unit 2 using information technology to engage in electronic commerce; computer use in an...

Unit 2Using Information Technology to Engage in Electronic Commerce; Using Information Technology to Engage in Electronic Commerce;

Computer Use in an International Marketplace; Computer Use in an International Marketplace; &&

Ethical Implications of Ethical Implications of Information TechnologyInformation Technology

MANAGEMENT INFORMATION SYSTEMS

1-1

Chapter 3Using Information Technology to Using Information Technology to

Engage in Electronic Engage in Electronic CommerceCommerce


3-2

Electronic CommerceElectronic Commerce

Electronic commerce is the use of Electronic commerce is the use of computers to facilitate the firm’s operationscomputers to facilitate the firm’s operations

– internal (finance, marketing, internal (finance, marketing, manufacturing, ...)manufacturing, ...)

– external (customers, suppliers, external (customers, suppliers, government, ...)government, ...)

3-3

Environmental Environmental Responsibilities Responsibilities

of Functional Areasof Functional Areas

Customers

Suppliers

Stockholders

Labor Unions

Government

Financial Community

Global Community

Competitors

Finance Resources Services Manufacturing Marketing

Human Information

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X3-4

Electronic Commerce Electronic Commerce BenefitsBenefits

Improved service, especially to Improved service, especially to customerscustomers

Improved relationships to suppliers and Improved relationships to suppliers and the financial communitythe financial community

Increased return on stockholder and Increased return on stockholder and owner investmentsowner investments

3-5

Electronic Commerce Electronic Commerce ConstraintsConstraints

High costsHigh costs Security concernsSecurity concerns Immature or unavailable softwareImmature or unavailable software

3-6

New Electronic Commerce New Electronic Commerce EraEra

Instead of specialized software, firms Instead of specialized software, firms are designing systems to use Internet are designing systems to use Internet BrowsersBrowsers

Making a common interface for Making a common interface for customers and electronic commerce customers and electronic commerce partnerspartners

3-7

Selection of Electronic Selection of Electronic CommerceCommerce

Strategy, Methodology, and Strategy, Methodology, and TechnologyTechnology

BusinessIntelligence

CompetitiveAdvantage

Strategic Business Plan

Enabling strategy

Interorganiza- tional

Electronic data interchange

Enabling methodology

System life cycle

Business process redesign

Enabling technology

Direct connectivity

Value-added networks

The Internet

3-8

Business Intelligence (BI)Business Intelligence (BI)

Evolved from simply gathering data Evolved from simply gathering data about competitors to data gathering about competitors to data gathering about all environmental elementsabout all environmental elements

3-9

Data

Collect data

2 Evaluate data

Analyze data

4Storeintelligence Intelligence

5

Disseminateintelligence

Intelligence

The Five Basic Intelligence Tasks

Data

31

3-10

External DatabasesExternal Databases

Important commercial databases that Important commercial databases that provide information on virtually any subjectprovide information on virtually any subject– LEXIS-NEXIS, DIALOG, DOWJONES.COMLEXIS-NEXIS, DIALOG, DOWJONES.COM– Over 1,000 data service sites listed by Over 1,000 data service sites listed by

YAHOO.COMYAHOO.COM Less expensive to use database services Less expensive to use database services

than to perform researchthan to perform research

3-11

Search EnginesSearch Engines

Special computer programs that ask users Special computer programs that ask users for a word or group of words to be found at for a word or group of words to be found at Internet sitesInternet sites

Yahoo, Excite, AltaVista, HotBot, Lycos, Yahoo, Excite, AltaVista, HotBot, Lycos, and Webcrawler are examplesand Webcrawler are examples

Government databases Government databases

3-12

ExtranetsExtranets

Allow sharing of sensitive computer-based Allow sharing of sensitive computer-based information using Internet technologyinformation using Internet technology

Limited to trusted suppliers and large Limited to trusted suppliers and large customerscustomers

Security and privacy issuesSecurity and privacy issues– FirewallsFirewalls

3-13

Interorganizational System Interorganizational System (IOS)(IOS)

These link two or more firms so that they These link two or more firms so that they function as a single function as a single systemsystem to accomplish a to accomplish a common goalcommon goal

Generate internal efficiency in addition to Generate internal efficiency in addition to interorganizational efficiencyinterorganizational efficiency

Provides customers with unique product Provides customers with unique product features, reduced search-related costs, and features, reduced search-related costs, and raises the customer’s switching costsraises the customer’s switching costs

3-14

Electronic Data Electronic Data Interchange (EDI)Interchange (EDI)

Consists of direct computer-to-computer Consists of direct computer-to-computer transmissions among multiple firms of data in a transmissions among multiple firms of data in a machine-readable, structured formatmachine-readable, structured format

