various pieces of hardware and
transfers data from one physical location to another. (Eg. Networks,
internet, intranet, intranets and extranets, world wide web)

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About 4 (“Networking and telecommunications technology”)
Network: links to or more computers to share data or resources
Internet: Network of networks
Intranet: Internal corporate networks based on Internet technology
Extranet: Private intranets extended to authorized users outside the organization
World wide web: service provided by Internet that uses universally accepted standards for
storing, retrieving, formatting, and display information in a page format on the internet.

All of the previous technologies, along with the people required to run and
manage them, represent sources that can be shared throughout the organization
and constitute the firm’s information technology (IT) infrastructures. This IT
infrastructures provides platform that system is built on.

Business perspective on information systems:

 Information systems provide real economic value to business. The
decision to invest in IS assumes that returns will be higher, which allows
higher profits caused by the increase in productivity and in revenues (or
decrease in costs), or also a superior long-term strategic positioning.
 Every business has an information value chain. It consists in raw data
acquired and transformed through stages that add value to that
information. It’s determined by extend to which it leads to better
decisions, greater efficiency and higher profits.

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  Business perspective calls attention to organizational and managerial
nature of information systems

Complementary Assets:
Investing in information technology does not guarantee good returns,
some companies get higher returns, others not. The reason for that lies in
complementary assets. Information technology investments alone cannot make
companies and managers more effective unless they are accompanied by
supportive values, structures, and behaviour patterns in the organizations and
other complementary assets. There is a need for change business process before
they can really reap the advantages of new information technologies.
Complementary assets are assets required to derive value from a primary
investment. Firms that support technology investments with investment in
complementary assets receive superior returns. Examples of complementary
assets are: new business models, new processes, management behaviour,
organizational culture, training, etc.
 Organizational assets: appropriate business model or efficient business
processes;
 Managerial assets: incentives for management innovation, teamwork and
collaborative work environments;
 Social assets: Internet and telecommunications infrastructures,
technology standards.

 Comtemporary approaches to information systems:

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Technical approach:
This approach emphazises mathematically based models to study
information systems. The disciplines that contribute to the technical approach
are computer science (establish theories of computability, methods of
computation, and methods of efficient data storage and access), management
science (development of models for decision-making and management practises)
and operations research (focuses on mathematical techniques for optimizing
selected parameters of organizations).
Behavioral approach:
It’s concerned with behavioral issues that arise in the development and long-
term maintenance of information systems (Eg. Strategic business integration,
design, implementation, etc). Areas that are connected with this approach are:
psychology, economics, sociology.

Sociotechnical systems:
In this story we have 4 actors: suppliers of hardware and software, business
firms making investments and seeking to obtain value from the technology,
managers and employees seeking to achieve business value, and contemporary
legal, social, and cultural context. Together they produce management
information systems. It combines computer science, management science,
operations research and pratical orientation with behavioral issues.
Book authors do not believe that a single perspective can capture the
reality of information systems, so they create a new perspective called
sociotechnical perspective. In this view, optimal organizational performance
achieved by jointly optimizing both social and technical systems used in
production. It helps avoid purely technological approach. Both the technical and
behavioral components need attention. This means that technology must be
changed and designed in such a way as to fit organizational and individual needs.
Organizations and individuals must also be changed through training, learning,
and planned organizational change to allow the technology to operate and
prosper.

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Chapter 2:
2.1. Business Processes and Information Systems:
 Business processes:
Business processes refer to the way in which work is organized,
coordinated and focused to produce valuable product or service. These activities
are supported by flows of material, information and knowledge among the
participants in business processes. The performance of a business firms depends
on how well its business processes are designed and coordinated. It can be a
source of competitive strength. Based on the last words we consider business
processes as an asset, but it also can be considered a liability if they are based on
out-dated ways of working that impede organizations to get competitive
advantage.
Business can be seen as a collection of business processes. Many business
processes cross many different functional areas and require coordination across
departments. Examples of functional business processes are:
 Manufacturing and production: Assembling products;
 Sales and marketing: Identifying customers;
 Finance and accounting: creating financial statements;
 Human resources: Hiring employees

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  How information technology improves business processes:
Information systems automate many steps in business processes that
were formerly performed manually. New technology can actually change the
flow of information, making it possible for many more people to access and share
information, with tasks that can be performed simultaneously, and eliminating
delays in decision making. Information systems also enabling entirely new
processes by changing the flow of information, replace sequential steps with
parallel steps, eliminating delays in decision making, and supporting business
models.
2.2. Types of information systems:
Transaction Processing Systems (TPS):
TPS provides information about elementary transactions of the organization,
such as: sales, receipts, cash deposits, payroll, credit decisions, and flow of
materials in a factory. It’s a computerized system that performs and records the
daily routine transactions. Its main purpose is to answer routine questions. It
allow managers to monitor status of operations an relations with external

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environment.

Business Intelligence (BI):

Management Information Systems (MIS) are the study of information systems in
business and management, but it also designates a specific category of
information systems serving middle management. It provides reports on firm’s
current performance, based on data from TPS. Basic transaction data from TPS
are compressed and presented in reports that are produced on a regular
schedule. We can see a usual MIS process in figure bellow.
These systems also provide answers to routine questions with predefined
procedure for answering them (daily, weekly, monthly). But they also have
disadvantages such as the lack in flexibility and the little analytic capability
(tools).