Typical linkagesTypical linkages– Supply sideSupply side– Customer sideCustomer side– Transaction setTransaction set

Vendor stock replenishment (VSR)Vendor stock replenishment (VSR) Electronic Funds Transfer (EFT)Electronic Funds Transfer (EFT)

3-15

Electronic Data Electronic Data Interchange (EDI)Interchange (EDI)

Adheres to Standard Adheres to Standard FormatsFormats

Suppliers The Firm

Request for a price quotePrice quote

Purchase order

Acknowledge P.O. receiptInvoice

ANSI ASC X12 - North America EDIFACT - International

3-16

Selected EDI Transaction Selected EDI Transaction Sets and Sample Invoice Sets and Sample Invoice

DataData104 Air Shipment Information 130 Student Educational Record (Transcript)152 Statistical Government Information 300 (Booking Request) (Ocean)311 Canadian Customs Information 810 Invoice

NameAddress InformationMarking, Packaging, LoadingIndustry CodeQuantityCurrency

Tax InformationPricing InformationItem Physical DetailsTerms of Sale / Deferred Terms of SaleCarrier DetailProduct / Item DescriptionInvoice Shipment SummaryTransaction Totals

3-17

Mapping Software Translates Mapping Software Translates Data to and from Standard Data to and from Standard

FormatsFormats

Sending firm’scomputer

Application software

Mappingsoftware

Standard EDI format

Receiving firm’scomputer

Application software

Mappingsoftware

3-18

Degree of EDI Degree of EDI ImplementationImplementation

Level-one usersLevel-one users– One or two transmission sets sent to limited trading One or two transmission sets sent to limited trading

partnerspartners Level-two usersLevel-two users

– Many transaction sets transmitted to large number of Many transaction sets transmitted to large number of trading partnerstrading partners

Level-three usersLevel-three users– Many transaction sets transmitted to large number of Many transaction sets transmitted to large number of

trading partners and firm’s computer applications are trading partners and firm’s computer applications are tailored to EDI approachtailored to EDI approach

3-19

Adoption InfluencesAdoption Influences

Competitive pressure, Competitive pressure, this is reactivethis is reactive Exercised power, Exercised power, this is proactivethis is proactive Internal need, Internal need, this is proactivethis is proactive Top management support, Top management support, this is both this is both

proactive and reactiveproactive and reactive

3-20

Internal and Internal and Environmental Influences Environmental Influences

on EDI Adoptionon EDI AdoptionEnvironmental Influences

PressureExercised Power

Internal Influences

InternalNeed

TopManagement

Support

Competitors TradingPartners

EDI3-21

EDI BenefitsEDI Benefits DirectDirect

– Reduced errorsReduced errors– Reduced costsReduced costs– Increased operational efficiencyIncreased operational efficiency

IndirectIndirect– Increased ability to competeIncreased ability to compete– Improved relationships with trading partnersImproved relationships with trading partners– Improved customer serviceImproved customer service

3-22

EDI Direct and Indirect EDI Direct and Indirect BenefitsBenefitsIndirect Benefits

Direct Benefits

ReducedErrors

IncreasedOperationalEfficiency

Reduced Costs

Competitors Trade Partners

Competitors

Increased Abilityto Compete

Improved Service

ImprovedRelationships

3-23

A Challenge to EDIA Challenge to EDI

Extensible markup language (XML)Extensible markup language (XML)– Extension of HTMLExtension of HTML– Provides file formatting structure and means for Provides file formatting structure and means for

describing data describing data – Allows Web pages to perform many EDI Allows Web pages to perform many EDI

functionsfunctions

3-24

Electronic Commerce Electronic Commerce TechnologyTechnology

Direct ConnectivityDirect Connectivity– Uses dial-up or private lines to connectUses dial-up or private lines to connect

Value-Added Networks (VANs)Value-Added Networks (VANs)– Circuit provided by vendorCircuit provided by vendor

– Vendor provides additional servicesVendor provides additional services The InternetThe Internet

– Global communications networkGlobal communications network3-25

Internet EvolutionInternet Evolution Derived from the Advanced Research

Projects Agency network (ARPANET) Designed to let computer-to-computer

communications continue even during military attacks

ARPANET joined with Computer Science Network (CSNET) and National Science Foundation Network (NSFNET) to form today’s Internet

3-26

Internet Evolution [cont.)Internet Evolution [cont.) During the 1970’s various other networks

were connected This led to the 1980’s Internet concept which

means each network can seamlessly interconnect with other networks

Businesses began using the new Internet with workstations and local area networks

The Internet has become a network of networks

3-27

Internet Evolution (cont.)Internet Evolution (cont.)

In 1989, Tim Berners-Lee of CERN came In 1989, Tim Berners-Lee of CERN came up with the hypertext conceptup with the hypertext concept

World-Wide Web is really the application World-Wide Web is really the application of hypertext documents and other materialsof hypertext documents and other materials

Hypertext is conceptually a ‘speed dial’ Hypertext is conceptually a ‘speed dial’ feature in that a user points to and presses feature in that a user points to and presses the hypertext link and the system the hypertext link and the system automatically goes to that locationautomatically goes to that location

3-28

Key Web TerminologyKey Web Terminology WebsiteWebsite Hypertext linkHypertext link Web pageWeb page Home pageHome page Universal resource locator (URL)Universal resource locator (URL)

– Protocol Protocol – Domain nameDomain name– PathPath

BrowserBrowser FTP (File Transfer Protocol)FTP (File Transfer Protocol)

3-29

Parts of a URLParts of a URL

http://aisvm1.ais.com/abra7883/index.html

hypertext transmission protocol

domain name path (directory and file name on the web server)

hypertext markup language

3-30

Internet Client/Server Internet Client/Server Information Retrieval Information Retrieval

SystemsSystems GopherGopher

Wide Area Information Servers (WAIS)Wide Area Information Servers (WAIS)

USENETUSENET

Each of these predates the WWW and represents a major step forward in Internet Use 3-31

Terminal Emulator PC or Macintosh Unix X11 NextStep

Addressing schema, Protocols, Format negotiation

FTP

News

Gopher

WAIS

HTTPGateway isHTTP serverplus otherapplication.

Database, infosystem, etc.

Internet Client/Server Architecture

3-32

Internet SecurityInternet Security

Any resources linked to data Any resources linked to data communications have riskcommunications have risk

Security by physically separating the Web Security by physically separating the Web site from the firm’s computer resourcessite from the firm’s computer resources

Security by using passwords that allow Security by using passwords that allow access to computing resourcesaccess to computing resources

‘‘Firewalls’ using routers, intermediary Firewalls’ using routers, intermediary computers or application-level methodscomputers or application-level methods

3-33

An Application-Level FirewallAn Application-Level Firewall

ExternalExternalServicesServices

Border RouterBorder Router

IP ChokeIP ChokeProtocol FilterProtocol Filter

Internal/ExternalInternal/ExternalService GatewayService Gateway

Internal RouterInternal Router

RouterRouter

Isolation MechanismIsolation Mechanism

Internet ConnectivityInternet ConnectivitySupplier’s NetworkSupplier’s Network

InternetInternet

Internal Network

Incoming packets from the Internet passIncoming packets from the Internet passthrough the connectivity supplier’s networkthrough the connectivity supplier’s networkto a router and to the organizationto a router and to the organization

The packet goes to a router box that duplicatesThe packet goes to a router box that duplicatesthe function of the external routerthe function of the external router

Rather than routing the packet directly to its destination, theRather than routing the packet directly to its destination, therouter redirects traffic through an external services host and router redirects traffic through an external services host and an IP “choke” hostan IP “choke” host

The external services host runs desired apps such as E-mail The external services host runs desired apps such as E-mail interfaceinterface

The IP choke performs actual protocol filteringThe IP choke performs actual protocol filtering

Traffic is sent through a gateway to a separate router box Traffic is sent through a gateway to a separate router box on the internal network, configured according to internal on the internal network, configured according to internal security policysecurity policy

3-34

IntranetIntranet

Internet technology used for internal Internet technology used for internal communications and applicationscommunications and applications

Used for many business applications Used for many business applications requiring communicationrequiring communication

3-35

Business Applications Business Applications for the Internetfor the Internet

Marketing researchMarketing research Competitive intelligenceCompetitive intelligence Retailing applicationsRetailing applications The future impact of the Internet on The future impact of the Internet on

business is enhanced as the National business is enhanced as the National Information Infrastructure programs Information Infrastructure programs become establishedbecome established

3-36

Successful Internet UseSuccessful Internet Use

Make sure your Web Make sure your Web site is robustsite is robust

Make sure your Make sure your browser and database browser and database structure are both structure are both flexible and intuitiveflexible and intuitive

Update oftenUpdate often Look beyond Look beyond

customerscustomers

Target content to Target content to specific users’ needsspecific users’ needs

Make the interface Make the interface intuitiveintuitive

Be in the right Web Be in the right Web locationlocation

Create a sense of Create a sense of communitycommunity

Get help if you need it Get help if you need it 3-37

SummarySummary

E-Commerce begins with business E-Commerce begins with business intelligenceintelligence

Primary and secondary data comprise Primary and secondary data comprise business intelligencebusiness intelligence

Reasons for IOSReasons for IOS– Comparative efficiencyComparative efficiency– Bargaining powerBargaining power

Three levels of EDIThree levels of EDI3-38

Summary [cont.]Summary [cont.]