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Decision Support Systems:
Support more non-routine decision-making. Focuses on problems that are
unique and rapidly changing, for which the procedure for arriving at a solution
may not be fully predefined in advance. It also serves middle management. DSS
use information from TPS and MIS, but they often bring information from
external sources (eg. Current stock prices, product prices of competitors). These
systems use a variety of models to analyse data and are designed so that users
can work with them directly.
Example of DSS system:

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 Model driven DSS (for routine decisions) example could be the voyage-
estimating systems, and a Data driven DSS could be intrawest’s marketing
analysis systems. This second ones are focusing instead on extracting useful
information from large quantities of data for non-routine decisions.
All management systems we have described are systems for business
intelligence. BI is a contemporary term for data and software tools for
organizing, analyzing, and providing access to data to help managers and other
enterprise users make more informed decisions. BI can be used at all levels of the
organization (it also can be used by senior managers that need systems that
adress strategic issues and long-term trends, both in firm and in the external
environment).
Executive support systems (ESS) help senior management make these
decisions. They address non-routine decisions which require judgement,
evaluation and insight. It present graphs and data from many sources through an
interface that is easier to understand. It’s designed to incorporate data about
external events (new tax laws or competitors), and it also draw summarized
information from internal MIS and DSS (Eg. Digital dashboard with real time
views of firm’s financial performance).
Summarizing: Business Intelligence systems include:
 Management information systems (MIS);
 Decision Support Systems (DSS);
 Executive Support Systems (ESS).

Systems for linking the enterprise:

Enterprise applications:
The major challenge for companies was how to link the firm and all of its
employees. There are many solutions for this problem.
One of them is what we call enterprise applications, which are systems
that span functional areas, focus on executing business processes across the
business firm, and include all levels of management. It help businesses become
more flexible and productive by coordinating their business processes more
closely and integrating groups of processes so they focus on efficient
management of resources and customer service.

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 There are four major enterprises applications: enterprise systems, supply
chain management systems, customer relationship management systems and
knowledge management systems. Each of them integrates a related set of
functions and business processes to enhance the performance of the
organization as a whole.

 Enterprise Systems:
Can be also called Enterprise resource planning (ERP) systems.
Information that was previously fragmented in many different systems is stored
in a single comprehensive data repository where it can be used by different parts
(departments) of firm. It solves the problem of fragmented data and enable
companies to: coordinate daily activities, to give a efficient response to
customers orders (production, inventory) and help managers make decisions
about daily operations and longer-term planning.

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  Supply chain management (SCM) systems:
It manages firm’s relationship with suppliers and share information
about: orders, production, inventory levels, delivery of products and services, so
that companies can work efficiently. The main goal is to supply the right amount
of products to destination with least amount of time and lowest cost. Using these
type of systems firms increase profits by lowering the costs of moving and
making products, and enable managers to male better decisions about how to
organize and schedule sourcing, production, and distribution. It’s considered a
type of inter-organizational system because they automate the flow of
information across organizational boundaries.
 Customer Relationship Management Systems:
It help manage relationships with costumers by providing information to
coordinate all of the business processes that deal with customers in sales,
marketing and customer service. It helps firms identify, attract and retain most
profitable customers.
 Knowledge management systems (KMS):
KMS support processes for capturing and applying knowledge and
expertise, which is a good tool to better perform. This firm knowledge should be
difficult to imitate, unique, and can be leveraged into long-term strategic
benefits. It helps answering questions such as: “how to create, produce, deliver
products and services?”. This system collects all relevant knowledge and
experience in the firms, and makes it available. They also link the firm to external
sources of knowledge.
 Intranets and extranets:
Enterprise applications create deep-seated changes in the way firm run
the business, but they are costly and it’s difficult to implement. Extranets and
intranets appear as alternative tools for increasing integration and expediting
the flow of information within the firm, and with customers and suppliers.
Intranets are simply internal company web sites that are accessible only by
employees. It’s an internal network. Internet by it’s side is a public network
linking organizations and other external networks. Extranets are company web
sites that are accessible to authorized vendors and suppliers, and is often used to
coordinate the movement of suppliers to the firm’s production apparatus.

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  E-business, E-commerce and E-government:
E-business or electronic business refers to the use of digital technology
and the Internet to execute the major business processes in the enterprise. It
includes activities for the internal management of the firm and for coordination
with suppliers. It also includes e-commerce, and is the part of e-business that
deals with the buying and selling of goods and services over the Internet. It
includes activities supporting those market transactions, such as advertising,
marketing, customer support, security, delivery and payment. These
technologies also make changes in public sector. E-government refers to
application of the Internet and networking technologies to digitally enable
government and public sector agencies to deliver information and services to
citizens, employees, and business.
2.3. Systems for collaboration and teamwork:
What is collaboration?
Collaborating is working with others to achieve shared and explicit goals.
It focuses on task or mission accomplishment and usually takes place in a
business, or other organization, and between businesses. It can be short-lived
(lasting a few minutes) or longer-term, depending on the nature of the task and
the relationship among participants. Employees can collaborate in informal
groups or formal groups.
Collaboration and teamwork becomes more and more important than
ever, for many reasons:
 Changing nature of work: Nature of work has changed from factory
manufacturing and pre-computer office work, where each stage is
independent from one another. Today, the kinds of jobs we have require
much closer coordination and interaction among the parties involved in
producing the service or product.
 Growth of professional work – “interaction jobs”: It tends to be
professional jobs in the service sector that requires close coordination
and collaboration. It requires substantial education, and the sharing of
information and opinions to get work done. Each actor brings specialized
expertise to the problem, and all the actors need to take one another into
account in order to accomplish the job.