Internet Internet – Network of networksNetwork of networks– Security concernsSecurity concerns– FirewallsFirewalls

IntranetsIntranets National information infrastructureNational information infrastructure

3-39

Chapter 4Computer Use in an International Computer Use in an International

MarketplaceMarketplace


4-40

The Multinational The Multinational Corporation (MNC)Corporation (MNC)

Parent company and group of subsidiariesParent company and group of subsidiaries Operates acrossOperates across

– ProductsProducts

– MarketsMarkets

– NationsNations

– CulturesCultures

4-41

Each Subsidiary Has Its Each Subsidiary Has Its OwnOwn

GeographyGeography GoalsGoals PoliciesPolicies ProceduresProcedures

4-42

Special Need for Special Need for Information Processing in Information Processing in

an MNCan MNC

Influenced by internal and external Influenced by internal and external conditionsconditions

Seeks to minimize environmental Seeks to minimize environmental uncertaintyuncertainty– Uncertainty - Difference between information Uncertainty - Difference between information

required andrequired and information possessedinformation possessed Requires ‘good’ use of information Requires ‘good’ use of information

technology to achieve desired performancetechnology to achieve desired performance

4-43

Types of MNC Types of MNC Organizational Structure Organizational Structure

ClassificationsClassifications Each structure requires its own information Each structure requires its own information

processor processor Worldwide functional divisionsWorldwide functional divisions

– Organized along functional linesOrganized along functional lines

– Marketing in subsidiary reports to marketing in parent Marketing in subsidiary reports to marketing in parent companycompany

– Strategic planning done at top executive levelStrategic planning done at top executive level

– Data that integrates operations does not exist at lower Data that integrates operations does not exist at lower levelslevels

4-44

MNC Classifications (cont.)MNC Classifications (cont.) International regionsInternational regions

– International division separate from domestic divisionInternational division separate from domestic division

Geographic regionsGeographic regions– Each region responsible for its subsidiariesEach region responsible for its subsidiaries

– No communication between regionsNo communication between regions

– Communication coordinated by parent companyCommunication coordinated by parent company

4-45

MNC Classifications (cont.)MNC Classifications (cont.)

Worldwide product divisionsWorldwide product divisions– Product division responsible for operations Product division responsible for operations

worldwideworldwide– Helps recognize product specific needsHelps recognize product specific needs

4-46

Need for Coordination in Need for Coordination in an MNCan MNC

Greater need than domestic companiesGreater need than domestic companies Companies unable to gain strategic control Companies unable to gain strategic control

of their worldwide operations and manage of their worldwide operations and manage them in a globally coordinated manner will them in a globally coordinated manner will not succeed in the emerging international not succeed in the emerging international economyeconomy

Resources are widely distributedResources are widely distributed

4-47

Need for Coordination Need for Coordination in an MNC (cont.)in an MNC (cont.)

Improvements in information technology Improvements in information technology and methodology have made global and methodology have made global coordination somewhat easiercoordination somewhat easier

Still, coordination is big challengeStill, coordination is big challenge

4-48

Advantages of Advantages of Coordination Coordination

in an MNCin an MNC Flexibility in responding to competitorsFlexibility in responding to competitors Ability to respond in one country to a Ability to respond in one country to a

change in anotherchange in another Ability to keep abreast of market needs Ability to keep abreast of market needs

around the worldaround the world Ability to transfer knowledge between units Ability to transfer knowledge between units

in different countriesin different countries

4-49

Advantages of Advantages of Coordination Coordination

in an MNC (cont.)in an MNC (cont.) Reduced overall costs of operationReduced overall costs of operation Increased efficiency and effectiveness in Increased efficiency and effectiveness in

meeting customer needsmeeting customer needs Ability to achieve and maintain diversity in Ability to achieve and maintain diversity in

firm’s products, their production, and firm’s products, their production, and distributiondistribution

4-50

Global Business StrategiesGlobal Business Strategies

Multinational strategyMultinational strategy Global strategyGlobal strategy International strategyInternational strategy Transnational strategyTransnational strategy

4-51

All use global information systems (GISs) in various ways

HQHQ

Loose controls; Loose controls; strategic decisions strategic decisions

remote remote

Financial reporting flows

Multinational StrategyMultinational Strategy

4-52

HQHQ

Tight controls; centrally driven strategy

One-way flows,goods, information,and resources

Global StrategyGlobal Strategy

4-53

Assets, responsibilities decentralized

HQHQInternationalmentality

Formal control systems

International StrategyInternational Strategy

4-54

Transnational StrategyTransnational Strategy

Complex controls; high coordination skills,coordinated strategic decision process

Heavy flows;materials, peopleinformation, technology

Distributedcapabilities,resources anddecision making

HQ

4-55

Global Business Drivers Global Business Drivers (GBD)(GBD)

Joint resourcesJoint resources Flexible operationsFlexible operations Rationalized operationsRationalized operations Risk reductionRisk reduction Global productsGlobal products Scarce suppliesScarce supplies Corporate customersCorporate customers

4-56

GBDs CautionsGBDs Cautions

All GBDs do not apply to all MCNsAll GBDs do not apply to all MCNs Drivers have many influencesDrivers have many influences

– IndustryIndustry– CountryCountry– Own characteristicsOwn characteristics– Business units within firmBusiness units within firm

Provide vehicle for mapping out SPIRProvide vehicle for mapping out SPIR

4-57

Global Information Global Information Systems (GISs) Systems (GISs)

Implementation ProblemsImplementation Problems

Politically imposed constraintsPolitically imposed constraints– Hardware purchases and importsHardware purchases and imports– Data processingData processing– Data communicationsData communications

» Transborder data flows (TDF)Transborder data flows (TDF) Operational dataOperational data Personal dataPersonal data Electronic funds transferElectronic funds transfer Technical and scientific dataTechnical and scientific data

4-58

Global Information Systems Global Information Systems (GISs) Implementation (GISs) Implementation

Problems (cont.)Problems (cont.) Technological problemsTechnological problems

– Unreliable powerUnreliable power– Slow telecommunicationsSlow telecommunications– Software copyrights and blackmarket productsSoftware copyrights and blackmarket products

Lack of support from subsidiary managersLack of support from subsidiary managers– View corporate office as an ‘outsider’View corporate office as an ‘outsider’– Drag heels to improve local profitabilityDrag heels to improve local profitability

4-59

GIS Implementation GIS Implementation StrategiesStrategies

Multinational strategyMultinational strategy– Development teams derived from subsidiariesDevelopment teams derived from subsidiaries

Global strategyGlobal strategy– Development teams derived from parent Development teams derived from parent

locationlocation

4-60

GIC Implementation GIC Implementation Strategies (cont.)Strategies (cont.)

International– Development teams can travel from parent to

subsidiaries Transnational strategy

– Development team includes members from both parent and subsidiaries

4-61

Transnational Transnational StrategyStrategy

Link the GIS to business strategyLink the GIS to business strategy Define the information resourcesDefine the information resources Provide for data sharingProvide for data sharing Consider the cultural environmentConsider the cultural environment

Caution: the tasks and issues listed above are issues to be addressed, not steps to always be followed in strict sequence

4-62

Computing Around the Computing Around the WorldWorld

Group Support Systems (GSS) in AfricaGroup Support Systems (GSS) in Africa– Top management influencesTop management influences– Computing literacyComputing literacy– Referent powerReferent power– Oral communication preferenceOral communication preference– Satisfaction with useSatisfaction with use

4-63

Group Support Systems Group Support Systems (GSS)(GSS)

Systems that typically support problem Systems that typically support problem solvers meeting in groups settingssolvers meeting in groups settings

Also called group decision support systems Also called group decision support systems (GDSS)(GDSS)

An expansion of the DSS areaAn expansion of the DSS area

4-64

Factors Influencing Factors Influencing Acceptance of GSSAcceptance of GSSEndorsement

by Top Management

Satisfaction with Use

Oral Communication

Preference

ReferentPower

ComputerLiteracy

Acceptanceof GSS

+

+

+

--

4-65

Computing Around the Computing Around the World (cont.)World (cont.)

Strategic Decision Support System (SDS) in Strategic Decision Support System (SDS) in SwitzerlandSwitzerland– SDS helps managers understand business SDS helps managers understand business

strategy and its implicationsstrategy and its implications– Tools and modelsTools and models– CasesCases– TutorialsTutorials– ApplicationsApplications

4-66

International Computer International Computer Use in PerspectiveUse in Perspective

Great deal of attention given to GIS in past Great deal of attention given to GIS in past few yearsfew years

GIS built on solid foundationGIS built on solid foundation Cultural differences can influence computer Cultural differences can influence computer

workwork A better understanding of GIS is requiredA better understanding of GIS is required

4-67

SummarySummary

MNC MNC – Four organizational structuresFour organizational structures– Coordination is the keyCoordination is the key– Multitude of problemsMultitude of problems

GISGIS– Implementation strategiesImplementation strategies– Consider cultureConsider culture