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  Changing organization of the firm:
For most of the industrial age, managers organized work in a hierarchical
fashion. Nowadays work is organized into groups and teams, who are expected
to develop their own methods for accomplishing the task.
 Changing scope of the firm:
The work of the firm has changed from single location to multiple
locations. Large global companies need to have teams working on global basis
(eg. Henry Ford by developing the first mass-production automobile plant).
 Emphasis on innovation: Great individuals that make innovations are
most likely working with a team of brilliant minds, and have been
preceded by a long line of earlier innovators and innovations. So,
innovation is a group of social process, and most innovations derived
from close collaboration among individuals in a workspace.
 Changing the culture of work: diverse teams produce better outputs,
faster, than individuals working on their own. Crowdsourcing also
provides cultural support for collaboration and teamwork.

Business advantages of collaboration and workteam:

There is a general belief that the more firms are collaborative, the more
success they achieve. Investments in collaboration technology can bring
organization improvements, returning a higher ROI. The benefits from business
collaboration are the following:

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Building a collaborative culture and business processes:
In the past, companies are seen as “command and control” organizations,
where top leaders though up all the really important matters, and then ordered
lower-level employees to execute senior management plans. Messages were pass
back from the top to the bottom, following a hierarchy. There is no horizontal
communication, only vertical. There is no value placed on teamwork or lower
level participation in decisions.
On the other hand, we have collaborative business culture, which is different
from business processes. Senior management establishes collaboration and

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teamwork as vital to the organization, and it is also implemented for the senior
ranks of business as well.

Tools and technologies for collaboration and teamwork:

Although companies have business culture, it doesn’t mean that they
don’t need information systems to support it. Actually they are both essential
things to achieve success. There are many tools to support this collaboration
process.
o E-mail and instant messaging:
It’s have been embraced by companies as a major communication and
collaboration tool. The software operates in any device (PC, mobile phone,
tablets, etc) and allow users to engage in real time conversations, to help each
other or share files, with multiple participants.
o Social Networks: such as Facebook, twitter, etc.
o Wikis: It is a type of website that makes it easy for users to contribute and
edit text contents and graphics without any knowledge of Web page
development. The most known example is Wikipedia, the largest
collaboratively edited reference project in the world. Wikis are the ideal
tools for storing and sharing company knowledge and insights. It is
destined to become the major repository for unstructured corporate
knowledge because it’s so much less costly than formal knowledge
management systems and they can be much more dynamic and current.
o Virtual worlds: Such as Second Life. It is an online 3-D environments
populated by residents who have built graphical representations of
themselves known as avatars. Real world people represented by avatars
meet, interact, and exchange ideas at these virtual location.
Communication takes place in the form of text messages similar to instant
messages.
o Internet –based collaboration environments:
Nowadays, there are suites of software products providing multi-function
platforms for workgroup collaboration among teams of employees who work
together from different locations. The most widely used are internet-based audio
conferencing and video conferencing systems, online software services such as

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Google apps/Google sites, and corporate collaboration systems such as Lotus
Notes and Microsoft Share Point.
(Each service is detailed in pages 61, 63, 64 and 65)

These type of social networking software’s are capable of:

o Create and show profiles;
o Feeds and notifications;
o Groups and team workspaces;
o Tagging and social bookmarking;
o Permissions and privacy.

Evaluating and selecting collaboration software tools:

How to choose the right collaboration technology for your company? We
need a framework for understanding just what problems these tools are
designed to solve.
One framework to help choose which systems we should use is the
time/space matrix presented bellow:

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 It focuses on two dimensions: time and space. You need to collaborate
with people in different places or time zones and you cannot meet at the same
time. So, time is clearly an obstacle to collaboration on a global scale. Place also
inhibits collaboration in a large global or even national and regional firms.
Assembling people for a physical meeting is made difficult by the physical
dispersion of distributed firms, the cost of travel, and the time limitations of
managers. The tools that we talked about before are ways to overcome both time
and place barriers. Note that some tools are applicable in more than one
time/place scenario, for example Lotus Notes have capabilities for both
synchronous (instant messaging, electronic meeting tools) and asynchronous (e-
mail, wikis, document editing) interactions.
For now will be presented a list with the steps we should take to make the
right choice on what to use, if we follow it we will make an accurate choice.
1. What are your firm’s collaboration challenges? – Locate your firms in
time/space matrix. It can occupy more than once cell, and in that case
different tools will be needed for each positioning.
2. What kinds of solutions are available? – Make a list of vendor products

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 3. Analyse available products’ cost and benefits – Be sure that you include
cost of training in cost estimation, and costs of involving the information
systems department if needed.
4. Evaluate security risks – Is your firm willing to risk important operations
and information controlled by other firms?
5. Consult users for implementation and training issues – Some of the tools
presented are easier to use than others.
6. Evaluate product vendors – invite vendors to make presentations.

2.4. The information systems function in Business:

Information Systems Department:
Consists of specialists (programmers, systems analysts, project leaders,
information systems managers). Programmers are highly trained technical
specialists who write software instructions for computers. Systems analysts
constitute the principal liaisons between the information systems groups and the
rest of organization. Information systems manager are leaders of teams of
programmers and analysts, project managers, physical facility managers of
computer operations and data entry staff.
Usually, in companies, the information system department is headed by a
CIO (chief information officer). CIO is a senior manager who oversees the use of
information technology in the firm. Large companies usually have positions for a
Chief Security officer, chief knowledge officer and chief privacy officer, who work
closely with CIO.
The end users are representatives of department outside of the
information systems group for whom applications are developed. These users
are playing an increasingly large role in the design and development of
information systems.

Organizing the information systems function:

There are many types of business firms, and there are many ways in which IT
functions are organized within the firm. The question of how the IS departments
should be organized is part of the larger issue of IT governance. It (IT Gov)
includes the strategy and policies for using information technology within an

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organization. It specifies the decision rights and framework for accountability to
ensure that the use of information technology supports the organization’s
strategies and objectives.

Chapter 3: Information Systems, Organizations and Strategy

To meet challenges of surviving and prospering in this environment, each
of these companies focused on a different competitive strategy using information
technology. The case studies show how difficult is to sustain a competitive
advantage.
3.1. Organizations and Information Systems:
Information systems and organizations influence one another, and they
are built to serve the interests of the business firm. At the same time, the
organization must be aware of and open to the influences of information systems
to benefit from new technologies. Interaction between information technology
and organizations is complex and its influenced by many mediating factors,
including the organization’s structure, business processes, politics, culture,
surrounding environment, and management decisions. Before use information
systems, companies must understand their own business organization.

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 You, as a manager cannot foreseen and get the results that may or may
not meet your expectations.
What is an organization?
1st definition: An organization is a stable, formal social structure that
takes resources from the environment and processes them to produce outputs.
2nd definition: More technical, which is based on three elements of an
organization. Capital and labor are primary production factors provided by the
environment and then, the organization uses it as an input and transform them
into products and services in a production function. Products and services are
consumed and then come back as supply inputs.
3rd definition: formal and legal entities with internal rules and
procedures that must abide by laws. They are also a social structure because
they are a collection of social elements.
More realistic definition (behavioural definition): It’s a collection of
rights, privileges, obligations, and responsibilities that is delicately balanced over
a period of time through conflict and conflict resolution. In this point of view
people who work in organizations develop ways to work, create relationships,
and make arrangements with subordinates and superiors about how the work
must be performed, and details related with that (time, etc).

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 But how this is related with Information Systems? Because we, as
managers, will focus on how inputs are combined to create outputs when
technology changes are introduced in company. Technological change requires
changes in who owns and controls information, who has the right to access and
update that information, and who makes decisions about whom, when, and how.

Features of organizations:
Organizations arrange specialists in an hierarchy of authority in which
everyone is accountable to someone and authority is limited to specific actions
governed by abstract rule or procedures. These rules create a system of impartial
and universal decision-making. The organization is devoted to the principle of
efficiency: maximizing output using limited inputs. Other features of
organizations include their business processes, organizational culture,
organizational politics, surrounding environments, structure, goals,
constituencies, and leadership styles. All of these features affect the kinds of
information systems used by organizations.
 Routines and business process: Companies become very efficient because
employees develop routines for producing goods and services. Routines,
also called standard operating procedures, are precise rules, procedures
and practises that have been developed to cope with virtually all expected
situations. As employees learn how to do a given task they become more
efficient doing that, and company can reduce its costs. Business
Processes are collections of such routines. So, business firm is a
collection of business processes.

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 Organizational Politics: In organizations, people occupy different
positions with different specialties, concerns, and perspectives. As a
result, they have different points of view about how resources, rewards
and punishments should be distributed. Political resistance is one of the
greatest difficulties of bringing about organizational change, specially the
development of new information systems. All large information systems
investments by a firm that bring about significant changes in strategy,
business objectives, business processes, and procedures become
politically charged events. Managers that know how to work with the
politics of an organization will be more successful than less-skilled
managers in implementing new information systems.
 Organizational Culture: Organizational culture encompasses this set of
assumptions about what products the culture encompasses this set of
assumptions about what products the organization should produce, how
should do it, where, and for whom. They are rarely publicly announced or
spoken about. Business processes, the actual way business firms produce
value, are usually ensconced in the organization’s culture. At the same
time, organizational culture is a powerful restraint on change, especially
technological change. Any technological issue that threatens commonly
held cultural assumptions usually meets a great deal of resistance.
Sometimes, the introduction of a new technology goes through the
cultural assumptions, and when this happens, the technology is often
stalled while the culture slowly adjusts.
 Organizational Environments: Organizations reside in environments from
which they draw resources and to which they supply goods and services.
Organizations and environments have a reciprocal relationship. On the
one hand, organizations are open to, and dependent on, the social and
physical environment that surrounds them. Without financial and human
resources organizations could not exist. Organizations must respond to
legislative and other requirements imposed by government, as well as the
actions and competitors. On the other hand, organizations can influence
their environments. Information systems help organizations perceive
changes in their environments and also in helping organizations act on

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their environments. IS are key instruments for environmental scanning,
helping managers identify external changes that might require an
organizational response. Environments generally change much faster
than organizations. Most organizations are unable to adapt to a rapidly
changing environment. Inertia built into an organization’s standard
operating procedures, the political conflict raised by changes to the
existing order, and the threat to closely held cultural values inhibit
organizations from making significant changes.

Disruptive technologies: riding the wave. It happens when a

technology and resulting business innovation comes along to radically
change the business landscape and environment. It happens that
sometimes they are substitute products that perform as well or better
than anything currently produced (Eg. Car substituted for the horse-
drawn carriage). This means that entire industries are put out of business.
In other cases, they simply extend the market, usually less functionality
and much less cost, than existing products. Eventually they turn into low-
cost competitors for whatever was sold before. Disruptive technologies
are tricky. Firms that invent disruptive technologies as “first movers” do
not always benefit if they lack the resources to exploit the technology or
fail to see the opportunity. Following we present some examples of
disruptive technologies:

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 Organizational structure: All organizations have a structure or shape. The
Mintzberg’s has identified 5 basic kinds of organizational structure.

The kind of information systems you find in a business firm often reflects
the type of organizational structure. In small companies you will often
find poorly designed systems developed in a rush that often outgrow their
usefulness quickly. In huge firms you will often find there is not a single
integrating information system, but instead each locale or each division
has its set of information systems.

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  Other organizational features: each organization has it’s own goals and
it’s own way to achieve those goals. They also provide a product/service
for different targets, and the nature of leadership differs greatly from one
to another. Another way organizations differ is by the tasks they perform
and the technologies they use.