U.S. is leader in computer useU.S. is leader in computer use

4-68

Chapter 5Ethical Implications of Ethical Implications of

Information TechnologyInformation Technology

MANAGEMENT INFORMATION SYSTEMS 8/ERaymond McLeod and George Schell

Copyright 2001 Prentice-Hall, Inc.5-69

Socially Conscionable Socially Conscionable CitizensCitizens

MoralsMorals– Traditions of right and wrongTraditions of right and wrong

EthicsEthics– Suite of guiding beliefs, standards, or ideals Suite of guiding beliefs, standards, or ideals

that promote an individual or communitythat promote an individual or community LawsLaws

– Formal rules of conduct that a sovereign Formal rules of conduct that a sovereign authority imposes on its citizensauthority imposes on its citizens

5-70

Pirated SoftwarePirated Software

Software that is illegally copied and then Software that is illegally copied and then used or soldused or sold– 35% in U.S.35% in U.S.– 92% in Japan92% in Japan– 99% in Thailand99% in Thailand

Some cultures encourage sharingSome cultures encourage sharing

5-71

Laws Lag BehindLaws Lag Behind

First computer crimeFirst computer crime– In 1966, a programmer used computer code to keep his In 1966, a programmer used computer code to keep his

checking account from being flagged as overdrawn. checking account from being flagged as overdrawn.

– When the bank discovered the crime the programmer When the bank discovered the crime the programmer could not be charged with a computer crime because no could not be charged with a computer crime because no computer crime law existed. computer crime law existed.

– He was charged with making false bank records.He was charged with making false bank records.

5-72

U.S. Computer LegislationU.S. Computer Legislation

Freedom of Information Act of 1966Freedom of Information Act of 1966– Gave citizens and organizations the right to Gave citizens and organizations the right to

access data held by the federal governmentaccess data held by the federal government Fair Credit Reporting Act of 1970Fair Credit Reporting Act of 1970

– Dealt with handling of credit dataDealt with handling of credit data Right to Federal Privacy Act of 1978Right to Federal Privacy Act of 1978

– Limited government’s ability to search bank Limited government’s ability to search bank recordsrecords

5-73

U.S. Computer Legislation U.S. Computer Legislation (cont.)(cont.)

Small Business Computer Security and Small Business Computer Security and Education Act (1984) Education Act (1984) – Advises Congress on matters relating to Advises Congress on matters relating to

computer crime against small businessescomputer crime against small businesses Counterfeit Access Device and Computer Counterfeit Access Device and Computer

Fraud and Abuse ActFraud and Abuse Act– Makes it a crime to gain unauthorized Makes it a crime to gain unauthorized

information pertaining to national security or information pertaining to national security or foreign relations and provides other protectionforeign relations and provides other protection

5-74

U.S. Computer Legislation U.S. Computer Legislation (cont.)(cont.)

In 1986, Electronic Communications In 1986, Electronic Communications Privacy Act was rewritten to cover digital, Privacy Act was rewritten to cover digital, data, and video communicationsdata, and video communications– Included special section on emailIncluded special section on email

Computer Matching and Privacy Act of Computer Matching and Privacy Act of 1988 1988 – Restricts government’s right to match computer Restricts government’s right to match computer

files for the purpose of determining eligibility files for the purpose of determining eligibility for government programs or identifying debtorsfor government programs or identifying debtors

5-75

Imposing an Ethics CultureImposing an Ethics Culture Corporate credoCorporate credo

– Succinct statement of values a firm seeks to upholdSuccinct statement of values a firm seeks to uphold

Ethics programsEthics programs– System of multiple activities designed to provide System of multiple activities designed to provide

employees with direction in carrying out corporate employees with direction in carrying out corporate credocredo

Tailored corporate codesTailored corporate codes– Codes of ethics for a particular organization or industryCodes of ethics for a particular organization or industry

5-76

2. Establishethics

programs

3. Establish corporate

ethics code

1. Establishcorporate

credo

Top-level Management

Imposes the Ethics Culture

In a Top-down Manner

An EthicsCulture

5-77

Example of a Corporate Example of a Corporate CredoCredo

Commitment to customer: The first commitment is to provide our customers withquality products and services that are innovative and technologically responsive to their current requirementsat appropriate prices. To perform these tasks with integrityrequires that we maintain confidentiality and protectcustomer privacy, promote customer satisfaction, andserve customer needs. We strive to serve qualifiedcustomers and industries that are socially responsibleaccording to broadly accepted community and companystandards.