3.2. How information systems impact organizations and business firms:

 Economic impact:
IT changes both the relative costs of capital and the costs of information.
Information systems can be viewed as a factor of production that can be
substituted for traditional capital and labour. As the cost of information
technology decreases, it’s substituted for labour. Therefore, information
technology should result in a decline in the number of middle managers and
clerical workers as information technology substitutes for their labour.
As cost of Information Technology decreases, it also substitutes for other
forms of capital (Eg. buildings or machinery), which remain relatively expensive.
So we should expect managers to increase their investments in IT because of it’s
declining cost relative to other capital investments.
IT affects cost and quality of information, and changes economics of
information, because it helps firms contract in size, and can reduce transaction
costs (costs incurred when a firm buys on the marketplace what it cannot make
it self). According to transaction cost theory, firms and individuals seek to
economize on transaction costs, much as they do on production costs.
Traditionally, firms have tried to reduce transportation costs through vertical
integration, by getting bigger, hiring more employees, and buying their own
suppliers and distributors (Eg. Ford). IT, especially the use of networks, can help
firms lower the transaction costs, making worthwhile for firms outsourcing some
tasks. By this way firms shrink in size because its cheaper outsource work to a
competitive marketplace rather than hire employees, which goes against the
traditional way of thinking, as we could see.
As transaction costs decrease, firm size should shrink because it becomes
easier and cheaper for firm to contract for the purchase of goods and services in

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the marketplace rather than to make the product or offer the service itself. Firm
size can stay constant or contract even as the company increases its revenues

IT also can reduce internal management costs. According to agency

theory, the firm is viewed as a “nexus of contracts” among self-interested
individuals rather than as a unified, profit-maximizing entity. Principal employs
“agents” to perform work on his or her behalf. However, agents need constant
supervision and management, otherwise, they will tend to pursue their own
interests rather than company ones (owner interests and goals). As firm grow in
size and scope, agency costs or coordination costs rise because owners must
expend more and more effort supervising and managing employees.
It allows reducing costs because becomes easier for managers to oversee
a greater number of employees. A good example of that is represented in the
figure bellow:

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 Concluding, since IT reduces agency costs and transaction costs, it’s
expected that costs shrink over time, as investmente in IT increases, as well as
revenues, which are also expected to increase.

 Organizational and behavioural impacts:

IT Flattens Organizations
Research shows that information technology facilitates flattering of
hierarchies by broadening the distribution of information to empower lower-
level employees and increase management efficiency. IT pushes decision-making
rights lower in organization because lower-level employees receive the
information needed to make efficient decisions, without supervision, which
make them acting quickly. Management costs also decrease as a percentage of
revenues, and the hierarchy becomes efficient.
Consequence: 1) High level managers can solve problems and control
employees over big distances; 2) Extinction of many middle managers.

Postindustrial Organizations:

This theory also confirms the fact that IT should flatten hierarchies.
Organizations flatten because in post-industrial societies, authority increasingly

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relies on knowledge and competence for self-management, rather than formal
positions. In this case, no one can make sure that self-managed teams are doing
their job well, and this is why there are new approaches for evaluating,
organizing and informing workers, and explains why not all companies can make
effective virtual work.

Understanding Organizational Resistance to Change:

IS became bound up in organizational politics because it influence the
access to information. But, new information systems require changes in personal,
individual routines that can be painful for those involved and require additional
efforts that may or may not be compensated. Because it changes organization’s
structure, culture, business processes and strategy, there is often considerable
resistance to them when they are introduced – reason for Organizational
Resistence.
Leavitt shows it in a shape of diamond, where technology and organization
is interrelated (picture bellow). Changes in technology are absorbed, deflected,
and defeated by organizational task arrangements, structures, and people. So,
the only way to bring about change e by changing technology, tasks, structure
and people simusltaneously.

Because of the higher resistant to change, many times the investments done by
companies on IT, does not increase productivity. The most common reason for

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failure for large projects is not the failure of technology, but organizational and
political resistance to change.

 The Internet and Organizations:

Internet increases the accessibility, store and distribution of information
and knowledge for organizations. Internet can easily decrease both transaction
and agency costs. Businesses are rebuilding some of their key business processes
based on Internet technology and making this technology a key component of
their IT infrastructures. This means simpler business processes, fewer
employees, and flatter organizations than in past.

 Implications for the design and understanding of Information

Systems:
In order to deliver genuine benefits, information systems must be built with
clear understanding of the organization in which they will be used. The central
organizational factors to consider when planning a new system are the
following:
 The environment in which the organization must function;
 The structure of the organization: hierarchy, specialization, routines, and
business processes;
 The organization’s culture and politics;
 The type of organization and its style of leadership;
 The principal interest groups affected by the system and the attitudes of
workers who will be using the system
 The kinds of tasks, decisions, and business processes that the information
system is designed to assist

3.3. Using information Systems to Achieve Competitive Advantage:

Firms that “do better” than others, have competitive advantage. They either
have access to special resources that others do not, or they are able to use
commonly available resources more efficiently, usually because of superior
knowledge and information assets. By better we mean higher profits, revenue
growth, all that would translate into higher stock market valuation.

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 Competitive forces model, developed by Michael Porter, answer how to get
that competitive advantage.
 Porter’s Competitive Forces Model:
It’s the most widely used model for understanding competitive advantage.

It provides an overview of the firm, competitors, and firm’s environment.

This model is all about firm’s general business environment, where five
competitive forces shape the fate of the firm.
Traditional Competitors: All firms share market space with competitors
who are continuously devising new products, services, efficiencies, and switching
costs.
New Market Entrants: Some industries have high barriers to entry (Eg:
Computer Chip Business). New companies have new equipment, younger
workers but little brand recognition. They are not locked into old plants and
equipment, and are “more hungry” than traditional occupants of an industry. But
there is also a weakness: they depend on outside financing for new plants and
equipment, which it’s usually expensive. They are less experienced and have
little brand recognition.
Substitute Products and Services: There are substitutes that your customers
might use if your prices become too high. New technologies create new
substitutes all the time. The more substitute products and services in your
industry, the less you can control pricing and the lower your profit margins.

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 Customers: Can costumers easily swith to competitor’s products? Can they
force businesses to compete on price alone in transparent marketplace? A
profitable company depends in large measure on its ability to attract and retain
customers, and charge high prices. The power of customers grows if they can
force a business and its competitors to compete on price alone in a transparent
marketplace where there is little product differentiation, and all prices are
known instantly.
Suppliers: The market power of suppliers can have significant impact on
firm profits especially when the firm cannot raise prices as fast as can suppliers.
The more different suppliers a firm has, greater control it can exercise over
suppliers in terms of price, quality, and delivery schedules.
 Information System strategies for dealing with competitive forces:
There are four generic strategies to deal with competitive forces, enabled by
using IT: Low-cost leadership, product differenciation, focus on market niche,
and strengthening customer and supplier intimacy.
Low-Cost Leadership: Consists in using information systems to achieve the
lowest operational costs and the lowest prices. (Eg. Walmart. By keeping prices
low and shelves well stocked using a legendary inventory replenishment system,
Walmart became the leading retail business in the United States. Walmart’s
continuous replenishement system is also an example of an efficient customer
response system. It directly links consumer behavior to distribution and
production and supply chains.
Product Differentiation: Information systems enable new products and
services, and change the customer convenience in using your existing products
and services. Google introduces new and unique search services on its web site,
such as Google Maps. Another example is Apple when launching iPod.
Manufacturers and retailers are using information systems to create products
and services that are customized and personalized to fit the precise
specifications of individual customers. The possibility of customization that Nike
offers is an example of mass customization.
Focus on Market Niche: Is related to the use of information systems to
enable a specific market focus, and serve this narrow target market better than
competitors. It support this strategy by producing and analysing data for finely

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tuned sales and marketing techniques. It enable companies to analyse customer
buying patterns, tastes, and preferences closely so that they efficiently pitch
advertising and marketing campaigns to smaller and smaller target markets. An
example of that is Hilton Hotels’ OnQ system analyzes detailed data about
customer preferences.
Strengthen Customer and Supplier Intimacy: Use information systems to
tighten linkages with suppliers and develop intimacy with customers and
suppliers. Strong linkafes to customers and suppliers increase swithcing costs
(costs of swithching from one product to a competing product), and loyalty to
your firm.
In summary:

 The internet’s impact on competitive adavantage:

With Internet, traditional competitive forces are still working, but
competitive rivarlry has become much more intese. Internet technology is based
on universal standards that any company can use. Although, because information
is available to everyone, the internet raises the bargaining power of customers,
who can find the lowest-cost provider on the web.
Bellow there are some posible negative impacts on business firms, identified by
porter.

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 Internet has destroyed some industries and has several threatened more.
However, Internet has also created entirely new markets, formed the basis for
thousands of new products, services and business models, and provided new
opportunities for building brands with very large and loyal customer bases.
 The business value chain model:
Porter model is helpful but it’s not very specific about what exactly to do,
and it also does not provide a methodology to follow for achieving competitive
advantages. This model helps achieving the Operational Excellence. Value chain
model highlights specific activities in the business where competitive strategies
can best be applied and where information systems are most likely to have a
strategic impact. It identifies specific, critical leverage points where firm can use
information technology in a more efficient way to enhance its competitive
position. It views the firm as a series or chain of basic activities that add a margin
of value to a firm’s products or services. These activities can be divided in:
primary activities or support activities. Primary activities are related with
production and distribution of products or services, which create value to
customer. It includes inbound logistics (receiving and storing material),
operations (transforms inputs into finished products), outbound logistics
(storing and distributing finished products), sales and marketing (include
promoting and selling the product), and service (maintenance and repair).
Support activities make the delivery of the primary activities possible and
consist of organization infrastructure, human resources, technology, and
procurement (purchasing input).

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 Supply chain management systems coordinate the flow of resources into
firm, and customer relationship management systems coordinate sales and
support employees with customers, are the most common system applications
that result from a business value chain analysis. Using this model will also cause
you to consider benchmarking your business processes against your competitors
or others in related industries, and identifying industry best practises.
Benchmarking involves comparing the efficiency and effectiveness of your
business processes against strict standards and then measuring performance
against those standards. Once you have analysed the various stages in the value
chain at your business, you can come up with candidate applications of
information systems. This is just the way to get competitive advantage (which
could have 4 sources as we said before).

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  Extending the Value Chain: The Value Web
Firm’s value chain is linked to the value chains of its suppliers, distributors, and
customers. After all, the performance of most firms depends not only on what
goes on inside a firm but also on how well the firm coordinates with direct and
indirect suppliers, delivery firms, and, customers. How can information systems
be used to achieve strategic advantage at the industry level? Value web consists
in a collection of independent firms using highly synchronized IT to coordinate
value chains to produce product or service collectively. These efforts increase
efficiency making product substitution less likely and perhaps raising entry
costs.
Looking at the industry value chain encourages you to think about how to
use information systems to link up more efficiently with your suppliers, strategic
partners and customers. Strategic advantage derives from your ability to relate
your value chain to the value chains of other partners in the process.