5-78

Ethics AuditEthics Audit

Internal auditor meets with a manager for Internal auditor meets with a manager for the purpose of learning how the manager’s the purpose of learning how the manager’s unit is carrying out the corporate credounit is carrying out the corporate credo

5-79

Computer EthicsComputer Ethics

Analysis of the nature and social impact of Analysis of the nature and social impact of computer technology as well as computer technology as well as corresponding formulation and justification corresponding formulation and justification of policies for the ethical use of such of policies for the ethical use of such technologytechnology

5-80

Responsibility for Responsibility for Computer EthicsComputer Ethics

CIO holds primary responsibilityCIO holds primary responsibility CIO Must:CIO Must:

– Be aware of how the computer is affecting Be aware of how the computer is affecting societysociety

– Do something about this by formulating Do something about this by formulating policies to ensure technology is being used in policies to ensure technology is being used in the right waythe right way

5-81

Importance of Computer Importance of Computer EthicsEthics

Logical malleabilityLogical malleability– Ability to program computer to do anything you want it Ability to program computer to do anything you want it

to doto do

The transformation factorThe transformation factor– Computers can change the way things are doneComputers can change the way things are done

The invisibility factorThe invisibility factor– Invisible programmingInvisible programming

– Invisible complex calculationsInvisible complex calculations

– Invisible abuseInvisible abuse

5-82

Rights to the ComputerRights to the Computer

Right to computer accessRight to computer access Right to computer skillsRight to computer skills Right to computer specialistsRight to computer specialists Right to computer decision makingRight to computer decision making

5-83

Rights to InformationRights to Information

Right to privacyRight to privacy

Right to accuracyRight to accuracy

Right to propertyRight to property

Right to accessRight to access

5-84

Social Contract of ISSocial Contract of IS• The computer will not be used to unduly invade a The computer will not be used to unduly invade a

person’s privacyperson’s privacy• Every measure will be taken to ensure the Every measure will be taken to ensure the

accuracy of computer processingaccuracy of computer processing• The sanctity of intellectual property will be The sanctity of intellectual property will be

protectedprotected• The computer will be made accessible to society The computer will be made accessible to society

so that its members can avoid the indignities of so that its members can avoid the indignities of information illiteracy and deprivationinformation illiteracy and deprivation

5-85

Ethics and the CIOEthics and the CIO

Perceptions of the CIO’s EthicsPerceptions of the CIO’s Ethics– Do not take advantage of opportunities to act Do not take advantage of opportunities to act

unethicallyunethically– Ethics breeds successEthics breeds success– Firms and managers have social responsibilitiesFirms and managers have social responsibilities– Managers back up their ethics beliefs with Managers back up their ethics beliefs with

actionaction

5-86

The CIO is Influenced by aThe CIO is Influenced by aHierarchy of FactorsHierarchy of Factors

Office of theCIO

LawsLaws

CorporateCorporateethics cultureethics culture

SocialSocialpressurepressure

ProfessionalProfessionalcodes of ethicscodes of ethics

PersonalPersonalpressurespressures

5-87

CIOs Usually Do Not Act CIOs Usually Do Not Act UnethicallyUnethically

There are many opportunities for 47.5 37.7 MIS managers in my company to engage in unethical behavior.

MIS managers in my company 19.7 80.3 engage in behaviors that I consider to be unethical.

Question Agree Disagree

5-88

Ethics and SuccessEthics and Success PercentPercent PercentPercent

QuestionQuestion AgreeAgree DisagreeDisagree

Successful MIS managers in my company are Successful MIS managers in my company are generally more ethical than unsuccessful generally more ethical than unsuccessful managers. managers. 73.8 13.1 73.8 13.1

In order to succeed in my company it is In order to succeed in my company it is often necessary to compromise one's ethics. often necessary to compromise one's ethics. 18.0 75.4 18.0 75.4

Successful managers in my company withhold Successful managers in my company withhold information that is detrimental to their information that is detrimental to their self-interest. self-interest. 21.3 50.8 21.3 50.8

5-89

Ethics (cont.)Ethics (cont.) PercentPercent PercentPercent


Successful managers in my company make Successful managers in my company make

rivals look bad in the eyes of important rivals look bad in the eyes of important

people in my company. people in my company. 23.0 59.0 23.0 59.0

Successful managers in my company look for Successful managers in my company look for

a scapegoat when they feel they may be a scapegoat when they feel they may be

associated with failure. associated with failure. 23.0 67.2 23.0 67.2

Successful managers in my company take Successful managers in my company take

credit for the ideas and accomplishments credit for the ideas and accomplishments

of others. of others. 16.4 75.416.4 75.4

5-90

Corporate Social Corporate Social ResponsibilityResponsibility PercentPercent PercentPercent


The socially responsible manager must The socially responsible manager must occasionally place the interests of society occasionally place the interests of society

over the interests of the company. over the interests of the company. 68.9 21.3 68.9 21.3

The fact that corporations have great The fact that corporations have great economic power in our society means that they economic power in our society means that they have a social responsibility beyond the have a social responsibility beyond the

interests of the shareholders. interests of the shareholders. 96.7 3.3 96.7 3.3

As long as corporations generate acceptable As long as corporations generate acceptable shareholder returns, managers have a social shareholder returns, managers have a social responsibility beyond the interests of responsibility beyond the interests of

shareholders. shareholders. 70.5 16.470.5 16.4

5-91

Achieving an Ethical Achieving an Ethical Computer OperationComputer Operation

1. 1. Formulate a code of conduct.Formulate a code of conduct.