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  Synergies, core competences and network-based strategies
Information systems can improve the overall performance of these business
units by promoting synergies and core competencies.
Synergies: It happens when the output of some units can be used as inputs
to other units, or two organizations pool markets and expertise. These
relationships lower costs and generate profits. One use of information
technology in synergies is to tie together the operations of disparate business
units so that they can act as a whole. Information systems would help the merged
companies consolidate operations, lower retailing costs, and increase cross-
marketing of financial products, in the case of merger of Bank of NY and
JPMorgan chase.
Enhancing Core Competencies: Another way to use information systems to
sustain competitive advantage is make IS enhancing core competencies.
Performance of all business units will increase insofar as these business units
develop, or create, central core competencies. Core competency is an activity
for which a firm is a world-class leader. It relies on knowledge that is gained over
many years of practical field experience with a technology. This practical
knowledge is supplemented with a long-term research effort and committed
employees. An example of this: Procter & Gamble.

Network-Based Strategies: It includes the use of network economics, a

virtual company model, and business ecosystems.
 Network Economics: Business models based on a network my help
firms strategically by taking advantage of network economics. In
traditional economics the more any given resource is applied to
production, the lower the marginal gain in output, until that point is
reached where the additional inputs produce no additional outputs –
Law of diminishing returns. Although, this law does not match all
realities. From Network Economics perspective, IT can be
strategically useful. IT can be used to build communities of users,
which grows customer loyalty and enjoyment, and builds unique ties
to customers. The marginal cost of adding new participants is almost
zero, with much greater marginal gain. By other side, value of

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 community grows with size, and the value of the software also
grows, as the value of the database.
 Virtual company strategy: It uses networks to ally with other
companies to create and distribute products without being limited
by traditional organizational boundaries or physical locations.
 Business Ecosystems: Industry sets of firms providing related
services and products, contrary to what Porter have said before,
assuming a relatively static industry environment. Business
Ecosystem includes interdependent networks of suppliers,
distributors, outsourcing firms, transportation service firms, and
technology manufacturers. Business ecosystems can be
characterized as having one or a few keystone firms that dominate
the ecosystem and create platforms used by other niche firms. Niche
firms include thousands of software application firms, software
developers, service firms, networking firms, and consulting firms
that both support and rely on products of Keystones. IT plays a
powerful role in establishing business ecosystems. Individual firms
should consider how their information systems would enable them
to become profitable niche players in larger ecosystems created by
keystone firms. A good example is apple. They create a phone
(iPhone) which is capable of running a variety of apps, and they
wouldn’t get it alone, they are incapable of producing so many apps.

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3.4. Using Systems for Competitive Advantage: Management Issues
Using IS to achieve a competitive advantage is challenging and requires
precise coordination of technology, organizations, and management.
 Sustaining Competitive Advantage:
Competitive advantages that strategic systems confer do not mean last long
enough to ensure long-term profitability, because competitors can copy that
systems. Moreover, markets, customer expectations, and technology change. All
of these are caused by globalization, making these changes even more rapid and
unpredictable. It can make competitive advantage disappear because all firms
use this technology. Information systems alone cannot provide an enduring
business advantage. Systems can become a tool for survival, making companies
stay in business.
 Aligning it with business objectives:
Research sows that:
 The more successfully a firm can align information technology
with its business goals, the more profitable it will be;
 Only one quarter of firms achieve alignment of IT with business.
Most businesses take it wrong: Information technology takes on a life of its
own and does not serve management and shareholder interests very well.
Successful firms and managers understand what IT can do and how it works,
take an active role in shaping its use, and measure its impact on revenues and
profits.

Checklist to perform a strategic system analysis: In order to understand

what type of systems to implement, managers should ask the following
questions:

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  Managing Strategic Transitions:
Adopting strategic systems requires changes in business goals, relationships
with customers and suppliers, and business processes. These sociotechnical
issues can be considered strategic transitions (movement between levels of
sociotechnical systems). Suppliers must enrol the systems, as well as managers,
who should also focus on coordinating all activities, in order to insure that all
goes on the right way.

Chapter 4: Ethical and Social Issues in Information Systems

The growing use of behavioural targeting techniques it’s a source of

benefits, but it also grows ethical issues, such as privacy concerns. By tracking
your online movements, your and million of behaviours of other persons,
companies can develop a clear picture about who you are, and use that
information to show you adds that might interest you. This would make the
marketing process more efficient and more profitable for all parties involved.

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But this solution also creates an ethical dilemma, putting monetary interest of
online advertisers and search engines against and above ours.

4.1. Understanding Ethical and Social Issues Related to Systems

Table bellow shows a small sample of recent cases demonstrating failed
ethical judgment by senior and middle managers.

Now firms are encouraged to cooperate with prosecutors to reduce charges

against the entire firm for obstructing investigations. These developments mean
that you will have to decide for yourself what constitutes proper legal and ethical
conduct.
Ethics refers to the principle of right and wrong that individuals, acting as
free moral agents, use to make choices to guide their behaviours. Information
systems raise new ethical questions for both individuals and societies because
they create opportunities for intense social change, and thus threaten existing
distribution of power, money, rights, and obligations. Information technology
can be used to achieve social progress, but it can also be used to commit crimes.
Development of information technology will produce benefits for many and costs
for others. Internet and digital firm technologies make it easier than ever to
assemble, integrate, and distribute information, unleashing new concerns about
the appropriate use of customer information, the protection of personal privacy,
and the protection of intellectual property. Other ethical issues raised by
information systems include establishing accountability for the consequences of
information systems, setting standards to safeguard system quality of life in an

47
information society. The answer that we should ask is: “what is the ethical and
socially responsible course of action?”.
 A model for thinking about ethical, social and political issues:
The ethical dilemma you may face as a manager of information systems is
reflected in social and political debate. One way to think about these
relationships is the following:

Thinks about a society as an ecosystem in partial equilibrium with

individuals, and with social and political institutions. Individuals behave because
social institutions have developed in the political sector that prescribe behaviour
and promise sanctions for violations. Now toss a rock into the centre of the pond.
What happens? Ripples, of course. Distributing force is a powerful shock of new
information technology and systems hitting a society more or less at rest.
Suddenly, individual actors are confronted with new situations often not covered
by the old rules. Social institutions cannot respond overnight to these ripples.
Also political institutions require time before developing new laws and often
require the demonstration of real harm before they act. In the meantime, you
may have to act. You may be forced to act in a legal gray area. This model
illustrates the dynamics that connect ethical, social, and political issues. It’s also

48
useful to identify the main moral dimensions of information society, which cut
across various levels of action.

 Five moral dimensions of the information age:

Ethical, social, and political issues raised by IS include the following moral
dimensions:
Information rights and obligations: What information rights do individuals and
organizations possesses with respect to themselves? What can they protect?
Property rights and obligations: How will traditional intellectual property rights
be protected in a digital society in which tracing and accounting for ownership
are difficult and ignoring such property rights is so easy?
Accountability and Control: Who can and will be accountable and liable for the
harm done to individual and collective information and property rights?
System Quality: What standards of data and system quality should we demand to
protect individual rights and the safety of society?
Quality of life: What values should be preserved in an information-and-
knowledge-based society? Which institutions should we protect from violation?
Which cultural values and practises are supported by the new information
technology?
 Key technology trends that raise ethical issues:
Four key technological trends responsible for these ethical issues are the
following:
 Doubling of computer power every 18 months: More organizations
depend on computer systems for critical operations and for their
core production processes. However, vulnerability to system
errors and poor data quality has increased. Social rules and laws
have not yet adjusted to this dependence, as well as the accuracy
and reliability of information systems.
 Rapidly declining data storage costs: It has been responsible for
the multiplying databases on individuals maintained by private
and public organizations. But this also has a dark side because it
allows the cheap and effective violation of individual privacy.

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 Massive data storage systems are inexpensive enough for regional
and even local retailing firms to use in identifying customers.
 Advances in data analysis techniques: It enables profiling, which
consists in combining data from multiple sources to create
dossiers of detailed information on individuals. And also NORA
(nonobvious relationship awareness), which combines data
from multiple sources to find obscure hidden connections that
might help identify criminals or terrorists.

 Networking advances and the internet: It’s a concern because

there is the possibility of copying data from one location to
another and accessing personal data from remote locations are
much easier and cheaper (Eg. Credit card information, home
banking information, etc).
 Mobile device growth: It allows the possibility of tracking
individual cell phones.

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4.2. Ethics in an information society
 Basic concepts for ethical analysis:
Ethical choices are decisions made by individuals who are responsible for
the consequences of their actions.
 Responsibility: key element of ethical action. It means that your accept
the potential costs, duties, and obligations for decisions we make.
 Accountability: issue of systems and social institutions. Means that
mechanisms are in place to determine who is held responsible.
 Liability: Extention of responsibility concept to the area of laws. A body
of laws permits individuals to recover the demages done to them or by
other actors, systems or organizations.
 Due Process: related with law-governed societies. It’s the process in
which laws are known and understood, and we could appeal to a
higher authority to ensure that laws are correctly applied.

Systems do not have impacts by themselves. Institutions, organizations, and

individual managers choices and behaviors. Also the responsibility for the
consequences of technology falls, are in who choses to use it. Moreover, political
society, individuals and others can recover demages to them through a set of
laws characterized by due process.

 Ethical Analysis:
In order to do a correct ethical analysis, we should follow 5 steps:
1. Identify and describe clearly the facts: Find out who did what to whom, and
where, when, and how.
2. Define the conflict or dillema and identify the higher-order values involved:
Ethical, social, and political issues always reference higher values. The
partiesto dispute all claim to be pursuing higher values. Typically, ethical
issue involves worthwhile values.
3. Identify stakeholders: Every ethical, social and political issue has
stakeholders (people interested in the outcome, who have invested in the
situation, and usually who have vocal ipinions). We should find out the
identitiy of these groups and what they want.

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 4. Identify the options that you can reasonably take: If none of the opinions
satisfy all interests involved, but some options do a better jobs than
others, arriving at a good solution may not be balancing consequences for
stakeholders.
5. Identify the potential consequences of your opitions: Some options may be
ethically correct but could have disastrous consequences from other
points of view. Ask yourself “What if I choose this options consistently
over time?”

 Candidate ethical principles:

What ethical principles or rules we should bear in mind and use to take a
decision? What higher-order valyes should inform your judgment? When we are
taking decisions on this role, there are some principles we shoul take in mind:

When the actions are not according to these rules, the issues need a bigger
care and attention.
 Professional codes of conduct:

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 Professionals take special rights and obligations because of their special
claims to knowledge, wisdom, and respect. Professional codes of conduct are
promulgated by associations of professionals (Eg. AMA, ABA, AITP, ACM). These
professional groups take responsibility for the partial regulation of their
professions by determining entrance qualifications and competence. They are
promises by professions to regulate themselves in the general interest of society.

 Some real-world ethical dillemmas: Examples

 Many telephone companies in US are using information technology to
reduce the sizes of their workforces. Voice recognition software
reduces the need for human operators by enabling computers to
recognize a customer’s response to a serie of computerized questions.
 Companies monitor what their employees are doing on internet to
prevent unneeded wastage.

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