2. 2. Establish rules of procedure relating to such Establish rules of procedure relating to such issues as personal use of computer services and issues as personal use of computer services and proprietary rights to computer programs and data.proprietary rights to computer programs and data.

3. 3. Make clear the sanctions that will be taken Make clear the sanctions that will be taken against offenders-such as reprimands, against offenders-such as reprimands, termination, and civil action.termination, and civil action.

4. 4. Recognize ethical behavior.Recognize ethical behavior.

5-92Parker’s 10-Step Action Plan

Achieving an Ethical Achieving an Ethical Computer Operation (cont.)Computer Operation (cont.)5. 5. Focus attention on ethics by means of such Focus attention on ethics by means of such

programs as training sessions and required reading.programs as training sessions and required reading.6. 6. Promote computer crime laws by keeping Promote computer crime laws by keeping

employees informed.employees informed.

7. 7. Keep a formal record that establishes accountability Keep a formal record that establishes accountability of each information specialist for her or his actions, of each information specialist for her or his actions, and also minimizes the temptations for violations and also minimizes the temptations for violations by means of such programs as ethics audits.by means of such programs as ethics audits.


Achieving an Ethical Achieving an Ethical Computer Operation (cont.)Computer Operation (cont.)

8. 8. Encourage the use of rehabilitation programs that Encourage the use of rehabilitation programs that treat ethics violators in the same way that treat ethics violators in the same way that corporations show concern for the recovery of corporations show concern for the recovery of alcoholics or drug offenders.alcoholics or drug offenders.

9. 9. Encourage participation in professional societies.Encourage participation in professional societies.

10. 10. Set an example.Set an example.


Ethics PerspectiveEthics Perspective

Severe social problems exist because Severe social problems exist because government and business organizations government and business organizations have failed to uphold the highest ethical have failed to uphold the highest ethical standards in computer usestandards in computer use– Invasion of privacyInvasion of privacy– Software piracySoftware piracy

CIOs can make a differenceCIOs can make a difference

5-95

An Information Services An Information Services Code of ConductCode of Conduct

Conduct all activities in a manner that Conduct all activities in a manner that precludes any form of dishonestyprecludes any form of dishonesty

Avoid any act that compromises integrityAvoid any act that compromises integrity Avoid any act that might create a dangerous Avoid any act that might create a dangerous

situationsituation Not use alcohol or drugs while at workNot use alcohol or drugs while at work

5-96See Figure 5.4

An Information Services An Information Services Code of Conduct (cont.)Code of Conduct (cont.)

Maintain courteous and professional Maintain courteous and professional relations with users, associates, and relations with users, associates, and supervisorssupervisors

Adhere to the no-solicitation rule and any Adhere to the no-solicitation rule and any other employment policyother employment policy

5-97See Figure 5.4

An Information Services An Information Services Code of Conduct (cont.)Code of Conduct (cont.)

Protect confidentiality of sensitive Protect confidentiality of sensitive information about the organization’s information about the organization’s competitive position, trade secrets, or assetscompetitive position, trade secrets, or assets

Exercise sound business practice in the Exercise sound business practice in the management of such company resources management of such company resources such as personnel, computer use, outside such as personnel, computer use, outside services, travel, and entertainmentservices, travel, and entertainment

5-98See Figure 5.4

SummarySummary

Morals, laws, and ethics govern behaviorMorals, laws, and ethics govern behavior Early yearsEarly years

– No computer lawsNo computer laws– Easy to bypass regulationEasy to bypass regulation

Executives impose ethical cultureExecutives impose ethical culture Computer ethics require executive to put Computer ethics require executive to put

proper policies in placeproper policies in place

5-99

Summary [cont.]Summary [cont.]

Society places importance on computer Society places importance on computer ethicsethics– Logical malleabilityLogical malleability– Transforming ways of livingTransforming ways of living– Processes are hidden from viewProcesses are hidden from view

Societal rights in relation to the computerSocietal rights in relation to the computer

5-100

unit 2 using information technology to engage in electronic commerce; computer use in an...

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